<PAGE> 1
PAGE 1 OF 20 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, 1998
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.
4343 SOUTH 118TH EAST AVENUE
TULSA, OKLAHOMA 74146
<PAGE> 2
INDEX
-----
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
(a) Financial Statements:
(1) Independent Auditors' Report........................................................ 3
(2) Statements of Net Assets Available for Benefits at
December 31, 1998 and 1997 ......................................................... 4
(3) Statements of Changes in Net Assets Available for Benefits for the years ended
December 31, 1998, 1997 and 1996 ................................................... 8
(4) Notes to Financial Statements ...................................................... 11
(5) Schedules to Financial Statements:
Line 27a - Schedule of Assets Held for Investment Purposes....................... 17
Line 27d - Schedule of Reportable Transactions................................... 18
(b) Signatures.............................................................................. 19
(c) Exhibits
23.1 Auditors' Consent.................................................................. 20
</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 as of December 31, 1998 and
1997, and the related statements of changes in net assets available for benefits
for each of the three years in the period ended December 31, 1998. 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, 1998 and 1997, and the changes in its net assets available for
benefits for each of three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1998, and reportable
transactions for the year then ended, are presented for purpose of additional
analysis and are not a required part of the financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The fund information in the Statement of Net Assets Available
for Benefits and the Statement of Changes in Net Assets Available for Benefits
is presented for purposes of additional analysis rather than to present the net
assets available for benefits and the changes in net assets available for
benefits of each fund. The supplemental schedules and fund information have been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the financial statements taken as a whole.
ERNST & YOUNG LLP
Tulsa, Oklahoma
June 25, 1999
3
<PAGE> 4
MPSI SYSTEMS INC.
MATCHING INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
JOHN
GLOBAL MERRILL LYNCH HANCOCK MERRILL LYNCH
PHOENIX ALLOCATION MPSI STOCK CORPORATE MLRP TRUST EQUITY INDEX SPECIAL GROWTH FUND
FUND FUND FUND BOND FUND FUND TRUST EQUITIES (CLASS B)
- ----------------------------- -------- ----------- ---------- --------- ---------- ------------- -------- -------------
INVESTMENTS AT FAIR VALUE:
ML PHOENIX FUND INC
(61,508 UNITS VALUED AT
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$10.30 PER UNIT) $633,530 -- -- -- -- -- -- --
ML GLOBAL ALLOCATION FUND
INC. (85,693 UNITS VALUED
AT $12.42 PER UNIT) -- 1,064,315 -- -- -- -- -- --
COMMON STOCK ($.05 PAR
VALUE) OF MPSI SYSTEMS
INC.. (129,197 SHARES
VALUED AT $1.875 SHARE E) -- -- 242,245 -- -- -- -- --
ML CORPORATE BOND FUND
(5,082 UNITS AT $11.67
PER UNIT) -- -- -- 59,306 -- -- -- --
ML RETIREMENT PRESERVATION
TRUST FUND -- -- -- -- 521,388 -- -- --
ML EQUITY INDEX TRUST
(5,861 UNITS VALUED AT
$83.92 PER UNIT) -- -- -- -- -- 491,850 -- --
JOHN HANCOCK SPECIAL
EQUITIES FUND (6,620 UNITS
VALUED AT $24.10 PER UNIT) -- -- -- -- -- -- 159,541 --
ML GROWTH FUND (CLASS B)
(6,389 UNITS VALUED AT
$19.85 PER UNIT) -- -- -- -- -- -- -- 126,825
OPPENHEIMER TOTAL RETURN
(28,834 UNITS VALUED AT
$12.23 PER UNIT) -- -- -- -- -- -- -- --
AIM BALANCED (7,633 UNITS
VALUED AT $28.23 PER UNIT) -- -- -- -- -- -- -- --
LOANS TO PARTICIPANTS -- -- -- -- -- -- -- --
- -------------------------------- -------- --------- ------- ------ ------- ------- ------- -------
TOTAL INVESTMENTS $633,530 1,064,315 242,245 59,306 521,388 491,850 159,541 126,825
</TABLE>
MPSI SYSTEMS INC.
