<PAGE> 1
Page 1 of 16
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the six months ended March 31, 1999 Commission file no. 0-11527
MPSI SYSTEMS INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 73-1064024
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4343 South 118th East Avenue, Tulsa Oklahoma 74146
- --------------------------------------------------------------------------------
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code (918) 877-6774
------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Number of shares of common stock outstanding at March 31, 1999 - 2,849,454
----------------
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. FINANCIAL INFORMATION:
Financial Statements:
Consolidated Balance Sheets - March 31, 1999 and September 30, 1998 ....................... 3
Consolidated Statements of Operations - Three Months and Six Months
Ended March 31, 1999 and 1998 ........................................................ 5
Consolidated Statement of Stockholders' Equity - Six Months
Ended March 31, 1999 ................................................................. 6
Consolidated Statements of Cash Flow -
Six Months Ended March 31, 1999 and 1998 ............................................. 7
Notes To Consolidated Financial Statements ................................................ 8
Management's Discussion and Analysis of Financial Condition and
Quarterly Results of Operations ........................................................... 9
Part II. OTHER INFORMATION (Including Index to Exhibits) ............................................ 13
SIGNATURES ...................................................................................... 14
</TABLE>
2
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MPSI SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
ASSETS 1999 1998
---------- ------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 177,000 $ 224,000
Short-term investments, at cost 3,000 3,000
Receivables:
Trade 3,608,000 4,207,000
Current portion of long-term receivables 1,696,000 1,275,000
Inventories 206,000 107,000
Prepayments 85,000 81,000
---------- ----------
Total current assets 5,775,000 5,897,000
Property and equipment, net 953,000 962,000
Long-term receivables, net of current portion
and unamortized discount 2,074,000 2,201,000
Software products, net 579,000 280,000
Other assets 183,000 150,000
---------- ----------
Total assets $9,564,000 $9,490,000
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
MPSI SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONT'D)
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1999 1998
------------ ------------
(UNAUDITED)
<S> <C> <C>
Current liabilities:
Accounts payable $ 884,000 $ 889,000
Accrued liabilities 1,272,000 1,173,000
Note payable under bank line of credit 275,000 350,000
Deferred revenue 1,651,000 1,929,000
------------ ------------
Total current liabilities 4,082,000 4,341,000
Noncurrent deferred revenue 1,277,000 1,346,000
Other noncurrent liabilities 231,000 258,000
------------ ------------
Total liabilities 5,590,000 5,945,000
------------ ------------
Commitments and contingencies -- --
Stockholders' Equity:
Preferred Stock, $.10 par value, 1,000,000 shares
authorized, none issued or outstanding -- --
Common Stock, $.05 par value, 20,000,000 shares authorized,
2,849,000 shares issued and outstanding
at March 31, 1999 and September 30, 1998 142,000 142,000
Junior Common Stock, $.05 par value, 500,000 shares
authorized, none issued or outstanding -- --
Additional paid-in capital 13,079,000 13,079,000
Deficit (9,999,000) (10,359,000)
Other accumulated comprehensive income 752,000 683,000
------------ ------------
Total stockholders' equity 3,974,000 3,545,000
------------ ------------
Total liabilities and stockholders' equity $ 9,564,000 $ 9,490,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
MPSI SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, SIX MONTHS ENDED MARCH 31,
----------------------------- -----------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Software maintenance/information services $ 5,226,000 $ 4,169,000 $ 9,659,000 $ 8,873,000
Software licensing 144,000 242,000 264,000 300,000
----------- ----------- ----------- -----------
Total revenues 5,370,000 4,411,000 9,923,000 9,173,000
----------- ----------- ----------- -----------
Cost of Sales:
Software maintenance/information services 2,189,000 2,052,000 4,000,000 3,803,000
Software licensing 5,000 57,000 56,000 236,000
----------- ----------- ----------- -----------
Total cost of sales 2,194,000 2,109,000 4,056,000 4,039,000
----------- ----------- ----------- -----------
