<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 28, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File number:
MSX INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 38-3323099
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
275 REX BOULEVARD AUBURN HILLS, MICHIGAN 48326
(Address of principal executive offices) (Zip Code)
(248) 299-1000
(Registrant's telephone number, including area code)
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...........No....X......
Number of shares outstanding of each of the issuer's classes of common stock, as
of the latest practicable date.
Shares Outstanding at
Class August 11, 1998
- --------------------------------- ----------------------------
Common Stock, par value $.01 95,004
<PAGE> 2
MSX INTERNATIONAL, INC.
INDEX
PAGES
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet as of June 28, 1998 and
December 28, 1997........................................... 2
Condensed Consolidated Statement of Operations for the
Fiscal Quarters and Fiscal Six-Month Periods Ended
June 28, 1998 and June 29, 1997..............................3
Condensed Consolidated Statement of Cash Flows for the
Fiscal Quarters and Fiscal Six-Month Periods Ended
June 28, 1998 and June 29, 1997..............................4
Notes to Condensed Consolidated Financial Statements............ 5-16
ITEM 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations................17-20
PART II - Other Information and Signature..................................21-22
EXHIBITS -.................................................................23-25
1
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MSX INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
as of June 28, 1998 and December 28, 1997
<TABLE>
<CAPTION>
JUNE 28, DECEMBER 28,
1998 1997
------------ ------------
(dollars in thousands)
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 9,769 $ 11,575
Receivables, net 169,090 178,938
Inventory 1,158 1,239
Prepaid expenses and other assets 7,954 5,638
Deferred income taxes 2,001 2,352
--------- ---------
Total current assets 189,972 199,742
Property and equipment, net of accumulated depreciation
of $64,923 and $58,693, respectively 31,628 34,337
Goodwill, net of accumulated amortization of $1,418 and $892, respectively 31,489 31,934
Other assets 11,544 8,783
Deferred income taxes 13,793 12,380
--------- ---------
Total assets $ 278,426 $ 287,176
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Notes payable and current portion of long-term debt $ 7,000 $ 87,930
Bank overdrafts 13,644 21,908
Accounts payable 54,124 58,458
Accrued payroll and benefits 19,698 16,984
Accrued expenses 16,824 20,907
Deferred income taxes 2,080 984
--------- ---------
Total current liabilities 113,370 207,171
Long-term debt 151,369 65,000
Long-term capital lease obligations 281 316
Long-term deferred compensation liability and other 3,570 5,053
--------- ---------
Total liabilities 268,590 277,540
--------- ---------
Redeemable Series A preferred stock: authorized 500,000 shares;
issued and outstanding, 360,000 shares 36,000 36,000
--------- ---------
Shareholders' equity (deficit):
Common stock, $.01 par: authorized, 2,000,000 shares;
issued and outstanding, 95,004 shares 1 1
Additional paid-in capital (22,251) (22,251)
Accumulated other comprehensive income/(loss) (1,594) (1,141)
Accumulated deficit (2,320) (2,973)
--------- ---------
Total shareholders' equity (deficit) (26,164) (26,364)
--------- ---------
Total liabilities and shareholders' equity (deficit) $ 278,426 $ 287,176
========= =========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
2
<PAGE> 4
MSX INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
for the fiscal quarters and fiscal six-month periods ended June 28, 1998 and
June 29, 1997
<TABLE>
<CAPTION>
FISCAL QUARTERS FISCAL SIX MONTHS
---------------------- ---------------------
1998 1997 1998 1997
---------- ---------- -------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C>
Net sales $ 255,310 $ 84,037 $ 510,366 $ 166,545
Cost of sales (235,074) (73,104) (471,793) (147,360)
--------- --------- --------- ---------
Gross profit 20,236 10,933 38,573 19,185
Selling, general and administrative expenses (13,921) (6,878) (26,425) (13,836)
Michigan Single Business Tax (971) (715) (1,743) (1,415)
--------- --------- --------- ---------
Operating income 5,344 3,340 10,405 3,934
--------- --------- --------- ---------
Other income (expense), net:
Interest expense, net (4,400) (595) (7,673) (1,523)
Interest expense, related parties -- (2,401) (1,040) (4,275)
Other income (expense), net 5 202 5 422
--------- --------- --------- ---------
(4,395) (2,794) (8,708) (5,376)
--------- --------- --------- ---------
Income (loss) before income taxes 949 546 1,697 (1,442)
Income tax provision (benefit) 674 111 1,044 (369)
--------- --------- --------- ---------
Net income (loss) $ 275 $ 435 $ 653 $ (1,073)
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
3
<PAGE> 5
MSX INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the fiscal quarters and fiscal six-month periods ended June 28, 1998 and
June 29, 1997
<TABLE>
<CAPTION>
FISCAL QUARTERS FISCAL SIX MONTHS
---------------------- --------------------
1998 1997 1998 1997
--------- --------- -------- ------
(dollars in thousands)
<S> <C> <C> <C> <C>
Cash from (used for) operating activities:
Net income (loss) $ 275 $ 435 $ 653 $ (1,073)
Adjustments to reconcile net income (loss)
to net cash from (used for) operating activities:
Depreciation 3,194 1,786 6,681 3,159
Amortization 293 203 645 546
Deferred taxes (54) -- (54) --
Sale of property and equipment 810 -- 810 --
(Increase) decrease in receivables, net 8,846 5,971 9,848 (10,294)
(Increase) decrease in inventory 17 (134) 81 644
(Increase) decrease in prepaid expenses (3,194) (2,694) (2,316) (1,472)
Increase (decrease) in current liabilities 588 6,554 (5,703) 3,046
Other, net (497) 143 (575) 6,257
--------- --------- --------- ---------
