<PAGE> 1
PAGE 1 OF 17 PAGES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d)OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE PLAN YEAR ENDED DECEMBER 31, 1996
--------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
------------ -----------
COMMISSION FILE NUMBER 0-11527 .
---------------------------------------
A. MPSI SYSTEMS INC. MATCHING INVESTMENT PLAN
B. MPSI SYSTEMS INC.
8282 SOUTH MEMORIAL DRIVE
TULSA, OKLAHOMA 74133
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
(a) Financial Statements:
(1) Independent Auditors' Report ........................................ 3
(2) Statements of Net Assets Available for Benefits,
With Fund Information at December 31, 1996 and 1995 ................. 4
(3) Statements of Changes in Net Assets
Available for Benefits, With Fund
Information for the years
ended December 31, 1996, 1995 and 1994 .............................. 6
(4) Notes to Financial Statements ....................................... 9
(5) Schedules to Financial Statements:
Schedule I - Schedule of Reportable Transactions ................. 14
Schedule II - Schedule of Assets Held for Investment Purposes .... 15
(b) Signatures .............................................................. 16
(c) Exhibits
23.1 Auditors' Consent .................................................. 17
</TABLE>
2
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
Administrative Committee
MPSI Systems Inc. Matching Investment Plan
We have audited the accompanying statements of net assets available for
benefits of the MPSI Systems Inc. Matching Investment Plan (the "Plan") as of
December 31, 1996 and 1995, and the related statements of changes in net assets
available for benefits for each of the three years in the period ended December
31, 1996. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1996 and 1995, and the changes in its net assets available for
benefits for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1996, and reportable
transactions for the year then ended, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the basic financial statements. The Fund Information in
the statements of net assets available for benefits and the statements of
changes in net assets available for benefits is presented for the purposes of
additional analysis rather than to present the net assets available for
benefits and changes in net assets available for benefits of each fund. The
Fund Information and supplemental schedules have been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
ERNST & YOUNG LLP
Tulsa, Oklahoma
June 13, 1997
3
<PAGE> 4
MPSI SYSTEMS INC.
MATCHING INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Global MPSI Corporate MLRP
Phoenix Allocation Stock Capital Bond Trust Loan
Fund Fund Fund Fund Fund Fund Fund Total
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at fair value:
Merrill Lynch Phoenix Fund Inc.
(47,445 units valued at
$12.83 per unit) $ 608,723 -- -- -- -- -- -- $ 608,723
Merrill Lynch Global Allocation
Fund Inc. (82,127 units
valued at $14.36 per unit) -- 1,179,363 -- -- -- -- -- 1,179,363
154,838 shares of $.05 par value
Common Stock of MPSI Systems
Inc. valued at $1.75 per share -- -- 270,967 -- -- -- -- 270,967
Merrill Lynch Corporate Bond
Fund Inc. (8,595 units at
$11.32 per unit) -- -- -- -- 97,302 -- -- 97,302
Merrill Lynch Capital Fund Inc.
(13,472 units valued at
$30.46 per unit) -- -- -- 410,374 -- -- -- 410,374
Merrill Lynch Retirement
Preservation Trust fund -- -- -- -- -- 290,152 -- 290,152
Loans to participants -- -- -- -- -- -- 106,742 106,742
- ------------------------------------------------------------------------------------------------------------------------------
Total investments 608,723 1,179,363 270,967 410,374 97,302 290,152 106,742 2,963,623
Receivables:
Employer contribution -- -- 137,394 -- -- -- -- 137,394
Employee contributions 8,612 9,998 834 5,517 1,036 1,863 2,897 30,757
Accrued interest and dividends 22,987 9,509 -- 12,769 478 1,193 -- 46,936
- ------------------------------------------------------------------------------------------------------------------------------
Total receivables 31,599 19,507 138,228 18,286 1,514 3,056 2,897 215,087
Cash and cash equivalents (3,800) (24,584) (15,296) (201) (1,298) (1,356) 33,012 (13,523)
- ------------------------------------------------------------------------------------------------------------------------------
Net assets available
for benefits
at December 31, 1996 $ 636,522 1,174,286 393,899 428,459 97,518 291,852 142,651 3,165,187
==============================================================================================================================
</TABLE>
See accompanying notes to financial statements
4
<PAGE> 5
MPSI SYSTEMS INC.