Gross profit 3,176,000 2,302,000 5,867,000 5,134,000
Operating expenses:
General and administrative 798,000 916,000 1,531,000 1,590,000
Marketing 1,669,000 1,796,000 3,147,000 3,521,000
Research and development 330,000 549,000 666,000 978,000
----------- ----------- ----------- -----------
Total operating expenses 2,797,000 3,261,000 5,344,000 6,089,000
----------- ----------- ----------- -----------
Operating income (loss) 379,000 (959,000) 523,000 (955,000)
Other income (expense):
Interest income 58,000 68,000 114,000 139,000
Interest expense (101,000) (34,000) (114,000) (46,000)
Foreign exchange (63,000) 8,000 (36,000) (54,000)
Other, net 11,000 5,000 17,000 5,000
----------- ----------- ----------- -----------
Income (loss) before income taxes 284,000 (912,000) 504,000 (911,000)
Provision for income taxes 19,000 322,000 144,000 286,000
----------- ----------- ----------- -----------
Net income (loss) $ 265,000 $ (590,000) $ 360,000 $ (625,000)
=========== =========== =========== ===========
Per Share: Basic and diluted income (loss)
per common share $ .09 $ (.21) $ .12 $ (.22)
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
MPSI SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
OTHER
COMMON STOCK ADDITIONAL ACCUMULATED TOTAL
----------------------------- PAID-IN COMPREHENSIVE STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT INCOME EQUITY
------------ ------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance,
September 30,
1998 2,849,000 $ 142,000 $ 13,079,000 $(10,359,000) $ 683,000 $ 3,545,000
Comprehensive income:
Net income -- -- -- 360,000 -- 360,000
Other accumulated
comprehensive
income -- -- -- -- 69,000 69,000
------------ ------------ ------------ ------------ ------------ ------------
Total comprehensive
income -- -- -- 360,000 69,000 429,000
------------ ------------ ------------ ------------ ------------ ------------
Balance,
March 31, 1999 2,849,000 $ 142,000 $ 13,079,000 $ (9,999,000) $ 752,000 $ 3,974,000
============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
MPSI SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW (NOTE 2)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31,
--------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Net income $ 360,000 $ (625,000)
Adjustments to reconcile net income to cash provided (used) by operations:
Depreciation 202,000 212,000
Amortization 56,000 224,000
Changes in assets and liabilities:
Decrease (increase) in assets:
Receivables 295,000 (1,438,000)
Inventories (99,000) (1,000)
Other assets (37,000) 55,000
Increase (decrease) in liabilities:
Trade payables and accruals 225,000 116,000
Taxes payable (80,000) (420,000)
Deferred revenue (345,000) 353,000
------------ ------------
Net cash provided (used) by operating activities 577,000 (1,524,000)
------------ ------------
Cash flow from investing activities:
Purchase equipment (194,000) (48,000)
Software development (355,000) --
------------ ------------
Net cash used by investing activities (549,000) (48,000)
------------ ------------
Cash flow from financing activities:
Net borrowing under bank line of credit (75,000) 353,000
Proceeds from exercised stock options -- 28,000
------------ ------------
Net cash provided (used) by financing activities (75,000) 381,000
------------ ------------
Decrease in cash and cash equivalents (47,000) (1,191,000)
Cash and cash equivalents at beginning of period 224,000 1,599,000
------------ ------------
Cash and cash equivalents at end of period $ 177,000 $ 408,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL NOTES:
Certain notes to the September 30, 1998 audited consolidated financial
statements filed with Form 10-K are applicable to the unaudited
consolidated financial statements for the six months ended March 31, 1999.
Accordingly, reference should be made to the audited financial statements
at September 30, 1998.
In the opinion of the Company, the unaudited consolidated financial
statements as of March 31, 1999 contain all adjustments (including normal
recurring accruals) necessary to fairly present the financial position and
the results of operations of the Company. The timing of market study
orders and software license agreements can significantly impact quarterly
results of operations and, accordingly, the results of operations for the
six months ended March 31, 1999 are not necessarily indicative of the
results to be expected for the full year.
2. SUPPLEMENTAL CASH FLOW INFORMATION:
The Company paid interest of $114,000 and $46,000 during the six months
ended March 31, 1999 and 1998, respectively. Income taxes of $224,000 and
$135,000 were paid during the six months ended March 31, 1999 and 1998,
respectively.
