CORPORATE FOCUS E-Transaction Technology Helped Put Interlink in Black By SLAV KANDYBA For Camarillo-based Interlink Electronics, Inc., the difference between 2002 and 2003 is akin to the difference between day and night. The company came back from a horrid 2002 losses in three of four quarters with strong signs in 2003. The highlight perhaps came in the fourth quarter, when Wells Fargo Bank ordered the company’s e-transaction technology to install in all of its branches. The deal, said Interlink CEO E. Michael Thoben III, was “a breakthrough,” but all of Interlink’s businesses segments contributed to its strong performance. “We have met or exceeded our objectives and continue to build momentum in our business segments,” said Thoben. Interlink designs and manufactures products in three business segments business communications including remote controls used for PowerPoint presentations and other projectors; home entertainment including remote control technology used in interactive television applications; and e-transactions, technology that allows companies to capture signatures and other data electronically. The company also has a specialty products division which designs technology for cell phones, PDAs and other applications. Net income for the fourth quarter ended Dec. 31 stood at $407,000, or $0.03 per diluted share, compared to a net loss of $3.6 million, or $0.37 per diluted share, for the same quarter in 2002. Revenues in the fourth quarter were $8.7 million, up 25 percent from fourth quarter of 2002. For the full year, net income was $1.1 million, or $0.09 per diluted share, on revenues of $31 million, versus a loss of $4.3 million or $0.44 per diluted share on $25 million in 2002 revenues. “We have three strategic markets and each is benefiting from each other as well as the rebounding of markets around the world,” Thoben said. “The niche markets are becoming more mainstream.” Business communications has been Interlink’s most dependable segment, Thoben said, accounting for 64 percent of the revenues. The company has a 70 percent market share in this area. Interlink primarily distributes its products through original equipment manufacturers, for use in a variety of products from computers to televisions. As an OEM supplier, Thoben noted that Interlink is well positioned to observe the trends in business spending. Interlink has benefited from the recent uptick in spending, but its performance can also be attributed to the innovative technologies the company has developed. Chief among those, the company is developing devices such as ePad, a technology that allows financial institutions and others to capture and authenticate signatures and thumbprints electronically and avoid the need for paper documents in a range of transactions. Interlink recently struck a deal with Wells Fargo, which will be using the company’s ePad technology throughout the company. Thoben said the deal was “one of our biggest successes,” being the first of its kind with a top-tier U.S. bank. Late in the fourth quarter last year, the company introduced another technology, MicroNav, which is already in trials with some OEMs. Interlink touts MicroNav as the world’s smallest 360-degree pointing device and is targeting the device for markets such as cell phones, PDAs and digital cameras. The device can be used somewhat like a computer mouse to navigate the Internet or play computer games. With about 20 percent of 460 million to 500 million cell phones made in the country equipped for Web browsing and gaming, MicroNav will “present a pretty significant opportunity,” Thoben said. Still a small player in the technology sector, Interlink has not yet garnered much interest among Wall Street analysts, but its stock price has nonetheless kept a strong pace over the past year. After reaching a 52-week low of $2.50 on March 24, 2003, Interlink shares have rebounded, trading close to their 52-week high of $12.15. On March 25, 2004 the stock price closed at $11.30. And the company has been adding personnel, including engineers and operations staff overseas and sales and marketing employees in Camarillo. “We’ve been hiring people and expanding our operations,” Thoben said.

