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Calif. firm's profits soar with demand for security screening devices

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Global demand for security screening technology continues to grow at a steady pace, as evidenced by a California manufacturer whose catalog of high-tech products includes controversial airport body scanners that travelers have come to know well.

Hawthorne-based OSI Systems Inc. reported an increase in revenues of $33.5 million during the three months ending March 31 over the same period last year. It posted $69 million in total gross profits during the quarter.

The company’s security division – its biggest, which contains the Rapiscan Systems subsidiary that manufactures body scanners – saw an increase in revenues of $23.6 million throughout the period. North American operations for OSI Systems still dominate the company’s international sales, but past terrorism attempts have boosted the company’s profits both in the United States and around the world.

Its overall backlog of purchases topped $1 billion during the quarter, the highest in the company’s history and a 263 percent increase over the same period last year, due in part to a hefty agreement with Mexico worth $900 million for screening equipment and services at checkpoints and airports.

The Port Authority of New York and New Jersey recruited the company with a $15 million handshake in February to supply screening devices for detecting potential threats among parcels and cargo at the new World Trade Center.   

“We think that Rapiscan is well-positioned and quickly gaining traction with its integrated services and turnkey solutions offerings for the security industry, a growing market segment,” company CEO Deepak Chopra told shareholders in April.

Indeed, the market for X-ray security screening alone is expected to reach nearly $2 billion by 2016. The Homeland Security Research Corp. attributes the anticipated growth in part to “terror-troubled India” and the need to replace aging security equipment in the United States and Europe with new machines.

Demand for X-ray body scanners from Rapiscan and a short list of competitors grew swiftly after Umar Farouk Abdulmutallab, nicknamed the “underwear bomber,” attempted to blow up a Northwest Airlines flight on Christmas 2009. That prompted the Department of Homeland Security to speed up plans for purchasing whole-body imagers. The machines have now become commonplace at American airports, even in mid-sized cities like Tulsa, Okla., and Austin, Texas.

Contracts for the company turned up elsewhere, too. Nigeria, where the underwear bomber’s flight originated, signed a deal with the company shortly after the attempted attack. Great Britain made its own arrangements days earlier with Rapiscan to buy full-body scanners for its Heathrow and Manchester international airports. Today, there are 700 "advanced imaging technology machines" deployed at nearly 200 airports nationwide, according to the Transportation Security Administration, including at airports in San Francisco, Oakland, Los Angeles, San Diego and Sacramento.

But by no means is body scanning the company’s only contracting boon. It also specializes in building machines that screen travelers' baggage for explosives and vehicle X-ray devices that expose the contents of a car or truck and single out anomalies, like narcotics loads or human stowaways. Full-size delivery trucks can pass through the company’s portal-like scanners, which produce an image of the vehicle’s insides for security personnel, who can then zero in on the image and hunt for what might appear to be weapons or drugs.

Filed under: Public Safety, Daily Report

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