MATCHING INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
OPPENHEIMER AIM
TOTAL RETURN BALANCED LOAN FUND TOTAL
- ----------------------------- ------------ --------- --------- ----------
INVESTMENTS AT FAIR VALUE:
ML PHOENIX FUND INC
(61,508 UNITS VALUED AT
<S> <C> <C> <C> <C>
$10.30 PER UNIT) -- -- -- $ 633,530
ML GLOBAL ALLOCATION FUND
INC. (85,693 UNITS VALUED
AT $12.42 PER UNIT) -- -- -- 1,064,315
COMMON STOCK ($.05 PAR
VALUE) OF MPSI SYSTEMS
INC.. (129,197 SHARES
VALUED AT $1.875 SHARE E) -- -- -- 242,245
ML CORPORATE BOND FUND
(5,082 UNITS AT $11.67
PER UNIT) -- -- -- 59,306
ML RETIREMENT PRESERVATION
TRUST FUND -- -- -- 521,388
ML EQUITY INDEX TRUST
(5,861 UNITS VALUED AT
$83.92 PER UNIT) -- -- -- 491,850
JOHN HANCOCK SPECIAL
EQUITIES FUND (6,620 UNITS
VALUED AT $24.10 PER UNIT) -- -- -- 159,541
ML GROWTH FUND (CLASS B)
(6,389 UNITS VALUED AT
$19.85 PER UNIT) -- -- -- 126,825
OPPENHEIMER TOTAL RETURN
(28,834 UNITS VALUED AT
$12.23 PER UNIT) 352,647 -- -- 352,647
AIM BALANCED (7,633 UNITS
VALUED AT $28.23 PER UNIT) -- 215,470 -- 215,470
LOANS TO PARTICIPANTS -- -- 142,146 142,146
- -------------------------------- ------- ------- ------- ----------
TOTAL INVESTMENTS 352,647 215,470 142,146 $4,009,263
</TABLE>
4
<PAGE> 5
Statement of Net Assets Available for Benefits
December 31, 1998 (continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
JOHN
GLOBAL MERRILL LYNCH HANCOCK MERRILL LYNCH
PHOENIX ALLOCATION MPSI STOCK CORPORATE MLRP TRUST EQUITY INDEX SPECIAL GROWTH FUND
FUND FUND FUND BOND FUND FUND TRUST EQUITIES (CLASS B)
- ----------------------------- -------- ---------- ---------- --------- ---------- ------------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RECEIVABLES:
EMPLOYER CONTRIBUTION $ 32,155 53,824 -- 4,882 22,596 18,670 8,709 9,987
EMPLOYEE CONTRIBUTIONS 5,993 8,525 -- 912 5,013 4,349 2,090 2,018
ACCRUED INTEREST/DIVIDENDS 27,317 9,917 -- 282 2,393 -- -- 271
- ----------------------------- -------- --------- ------- ------ ------- ------- ------- -------
TOTAL RECEIVABLES 65,465 72,266 -- 6,076 30,002 23,019 10,799 12,276
- ----------------------------- -------- --------- ------- ------ ------- ------- ------- -------
NET ASSETS AVAILABLE FOR
BENEFITS AT 12/31/98 $698,995 1,136,581 242,245 65,382 551,390 514,869 170,340 139,101
============================= ======== ========= ======= ====== ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
OPPENHEIMER AIM
TOTAL RETURN BALANCED LOAN FUND TOTAL
- ----------------------------- ------------ -------- --------- ---------
<S> <C> <C> <C> <C>
RECEIVABLES:
EMPLOYER CONTRIBUTION 9,814 5,878 -- $ 166,515
EMPLOYEE CONTRIBUTIONS 2,720 1,379 -- 32,999
ACCRUED INTEREST/DIVIDENDS 7,152 1,168 -- 48,500
- ----------------------------- ------- ------- ------- ----------
TOTAL RECEIVABLES 19,686 8,425 -- 248,014
- ----------------------------- ------- ------- ------- ----------
NET ASSETS AVAILABLE FOR
BENEFITS AT 12/31/98 372,333 223,895 142,146 $4,257,277
============================= ======= ======= ======= ==========
</TABLE>
See accompanying notes to financial statements
5
<PAGE> 6
MPSI SYSTEMS INC.