MATCHING INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Global MPSI Corporate MLRP
Phoenix Allocation Stock Capital Bond Trust Loan
Fund Fund Fund Fund Fund Fund Fund Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investments at fair value:
Merrill Lynch Phoenix Fund Inc.
(39,077 units valued at
$12.62 per unit) $ 493,154 -- -- -- -- -- -- 493,154
Merrill Lynch Global Allocation
Fund Inc. (72,258 units
valued at $13.73 per unit) -- 992,116 -- -- -- -- -- 992,116
123,157 shares of $.05 par value
Common Stock of MPSI Systems
Inc. valued at $5.00 per share -- -- 615,785 -- -- -- -- 615,785
Merrill Lynch Corporate Bond
Fund Inc. (7,287 units at
$11.84 per unit) -- -- -- -- 86,285 -- -- 86,285
Merrill Lynch Capital Fund Inc.
(11,940 units valued at
$30.04 per unit) -- -- -- 358,694 -- -- -- 358,694
Merrill Lynch Retirement
Preservation Trust fund -- -- -- -- -- 268,433 -- 268,433
Loans to participants -- -- -- -- -- -- 25,214 25,214
- -----------------------------------------------------------------------------------------------------------------------------------
Total investments 493,154 992,116 615,785 358,694 86,285 268,433 25,214 2,839,681
Receivables:
Employer contribution -- -- 133,000 -- -- -- -- 133,000
Employee contributions 8,747 11,808 395 5,857 1,366 2,425 1,575 32,173
Accrued interest and dividends 4,910 5,464 -- 3,846 -- -- -- 14,220
- -----------------------------------------------------------------------------------------------------------------------------------
Total receivables 13,657 17,272 133,395 9,703 1,366 2,425 1,575 179,393
Cash and cash equivalents (3,736) 9,385 (2,988) (727) 301 (8,330) 12,885 6,790
Other liabilities (15,535) (6,162) (9,563) (2,824) (4,153) (10,506) -- (48,743)
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets available
for benefits
at December 31, 1995 $ 487,540 1,012,611 736,629 364,846 83,799 252,022 39,674 2,977,121
===================================================================================================================================
</TABLE>
See accompanying notes to financial statements
5
<PAGE> 6
MPSI SYSTEMS INC.
MATCHING INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MPSI Global Corporate MLHP
Stock Phoenix Allocation Capital Bond Trust Loan
Fund Fund Fund Fund Fund Fund Fund Total
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends and interest $ -- 79,467 107,775 45,189 5,671 14,978 4,189 257,269
Contributions:
Employers 137,394 -- -- -- -- -- -- 137,394
Employees 12,988 129,378 148,545 82,625 15,250 27,451 -- 416,237
Distributions:
Cash -- (52,968) (70,908) (42,877) (2,488) (20,933) -- (190,174)
In kind -- (1,501) (4,072) -- -- -- -- (5,573)
MPSI Systems Inc. $.05
Common Stock (38,295) -- -- -- -- -- -- (38,295)
Other income (expense):
Net appreciation (depreciation)
in fair value of investments (453,318) 13,094 48,461 6,546 (3,546) -- -- (388,763)
Other income -- -- -- -- -- -- (29) (29)
Interfund transfers in (out) (1,499) (18,488) (68,126) (27,870) (1,168) 18,334 98,817 --
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets available
for benefits during 1996 (342,730) 148,982 161,675 63,613 13,719 39,830 102,977 188,066
Net assets available for benefits
at December 31, 1995 736,629 487,540 1,012,611 364,846 83,799 252,022 39,674 2,977,121
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets available for benefits
at December 31, 1996 $ 393,899 636,522 1,174,286 428,459 97,518 291,852 142,651 3,165,187
==================================================================================================================================
</TABLE>
See accompanying notes to financial statements
6
<PAGE> 7
.
MPSI SYSTEMS INC.