3. INCOME TAXES
In March 1996, the Internal Revenue Service initiated an examination of
tax years 1993 through 1995. The Company has not yet received a final
report of the results and believes that the resolution of any items raised
will not have a material effect on its financial position.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND QUARTERLY RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
MPSI reported net income of $265,000 or $.09 per share on revenues of $5.4
million for the quarter ended March 31, 1999 compared with a net loss of
$590,000 or $.21 per share on revenues of $4.4 million for the comparable
quarter last year. For the six months ended March 31, 1999 MPSI reported net
income of $360,000 or $.12 per share on revenues of $9.9 million. This compared
with a net loss of $625,000 or $.22 per share on revenues of $9.2 million for
the comparable six months of last fiscal year. As discussed in more detail
below, revenues and margins for the quarter and six months ended March 31, 1999
were up, while operating expenses decreased significantly due to reorganization
of the Company's foreign offices and an increased emphasis on new product
offerings resulting in increased capitalization of development costs.
Revenues of $5.4 million for the second quarter of fiscal 1999 represent an
increase of approximately 22% or $959,000 as compared with last year. Revenues
increased $811,000 (62%) in the Pacific Rim over the same quarter last year as a
result of a resurgence of business in Korea, Malaysia and Thailand, and the
renewal of a software license with a major client in that region . Revenues in
the European region decreased slightly as compared to the second quarter last
year while nominal increases in revenues from North America, Latin America and
MPSI's consulting business unit offset those reductions.
Revenues of $9.9 million for the six months ended March 31, 1999 represent an 8%
or $750,000 increase over the same six months of fiscal 1998. Driven by the
second quarter performance of the Pacific Rim, revenues increased $589,000 (20%)
over the comparable period last year in that region. For the six months ended
March 31, 1999, the European region generated $280,000 of revenue which compared
to $1,152,000 last year. The revenue decline is primarily the result of the
timing of revenue on certain multi-year contracts. The Company expects that by
the end of fiscal year 1999 revenues in the European region will approximate
those recorded in fiscal 1998.
Revenue and gross profit from the Company's pricing product line (principally
North American customers) were $593,000 and $367,000, respectively, for the
quarter ended March 31, 1999 as compared to $244,000 and $204,000, respectively,
for the comparable quarter last year. For the six months ended March 31, 1999
revenue and gross profit were $1,194,000 and $813,000, respectively, as compared
with $454,000 and $378,000, respectively, for the comparative period last fiscal
year. This increase in pricing revenue and profitability reflects growth in both
the number of clients and markets utilizing these products.
The Company continues to place emphasis on a fully integrated product offering
and process improvements over and above its traditional retail/site evaluation
niche. Accordingly, the Company has undertaken three new initiatives designed to
(a) reduce software complexity and improve flexibility in order to open up new
petroleum market segments and/or industries, (b) leverage the substantial data
warehouse that MPSI has accumulated over the years, and (c) open new sales
channels for existing products utilizing the worldwide web. Included in expenses
during the quarter and six months ended March 31, 1999 were costs of more than
$380,000 and $440,000, respectively, related to these initiatives (without
revenue offset during start-up).
The Company's gross profit on information services during the quarter ended
March 31, 1999 increased to 57% as compared with 50% during the March 1998
quarter. Margins on information services for the six months ended March 31, 1999
were 58% as compared to 56% for the comparable period last year. MPSI has
consistently implemented new technology in its information services business in
order to counterbalance rising labor costs and maintain the ability to
competitively price its products. The Company implemented a new strategic
initiative in mid 1997 wherein the average timeline for data service projects
has been reduced through additional process revisions. The Company will continue
to aggressively look at all aspects of its software and information services to
determine ways to reduce costs. The software re-engineering noted above will
also allow the Company to significantly alter its database processes and further
reduce costs beginning in the fourth fiscal quarter of 1999. Additionally, year
to date margins were favorably impacted by the signing of a significant client
late in the first quarter which allowed the Company to leverage information from
studies which were previously completed. Software cost of sales, including
software amortization, decreased $52,000 and $180,000, respectively, for the
quarter and six months ended March 31, 1999 as compared to the same periods last
year. This change
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<PAGE> 10
reflects the complete amortization of certain products developed in prior years.
Later this year, management anticipates introduction of its CAPS software for
its Japanese clients and a new but complementary software system in North
America. Upon completion of these projects, amortization of capitalized costs
should increase to levels more comparable with prior years.
