<PAGE>   1

                                                                   Page 1 of 48
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                               -----------------


                                   FORM 10-K
(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 SEPTEMBER 30, 1996
                                       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.)

                8282 SOUTH MEMORIAL DRIVE, TULSA, OKLAHOMA 74133
             (Address of principal executive offices and zip code)

       Registrant's telephone number, including area code (918) 250-9611

       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. [ ]

      The aggregate market value of the voting stock held by non-affiliates of
the registrant on December 5, 1996 was approximately $2,240,000.

     The number of shares outstanding of the registrant's common stock was
2,793,164 shares of $0.05 Par Value Common Stock as of December 5, 1996.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the definitive Proxy Statement for the Annual Meeting of
Shareholders presently anticipated to be held on January 30, 1997, are
incorporated by reference into Part III. The Registrant's Annual Report to
Stockholders for fiscal year ended September 30, 1996 is incorporated by
reference into Parts I, II and IV.
===============================================================================


<PAGE>   2





                               MPSI SYSTEMS INC.
                                   FORM 10-K

                                    CONTENTS


<TABLE>
<CAPTION>
                                                                                         PAGE
                                                                                         ----
<S>      <C>         <C>                                                                  <C>
PART I

         ITEM 1.     Business..................................................            3

         ITEM 2.     Properties................................................           11

         ITEM 3.     Legal proceedings.........................................           12

         ITEM 4.     Submission of matters to a vote of security holders.......           12


PART II

         ITEM 5.     Market for the registrant's common equity and related
                     stockholder matters.......................................           12

         ITEM 6.     Selected financial data...................................           12

         ITEM 7.     Management's discussion and analysis of financial
                     condition and results of operation........................           12

         ITEM 8.     Financial statements and supplementary data...............           12

         ITEM 9.     Changes in and disagreements with accountants on 
                     accounting and financial disclosure.......................           13


PART III

         ITEM 10.    Directors and executive officers of the registrant.......            13

         ITEM 11.    Executive compensation....................................           13

         ITEM 12.    Security ownership of certain beneficial owners and
                     management................................................           13

         ITEM 13.    Certain relationships and related transactions............           13


PART IV

         ITEM 14.    Exhibits, financial statement schedules, and
                     reports on Form 8-K.......................................           13


Signatures           ..........................................................           20

Index to Exhibits    ..........................................................           21

</TABLE>


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PART I


ITEM 1.    BUSINESS

GENERAL

     The operations of MPSI are confined to one business segment wherein it
provides decision support products and services in the form of (1) proprietary
computer software, (2) geographically specific information databases (market
studies), and (3) consulting services. These products and services are designed
to meet retail business planning requirements of its clients.

     From its inception in 1970 until it became a publicly-held company in
1983, the Company's decision support services were directed primarily at
planning requirements for petroleum companies and other multi-outlet retailers
who were concerned with retail site selection and retail network optimization.
MPSI products provided computerized models of specified retail markets which
enabled its clients to predict sales volumes at proposed new retail sites,
while at the same time indicating the effects of each new outlet on sales
volumes at both the client's and competitors' existing outlets. During this
period, the Company's operations were characterized by limited geographic
diversification, centralized management, centralized market study production
and significant dependence on the petroleum industry.

     With the 1983 capital infusion from its initial public offering, the
operating plan of the Company expanded. In order to diversify and maintain
growth, management initiated programs intended to expand the Company's
geographic presence and its client mix. Such programs sought to reduce MPSI's
exposure to economic factors in a particular country and to lessen the
percentage of its total revenues which were attributable to the petroleum
industry (while maintaining steady growth in that core business). Accordingly,
during the period from 1983 to 1987, MPSI expanded its European operations and
opened new offices in Singapore, Japan and Brazil. This expansion led to
decentralization of management and the market study production operations. In
1986, the Company acquired RSI, a company headquartered in Minneapolis,
Minnesota, which offered products to retail food clients that were similar to
those offered by MPSI to the petroleum industry. This acquisition combined with
expanded retail planning software for banks, restaurants and governmental
clients, enabled MPSI to diversify its revenue portfolio such that revenues
from the petroleum industry, as a percent of total revenues, dropped from 90%
in 1985 to 75% in 1988. During this period, MPSI's products continued to be
directed toward site selection, although enhancements such as artificial
intelligence technology moved the Company's products toward operational
decision support capabilities.

     In 1988 MPSI undertook significant changes aimed at accelerating the
Company's revenue growth, product expansion and diversification of its customer
base. MPSI reorganized its existing business unit and acquired Execucom Systems
Corporation ("ESC"). The ESC acquisition resulted in (1) a more diverse family
of products including financial planning and executive information systems, (2)
a greater number of client industries, and (3) an expanded international
presence. Although revenues from petroleum clients continued to be important to
the Company, they accounted for approximately 53% of consolidated revenues in
1990 because of the dilutive effect of ESC's non-petroleum revenues. The
concurrent restructuring of the MPSI business unit resulted in the realignment
of managerial responsibilities to correspond with the distinct client
industries it served. This realignment centralized management responsibilities
such that functional units were again controlled from the United States,
regardless of where the personnel might be located. Although not brought about
directly as the result of the changes noted above, in 1989 management also
decided that the computer workstation should replace the mainframe computer as
the Company's principal product delivery and product development hardware. This
action was taken in order to reduce internal operating costs associated with
the mainframe, facilitate product development and communications using
workstation networks and enhance product distribution.

     The period from 1988 to 1991 was characterized by significant product
development. The development activities were driven by two principal needs. The
MPSI unit needed new products and services which went beyond site selection to
operational decision support. The ESC unit, being in a highly competitive
environment, needed to regularly upgrade existing products incorporating new
technology in order to retain its maintenance revenue stream. 

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<PAGE>   4

These requirements coupled with additional marketing personnel and programs
contributed to a substantial increase in the Company's debt through early 1991.

     In March 1991, effective for accounting purposes at February 28, 1991, the
Company sold substantially all of the net operating assets of ESC to Comshare,
Incorporated. This action was necessitated because of poor performance by the
ESC unit, the weakening U.S. economy, declines in MPSI revenues due to the
effects of the Persian Gulf conflict and limitations on the Company's cash
resources. The sale resulted in a substantial loss on disposition, but
generated approximately $4.5 million of cash which was used to reduce debt.