Company Takes Flight Global Jet Shares Inc. opened for business earlier this month offering time-shares in its airplanes for what the company claims is half the cost of traditional airline time-share prices. Global Jet launched with one plane, a Gulfstream GIII, out of Van Nuys Airport, but the company intends to expand the business to include a fleet of planes in several locations, officials said. Airline time shares work this way: Customers purchase a share of the plane based on a percentage of total flying time and then reserve the actual flying time they require. The idea is to provide the convenience of a private jet, usually to business executives, for a small portion of the cost of owning the jet outright. Although even time-shares can be extremely costly, Global Jet has reduced the expense of such ownership by outfitting its company with previously owned airplanes. The typically older Gulfstream jets are refurbished and equipped with the latest luxury amenities. According to David Reich, a spokesman for Global Jet, a $2.8 million time share from competitors would cost $1.3 million at Global Jet. Lighting Company Acquired RSA Lighting, a contract manufacturer based in Chatsworth, has been acquired by Cooper Industries, a publicly-traded manufacturer of electrical and other products based in Houston. Terms of the deal were not disclosed. The acquisition will allow Cooper’s lighting division to expand into the architectural market and provide RSA’s product line, sold to architects and other commercial channels, with enhanced sales and marketing support, the companies said. Salem Gets New Station Salem Communications Corp. is expected to acquire radio station WAFS-AM in Atlanta, Ga. for about $16.4 million. Salem, a broadcaster of religious programming based in Camarillo, owns and operates about 92 radio stations. The company is acquiring WAFS-AM from Moody Bible Institute. The station has a Christian talk format. Hemacare Posts Losses for Year Hemacare Corp. reported net income rose to $264,000 or $0.03 per diluted share for the fourth quarter ended Dec. 31 on revenues of $6.6 million, but the company ended up in the red for the year. In the 12 months ended Dec. 31, Hemacare, a publicly-traded provider of blood products and services, lost $4.7 million or $0.60 per diluted share, compared to a loss of $591,000 in the 2002 year. Revenues for the full year were $27.5 million, compared with $27.8 million in 2002. Hemacare attributed the losses to costs associated with closing several of its unprofitable blood donor centers and a decline in gross profits of its ongoing centers, among other factors. The company said its fourth quarter profits indicated an improved outlook for the future. Wells Fargo Feted The Valley Industry and Commerce Association has selected Wells Fargo to receive its 2004 Robert E. Gibson Corporate Award for Excellence. VICA will present the award on June 17 at an awards gala to be held at Sheraton Universal Hotel. Wells Fargo, which has 35 branches in the San Fernando Valley area, was selected as the award recipient because of its support to the communities in which it does business, VICA officials said. The company made a $1 million gift to Cal State Northridge and awarded an additional $1 million to non-profit organizations throughout the Valley last year. California Chamber Seeks Entries The California Chamber of Commerce launched its first-ever “Simply Essential Success Stories” contest to reward smaller California businesses for innovation and success during difficult times. The deadline for the contest is Wednesday, March 31, 2004. The contest is open to any small business in California with 100 employees or less. Businesses can enter the contest online at www.calchamber.com/successstories by filling out a short questionnaire and submitting their success story. A panel of small business leaders will review the responses and award prizes in six regional categories, including Los Angeles. A grand prize winner will be chosen from among the regional winners and receive $5,000 plus a regional prize package. Scheib Continues Losses Earl Scheib Inc. a Sherman Oaks-based auto painting company, reported a net loss of $2 million or $0.45 per diluted share for the third quarter of fiscal 2004 ended January 31 compared to a net loss of $1.5 million or $0.36 per diluted share, for the like period a year ago. Net sales for the third quarter were $9 million, a decrease of 3.1% from the third quarter of fiscal 2003, where Scheib reported net sales of $9.3 million. Scheib attributed the decline to the company operating 12 fewer retail paint and body shops compared to the same date last year. Scheib’s operating losses for the third quarter of fiscal 2004 and fiscal 2003 were $1.7 million and $2.1 million respectively.