MATCHING INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
MPSI Global Corporate MLHP
Stock Phoenix Allocation Capital Bond Trust Loan
Fund Fund Fund Fund Fund Fund Fund Total
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends and interest $ -- 27,346 76,427 36,919 4,472 15,504 2,354 163,022
Contributions:
Employers 136,792 -- -- -- -- -- -- 136,792
Employees 9,981 110,595 135,652 54,394 14,397 26,696 -- 351,715
Distributions:
Cash (10,147) (69,321) (37,525) (20,831) (5,755) (122,742) -- (266,321)
In kind -- (6,149) (5,761) -- -- -- -- (11,910)
MPSI Systems Inc. $.05
Common Stock (96,860) -- -- -- -- -- -- (96,860)
Other income (expense):
Net appreciation (depreciation)
in fair value of investments 311,224 57,636 101,189 46,995 7,987 -- -- 525,031
Other income -- -- -- 706 -- -- -- 706
Interfund transfers in (out) (1,203) (2,420) (3,440) (841) (1,496) -- 9,400 --
- ---------------------------------------------------------------------------------------------------------------------------------
Change in net assets available
for benefits during 1995 349,787 117,687 266,542 117,342 19,605 (80,542) 11,754 802,175
Net assets available for benefits
at December 31, 1994 386,842 369,853 746,069 247,504 64,194 332,564 27,920 2,174,946
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets available for benefits
at December 31, 1995 $ 736,629 487,540 1,012,611 364,846 83,799 252,022 39,674 2,977,121
=================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
7
<PAGE> 8
MPSI SYSTEMS INC.
MATCHING INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Short Long Inter-
Term Term mediate MPSI
Equity Income Income Income Stock Phoenix
Fund Fund Fund Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends $ 1,530 -- 470 -- -- 45,145
Interest 44 998 2,744 1,072 -- 3,741
Contributions:
Employers -- -- -- -- 120,608 --
Employees -- -- -- -- 13,648 113,577
Distributions:
Cash -- -- -- -- (6,092) (57,636)
In kind -- -- -- -- -- (29,059)
MPSI Systems Inc. $.05
Common Stock -- -- -- -- (26,519) --
Other income (expense):
Net appreciation (depreciation)
in fair value of investments (3,426) -- (4,871) 2,515 (329,969) (68,059)
Other income (70) 59 (5) (18) 5,039 --
Interfund transfers in (out) -- -- -- -- (267) (5,201)
- ----------------------------------------------------------------------------------------------------------------------------
Change in net assets available for
benefits during 1994 (1,922) 1,057 (1,662) 3,569 (223,552) 2,508
Trustee transfer (701,903) (201,461) (287,000) (561,120) -- 367,345
Net assets available for benefits
at December 31, 1993 703,825 200,404 288,662 557,551 610,394 --
- ----------------------------------------------------------------------------------------------------------------------------
Net assets available for benefits
at December 31, 1994 $ -- -- -- -- 386,842 369,853
============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Global Corporate MLHP
Allocation Capital Bond Trust Loan
Fund Fund Fund Fund Fund Total
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends $ 39,282 21,906 -- -- -- 108,333
Interest 7,032 2,335 3,632 13,086 320 35,004
Contributions:
Employers -- -- -- -- -- 120,608
Employees 155,889 40,990 13,012 24,764 -- 361,880
Distributions:
Cash (71,717) (26,983) (15,312) (58,697) -- (236,437)
In kind (17,981) (367) (8,707) -- -- (56,114)
MPSI Systems Inc. $.05
Common Stock -- -- -- -- -- (26,519)
Other income (expense):
Net appreciation (depreciation)
in fair value of investments (70,906) (24,455) (3,768) -- -- (502,939)
Other income 3,977 -- -- 1,312 -- 10,294
Interfund transfers in (out) (19,278) (1,672) (42) (1,140) 27,600 --
- ----------------------------------------------------------------------------------------------------------------------
Change in net assets available for
benefits during 1994 26,298 11,754 (11,185) (20,675) 27,920 (185,890)
Trustee transfer 719,771 235,750 75,379 353,239 -- --
Net assets available for benefits
at December 31, 1993 -- -- -- -- -- 2,360,836
- ----------------------------------------------------------------------------------------------------------------------
Net assets available for benefits
at December 31, 1994 $ 746,069 247,504 64,194 332,564 27,920 2,174,946
======================================================================================================================
</TABLE>
See accompanying notes to financial statements.
8
<PAGE> 9
MPSI SYSTEMS INC.
MATCHING INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CHANGES IN THE PLAN
In 1993, the MPSI Systems Inc. Matching Investment Plan ("the Plan") was
amended (the "Third Amendment") to provide for quarterly contribution
percentage elections and for quarterly investment elections. This
amendment was effective January 1, 1993. The revisions had no impact on
previously issued financial statements.
