Controversial full-body scanners made by Torrance-based Rapiscan Systems will no longer be used at U.S. airports, a development the company says it welcomes.
The U.S. Transportation Security Administration and Rapiscan's parent company announced the agreement late Thursday.
Airline passengers, privacy rights activists and members of Congress had criticized the full-body scanners as too invasive because they showed the silhouette of people's entire bodies through their clothes.
By June, none of Rapiscan's full-body scanners will be used at U.S. airports. Instead, the airports will use a competing scanner made by L-3 Communications that is considered less invasive. Congress had set the June deadline.
Rapiscan was under contract with the TSA to modify its scanners to be less invasive. The software Rapiscan was developing for this purpose was known as Automated Target Recognition, or ATR.
"Due to its inability to deploy non-imaging Automated Target Recognition (ATR) software by the congressionally-mandated June 2013 deadline, TSA has terminated its contract with Rapiscan," the government agency said in a statement.
The L-3 Communications scanners comply with TSA requirements and are also faster than the Rapiscan models.
"This means faster lanes for the traveler and enhanced security," the TSA said.
At first, both types of scanners showed travelers naked.
The TSA defended the scanners, saying the images couldn't be stored and were seen only by a security worker who didn't interact with the passenger. But the scans still raised privacy concerns. Congress ordered that the scanners either produce a more generic image or be removed by June.
In August, the TSA stopped using the Rapiscan full-body scanners at Los Angeles International Airport. Those machines were never used at other area airports, including in Ontario International, Long Beach and Burbank.
Long Beach Airport uses no full-body scanners to check passengers, according to a TSA official.
"Not every airport in the country does have them," said the official, who asked not to be named because he was not authorized to speak on the record regarding th e scanners.
The Rapiscan scanners will be moved to other government agencies. They are used at prisons and military facilities.
An official at Rapiscan's parent company, Hawthorne-based OSI Systems Inc., said the TSA's decision to remove the scanners from airports was good for the company.
"By taking this decision, it removes that uncertainty for us on a product that really wasn't a big seller," said Alan Edrick, OSI Systems' executive vice president and chief financial officer. "It really doesn't impact our growth."
For example, OSI Systems reported a record $800 million in sales for its 2012 fiscal year, with none of that revenue coming from its line of full-body scanners, Edrick said. By contrast, Rapiscan sells many more X-ray baggage scanners to airports.
He added that resources previously dedicated to modifying the full-body scanners can now be used elsewhere in the company.
Investors seemed to approve of the TSA decision by pushing up the company's stock price 3.5 percent Friday to close at $70.02 on the Nasdaq.
OSI Systems said it will incur a one-time charge of $2.7 million that will be attributed to the previous fiscal quarter.
The TSA decision will not impact OSI Systems' employment, which include 500 to 600 people in the South Bay and nearly 5,000 worldwide, Edrick said.
The company produces the scanners at a plant in Mississippi.
Rapiscan's exit from U.S. airports also ends the controversy surrounding the company's product.
"It's just not an important line for us, but it gets a lot of publicity," Edrick said. "It's been a controversial product. So for those people who are concerned about privacy and other matters, it's an easy target."
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The Associated Press contributed to this article.