Net cash from (used for) operating activities 10,278 12,264 10,070 813
--------- --------- --------- ---------
Cash from (used for) investing activities:
Capital expenditures (3,035) (5,592) (4,798) (8,238)
Acquisition of business, net of cash received -- -- -- (132,361)
Other, net -- -- -- (317)
--------- --------- --------- ---------
Net cash from (used for) investing activities (3,035) (5,592) (4,798) (140,916)
--------- --------- --------- ---------
Cash from (used for) financing activities:
Proceeds from long-term debt issues 2,599 398 99,377 70,398
Repayment of long-term debt (5,029) -- (75,029) --
Change in bank borrowings (323) (5,022) (22,406) 40,592
Change in cash overdraft (10,103) (13) (8,264) (4,037)
Sale of Redeemable Preferred Stock -- -- -- 36,000
Sale of Common Stock -- 40 -- 3,800
Other, net 21 263 (303) (88)
--------- --------- --------- ---------
Net cash from (used for) financing activities (12,835) (4,334) (6,625) 146,665
--------- --------- --------- ---------
Effect of foreign exchange rate changes on cash 323 (696) (453) (1,233)
--------- --------- --------- ---------
Cash:
Increase (decrease) for the period (5,269) 1,642 (1,806) 5,329
Balance, beginning of period 15,038 3,687 11,575 --
--------- --------- --------- ---------
Balance, end of period 9,769 5,329 $ 9,769 $ 5,329
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
4
<PAGE> 6
MSX INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands unless otherwise stated)
1. ORGANIZATION AND BASIS OF PRESENTATION:
The accompanying financial statements represent the consolidated assets
and liabilities and operations of MSX International, Inc. and its
subsidiaries ("MSXI" or the "Company"). Effective August 31, 1997, the
Company acquired certain service-providing operations of Ford Motor
Company ("Ford") through the acquisition of Geometric Results
Incorporated ("GRI"), a wholly-owned subsidiary of Ford. The results of
operations of GRI have been included in the results of the operations
of the Company from September 1, 1997.
The Company is principally engaged in the business of providing
technical support services, primarily to automobile manufacturers and
suppliers in the United States and Europe.
The Company utilizes a fiscal year which ends on the last Sunday in
December.
In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments which are normal
and recurring in nature necessary to present fairly its financial
position at June 28, 1998 and the results of operations and cash flows
for the fiscal quarter and fiscal six-month periods ended June 28, 1998
and June 29, 1997. The operating results for the fiscal quarter and
fiscal six-month periods ended June 28, 1998 and June 29, 1997 are not
necessarily indicative of the results of operations for the entire
year. Reference should be made to the consolidated financial statements
included in the Company's Registration Statement on Form S-4 which
was declared effective by the Securities and Exchange Commission
on July 22, 1998.
2. RESTRUCTURING ACTIONS:
As of December 28, 1997, accrued restructuring costs totaled $6.1
million. Approximately $1.7 million and $2.4 million was charged to
MSXI's accrual in the fiscal quarter and fiscal six-month period ended
June 28, 1998, primarily for operating lease payments on unused
facilities. Remaining accrued restructuring costs totaled $3.7 million
as of June 28, 1998, of which $2.5 million is expected to be paid in
1998.
3. REDEEMABLE SERIES A PREFERRED STOCK:
Dividends on preferred stock are payable in cash at a rate per annum
equal to 12 percent of the stated value plus an amount equal to any
accrued and unpaid dividends. As of June 28, 1998, the Company had not
declared any dividends. Accordingly, no dividends have been paid or
accrued. Dividends accumulated but not declared aggregated
approximately $6.8 million as of June 28, 1998.
5
<PAGE> 7
MSX INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(dollars in thousands unless otherwise noted)
4. DEBT:
On January 22, 1998, the Company issued, in a private placement, $100
million aggregate principal amount of 11 3/8% unsecured senior
subordinated notes maturing January 15, 2008 (the "Notes"). Interest on
the Notes is payable semiannually at 11 3/8% per annum commencing on
July 15, 1998. The Notes may be redeemed subsequent to January 15, 2003
at premiums which begin at 105.6875 percent and decline each year to
face for redemptions taking place after January 15, 2006. In addition,
at any time prior to January 15, 2001, the Company may redeem up to 35
percent of the original aggregate principal amount of the Notes with
the proceeds of one or more public equity offerings at a redemption
price of 111.375 percent plus accrued and unpaid interest, if any.
Also, upon the occurrence of a change of control, as defined in the
indenture (the "Indenture"), the Notes may be redeemed at the option of
the note holders at a premium of one percent, plus accrued and unpaid
interest, if any. The Notes contain covenants which, among others,
limit the incurrence of additional indebtedness and restrict capital
transactions, distributions and asset dispositions of certain
subsidiaries.
In connection with the Notes offering, each of the Company's domestic
restricted subsidiaries, as defined in the Indenture (the "Guarantor
Subsidiaries"), irrevocably and unconditionally guarantee the Company's
performance under the Notes as primary obligors.
Concurrently with the private placement, the Company entered into a new
credit facility with NBD Bank (the "New Credit Facility"), with a
borrowing base of up to $100 million, as defined, to replace a prior
NBD Credit Facility (the "Old Credit Facility"). Interest on the loans
under the New Credit Facility is payable quarterly or, if earlier, at
the end of each interest period and accrues at an annual rate equal to,
at the option of the Company: (a) a floating rate, as defined or (b)
the London Interbank Offered Rate plus an applicable margin, as
defined.
