================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-K/A
AMENDMENT NO. 1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ____________ to ____________
Commission file number 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
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $.05 PAR VALUE
----------------------------
(Title of Class)
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
------- -------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements or
any amendment to this Form 10-K. [X]
The aggregate market value of common stock held by non-affiliates of the
registrant on December 31, 2002 was approximately $143,000.
The number of shares outstanding of the registrant's common stock was
2,911,781 shares of $0.05 Par Value Common Stock as of December 31, 2002.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) and (b) Identification of directors and officers.
The directors and executive officers of the Company are as follows:
<Table>
<Caption>
NAME AGE POSITION
- ----------------------------- ---- ---------------------------------------------
Ronald G. Harper(1) 64 Chairman of the Board of Directors,
President and Chief Executive Officer
Bryan D. Porto 53 Group Vice President, Regional Sales
Bryan D. Gross 45 Group Vice President, Technology
Richard K. Abrams 55 Group Vice President, Regional Sales
James C. Auten 54 Group Vice President, Chief Financial Officer
William H. Webb 62 Gen. Mgr., Corporate Human Resources
John C. Bumgarner, Jr.(1)(2) 60 Director
Joseph C. McNay(1)(2) 68 Director
John J. McQueen(2) 81 Director
</Table>
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
Effective October 15, 2002, Dr. David L. Huff resigned from the
Company's Board of Directors after twenty years of service. Dr.
Huff recently retired as a professor from the University of Texas
and chose to pursue other business opportunities. His resignation
is not the result of any disagreement with the Company or its
management.
(c) Identification of certain significant employees.
Not applicable.
(d) Family relationships.
Not applicable.
(e) Business experience.
Mr. Harper, who founded the Company in 1970, has served as its
President, Chairman of the Board and Chief Executive Officer since
inception.
Mr. Porto was appointed Group Vice President of Regional Sales
for the developing markets in 2002. He previously served as Group Vice
President of Operations and Leveraged Diversification, Executive Vice
President of MPSI's Petroleum Service Division and as Sr. Vice President -
Retail Petroleum. He has served in marketing and network planning positions
since joining MPSI in the Rio de Janeiro office in 1985. Mr. Porto was
named to MPSI's Board of Directors in June 1998.
Dr. Gross was appointed Group Vice President of Technology in
November 1999. Prior to this position, he led the Core Product
Re-engineering effort and Corporate Research activities. Dr. Gross joined
MPSI in 1984 as Project Supervisor in Network Planning. He joined QuikTrip
Corporation in 1991 as Manager of Statistical Research and Site Selection,
returning to MPSI in 1997 as General Manager of Corporate Technology.
2
Mr. Abrams was appointed Group Vice President, Regional Sales in
2001. Prior to joining MPSI in 2000 as Managing Director of Europe and
Africa, he served in various executive positions with Caltex Corporation
around the world. Mr. Abrams currently resides in Bristol, England.
Mr. Auten was appointed Vice President and Chief Financial
Officer in 1996. Mr. Auten joined MPSI in 1984 as Corporate Controller and
held such position until December 1992 when he was appointed Principal
Accounting Officer. Prior to joining MPSI, Mr. Auten was with KPMG Peat
Marwick accounting firm.
Mr. Webb joined MPSI as General Manager, Corporate Human
Resources on April 8, 1996. Previously, Mr. Webb spent 14 years with
Amerada Hess Corporation as Manager of Personnel Administration.
Mr. Bumgarner recently retired from Williams Communications where
he served as Chief Operating Officer. Prior to that, he served as Sr. Vice
President of Corporate Development and Planning for The Williams Companies
and President of Williams International. He is also a director of Energy
Partners, Ltd. and James River Coal Company. He has served on MPSI's Board
since 1982.
Mr. McNay has been the President, Director and Chairman of the
Board of Essex Investment Management Company, Inc., a company engaged in
investment and advisory services, since 1976. Mr. McNay is also a director
of Softech, Inc. and Alpha 1 Biomedical, Inc., which are publicly held
companies. He has served on MPSI's Board since 1982.