MATCHING INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
<TABLE>
<CAPTION>
GLOBAL
PHOENIX ALLOCATION MPSI STOCK CORPORATE MLRP TRUST
FUND FUND FUND BOND FUND FUND
-------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
INVESTMENTS AT FAIR VALUE:
ML PHOENIX FUND INC
(51,768 UNITS VALUED
AT $12.09 PER UNIT) $625,879 -- -- -- --
ML GLOBAL ALLOCATION
FUND INC. (86,772
UNITS VALUED AT
$13.94 PER UNIT) -- 1,209,604 -- -- --
COMMON STOCK ($.05 PAR
VALUE) OF MPSI SYSTEMS
INC.. (139,256 SHARES
VALUED AT $4.63/SHAREE) -- -- 644,061 -- --
ML CORPORATE BOND FUND
(7,257 UNITS AT $11.56
PER UNIT) -- -- -- 83,898 --
ML RETIREMENT PRESERVA-
TION TRUST FUND -- -- -- -- 459,886
ML EQUITY INDEX TRUST
(3,813 UNITS VALUED AT
$65.37 PER UNIT) -- -- -- -- --
JOHN HANCOCK SPECIAL
EQUITIES FUND (3,474
UNITS VALUED AT $25.92
PER UNIT) -- -- -- -- --
ML GROWTH FUND (CLASS B)
(4,654 UNITS VALUED AT
$26.42 PER UNIT) -- -- -- -- --
OPPENHEIMER TOTAL RETURN
(6,853 UNITS VALUED AT
$11.00 PER UNIT) -- -- -- -- --
AIM BALANCED (3,460 UNITS
VALUED AT $25.78 PER -- -- -- -- --
UNIT)
LOANS TO PARTICIPANTS -- -- -- -- --
-------- --------- ------- ------ -------
TOTAL INVESTMENTS $625,879 1,209,604 644,061 83,898 459,886
======== ========= ======= ====== =======
<CAPTION>
JOHN
MERRILL LYNCH HANCOCK MERRIL LYNCH
EQUITY INDEX SPECIAL GROWTH FUND OPPENHEIMER AIM
TRUST EQUITIES (CLASS B) TOTAL RETURN BALANCED LOAN FUND TOTAL
------------ -------- ------------ ------------ -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENTS AT FAIR VALUE:
ML PHOENIX FUND INC
(51,768 UNITS VALUED
AT $12.09 PER UNIT) -- -- -- -- -- -- $ 625,879
ML GLOBAL ALLOCATION
FUND INC. (86,772
UNITS VALUED AT
$13.94 PER UNIT) -- -- -- -- -- -- 1,209,604
COMMON STOCK ($.05 PAR
VALUE) OF MPSI SYSTEMS
INC.. (139,256 SHARES
VALUED AT $4.63/SHAREE) -- -- -- -- -- -- 644,061
ML CORPORATE BOND FUND
(7,257 UNITS AT $11.56
PER UNIT) -- -- -- -- -- -- 83,898
ML RETIREMENT PRESERVA-
TION TRUST FUND -- -- -- -- -- -- 459,886
ML EQUITY INDEX TRUST
(3,813 UNITS VALUED AT
$65.37 PER UNIT) 249,259 -- -- -- -- -- 249,259
JOHN HANCOCK SPECIAL
EQUITIES FUND (3,474
UNITS VALUED AT $25.92
PER UNIT) -- 90,051 -- -- -- -- 90,051
ML GROWTH FUND (CLASS B)
(4,654 UNITS VALUED AT
$26.42 PER UNIT) -- -- 122,969 -- -- -- 122,969
OPPENHEIMER TOTAL RETURN
(6,853 UNITS VALUED AT
$11.00 PER UNIT) -- -- -- 75,383 -- -- 75,383
AIM BALANCED (3,460 UNITS
VALUED AT $25.78 PER -- -- -- -- 89,210 -- 89,210
UNIT)
LOANS TO PARTICIPANTS -- -- -- -- -- 164,814 164,814
------- ------ ------- ------ ------ ------- ----------
TOTAL INVESTMENTS 249,259 90,051 122,969 75,383 89,210 164,814 $3,815,014
======= ====== ======= ====== ====== ======= ==========
</TABLE>
6
<PAGE> 7
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1997 (CONTINUED)
<TABLE>
<CAPTION>
GLOBAL
PHOENIX ALLOCATION MPSI STOCK CORPORATE MLRP TRUST
FUND FUND FUND BOND FUND FUND
-------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
RECEIVABLES:
EMPLOYER CONTRIBUTION $ 39,013 57,833 -- 3,800 24,906
