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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 September 29, 2002

OR

|  |  |                                                                                         
|- |  | ----------------------------------------------------------------------------------------
|o |  | 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: 333-49821

MSX International, Inc.
(Exact name of registrant as specified in its charter)

|                                                                                      |  |                                                
|------------------------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or other jurisdiction
of incorporation or organization)               |  | 38-3323099
(I.R.S. Employer Identification No.)
|                                                                                      |  |                                                
|22355 West Eleven Mile, Southfield, Michigan
(Address of principal executive offices) |  | 48034
(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 x No o



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TABLE OF CONTENTS



|                                             |                                                                                               |                                                                                                                                                  |  |  |  |  |  | 
|-------------------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------ |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION               
|                                             | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                             |                                                                                               | Consolidated Balance Sheets as of September 29, 2002 and December 30, 2001                                                                      
|                                             |                                                                                               | Consolidated Statements of Operations (Unaudited) for the Fiscal Quarters and Fiscal Nine Months Ended September 29, 2002 and September 30, 2001
|                                             |                                                                                               | Consolidated Statements of Cash Flows (Unaudited) for the Fiscal Nine Months Ended September 29, 2002 and September 30, 2001                    
|                                             |                                                                                               | Notes to Consolidated Financial Statements (Unaudited)                                                                                          
|                                             | ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|PART II. OTHER INFORMATION                  
|                                             | ITEM 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURE                                   
|CERTIFICATION                               
|Certifications of Sarbanes-Oxley Act of 2002



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##### Table of Contents



MSX INTERNATIONAL, INC.
INDEX

|                             |                                                                                              |                                                                                                                                                  |    |       |   | 
|---------------------------- | -------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------ | -- | ----- | - | 
|                             |                                                                                              |                                                                                                                                                  |    | Pages |  
|                             |                                                                                              |                                                                                                                                                  |    |       |  
|PART I.FINANCIAL INFORMATION |                                                                                              |                                                                                                                                                  |    |      
|                             |                                                                                              |                                                                                                                                                  |    |      
|                             | ITEM 1.Financial Statements:                                                                 |                                                                                                                                                  |    |       |  
|                             |                                                                                              |                                                                                                                                                  |    |      
|                             |                                                                                              | Consolidated Balance Sheets as of September 29, 2002 (Unaudited) and
December 30, 2001                                                           |    |       | 2 | 
|                             |                                                                                              |                                                                                                                                                  |    |      
|                             |                                                                                              | Consolidated Statements of Operations (Unaudited) for the Fiscal Quarters and Fiscal Nine Months
Ended September 29, 2002 and September 30, 2001 |    |       | 3 | 
|                             |                                                                                              |                                                                                                                                                  |    |      
|                             |                                                                                              | Consolidated Statements of Cash Flows (Unaudited) for the Fiscal Nine Months
Ended September 29, 2002 and September 30, 2001                     |    |       | 4 | 
|                             |                                                                                              |                                                                                                                                                  |    |      
|                             |                                                                                              | Notes to Consolidated Financial Statements (Unaudited)                                                                                           |    |       | 5 | 
|                             |                                                                                              |                                                                                                                                                  |    |      
|                             | ITEM 2.Managements Discussion and Analysis of Financial Condition and Results of Operations |                                                                                                                                                  |    | 16    |  
|                             |                                                                                              |                                                                                                                                                  |    |      
|PART II.OTHER INFORMATION    |                                                                                              |                                                                                                                                                  |    |      
|                             |                                                                                              |                                                                                                                                                  |    |      
|                             | ITEM 6. Exhibits and Reports on Form 8-K                                                     |                                                                                                                                                  |    | 20    |  
|                             |                                                                                              |                                                                                                                                                  |    |      
|SIGNATURE                    |                                                                                              |                                                                                                                                                  | 21 |      
|                             |                                                                                              |                                                                                                                                                  |    |      
|CERTIFICATIONS               |                                                                                              |                                                                                                                                                  | 22 |      

1



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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

MSX INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETSas of September 29, 2002 and December 30, 2001

|                                                      |                                                                                                                                                                                                          |              |                      |                                             |         |                        |         |         |              |         |         |  
|----------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | -------------------- | ------------------------------------------- | ------- | ---------------------- | ------- | ------- | ------------ | ------- | ------- | -
|                                                      |                                                                                                                                                                                                          |              |                      |                                             |         | September 29,          |         |         |              |         |        
|                                                      |                                                                                                                                                                                                          |              |                      |                                             |         | 2002                   |         |         | December 30, |        
|                                                      |                                                                                                                                                                                                          |              |                      |                                             |         | (Unaudited)            |         |         | 2001         |        
|                                                      |                                                                                                                                                                                                          |              |                      |                                             |         |                        |         |         |              |        
|                                                      |                                                                                                                                                                                                          |              |                      |                                             |         | (dollars in thousands) |        
|ASSETS                                                |                                                                                                                                                                                                          |              |                      |                                             |         |                        |         |        
|Current assets:                                       |                                                                                                                                                                                                          |              |                      |                                             |         |                        |         |        
|                                                      | Cash and cash equivalents                                                                                                                                                                                |              | $                    | 6,515                                       |         |                        | $       | 4,924   |             
|                                                      | Accounts receivable, net (Note 4)                                                                                                                                                                        |              |                      | 245,478                                     |         |                        |         | 252,868 |             
|                                                      | Inventory                                                                                                                                                                                                |              |                      | 4,905                                       |         |                        |         | 6,916   |             
|                                                      | Prepaid expenses and other assets                                                                                                                                                                        |              |                      | 8,159                                       |         |                        |         | 7,151   |             
|                                                      | Deferred income taxes, net                                                                                                                                                                               |              |                      | 5,011                                       |         |                        |         | 3,477   |             
|                                                      |                                                                                                                                                                                                          |              |                      |                                             |         |                       
|                                                      |                                                                                                                                                                                                          |              | Total current assets |                                             |         | 270,068                |         |         |              | 275,336 |        
|Property and equipment, net                           |                                                                                                                                                                                                          |              | 42,115               |                                             |         |                        | 42,977  |        
|Goodwill, net (Note 3)                                |                                                                                                                                                                                                          |              | 133,700              |                                             |         |                        | 170,491 |        
|Other assets                                          |                                                                                                                                                                                                          |              | 14,864               |                                             |         |                        | 22,608  |        
|Deferred income taxes, net                            |                                                                                                                                                                                                          |              | 13,230               |                                             |         |                        | 2,970   |        
|                                                      |                                                                                                                                                                                                          |              |                      |                                             |         |                       
|                                                      |                                                                                                                                                                                                          | Total assets |                      | $                                           | 473,977 |                        |         | $       | 514,382      |        
|                                                      |                                                                                                                                                                                                          |              |                      |                                             |         |                       
|LIABILITIES AND SHAREHOLDERS DEFICIT                 |                                                                                                                                                                                                          |              |                      |                                             |         |                        |         |        
|Current liabilities:                                  |                                                                                                                                                                                                          |              |                      |                                             |         |                        |         |        
|                                                      | Notes payable and current portion of long-term debt (Note 5)                                                                                                                                             |              | $                    | 11,783                                      |         |                        | $       | 15,785  |             
|                                                      | Accounts payable and book overdrafts                                                                                                                                                                     |              |                      | 134,002                                     |         |                        |         | 153,645 |             
|                                                      | Accrued payroll and benefits                                                                                                                                                                             |              |                      | 29,416                                      |         |                        |         | 23,946  |             
|                                                      | Other accrued liabilities                                                                                                                                                                                |              |                      | 55,791                                      |         |                        |         | 55,450  |             
|                                                      |                                                                                                                                                                                                          |              |                      |                                             |         |                       
|                                                      |                                                                                                                                                                                                          |              |                      | Total current liabilities                   |         |                        | 230,992 |         |              |         | 248,826 |  
|Long-term debt (Note 5)                               |                                                                                                                                                                                                          |              | 246,525              |                                             |         |                        | 230,869 |        
|Long-term deferred compensation liabilities and other |                                                                                                                                                                                                          |              | 12,131               |                                             |         |                        | 12,977  |        
|                                                      |                                                                                                                                                                                                          |              |                      |                                             |         |                       
|                                                      | Total liabilities                                                                                                                                                                                        |              |                      | 489,648                                     |         |                        |         | 492,672 |             
|Minority interests                                    |                                                                                                                                                                                                          |              | 2,277                |                                             |         |                        | 1,197   |        
|Redeemable Series A Preferred Stock (Note 6)          |                                                                                                                                                                                                          |              | 35,945               |                                             |         |                        | 36,000  |        
|Shareholders deficit:                                |                                                                                                                                                                                                          |              |                      |                                             |         |                        |         |        
|                                                      | Common Stock, $.01 par value, 200,000,000 aggregate shares of
Class A and Class B Common Stock authorized; 20,054,000
and 20,080,800 shares of Class A Common Stock issued and
outstanding, respectively |              |                      | 201                                         |         |                        |         | 201     |             
|                                                      | Additional paid-in-capital                                                                                                                                                                               |              |                      | (21,879                                     | )       |                        |         | (21,769 | )           
|                                                      | Note receivable from officer                                                                                                                                                                             |              |                      | (3,198                                      | )       |                        |         | (3,000  | )           
|                                                      | Accumulated other comprehensive loss (Note 7)                                                                                                                                                            |              |                      | (12,649                                     | )       |                        |         | (15,603 | )           
|                                                      | Retained earnings                                                                                                                                                                                        |              |                      | (16,368                                     | )       |                        |         | 24,684  |             
|                                                      |                                                                                                                                                                                                          |              |                      |                                             |         |                       
|                                                      |                                                                                                                                                                                                          |              |                      | Total shareholders deficit                 |         |                        | (53,893 | )       |              |         | (15,487 | )
|                                                      |                                                                                                                                                                                                          |              |                      |                                             |         |                       
|                                                      |                                                                                                                                                                                                          |              |                      | Total liabilities and shareholders deficit |         | $                      | 473,977 |         |              | $       | 514,382 |  
|                                                      |                                                                                                                                                                                                          |              |                      |                                             |         |                       