Each significant domestic subsidiary of the Company guarantees all
obligations of the Company under the New Credit Facility. In addition,
these obligations are secured by a pledge of the stock of such domestic
subsidiaries and a first lien on substantially all assets of such
domestic subsidiaries and a pledge of 65 percent of the stock of the
significant foreign subsidiaries. The obligations of the Company under
the New Credit Facility rank senior to all other indebtedness of the
Company, including the Notes.
6
<PAGE> 8
MSX INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
(dollars in thousands unless otherwise noted)
4. DEBT: - (CONTINUED)
The New Credit Facility contains certain reporting covenants and other
customary affirmative covenants and various negative covenants
including but not limited to certain limitations on mergers, sales of
assets, acquisitions, liens, investments, indebtedness, contingent
obligations, dividends, subsidiaries ability to agree to dividend
restrictions, affiliate transactions and changes of business. The New
Credit Facility also contains certain covenants with respect to
employee benefit arrangements and environmental matters and certain
financial covenants including but not limited to a ratio of total debt
to EBITDA, a fixed charge coverage ratio and a minimum net worth
requirement, each as defined.
On April 14, 1998, the Company syndicated the New Credit Facility to
three additional commercial lenders and amended the New Credit Facility
to add a $30 million term loan portion. Term loan borrowings are
subject to satisfaction of the same borrowing base requirements and
financial reporting and operating covenants as are other borrowings
under the New Credit Facility. As of June 28, 1998, $51.4 million was
outstanding under the New Credit Facility.
5. BANK OVERDRAFTS:
Bank overdrafts represent outstanding checks drawn on zero balance
accounts that have not yet been presented to the Company's banks for
funding. Such overdrafts are funded when the related checks are
presented and are not subject to finance charges.
6. COMMITMENTS AND CONTINGENCIES:
On December 27, 1997, Cambridge Industries, Inc. filed a complaint
against the Company in Michigan State Court. The complaint alleges that
the Company, by retaining approximately $1.1 million of funds paid into
a lock-box account maintained by the Company, has converted such funds.
Cambridge Industries is seeking whatever relief the court deems just,
including treble damages. The Company believes it has meritorious
defenses and counterclaims to this action and intends to defend itself
vigorously against all of the allegations contained in the complaint.
The Company does not believe that the ultimate outcome of this
litigation will have a material effect on its consolidated financial
condition, results of operations or cash flows.
7
<PAGE> 9
MSX INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
(dollars in thousands unless otherwise noted)
7. INCOME TAXES:
For the fiscal six-month period ended June 28, 1998 and June 29, 1997,
the effective income tax rate was 61.5% and (25.6%), respectively. The
change in the effective income tax rate was due to operations of the
acquired GRI business and a change in the projected mix of foreign
earnings which were offset in part by losses from other foreign
businesses and a related valuation allowance. The effect of the change
in the projected mix of foreign earnings was $187,000 on the 1998
year-to-date expense.
8. ADOPTION OF STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 130
"REPORTING COMPREHENSIVE INCOME":
Effective December 29, 1997, the Company adopted Statement of Financial
Accounting Standards (FASB) No. 130, "Reporting Comprehensive Income."
This statement requires that all items recognized under accounting
standards as components of comprehensive earnings be reported in an
annual financial statement that is displayed with the same prominence
as other annual financial statements. This Statement also requires that
an entity classify items of other comprehensive earnings by their
nature in an annual financial statement. Annual financial statements
for prior periods will be reclassified, as required. The Company's
total comprehensive earnings were as follows:
<TABLE>
<CAPTION>
FISCAL QUARTER FISCAL SIX MONTHS
------------------- ---------------------
JUNE 28, JUNE 29, JUNE 28, JUNE 29,
1998 1997 1998 1997
------ ------ ------- --------
<S> <C> <C> <C> <C>
Net income/(loss) $ 275 $ 435 $ 653 $ (1,073)
Other comprehensive income/(loss) 323 (696) (453) (1,233)
------ ------ ------- --------
Total comprehensive income/(loss) $ 598 $ (261) $ 200 $ (2,306)
====== ====== ======= ========
</TABLE>
Other comprehensive income (loss) is comprised of the change in the
accumulated foreign currency translation adjustment.
8
<PAGE> 10
MSX INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
(dollars in thousands unless otherwise noted)
9. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES:
In connection with the Note Offering, the Guarantor Subsidiaries
irrevocably and unconditionally guarantee the Company's performance
under the Notes as primary obligors. The Guarantor Subsidiaries are
direct or indirect wholly-owned subsidiaries of the Company. The
remaining subsidiaries are direct or indirect subsidiaries of the
Guarantor Subsidiaries.
The following condensed consolidated financial data provides
information regarding the financial position, results of operations and
cash flows of the Guarantor Subsidiaries ("Condensed Consolidated
Financial Data"). Separate financial statements of the Guarantor
Subsidiaries are not presented because management has determined those
would not be material to the holders of the notes.
For purposes of the condensed consolidated financial data, the
Guarantor Subsidiaries include substantially all domestic subsidiaries
of the Company. The Guarantor Subsidiaries account for their
investments in the non-guarantor subsidiaries, if any, on the equity
method. The principal elimination entries are to eliminate the
investments in subsidiaries and intercompany balances and transactions.
