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EARNING DROP TIED TO EMINENT DOMAIN.

Byline: Nicholas Grudin Staff Writer

A defense contractor with a test facility in Saugus partly blames a decline in earnings on Santa Clarita's eminent domain seizure of some of its property that was used to build Golden Valley Road.

In its first-quarter earnings report issued Wednesday, National Technical Systems Inc. claimed that a 3.5 percent drop in overall gross margin as a percentage of revenues was due to a combination of factors, including ``losing a portion of its land by eminent domain for a new highway,'' which thus limited security.

``Our customers told us so,'' said Chairman and CEO Jack Lin, explaining that Golden Valley Road has compromised the security of highly confidential defense testing. ``The problem is that with a pair of binoculars, you can overlook our whole facility.''

``Our Camden, Ark., facility has doubled in sales since the war, and in Santa Clarita we've been fighting to bring in other testing capabilities to keep it viable,'' Lin said.

The $41 million Calabasas-based company tests missile and satellite technology as well as contracting for telecommunication providers at a facility on 147 acres in Santa Clarita.

The eminent domain action dates back to 1999, when the city of Santa Clarita forcibly acquired 5 1/2 acres of NTS property in order to build Golden Valley Road, the first portion of what will eventually be a cross-valley connector, according to Brian Pierik, assistant city attorney for Santa Clarita.

Eminent domain is the constitutional power of government agencies to acquire privately owned land for public use, as long as it pays just compensation, according to Pierik.

The city paid NTS market value for the land, Pierik said, but NTS disagrees. NTS officials contend that the market value was higher than the city's estimate, Lin said.

The court has already established that NTS's revenues were not effected by the eminent domain seizure, but a final judgment on what the city might owe NTS has not yet been made.

``It's in the judge's hands,'' Lin said.

Since the 1999 eminent domain filing, NTS has fought the action and asked for damages.

The issue went to court in December of 2002, and a judgment is expected in the coming days, Pierik said.

NTS's earnings report for the first quarter identifies the property takeover by Santa Clarita as one of several reasons for the gross margin decline, but attributes much of the drop-off to other factors.

``The year-to-year decrease ... was due principally to competitive pricing pressures in the staffing industry and a historically lower average gross margin percentage from recently acquired TRS staffing business,'' according to the report.

NTS's total first quarter revenues for fiscal 2004 rose to $26.8 million, from $19.3 million in the first quarter of fiscal 2003.

The company's overall growth stemmed from the opening of a European subsidiary, the beginning of a five-year contract with Siemens in Germany, and Verizon's approval of NTS to conduct fiber optic technology testing, according to the earnings report.

The Santa Clarita site is one of 12 NTS technology testing labs throughout the country.

In Santa Clarita, NTS conducts testing for fuel cells, satellites, hot gas, high vacuum and solar capabilities, and has recently upgraded the facility's acoustic testing capability, Lin said.

Nicholas Grudin, (661) 257-5255

nicholas.grudin(at)dailynews.com

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photo

Photo:

(color) National Technical Systems Inc.'s testing facility in Saugus is shown with the Golden Valley Road project in the background.

David R. Crane/Staff Photographer
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Publication:Daily News (Los Angeles, CA)
Article Type:Statistical Data Included
Geographic Code:1USA
Date:Jun 12, 2003
Words:577
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