The accompanying notes are an integral part of the consolidated financial statements

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MSX INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)for the fiscal quarters and fiscal nine months ended September 29, 2002 and September 30, 2001

|                                                                                                |                   |                                                                                                      |         |                      |        |   |                          |        |        |               |         |         |               |   |         |       |        | 
|----------------------------------------------------------------------------------------------- | ----------------- | ---------------------------------------------------------------------------------------------------- | ------- | -------------------- | ------ | - | ------------------------ | ------ | ------ | ------------- | ------- | ------- | ------------- | - | ------- | ----- | ------ | 
|                                                                                                |                   |                                                                                                      |         | Fiscal Quarter Ended |        |   | Fiscal Nine Months Ended |       
|                                                                                                |                   |                                                                                                      |         |                      |        |   |                          |       
|                                                                                                |                   |                                                                                                      |         | September 29,        |        |   | September 30,            |        |        | September 29, |         |         | September 30, |  
|                                                                                                |                   |                                                                                                      |         | 2002                 |        |   | 2001                     |        |        | 2002          |         |         | 2001          |  
|                                                                                                |                   |                                                                                                      |         |                      |        |   |                          |        |        |               |         |         |               |  
|                                                                                                |                   |                                                                                                      |         | (in thousands)       |       
|Net sales                                                                                       |                   | $                                                                                                    | 200,556 |                      |        | $ | 213,906                  |        |        | $             | 618,170 |         |               | $ | 712,464 |      
|Cost of sales                                                                                   |                   |                                                                                                      | 173,119 |                      |        |   | 187,267                  |        |        |               | 538,203 |         |               |   | 621,136 |      
|                                                                                                |                   |                                                                                                      |         |                      |        |   |                          |        |        |               |         |        
|                                                                                                |                   | Gross profit                                                                                         |         |                      | 27,437 |   |                          |        | 26,639 |               |         |         | 79,967        |   |         |       | 91,328 | 
|Selling, general and administrative expenses                                                    |                   |                                                                                                      | 20,746  |                      |        |   | 19,249                   |        |        |               | 60,996  |         |               |   | 59,177  |      
|Amortization of goodwill (Note 3)                                                               |                   |                                                                                                      |        |                      |        |   | 1,548                    |        |        |               |        |         |               |   | 4,660   |      
|                                                                                                |                   |                                                                                                      |         |                      |        |   |                          |        |        |               |         |        
|                                                                                                |                   | Operating income                                                                                     |         |                      | 6,691  |   |                          |        | 5,842  |               |         |         | 18,971        |   |         |       | 27,491 | 
|Interest expense, net                                                                           |                   |                                                                                                      | 6,892   |                      |        |   | 6,856                    |        |        |               | 19,459  |         |               |   | 21,340  |      
|                                                                                                |                   |                                                                                                      |         |                      |        |   |                          |        |        |               |         |        
|                                                                                                |                   | Income (loss) before income taxes, minority
interests, and equity in net income/losses of
affiliates |         |                      | (201   | ) |                          |        | (1,014 | )             |         |         | (488          | ) |         |       | 6,151  | 
|Income tax provision (benefit)                                                                  |                   |                                                                                                      | 229     |                      |        |   | (405                     | )      |        |               | 1,896   |         |               |   | 2,556   |      
|Minority interests and equity in net income/losses
of affiliates, net of taxes                  |                   |                                                                                                      | 94      |                      |        |   | (507                     | )      |        |               | (522    | )       |               |   | (1,257  | )    
|                                                                                                |                   |                                                                                                      |         |                      |        |   |                          |        |        |               |         |        
|                                                                                                |                   | Income (loss) before cumulative effect of
accounting change for goodwill impairment                  |         |                      | (336   | ) |                          |        | (1,116 | )             |         |         | (2,906        | ) |         |       | 2,338  | 
|Cumulative effect of accounting change for
goodwill impairment, net of taxes of $9,745 (Note 3) |                   |                                                                                                      |        |                      |        |   |                         |        |        |               | (38,102 | )       |               |   |        |      
|                                                                                                |                   |                                                                                                      |         |                      |        |   |                          |        |        |               |         |        
|                                                                                                | Net income (loss) |                                                                                                      | $       | (336                 | )      |   | $                        | (1,116 | )      |               | $       | (41,008 | )             |   | $       | 2,338 |       
|                                                                                                |                   |                                                                                                      |         |                      |        |   |                          |        |        |               |         |        

The accompanying notes are an integral part of the consolidated financial statements

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MSX INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)for the fiscal nine months ended September 29, 2002 and September 30, 2001