Northrop Finishes Consolidation of Unit at Valley Site By SLAV KANDYBA Staff Reporter Officials at Northrop Grumman Corp.’s Navigation Systems Division in Woodland Hills dedicated a manufacturing center March 16 that took two years to relocate from Santa Barbara County. The Hemispherical Resonator Gyro center is the latest addition to a 765,000- square-foot, nine-building park nestled next to the 101 Freeway just off the Canoga Avenue ramp that serves as Navigation Systems headquarters. It occupies about 4,500 square feet inside the defense contractor’s sole Valley location. Northrop was on a shopping spree of sorts in the past decade and HRG, formerly part of Litton Systems, was one of several acquisitions, said Ron Tanabe, Northrop’s director of space systems. “They wanted it all merged here in Woodland Hills,” Tanabe said. “Instead of having pockets all over.” HRG employed 250 people in Goleta, but many of them declined a proposed move to Woodland Hills and subsequently left the company, Tanabe said. Northrop then drew on its existing employees. Between 60 and 70 Navigation Systems employees were assigned to learn gyro production. They create the small, spinning objects at the core of technology that controls motion on military, space and commercial projects, said Chris Seemann, a program manager who reports to Tanabe. Although he declined to say how much revenue the HRG unit brings in to Navigation Systems, spokesperson Barteld said the entire division has had growth. In 2001, it brought in $591 million in sales, compared to $668 million in 2002 and $756 million in 2003. Now that it’s fully operational, the center employs about 200 people that either work in or support technicians in four “clean rooms” that occupy 4,500 square feet of space, Seemann said. Although it wasn’t exactly significant job growth, the consolidation is still good news to at least one public official. “The last two weeks I’ve been getting a notice every day” that a 101 corridor company is downsizing or leaving, said County Supervisor Zev Yaroslavsky, who represents the Third District and attended the ceremony. “Any time we can create jobs (and) bring manufacturers back is a good deal.” Tanabe doesn’t necessarily see it that way. “Population has grown here (at the facility), but a lot of that is by consolidation and not growth,” he said. However, he added: “I know we’ve hired people.” Northrop is not the only large defense contractor that is consolidating its businesses in the Valley. Last month, a spokesperson at Boeing Co.’s Rocketdyne Propulsion and Power plant on Canoga Avenue revealed his department along with some machinists were moving to a facility on DeSoto Avenue.

Edwards, Chen Latest Aides to Leave Hahn Staff Deputy Mayor Troy Edwards, who has been named in an investigation of corruption in city contracting practices, has stepped down from his post. His resignation is effective April 9. Edwards, who was most recently deputy mayor for special projects, had been responsible for overseeing Los Angeles World Airports and the Port of Los Angeles. A grand jury probe launched by District Attorney Steve Cooley earlier this month is seeking to determine whether city commissioners and mayoral aides had engaged in questionable fund-raising tactics by offering contractors who work with those agencies favorable treatment in return for campaign contributions. The city’s practice of allowing civilian commissioners to purchase contractor services amounting to millions of dollars in contracts from the airport, harbor and power authorities, has since been outlawed, but a federal grand jury has subpoenaed documents from the various agencies and begun calling officials, including Edwards, to testify. Calling Edwards a “long-time key advisor,” Mayor Jim Hahn said he would appoint Phillip Depoian senior advisor on aviation to serve as his liaison for the LAX master plan and other aviation issues. Meanwhile, Hahn has announced a blue ribbon city commission panel to study best practices for contracting at the city’s proprietary departments. Among the officials named to the panel is Roberto Barragan, president of the Valley Economic Development Center. The commission will be chaired by USC Law Professor Erwin Chemerinsky. In an unrelated move, the deputy mayor for workforce development has also resigned effective April 16. Joy Chen said she would remain as a consultant to the Los Angeles Workforce Investment Board, a group involved with the 25 One-Stop centers providing job training and placement services. Deputy Mayor Renata Simril will oversee Chen’s areas, which also included Mayor Hahn’s L.A. Workforce Literacy Project and the L.A. Free Cash for College Project. Also resigning from Hahn’s staff was Sarah Dusseault, deputy mayor for housing, saying she wanted to spend more time with her family. Business Journal Staff

