8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 15, 2008

NATIONAL TECHNICAL SYSTEMS, INC.

(Exact Name of Registrant as Specified in Charter)

California                 (State or Other Jurisdiction of Incorporation)	0-16438            (Commission File Number)	95-4134955           (IRS Employer Identification No.)
24007 Ventura Boulevard, Suite 200                  Calabasas, California                 (Address of Principal Executive Offices)		91302    Zip Code
(818) 591-0776                               (Registrant’s telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 2.02. Results of Operation and Financial Condition.

On September 15, 2008, we issued a press release announcing our financial results for our second fiscal quarter ended July 31, 2008.  On September 15, 2008, we held a conference call to discuss the contents of the press release.  The information contained in the press release and transcript of the conference call is incorporated herein by reference and furnished as Exhibit 99.1 and Exhibit 99.2, respectively.

The information in this Item 2.02, Exhibit 99.1 and Exhibit 99.2 is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit 99.1 Press release dated September 15, 2008.

Exhibit 99.2 Portions of transcript of earnings call held on September 15, 2008 regarding

financial results for the second fiscal quarter ended July 31, 2008.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date:      September 17, 2008 National Technical Systems, Inc.


By: /s/ Raffy Lorentzian
        Name: Raffy Lorentzian Title: Senior Vice President
Chief Financial Officer

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EX-99.1

EXHIBIT 99.1

NEWS RELEASE for September 15, 2008 at 7:30 AM EDT

Contact: BPC Financial Marketing National Technical Systems

John Baldissera Raffy Lorentzian, Sr. V.P. & C.F.O.

800-368-1217 818-591-0776

NATIONAL TECHNICAL SYSTEMS ANNOUNCES STRONG

FISCAL 2009 SECOND QUARTER AND SIX MONTHS RESULTS

CALABASAS, CA (September 15, 2008)....National Technical Systems, Inc. (Nasdaq: NTSC) (NTS) today announced strong results for its fiscal 2009 second quarter and six months ended July 31, 2008.

Net income for the quarter increased 46.8% to $1,130,000 as compared to $770,000 for the same period in the prior year with corresponding diluted earnings per share of $0.12 in the current period compared to $0.08 for the same quarter in the prior year. Net income for the six months ended July 31, 2008 increased 36.5% to $1,858,000 as compared to $1,361,000 for the same period in the prior year with corresponding diluted earnings per share of $0.20 in the current period compared to $0.15 for the same period in the prior year. Total revenues for the quarter increased 16.0% to $36,004,000, compared to $31,025,000 for the same period in the prior year. Total revenues for the six months ended July 31, 2008 increased 11.4% to $67,736,000, compared to $60,829,000 for the same period in the prior year.

CEO William C. McGinnis commented, “I am extremely pleased with our second quarter results, which were driven by healthy growth organically and through our recent acquisitions. The Elliott Laboratories acquisition has been effectively integrated and, from a financial perspective, is performing above expectations. In addition, the demand for aerospace testing was strong across the Company and as a result, we experienced strong financial performance from our California and Massachusetts facilities. Our Wichita facility, another recent acquisition, experienced increased demand for body armor testing during this past quarter. Finally, our Technical Solutions segment has achieved a slight improvement in revenues and a modest increase in operating income resulting from our cost cutting measures.”

Revenues from Engineering & Evaluation increased 19.3% for the quarter to $27.2 million, compared to $22.8 million for the same period in the prior year. Revenues from Engineering & Evaluation increased 14.2% for the six months ended July 31, 2008 to $50.5 million, compared to $44.2 million for the same period in the prior year.

Operating income in the Engineering & Evaluation segment increased 25.2% for the quarter to $2,288,000, compared to $1,828,000 for the same period in the prior year. Operating income in the Engineering & Evaluation segment increased 22.0% for the six months ended July 31, 2008 to $3,654,000, compared to $2,995,000 for the same period in the prior year.

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Revenues from Technical Solutions increased 7.1% for the quarter to $8.8 million, compared to $8.2 million for the same period in the prior year. Revenues from Technical Solutions increased 3.7% for the six months ended July 31, 2008 to $17.2 million, compared to $16.6 million for the same period in the prior year.