     Concurrent with the ESC sale, management scaled back the MPSI business
unit to refocus on the core petroleum industry products and clients in order to
begin liquidating the remaining debt. Additionally, the Company wrote down
certain capitalized software development costs previously carried in the
consolidated balance sheet which related to products developed for industries
that had not met profit goals.

     The corporate restructuring initiated in 1991 eventually encompassed
further restructuring throughout the three-year period ended September 30,
1993. The initial 1991 restructuring involved a 30% reduction of the work force
in England, closure of the Singapore production center with termination of
virtually all employees in that facility, and reduction of management personnel
in the United States. Substantially all market study production and software
development activities were consolidated back into the United States. Portions
of these activities had been previously performed in the Company's Singapore
and England offices, in addition to the U.S. corporate headquarters. In spite
of the cost reductions and production streamlining achieved as the result of
1991 actions discussed above, consolidated revenues continued to decline during
fiscal year 1992 forcing the Company to further reduce its work force in the
United States and in England. Economic conditions continued to worsen for MPSI
during fiscal year 1993. The Company again reduced its work force and overhead
expenses throughout the fiscal year. Approximately 106 employees (30% of work
force) were terminated or resigned, and the Company negotiated a reduction in
the space occupied by its corporate headquarters. Further, the Company closed
certain foreign sales offices and moved to less expensive office space in
several satellite offices.

     During the fourth quarter of fiscal year 1993, the Company completed a
significant recapitalization transaction and eliminated its corporate debt
(other than trade payables and accrued liabilities). Among other benefits, the
recapitalization allowed the Company to redirect funding from debt service to
product development. Beginning in 1994 and in response to client input, MPSI
committed substantial funding and development efforts toward release of a new
generation of MPSI decision support products. Early versions of these products
were completed for commercial release in fiscal year 1995 (see discussion of
CAPS(TM), OPS(R) and PVO(R) software under "Product Development").

     During fiscal years 1994 and 1995, the Company experienced increased
stability in its regional petroleum industry markets as clients, except in
Europe, generally completed restructuring and focused on the retail aspects of
their businesses. Although European operations continued to be sluggish,
revenues in North America, South America and the Pacific Rim grew. Several U.S.
oil companies who had been recently inactive with MPSI placed significant
market study orders in 1994 and 1995 indicating interest in MPSI's new software
products which targeted operational and pricing decision support.

          Although the petroleum industry utilization of MPSI's products had
been somewhat revitalized, the Company's retail food line of business, which
was serviced by RSI, never developed to the point of being a profitable
endeavor and had sustained losses regularly since its acquisition. As a result,
on September 1, 1994, RSI sold all of its noncash assets to Dakota Worldwide
Corporation ("Dakota"), an unaffiliated third party, and the Company
discontinued its services and products to that class of customer. See Note 2 to
the Consolidated Financial Statements.

          Although MPSI successfully launched initial versions of new products
in 1994 and 1995, such products principally were directed at the North American
market. New versions of CAPS(TM) for European and South American clients were
scheduled for release in the first quarter of fiscal year 1996 but were
ultimately delayed approximately eight months until June 1996. The delay in
release was partially attributable to MPSI's desire to accommodate client
requests for additional functionality and multi-product modeling capabilities.
However, a portion of the delay 

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<PAGE>   5

was attributable to MPSI's software development methodology and organizational
structure. The delayed release of the two new CAPS(TM) versions significantly
hampered MPSI's sales activities in the European and South American regions and
contributed to the lower 1996 revenues and profitability compared to 1995. In
order to address the organizational implications indicated above, MPSI
undertook a significant reorganization in July 1996. The primary objectives of
the reorganization were to (1) promote interdepartmental cooperation in
software development, (2) improve accountability and teamwork, and (3) insure
timely delivery of future software versions. Although not undertaken
specifically in order to reduce staffing, the reorganization resulted in
approximately an 8% staff reduction for which MPSI took a $215,000 charge
against its 1996 fourth quarter earnings. Management believes that the new
organizational structure positions MPSI for better quality, more timely
delivery and better client service going forward.

PRODUCTS AND SERVICES

     The Company markets its services in the United States, Europe, Africa,
Canada, South America, Central America, the Caribbean Basin and the Pacific
Rim. See Note 8 to the Consolidated Financial Statements for financial
information addressing foreign and domestic operations and export sales.
Generally, the Company's marketing activities center on personal presentations
to existing and prospective clients, client referrals, proposal submissions,
selective mailings, limited print advertising, seminars and trade show
participation. Most of the Company's clients are identified by the Company's
direct sales force.

     The Company's operating cycle and cash flow are driven principally by the
timing of client orders for market studies. Many North American petroleum
clients budget on a calendar year basis. Consequently, MPSI generally receives
a concentration of orders in December through February from such clients. Many
European and Pacific Rim clients operate on March 31 fiscal periods resulting
in significant orders during the period May through June. The timing of market
study production and the resulting revenues are subject to a degree of
fluctuation. Quarterly revenues can also be impacted by the timing of software
license agreements. Accordingly, management believes that quarterly results may
not be indicative of results for full fiscal years.

     Economic conditions throughout the world have varying degrees of impact on
the Company's products. Volatile oil prices, unsettled economic conditions and
retail consolidation affected the Company's volume of new business in fiscal
1996. The Company is unable to predict the extent to which these conditions
will continue to affect its business during 1997. At present, however, the
Company is realigning its products and services to increase profitability,
either by evaluating alternative methods for gathering market information in
order to contain future expenses or by development of ancillary products and
services which will allow the Company to leverage market information through
sales to companies who cannot afford a commitment to MPSI's more expensive main
line products. The Company anticipates growth in Southeast Asia during fiscal
1997 and increased retail petroleum activity in the U.S. and South American
markets.

     After adjustment to remove the effects of RSI, which business was
discontinued in September 1994 as set forth above, approximately 97%, 96%, and
99% of revenues were derived from the petroleum industry during the fiscal
years ended September 30, 1996, 1995, and 1994, respectively. In each of the
fiscal years 1996, 1995 and 1994, MPSI derived revenues representing 10% or
more of consolidated revenues from certain clients, together with their
affiliates, as set forth below (in millions of dollars):

<TABLE>
<CAPTION>
                            1996            1995            1994
                            ----            ----            ----
                        AMOUNT    %     AMOUNT   %      AMOUNT    %
                        ------    -     ------   -      ------    -
<S>                     <C>      <C>    <C>      <C>    <C>      <C>
Exxon/Esso/Imperial     $  6.3   29     $  4.4   19     $  3.8   19
Texaco/Caltex           $  2.7   12     $  1.3    6     $  3.0   15
Shell                   $  1.5    7     $  2.8   12     $  2.1   11
Amoco                   $  2.1   10     $  2.5   11     $  1.4    7
</TABLE>


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<PAGE>   6

     The Company would be adversely affected if several petroleum industry
clients curtailed their long-term usage of MPSI products.