Cardinal Health Layoffs Loom By SHELLY GARCIA Senior Reporter As many as 250 employees could get the axe at Cardinal Health’s local offices here, effectively shutting down the company’s Woodland Hills offices. The layoffs, which began last year, stem from the acquisition of Syncor International Corp., a medical imaging company that had a presence in the Warner Center area for nearly three decades, by Cardinal Health Inc., a Dublin, Ohio-based provider of health care products and services, medical and laboratory supplies drug delivery technology and other products. Pink slips have been handed out in stages since the acquisition, which was completed in January, 2003. But the coming layoffs are likely to affect the largest number of employees yet, impacting 150 workers or more. “At least nine months ago we communicated plans to consolidate some staff functions at our corporate headquarters, and we’ve been doing that,” said Jim Mazzola, a spokesman for Cardinal Health. Mazzola declined to provide further details, saying that the company does not disclose the number of employees at any individual site. But Cardinal Health has just put the former Syncor headquarters offices at 6464 Canoga Ave. in Woodland Hills up for sublease, with three years left on the 60,000-square foot building. The space being marketed has not yet been vacated, according to brokers at CB Richard Ellis, which is marketing the property, but another 36,000 square feet of adjoining office space, at 21300 Victory Boulevard, which was put on the market for sublease late last year, has already been vacated. Both leases have another three years to run, according to Rich Bright, the CB broker marketing the property. In Securities and Exchange Commission documents filed on Dec. 31, 2003, Cardinal Health said that it would terminate about 150 employees as a result of the Syncor acquisition, and 100 of those workers had been let go as of the end of last year. But other records suggest that as many as 250 workers were employed in Woodland Hills prior to the acquisition. Indeed, expansion at what was then Syncor had been so dramatic over the past several years, that by December, 2000 the company was forced to add the adjoining space to accommodate the growth. Syncor’s business had for many years been rooted in the radiopharmaceuticals business, compounds used to diagnose and treat cancer and other diseases, but late in the 1990s the company began an aggressive diversification program into the medical imaging segment. The company also expanded overseas. But the foray into medical imaging ultimately faltered, and just before the acquisition was announced, Syncor had decided to divest its imaging clinics. Cardinal Health, a $40 billion company with some 49,000 employees, in its most recent financial report for the three months ended Dec. 31, said it incurred employee-related costs of $5.5 million resulting from retention bonuses and severance paid as a result of the Syncor acquisition. Those costs for the six months ended Dec. 31, were reported to be $7.1 million in the same documents. Mazzola said that the layoffs were part of a program to achieve greater operating efficiencies. He said Cardinal would continue to maintain a presence in Southern California, and would employ quality and regulatory affairs personnel as well as sales and marketing staff for its nuclear pharmacy division in the area.

Fitness Clubs Get Less Intimidating to Lure Customers RETAIL by Senior Reporter Shelly Garcia Chew on this: About 85 percent of Americans say it’s important to get enough exercise, and two out of three of those very same folks are overweight, even obese. The conundrum, it turns out, is also a marketing opportunity, at least for those who think they’ve figured out what happens between knowing what’s good for you and actually doing it. It also goes a way to explaining why new fitness operations are opening faster than the industry is growing. One of the latest is Cuts Fitness for Men, a franchise operation out of Clark, N.J. that opened its first West Coast club in Northridge late last year. Cuts is modeled on another fitness club, Curves International, which caters to women with a 30-minute circuit workout. Hugely successful, Curves, which also franchises its clubs, has grown to 7,000 locations since it opened in 1995, and nearly every Valley community has one. Cuts, located in the Northridge Promenade at 19520 Nordhoff St., also offers a 30-minute circuit workout, a combination of cardiovascular and muscle strengthening exercises performed in succession. Members start at any open station along the circuit, so there’s no waiting, and they are prompted to move to the next station every 40 seconds by a public address system. The workout