9
<PAGE> 11
MSX INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(dollars in thousands unless otherwise noted)
9. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES - (CONTINUED)
MSX INTERNATIONAL, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
as of June 28, 1998
<TABLE>
<CAPTION>
GUARANTOR NON-GUARANTOR MSXI
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ---------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,111 $ 8,658 $ -- $ 9,769
Receivables, net 118,277 50,813 -- 169,090
Inventory 1,122 36 -- 1,158
Prepaid expenses and other assets 3,516 4,438 -- 7,954
Deferred income taxes 863 1,138 -- 2,001
--------- --------- --------- ---------
Total current assets 124,889 65,083 -- 189,972
Property and equipment, net 21,180 10,448 -- 31,628
Goodwill, net 31,489 -- -- 31,489
Other assets 38,787 4,028 (31,271) 11,544
Deferred income taxes 12,234 1,559 -- 13,793
--------- --------- --------- ---------
Total assets $ 228,579 $ 81,118 $ (31,271) $ 278,426
========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Notes payable and current portion of long-term debt $ -- $ 7,000 $ -- $ 7,000
Bank overdrafts 13,644 -- -- 13,644
Accounts payable 43,507 10,617 -- 54,124
Accrued liabilities 29,964 6,590 (32) 36,522
Deferred income taxes 853 1,227 -- 2,080
--------- --------- --------- ---------
Total current liabilities 87,968 25,434 (32) 113,370
Long-term debt 144,602 6,767 -- 151,369
Intercompany accounts (30,680) 30,680 -- --
Long-term capital lease obligations 281 -- -- 281
Long-term deferred compensation liability and other 3,570 -- -- 3,570
--------- --------- --------- ---------
Total liabilities 205,741 62,881 (32) 268,590
--------- --------- --------- ---------
Redeemable Series A preferred stock 36,000 33 (33) 36,000
--------- --------- --------- ---------
Shareholders' equity (deficit):
Common stock 1 2,950 (2,950) 1
Additional paid-in capital (9,442) 28,851 (41,660) (22,251)
Accumulated other comprehensive income/(loss) (1,393) (4,025) 3,824 (1,594)
Retained earnings (deficit) (2,328) (9,572) 9,580 (2,320)
--------- --------- --------- ---------
Total shareholders' equity (deficit) (13,162) 18,204 (31,206) (26,164)
--------- --------- --------- ---------
Total liabilities and shareholders' equity (deficit) $ 228,579 $ 81,118 $ (31,271) $ 278,426
========= ========= ========= =========
</TABLE>
10
<PAGE> 12
MSX INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(dollars in thousands unless otherwise noted)
9. Guarantor and Non-Guarantor Subsidiaries - (continued)
MSX INTERNATIONAL, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
as of December 28, 1997
<TABLE>
<CAPTION>
GUARANTOR NON-GUARANTOR MSXI
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,449 $ 9,126 $ - $ 11,575
Receivables, net 130,404 48,534 - 178,938
Inventory 1,204 35 - 1,239
Prepaid expenses and other assets 2,106 3,532 - 5,638
Deferred income taxes 863 1,489 - 2,352
------------ ---------- ---------- ----------
Total current assets 137,026 62,716 - 199,742
Property and equipment, net 23,208 11,129 - 34,337
Goodwill, net 31,934 - - 31,934
Other assets 28,877 489 (20,583) 8,783
Deferred income taxes 11,036 1,344 - 12,380
------------ ---------- ---------- ----------
Total assets $ 232,081 $ 75,678 $ (20,583) $ 287,176
============ ========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Notes payable and current portion of long-term debt $ 71,280 $ 16,650 $ - $ 87,930
Bank overdrafts 21,908 - - 21,908
Accounts payable 51,818 6,640 - 58,458
Accrued liabilities 31,752 6,171 (32) 37,891
Deferred income taxes - 984 - 984
------------ ---------- ---------- ----------
Total current liabilities 176,758 30,445 (32) 207,171
Long-term debt 65,000 - - 65,000
Intercompany accounts (31,389) 31,389 - -
Long-term capital lease obligations 316 - - 316
Long-term deferred compensation liability and other 4,654 399 - 5,053
------------ ---------- ---------- ----------
Total liabilities 215,339 62,233 (32) 277,540
------------ ---------- ---------- ----------
Redeemable Series A preferred stock 36,000 32 (32) 36,000
------------ ---------- ---------- ----------
Shareholders' equity (deficit):
Common stock 1 2,702 (2,702) 1
Additional paid-in capital (16,263) 19,154 (25,142) (22,251)
Accumulated other comprehensive income/(loss) (23) (3,598) 2,480 (1,141)
Retained earnings (deficit) (2,973) (4,845) 4,845 (2,973)
------------ ---------- ---------- ----------
Total shareholders' equity (deficit) (19,258) 13,413 (20,519) (26,364)
------------ ---------- ---------- ----------
Total liabilities and shareholders' equity (deficit) $ 232,081 $ 75,678 $ (20,583) $ 287,176
============ ========== ========== ==========
</TABLE>
11
<PAGE> 13
MSX INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(dollars in thousands unless otherwise noted)
9. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES: - (CONTINUED)
MSX INTERNATIONAL, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
for the fiscal quarters ended June 28, 1998 and June 29, 1997
<TABLE>
<CAPTION>
1998
-------------------------------------------------------------
GUARANTOR NON-GUARANTOR MSXI
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 217,574 $ 37,736 $ - $ 255,310
Cost of sales (203,052) (32,022) - (235,074)
--------- --------- --------- -----------
Gross profit 14,522 5,714 - 20,236
Selling, general and administrative expenses (9,360) (4,561) - (13,921)
Michigan Single Business Tax (971) - - (971)
--------- --------- --------- -----------
Operating income 4,191 1,153 - 5,344
Other expense, net (3,574) (821) - (4,395)
Equity in subsidiary earnings (97) - 97 -
--------- --------- --------- -----------
Income before income taxes 520 332 97 949
Income tax provision (benefit) 245 429 - 674
--------- --------- --------- -----------
Net income $ 275 $ (97) $ 97 $ 275
========= ========= ========= ===========
<CAPTION>
1997
----------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 63,372 $ 20,665 $ - $ 84,037
Cost of sales (55,496) (17,608) - (73,104)
--------- --------- --------- -----------
Gross profit 7,876 3,057 - 10,933
Selling, general and administrative expenses (4,657) (2,221) - (6,878)
Michigan Single Business Tax (715) - - (715)
--------- --------- --------- -----------
Operating income (loss) 2,504 836 - 3,340
Other expense, net (1,631) (1,163) - (2,794)
Equity in subsidiary earnings (loss) (131) - 131 -
--------- --------- --------- -----------
Income before income taxes 742 (327) 131 546
Income tax provision (benefit) 307 (196) - 111
--------- --------- --------- -----------
Net income (loss) $ 435 $ (131) $ 131 $ 435
========= ========= ========= ===========
</TABLE>
12
<PAGE> 14
MSX INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(dollars in thousands unless otherwise noted)
9. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES - (CONTINUED)
MSX INTERNATIONAL, INC.