Mr. McQueen has been in the private practice of law in the Tulsa
area since 1959. He has also served as a certified public accountant with
KPMG Peat Marwick, as a tax specialist with Warren Petroleum Corp., and as
controller of Davis Investments, a company engaged in oil and real estate
activities. He has served on MPSI's Board since 1982.
(f) Involvement in certain legal proceedings.
Not applicable.
(g) Promoters and control persons.
Not applicable.
(h) Compliance with Section 16(a) of the Exchange Act.
Based upon a review of Forms 3, 4 and 5 furnished to the Company with
respect to its most recent fiscal year, the Company has determined that
reports required pursuant to Section 16(a) of the Securities Exchange Act
of 1934, as amended, were filed on a timely basis.
3
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table. The following table summarizes the
compensation paid over the last three completed fiscal years to the Company's
CEO and the other executive officers of the Company who received compensation of
$100,000 or more during the fiscal year ended December 31, 2002:
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG TERM COMPENSATION
-------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------ -------------------- --------
OTHER ALL
ANNUAL OTHER
COMPEN- RESTRICTED LTIP COMPEN-
NAME AND SALARY BONUS SATION STOCK OPTIONS/ PAYOUTS SATION
PRINCIPAL POSITION YEAR ($) ($) ($)(1) AWARDS SARS (#) ($) ($)(2)
- ------------------------------- -------- -------- -------- -------- ---------- -------- -------- --------
Ronald G. Harper .............. 2002 $231,285 -- $ 9,000 -- -- -- $ 11,318
Chairman of the Board, 2001 220,298 -- 9,000 -- -- -- 11,218
President & CEO 2000 246,195 -- 8,716 -- -- -- 6,218
Bryan D. Porto ................ 2002 $147,791 -- -- -- -- -- $ 5,421
Vice President Operations and 2001 145,002 -- -- -- -- -- 5,719
and Leveraged Diversification 2000 172,329 -- -- -- -- -- 1,021
James C. Auten ................ 2002 $107,105 -- -- -- -- -- $ 2,609
Vice President Corporate Svcs 2001 105,482 -- -- -- -- -- 2,774
and Chief Financial Officer 2000 114,851 -- -- -- -- -- 1,021
Bryan D. Gross ................ 2002 $151,315 $ -- -- $ -- -- $ 5,837
Vice President Technology 2001 145,340 10,000 -- -- -- -- 4,240
2000 147,275 -- -- -- 3,000 -- 898
Richard K. Abrams ............. 2002 $144,996 $ -- $ 6,888 $ -- -- -- $ 13,861
Vice President Convenience 2001 95,922 4,929 6,888 10,000 -- -- 5,909
Retailing 2000 95,922 -- 6,888 -- -- -- 2,099
</Table>
(1) Represents automobile lease paid/auto allowance.
(2) The components of "All Other Compensation" for the fiscal years ended
December 31, 2002, September 30, 2001, and September 30, 2000 include (a)
Company matching contributions to the Company's 401(k) defined contribution
plan (Mr. Harper--$5,100, $5,000, and $0; Mr. Porto -- $4,400, $4,698, and
$0; Mr. Auten--$1,588, $1,753, and $0; and Dr. Gross--$4,816, $3,219, and
$0 in 2002, 2001, and 2000, respectively); and (b) supplemental life
insurance premiums paid by the Company for each of the reported fiscal
years (Mr. Harper--$6, 218; Mr. Porto--$1,021; Mr. Auten--$1,021); Dr.
Gross received $1,021, $1,021, and $898 in 2002, 2001, and 2000,
respectively).
Mr. Abrams is a citizen of the United Kingdom and participates in
comparable plans --Company match for the pension plan was $9,360 in 2002
and $4,329 in 2001. Supplemental life insurance premiums paid by the
Company were $4,501 in 2002, $1,580 in 2001 and $2,099 in 2000.