Operating income in the Technical Solutions segment increased to $236,000 for the quarter, compared to $16,000 for the same period in the prior year. Operating income in the Technical Solutions segment increased to $406,000 for the six months ended July 31, 2008, compared to $138,000 for the same period in the prior year.

Conference Call

NTS is conducting a conference call to review the financial results today, at 10:00 AM Pacific Time (11:00 AM Mountain Time, 12:00 PM Central Time, 1:00 PM Eastern Time). The dial-in number for the call is 800-257-2182 (this is an operator assisted call; ask for the NTS 2009 Second Quarter Results conference call). A live web cast of the call can be accessed at www.ntscorp.com.

About National Technical Systems, Inc.

National Technical Systems, Inc. is a leading provider of engineering and evaluation services to the defense, aerospace, telecommunications, automotive and high technology markets. Through a world-wide network of resources, NTS provides full product life-cycle support, offering world class design engineering, compliance, testing, certification, quality registration and program management. For additional information about NTS, visit our website at www.ntscorp.com or call 800-270-2516.

Cautionary Note Regarding Forward-Looking Statements:

The statements in this press release that relate to future plans, events or performance, are forward-looking statements that involve risks and uncertainties, including risks associated with uncertainties pertaining to customer orders, demand for services and products, development of markets for the company’s services and products and other risks identified in the company’s SEC filings, and in particular its Annual Report on Form 10-K. Actual results, events and performance may differ materially, including the continuing demand for personal protection equipment and the testing of same. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding National Technical Systems’ business which are not historical facts are “forward-looking statements” that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in the Company’s Annual Report or Form 10-K for the most recently ended fiscal year.

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NATIONAL TECHNICAL SYSTEMS, INC. AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Income

	Three Months Ended July 31,						Six Months Ended July 31,
	2008			2007			2008			2007
Net revenues	$	36,004,000		$	31,025,000		$	67,736,000		$	60,829,000
Cost of sales		26,290,000			22,896,000			50,346,000			45,685,000
Gross profit		9,714,000			8,129,000			17,390,000			15,144,000
Selling, general and administrative expense		7,218,000			6,300,000			13,326,000			12,082,000
Equity income from non-consolidated subsidiary		(28,000	)		(15,000	)		4,000			(71,000	)
Operating income		2,524,000			1,844,000			4,060,000			3,133,000
Other income (expense):
Interest expense, net		(575,000	)		(478,000	)		(1,098,000	)		(932,000	)
Other income (expense), net		34,000			(29,000	)		235,000			127,000
Total other expense, net		(541,000	)		(507,000	)		(863,000	)		(805,000	)
Income before income taxes and minority interest		1,983,000			1,337,000			3,197,000			2,328,000
Income taxes		821,000			549,000			1,312,000			942,000
Income before minority interest		1,162,000			788,000			1,885,000			1,386,000
Minority interest		(32,000	)		(18,000	)		(27,000	)		(25,000	)
Net income	$	1,130,000		$	770,000		$	1,858,000		$	1,361,000
Net income per common share:    Basic	$	0.12		$	0.09		$	0.21		$	0.16
Diluted	$	0.12		$	0.08		$	0.20		$	0.15
Weighted average common shares outstanding		9,118,000			8,779,000			8,993,000			8,761,000
Dilutive effect of stock options and non-vested   shares		465,000			664,000			522,000			620,000
Weighted average common shares outstanding,  assuming dilution		9,583,000			9,443,000			9,515,000			9,381,000

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EX-99.2

EXHIBIT 99.2

National Technical Systems, Inc. (NTSC)

F2Q08 Earnings Call

September 15, 2008 1:00 pm ET

Executives

Arthur Woods - Investor Relations

William C. McGinnis - President, Chief Executive Officer, Director

Raffy Lorentzian - Chief Financial Officer, Senior Vice President

Analysts

David Gabai - Analyst

Presentation

Operator

Ladies and gentlemen, thank you for standing by and welcome to the National Technical Systems announce date for fiscal year 2009 second quarter earnings conference call. (Operator Instructions) I would now like to turn the conference over to Mr. Arthur Woods. Please go ahead.