In October 1993, the Company notified the Plan Trustee, Bank of Oklahoma,
N.A., (former Trustee) that its services as Plan Trustee would be
terminated effective December 31, 1993. Merrill Lynch, Pierce, Fenner &
Smith, Inc. ("Merrill Lynch") was appointed as the new Trustee effective
January 1, 1994. In connection with that transition, a new Plan document
was executed, substantially in the form which governed the Plan during the
three-year period ended December 31, 1993, except that new investment
options were identified to replace those available at December 31, 1993.
In connection with the new Plan document, an option was added allowing
employees to borrow against the assets of their respective account in
amounts not to exceed 50% of the employee's vested account balance in the
Plan. Interest is charged at the published prime rate plus 1-1/2% on the
date of the loan request, and the resulting income is credited solely to
the borrower's Plan account. The term of the loan is determined by the
Administrative Committee and generally shall not exceed five years.
Neither the loan, interest or repayment affect assets of other Plan
participants.
On May 11, 1994, at the request of the Internal Revenue Service, a Fourth
Amendment to the old Plan document (as it was stated before January 1,
1994) was adopted to clarify that the allocation of the matching
contribution applies only to participants in the active employ of the
Employer on the last day of the Plan Year or on an Authorized Leave of
Absence on the last day of the Plan Year. The new Plan document, effective
January 1, 1994, already complied with such changes.
CHANGE IN SPONSORING ENTITIES
Effective September 1, 1994, MPSI Systems Inc. sold substantially all of
the assets of Retail Systems, Inc. ("RSI") to Dakota Worldwide Corporation.
As a result, substantially all of the RSI participants were terminated
from the Plan effective on the date of the sale to Dakota.
INVESTMENTS
All investments were held by Merrill Lynch, as Trustee, from March 4, 1994
through December 31, 1996. From January 1, 1994 through March 3, 1994,
Plan assets were held in trust by Bank of Oklahoma, N.A., pending transfer
to the new trustee. Gains and losses resulting from the sale of
investments were determined by the difference between average cost of the
investments sold and the proceeds received. Brokerage commissions,
transfer taxes, and other charges and expenses in connection with the
purchase or sale of securities (if any) were added to the cost of the
securities purchased or deducted from the proceeds of the sale.
The investment in $.05 par value Common Stock of MPSI Systems Inc.
(hereinafter "Common Stock") was stated at the average bid and offer prices
quoted by the National Quotation Bureau. Investments in equity and bond
funds were stated at aggregate unit values as published in a widely
accepted financial journal at December 31, 1996 and as set forth in the
periodic valuation of each fund for 1996. Investments in money market
funds were stated at par value, which approximates fair value.
9
<PAGE> 10
The market value per share of MPSI Systems Inc. Common Stock was $1.75,
$5.00 and $2.50 at December 31, 1996, 1995, and 1994, respectively.
At June 13, 1997, the estimated market value of 154,838 shares of MPSI
Systems Inc. Common Stock was approximately $445,159.
INVESTMENT FUNDS
Six investment funds as set forth below were maintained by Merrill Lynch
under the terms of a trust agreement beginning January 1, 1994.
Phoenix Fund:
The primary objective of the fund is long term capital growth through
a diversified portfolio of equity and fixed income securities,
including municipal securities, of issuers in weak financial condition
or experiencing poor operating results, that the management of the
fund believes to be undervalued relative to fund management's
assessment of the current or prospective condition of the issuer.
Global Allocation Fund:
The fund in a non-diversified mutual fund seeking high total
investment return, consistent with prudent risk, through a fully
managed investment policy utilizing United States and foreign equity,
debt, and money market securities, the combination of which will be
varied from time to time both with respect to types of securities and
markets in response to changing market and economic trends.
MPSI Systems Inc. Common Stock Fund:
This fund invests solely in the common stock of the registrant, MPSI
Systems Inc. Common stock may be purchased by the Trustee on the open
market or through private transactions, including direct purchases
from the company.
Capital Fund:
The fund seeks to achieve the highest total investment return
consistent with prudent risk through a fully managed investment policy
utilizing equity, debt, and convertible securities. This permits
management of the fund to vary investment policy based on its
evaluation of changes in economic and market trends.