|                                                                     |                                                                                          |                                                                |        |                          |         |   |               |         |         |  
|-------------------------------------------------------------------- | ---------------------------------------------------------------------------------------- | -------------------------------------------------------------- | ------ | ------------------------ | ------- | - | ------------- | ------- | ------- | -
|                                                                     |                                                                                          |                                                                |        | Fiscal Nine Months Ended |        
|                                                                     |                                                                                          |                                                                |        |                          |        
|                                                                     |                                                                                          |                                                                |        | September 29,            |         |   | September 30, |        
|                                                                     |                                                                                          |                                                                |        | 2002                     |         |   | 2001          |        
|                                                                     |                                                                                          |                                                                |        |                          |         |   |               |        
|                                                                     |                                                                                          |                                                                |        | (in thousands)           |        
|Cash flows from operating activities:                                |                                                                                          |                                                                |        |                          |         |   |               |        
|                                                                     | Net income (loss)                                                                        |                                                                | $      | (41,008                  | )       |   | $             | 2,338   |        
|                                                                     | Adjustments to reconcile net income (loss) to net cash
provided by operating activities: |                                                                |        |                          |         |   |               |         |        
|                                                                     |                                                                                          | Cumulative effect of accounting change for goodwill
impairment |        |                          | 38,102  |   |               |         |        |  
|                                                                     |                                                                                          | Minority interests and equity in net losses of affiliates      |        |                          | 522     |   |               |         | 1,257   |  
|                                                                     |                                                                                          | Depreciation                                                   |        |                          | 13,921  |   |               |         | 12,352  |  
|                                                                     |                                                                                          | Amortization, including goodwill                               |        |                          | 1,332   |   |               |         | 5,497   |  
|                                                                     |                                                                                          | Deferred taxes                                                 |        |                          | (2,116  | ) |               |         | (1,866  | )
|                                                                     |                                                                                          | (Gain) loss on sale/disposal of property and equipment         |        |                          | 264     |   |               |         | 46      |  
|                                                                     |                                                                                          | (Increase) decrease in receivables                             |        |                          | 13,254  |   |               |         | 30,284  |  
|                                                                     |                                                                                          | (Increase) decrease in inventory                               |        |                          | 2,010   |   |               |         | 291     |  
|                                                                     |                                                                                          | Increase (decrease) in prepaid expenses and other assets       |        |                          | (937    | ) |               |         | (2,050  | )
|                                                                     |                                                                                          | Increase (decrease) in current liabilities                     |        |                          | (11,403 | ) |               |         | (40,586 | )
|                                                                     |                                                                                          | Other, net                                                     |        |                          | 86      |   |               |         | (918    | )
|                                                                     |                                                                                          |                                                                |        |                          |         |  
|Net cash provided by operating activities                            |                                                                                          |                                                                | 14,027 |                          |         |   | 6,645         |        
|                                                                     |                                                                                          |                                                                |        |                          |         |  
|Cash flows from investing activities:                                |                                                                                          |                                                                |        |                          |         |   |               |        
|                                                                     | Capital expenditures                                                                     |                                                                |        | (7,861                   | )       |   |               | (13,905 | )      
|                                                                     | Acquisition of businesses, net of cash acquired                                          |                                                                |        | (3,132                   | )       |   |               | (16,132 | )      
|                                                                     | Proceeds from sale/disposal of property and equipment                                    |                                                                |        | 170                      |         |   |               | 147     |        
|                                                                     | Other, net                                                                               |                                                                |        | 1,857                    |         |   |               | 44      |        
|                                                                     |                                                                                          |                                                                |        |                          |         |  
|Net cash used for investing activities                               |                                                                                          |                                                                | (8,966 | )                        |         |   | (29,846       | )      
|                                                                     |                                                                                          |                                                                |        |                          |         |  
|Cash flows from financing activities:                                |                                                                                          |                                                                |        |                          |         |   |               |        
|                                                                     | Proceeds from issuance of debt                                                           |                                                                |        | 15,450                   |         |   |               |        |        
|                                                                     | Repayment of debt                                                                        |                                                                |        | (28,746                  | )       |   |               | (3,938  | )      
|                                                                     | Debt issuance costs                                                                      |                                                                |        | (1,445                   | )       |   |               | (28     | )      
|                                                                     | Changes in revolving debt, net                                                           |                                                                |        | 19,657                   |         |   |               | 25,046  |        
|                                                                     | Changes in book overdraft, net                                                           |                                                                |        | (8,421                   | )       |   |               | (778    | )      
|                                                                     | Repurchase of common and preferred stock                                                 |                                                                |        | (209                     | )       |   |               | (4,178  | )      
|                                                                     | Sale of common stock and preferred stock                                                 |                                                                |        |                         |         |   |               | 3,612   |        
|                                                                     |                                                                                          |                                                                |        |                          |         |  
|Net cash provided by (used for) financing activities                 |                                                                                          |                                                                | (3,714 | )                        |         |   | 19,736        |        
|                                                                     |                                                                                          |                                                                |        |                          |         |  
|Effect of foreign exchange rate changes on cash and cash equivalents |                                                                                          |                                                                | 244    |                          |         |   | 2,507         |        
|                                                                     |                                                                                          |                                                                |        |                          |         |  
|Cash and cash equivalents:                                           |                                                                                          |                                                                |        |                          |         |   |               |        
|                                                                     | Increase (decrease) for the period                                                       |                                                                |        | 1,591                    |         |   |               | (958    | )      
|                                                                     | Balance, beginning of period                                                             |                                                                |        | 4,924                    |         |   |               | 4,686   |        
|                                                                     |                                                                                          |                                                                |        |                          |         |  
|                                                                     | Balance, end of period                                                                   |                                                                | $      | 6,515                    |         |   | $             | 3,728   |        
|                                                                     |                                                                                          |                                                                |        |                          |         |  

The accompanying notes are an integral part of the consolidated financial statements

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MSX International, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollars in thousands unless otherwise stated)



|1. |  | Organization and Basis of Presentation:
|-- |  | ---------------------------------------

The accompanying financial statements present the consolidated assets and
liabilities and results of operations of MSX International, Inc. and its
majority owned subsidiaries (MSXI). MSXI is a holding company owned by
Citigroup and affiliates and certain members of management. We are principally
engaged in providing collaborative enterprise services to automobile
manufacturers and suppliers and other industries primarily in North America and
Europe. We utilize a 52-53 week fiscal year, which ends on the Sunday nearest
December 31.

All intercompany transactions and balances have been eliminated. In the
opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments, consisting of only normal recurring items,
which are necessary for a fair presentation. The operating results for the
fiscal quarters and fiscal nine months ended September 29, 2002 and September
30, 2001 are not necessarily indicative of the results of operations for the
entire year. Reference should be made to the consolidated financial statements
and notes thereto included in our Annual Report on Form 10-K for the fiscal
year ended December 30, 2001. Certain prior year amounts have been
reclassified to conform to the presentation adopted during the current period.



|2. |  | Acquisitions of Businesses:
|-- |  | ---------------------------

Effective January 1, 2002, we completed the acquisition of selected assets
and liabilities of Draupner Associates AB in Gottenberg, Sweden for a total
purchase price at closing of about $2.4 million, before acquisition related
costs, with an additional amount payable contingent on the achievement of an
annual earnings target. Draupners principal business is digital documentation
and translation services for the automotive and related industries. Upon
completion, the Draupner business was integrated with our custom communication
service offerings. Also effective January 1, 2002, we acquired the remaining
51% of the outstanding common stock of Cadform-MSX Engineering GmbH through a
series of transactions that were contemplated at the time of our previous
investment in Cadform. Specifically, we exercised our option to acquire an
additional 16% of the common stock of Cadform for about $0.3 million. The
remaining 35% of their common stock was acquired in exchange for a 7.8%
interest in our existing engineering business in Germany. Prior to these
transactions, we owned 49% of the outstanding common stock of Cadform. The
purchase price for both the Draupner and Cadform transactions was funded with
borrowings under our credit facility.

The terms of certain of our acquisition agreements provide for additional
contingent consideration to be paid over a period of up to two years if the
acquired entitys future operating results exceed targeted levels. Contingent
consideration is earned when the acquired entitys financial performance grows
in excess of the targeted levels established at the time of acquisition. Such
additional consideration is recorded when earned. No such additional
consideration has been recorded or paid during fiscal 2002.

The operating results of acquired companies have been included in our
consolidated operating results from the effective date of acquisition. The
proforma effects of the above transactions would not be materially different
from reported results for the periods presented.



|3. |  | Goodwill and Intangible Assets:
|-- |  | -------------------------------

Effective January 1, 2002, we adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 142. Under the standard, goodwill
is no longer amortized but is tested periodically for impairment.
Additionally, SFAS No. 142 changes the methodology of assessing goodwill
impairment. Under the standard, goodwill is considered impaired if the book
value of an operating unit exceeds its estimated fair value. Upon adoption of
SFAS No. 142 we recorded a one-time, non-cash charge of $47.8 million, before
related taxes, to reduce the carrying value of goodwill. The charge is
reflected as a cumulative effect of an accounting change in our consolidated
results of operations. In calculating the impairment charge, the fair value of
the operating units underlying our business was estimated using a discounted
cash flow methodology.