EMPLOYEE CONTRIBUTIONS 9,510 13,871 -- 943 5,774
ACCRUED INTEREST / 35,923 13,523 -- 365 2,159
DIVIDENDS
-------- --------- ------- ------ -------
TOTAL RECEIVABLES 84,446 85,227 -- 5,108 32,839
-------- --------- ------- ------ -------
NET ASSETS AVAILABLE FOR
BENEFITS AT 12/31/97 $710,325 1,294,831 644,061 89,006 492,725
======== ========= ======= ====== =======
<CAPTION>
JOHN
MERRILL LYNCH HANCOCK MERRIL LYNCH
EQUITY INDEX SPECIAL GROWTH FUND OPPENHEIMER AIM
TRUST EQUITIES (CLASS B) TOTAL RETURN BALANCED LOAN FUND TOTAL
------------ -------- ------------ ------------ -------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
RECEIVABLES:
EMPLOYER CONTRIBUTION 11,219 7,648 6,292 3,247 2,742 -- $ 156,700
EMPLOYEE CONTRIBUTIONS 2,532 1,726 1,420 733 619 -- 37,128
ACCRUED INTEREST / -- -- 2,404 2,232 933 -- 57,539
DIVIDENDS
------- ------ ------- ------ ------ ------- ----------
TOTAL RECEIVABLES 13,751 9,374 10,116 6,212 4,294 -- 251,367
------- ------ ------- ------ ------ ------- ----------
NET ASSETS AVAILABLE FOR
BENEFITS AT 12/31/97 263,010 99,425 133,085 81,595 93,504 164,814 $4,066,381
======= ====== ======= ====== ====== ======= ==========
</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, 1998
<TABLE>
<CAPTION>
Merrill
Lynch
Global MLRP Equity
Phoenix Allocation MPSI Corporate Trust Index
Fund Fund Stock Fund Bond Fund Fund Trust
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends and interest $ 86,521 109,082 -- 4,156 26,880 --
Net appreciation
(depreciation)
in fair value of
investments (62,533) (108,536) (382,008) 706 -- 92,087
Contributions:
Employer 23,290 42,962 -- 4,496 26,797 22,914
Employees 82,981 134,737 -- 11,983 68,266 55,248
Distributions:
Cash (32,134) (59,350) (355) (4,415) (86,098) (20,590)
In kind -- (660) -- -- -- --
MPSI Systems Inc.
$.05 Common Stock -- -- (11,055) -- -- --
Interfund transfers in
(out) (109,455) (276,485) (8,398) (40,550) 22,820 102,200
----------- ----------- ----------- ----------- ----------- -----------
Change in net assets
available for
benefits during (11,330) (158,250) (401,816) (23,624) 58,665 251,859
Net assets available
for benefits at
December 31, 1997 710,325 1,294,831 644,061 89,006 492,725 263,010
----------- ----------- ----------- ----------- ----------- -----------
Net assets available
for benefits at
December 31, 1998 $ 698,995 1,136,581 242,245 65,382 551,390 514,869
=========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Merrill
John Lynch
Hancock Growth Oppenheimer
Special Fund Total AIM
Equities (Class B) Return Balanced Loan Fund Total
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends and interest 2,271 (1,068) 31,243 4,754 13,282 $ 277,121
Net appreciation
(depreciation)
in fair value of
investments (9,066) (35,054) 19,809 15,519 -- (469,076)
Contributions:
Employer 8,594 13,662 16,802 8,386 -- 167,903
Employees 25,773 29,553 29,042 18,761 -- 456,344
Distributions:
Cash (3,994) (9,771) (512) (3,567) (8,895) (229,681)
In kind -- -- -- -- -- (660)
MPSI Systems Inc.