Corporate Bond Fund:
The fund is a professionally managed, diversified, open end investment
company consisting of three separate portfolios. The primary
objective of each Portfolio is to provide shareholders with as high a
level of current return as is consistent with the investment policies
of such Portfolio and with prudent investment management.
Merrill Lynch Retirement Preservation Trust
The fund is maintained by Merrill Lynch Trust Company, which receives
nondiscretionary advice from Merrill Lynch Asset Management. The fund
is a collective trust fund that invests primarily in Guaranteed
Investment Contracts and U.S. government and U.S. government agency
securities, as well as high quality money market instruments. The
fund seeks to provide safety of principal, fiduciary comfort and
administrative ease.
Prior to January 1, 1994, employees had the following investment fund
options:
10
<PAGE> 11
Equity Fund The primary objective of this investment fund was
long-term capital growth. Investments consisted of common stock of
corporations which may be purchased individually or by acquisition of
units in a fund or funds which invest in corporate common stocks.
Short-Term Fixed Income Fund This fund generally purchased
certificates of deposit, high-grade commercial paper, Treasury Bills
and other similar short-term investments with maximum maturities of 90
days.
MPSI Systems Inc. Common Stock Fund This fund invested solely in the
common stock of the registrant, MPSI Systems Inc. Common stock may be
purchased by the Trustee on the open market or through private
transactions, including direct purchases from the Company.
Long-Term Fixed Income Fund The primary objective of this fund was to
purchase bonds and notes issued by the U.S. Government, agencies of
the U.S. Government, mortgage pass-through certificates and high-grade
corporate debt with a quality rating of "A" or better.
Intermediate Fixed Income Fund The primary investment objective of
this fund was to purchase investment contracts from insurance
companies rated "A" or "A+", or pooled funds of similar contracts.
The average maturities will be 2 to 3 years.
The following table shows the employee participation in the various
investment options:
<TABLE>
<CAPTION>
Number of Participants at December 31,
--------------------------------------
1996 1995
-------------------------------------------------------
<S> <C> <C>
Phoenix Fund 110 104
Global Allocation Fund 135 126
MPSI Systems Inc. Common Stock Fund 164 159
Capital Fund 98 81
Corporate Bond Fund 37 35
Merrill Lynch Retirement Preservation Trust 51 49
Total Participants 176 175
-------------------------------------------------------
</TABLE>
INCOME TAXES
The Internal Revenue Service has determined by notice dated April 24, 1986
that the Plan as amended and restated effective January 1, 1985 was in
compliance with the Retirement Equity Act of 1984 and the Tax Reform Act of
1984 and was qualified under Section 401 of the Internal Revenue Code. The
Plan, as amended in compliance with the Tax Reform Act of 1986 and as
amended and restated effective January 1, 1990 is intended to comply with
Section 401(a) of the Internal Revenue Code. The Company was notified on
June 8, 1995 that the Plan (adopted on May 11, 1994) was deemed to be a
qualified plan under the applicable code section. The Company is not aware
of anything that would adversely impact the qualified status of the Plan.
Under a qualified plan, amounts contributed by the Company including salary
deferrals (see Note 3) will not be taxed to the employee until the employee
receives a distribution from the Plan and further, any appreciation in
value of Common Stock distributed to an employee upon termination of
employment will not be taxed to the employee until disposal of such
shares.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
11
<PAGE> 12
(2) PARTICIPANTS AND CONTRIBUTIONS
All employees of MPSI Systems Inc. and a subsidiary in 1994 (herein after
referred to as the "Company") meeting eligibility requirements set forth in
the Plan participate in the Plan as of January 1 and July 1 of the Plan
year next following their completion of a six-month period of service.
Participants may contribute as salary deferrals up to 16% of their annual
earnings. Voluntary contributions in excess of 9% of a participant's
salary may also be made subject to certain limitations. A participant's
interest in salary deferrals and voluntary contributions is at all times
fully vested. A participant's interest in amounts attributable to employer
contributions is fully vested when employment terminates due to (1)
retirement at age 65, (2) total and permanent disability or (3) death.