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MSX International, Inc.
Notes to Consolidated Financial Statements (Unaudited)   continued
(dollars in thousands unless otherwise stated)

The following summarizes our comparable income (loss) before the
cumulative effect of this change in accounting principle, assuming SFAS No. 142
was adopted effective January 1, 2001.

|                                                                                               |  |                      |      |   |                          |   |        |               |  |   |               |   |  |   |       | 
|---------------------------------------------------------------------------------------------- |  | -------------------- | ---- | - | ------------------------ | - | ------ | ------------- |  | - | ------------- | - |  | - | ----- | 
|                                                                                               |  | Fiscal Quarter Ended |      |   | Fiscal Nine Months Ended |  
|                                                                                               |  |                      |      |   |                          |  
|                                                                                               |  | September 29,        |      |   | September 30,            |   |        | September 29, |  |   | September 30, |  
|                                                                                               |  | 2002                 |      |   | 2001                     |   |        | 2002          |  |   | 2001          |  
|                                                                                               |  |                      |      |   |                          |   |        |               |  |   |               |  
|Reported income (loss)
before cumulative
effect of accounting
change for goodwill
impairment   |  | $                    | (336 | ) |                          | $ | (1,116 | )             |  | $ | (2,906        | ) |  | $ | 2,338 | 
|Amortization of goodwill                                                                       |  |                      |     |   |                          |   | 1,548  |               |  |   |              |   |  |   | 4,660 | 
|Amortization of equity
method investee
goodwill                                                |  |                      |     |   |                          |   | 73     |               |  |   |              |   |  |   | 188   | 
|                                                                                               |  |                      |      |   |                          |   |        |               |  |   |               |  
|Comparable income
(loss) before
cumulative effect of
accounting change for
goodwill impairment |  | $                    | (336 | ) |                          | $ | 505    |               |  | $ | (2,906        | ) |  | $ | 7,186 | 
|                                                                                               |  |                      |      |   |                          |   |        |               |  |   |               |  

The following summarizes the changes in our goodwill balances during the
nine months ended September 29, 2002:

|                                   |                                      |   |         |         |  
|---------------------------------- | ------------------------------------ | - | ------- | ------- | -
|Balance at December 30, 2001, net  |                                      | $ | 170,491 |        
|                                   | Goodwill recorded during the period  |   |         | 9,130   |  
|                                   | Impairment losses recognized         |   |         | (47,847 | )
|                                   | Other, including translation changes |   |         | 1,926   |  
|                                   |                                      |   |        
|Balance at September 29, 2002, net |                                      | $ | 133,700 |        
|                                   |                                      |   |        

Goodwill recorded during the period was primarily generated from the
purchase of additional shares and consolidation of Cadform-MSX Engineering as
disclosed in Note 2. Adjustments to the preliminary allocation of purchase
price to Cadform may occur during the remainder of 2002 as a result of new or
revised information regarding the value of assets acquired and liabilities
assumed. Management believes the resolution of these matters will not have a
material effect on the results of operations, financial position, or cash flows
of MSXI. A substantial portion of the goodwill generated was previously
included in the carrying amount of our investment in Cadform-MSX Engineering as
of December 30, 2001.



|4. |  | Accounts Receivable:
|-- |  | --------------------

Accounts receivable include the portion of our billings for purchasing
support services attributable to services provided by our vendors that are
passed on to our customers. These amounts totaled $47.8 million as of September
29, 2002 and $49.7 million as of December 30, 2001. A corresponding liability
to our vendors for these amounts is recorded in accounts payable at the time
the receivable is recognized.

6



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MSX International, Inc.
Notes to Consolidated Financial Statements (Unaudited)  continued
(dollars in thousands unless otherwise stated)



|5. |  | Debt:
|-- |  | -----

Debt is comprised of the following:

|                                          |                                |  |                   |            |   |                |  |  |               |  |           |              |   |   |         |        |  |   |         |        | 
|----------------------------------------- | ------------------------------ |  | ----------------- | ---------- | - | -------------- |  |  | ------------- |  | --------- | ------------ | - | - | ------- | ------ |  | - | ------- | ------ | 
|                                          |                                |  | Interest Rates at |            |   | Outstanding at | 
|                                          |                                |  |                   |            |   |                | 
|                                          |                                |  | September 29,     |            |   | December 30,   |  |  | September 29, |  |           | December 30, |  
|                                          |                                |  | 2002              |            |   | 2001           |  |  | 2002          |  |           | 2001         |  
|                                          |                                |  |                   |            |   |                |  |  |               |  |           |              |  
|Senior subordinated notes                 |                                |  | 11.375            | %          |   |                |  |  |               |  | 11.375    | %            |   | $ | 130,000 |        |  | $ | 130,000 |       
|Second secured term loan                  |                                |  | 10.00             | %          |   |                |  |  |               |  | n/a       |              |   |   | 15,450  |        |  |   |        |       
|Credit facility, as amended and restated: |                                |  |                   |            |   |                |  |  |               |  |           |              |   |   |         |        |  |   |         |       
|                                          | Revolving line of credit notes |  |                   | 4.81-4.83  | % |                |  |  |               |  |           | n/a          |   |   |         | 16,000 |  |   |         |       | 
|                                          | Swingline notes                |  |                   | 5.03-11.15 | % |                |  |  |               |  |           | 4.23-7.00    | % |   |         | 22,399 |  |   |         | 9,931  | 
|                                          | Term notes                     |  |                   | 5.58-6.88  | % |                |  |  |               |  |           | 5.34-6.10    | % |   |         | 68,567 |  |   |         | 97,313 | 
|Satiz facility                            |                                |  | n/a               |            |   |                |  |  |               |  | 4.55      | %            |   |   |        |        |  |   | 8,750   |       
|Other debt                                |                                |  | 7.00-9.00         | %          |   |                |  |  |               |  | 7.00-7.25 | %            |   |   | 5,892   |        |  |   | 660     |       
|                                          |                                |  |                   |            |   |                |  |  |               |  |           |              |   |   |         |        |  |  
|                                          |                                |  |                   |            |   |                |  |  |               |  |           |              |   |   | 258,308 |        |  |   | 246,654 |       
|Less current portion                      |                                |  |                   |            |   |                |  |  |               |  |           |              |   |   | 11,783  |        |  |   | 15,785  |       
|                                          |                                |  |                   |            |   |                |  |  |               |  |           |              |   |   |         |        |  |  
|Total long-term debt                      |                                |  |                   |            |   |                |  |  |               |  |           |              |   | $ | 246,525 |        |  | $ | 230,869 |       
|                                          |                                |  |                   |            |   |                |  |  |               |  |           |              |   |   |         |        |  |  

Effective July 10, 2002, our lending group approved the second amendment
to our amended and restated credit facility. In conjunction with this
amendment, on July 31, 2002 we also entered into a second secured term loan
with an affiliate of Citigroup, our majority owners, totaling about $15.5
million. In summary, terms of the second amendment to our credit agreement
include the following:



| |  |  | Available funds under the revolving credit portion of the credit
facility are reduced from $100 million to $85 million                 
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | A prepayment of $15 million was made on July 31, 2002 against outstanding term loans under the agreement                               
|
| |  |  | Certain financial covenant requirements have been revised for the duration of the credit facility term                                 
|
| |  |  | The applicable spread over benchmark interest rates, applicable when
the ratio of debt to EBITDA is above certain levels, was increased
|
| |  |  | Certain other definitions and requirements were added and/or modified                                                                  

The second secured term loan is secured by a second priority security
interest on all assets securing our amended and restated credit agreement. The
loan matures on July 7, 2007 with interest accruing annually at 10%. Interest
is not payable until the later of July 7, 2007 or the date on which payment in
full of all other obligations under the amended and restated credit agreement
are made.

Other debt represents balances outstanding on lines of credit and other
facilities maintained by certain foreign subsidiaries with local banks.
Included in other debt at September 29, 2002 is $2.4 million outstanding under
the BHF Bank Credit Facility maintained by Cadform-MSX Engineering GmbH. This
facility provides for borrowings up to 4.7 million euro at both fixed and
floating interest rates. Amounts outstanding are currently payable on demand
and are partially secured by a guarantee and letter of credit provided by MSX
International.