4
Options Exercised Table. The following table sets forth information
concerning each exercise of stock options by the named executive officers during
the last completed fiscal year together with information concerning unexercised
options held by the named executive officers:
<Table>
<Caption>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTIONS/SAR VALUES
(a) (b) (c) (d) (e)
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Value Options/SARs at FY-End In-the-Money Options/SARs
on Exercise Realized (#) at FY-End ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------- ----------- -------- -------------------------- --------------------------
James C. Auten * * -- / -- -- / --
Bryan D. Porto * * 10,000/-- -- / --
William D. Webb * * -- / -- -- / --
Bryan D. Gross * * 16,000/-- -- / --
Richard K. Abrams * * 6,667/3,333 -- / --
</Table>
*None exercised during the period.
EMPLOYMENT CONTRACTS AND SEVERANCE ARRANGEMENTS
The Company maintains a severance policy applicable to all full-time
regular employees with at least one year of full-time service. Eligible
employees are those who are terminated as the result of (1) a reduction of the
Company's work force, (2) elimination of a job or position, (3) inability to
satisfactorily perform required responsibilities, or (4) relocation of
applicable Company facilities. The amount of severance paid is based upon the
employee's base salary and length of service, and includes payment for vested
but unused vacations and pro rated automobile allowances, if applicable. The
only named executive officer who would receive aggregate severance in excess of
$100,000 under the current policy is Mr. Ronald G. Harper. Mr. Harper's
aggregate severance would be approximately $120,000 at December 31, 2002.
Subsequently, however, in March 2003, the Company revised its severance policy
for all employees. As a result of that revision, no employee is entitled to
severance in excess of $100,000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Ronald G. Harper, Chief Executive Officer of the Company, is the only
member of the Compensation Committee who is also an employee or officer of the
Company.
DIRECTORS' COMPENSATION
Members of the Board of Directors who are employees of the Company receive
no additional compensation as a result of their service as directors. Directors
who are not employees of the Company are compensated at the rate of $1,500 for
each board meeting attended and are reimbursed for any out-of-pocket expenses
incurred in attending meetings.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 31, 2003, as to
shares of Common Stock beneficially owned by the directors (all of whom are
nominees for another term), certain executive officers, the directors and
officers of the Company as a group, and certain persons known to the Company to
own beneficially more than five percent of the Common Stock. Except as otherwise
indicated, each person has sole investment and voting power with respect to the
shares shown. Ownership information is based upon information furnished by the
respective individuals.
5
<Table>
<Caption>
BENEFICIAL OWNERSHIP
OF COMMON STOCK
-----------------------------
NUMBER PERCENT
NAME OF COMMON STOCKHOLDER OF SHARES OF CLASS
- -------------------------- ------------ ----------
Ronald G. Harper(2) ........................................ 1,266,724(1) 43%
4343 South 118th East Avenue
Tulsa, Oklahoma 74146
John C. Bumgarner, Jr ...................................... 205,322 7%
2100 South Utica, Penthouse
Tulsa, Oklahoma 74114
Joseph C. McNay ............................................ 242,722 8%
125 High Street, 29th Floor
Boston, Massachusetts 02110
Bank of Oklahoma, N.A ...................................... 284,714 10%
P. O. Box 2300
Tulsa, Oklahoma 74192
RS Investment Management Co., LLC(3) ....................... 225,838 8%
388 Market Street, Suite 200
San Francisco, California 94111
Sanford Orkin .............................................. 222,222 8%
3414 Peachtree Road, N.E., Suite 236
Atlanta, Georgia 30326
James C. Auten(2) .......................................... 1,854 *
Bryan D. Porto(2) .......................................... 13,902 *
Bryan D. Gross(2) .......................................... 16,893 *
Richard K. Abrams(2) ....................................... 6,667 *
All officers and directors as a group (7 persons) .......... 1,754,417 60%
</Table>
* Less than 1%.