requires no prior experience and there’s little risk of injury with weights that are too heavy or improper form. One look at the advertising Cuts has been doing, and it’s easy to see who the target market is. The ads feature owner Jeff Jarred, owner of the Northridge franchise who tipped the scale at 334 pounds when he opened the club in November and now weighs 291 pounds, in before and after pictures. An admirable accomplishment, but certainly not the Adonis-with-a-six-pack model that many traditional clubs rely on to lure new members. “A lot of men are intimidated by a conventional gym,” said Jarred. “They may not be athletic, they may be overweight, they may be intimidated by young guys who are in great shape at conventional gyms. It’s really for the guy that is just not going to go to the conventional gym.” Jarred, who is also an owner in a family metal fabrication business, Fenders ‘n More, in Pacoima, decided to open Cuts as part of a decision to get himself into better shape. He looked into the franchise after his wife joined a Curves gym and stuck with the program. The franchise fee is about $25,000, which includes the startup equipment, and Jarred figures he pumped another $30,000 to $50,000 in for audio-visual equipment, computers, furniture and the build-out. Those 55 and older have driven the growth in health clubs over the last five years, accounting for membership increases of about 41 percent, compared to a 23 percent increase in membership overall, according to the International Health, Racquet & Sportsclub Association, a trade group in Boston. To appeal to those older members clubs are boosting their offerings in activities such as yoga, Pilates and other less physically demanding exercises. “Yoga has really exploded and Pilates the same, said Brooke MacInnis, a spokesperson for IHRSA. “Classes like that are low impact you’re not going to dislocate anything so it’s certainly appealing to that age group.” While companies like Cuts do not specifically target older members, they do attract the demographic because of the nature of the program. Tom Marshall, who has been going to Cuts four or five times a week since he joined in December, is one example. The 62 year old said he and his wife had previously tried traditional fitness clubs and failed to go regularly. And they bought home equipment, a machine Marshall now refers to as “the stare-master” because all they do is stare at it. Marshall’s wife then joined Curves, and lost about 40 pounds. When she saw an article about what seemed like the men’s version, she passed it along to her husband. “l just want to keep myself in shape so I can do things,” said Marshall, who said he used to hike regularly until he moved to Northridge. “My cholesterol is high, but it’s coming down. I haven’t lost much weight, but I feel much fitter. And I went to the doctor and did the treadmill and they were happy with it.” Albertsons Expands Albertsons is set to roll out a new store-within-a-store concept in all its Los Angeles area stores, and the company is about to test yet another such concept in several as-yet undetermined L.A. stores. The second-largest food and drug retailer in the nation is now installing Toys ‘R’ Us departments in its Savon stores after a successful test run that included Burbank, Encino and Sherman Oaks units. In coming months, the company will begin a test of Office Depot departments in its L.A. stores. “It’s just a partnership for the trial while we’re doing the test,” said Karen Ramos, a spokeswoman for Albertsons. “Then we’ll evaluate after the test is completed. Albertsons will test the Office Depot concept in about 18 stores in three markets, L.A., Chicago and Phoenix. The Phoenix stores have already been set up and the company expects to decide which L.A. stores will carry the department in coming months. The Office Depot store-within-a-store will carry about 700 products, focusing on the home office market. “We have tended to concentrate on more school supplies and stationery,” Ramos said. “But Office Depot had this fabulous expertise in selling office supplies and technology like printer cartridges that we’ve never done.” The company has previously set up partnerships with other food marketers including Krispy Kreme and Starbucks. Wal-Mart has made significant inroads expanding its general merchandise stores into the food arena. Although Albertsons officials say the recent moves are unrelated to Wal-Mart’s expansion, they do concede that enhancing their grocery offerings makes good business sense. “We’re able to offer our customers a product selection they’ve never seen here, and save them a shopping trip elsewhere,” Ramos said. This is an occasional column by Senior Reporter Shelly Garcia. She can be reached at (818) 316-3123 or at [email protected]