Operating expenses in total for the quarter and six months ended March 31, 1999
decreased $464,000 (14%) and $745,000 (12%), respectively, as compared with the
same periods last fiscal year. General and administrative expenses were down
approximately $118,000 (13%) and $59,000 (4%), respectively, for the quarter and
six months primarily as a result of the payment of consulting fees related to an
IRS audit during the second fiscal quarter of last year. Marketing costs for the
second fiscal quarter and six months ended March 31, 1999 decreased
approximately $435,000 (24%) and $742,000 (21%), respectively, as compared to
last year. Both the quarterly and year to date decreases are the result of
corporate reorganizations of certain international offices and other personnel
reductions through normal attrition during the latter part of fiscal 1998. These
decreases in marketing expenses are offset by data unit start-up costs of
$308,000 and $368,000, respectively, for the quarter and six months ended March
31, 1999. Research and development costs decreased approximately $219,000 (40%)
and $312,000 (32%), respectively, for the quarter and six months ended March 31,
1999 as a result of higher cost capitalization as explained below under
Financial Condition and Liquidity.
During the quarter ended March 31, 1999, the Singapore Dollar and the Japanese
Yen maintained their value against the U.S. dollar resulting in minimal foreign
currency gains/losses on transactions invoiced to the Pacific Rim in those
currencies. Transaction gains recognized in the first fiscal quarter were offset
by a devaluation of the Brazilian currency during the second quarter. Currency
transaction losses for the second quarter and six months ended March 31, 1999
were $63,000 and $36,000, respectively, as compared with an $8,000 gain and
$54,000 loss, respectively, for the comparable periods last year. Currency
swings can substantially affect quarterly results, but management anticipates a
more stable environment for the remainder of fiscal year 1999.
Income taxes on pre-tax income of $284,000 for the quarter ended March 31, 1999
were $19,000 (7% effective rate) resulting from foreign withholdings ($8,000)
and taxes on income from foreign subsidiaries ($11,000) as compared to a tax
benefit of $322,000 (including $20,000 foreign withholdings and $8,000 tax on
foreign subsidiaries) on losses of $590,000 reported for the quarter ended March
31, 1998. Income taxes on pre-tax income of $504,000 for the six months ended
March 31, 1999 of $144,000 (29% effective tax rate) are made up of $119,000
foreign withholdings and $25,000 tax on foreign subsidiaries as compared to a
tax benefit of $286,000 on a net loss of $911,000 for the comparable period last
year. Included in last years tax benefit were foreign withholdings of $49,000
and taxes on foreign subsidiaries of $15,000. The effective U.S. tax rate for
both the quarter and six months ended March 31, 1999 is reduced through the
application of tax credits, carried forward from prior years, against U.S.
income.
FINANCIAL CONDITION AND LIQUIDITY
Working capital of approximately $1.7 million at March 31, 1999 was comparable
with $1.6 million at September 30, 1998. Trade receivables (net of associated
deferred revenues),\ and trade accounts payable and accruals at March 31, 1999
were comparable with September 30, 1998. The Company continues to fund its
activities primarily from operations but utilizes funds from its available
credit line as required. At March 31, 1999, the Company had utilized $275,000 of
the $1,500,000 available line of credit as compared to $350,000 at September 30,
1998. Although the working capital credit line expires June 30, 1999, the
Company is presently negotiating an increased credit line and a renewal of the
line for another year. Backlog of $14.2 million at March 31, 1999 increased
slightly from $13.6 million at September 30, 1998. New orders received from
North American, Japanese, and Southeast Asian customers offset backlog
reductions resulting from revenue recognized through March 31, 1999.
As set forth in the Consolidated Statements of Cash Flow, MPSI expended
approximately $355,000 for capitalized programming of new software
products/versions during the six months ended March 31, 1999. During the same
period last fiscal year, there was no new product development in process, as the
Company was evaluating new product offerings and maintaining existing products.
The higher capitalized costs in the current year are the result of CAPS
development for the Japanese markets, re-engineering of the Company's core
software system, and development of software to be utilized internally to
enhance the production process of database construction and to shorten
development times of new product offerings.
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During the six months ended March 31, 1999, the Company spent approximately
$194,000 principally on computer equipment and software as compared with $48,000
in fiscal 1998. Such expenditures were part of a plan initiated in fiscal 1998
to upgrade internally used computer systems (hardware/software). No firm
commitments had been made for additional computer equipment at March 31, 1999.