(1) Includes 138,137 shares of Common Stock held in trust for the benefit of
Mr. Harper's family and 479,209 shares held in trust for the benefit of
certain charities. Mr. Harper has sole voting and investment power over all
of the trust shares except for 135,637 shares over which he shares
investment or voting power. Mr. Harper's immediate family own 257,140
shares. Mr. Harper disclaims beneficial ownership of these trust and
family-held shares.
(2) The indicated individuals are executive officers of the Company.
(3) As reported in the Schedule 13G filed by the named person (among others),
voting and dispositive power over the listed shares may be deemed shared
among the RS Value Group, RSIM, LP, the RS Orphan Fund, LP and the RS
Orphan Offshore Fund and the named person by reason of corporate
relationships. Each such beneficial owner has the same address as that set
forth above for the named person.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In February 1999, the Company obtained an exclusive license to incorporate
in a new suite of products a software modeling engine, Huff 2000, developed by
Dr. David L. Huff, a member of the Company's Board of Directors since 1982. Upon
Dr. Huff's resignation from the Board effective October 2002, this agreement was
cancelled.
6
ITEM 14. CONTROLS AND PROCEDURES
Within the 90 days prior to the date of this report, we carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive officer and the Company's
Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures, as such term is defined in Rules 13a-14 and 15d-14 promulgated under
the Securities and Exchange Act of 1934, as amended. Based upon the evaluation,
the Company's Chief Executive Officer and the Company's Chief Financial Officer
concluded that our disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company (including its
consolidated subsidiaries) that is required to be included in our periodic SEC
filings.
There have been no significant changes in our internal controls or in other
factors that could significantly affect those controls subsequent to the date of
such evaluation. There were no significant deficiencies or material weaknesses
identified in the evaluation and therefore, no corrective actions were taken.
7
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant, a corporation organized and existing under
the laws of the State of Delaware, has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Tulsa,
State of Oklahoma, on the 29th day of April 2003.
MPSI SYSTEMS INC.
By /s/ Ronald G. Harper
------------------------------
Ronald G. Harper
Chairman of the Board,
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1934, this Report has
been signed below by the following persons on behalf of the Registrant, in the
capacities and on the date indicated.
<Table>
/s/ Ronald G. Harper Chairman of the Board, April 29, 2003
- ------------------------------ President and Chief
Ronald G. Harper Executive Officer
/s/ James C. Auten Vice President and Chief-- April 29, 2003
- ------------------------------ Financial Officer
James C. Auten
/s/ John C. Bumgarner, Jr. Director April 29, 2003
- ------------------------------
John C. Bumgarner, Jr.
/s/ Joseph C. McNay Director April 29, 2003
- ------------------------------
Joseph C. McNay
/s/ John J. McQueen Director April 29, 2003
- ------------------------------
John J. McQueen
/s/ Bryan D. Porto Director April 29, 2003
- ------------------------------
Bryan D. Porto
</Table>
The Company's proxy statement for the Annual Meeting of Stockholders to be
held later this year has not yet been sent to stockholders of record. Copies of
such materials will be furnished to the Commission at such time as they are sent
to stockholders.
8
CERTIFICATIONS
I, Ronald G. Harper, President and Chief Executive Officer, certify that:
1. I have reviewed this annual report on Form 10-K as amended of MPSI Systems
Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: April 29, 2003
/s/ Ronald G. Harper
--------------------------
Ronald G. Harper
Chief Executive Officer
9
I, James C. Auten, Chief Financial Officer, certify that:
1. I have reviewed this annual report on Form 10-K as amended of MPSI Systems
Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this annual report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: April 29, 2003
/s/ James C. Auten
--------------------------
James C. Auten,
Chief Financial Officer
10
INDEX TO EXHIBITS
<Table>
<Caption>
EXHIBIT
NUMBER EXHIBIT
-------- -------
99.1 -- CEO/CFO Certifications
</Table>