<PAGE> 1
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 THREE MONTHS ENDED DECEMBER 31, 1998 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 December 31, 1998 - 2,849,454
-------------
1
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. FINANCIAL INFORMATION:
Financial Statements:
Consolidated Balance Sheets - December 31, 1998
and September 30, 1998 ......................................... 3
Consolidated Statements of Operations -
Three Months Ended December 31, 1998 and 1997 .................. 5
Consolidated Statement of Stockholders' Equity -
Three Months Ended December 31, 1998 ........................... 6
Consolidated Statements of Cash Flow -
Three Months Ended December 31, 1998 and 1997 .................. 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) ...................... 12
SIGNATURES ..................................................................... 13
</TABLE>
2
<PAGE> 3
MPSI SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
Assets
- ---------------------------------------------------------------------------------------------
December 31, September 30,
1998 1998
- ---------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 480,000 $ 224,000
Short-term investments, at cost 3,000 3,000
Receivables:
Trade 4,587,000 4,207,000
Current portion of long-term receivables 1,331,000 1,275,000
Work in process inventory 215,000 107,000
Prepayments 196,000 81,000
- ---------------------------------------------------------------------------------------------
Total current assets 6,812,000 5,897,000
Long-term receivables, net of current portion
and unamortized discount 2,253,000 2,201,000
Property and equipment, net of accumulated amortization 949,000 962,000
Software products, net of accumulated amortization 335,000 280,000
Other assets 165,000 150,000
- ---------------------------------------------------------------------------------------------
Total assets $10,514,000 $ 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>
Liabilities and Stockholders' Equity
- ----------------------------------------------------------------------------------------------------
December 31, September 30,
1998 1998
- ----------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
Current liabilities:
Note payable to bank (Note 4) $ 1,180,000 $ 350,000
Accounts payable 770,000 889,000
Accrued liabilities 926,000 1,173,000
Deferred revenue 2,374,000 1,929,000
- ----------------------------------------------------------------------------------------------------
Total current liabilities 5,250,000 4,341,000
Non-current deferred revenue 1,300,000 1,346,000
Non-current deferred income taxes (Note 2) 88,000 86,000
Other noncurrent liabilities 158,000 172,000
- ----------------------------------------------------------------------------------------------------
Total liabilities 6,796,000 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 December 31, 1998
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 (10,264,000) (10,359,000)
Foreign currency translation adjustment 761,000 683,000
- ----------------------------------------------------------------------------------------------------
Total stockholders' equity 3,718,000 3,545,000
- ----------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 10,514,000 $ 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 December 31,
-------------------------------
1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues:
Software maintenance and information services $ 4,433,000 $ 4,704,000
Software 120,000 58,000
- -----------------------------------------------------------------------------------------------------------
Total revenues 4,553,000 4,762,000
- -----------------------------------------------------------------------------------------------------------
Cost of Sales:
Software maintenance and information services 1,811,000 1,751,000
Software 51,000 179,000
- -----------------------------------------------------------------------------------------------------------
Total cost of sales 1,862,000 1,930,000
- -----------------------------------------------------------------------------------------------------------
Gross profit 2,691,000 2,832,000
Operating expenses:
General and administrative 733,000 674,000
Marketing 1,478,000 1,725,000
Research and development 336,000 429,000
- -----------------------------------------------------------------------------------------------------------
Total operating expenses 2,547,000 2,828,000
- -----------------------------------------------------------------------------------------------------------
Operating income 144,000 4,000
Other income (expense):
Interest income 56,000 71,000
Interest expense (13,000) (12,000)
Gain (loss) on foreign exchange 27,000 (98,000)
Other, net 6,000 36,000
- -----------------------------------------------------------------------------------------------------------
Income before income taxes 220,000 1,000
Provision for income taxes 125,000 36,000
- -----------------------------------------------------------------------------------------------------------
Net income (loss) $ 95,000 $ (35,000)
===========================================================================================================
Per Share: Basic and diluted income (loss) per common share $ .03 $ (.01)
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
MPSI SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Foreign
Common stock Additional currency Total
--------------------- paid-in translation stockholders'
Shares Amount capital Deficit adjustment 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
Net loss - - - 95,000 - 95,000
Foreign currency
translation adjustment - - - - 78,000 78,000
- --------------------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1998 2,849,000 $142,000 $13,079,000 $(10,264,000) $ 761,000 $ 3,718,000
==========================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements .
6
<PAGE> 7
MPSI SYSTEMS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
(NOTE 2)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Three Months Ended December 31,
-------------------------------
1998 1997
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Income (loss) from continuing operations $ 95,000 $ (35,000)
Adjustments to reconcile income (loss) from continuing operations to cash used
by continuing operations:
Depreciation and amortization of property and equipment 100,000 105,000
Amortization of software products 50,000 179,000
Changes in assets and liabilities:
Decrease (increase) in assets:
Receivables (484,000) (1,149,000)
Inventories (108,000) 14,000
Other (130,000) (20,000)
Increase (decrease) in liabilities:
Trade payables and accruals (221,000) (286,000)
Taxes payable (88,000) (79,000)
Deferred revenue 401,000 (82,000)
- --------------------------------------------------------------------------------------------------------------------------
Net cash used by operations (385,000) (1,353,000)
- --------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase equipment (84,000) (28,000)
Software development (105,000) -
- --------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (189,000) (28,000)
- --------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from debt 830,000 303,000
Exercise of stock options - 15,000
- --------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 830,000 318,000
- --------------------------------------------------------------------------------------------------------------------------
Increase/(decrease) in cash and cash equivalents 256,000 (1,063,000)
Cash and cash equivalents at beginning of period 224,000 1,599,000
- --------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 480,000 $ 536,000
==========================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE> 8
MPSI SYSTEMS INC.
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 three months ended December 31,
1998. 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 December 31, 1998 contain all adjustments (including
normal recurring accruals) necessary to fairly present the financial
position and the results of operations of the Company. The results of
operations for the three months ended December 31, 1998 are not
necessarily indicative of the results to be expected for the full year.
- --------------------------------------------------------------------------------
2. Supplemental Cash Flow Information
The Company paid interest of $13,000 and $12,000 during the three months
ended December 31, 1998 and 1997, respectively, related to certain lease
obligations and supplier financing arrangements. Income taxes of $196,000
and $114,000 were paid during the quarters ended December 31, 1998 and
1997, respectively, including foreign income taxes withheld at the source
from remittances by customers.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
4. Note Payable to Bank
In May 1998, the Company expanded its bank line of credit through April
1999 in the aggregate amount of $1,500,000 which is secured by billed
accounts receivable and current portions of long-term receivables;
$1,180,000 was outstanding at December 31, 1998. Outstanding balances bear
interest at a floating rate based on NationsBank's corporate lending rate
plus 1% (8.75% at December 31, 1998). The Agreement requires that the
Company shall maintain Tangible Net Worth of not less than $3.5 million,
shall maintain reasonable and customary insurance, and shall not, without
authorization of lender, undertake to lend money, invest in other entities
or guarantee debt of others during the term of the Agreement.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND QUARTERLY RESULTS OF OPERATION
FOR THE QUARTER ENDED DECEMBER 31, 1998
RESULTS OF OPERATIONS
MPSI reported net income of $95,000 or $.03 per share on revenues of $4.6
million for the quarter ended December 31, 1998 compared with a net loss of
$35,000 or $.01 per share on revenues of $4.8 million for the comparable quarter
last year. As discussed in more detail below, revenues were down slightly from
last year while margin percentages remained consistent with those reported for
the quarter ended December 31, 1997. The increase in net income results
primarily from decreased operating expenses and gains relating to foreign
exchange transactions in the Pacific Rim.
Revenues of $4.6 million for the first quarter of fiscal 1999 represent a
decrease of approximately 4% or $209,000 compared with last year. MPSI
maintained its North American business level, which included a new software
license agreement with a regional client. The Company's business in Latin
America and Europe during the quarter decreased as compared with last year's
quarter due to the timing of revenue on certain multi-year contracts. The
combination of petroleum deregulation in Japan and turmoil in the economies of
the Pacific Rim, where clients were undergoing reorganizations to cope with
weaker currencies and uncertainties in the banking systems, resulted in lower
revenues during the December 1998 quarter compared with December 1997. However,
new orders in the December 1998 quarter from Southeast Asia indicated a
resurgence of the Asian business which will begin to impact revenues and
profitability in the second fiscal quarter of 1999. The timing of long-term
software license agreements or renewals and market study orders can
significantly affect comparability of reported revenues for any fiscal quarter
and, therefore, may not accurately project a trend for the remainder of the
fiscal year.