     The following table shows the percentage of total revenue from continuing
operations that the Company derived from various sources during each of the
last three fiscal years.

-------------------------------------------------------------------------------
               REVENUE DERIVED FROM KEY PRODUCTS AND SERVICES (%)
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                               1996   1995   1994
                                               ----   ----   ----
<S>                                             <C>    <C>    <C>
Database construction (market studies)          71     70     65
Software licenses                                2      5     12
Software maintenance agreements                  6      5      7
Consulting, educational, and other services     21     20     16
</TABLE>

     Described below are the computer applications software, information
databases and other services currently provided by the Company.

  Retail Planning

     Until 1995, the Company's primary retail planning applications software
was the Retail Planning System(R) ("RPS"). See "Product Development" for
discussion of three major enhancements of RPS scheduled for commercial release
in fiscal years 1996 and 1997. In fiscal year 1995, MPSI released the first
version of its new CAPSa software for use by North American clients. This
country-specific software interacts with an information database (market study)
to construct a mathematical model of a retail market. The enhanced systems
support client needs in three areas:

          Short-term pricing issues are addressed by assisting the client with
     daily pricing decisions at retail outlets that optimize profit while
     maintaining target sales volumes. The system also aids with the
     establishment of supply/demand-balanced trade zones to reduce rapid
     geographic deterioration in pricing.

          Medium-term operational issues are addressed by systematic
     forecasting of retail sales volume changes resulting from operational
     changes (such as hours of operation and merchandising practices), by
     counselling dealers as to pricing, merchandising and operational practices
     and by providing territory-wide planning for anticipated retail sales
     volumes, pricing and operations.

          Long-term capital investment issues are addressed in the areas of (1)
     new retail site location where the system provides an objective measure
     for comparing available sites based on competition and convenience to
     demand, (2) identification of outlets to divest where the system isolates
     and evaluates client locations that have poor performance, (3)
     identification of outlets to be rebuilt by identifying sales potential to
     be realized by remodeling or reformatting specified outlets and (4)
     assessing multiple profit centers by forecasting the potential benefits of
     retailing complementary products and services.

     Software licensing agreements for the RPS and/or CAPS(TM) software
(including ancillary products) generally have multi-year (generally five year
agreements) noncancellable terms. These agreements offer the client an
installment payment option requiring a payment upon execution and annual
payments on the succeeding anniversary dates of the agreement. The software can
be used by the client for a particular industry (such as petroleum) and a
particular geographic market (such as Japan). Also, the agreement contains
broad restrictions on the use and disclosure of the software by the client. See
"Trademarks, Copyrights, and Licenses" below. Modifying the software typically
involves changes in the weighting of various supply and demand factors or the
addition of a new factor as the result of changes in the marketplace.

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<PAGE>   7

     MPSI provides full maintenance (postcontract customer support) services
for the RPS and, where necessary, training of and consultation with client
staff. Software licenses, maintenance and optional consulting services are set
out separately in each multi-year license agreement. The agreement states that
any company-sponsored modification to the software during the postcontract
customer support period will be provided to the client at no additional cost.
Prices for the CAPS(TM) software in the United States are based upon formulas
which address geographical boundaries, population, number of automobiles and
other factors. Prices for the RPS and/or CAPS(TM) software applicable to
foreign countries are based on a percentage of the United States pricing.

  Information Databases

     The Company also constructs the market study databases that are the
primary informational sources used by the retail planning software. The
database construction process involves acquisition of geographic digitized
mapping, traffic counts, and demographic demand data from governmental agencies
or independent suppliers, on-site survey of retail outlet supply information by
MPSI personnel or contract surveyors, collation of all demographic demand and
supply information into specified data layout, data editing and quality control
checking, and preparation of the client-specific deliverables. Separate
contracts govern each database order by a client and generally require advance
payments ranging from 35 percent to 70 percent of the total sales value. The
amount of the required prepayment is determined principally by the client's
delivery requirements. There is no retainage provision relative to these
production-type contracts. These databases are arranged and presented in six
types of studies.

          Constantly Current Market Studies ("CCMS"). These studies are used by
     clients who possess a large number of retail sites and who wish to analyze
     market conditions and evaluate site locations in metropolitan areas on a
     regular basis. The supply and demand data used in this type of study is
     collected by the Company. This type of study provides clients with a
     series of consecutive database updates over a specific time period,
     generally five years. Clients agree to pay for the CCMS in periodic
     installments. It is tailored to individual client needs, and pricing is
     determined in part by the number of subscribers to a particular market
     during the commitment period and offers clients discounts for their
     multi-year commitments.

          Quality Partnership Studies ("QP"). These study programs, like the
     CCMS studies, offer clients the opportunity to regularly update market
     study information on an annual basis. However, in the QP program, all
     clients participate in the updating process by providing regular
     information about changes (new outlets, new brands, rebuilt outlets, etc.)
     in the market. MPSI gathers information relative to these changes and
     updates the database which otherwise remains unchanged. The lower update
     costs are passed on to the client participants in the form of lower annual
     update prices. Although the updates are not as extensive as full CCMS
     updates, clients are able to track the effects of major market changes
     using QP's.

          Scheduled Market Area Studies ("SMAS"). These studies are similar to
     the CCMS except that the clients do not commit to a series of consecutive
     database updates over a specific time period. These studies are usually
     scheduled by one client and offered to additional clients on a
     subscription basis. While each study uses a single demand-side database,
     the final database provided to each client is unique.

          Market Area Studies ("MAS"). These studies are similar to the SMAS
     except they are sold to a single client. Portions of the demographic data
     can generally be used as a major part of other studies in the same market
     for clients in the same or comparable retail industries.

          Mini-Market Area Studies. These studies are similar to the MAS except
     the area studied does not contain more than 75 outlets. Likewise, the
     accompanying study deliverables are scaled down.