$.05 Common Stock -- -- -- -- -- (11,055)
Interfund transfers in
(out) 47,337 8,694 194,354 86,538 (27,055) 0
----------- ----------- ----------- ----------- ----------- -----------
Change in net assets
available for
benefits during 70,915 6,016 290,738 130,391 (22,668) 190,896
1998
Net assets available
for benefits at
December 31, 1997 99,425 133,085 81,595 93,504 164,814 4,066,381
----------- ----------- ----------- ----------- ----------- -----------
Net assets available
for benefits at
December 31, 1998 170,340 139,101 372,333 223,895 142,146 $ 4,257,277
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
8
<PAGE> 9
MPSI SYSTEMS INC.
MATCHING INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Merrill
Lynch
Global MLRP Equity
Phoenix Allocation MPSI Capital Corporate Trust Index
Fund Fund Stock Fund Fund Bond Fund Fund Trust
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends and interest $ 145,938 157,278 -- -- 4,264 24,645 --
Net appreciation
(depreciation) in fair
value of investments (42,420) (37,022) 409,392 10,846 489 -- 33,391
Contributions:
Employer 39,013 57,833 -- -- 3,800 24,906 11,219
Employees 107,490 159,342 -- 17,507 10,470 68,623 30,911
Rollovers -- 5,977 -- -- -- -- 5,977
Distributions:
Cash (70,988) (116,002) (29) (30,903) (6,421) (130,064) (1,215)
In kind (40,045) (54,784) -- -- -- -- --
MPSI Systems Inc.
$.05 Common Stock (26,609) -- -- (26,609) -- -- --
Other expense -- -- (834) (12,720) -- -- --
Interfund transfers in
(out) (65,185) (52,077) (131,758) (413,189) (21,114) 212,763 182,727
---------- ---------- ---------- ---------- ---------- ---------- ----------
Change in net assets
available for
benefits during 73,803 120,545 250,162 (428,459) (8,512) 200,873
263,010
Net assets available
for benefits at
December 31, 1996 636,522 1,174,286 393,899 428,459 97,518 291,852 --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net assets available
for benefits at
December 31, 1997 $ 710,325 1,294,831 644,061 -- 89,006 492,725 263,010
========== ========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Merrill
John Lynch
Hancock Growth Oppenheimer
Special Fund Total AIM
Equities (Class B) Return Balanced Loan Fund Total
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends and interest -- 12,125 10,382 4,523 10,555 $ 369,710
Net appreciation
(depreciation) in
fair value of
investments 19,291 2,744 2,465 5,547 -- 404,723
Contributions:
Employer 7,648 6,292 3,247 2,742 -- 156,700
Employees 21,073 17,336 8,945 6,187 -- 447,884
Rollovers -- -- 5,977 5,977 -- 23,908
Distributions:
Cash (1,499) (9,116) (502) -- -- (366,739)
In kind -- -- -- -- -- (94,829)
MPSI Systems Inc.
$.05 Common Stock -- -- -- -- -- (26,609)
Other expense -- -- -- -- -- (13,554)
Interfund transfers in
(out) 52,912 103,704 51,081 68,528 11,608 --
----------- ----------- ----------- ----------- ----------- -----------
Change in net assets
available for
benefits during 1997 99,425 133,085 81,595 93,504 22,163 901,194
Net assets available for
benefits at December
31, 1996 -- -- -- -- 142,651 3,165,187
----------- ----------- ----------- ----------- ----------- -----------
Net assets available for
benefits at December
31, 1997 99,425 133,085 81,595 93,504 164,814 $ 4,066,381
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
9
<PAGE> 10
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>
- ----------------------------------------------------------------------------------------------------------------------------------
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>
Investment income:
Dividends and interest $ 79,467 107,775 -- 45,189 5,671 14,978 4,189 $ 257,269
Net appreciation (depreciation)
in fair value of investments 13,094 48,461 (453,318) 6,546 (3,546) -- -- (388,763)
Contributions:
Employers -- -- 137,394 -- -- -- -- 137,394
Employees 129,378 148,545 12,988 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 (expense) -- -- -- -- -- -- 29 29
Interfund transfers in (out) (18,488) (68,126) (1,499) (27,870) (1,168) 18,334 98,817 --
- ----------------------------------------------------------------------------------------------------------------------------------
Change in net assets available
for benefits during 1996 148,982 161,675 (342,730) 63,613 13,719 39,830 102,977 188,066
Net assets available for benefits
at December 31, 1995 487,540 1,012,611 738,629 364,846 83,799 252,022 39,674 2,977,121
- -----------------------------------------------------------------------------------------------------------------------------------
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
===================================================================================================================================
See accompanying notes to financial statements
</TABLE>
10
<PAGE> 11
MPSI SYSTEMS INC.