Revenue and gross profit from the Company's pricing product line was $601,000
and $446,000, respectively, for the quarter ended December 31, 1998 as compared
to $210,000 and $174,000, respectively, for the comparable quarter last 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 world wide web. Included in expenses during the
quarter ended December 31, 1998 were costs of more than $97,000 related to these
initiatives (without revenue offset during start-up).
The Company's gross profit on information services during the quarter ended
December 31, 1998 increased to 42% as compared with 37% during the December 1997
quarter. MPSI has consistently implemented new technology in its information
services business, particularly over the last eight months, in order to
counterbalance rising labor costs. 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,
margins were favorably impacted by the signing of a new client late in the
quarter which allowed the company to leverage information from studies which
were previously completed. Software cost of sales, including software
amortization, decreased $128,000 as compared to the same period last year. This
change reflects the maturity 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. Upon completion of
these projects, amortization of capitalized costs should increase to levels more
comparable with the December 31, 1997 quarter.
Operating expenses in total for the quarter ended December 31, 1998 decreased
$281,000 (10%) as compared with the first quarter last fiscal year. General and
administrative expenses were up approximately $59,000 (9%) primarily as a result
of the timing of the payment of franchise taxes (which were reflected in the
second fiscal quarter last year) and income tax payments made on behalf of
certain expatriate employees. Marketing costs decreased approximately $247,000
(14%) resulting from the downsizing of certain international offices and other
personnel reductions through normal attrition during the latter part of fiscal
1998. The Company is evaluating the effectiveness of its marketing efforts to
determine what further managed attrition, if any, is required. Research and
development costs decreased approximately $93,000 (22%) as a result of higher
cost capitalization as explained below under Financial Condition and Liquidity.
9
<PAGE> 10
During the quarter ended December 31, 1998, the Singapore Dollar and the
Japanese Yen strengthened against the U.S. dollar resulting in foreign exchange
gains recognized on transactions invoiced to the Pacific Rim in those
currencies. Currency transaction gains for the first quarter of fiscal 1999 were
$27,000 compared with losses of $98,000 for the comparable quarter 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 of $125,000 (57% effective rate) on net income of $220,000 for the
quarter ended December 31, 1998 resulted from foreign withholdings ($111,000)
and taxes on income from foreign subsidiaries ($14,000) as compared to $36,000
($29,000 foreign withholdings and $7,000 tax on foreign subsidiaries) on losses
of $35,000 reported December 31, 1997. The effective U.S. tax rate for fiscal
1999 was reduced through the application of $154,000 of tax credits, carried
forward from prior years, against U.S. source income.
FINANCIAL CONDITION AND LIQUIDITY
Working capital of approximately $1.6 million during the quarter ended December
31, 1998 was comparable with $1.6 million at September 30, 1998 (but decreased
from the $2.8 million at December 31, 1997). A reduction of cash flow from
operations, as set forth in the Consolidated Statements of Cash Flow, is
consistent with historical trends in the Company's first fiscal quarter. This
results from most of the Company's clients utilizing the majority of their
capital budgets earlier in the calendar year and the result of holidays in the
first fiscal quarter which affect delivery and final billings. Trade receivables
net of associated deferred revenues at December 31, 1998 were comparable with
September 30, 1998. Trade accounts payable and accruals decreased approximately
$366,000 during the quarter ended December 31, 1998. The Company continues to
fund its activities primarily from operations but has utilized an additional
$830,000 of its available credit line during the quarter, bringing the
outstanding balance on the line to $1,180,000 at December 31, 1998. In line with
historical trends, management expects to substantially reduce the outstanding
balance during the second fiscal quarter of 1999. Backlog of $16.0 million at
December 31, 1998 increased approximately 18% from $13.6 million at September
30, 1998 as a result of several significant orders received from North American,
Japanese, and Southeast Asia customers late in the first quarter. The trend of
strengthening orders in Southeast Asia should result in improved profits later
in the fiscal year as these leveraged projects are completed. Backlog at
December 31, 1998 was comparable with the December 31, 1997 level.