          Single Site Studies. These studies are used to evaluate market
     conditions or the effects of various operating decisions at a specific
     location within a specified geographic area.




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<PAGE>   8


  Other Products and Services

     Licensed software clients may utilize the retail planning software and
information databases on their own computer facilities, may dial in to MPSI's
computers and use the software interactively (subject to certain usage
restrictions),or may elect to have MPSI run tactics (that is, pose "what if"
questions) on MPSI's computers. In cases where software is installed on client
computers, the Company charges for installation of the software and training
the client's personnel. A client may then run unlimited tactics on its own
equipment. If tactics are run on the Company's computers, the client pays a fee
per tactic. Clients who have entered into long-term user agreements are
entitled to discounts on databases and on tactics.

     MPSI introduced two new "data" products during fiscal year 1995 which were
designed to leverage market information already in MPSI's inventory or allow
clients to contract for customized data collection by MPSI. The Quest product
allows MPSI clients to obtain point-in-time retail outlet information either
relative to MPSI's standard market study boundaries in a given geographic
market or to establish specialized market boundaries or specialized data
requirements for an additional fee. MPSI's PriceTracker(TM) product allows
clients to obtain high quality, timely retail pricing information on a
recurring basis in order to track trends in the marketplace. Such products were
introduced partially in response to competitors who attempt to infiltrate
MPSI's client base by initially providing low-cost market data. The
PriceTracker(TM) product is currently utilized by clients only in the United
States. Quest services have been supplied in Europe, South Africa, and the
United States, among other other countries. These products, while not intended
to be a material portion of MPSI's business, have been well received by clients
needing lower cost data.

     Other products and services provided by the Company include litigation
support; determination of petroleum price zones and key competitors; regular
tracking of petroleum prices using geographic information systems for user
analyses; retail consulting; consumer research; and customized retail outlet
surveys. Certain services are complementary to retail planning services. For
example, the databases provided as part of the retail planning services may be
linked with other data supplied by the client. This data could then be
processed interactively through geographic information system software which
manages and displays information in a variety of graphic and map formats.

COMPETITION

     Since its inception in 1970 the Company has provided comprehensive
applications software and database systems, primarily to the retail petroleum
industry, and currently has more than 175 multinational clients in 73
countries. There has recently been a worldwide trend toward competitive product
development of this type due to the availability of computer resources and
acceptance of retail modeling theory. The Company believes its competition lies
in two areas: first, in the market research staffs of petroleum companies or
potential customers who develop and manage their own software and data; and
second, in consulting and research companies which compete for portions of the
Company's business.

     The Company has found that the market research staffs of some large
petroleum companies continue to concentrate on in-house data gathering and site
selection methods, while other companies with more limited resources must
consider low cost alternatives for obtaining market information. It has been
MPSI's experience that clients often encounter substantial cost barriers
relative to internally developed systems. Without the economies of scale, data
gathering expertise and modelling sophistication that MPSI has obtained during
its 25-year existence, clients often find that systems developed in house are
expensive to develop, expensive to maintain given changing market conditions,
require market information with an inherent degree of accuracy which is
difficult to obtain, and that the results of such systems do not justify the
associated costs and effort. Additionally, as clients or potential clients
struggle to manage operating costs and consider outsourcing certain activities
where economically feasible, the capabilities of companies like MPSI offer an
attractive alternative to internal systems. Because of the trend in large
companies to outsource certain functions and because of the growth in business
consulting generally, independent consulting and research companies have
challenged certain products the Company offers such as demographic data
collection, geographic databases, retail outlet surveys, retail consulting,
pricing applications, and single site studies. Occasionally, such consultants
are engaged to develop a proprietary internal model for their clients. Often
competitive services of this type 


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<PAGE>   9

are offered by independent consultants as part of a larger consulting project
wherein pricing for the retail planning segment can be very competitive with
MPSI's pricing. Certain of such companies are offering computerized tools and
services which, the Company believes are not as sophisticated as MPSI products,
but may be attractive to customers willing to sacrifice accuracy for a lower
cost solution to their business needs.

     The Company believes it competes with these various market alternatives by
providing high-quality, sophisticated software and reliable, accurate databases
at a reasonable cost. MPSI further believes its historical expertise and
success in the areas of volume projections and retail network planning provide
a substantial barrier to entry for competitors. Further, MPSI's maintenance
programs and its commitment to more than one client in a given market results
in regular updates of existing software in line with changes in a given market.
The Company attributes its ability to provide these quality products and
services to the expertise and experience of its personnel.

     By focusing on PC-oriented products and services, the Company believes it
is better equipped to challenge "lower cost competitors". New data collection
techniques will allow more timely and regular updating of market data using
hand-held data collection technology and PC-based data transmission and
delivery technology. These processes are expected to reduce MPSI's data
collection costs relative to market studies and thereby allow the Company to
leverage data already collected or to collect custom data for clients who may
not require full market study information. The Company believes it can thereby
be competitive with potential competitors who have targeted customers with
limited retail market resources.

     In addition to addressing low-cost competitors, MPSI regularly evaluates
potential strategic alliances with certain independent consulting firms. The
target consulting firms will be those who service industries in which MPSI has
historical expertise (e.g., petroleum, government/postal, and banking). Such
alliances can provide MPSI the opportunity to sub-contract portions of larger
consulting projects thereby establishing MPSI's credibility with the client and
allowing interface with customer personnel who are potentially valuable sales
contacts for future business.

BACKLOG

     The Company's September 30, 1996 and 1995 backlog consisted principally of
orders for market information databases (1996--$16,338,000, 1995--$14,669,000)
and multi-year commitments by customers for software maintenance and support
services (1996--$2,194,000, 1995--$3,014,000). The Company expects that the
market information databases in backlog at September 30, 1996 will be
recognized in fiscal year revenues as follows: 1997--$9,998,000;
1998--$3,264,000, 1999--$2,248,000 and 2000--$828,000. Maintenance and support
services in backlog are the result of client contractual obligations to
purchase support services generally over periods of three to five years. Such
revenues will be recognized, and backlog accordingly reduced, on a ratable
basis over the life of each underlying agreement. Of the aggregate maintenance
and support backlog at September 30, 1996, future fiscal year revenues are
expected to be recognized as follows: 1997--$875,000; 1998--$562,000;
1999--$391,000, 2000--$246,000, 2001--$100,000 and 2002--$20,000.