MATCHING INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVESTMENTS
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 quoted market prices of the underlying assets.
Investments in money market funds were stated at par value, which
approximates fair value. The Merrill Lynch Retirement Preservation Trust
Fund investments are valued by Merrill Lynch based on the fair value of the
underlying assets. Participant loans are stated at cost, which approximates
fair value.
The fair market value per share of MPSI Systems Inc. Common Stock was
$1.88, $4.63, and $1.75 at December 31, 1998, 1997, and 1996, respectively.
INVESTMENT FUNDS
For 1996, six investment funds as set forth below were maintained by
Merrill Lynch Trust Company (the "Trustee") and were available to plan
participants.
Phoenix Fund:
The primary objective of the mutual 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 is 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. (the "Company") Common stock may be purchased by the
Trustee on the open market or through private transactions, including
direct purchases from the Company.
Capital Fund:
This mutual 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.
11
<PAGE> 12
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 ("MLRP Trust Fund")
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.
Beginning January 1, 1997, five new fund options were added to the Plan and
were available to participants. The fund options are described below.
Merrill Lynch Equity Index Trust
This mutual fund seeks to provide results that replicate the total
return of the Standard and Poor's 500 Composite Stock Price Index. In
order to manage the Trust's cash flows efficiently, management will
utilize the Standard and Poor's 500 Index Futures or combinations of
index options as a method of investment. Management will also
participate in index arbitrage transactions where deemed prudent.
John Hancock Special Equities Fund
This mutual fund seeks long-term capital appreciation. To pursue this
goal, the fund invests in small capitalization companies and companies
offering unusual or non-recurring opportunities. The fund looks for
companies that dominate an emerging industry or hold a growing market
share in a fragmented industry and that have demonstrated annual
earnings and revenue growth of at least 25%, self financing
capabilities, and strong management.
Merrill Lynch Growth Fund (Class B)
The investment objectives of this mutual fund is to seek growth of
capital and, secondarily, income by investing in a diversified
portfolio of primarily equity securities placing principal emphasis on
those securities that management of the fund believes to be
undervalued. Undervalued issues include securities selling at
discounts from the price to book value ratios and price/earnings
ratios computed with respect to the popular stock market averages
(primarily Standard and Poors 400 Industrials stock price index).
Oppenheimer Total Return
The fund is a mutual fund with the investment objective of seeking
high total return through investment in securities which it believes
will provide a high return, including investments which are expected
to provide opportunities for growth or to produce income, or both. The
fund is not restricted to any specific type of security and may also
use certain hedging instruments to try to reduce risks of market
fluctuations that affect the value of the securities the fund holds.
AIM Balanced
This mutual fund's objective is to achieve as high a total return to
investors as possible, consistent with preservation of capital, by
investing in a broadly diversified portfolio of high yielding
securities, including common stocks, preferred stocks, convertible
securities and bonds. Although equity
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<PAGE> 13
securities will be purchased primarily for capital appreciation and
fixed income securities primarily for income purposes, income and
capital appreciation potential will be considered in connection with
all investments.
Effective January 1, 1997, MPSI Systems Inc. Matching Investment Plan (the
"Plan") closed the Capital Fund as an elective fund option available to
participants. As a result, existing account balances were transferred to
other fund options as directed by the participant. Also, effective January
1, 1997, the Plan closed the MPSI Stock Fund to new contributions. Existing
account balances were permitted to remain in the fund or transferred to
other fund options as directed by the participant.
