Terminal Data Attributes the Sale of Its Plant to Sheer Necessity

Terminal Data, the Woodland Hills microfilm-systems company, put the matter bluntly.

“Management believes that in the near term the company cannot achieve net earnings,” it said in a recent Securities and Exchange Commission filing, “as long as the Simi Valley facility remains unsold or unoccupied.”

That, in a nutshell, is why Terminal Data agreed to sell its Woodland Hills headquarters at 21221 Oxnard St. in Warner Center last week and move to its empty new plant in Simi Valley. The company had tried to sell the new plant, an albatross from the day it was finished, for 10 months, but never found a buyer.

So it sold what it could sell. And, according to real estate specialists in the San Fernando Valley, it sold cheaply. The price was $8.35 million for the 11-year-old, 132,000-square-foot Warner Center plant, which was sold to the real estate operation of Daily News owner Jack Kent Cooke, who plans to move most of the paper’s operations there.

Founded by Chairman

Terminal Data was founded in 1968 by its current chairman, Michael Rothbart. It has been a leading producer of cameras and other optical equipment used by companies like Burroughs and NCR for systems such as high-speed microfilmers, sorters and filmers for bank checks and microfiche duplicators.

Rothbart, 66, built the $23-million Simi Valley quarters to accommodate growth he believed would stem from increasing sales of equipment used to store documents on optical discs. Such equipment relies on laser technology to store information in digital form on a high-capacity medium much like the compact discs used for music.

But the technology caught on more slowly than expected, and the results were disastrous for Terminal Data. The company never got big enough for the Simi Valley building, and a glut of office space made it difficult to sell.

As a result, Terminal Data slipped into the red. Instead of growing, it had to shrink. As part of its continuing cost-cutting, it has reduced its work force from 600 to 365 in roughly two years.

Several real estate experts said that Terminal Data’s Warner Center building is worth at least $13 million, even though it has just 220 parking spaces and could use as many as 400.

But James R. Schwartz, Terminal Data president, said in an interview that the company had the property appraised twice, and that the selling price is in line with those appraisals.

Rothbart said Terminal Data, which sold the building without a real estate agent, will enjoy a gain of about $4.5 million from the deal.

The company said the 280,000-square-foot Simi Valley facility costs $225,000 a month to maintain. Now, Rothbart said, the company itself will occupy half the facility and try to rent out the rest.

Terminal Data has lost money for about two years. The Simi Valley fiasco widened the net loss to $2.8 million for the nine months ended June 30, from a deficit of $1.4 million a year ago, and sales were off 17%, to $22.8 million.

Jay Jacobs, an analyst at Wessels, Arnold & Henderson in Minneapolis, called the drop in sales particularly disturbing. He also complained that Terminal Data gave the investment community the impression that its contracts could not be canceled, when in fact some big customers did cancel or cut back their buying.

“They lost a lot of credibility,” he said.

He added that he no longer follows the firm closely because of its troubles, but said it always had good products, was using up-to-date technologies and seemed promising. He said he doesn’t expect renewed interest in the stock until there is “some kind of improved sales forecast” from Terminal Data.

Sales High for One Year

Rothbart denied that the company misled investors. He said the company’s sales in the fiscal year ended Sept. 30, 1984, were unusually high--$45.6 million--because of a one-year contract with Kodak that was not renewed. He added that the contract never was represented as likely to become permanent.

Rothbart said annual sales have returned to about their previous levels. He blamed the company’s troubles on the Simi Valley property and a slump in the computer industry. Terminal Data products are often used with computers that control their high-speed operations.

Schwartz, 52, who took over as president from Rothbart earlier this year, said the company should show an operating profit next year but will not generate net income until its real-estate problems are settled.

In fact, things have improved at Terminal Data, on an operating basis. For the nine months ended June 30, operating losses were $1.3 million, down sharply from the operating deficit of $2.6 million in the same period a year ago.

Another promising sign, Schwartz said, is that demand for optical-disk-storage equipment is rising now that the technology is becoming standardized. He added that the firm has two new optical-storage products: one permits documents to be stored on optical discs, the other does the same for documents already on microfilm.

Meanwhile, the company plans to move to its new building at 2800 N. Madera Road in Simi Valley before the end of the year.