EMPLOYEES

     As of September 30, 1996, the Company employed 225 people, including 80 in
sales and marketing, 39 in research and development, 77 in database analysis,
consulting, and production and 29 in management, administration, and finance.
Of these, 184 are employed in the United States and 41 are employed in foreign
countries.

PRODUCT DEVELOPMENT

     Since 1970, the foundation of the Company's business has been its
developed software which helps retailers select sites, improve operations and
make product pricing decisions. Over the last five years, the major development
efforts of the Company have been directed toward (1) enhancement of this core
RPS product in order to extend its petroleum utilization around the world, (2)
portation of the software from mainframe to workstation/PC platforms, and (3)
incorporation of third party software in order to enhance the user interface,
speed and efficiency of this software. Currently, the Company has several
development efforts underway that address the aforesaid areas.



                                       9
<PAGE>   10

     MPSI's product development cycle consists of four primary stages. During
the PRODUCT SPECIFICATION PHASE the Company identifies the initial requirements
of the software, determines the functional requirements and begins the initial
design. During this stage, the Company sets forth the database requirements as
well as the hardware, operating systems, third-party imbedded software and
general functional requirements. From this information a business plan,
conceptual prototype and a project plan are developed. The prototypes developed
during this stage are not fully functional prototypes, but are designed to
present the "look and feel" of the end product. Upon completion of this phase,
the Company has generally completed a detailed program design and, accordingly,
established the technological feasibility of the project. Following the product
specification phase, the project enters the BUILD PHASE where actual software
programming takes place. Once coding is complete the project enters the QUALITY
ASSURANCE PHASE which encompasses various internal systems testing and user
acceptance testing. Once testing is completed the project enters the
IMPLEMENTATION PHASE where hardware and software installation procedures and
user documentation are finalized.

     Software development costs incurred prior to completion of the detailed
program design are expensed as research and development costs. Costs incurred
during the build, quality assurance and implementation phases are generally
capitalized. At the point where the software product is ready for general
release to the customers, capitalization of costs ceases.

     Beginning in fiscal year 1993, MPSI undertook a major internally funded
rewrite of its retail planning software. The new systems are designed to meet
the three primary operational requirements of clients through PC-based products
including the Capital Performance System ("CAPS")(TM) for site selection and
capital planning, the Operational Performance System ("OPS")(R) for use in the
field by retail managers in order to optimize outlet and territory performance
and the Price Volume Optimizer ("PVO")(R) for retail fuel pricing decisions.
The initial versions of OPS(R) and PVO(R) software were available to customers
in fiscal year 1994 but are presently undergoing further enhancement. The
CAPS(TM) software for North America was released in January 1995. Third-party
geographic information system software is being incorporated into the CAPS(TM)
as part of rewrite enhancements. The new software should not only provide
client requested enhancements but is also expected to reduce costs associated
with (market study) database production and efficiencies in future product
programming and model revisions. Regional CAPS(TM) software for Europe and
South America was released in June 1996. CAPS(TM) for Japan and Asia is
scheduled for release in fiscal year 1997.

     Development of the initial PVO(R) product was the result of a contract
that was signed with a North American client during 1993 for the nonexclusive
development of a volume prediction model for a petroleum related product and
service facility. Several market databases were also part of the contract. The
commercial version of PVO(R) was completed in August of 1995 and is presently
undergoing implementation testing by clients in Canada, England, Belgium, South
Korea, and the United States. It is anticipated this product, if successful,
will not only result in contracts for additional client databases in 1997, but
also will lead to further business with other clients through the adaptation of
the model to other petroleum client ancillary product/service needs. Utilizing
information from Company produced CAPS(TM)/RPS databases or from other MPSI
studies, PVO(R) is designed to give retailers an easy to use decision tool for
optimizing petroleum outlet profits through price or volume level
determinations.

     The PC-based OPS(R) software utilizing CAPSO/RPS database information is
currently installed with clients in the United States, Europe and the Pacific
Rim. During fiscal year 1997, the Company intends to continue making the model
available to existing clients at a nominal cost for the purpose of increasing
Company-produced databases, MPSI's principal revenue source. A stand-alone
OPS(R) product is scheduled for development and release late in fiscal year
1998.

     MPSI has historically provided retail network planning software, data, and
consulting services to the postal industry on a limited basis, primarily in
Europe and the United States. MPSI continues to pursue opportunities with the
United States Postal Service and expects an increase in revenues from that
source in 1997. Should MPSI be awarded a U.S. postal contract for market
studies, additional development efforts would be expended during fiscal 1997 to
enhance certain features of an existing prototype model and to incorporate new
technology which has become available since the prototype was developed.

                                      10
<PAGE>   11

     During the years ended September 30, 1996, 1995, and 1994, the Company
spent $2,610,000, $2,789,000, and $3,257,000, respectively, on research and
development or enhancement of new products and the maintenance of existing
products. The amounts spent on research and development were primarily Company
sponsored, meaning there is no direct recoupment of expenses from clients.

TRADEMARKS, COPYRIGHTS, AND LICENSES

     The Company holds a number of trademarks, some of which are registered at
the U.S. Patent and Trademark Office. To date, registrations have been sought
only in the United States and Mexico. During fiscal year 1997 and in connection
with global introduction of new products, the Company will evaluate trademark
registration in certain other foreign countries where the volume of present
and/or potential business warrants registration. Set forth below are the
Company's trademarks and related registration expiration dates.