The Company expects to upgrade present equipment, as needed, throughout the
remainder of the year through funding from operations.
Changes in stockholders' equity since September 30, 1998 are the result of
routine recognition of the results of operations for six months ended March 31,
1999 and variation in the foreign currency translation adjustment.
YEAR 2000 IMPACT
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of a company's
computer programs or hardware that have date-sensitive software or embedded
chips may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
of deliverable software products to meet client specifications or the inability
of internal software to process transactions, send invoices, or engage in
similar normal business activities. In order to correct this problem, computer
operating systems, applications software and/or hardware may require
modifications.
MPSI's assessment of the impact of this issue has encompassed (1) internally
utilized systems, (2) software held for resale, (3) computerized information and
software provided by third parties which might be integral to client usage of
MPSI products, and (4) compliance issues related entirely to the state of
readiness by major customers and vendors. Set forth below is the status of each
review and the estimated impact, to the extent that management can determine it:
o Internal Systems. MPSI has assessed and tested its financial accounting
systems, production control systems, software/data development
applications, internal hardware, and other internal management information
systems and believes them to be materially Year 2000 compliant. No
significant costs have been expended. Costs yet to be incurred are
estimated to be less than $75,000.
o MPSI Software Held for Resale. The Company has evaluated and tested the
date sensitivity features of its applications software held for resale to
customers and believes that there are no material unresolved Year 2000
compliance issues. MPSI's products typically are not date sensitive in
nature and no significant costs were incurred or are anticipated in the
future.
o Third Party Systems. MPSI has queried all critical external suppliers of
applications software, operating systems and PC computer equipment which we
believe are integral components of a client's computer network that could
affect the performance of MPSI products in that environment. While such
products are not directly embedded in the MPSI product delivery, their Year
2000 compliance could affect a client's satisfaction with the use of MPSI
products on site. Although not all inquiries have been completed and
additional issues could yet be discovered, management estimates that it has
received compliance satisfaction from all of the third party vendors that
could materially impact MPSI product performance. Although no significant
costs have been incurred to date relative to this category of computerized
process, management is unable to assess future costs associated with as yet
unidentified issues.
o Customers and Vendors. MPSI's evaluation of the potential impact of Year
2000 readiness by major customers and data suppliers is not yet complete.
Slow response from third parties has extended the timeline for this
evaluation. Management now expects this phase to be completed by September
30, 1999 and should cost less than $25,000 to complete. To date, management
has identified two potential issues: (1) remote product support, and (2)
general client system failures. Other than the applications software
delivered to clients as discussed above, the Company has limited direct
interfaces with computerized systems of its customers or vendors, except
that MPSI does provide a variety of product support and installation
support services using remote access to client systems. We do not expect
those interfaces to be materially impacted by Year 2000 issues, but in the
event that they were, manual support could supplant the remote support
without significantly affecting client relationships (although on-site
support would be more expensive for a period). Should major clients
experience general systems failures as the result of their planning for
Year
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2000, MPSI could be substantially impacted on a temporary basis. However,
as most of MPSI's applications software can run on a single PC if
necessary, our contingency plan contemplates transfer of client delivered
software from its network configuration to compliant individual PC
equipment until a client's overall system problems can be resolved. As
clients and vendors are often unable or unwilling to share information
about their state of Year 2000 readiness, management does not have
sufficient information concerning the state of readiness of major
customers/vendors, and assessment of the potential costs of the contingency
plan (which might have to be partially borne by MPSI) cannot be determined.
Management of the Company believes it has an effective program in place to
resolve the Year 2000 issue in a timely manner, to the extent that compliance is
within the Company's control. As noted above, the Company has not yet completed
all necessary phases of the Year 2000 program. In the event that the Company is
unable to ascertain all potential external impacts and thereby is unable to
contemplate all possible contingency plans, the Company may be unable to satisfy
customer product performance expectations, take additional orders, invoice
customers or collect payments, or perform certain other mission-critical
functions. In addition, disruptions in the economy generally resulting from Year
2000 issues could also materially adversely affect the Company. The Company
could be subject to litigation for computer systems product failure, for
example, equipment shutdown or failure to properly date business records. The
amount of potential liability and lost revenue cannot be reasonably estimated at
this time.