Arthur Woods

Good day. My name is Arthur Woods and I’ll be the moderator for today’s presentation, which is being recorded and will be accessible for 90 days via the company’s website, www.ntscorp.com. Thank you for your interest in National Technical Systems. With me today are the President and Chief Executive Officer of the company, Bill McGinnis, and Raffy Lorentzian, Chief Financial Officer. Mr. McGinnis and Mr. Lorentzian are going to discuss the company’s financial results for its fiscal second quarter of 2009 period ended July 31, 2008. At the conclusion of the prepared remarks, we will open the conference for questions.

In compliance with SEC requirements, I must read the following statement: forward-looking statements -- certain matters discussed during this conference call will include forward-looking statements within the meaning of Section 21(E) of the United States Securities and Exchange Act of 1934 as amended. All statements regarding potential results and future plans and objectives of the company are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.

Important factors that could cause actual results to differ materially from the company’s expectations include, but are not limited to, those factors that are disclosed under the heading risk factors and elsewhere in the company’s documents filed from time to time with the United States Securities and Exchange Commission and other regulatory authorities.

Forward-looking statements made during today’s call are only made as of the date of this conference call and the company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

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Gentlemen, please proceed.

William C. McGinnis

Thank you, Arthur and thank you for joining us this morning. I will make a few comments related to the business and then turn it over to Raffy for a detailed financial presentation.

I am very pleased with the second quarter results and the six-month year-to-date results. Net income for the quarter increased 46.8% and net income for the six months increased 36.5%. We are accomplishing these results by effectively executing our strategy to grow organically and also through acquisitions. The Elliott Lab acquisition announced last quarter has been effectively integrated and is performing extremely well. The Wichita acquisition announced at the end of last year had a very strong second quarter due to an increased demand for body armor testing and is expected to continue to perform extremely well.

We also experienced strong financial performance in many of our laboratories, particularly in Massachusetts and California due to the continued strong demand for aerospace systems and component testing. We anticipate the aerospace demand will remain strong for the foreseeable future.

The Technical Resources group also achieved an improvement in revenues and operating income resulting from our cost-cutting measures and increased demand for engineering resources. The company continues to invest development dollars mainly in sales and marketing to reposition the technical resources group as a provider of engineering services versus traditional IT services. We believe this strategy will support our organic growth initiative by allowing us to service our current engineering and evaluation clients as they start to outsource product development activities. NTS’ desire is to become a full-service supplier, supporting customer needs from product concept and product development through product testing compliance.

At this point in time, I will turn it over to Raffy for a financial overview. Raffy.

Raffy Lorentzian

Thanks, Bill. I’ll start with a three-month review of the numbers. For the quarter ended July 31, 2008, revenues increased by 16% to $36 million in this quarter, compared to $31 million in the same quarter last year, while net income increased by 46.8% to $1,130,000 in this quarter compared to $770,000 in the same quarter last year. The corresponding earnings per share on a diluted basis increased to $0.12 per share in the current quarter from $0.08 per share in the same quarter last year.

Our engineering and evaluation segment revenues grew by 19.3% to $27.2 million in this quarter, compared to $22.8 million in the same quarter last year. Approximately $2.7 million of this increase in revenues, or 11.9%, were generated from new acquisitions. Our organic growth was 7.4%, primarily due to the increase in the aerospace and power product revenues.

Our technical solutions segment revenues grew by 7.1% to $8.8 million. Our total gross profit increased by 19.5% to $9.7 million. Gross profit as a percentage of revenues grew by 0.8% to 27% from 26.2%.

Selling and G&A expenses increased by 14.6% to $7.2 million, primarily from the increased revenues and additional costs related to the development of the engineering services group and amortization expense related to the new acquisitions.

Operating income increased by 36.9% to $2.5 million.

Interest expense increased from $478,000 to $575,000. This was primarily due to additional borrowings for the U.S.T.L. and Elliott Labs acquisitions, partially offset by lower interest rates.

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Income before income taxes and minority interest increased by 48.3% to $1,983,000 in this quarter, compared to $1,337,000 in the same quarter last year. Our total income tax rate was about the same for both periods at around 41%. Our net income increased by 46.8% to $1,130,000 from $770,000; and again, earnings per share, $0.12 compared to $0.08 per share in the same quarter last year.