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
for the fiscal six-month periods ended June 28, 1998 and June 29, 1997
<TABLE>
<CAPTION>
1998
-----------------------------------------------------------------
GUARANTOR NON-GUARANTOR MSXI
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Net sales $ 435,540 $ 74,826 $ - $ 510,366
Cost of sales (408,352) (63,441) - (471,793)
------------ ------------ -------- ----------
Gross profit 27,188 11,385 - 38,573
Selling, general and administrative expenses (17,998) (8,427) - (26,425)
Michigan Single Business Tax (1,743) - - (1,743)
------------ ------------ -------- ----------
Operating income 7,447 2,958 - 10,405
Other expense, net (6,954) (1,754) - (8,708)
Equity in subsidiary earnings 353 - (353) -
------------ ------------ -------- ----------
Income before income taxes 846 1,204 (353) 1,697
Income tax provision (benefit) 193 851 - 1,044
------------ ------------ -------- ----------
Net income $ 653 $ 353 $ (353) $ 653
============ ============ ======== ==========
<CAPTION>
1997
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 125,754 $ 40,791 $ - $ 166,545
Cost of sales (110,385) (36,975) - (147,360)
------------ ------------ -------- ----------
Gross profit 15,369 3,816 - 19,185
Selling, general and administrative expenses (9,285) (4,551) - (13,836)
Michigan Single Business Tax (1,415) - - (1,415)
------------ ------------ -------- ----------
Operating income (loss) 4,669 (735) - 3,934
Other expense, net (3,510) (1,866) - (5,376)
Equity in subsidiary earnings (loss) (1,805) - 1,805 -
------------ ------------ -------- ----------
Income before income taxes (646) (2,601) 1,805 (1,442)
Income tax provision (benefit) 427 (796) - (369)
------------ ------------ -------- ----------
Net income (loss) $ 1,073 $ (1,805) $ 1,805 $ 1,073
============ ============ ======== ==========
</TABLE>
13
<PAGE> 15
MSX INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(dollars in thousands unless otherwise noted)
9. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES - (CONTINUED)
MSX INTERNATIONAL, INC.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
for the fiscal quarters ended June 28, 1998
<TABLE>
<CAPTION>
GUARANTOR NON-GUARANTOR MSXI
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ -------------- ------------ ------------
<S> <C> <C> <C> <C>
Cash from (used for) operating activities:
Net income (loss) $ 372 $ (97) $ - $ 275
Equity in earnings of subsidiaries (97) - 97 -
Adjustments to reconcile net income (loss) to net cash
from (used for) operating activities:
Depreciation 1,833 1,361 - 3,194
Amortization 293 - - 293
Deferred taxes (344) 290 - (54)
Sale of property and equipment 426 384 - 810
(Increase) decrease in receivables 3,078 5,768 - 8,846
(Increase) decrease in inventory 17 - - 17
(Increase) decrease in prepaid expenses and
other assets (199) (2,995) - (3,194)
Increase (decrease) in current liabilities 3,672 (3,084) - 588
Other, net (894) 305 92 (497)
------------ -------------- ------------ -------------
Net cash from (used for) operating activities 8,157 1,932 189 10,278
------------ -------------- ------------ -------------
Cash from (used for) investing activities:
Capital expenditures (1,518) (1,517) - (3,035)
Acquisition of business, net - - - -
Investment in foreign activities - - - -
Other, net - - - -
------------ -------------- ------------ -------------
Net cash from (used for) investing activities (1,518) (1,517) - (3,035)
------------ -------------- ------------ -------------
Cash from (used for) financing activities:
Intercompany 2,272 (2,272) - -
Investment in subsidiaries 812 4,539 (5,351) -
Equity in subsidiaries (64) (3,697) 3,761 -
Proceeds from long-term debt issues 2,599 - - 2,599
Payment of long-term debt - (5,029) - (5,029)
Change in bank borrowings - (323) - (323)
Change in cash overdraft (10,103) - - (10,103)
Sale of redeemable preferred stock - - - -
Sale of common stock - - - -
Other, net 21 - - 21
------------ -------------- ------------ -------------
Net cash from (used for) financing activities (4,463) (6,782) (1,590) (12,835)
------------ -------------- ------------ -------------
Effect of foreign exchange rate changes on cash (1,341) 263 1,401 323
------------ -------------- ------------ -------------
Cash:
Increase for the period 835 (6,104) - (5,269)
Balance, beginning of period 276 14,762 - 15,038
------------ -------------- ------------ -------------
Balance, end of period $ 1,111 $ 8,658 $ - $ 9,769
============ ============== ============ =============
</TABLE>
14
<PAGE> 16
MSX INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(dollars in thousands unless otherwise noted)
9. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES - (CONTINUED)
MSX INTERNATIONAL, INC.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
for the fiscal six-month period ended June 28, 1998
<TABLE>
<CAPTION>
GUARANTOR NON-GUARANTOR MSXI
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Cash from (used for) operating activities:
Net income (loss) $ 300 $ 353 $ - $ 653
Equity in earnings of subsidiaries 353 - (353) -
Adjustments to reconcile net income (loss) to net cash
from (used for) operating activities:
Depreciation 3,991 2,690 - 6,681
Amortization 645 - - 645
Deferred taxes (344) 290 - (54)
Sale of property and equipment 426 384 - 810
(Increase) decrease in receivables 12,129 (2,281) - 9,848
(Increase) decrease in inventory 81 - - 81
(Increase) decrease in prepaid expenses and
other assets (1,497) (819) - (2,316)
Increase (decrease) in current liabilities (10,099) 4,396 - (5,703)
Other, net (608) (10) 43 (575)
---------- ---------- -------- ----------
Net cash from (used for) operating activities 5,377 5,003 (310) 10,070
---------- ---------- -------- ----------
Cash from (used for) investing activities:
Capital expenditures (2,413) (2,385) - (4,798)
Acquisition of business, net - - - -
Investment in foreign activities - - - -
Other, net - - - -
---------- ---------- -------- ----------
Net cash from (used for) investing activities (2,413) (2,385) - (4,798)
---------- ---------- -------- ----------
Cash from (used for) financing activities:
Intercompany 708 (708) - -
Investment in subsidiaries 602 4,640 (5,242) -
Equity in subsidiaries (514) (3,697) 4,211 -
Proceeds from long-term debt issues 99,377 - - 99,377
Payment of long-term debt (70,000) (5,029) - (75,029)
Change in bank borrowings (24,552) 2,146 - (22,406)
Change in cash overdraft (8,264) - - (8,264)
Sale of redeemable preferred stock - - - -
Sale of common stock - - - -
Other, net (300) (3) - (303)
---------- ---------- -------- ----------
Net cash from (used for) financing activities (2,943) (2,651) (1,031) (6,625)
---------- ---------- -------- ----------
Effect of foreign exchange rate changes on cash (1,359) (435) 1,341 (453)
---------- ---------- -------- ----------
Cash:
Increase for the period (1,338) (468) - (1,806)
Balance, beginning of period 2,449 9,126 - 11,575
---------- ---------- -------- ----------
Balance, end of period $ 1,111 $ 8,658 $ - $ 9,769
========== ========== ======== ==========
</TABLE>
15
<PAGE> 17
MSX INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)
(dollars in thousands unless otherwise noted)
9. GUARANTOR AND NON-GUARANTOR SUBSIDIARIES: - (CONTINUED)
MSX INTERNATIONAL, INC.
CONDENSED COMBINING STATEMENT OF CASH FLOWS
for the fiscal six-month period ended June 29, 1997
<TABLE>
<CAPTION>
GUARANTOR NON-GUARANTOR MSXI
SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Cash from (used for) operating activities:
Net income (loss) $ 732 $ (1,805) $ - $ (1,073)
Equity in earnings of subsidiaries (1,805) - 1,805 -
Adjustments to reconcile net income (loss) to net cash
from (used for) operating activities:
Depreciation 1,705 1,454 - 3,159
Amortization 546 - - 546
Deferred taxes - - - -
(Increase) decrease in receivables (10,276) (18) - (10,294)
(Increase) decrease in inventory 644 - - 644
(Increase) decrease in prepaid expenses
and other assets (2,441) 969 - (1,472)
Increase (decrease) in current liabilities 2,910 169 (33) 3,046
Other, net 5,937 319 1 6,257
------------- ------------ ----------- -----------
Net cash from (used for) operating activities (2,048) 1,088 1,773 813
------------- ------------ ----------- -----------
Cash from (used for) investing activities:
Capital expenditures (6,438) (1,800) - (8,238)
Acquisition of business, net (106,691) (19,666) (6,004) (132,361)
Investment in foreign subsidiaries (13,043) - 13,043 -
Other, net (317) - - (317)
------------- ------------ ----------- -----------
Net cash from (used for) investing activities (126,489) (21,466) 7,039 (140,916)
------------- ------------ ----------- -----------
Cash from (used for) financing activities:
Intercompany (22,182) 22,182 - -
Investment in subsidiaries 20 7,059 (7,079) -
Equity in subsidiaries 1,806 - (1,806) -
Proceeds from long-term debt issues 70,408 (10) - 70,398
Change in bank borrowings 43,967 (3,375) - 40,592
Change in cash overdraft (4,037) - - (4,037)
Sale of redeemable preferred stock 36,000 - - 36,000
Sale of common stock 3,800 - - 3,800
Other, net 169 (348) 91 (88)
------------- ------------ ----------- -----------
Net cash from (used for) financing activities 129,951 25,508 (8,794) 146,665
------------- ------------ ----------- -----------
Effect of foreign exchange rate changes on cash - (1,215) (18) (1,233)
------------- ------------ ----------- -----------
Cash:
Increase for the period 1,414 3,915 - 5,329
Balance, beginning of period - - - -
------------- ------------ ----------- -----------
Balance, end of period $ 1,414 $ 3,915 $ - $ 5,329
============= ============ =========== ===========
</TABLE>
16
<PAGE> 18
MSX INTERNATIONAL, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
MSXI's net sales for the quarter ended June 28, 1998 increased $171.3 million
(203.8%) from $84.0 million to $255.3 million, as compared to the fiscal quarter
ended June 29, 1997. For the fiscal six months ended June 28, 1998, net sales
increased $343.8 million (206.4%) from $166.5 million to $510.4 million, as
compared to the fiscal six months ended June 29, 1997. These increases resulted
principally from the GRI acquisition. In addition, net sales for the quarter and
fiscal year to date 1998 increased approximately 10% from the comparable prior
periods throughout the balance of the business.