<TABLE>
<CAPTION>
                         PRODUCT                               TYPE OF MARK              STATUS/EXPIRATION
                         -------                               ------------              -----------------
          <S>                                                   <C>                            <C>
          MPSI's Site Evaluation System                         Registered                     2001
          MPSI and Design                                       Registered                     2002
          MPSI's OPS                                            Registered                     2002
          MPSI                                                  Registered                     2004
          Retail Planning System                                Registered                     2005
          PVO                                                   Registered                     2006
          Location Volume                                       Registered                     2006
          Facility/Location Volume                              Registered                     2006
          Price Volume Optimizer                                 Trademark                     Filed
          MPSI's CAPS                                            Trademark                     Filed
          MPSI's Market Monitor                                  Trademark               Common Law Rights
          PriceTracker                                           Trademark               Common Law Rights
          The Intelligent Approach to Retail Marketing           Trademark               Common Law Rights
</TABLE>

     The Company does not hold any patents or registered copyrights. The
Company's long-term software license agreements require customer acknowledgment
of the proprietary nature of the Company's software. The Company relies on
these agreements, together with trade secret laws and internal nondisclosure
safeguards, to protect its products. To date, the Company has had no indication
of any material breach in the security of its products. Should a material
breach in the security of the Company's software products occur, it might have
the impact of reducing the current barriers to entry for competitors and thus
materially adversely affect long-term results of Company operations. The
Company's modeling methodology, mathematical modeling algorithms and data
gathering processes have been developed over an extensive period of time and
would, in the absence of a material breach in the security, require potential
competitors a substantial period of time to duplicate. Even in the event that a
material breach did occur, such as a reverse engineering of an MPSI software
product, the Company believes that because of the rapid annual change in
technology and the regular software upgrades required thereby, such breach
would not result in a material adverse effect on the Company's short-term
business because new versions of its products would likely reduce the
competitive value of older versions breached by potential competitors.

ITEM 2.   PROPERTIES

     The Company's principal facility and corporate headquarters in Tulsa,
Oklahoma (42,500 square feet) is the primary location for software development
and market study production. The Bristol, England facility encompasses 10,000
square feet, and the Rio de Janeiro, Brazil office encompasses 3,000 square
feet. Both foreign offices do single site and special project work in addition
to their primary marketing role. Regional sales offices in Singapore;
Johannesburg, South Africa (established in 1996); Melbourne, Australia; and
Tokyo, Japan remained the Company's principal client liaison facilities in
those areas at September 30, 1996. MPSI has established a new office in Seoul,
South Korea which will begin operations during the first quarter of fiscal year
1997. Management believes that the various facilities are now properly sized to
meet anticipated business levels. Additional space may be required to
accommodate business expansion. All office facilities are leased.

                                      11
<PAGE>   12

ITEM 3.    LEGAL PROCEEDINGS

     There are no material pending legal proceedings at September 30, 1996
which meet the criteria for disclosure under this item.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of security holders during the fourth
quarter ended September 30, 1996.


                                    PART II


ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
           STOCKHOLDER MATTERS

     The information required by this ITEM is incorporated by reference to page
20 of the Company's 1996 Annual Report to Stockholders.

ITEM 6.    SELECTED FINANCIAL DATA

     The Selected Financial Data required by this ITEM for the five years ended
September 30, 1996 is incorporated by reference to page 1 of the Company's 1996
Annual Report to Stockholders. The Selected Quarterly Financial Data required
by this ITEM for the two years ended September 30, 1996 is set forth below:

                       SELECTED QUARTERLY FINANCIAL DATA
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   UNAUDITED



<TABLE>
<CAPTION>
                                     NET      GROSS       NET        PER
           QUARTER ENDED            SALES     PROFIT     INCOME     SHARE
           -------------            -----     ------     ------     -----
          <S>                      <C>        <C>        <C>        <C>
          Fiscal Year 1995:
            December 31, 1994      $4,911     $2,978     $ 172      $   .06
            March 31, 1995          5,280      3,244       386          .14
            June 30, 1995           6,114      3,288       593          .21
            September 30, 1995      7,132      3,494       878          .31

          Fiscal Year 1996:
            December 31, 1995      $5,311     $2,988     $ 180      $   .06
            March 31, 1996          5,364      2,505      (148)        (.05)
            June 30, 1996           4,976      2,161      (723)        (.26)
            September 30, 1996      6,094      3,077        68          .02
</TABLE>


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATION

     The information required by this ITEM is incorporated by reference to
pages 3 through 6 of the Company's 1996 Annual Report to Shareholders.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial statement information required by this ITEM is incorporated
by reference to pages 7 through 19 of the Company's 1996 Annual Report to
Stockholders. Supplementary financial statement schedules are presented under
ITEM 14 of this Form 10-K beginning on page 17.

                                      12
<PAGE>   13

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     There were no changes in accountants or disagreements with accountants on
matters related to accounting or financial disclosure during the fiscal years
ended September 30, 1996 and 1995.


                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Reference is made to the information appearing under the caption
"Directors and Executive Officers" in the Company's Proxy Statement which will
be filed pursuant to Regulation 14A not later than 120 days after the end of
the Company's fiscal year ended September 30, 1996 and is incorporated herein
by reference.

ITEM 11.   EXECUTIVE COMPENSATION

     Reference is made to the information appearing under the caption
"Compensation of Directors and Officers" in the Company's Proxy Statement which
will be filed pursuant to Regulation 14A not later than 120 days after the end
of the Company's fiscal year ended September 30, 1996 and is incorporated
herein by reference.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Reference is made to the information appearing under the caption "Stock
Ownership" in the Company's Proxy Statement which will be filed pursuant to
Regulation 14A not later than 120 days after the end of the Company's fiscal
year ended September 30, 1996 and is incorporated herein by reference.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Reference is made to the information appearing under the caption "Certain
Transactions" in the Company's Proxy Statement which will be filed pursuant to
Regulation 14A not later than 120 days after the end of the Company's fiscal
year ended September 30, 1996 and is incorporated herein by reference.


                                    PART IV

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) (1)    The  response to this  portion of ITEM 14 is  submitted  as a 
           separate  section of this report  under ITEM 8.

    (2)    The response to this portion of ITEM 14 is set forth in ITEM 14(d) 
           below.

    (3)    Exhibits.

<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                                  DESCRIPTION
-------                                  -----------
  <S>    <C> <C>
  *3.1   --  Certificate of Incorporation of MPSI Systems Inc., as amended, 
             filed as the same numbered exhibit with the Company's Form 10-Q 
             dated March 31, 1987, File No. 0-11527.
</TABLE>




                                      13
<PAGE>   14


(3)    Exhibits. (Continued)

 EXHIBIT

<TABLE>
<CAPTION>
  NUMBER                             DESCRIPTION
  ------                             -----------
  <S>    <C> <C>
  *3.2   --  By-laws, as amended, filed as Exhibit 3.1 with the Company's 
             Form 10-Q dated June 30, 1987, File No. 0-11527.

  *3.3   --  Certificate of Designation dated September 23, 1993 establishing 
             the rights conferred on $.10 Par Value Convertible Preferred Stock, 
             Series 1993, filed as the same numbered exhibit with the Company's 
             1993 Form 10-K, File No. 0-11527.