When a participant's employment terminates prior to meeting the above
conditions, the participant is fully vested in employer contributions only
if the participant either has completed five years of vesting service or
has satisfied one of the Plan's grandfathered vesting rules. The remaining
balance in the participant's "Company Contributions Account" is forfeited
and used to reduce Company contributions, although if the participant is
rehired within five years, the forfeited amounts may be restored to the
participant's accounts under certain circumstances. Net employee
contributions of $361,880 in 1994 included $47,758 from employees of Retail
Systems, Inc., a wholly owned subsidiary which was sold in September 1994.
MPSI Systems Inc. and in 1994 its wholly owned subsidiary, Retail Systems,
Inc. (the "Employer") made contributions under the Plan during the three
years ended December 31, 1996 based upon a Matching Percentage applied to
the participants' qualifying contributions. Participants' qualifying
contributions equal the aggregate of each participant's salary deferral,
contributions up to 6% of that participant's earnings for the Plan year.
As previously mentioned in the note regarding "Change in Sponsoring
Entities," the subsidiary, Retail Systems, Inc., was sold in a 1994 asset
transaction and all the employees were terminated under rules governing the
Plan. The total number of RSI employees terminated was 19 out of total
Plan participants of 192. The Employers' Matching Percentage relative to
qualifying participant contributions is based upon the Operating Income
Ratio of the Employers (the ratio of the operating income for the
Employers' fiscal year ending with or within the Plan year to the average
operating income in the three prior fiscal years), is as follows:
<TABLE>
<CAPTION>
Matching
Operating Income Ratio Percentage
------------------------ ----------
<S> <C>
Under 1.01 50%
1.01, but less than 1.50 60%
1.50, but less than 1.75 70%
1.75, but less than 2.00 80%
2.00, but less than 2.25 90%
2.25 or over 100%
</TABLE>
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate
the Plan subject to the provisions of ERISA. In the event of Plan terminations,
participants will become 100 percent vested in their accounts.
The Company's matching percentage was 50 percent for Plan years 1996 through
1994 resulting in contributions of $137,394, $136,792, and $120,608,
respectively, as calculated below:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Year Ended December 31,
-------------------------------
1996 1995 1994
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Net employee contributions
(including nonelective contributions) $416,237 $351,715 $361,880
Nonqualifying contributions (141,449) (78,131) (113,388)
- -----------------------------------------------------------------------
Qualifying employee contributions 274,788 273,584 248,492
Applicable matching percentage x 50% x 50% x 50%
- -----------------------------------------------------------------------
137,394 136,792 124,246
Less forfeitures - - (3,638)
- -----------------------------------------------------------------------
Required company contribution $137,394 $136,792 $120,608
=======================================================================
</TABLE>
12
<PAGE> 13
(3) EXPENSES
All costs and expenses incurred in administering the Plan, including the
expenses of the Administrative Committee, the fees and expenses of the
Trustee, the fees of its counsel, and other administrative expenses, are
borne by the Company and amounted to approximately $16,158, $11,567, and
$24,603 for 1996, 1995, and 1994, respectively.
(4) INVESTMENTS
The fair value of individual investments that represent 5% or more of the
Plan's net assets are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
December 31, December 31,
1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
Phoenix Fund $ 608,723 $ 493,154
Global Allocation Fund 1,179,363 992,116
MPSI Systems Inc. Common Stock Fund 270,967 615,785
Capital Fund 410,374 358,694
Corporate Bond Fund 97,302 86,285
Merrill Lynch Retirement Preservation Trust 290,152 268,433
MPSI Matching Investment Plan Employee Loan Fund 106,742 25,214
- -------------------------------------------------------------------------------
</TABLE>
(5) DIFFERENCES BETWEEN FINANCIAL STATEMENTS AND FORM 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to the Form 5500:
<TABLE>
<CAPTION>
December 31, 1996
- -------------------------------------------------------------------------------
<S> <C>
Net assets available for benefits per
the financial statements $3,165,187
Amounts shown on the Form 5500
Welfare benefits due (245,742)
- -------------------------------------------------------------------------------
Net assets available for benefits per the Form 5500 $2,919,445
==============================================================================
</TABLE>
The following is a reconciliation of benefits paid per the financial
statements to the Form 5500:
<TABLE>
<CAPTION>
Year Ended December 31, 1996
Welfare Benefits Paid
- -------------------------------------------------------------------------------
<S> <C>
Amounts distributed to participants per statement of
changes in net assets $234,042
Amounts allocated to withdrawing participants at
December 31, 1996 245,742
- -------------------------------------------------------------------------------
Amounts per the Form 5500 $479,784
===============================================================================
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31 but not yet paid as of that date.