As of September 29, 2002, $38.4 million was outstanding under the
revolving and swingline portions of our credit facility and has been classified
as long-term debt as we have both the ability and intent to refinance such
amounts under the credit facility. The revolving credit portion of our credit
facility expires on December 7, 2004.

7



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MSX International, Inc.
Notes to Consolidated Financial Statements (Unaudited)  continued
(dollars in thousands unless otherwise stated)



|6. |  | Redeemable Series A Preferred Stock:
|-- |  | ------------------------------------

We are authorized to issue up to 1,500,000 shares of Preferred Stock,
divided into two classes: 500,000 shares of Redeemable Series A Preferred
Stock, par value $0.01, and 1,000,000 shares of New Preferred Stock, par value
$0.01. As of September 29, 2002 and December 30, 2001, 359,448 and 360,000
shares of our Redeemable Series A Preferred Stock are issued and outstanding.
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 September 29, 2002, we have not declared or paid any
dividends. Dividends accumulated but not declared totaled about $34.6 million
as of September 29, 2002.



|7. |  | Comprehensive Income:
|-- |  | ---------------------

Our comprehensive income was:

|                                                                      |                             |   |                      |      |   |                          |        |       |               |   |         |               |   |   |       |       | 
|--------------------------------------------------------------------- | --------------------------- | - | -------------------- | ---- | - | ------------------------ | ------ | ----- | ------------- | - | ------- | ------------- | - | - | ----- | ----- | 
|                                                                      |                             |   | Fiscal Quarter Ended |      |   | Fiscal Nine Months Ended |       
|                                                                      |                             |   |                      |      |   |                          |       
|                                                                      |                             |   | September 29,        |      |   | September 30,            |        |       | September 29, |   |         | September 30, |  
|                                                                      |                             |   | 2002                 |      |   | 2001                     |        |       | 2002          |   |         | 2001          |  
|                                                                      |                             |   |                      |      |   |                          |        |       |               |   |         |               |  
|Net income (loss)                                                     |                             | $ | (336                 | )    |   | $                        | (1,116 | )     |               | $ | (41,008 | )             |   | $ | 2,338 |      
|Other comprehensive income  Foreign
currency translation adjustments |                             |   | 119                  |      |   |                          | 3,959  |       |               |   | 2,954   |               |   |   | 2,194 |      
|                                                                      |                             |   |                      |      |   |                          |        |       |               |   |         |              
|                                                                      | Comprehensive income (loss) |   | $                    | (217 | ) |                          | $      | 2,843 |               |   | $       | (38,054       | ) |   | $     | 4,532 | 
|                                                                      |                             |   |                      |      |   |                          |        |       |               |   |         |              



|8. |  | Segment Information:
|-- |  | --------------------

MSXI is a global
provider of collaborative enterprise services to the automotive and other industries. We group our services by type of
service as follows: collaborative engineering management, human capital
management, and other collaborative services. Due to the similar
characteristics of our service lines, including the nature of our service
offerings, processes supporting the delivery of our services, our customers,
and our marketing and sales processes, our operations have been aggregated
following the provisions of Statement of Financial Accounting Standards
(SFAS) No. 131 for segment reporting purposes.

The following is a summary of our net sales by service line:

|                                     |                 |   |                      |         |  |                          |        |         |               |   |         |               |  |   |         |         | 
|------------------------------------ | --------------- | - | -------------------- | ------- |  | ------------------------ | ------ | ------- | ------------- | - | ------- | ------------- |  | - | ------- | ------- | 
|                                     |                 |   | Fiscal Quarter Ended |         |  | Fiscal Nine Months Ended |       
|                                     |                 |   |                      |         |  |                          |       
|                                     |                 |   | September 29,        |         |  | September 30,            |        |         | September 29, |   |         | September 30, | 
|                                     |                 |   | 2002                 |         |  | 2001                     |        |         | 2002          |   |         | 2001          | 
|                                     |                 |   |                      |         |  |                          |        |         |               |   |         |               | 
|Collaborative Engineering Management |                 | $ | 55,191               |         |  | $                        | 60,337 |         |               | $ | 172,115 |               |  | $ | 199,032 |        
|Human Capital Management Services    |                 |   | 79,662               |         |  |                          | 95,026 |         |               |   | 249,789 |               |  |   | 323,701 |        
|Other Collaborative Services         |                 |   | 65,703               |         |  |                          | 58,543 |         |               |   | 196,266 |               |  |   | 189,731 |        
|                                     |                 |   |                      |         |  |                          |        |         |               |   |         |              
|                                     | Total net sales |   | $                    | 200,556 |  |                          | $      | 213,906 |               |   | $       | 618,170       |  |   | $       | 712,464 | 
|                                     |                 |   |                      |         |  |                          |        |         |               |   |         |              

8



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MSX International, Inc.
Notes to Consolidated Financial Statements (Unaudited)  continued
(dollars in thousands unless otherwise stated)

We evaluate performance based on earnings before interest and taxes
(EBIT), including the Michigan Single Business Tax and other similar taxes, as
defined. A reconciliation of consolidated EBIT to consolidated income (loss)
before income taxes, minority interests, and equity in net losses of affiliates
is as follows:

|                                                                                                    |  |                      |        |   |                          |   |        |               |  |   |               |   |  |   |         |  
|--------------------------------------------------------------------------------------------------- |  | -------------------- | ------ | - | ------------------------ | - | ------ | ------------- |  | - | ------------- | - |  | - | ------- | -
|                                                                                                    |  | Fiscal Quarter Ended |        |   | Fiscal Nine Months Ended |  
|                                                                                                    |  |                      |        |   |                          |  
|                                                                                                    |  | September 29,        |        |   | September 30,            |   |        | September 29, |  |   | September 30, |  
|                                                                                                    |  | 2002                 |        |   | 2001                     |   |        | 2002          |  |   | 2001          |  
|                                                                                                    |  |                      |        |   |                          |   |        |               |  |   |               |  
|Total EBIT before minority interests and
equity in net losses of affiliates                         |  | $                    | 7,408  |   |                          | $ | 7,159  |               |  | $ | 21,481        |   |  | $ | 31,144  |  
|Interest expense                                                                                    |  |                      | (6,892 | ) |                          |   | (6,856 | )             |  |   | (19,459       | ) |  |   | (21,340 | )
|Michigan Single Business Tax and other similar
taxes                                                |  |                      | (717   | ) |                          |   | (1,317 | )             |  |   | (2,510        | ) |  |   | (3,653  | )
|                                                                                                    |  |                      |        |   |                          |   |        |               |  |   |               |  
|Consolidated income (loss) before taxes, minority
interests, and equity in net losses of affiliates |  | $                    | (201   | ) |                          | $ | (1,014 | )             |  | $ | (488          | ) |  | $ | 6,151   |  
|                                                                                                    |  |                      |        |   |                          |   |        |               |  |   |               |  



|9. |  | Guarantor and Non-Guarantor Subsidiaries:
|-- |  | -----------------------------------------

In connection with our $130 million of senior subordinated notes
outstanding, each of our significant domestic restricted subsidiaries, as
defined in the related bond indenture (the Guarantor Subsidiaries),
irrevocably and unconditionally guarantee MSXIs performance as primary
obligor. The following condensed consolidating financial data provides
information regarding the financial position, results of operations and cash
flows of the Guarantor Subsidiaries as set forth below. Separate financial
statements of the Guarantor Subsidiaries are not presented because management
has determined those would not provide material information to the holders of
the senior subordinated notes.

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



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MSX International, Inc.
Notes to Consolidated Financial Statements (Unaudited)  continued
(dollars in thousands unless otherwise stated)



|9. |  | Guarantor and Non-Guarantor Subsidiaries:  continued
|-- |  | -----------------------------------------------------

MSX INTERNATIONAL, INC.