As set forth in the Consolidated Statements of Cash Flow, MPSI expended
approximately $105,000 for capitalized programming of new software
products/versions during the quarter ended December 31, 1998 compared with
$81,000 during the same quarter last fiscal year. The higher capitalized costs
in the current quarter were the result of CAPS development for the Japanese
markets and re-engineering of the Company's core software system.
During the quarter ended December 31, 1998, the Company spent approximately
$84,000 on personal computer equipment and software as compared with $29,000 in
first fiscal quarter of 1997. Such expenditures were part of a plan initiated in
fiscal 1998 to upgrade internal systems and achieve Y2K compliance (see below).
No firm commitments had been made for additional computer equipment at December
31, 1998. The Company expects to upgrade present equipment, as needed,
throughout the remainder of the year through funding from operations.
Changes in stockholder's equity since September 30, 1998, are the result of
routine recognition of the results of operations for the quarter and variation
in the foreign currency translation adjustment relating to the consolidation of
foreign subsidiaries, brought about by the currency valuation benefits as
discussed above.
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.
10
<PAGE> 11
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.
Such evaluations should be completed by March 31, 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 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.
11
<PAGE> 12
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 - None
Item 5 -- Other Information - None
Item 6 -- Exhibits and Reports on Form 8-K.
Page
----
(a) Exhibit:
11.1 Earnings per share computation 15
27.1 Financial Data Schedule 16
(b) Reports on Form 8-K - No reports on such form were
filed during the quarter ended December 31, 1998.
12
<PAGE> 13
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 February 10, 1999 By /s/ Ronald G. Harper
----------------------- ------------------------------
Ronald G. Harper, President
(Chief Executive Officer) and
Director
Date February 10, 1999 By /s/ James C. Auten
----------------------- ------------------------------
James C. Auten, Vice President
(Chief Financial Officer)
13
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------- ------------ ----
<S> <C> <C>
11.1 Earnings Per Share Computation 15
27.1 Financial Data Schedule 16
</TABLE>
<PAGE> 1
EXHIBIT 11.1
EARNINGS PER SHARE COMPUTATION
Earnings per share calculations may be affected by the granting of stock options
under the Company's stock option plan. 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 diluted earnings
per share are the same for each period presented.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Three Months Ended December 31,
-------------------------------
Weighted Average Shares Outstanding 1998 1997
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common stock outstanding throughout the period 2,841,000 2,832,000
Weighted average exercised options - 5,000
Dilutive unexercised stock options (Treasury Stock Method):
Shares presumed issued at exercise ($1.00 in 1998; $2.25 to $5.50 in 1997) 81,000 197,000
Less: Shares repurchased with presumed proceeds at average per
share price ($1.09 in 1998; $5.48 in 1997) (74,000) (156,000)
- --------------------------------------------------------------------------------------------------------------------------
Weighted average shares outstanding 2,848,000 2,878,000
==========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
(a) (b)
Per Share Computations Weighted Per Share (a / b)
Results of Average --------------------------
Operations Shares 1998 1997
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income -Three Months Ended
December 31, 1998 $ 95,000 2,848,000 $ .03
Net loss -Three Months Ended
December 31, 1997 $ (35,000) 2,878,000 $ (.01)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 480
<SECURITIES> 0
<RECEIVABLES> 5,918
<ALLOWANCES> 0
<INVENTORY> 215
<CURRENT-ASSETS> 6,812
<PP&E> 6,024
<DEPRECIATION> 5,075
<TOTAL-ASSETS> 10,514
<CURRENT-LIABILITIES> 5,250
<BONDS> 0
0
0
<COMMON> 142
<OTHER-SE> 3,576
<TOTAL-LIABILITY-AND-EQUITY> 10,514
<SALES> 4,553
<TOTAL-REVENUES> 4,553
<CGS> 1,862
<TOTAL-COSTS> 4,409
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13
<INCOME-PRETAX> 220
<INCOME-TAX> 125
<INCOME-CONTINUING> 95
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 95
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