13
<PAGE> 14
SCHEDULE I
MPSI SYSTEMS INC.
MATCHING INVESTMENT PLAN
LINE 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (g) (h) (i)
Current
Value of
Identity Asset on
of Party Description No. of Purchase Selling Cost of Transaction Net Gain
Involved of Assets Shares Price Price Asset Date or (Loss)
- -----------------------------------------------------------------------------------------------------------------------------------
Category (iii) - Series of Transactions in Excess of 5% of Plan Assets
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Merrill Lynch* Retirement Preservation Trust 305,795 $305,795.00 $305,795.00 $305,795.00 $ 0.00
MPSI Systems Inc.* Common Stock 32.422 123,675.99 232,929.99 123,675.99 (109,254.00)
Merrill Lynch* Phoenix Fund - Class B 7,563 98,564.92 96,055.87 98,564.92 2,509.05
Merrill Lynch* Global Allocation Fund 9,048 132,226.42 120,543.17 132,226.42 11,683.25
Merrill Lynch* Capital Fund 2,547 76,426.22 72,079.80 76,426.22 4,346.42
Merrill Lynch* CMA Money Fund 656,526 656,526.00 656,526.00 656,526.00 0.00
Merrill Lynch* Retirement Preservation Trust 327,514 $327,514.09 $327,514.09
MPSI Systems Inc.* Common Stock 26,804 124,393.46 124,393.46
Merrill Lynch* Phoenix Fund - Class B 16,049 202,539.74 202,539.74
Merrill Lynch* Global Allocation Fund 19,223 275,084.31 275,084.31
Merrill Lynch* Capital Fund 4,079 121,559.80 121,559.80
Merrill Lynch* CMA Money Fund 656,311 656,311.00 656,311.00
</TABLE>
There were no Category (i), (ii), or (iv) Reportable Transactions During 1996.
Columns (e) and (f) are not applicable.
*Party in Interest
14
<PAGE> 15
SCHEDULE II
MPSI SYSTEMS INC.
MATCHING INVESTMENT PLAN
LINE 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Description of Investment,
Identity of Issue, Borrower, Lessor Including Maturity Date, Rate of Current
of Similar Party Interest, Par or Maturity Value Cost Value
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MUTUAL FUNDS
Merrill Lynch Phoenix Fund* 47,445 Class B Shares $ 600,371 $ 608,723
Merrill Lynch Global Allocation Fund* 82,127 Class B Shares 1,105,591 1,179,363
Merrill Lynch Capital Fund* 13,472 Class B Shares 384,299 410,374
Merrill Lynch Corporate Bond Fund* 8,595 Class B Shares 96,136 97,302
MONEY FUNDS
Merrill Lynch Retirement Preservation Trust* 290,152 Units 290,152 290,152
COMMON STOCKS
MPSI Systems Inc.* 154,838 Common Shares 1,072,678 270,967
LOANS TO PARTICIPANTS* 3.75% to 4.14% interest rate - 106,742
</TABLE>
*Party in Interest
15
<PAGE> 16
S I G N A T U R E S
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Administrative Committee of the MPSI Systems Inc. Matching Investment Plan
has duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
MPSI SYSTEMS INC. MATCHING INVESTMENT PLAN
------------------------------------------
Name of Plan
Date June 26, 1997 By /s/ William H. Webb, Jr.
---------------------- ------------------------------
William H. Webb, Jr., Chairman
Administrative Committee
16
<PAGE> 17
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
23.1 Auditor's Consent
<PAGE> 1
EXHIBIT 23.1 TO 1996 FORM 11-K
MPSI SYSTEMS INC.
MATCHING INVESTMENT PLAN
AUDITORS' CONSENT
The Board of Directors
MPSI Systems Inc.:
We consent to incorporation by reference in the Registration Statement (Form
S-8 No. 33-32503) pertaining to the MPSI Systems Inc. Matching Investment Plan
and in the related Prospectus of our report dated June 13, 1997, with respect
to the financial statements and supplemental schedules of the MPSI Systems Inc.
Matching Investment Plan included in this Annual Report (Form 11-K) for the
year ended December 31, 1996.
ERNST & YOUNG LLP
Tulsa, Oklahoma
June 27, 1997