The following table shows the employee participation in the various
investment options:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
Number of Participants at December 31,
1998 1997
-------------------------------------------------------------------------------------
<S> <C> <C>
Phoenix Fund 94 93
Global Allocation Fund 120 120
MPSI Systems Inc. Common Stock Fund 124 130
Corporate Bond Fund 40 34
Merrill Lynch Retirement Preservation Trust 82 25
Merrill Lynch Equity Index Trust 33 26
John Hancock Special Equities Fund 27 22
Merrill Lynch Growth Fund (Class B) 31 29
Oppenheimer Total Return 34 24
AIM Balanced 21 17
Total Participants 153 160
-------------------------------------------------------------------------------------
</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 January 11, 1994) was deemed to be a
qualified plan under Section 401 of the Internal Revenue Code. 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 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 that
affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
(2) PARTICIPANTS AND CONTRIBUTIONS
All employees of 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 following their completion of a six-month period of service.
Participants may contribute as salary deferrals up to 16% of their annual
earnings. Participant contributions in excess of 9% of a participant's
salary may also be made subject to certain limitations as designed to
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<PAGE> 14
prevent the Plan from failing Annual Tax Compliance Testing. 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.
MPSI Systems Inc. made contributions under the Plan during the three years
ended December 31, 1998 based upon a Matching Percentage applied to the
participants' qualifying contributions. Participants' qualifying
contributions equal the aggregate of each participant's salary deferral and
contributions up to 6% of that participant's earnings for the Plan year.
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>
During 1996 the Employers Match was made in the form of newly issued shares
of MPSI common stock. In 1997 and 1998, the Employer Match was made in cash
and allocated to participant accounts based upon contribution elections
made by the participant.
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
termination, participants will become 100 percent vested in their accounts.
The Company's matching percentage was 50 percent for Plan years 1998, 1997
and 1996 resulting in contributions of $167,903, $156,700 and $137,394,
respectively, as calculated below:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
Year Ended December 31,
1998 1997 1996
---------------------------------------------------------------------------------
<S> <C> <C> <C>
Net employee contributions
(including nonelective contributions) $ 456,344 $ 447,884 $ 416,237
Nonqualifying contributions (120,538) (134,484) (141,449)
---------------------------------------------------------------------------------
Qualifying employee contributions 335,806 313,400 274,788
Applicable matching percentage x 50% x 50% x 50%
---------------------------------------------------------------------------------
Required company contribution $ 167,903 $ 156,700 $ 137,394
=================================================================================
</TABLE>
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<PAGE> 15
(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 $18,265, $13,786, and
$16,158 for 1998, 1997and 1996, 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,
1998 1997
-------------------------------------------------------------------------------------
<S> <C> <C>
Phoenix Fund $ 633,530 $ 625,879
Global Allocation Fund 1,064,315 1,209,604
MPSI Systems Inc. Common Stock Fund 242,245 644,061
Merrill Lynch Retirement Preservation Trust 521,388 459,886
Merrill Lynch Equity Index Trust 491,850 249,259
Oppenheimer Total Return 352,647 75,383
AIM Balanced 215,470 89,210
</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,
1998 1997
------------------------------------------------------------------------------------------------
<S> <C> <C>
Net assets available for benefits per the financial statements $ 4,257,277 $ 4,066,381
Amounts shown on the Form 5500
Benefit Claims Payable -- (13,987)
------------------------------------------------------------------------------------------------
Net assets available for benefits per the Form 5500 $ 4,257,277 $ 4,052,394
================================================================================================
</TABLE>
15
<PAGE> 16
The following is a reconciliation of distributions per the financial
statements to the Form 5500:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Benefits Paid
------------------------------------------------------------------------------------------------
<S> <C>
Amounts distributed to participants per statement of
changes in net assets $ 241,396
Add amounts allocated to withdrawing participants at
December 31, 1998 --
Less amounts allocated to withdrawing participants at
December 31, 1997 (13,987)
------------------------------------------------------------------------------------------------
Amounts distributed to participants per the Form 5500 $ 227,409
================================================================================================
</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.
(6) YEAR 2000 ISSUE (UNAUDITED)
The Plan Sponsor has determined that it will be necessary to take certain
steps in order to ensure that the Plan's information systems are prepared
to handle year 2000 dates. The Plan Sponsor is taking a two phase approach.