  *3.4   --  Amendment to Certificate of Incorporation dated November 16,
             1993 to reflect a one-for-ten reverse stock split, filed as the
             same numbered exhibit with the Company's 1993 Form 10-K, File
             No. 0-11527.

  *3.5   --  Certificate dated November 18, 1993 whereby the $.10 Par Value 
             Preferred Stock, Series 1993, and the rights previously set forth 
             in the Certificate of Designation were eliminated, filed as the 
             same numbered exhibit with the Company's 1993 Form 10-K, 
             File No. 0-11527.

  *4.1   --  Stock Purchase Agreement dated September 3, 1993 between MPSI 
             Systems Inc. and various private investors (excluding exhibits 
             thereto which are included herewith as Exhibits 4.2 and 4.3) which 
             sets forth the terms of an equity recapitalization of the 
             registrant, filed as the same numbered exhibit with the Company's 
             1993 Form 10-K, File No. 0-11527.

  *4.2   --  Stockholder Agreement dated September 29, 1993 between MPSI
             Systems Inc. and certain private investors which regulates
             certain stockholder relationships with respect to voting,
             ownership, transfer or other disposition of MPSI stock, filed
             as the same numbered exhibit with the Company's 1993 Form 10-K,
             File No. 0-11527.

  *4.3   --  Registration Rights Agreement dated September 29, 1993
             between MPSI Systems Inc. and certain private investors which
             sets forth the rights of the parties with respect to future
             registrations of stock of the registrant, filed as the same
             numbered exhibit with the Company's 1993 Form 10-K, File No.
             0-11527.

  *4.4   --  Supplemental Agreement dated October 7, 1993 which revised
             the requirements and procedures related to the proposed reverse
             stock split and the conversion of preferred stock, filed as the
             same numbered exhibit with the Company's 1993 Form 10-K, File
             No. 0-11527.

  *4.5   --  Stock Purchase Agreement dated September 23, 1993 among MPSI
             Systems Inc. and Selling Stockholders other than the Principal
             Investors, filed as the same numbered exhibit with the
             Company's 1994 Registration Statement on Form S-1, Registration
             No. 33-76286.

  *4.6   --  Registration Agreement dated July 1, 1994 among MPSI Systems
             Inc. and the Selling Stockholders (final form), filed as the
             same numbered exhibit with the Company's 1994 Registration
             Statement on Form S-1, Registration No. 33-76286.

  *10.3  --  MPSI Systems Inc. 1984 Stock Option Plan as amended effective 
             January 1, 1987, filed as the same numbered exhibit with the 
             Company's 1987 Form 10-K, File No. 0-11527.

  *10.4  --  Stock Option Agreement pursuant to MPSI Systems Inc. 1984 Stock 
             Option Plan, filed as the same numbered exhibit with the Company's
             1984 Form 10-K, File No. 0-11527.
</TABLE>


                                      14
<PAGE>   15

(3) Exhibits. (Continued)

<TABLE>
<CAPTION>
EXHIBIT
 NUMBER                                DESCRIPTION
-------                                -----------
  <S>       <C>
  *10.7 --  Real property lease dated August 7, 1981, between MPSI
            Centre Joint Venture, as lessor, and the Company, as lessee,
            relating to the Company's Tulsa, Oklahoma facility, filed as
            Exhibit 10.5 with the Company's Registration Statement on Form
            S-1, File No. 2-81641, which became effective on March 2, 1983.

 *10.14 --  Stipulation Providing For Settlement, Mutual Release and Transfer 
            of Certain Assets of the Estate of Comarc Systems, Inc. (Debtor), 
            filed as the same numbered exhibit with the Company's 1986 Form
            10-K, File No. 0-11527.

 *10.15 --  Indemnification Agreements with Directors and Officers of MPSI 
            Systems Inc. filed as the same numbered exhibit with the Company's 
            1986 Form 10-K, File No. 0-11527.

 *10.16 --  MPSI Systems Inc. Amended and Restated 1988 Stock Option
            Plan, effective November 29, 1988, filed as Exhibit 4.5 with
            the Company's 1994 Form S-8, File No. 0-11527.

 *10.17 --  Stock Option Agreement pursuant to MPSI Systems Inc. Amended and 
            Restated 1988 Stock Option Plan, filed as Exhibit 4.6 with the 
            Company's 1994 Form S-8, File No. 0-11527.

*10.20 --   MPSI Systems Inc. Matching Investment Plan, effective January 1, 
            1990, filed as Exhibit 4(c) with Pre-effective Amendment No. 1 to 
            the Company's Form S-8, filed on December 29, 1989, File No. 
            0-11527.

*10.22 --   Asset Purchase Agreement dated March 11, 1991 between Comshare, 
            Incorporated (Buyer), Execucom Systems Corporation (Seller) and 
            MPSI Systems Inc. (Seller's Parent); and Amendment to Asset Purchase
            Agreement effective March 22, 1991, filed as Exhibit 2.1 to Form 
            8-K dated March 22, 1991, File No. 0-11527.

*10.23 --   Amendment dated March 19, 1991 to real property lease between MPSI 
            Centre Joint Venture, as lessor, and MPSI Systems Inc., as lessee, 
            filed as the same numbered exhibit with the Company's 1991 Form 
            10-K, File No. 0-11527.

*10.25 --   Amendment dated March 31, 1993 to real property lease between MPSI 
            Centre Joint Venture, as lessor, and MPSI Systems Inc., as lessee, 
            filed as the same numbered exhibit with the Company's 1993 Form 
            10-K, File No. 0-11527.

*10.26 --   Asset Purchase Agreement dated August 29, 1994 between the
            Registrant, its wholly-owned Subsidiary, Retail Systems, Inc.,
            and Dakota Worldwide Corporation filed as Exhibit 10.1 to Form
            8-K filed September 15, 1994.

 11.1  --   Computation of Earnings Per Share. 

 13.1  --   MPSI Systems Inc. 1996 Annual Report to Stockholders.

 21.1  --   List of Subsidiaries.

 23.1  --   Consent of Independent Auditors -- Ernst & Young LLP.

 27.1  --   Financial Data Schedules.
</TABLE>
----------
* Incorporated by reference.