Operating income for the fiscal quarter ended June 28, 1998 increased $2.0
million (60%) from $3.3 million to $5.3 million, as compared to the fiscal
quarter ended June 29, 1997. As a percent of net sales operating income
decreased from 4.0% for the fiscal quarter ended June 29, 1997 to 2.1% for the
fiscal quarter ended June 28, 1998. For the fiscal six months ended June 28,
1998 operating income increased $6.5 million (164.5%) from $3.9 million to $10.4
million as compared to the fiscal six months ended June 29, 1997. As a percent
of net sales operating income decreased from 2.4% for the fiscal six months
ended June 29, 1997 to 2.0% for the fiscal six months ended June 28, 1998. The
changes in operating income and operating income as a percent of net sales for
the 1998 periods as compared to the 1997 periods are primarily due to the
inclusion of the GRI businesses, which operate at a lower gross profit margin on
a higher volume of net sales.
Net income for the fiscal quarter ended June 28, 1998 was $.3 million (.1% of
net sales) as compared to $.4 million (.5% of net sales) for the fiscal quarter
ended June 29, 1997. For the fiscal six months ended June 28, 1998 net income
was $.7 million (.1% of net sales) as compared to a net loss of $(1.1) million
(.6% of net sales) for the comparable prior period. For the fiscal quarter ended
June 28, 1998, income before taxes improved to $.9 million from $.5 million in
the prior year. However, net income was lower as a result of a change in
effective tax rates due to the projected mix of foreign earnings and
deductibility of foreign interest.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital requirements are for the acquisition of
businesses and capital expenditures. These requirements have been met through a
combination of bank debt, issuance of securities and cash from operations.
17
<PAGE> 19
MSX INTERNATIONAL, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS - (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES - (CONTINUED)
During the fiscal quarter ended June 28, 1998 net cash provided from operating
activities was $10.3 million which resulted primarily from improved accounts
receivable collections.
The Company's total indebtedness as of June 28, 1998 consists of Notes,
borrowings under the New Credit Facility, and borrowings under the Ford
Facility. On April 14, 1998, the Company amended and restated the New Credit
Facility to add a $30 million term loan portion. On the same date, the Company
borrowed the full amount available under the term loan and used the funds to
reduce outstanding bank balances under the revolving loan portion of the New
Credit Facility. The amount is classified as long-term debt as the Company has
both the ability and intent to refinance such amount under the New Credit
Facility.
OTHER MATTERS
The Company provides staffing procurement services to Ford pursuant to the Ford
Master Vendor Agreement. In exchange for such services, Ford pays certain
agreed-upon compensation to the Company. In the United States, this compensation
includes payment for personnel supplied to Ford, together with certain
agreed-upon fees. The fees were scheduled to be reduced by 20% on July 1, 1998
from fees in effect since September 1, 1997. On May 4, 1998, an advisory board
comprised of executives from both the Company and Ford agreed to suspend
implementation of this fee reduction.
During the fiscal quarter ended June 28, 1998, one of the Company's three
largest customers, General Motors ("GM"), experienced a labor dispute which
resulted in a significant disruption to GM's North American automotive
production ("GM Strike"). GM accounted for approximately 7% of the Company's
total net sales during the fiscal quarter, reflecting a slight increase in net
sales over the prior quarter. The GM Strike, which ended July 28, 1998, did not
significantly impact operating results in the fiscal quarter. Although the media
has reported on possible cost reduction programs at General Motors resulting
from the GM Strike, the Company is not aware of any specific actions that would
have a material affect on its financial condition, results of operations, or its
cash flow in subsequent quarters.
18
<PAGE> 20
MSX INTERNATIONAL, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS - (CONTINUED)
SUBSEQUENT EVENTS
On July 22, 1998, the Company initiated an offer to exchange 11-3/8% Senior
Subordinated Notes which have been registered under the Securities Act of 1933
for any and all outstanding Notes. The exchange offer will expire at 5:00 P.M.
(EDT) on August 20, 1998 unless extended. Prior to beginning the exchange offer,
the Company filed a Registration Statement on Form S-4 with the Securities and
Exchange Commission.
On August 4, 1998, the Company acquired Gold Arrow Contract Services, Ltd.
("Gold Arrow"), a U.K. technical and information technology staffing services
company with sales of approximately $20 million.. Initial funding for the
transaction was provided by borrowings under the New Credit Facility.
INFLATION
Although the Company cannot anticipate future inflation, it does not believe
that inflation has had, or is likely in the forseeable future, to have a
material impact on its results of operations. While the Company's contracts
typically do not include automatic adjustments for inflation, the Ford Master
Vendor Agreement does provide for automatic adjustments for inflation for
services provided under the Master Vendor Program.