- ------------
Portions of this document may constitute forward-looking statements as defined
by federal law. Although the Company believes any such statements are based on
reasonable assumptions, there is no assurance that actual outcomes will not be
materially different. Additional information about issues that could lead to
material changes in performance is contained in the Company's annual report on
Form 10-K which is filed with the Securities and Exchange Commission.
12
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PART II - OTHER INFORMATION
Item 1 -- Legal Proceedings - None.
Item 2 -- Changes in Securities - None.
Item 3 -- Defaults Upon Senior Securities - None.
Item 4 -- Submission of Matters to a Vote of Security Holders -
(a) The annual stockholders meeting was held February 1,
1999. Proxies were solicited in accordance with
Regulation 14 of the Securities Exchange Act of 1934.
(b) All members of the Board of Directors, as previously
reported in the Company's Form 10-K at September 30,
1998, were re-elected and Ernst & Young LLP were
ratified as the certified public accountants.
Item 5 -- Other Information - None
Item 6 -- Exhibits and Reports on Form 8-K.
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
(a) Exhibits:
11.1 Earnings per share computation 16
27.1 Financial Data Schedule 17
(b) Reports on Form 8-K - None --
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed in its behalf by the
undersigned hereunto duly authorized.
MPSI SYSTEMS INC.
Date May 6, 1999 By /s/ Ronald G. Harper
------------------------- -------------------------------
Ronald G. Harper, President
(Chief Executive Officer) and
Director
Date May 6, 1999 By /s/ James C. Auten
-------------------------- -------------------------------
James C. Auten, Vice President
(Chief Financial Officer)
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------ ----------- ----
<S> <C> <C>
11.1 Earnings Per Share Computation 16
27.1 Financial Data Schedule 17
</TABLE>
15
<PAGE> 1
EXHIBIT 11.1 - EARNINGS PER SHARE COMPUTATION
Earnings per share calculations may be affected by the granting of stock options
under the provisions of MPSI Systems Inc. Stock Option Plans. The granting of
these options may have a dilutive effect on earnings per common and common
equivalent share. Following is a summary computation of the weighted average
number of shares outstanding and earnings per share using the treasury-stock
method. Primary and fully diluted earnings per share are the same for each
period presented.
<TABLE>
<CAPTION>
Three Months Ended March 31, Six Months Ended March 31,
---------------------------- ---------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Common stock outstanding throughout the period 2,849,000 2,836,000 2,849,000 2,793,000
Exercised options -- 3,000 -- 5,000
Dilutive unexercised stock options:
Shares presumed issued at exercise
($1.00 to $1.50 per share in 1999 and
$2.25 to $3.75 per share in 1998) 82,000 198,000 82,000 201,000
Less: Shares repurchased with presumed
proceeds at average per share price
($2.06 per share in 1999 and
$3.73 per share in 1998) (40,000) (180,000) (52,000) (169,000)
---------- ---------- ---------- ----------
Weighted average shares outstanding 2,891,000 2,857,000 2,879,000 2,830,000
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
(a) (b)
Weighted
Results of Average
Operations Shares Per Share (a/b)
---------- -------- ---------------
<S> <C> <C> <C>
Net income - Three Months Ended March 31, 1999 $ 265,000 2,891,000 $ .09
Six Months Ended March 31, 1999 $ 360,000 2,879,000 $ .12
Net loss - Three Months Ended March 31, 1998 $ (590,000) 2,857,000 $(.21)
Six Months Ended March 31, 1998 $ (625,000) 2,830,000 $(.22)
</TABLE>
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 177
<SECURITIES> 3
<RECEIVABLES> 5,304
<ALLOWANCES> 0
<INVENTORY> 206
<CURRENT-ASSETS> 5,775
<PP&E> 5,791
<DEPRECIATION> 4,838
<TOTAL-ASSETS> 9,564
<CURRENT-LIABILITIES> 4,082
<BONDS> 0
0
0
<COMMON> 142
<OTHER-SE> 3,832
<TOTAL-LIABILITY-AND-EQUITY> 9,564
<SALES> 9,923
<TOTAL-REVENUES> 9,923
<CGS> 4,056
<TOTAL-COSTS> 9,400
<OTHER-EXPENSES> (95)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 114
<INCOME-PRETAX> 504
<INCOME-TAX> 144
<INCOME-CONTINUING> 360
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 360
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