                                      15
<PAGE>   16

(b)  No report on Form 8-K was filed by the Company during or applicable to the
     quarter ended September 30, 1996.

(c)  Exhibits - The response to this ITEM is submitted as a separate section of
     this report.

(d)  Financial Statement Schedules - Set forth below are the required financial
     statement schedules together with the Report of Independent Auditors on
     Financial Statement Schedules. All other schedules are omitted because
     they are not applicable or the information is shown in the financial
     statements or notes thereto.



                                      16
<PAGE>   17





        REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULES



We have audited the consolidated financial statements of MPSI Systems Inc. as
of September 30, 1996 and 1995, and for each of the three years in the period
ended September 30, 1996, and have issued our report thereon dated November 19,
1996 (incorporated by reference in this Form 10-K). Our audits also included
the financial statement schedules included in this Form 10-K. These schedules
are the responsibility of the Company's management. Our responsibility is to
express an opinion based on our audits.

In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.



                               ERNST & YOUNG LLP



Tulsa, Oklahoma
November 19, 1996



                                      17
<PAGE>   18



                                                                   SCHEDULE VIII

                                      
                      MPSI SYSTEMS INC. AND SUBSIDIARIES
                                      
                      VALUATION AND QUALIFYING ACCOUNTS
                     THREE YEARS ENDED SEPTEMBER 30, 1996



<TABLE>
<CAPTION>
          COLUMN A                             COLUMN B              COLUMN C                COLUMN D        COLUMN E
          --------                             ----------     -----------------------        --------        --------
                                                                      ADDITIONS
                                                              -----------------------
                                               BALANCE AT    CHARGED TO                        OTHER          BALANCE
                                               BEGINNING      COSTS AND   REDUCTION OF      (DEDUCTIONS)      AT END OF
          DESCRIPTION                          OF PERIOD      EXPENSES      REVENUES          ADDITIONS         PERIOD
          -----------                          ---------      --------      --------       -------------       ------
<S>                                            <C>            <C>          <C>             <C>               <C>     
For the year ended September 30, 1994:
  Accumulated depreciation                     $7,112,000     $433,000     $   --          $(441,000)(3)     $7,104,000
  Accumulated amortization                      1,958,000      246,000         --               --            2,204,000
  Allowance for doubtful receivables (RSI)         16,000       17,000         --            (33,000)(3)           --
  Unamortized discount on software license
    agreements                                    278,000         --        138,000(1)      (228,000)(1)        188,000
For the year ended September 30, 1995:
  Accumulated depreciation                     $7,104,000     $405,000     $   --          $ (89,000)(2)     $7,420,000
  Accumulated amortization                      2,204,000      294,000         --               --            2,498,000
  Unamortized discount on software license
    agreements                                    188,000         --        304,000(1)      (171,000)(1)        321,000
For the year ended September 30, 1996:
  Accumulated depreciation                     $7,420,000     $450,000     $   --          $(901,000)(2)     $6,969,000
  Accumulated amortization                      2,498,000      592,000         --             (2,000)         3,088,000
  Unamortized discount on software license
    agreements                                    321,000         --         77,000(1)      (160,000)(1)        238,000
</TABLE>
----------

(1)  Reduction of unamortized discount on long-term receivables represents
     current period interest income recognition (see Note 3 to Consolidated
     Financial Statements). Increases to unamortized discount represent the
     present-value-discount on new software license agreements net of
     adjustment for any contract cancellations or revisions.

(2)  Reduction is due to retirement of fully amortized assets and to assets
     sold or otherwise disposed.

(3)  Included in the reductions are $373,000 of accumulated depreciation and
     $33,000 related to uncollectible accounts, all of which are attributable
     to the sale of the RSI business unit.



                                      18
<PAGE>   19



                                                                     SCHEDULE X


                       MPSI SYSTEMS INC. AND SUBSIDIARIES

                   SUPPLEMENTARY INCOME STATEMENT INFORMATION
                      THREE YEARS ENDED SEPTEMBER 30, 1996

<TABLE>
<CAPTION>
                          COLUMN A                             COLUMN B
                          --------                   --------------------------
                                                         FISCAL YEARS ENDED
                                                            SEPTEMBER 30,
                                                     --------------------------
                           ITEM                       1996      1995      1994
                           ----                      --------------------------
<S>                                                  <C>      <C>      <C>     
Maintenance and repairs                              $172,000 $155,000 $178,000
Amortization of internally developed software         592,000  294,000  246,000
Royalties                                             125,000   28,000       --
Advertising costs                                     114,000   99,000   51,000
</TABLE>




                                      19
<PAGE>   20


                                   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 6th day of December, 1996.

                                               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>                                      <C>                                      <C>
       /s/ Ronald G. Harper              Chairman of the Board,                   December 6, 1996
   -------------------------------       President and Chief
          Ronald G. Harper               Executive Officer


        /s/ James C. Auten               Vice President and Chief--               December 6, 1996
   -------------------------------       Financial Officer
           James C. Auten                



     /s/ John C. Bumgarner, Jr.          Director                                 December 6, 1996
   -------------------------------
       John C. Bumgarner, Jr.


       /s/ David L. Huff                 Director                                 December 6, 1996
   -------------------------------
          David L. Huff


        /s/ Joseph C. McNay              Director                                 December 6, 1996
  --------------------------------
          Joseph C. McNay


       /s/ John J. McQueen               Director                                 December 6, 1996
  --------------------------------
           John J. McQueen
</TABLE>



     The Company's proxy statement for the Annual Meeting of Stockholders to be
held February 4, 1997* has not yet been sent to stockholders. Copies of such
materials will be furnished to the Commission at such time as they are sent to
stockholders.

 * The date of the Annual Meeting of Stockholders has subsequently been changed
   to January 30, 1997.



                                      20
<PAGE>   21


                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
                                                                     SEQUENTIALLY
EXHIBIT                                                                 NUMBERED
NUMBER                              EXHIBIT                               PAGE
------                              -------                               ----

<S>       <C>                                                              <C>
11.1   -- Earnings Per Share Computation.................................  22

13.1   -- MPSI Systems Inc. 1996 Annual Report to Stockholders...........  23

21.1   -- List of Subsidiaries...........................................  46

23.1   -- Consent of Independent Auditors -- Ernst & Young LLP...........  47

27.1   -- Financial Data Schedule........................................  48
</TABLE>






                                      21