SEASONALITY
The Company's quarterly operating results are affected primarily by the number
of billing days in the quarter and the seasonality of its customers' businesses.
Demand for services of the Company have historically been lower during the
year-end holidays.
19
<PAGE> 21
MSX INTERNATIONAL, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS - (CONTINUED)
FORWARD LOOKING STATEMENTS
This report on Form 10-Q contains statements which constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements can be identified by the use of forward-looking
terminology such as "believes," "expects," "may," "estimates," "will," "should,"
"plans" or "anticipates" or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy. Such forward-looking
statements are not guarantees of future performance and involve significant
risks and uncertainties. Actual results may vary materially from those in the
forward-looking statements as a result of any number of factors, many of which
are beyond the control of management. These factors include, but are not limited
to, the Company's leverage, its reliance on major customers in the automotive
industry, the degree and nature of competition, the Company's ability to recruit
and place qualified personnel, risks associated with its acquisition strategy,
and employment liability risk. They are hereby incorporated by reference from
the risk factors and other factors included in the Company's Registration
Statement on Form S-4.
20
<PAGE> 22
MSX INTERNATIONAL, INC.
PART II. OTHER INFORMATION
ITEM 1. On December 27, 1997, Cambridge Industries, Inc. filed a
complaint against the Company in Michigan State Court. The
complaint alleges that the Company, by retaining approximately
$1.1 million of funds paid into a lock-box account maintained by
the Company, has converted such funds. Cambridge Industries is
seeking whatever relief the court deems just, including treble
damages. The Company believes it has meritorious defenses and
counterclaims to this action and intends to defend itself
vigorously against all of the allegations contained in the
complaint. The Company does not believe that the ultimate
outcome of this litigation will have a material effect on its
consolidated financial condition, results of operations or cash
flows.
ITEM 2. Not applicable.
ITEM 3. Not applicable.
ITEM 4. Not applicable.
ITEM 5. Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
Exhibit 12 - Computation of Ratio of Earnings to Fixed Changes
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
None
21
<PAGE> 23
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MSX INTERNATIONAL, INC.
(Registrant)
Date: August 12, 1998
By: /s/ Frederick K. Minturn
-------------------------
Frederick K. Minturn
Executive Vice President and
Chief Financial Officer
(Chief accounting officer
and authorized signatory)
22
<PAGE> 24
MSX INTERNATIONAL, INC.
EXHIBIT INDEX
Exhibit Sequential Page No.
- ------- -------------------
Exhibit 12 - Computation of Ratio of Earnings to Fixed 24
Charges
Exhibit 27 - Financial Data Schedule 25
23
<PAGE> 1
EXHIBIT 12
MSX INTERNATIONAL, INC. AND CONSOLIDATED SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(dollars in thousands)
<TABLE>
<CAPTION>
PREDECESSOR FISCAL FISCAL
-------------------------------------------------- YEAR SIX MONTHS
YEAR ENDED DECEMBER 31 ENDED ENDED
-------------------------------------------------- DECEMBER 28 JUNE 28,
1993 1994 1995 1996 1997 1998
---------- ---------- ---------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Earnings before income taxes and
fixed charges:
Income from continuing operations
before income taxes $ 6,997 $ 8,540 $ 10,240 $ 6,620 $ (2,748) $ 1,697
Add interest on indebtedness, net 308 920 1,470 1,310 12,400 8,545
Add amortization of debt expense - - - - - 168
Add estimated interest factor
for rentals 2,054 1,800 2,733 1,800 5,867 2,942
---------- ---------- ---------- -------- --------- -----------
Earnings before income taxes and
fixed charges $ 9,359 $ 11,260 $ 14,443 $ 9,730 $ 15,519 $ 13,352
========== ========== ========== ======== ========= ===========
Fixed charges:
Interest on indebtedness $ 308 $ 920 $ 1,470 $ 1,310 $ 12,400 $ 8,545
Amortization of debt expense - - - - - 168
Estimated interest factor for rentals 2,054 1,800 2,733 1,800 5,867 2,942
---------- ---------- ---------- -------- --------- -----------
$ 2,362 $ 2,720 $ 4,203 $ 3,110 $ 18,267 $ 11,655
========== ========== ========== ======== ========= ===========
Ratio of earnings to fixed charges 4.0 4.1 3.4 3.1 (a) 1.1
</TABLE>
(a) Earnings were insufficient to cover fixed charges by $2.7 million for the
fiscal year ended December 28, 1997
24
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 28,
1998 MSX INTERNATIONAL, INC. 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-27-1998
<PERIOD-END> JUN-28-1998
<CASH> 9,769
<SECURITIES> 0
<RECEIVABLES> 169,090
<ALLOWANCES> 0
<INVENTORY> 1,158
<CURRENT-ASSETS> 189,972
<PP&E> 96,551
<DEPRECIATION> (64,923)
<TOTAL-ASSETS> 278,426
<CURRENT-LIABILITIES> 113,370
<BONDS> 151,369
36,000
0
<COMMON> 1
<OTHER-SE> (26,165)
<TOTAL-LIABILITY-AND-EQUITY> 278,426
<SALES> 510,366
<TOTAL-REVENUES> 510,366
<CGS> 471,793
<TOTAL-COSTS> 471,793
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,713
<INCOME-PRETAX> 1,697
<INCOME-TAX> 1,044
<INCOME-CONTINUING> 1,697
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 653
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