The first phase addresses internal systems that must be modified or
replaced to function properly. Both internal and external resources are
being utilized to replace or modify existing software applications, and
test the software and equipment for the year 2000 modifications. The Plan
Sponsor anticipates substantially completing this phase of the project by
June 1999. Costs associated with modifying software and equipment are not
estimated to be significant and will be paid by the Plan Sponsor.
For the second phase of the project, Plan management established formal
communications with its third party service providers to determine that
they have developed plans to address their own year 2000 problems as they
relate to the Plan's operations. All third party service providers have
indicated that they will be year 2000 compliant by early 1999. If
modification of data processing systems of either the Plan, the Plan
Sponsor, or its service providers are not completed timely, the year 2000
problem could have a material impact on the operations of the Plan. Plan
management has not developed a contingency plan, because they are confident
that all systems will be year 2000 ready. However, an unexpected failure to
adequately address this issue could result in an interruption of normal
Plan operations and activities.
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<PAGE> 17
MPSI SYSTEMS INC. MATCHING INVESTMENT PLAN
EIN: 73-1064024, PLAN #: 001
LINE 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
- ------------------------------------------------------------------------------------------------------------------------
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 61,508 Class B Shares $ 736,157 $ 633,530
* Merrill Lynch Global Allocation Fund 85,693 Class B Shares 1,139,219 1,064,315
* Merrill Lynch Corporate Bond Fund 5,082 Class B Shares 58,314 59,306
* Merrill Lynch Equity Index Trust 5,861 Class B Shares 372,141 491,850
John Hancock Special Equities Fund 6,620 Class A Shares 157,689 159,541
* Merrill Lynch Growth Fund (Class B) 6,389 Class B Shares 157,091 126,825
Oppenheimer Total Return 28,834 Class A Shares 330,844 352,647
AIM Balanced 7,633 Class A Shares 194,678 215,470
----------- -----------
3,146,133 3,103,484
MONEY FUNDS
* Merrill Lynch Retirement Preservation Trust 521,388 Units 521,388 521,388
COMMON STOCKS
* MPSI Systems Inc. 129,197 Common Shares 1,025,242 242,245
* LOANS TO PARTICIPANTS 7.75% to 9.50% interest rate -- 142,146
----------- -----------
$ 4,692,763 $ 4,009,263
=========== ===========
* Party in Interest
</TABLE>
17
<PAGE> 18
MPSI SYSTEMS INC. MATCHING INVESTMENT PLAN
EIN: 73-1064024, PLAN #: 001
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (g) (h) (i)
Identity Current Value
of Party Description No. of Purchase Selling Cost of of Asset on Net Gain
Involved of Assets Shares Price Price Asset Transaction Date or (Loss)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Category (iii) - Series of Transactions in Excess of 5% of Plan Assets
Merrill Lynch Retirement Preservation Trust 126,155 $ -- $ 126,155 $ 126,155 $ 125,155 $ --
Merrill Lynch Phoenix Fund - Class B 13,043 -- 165,716 165,826 165,716 (110)
Merrill Lynch Global Allocation Fund 26,901 -- 379,463 386,939 379,463 (7,476)
Oppenheimer Total Return 47 -- 512 556 512 (44)
Merrill Lynch Retirement Preservation Trust 187,657 187,657 187,657 187,657
Merrill Lynch Phoenix Fund - Class B 22,783 235,902 235,902 235,902
Merrill Lynch Global Allocation Fund 25,822 342,710 342,710 342,710
Oppenheimer Total Return 22,029 257,967 257,967 257,967
There were no Category (i), (ii), or (iv) Reportable Transactions During 1997.
Columns (e) and (f) are not applicable.
</TABLE>
18
<PAGE> 19
SIGNATURES
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 25, 1999 By \s\ William H. Webb, Jr.
William H. Webb, Jr., Chairman
Administrative Committee
19
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
23.1 Auditors Consent
</TABLE>
<PAGE> 1
AUDITORS' CONSENT
The Board of Directors
MPSI Systems Inc.:
We consent to the 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 25, 1999, 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, 1998.
ERNST & YOUNG LLP
Tulsa, Oklahoma
June 25, 1999
20