CONDENSED CONSOLIDATING BALANCE SHEETas of September 29, 2002

|                                                      |                                                     |                                                      |          |          |         |  |              |         |         |               |        |         |              |  |          |              |          |   |         |         |         | 
|----------------------------------------------------- | --------------------------------------------------- | ---------------------------------------------------- | -------- | -------- | ------- |  | ------------ | ------- | ------- | ------------- | ------ | ------- | ------------ |  | -------- | ------------ | -------- | - | ------- | ------- | ------- | 
|                                                      |                                                     |                                                      |          | MSXI     |         |  | Guarantor    |         |         | Non-Guarantor |        |         |              |  |          |              | MSXI     |  
|                                                      |                                                     |                                                      |          | (Issuer) |         |  | Subsidiaries |         |         | Subsidiaries  |        |         | Eliminations |  |          | Consolidated |         
|                                                      |                                                     |                                                      |          |          |         |  |              |         |         |               |        |         |              |  |          |              |         
|ASSETS                                                |                                                     |                                                      |          |          |         |  |              |         |         |               |        |         |              |  |          |              |          |   |         |        
|Current assets:                                       |                                                     |                                                      |          |          |         |  |              |         |         |               |        |         |              |  |          |              |          |   |         |        
|                                                      | Cash and cash equivalents                           |                                                      | $        |         |         |  | $            | 249     |         |               | $      | 6,266   |              |  | $        |             |          |   | $       | 6,515   |        
|                                                      | Accounts receivable, net                            |                                                      |          | 127      |         |  |              | 126,082 |         |               |        | 119,269 |              |  |          |             |          |   |         | 245,478 |        
|                                                      | Inventory                                           |                                                      |          |         |         |  |              | 3,596   |         |               |        | 1,309   |              |  |          |             |          |   |         | 4,905   |        
|                                                      | Prepaid expenses and other assets                   |                                                      |          | 39       |         |  |              | 3,584   |         |               |        | 4,536   |              |  |          |             |          |   |         | 8,159   |        
|                                                      | Deferred income taxes, net                          |                                                      |          |         |         |  |              | 2,413   |         |               |        | 2,598   |              |  |          |             |          |   |         | 5,011   |        
|                                                      |                                                     |                                                      |          |          |         |  |              |         |         |               |        |         |              |  |         
|                                                      |                                                     | Total current assets                                 |          |          | 166     |  |              |         | 135,924 |               |        |         | 133,978      |  |          |              |         |   |         |         | 270,068 | 
|Property and equipment, net                           |                                                     |                                                      |         |          |         |  | 22,615       |         |         |               | 19,500 |         |              |  |         |              |          |   | 42,115  |        
|Goodwill, net                                         |                                                     |                                                      |         |          |         |  | 103,743      |         |         |               | 29,957 |         |              |  |         |              |          |   | 133,700 |        
|Investment in subsidiaries                            |                                                     |                                                      | 124,167  |          |         |  | 70,225       |         |         |               | 1,666  |         |              |  | (190,732 | )            |          |   | 5,326   |        
|Other assets                                          |                                                     |                                                      | 6,194    |          |         |  | 3,055        |         |         |               | 289    |         |              |  |         |              |          |   | 9,538   |        
|Deferred income taxes, net                            |                                                     |                                                      | 5,451    |          |         |  | 7,074        |         |         |               | 705    |         |              |  |         |              |          |   | 13,230  |        
|                                                      |                                                     |                                                      |          |          |         |  |              |         |         |               |        |         |              |  |         
|                                                      |                                                     | Total assets                                         |          | $        | 135,978 |  |              | $       | 342,636 |               |        | $       | 186,095      |  |          | $            | (190,732 | ) |         | $       | 473,977 | 
|                                                      |                                                     |                                                      |          |          |         |  |              |         |         |               |        |         |              |  |         
|LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)        |                                                     |                                                      |          |          |         |  |              |         |         |               |        |         |              |  |          |              |          |   |         |        
|Current liabilities:                                  |                                                     |                                                      |          |          |         |  |              |         |         |               |        |         |              |  |          |              |          |   |         |        
|                                                      | Notes payable and current portion
of long-term debt |                                                      | $        | 6,154    |         |  | $            |        |         |               | $      | 5,629   |              |  | $        |             |          |   | $       | 11,783  |        
|                                                      | Accounts payable and book overdrafts                |                                                      |          |         |         |  |              | 75,106  |         |               |        | 58,896  |              |  |          |             |          |   |         | 134,002 |        
|                                                      | Accrued liabilities                                 |                                                      |          | 4,076    |         |  |              | 46,911  |         |               |        | 34,220  |              |  |          |             |          |   |         | 85,207  |        
|                                                      |                                                     |                                                      |          |          |         |  |              |         |         |               |        |         |              |  |         
|                                                      |                                                     | Total current liabilities                            |          |          | 10,230  |  |              |         | 122,017 |               |        |         | 98,745       |  |          |              |         |   |         |         | 230,992 | 
|Long-term debt                                        |                                                     |                                                      | 245,875  |          |         |  |             |         |         |               | 650    |         |              |  |         |              |          |   | 246,525 |        
|Intercompany accounts                                 |                                                     |                                                      | (102,179 | )        |         |  | 91,496       |         |         |               | 10,683 |         |              |  |         |              |          |   |        |        
|Long-term deferred compensation
liabilities and other |                                                     |                                                      |         |          |         |  | 3,799        |         |         |               | 8,332  |         |              |  |         |              |          |   | 12,131  |        
|                                                      |                                                     |                                                      |          |          |         |  |              |         |         |               |        |         |              |  |         
|                                                      |                                                     | Total liabilities                                    |          |          | 153,926 |  |              |         | 217,312 |               |        |         | 118,410      |  |          |              |         |   |         |         | 489,648 | 
|Minority interests                                    |                                                     |                                                      |         |          |         |  |             |         |         |               | 2,277  |         |              |  |         |              |          |   | 2,277   |        
|Redeemable Series A Preferred Stock                   |                                                     |                                                      | 35,945   |          |         |  |             |         |         |               |       |         |              |  |         |              |          |   | 35,945  |        
|Shareholders equity (deficit)                        |                                                     |                                                      | (53,893  | )        |         |  | 125,324      |         |         |               | 65,408 |         |              |  | (190,732 | )            |          |   | (53,893 | )      
|                                                      |                                                     |                                                      |          |          |         |  |              |         |         |               |        |         |              |  |         
|                                                      |                                                     | Total liabilities and shareholders
Equity (deficit) |          | $        | 135,978 |  |              | $       | 342,636 |               |        | $       | 186,095      |  |          | $            | (190,732 | ) |         | $       | 473,977 | 
|                                                      |                                                     |                                                      |          |          |         |  |              |         |         |               |        |         |              |  |         

10



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MSX International, Inc.
Notes to Consolidated Financial Statements (Unaudited)  continued
(dollars in thousands unless otherwise stated)



|9. |  | Guarantor and Non-Guarantor Subsidiaries:  continued
|-- |  | -----------------------------------------------------

MSX INTERNATIONAL, INC.