Now I’ll do a quick review of the six-month results -- revenues for the six months increased by 11.4% to $67.7 million, compared to $60.8 in the same period last year. Our engineering and evaluation segment revenues grew by 14.2% to $50.5 million compared to $44.2 million in the same period last year. Approximately $3.7 million, or 8.3% of this increase, was from new acquisitions. Our organic growth for the six-month period was 6%.

Our technical solutions segment revenues grew by 3.7% for the six months to $17.2 million. Our total gross profit increased by 14.8% to $17.4 million. Gross profit as a percentage of revenues grew to 25.7% from 24.9%.

Selling and G&A expenses increased by 10.3% to $13.3 million. Operating income increased by 29.6% to $4.1 million. Interest expense from $932,000 to $1,098,000, again due to additional borrowings for the U.S.T.L. and Elliott Labs acquisitions.

Income before income taxes and minority interest increased by 37.3% to $3,197,000 in this period, compared to $2,328,000 the same period last year.

Our net income increased by 36.5% to $1,858,000 from $1,361,000, and diluted earnings per share increased to $0.20 per share in the current period from $0.15 per share in the same period last year. And still our balance sheet remains strong, with approximately $3.4 million in cash, $104 million in total assets, and $41.7 million in shareholders equity. And orders also remain strong -- our backlog is at a record high at $46.3 million at July 31/08, compared to $40.9 million at July 31/07.

The 10-Q will be filed later today and back to you, Bill.

William C. McGinnis

Thanks, Raffy. Arthur, why don’t we go back to you for Q&A?

Question-and-Answer Session

Operator

(Operator Instructions) We have a question from the line of David [Gabai]. Please go ahead.

David Gabai - Analyst

I’ve got two quick questions. First off, you guys keep mentioning these asset numbers. I know -- I don’t know if it was last conference call or maybe two ago, you mentioned you had $83 million in equipment. You just said what, $103 million in assets? So what does that mean? Does that include all the real estate holdings or what?

Raffy Lorentzian

Well, it includes all our assets. In addition, we had the new acquisition of Elliott Labs, and so we acquired some assets from Elliott Labs and plus additionally, it includes all our intangibles and good will, so this is a total asset number.

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David Gabai - Analyst

Okay, so obviously -- I mean, straight division, you’re still looking at about 11.5 a share on that number but I don’t know what it really means, but obviously we continue to be undervalued.

So as far as earnings go, I just want to ask a quick question, which is do you see this growth rate continuing through the year? I know you are talking about busy and increased demand. I’m assuming then that’s going to translate into continued increased earnings and I wondered if you can comment on what you foresee for the next quarter and the year.

William C. McGinnis

Well, I hope you are right, David. We see the aerospace market, as I mentioned earlier, really staying strong, so I think that should stay stable or increase for the foreseeable future. We actually see a pick-up in the commercial nuclear industry and we see that in the future as positive. I think the key here is we are investing money into -- from servicing our client from a concept and a product development area and as we continue to do that, we hope to see some revenue increases from that activity.

To kind of offset that, we still see some weakness in the automotive industry but that’s nothing new and we anticipate that to continue for the future.

And I think, or I’m anticipating an actual increase in revenues from our defense business, specifically related to munitions and ordinance activity, so we’ll continue to push hard to grow the company organically. I think we’ve got some pretty favorable markets and we are going to continue to pursue some acquisition activities and that certainly should add to the financial performance of the company.

David Gabai - Analyst

Great.

William C. McGinnis

Thank you, sir.

Operator

(Operator Instructions) Arthur, I’m showing that we have no further questions at this time.

Arthur Woods

Okay. Bill, do you have any concluding remarks?

William C. McGinnis

Well, kind of just a take on what I just said. We continue to have good financial performance. We’ve had a number of good quarters in a row and as the markets continue to be favorable, especially the defense and aerospace markets and we continue to hopefully execute on a few additional activities in the near future. I think NTS is strong and should remain strong financially for the foreseeable future. So we’re pretty excited about our opportunities.

I guess with that, Arthur, I guess we can close it. I just really want to thank everybody for joining us this morning and we look forward to talking with you in the near future.

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Arthur Woods

Thanks very much.

Operator

That does conclude our conference for today. Thank you for your participation. You may now disconnect.

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