CONDENSED CONSOLIDATING BALANCE SHEETas of December 30, 2001

|                                                      |                                                     |                                                      |         |          |         |  |              |         |         |               |        |         |              |  |          |              |          |   |         |         |         | 
|----------------------------------------------------- | --------------------------------------------------- | ---------------------------------------------------- | ------- | -------- | ------- |  | ------------ | ------- | ------- | ------------- | ------ | ------- | ------------ |  | -------- | ------------ | -------- | - | ------- | ------- | ------- | 
|                                                      |                                                     |                                                      |         | MSXI     |         |  | Guarantor    |         |         | Non-Guarantor |        |         |              |  |          |              | MSXI     |  
|                                                      |                                                     |                                                      |         | (Issuer) |         |  | Subsidiaries |         |         | Subsidiaries  |        |         | Eliminations |  |          | Consolidated |         
|                                                      |                                                     |                                                      |         |          |         |  |              |         |         |               |        |         |              |  |          |              |         
|ASSETS                                                |                                                     |                                                      |         |          |         |  |              |         |         |               |        |         |              |  |          |              |          |   |         |        
|Current assets:                                       |                                                     |                                                      |         |          |         |  |              |         |         |               |        |         |              |  |          |              |          |   |         |        
|                                                      | Cash and cash equivalents                           |                                                      | $       |         |         |  | $            | 638     |         |               | $      | 4,286   |              |  | $        |             |          |   | $       | 4,924   |        
|                                                      | Accounts receivable, net                            |                                                      |         | 171      |         |  |              | 137,694 |         |               |        | 115,003 |              |  |          |             |          |   |         | 252,868 |        
|                                                      | Inventory                                           |                                                      |         |         |         |  |              | 5,885   |         |               |        | 1,031   |              |  |          |             |          |   |         | 6,916   |        
|                                                      | Prepaid expenses and other assets                   |                                                      |         | 134      |         |  |              | 5,118   |         |               |        | 1,899   |              |  |          |             |          |   |         | 7,151   |        
|                                                      | Deferred income taxes, net                          |                                                      |         |         |         |  |              | 2,836   |         |               |        | 641     |              |  |          |             |          |   |         | 3,477   |        
|                                                      |                                                     |                                                      |         |          |         |  |              |         |         |               |        |         |              |  |         
|                                                      |                                                     | Total current assets                                 |         |          | 305     |  |              |         | 152,171 |               |        |         | 122,860      |  |          |              |         |   |         |         | 275,336 | 
|Property and equipment, net                           |                                                     |                                                      |        |          |         |  | 23,447       |         |         |               | 19,530 |         |              |  |         |              |          |   | 42,977  |        
|Goodwill, net                                         |                                                     |                                                      |        |          |         |  | 131,909      |         |         |               | 38,582 |         |              |  |         |              |          |   | 170,491 |        
|Investment in subsidiaries                            |                                                     |                                                      | 155,563 |          |         |  | 83,439       |         |         |               | 6,342  |         |              |  | (232,783 | )            |          |   | 12,561  |        
|Other assets                                          |                                                     |                                                      | 6,006   |          |         |  | 3,824        |         |         |               | 217    |         |              |  |         |              |          |   | 10,047  |        
|Deferred income taxes, net                            |                                                     |                                                      | 1,373   |          |         |  | (748         | )       |         |               | 2,345  |         |              |  |         |              |          |   | 2,970   |        
|                                                      |                                                     |                                                      |         |          |         |  |              |         |         |               |        |         |              |  |         
|                                                      |                                                     | Total assets                                         |         | $        | 163,247 |  |              | $       | 394,042 |               |        | $       | 189,876      |  |          | $            | (232,783 | ) |         | $       | 514,382 | 
|                                                      |                                                     |                                                      |         |          |         |  |              |         |         |               |        |         |              |  |         
|LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)        |                                                     |                                                      |         |          |         |  |              |         |         |               |        |         |              |  |          |              |          |   |         |        
|Current liabilities:                                  |                                                     |                                                      |         |          |         |  |              |         |         |               |        |         |              |  |          |              |          |   |         |        
|                                                      | Notes
payable and current portion of long-term debt |                                                      | $       | 6,375    |         |  | $            |        |         |               | $      | 9,410   |              |  | $        |             |          |   | $       | 15,785  |        
|                                                      | Accounts payable and book overdrafts                |                                                      |         |         |         |  |              | 102,910 |         |               |        | 50,735  |              |  |          |             |          |   |         | 153,645 |        
|                                                      | Accrued liabilities                                 |                                                      |         | 7,604    |         |  |              | 50,844  |         |               |        | 20,948  |              |  |          |             |          |   |         | 79,396  |        
|                                                      |                                                     |                                                      |         |          |         |  |              |         |         |               |        |         |              |  |         
|                                                      |                                                     | Total current liabilities                            |         |          | 13,979  |  |              |         | 153,754 |               |        |         | 81,093       |  |          |              |         |   |         |         | 248,826 | 
|Long-term debt                                        |                                                     |                                                      | 225,187 |          |         |  |             |         |         |               | 5,682  |         |              |  |         |              |          |   | 230,869 |        
|Intercompany accounts                                 |                                                     |                                                      | (96,432 | )        |         |  | 79,771       |         |         |               | 16,661 |         |              |  |         |              |          |   |        |        
|Long-term deferred compensation
liabilities and other |                                                     |                                                      |        |          |         |  | 4,959        |         |         |               | 8,018  |         |              |  |         |              |          |   | 12,977  |        
|                                                      |                                                     |                                                      |         |          |         |  |              |         |         |               |        |         |              |  |         
|                                                      |                                                     | Total liabilities                                    |         |          | 142,734 |  |              |         | 238,484 |               |        |         | 111,454      |  |          |              |         |   |         |         | 492,672 | 
|Minority interests                                    |                                                     |                                                      |        |          |         |  |             |         |         |               | 1,197  |         |              |  |         |              |          |   | 1,197   |        
|Redeemable Series A Preferred Stock                   |                                                     |                                                      | 36,000  |          |         |  |             |         |         |               |       |         |              |  |         |              |          |   | 36,000  |        
|Shareholders equity (deficit)                        |                                                     |                                                      | (15,487 | )        |         |  | 155,558      |         |         |               | 77,225 |         |              |  | (232,783 | )            |          |   | (15,487 | )      
|                                                      |                                                     |                                                      |         |          |         |  |              |         |         |               |        |         |              |  |         
|                                                      |                                                     | Total liabilities and shareholders
equity (deficit) |         | $        | 163,247 |  |              | $       | 394,042 |               |        | $       | 189,876      |  |          | $            | (232,783 | ) |         | $       | 514,382 | 
|                                                      |                                                     |                                                      |         |          |         |  |              |         |         |               |        |         |              |  |         

11



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##### Table of Contents



MSX International, Inc.
Notes to Consolidated Financial Statements (Unaudited)  continued
(dollars in thousands unless otherwise stated)



|9. |  | Guarantor and Non-Guarantor Subsidiaries:  continued
|-- |  | -----------------------------------------------------

MSX INTERNATIONAL, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONSFor the fiscal quarters ended September 29, 2002 and September 30, 2001

|                                                                                |                                                                                               |   |          |        |   |              |         |         |               |   |        |              |   |   |              |        |   |   |         |        |  
|------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- | - | -------- | ------ | - | ------------ | ------- | ------- | ------------- | - | ------ | ------------ | - | - | ------------ | ------ | - | - | ------- | ------ | -
|                                                                                |                                                                                               |   | MSXI     |        |   | Guarantor    |         |         | Non-Guarantor |   |        |              |   |   |              | MSXI   |  
|                                                                                |                                                                                               |   | (Issuer) |        |   | Subsidiaries |         |         | Subsidiaries  |   |        | Eliminations |   |   | Consolidated |       
|                                                                                |                                                                                               |   |          |        |   |              |         |         |               |   |        |              |   |   |              |       
|Fiscal Quarter Ended September 29, 2002:                                        |                                                                                               |   |          |        |   |              |         |         |               |   |        |              |   |   |              |        |   |   |         |       
|Net sales                                                                       |                                                                                               | $ |         |        |   | $            | 105,623 |         |               | $ | 97,894 |              |   | $ | (2,961       | )      |   | $ | 200,556 |       
|Cost of sales                                                                   |                                                                                               |   |         |        |   |              | 91,034  |         |               |   | 85,046 |              |   |   | (2,961       | )      |   |   | 173,119 |       
|                                                                                |                                                                                               |   |          |        |   |              |         |         |               |   |        |              |   |   |             
|                                                                                | Gross profit                                                                                  |   |          |       |   |              |         | 14,589  |               |   |        | 12,848       |   |   |              |       |   |   |         | 27,437 |  
|Selling, general and administrative expenses                                    |                                                                                               |   |         |        |   |              | 11,436  |         |               |   | 9,310  |              |   |   |             |        |   |   | 20,746  |       
|Amortization of goodwill and other intangibles                                  |                                                                                               |   |         |        |   |              |        |         |               |   |       |              |   |   |             |        |   |   |        |       
|                                                                                |                                                                                               |   |          |        |   |              |         |         |               |   |        |              |   |   |             
|                                                                                | Operating income                                                                              |   |          |       |   |              |         | 3,153   |               |   |        | 3,538        |   |   |              |       |   |   |         | 6,691  |  
|Interest income (expense), net                                                  |                                                                                               |   | (4,012   | )      |   |              | (2,464  | )       |               |   | (416   | )            |   |   |             |        |   |   | (6,892  | )     
|                                                                                |                                                                                               |   |          |        |   |              |         |         |               |   |        |              |   |   |             
|                                                                                | Income (loss) before income taxes, minority
interests, and equity in net losses of affiliates |   |          | (4,012 | ) |              |         | 689     |               |   |        | 3,122        |   |   |              |       |   |   |         | (201   | )
|Income tax provision (benefit)                                                  |                                                                                               |   | (1,389   | )      |   |              | 1,115   |         |               |   | 503    |              |   |   |             |        |   |   | 229     |       
|Minority interests and equity in net income/
losses of affiliates, net of taxes |                                                                                               |   | 2,287    |        |   |              | 2,713   |         |               |   | 44     |              |   |   | (4,950       | )      |   |   | 94      |       
|                                                                                |                                                                                               |   |          |        |   |              |         |         |               |   |        |              |   |   |             
|                                                                                | Income (loss) before cumulative effect of
accounting change for goodwill impairment           |   |          | (336   | ) |              |         | 2,287   |               |   |        | 2,663        |   |   |              | (4,950 | ) |   |         | (336   | )
|Cumulative effect of accounting change for goodwill impairment, net
of taxes    |                                                                                               |   |         |        |   |              |        |         |               |   |       |              |   |   |             |        |   |   |        |       
|                                                                                |                                                                                               |   |          |        |   |              |         |         |               |   |        |              |   |   |             
|                                                                                | Net income (loss)                                                                             |   | $        | (336   | ) |              | $       | 2,287   |               |   | $      | 2,663        |   |   | $            | (4,950 | ) |   | $       | (336   | )
|                                                                                |                                                                                               |   |          |        |   |              |         |         |               |   |        |              |   |   |             
|Fiscal Quarter Ended September 30, 2001:                                        |                                                                                               |   |          |        |   |              |         |         |               |   |        |              |   |   |              |        |   |   |         |       
|Net sales                                                                       |                                                                                               | $ |         |        |   | $            | 130,051 |         |               | $ | 87,829 |              |   | $ | (3,974       | )      |   | $ | 213,906 |       
|Cost of sales                                                                   |                                                                                               |   |         |        |   |              | 109,005 |         |               |   | 82,236 |              |   |   | (3,974       | )      |   |   | 187,267 |       
|                                                                                |                                                                                               |   |          |        |   |              |         |         |               |   |        |              |   |   |             
|                                                                                | Gross profit                                                                                  |   |          |       |   |              |         | 21,046  |               |   |        | 5,593        |   |   |              |       |   |   |         | 26,639 |  
|Selling, general and administrative expenses                                    |                                                                                               |   |         |        |   |              | 13,270  |         |               |   | 5,979  |              |   |   |             |        |   |   | 19,249  |       
|Amortization of goodwill and other intangibles                                  |                                                                                               |   |         |        |   |              | 1,168   |         |               |   | 380    |              |   |   |             |        |   |   | 1,548   |       
|                                                                                |                                                                                               |   |          |        |   |              |         |         |               |   |        |              |   |   |             
|                                                                                | Operating income                                                                              |   |          |       |   |              |         | 6,608   |               |   |        | (766         | ) |   |              |       |   |   |         | 5,842  |  
|Interest income (expense), net                                                  |                                                                                               |   | 13,147   |        |   |              | (17,893 | )       |               |   | (2,110 | )            |   |   |             |        |   |   | (6,856  | )     
|                                                                                |                                                                                               |   |          |        |   |              |         |         |               |   |        |              |   |   |             
|                                                                                | Income (loss) before income taxes, minority
interests, and equity in net losses of affiliates |   |          | 13,147 |   |              |         | (11,285 | )             |   |        | (2,876       | ) |   |              |       |   |   |         | (1,014 | )
|Income tax provision (benefit)                                                  |                                                                                               |   | 4,888    |        |   |              | (4,106  | )       |               |   | (1,187 | )            |   |   |             |        |   |   | (405    | )     
|Minority interests and equity in net income/
losses of affiliates, net of taxes |                                                                                               |   | (9,375   | )      |   |              | (2,196  | )       |               |   | (267   | )            |   |   | 11,331       |        |   |   | (507    | )     
|                                                                                | Income (loss) before cumulative effect of
accounting change for goodwill impairment           |   |          | (1,116 | ) |              |         | (9,375  | )             |   |        | (1,956       | ) |   |              | 11,331 |   |   |         | (1,116 | )
|Cumulative effect of accounting change for goodwill impairment, net of taxes    |                                                                                               |   |         |        |   |              |        |         |               |   |       |              |   |   |             |        |   |   |        |       
|                                                                                |                                                                                               |   |          |        |   |              |         |         |               |   |        |              |   |   |             
|                                                                                | Net income (loss)                                                                             |   | $        | (1,116 | ) |              | $       | (9,375  | )             |   | $      | (1,956       | ) |   | $            | 11,331 |   |   | $       | (1,116 | )
|                                                                                |                                                                                               |   |          |        |   |              |         |         |               |   |        |              |   |   |             

12



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##### Table of Contents



MSX International, Inc.
Notes to Consolidated Financial Statements (Unaudited)  continued
(dollars in thousands unless otherwise stated)



|9. |  | Guarantor and Non-Guarantor Subsidiaries:  continued
|-- |  | -----------------------------------------------------

MSX INTERNATIONAL, INC.

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONSFor the fiscal nine months ended September 29, 2002 and September 30, 2001

|                                                                                |                  |                                                                                               |         |          |         |   |              |       |         |               |         |        |              |   |         |              |        |   |         |        |         |  
|------------------------------------------------------------------------------- | ---------------- | --------------------------------------------------------------------------------------------- | ------- | -------- | ------- | - | ------------ | ----- | ------- | ------------- | ------- | ------ | ------------ | - | ------- | ------------ | ------ | - | ------- | ------ | ------- | -
|                                                                                |                  |                                                                                               |         | MSXI     |         |   | Guarantor    |       |         | Non-Guarantor |         |        |              |   |         |              | MSXI   |  
|                                                                                |                  |                                                                                               |         | (Issuer) |         |   | Subsidiaries |       |         | Subsidiaries  |         |        | Eliminations |   |         | Consolidated |       
|                                                                                |                  |                                                                                               |         |          |         |   |              |       |         |               |         |        |              |   |         |              |       
|Fiscal Nine Months Ended September 29, 2002:                                    |                  |                                                                                               |         |          |         |   |              |       |         |               |         |        |              |   |         |              |        |   |         |       
|Net sales                                                                       |                  | $                                                                                             |        |          |         | $ | 337,016      |       |         | $             | 290,474 |        |              | $ | (9,320  | )            |        | $ | 618,170 |       
|Cost of sales                                                                   |                  |                                                                                               |        |          |         |   | 293,460      |       |         |               | 254,063 |        |              |   | (9,320  | )            |        |   | 538,203 |       
|                                                                                |                  |                                                                                               |         |          |         |   |              |       |         |               |         |        |              |   |        
|                                                                                |                  | Gross profit                                                                                  |         |          |        |   |              |       | 43,556  |               |         |        | 36,411       |   |         |              |       |   |         |        | 79,967  |  
|Selling, general and administrative expenses                                    |                  |                                                                                               |        |          |         |   | 35,259       |       |         |               | 25,737  |        |              |   |        |              |        |   | 60,996  |       
|Amortization of goodwill and other intangibles                                  |                  |                                                                                               |        |          |         |   |             |       |         |               |        |        |              |   |        |              |        |   |        |       
|                                                                                |                  |                                                                                               |         |          |         |   |              |       |         |               |         |        |              |   |        
|                                                                                | Operating income |                                                                                               |         |         |         |   |              | 8,297 |         |               |         | 10,674 |              |   |         |             |        |   |         | 18,971 |        
|Interest income (expense), net                                                  |                  |                                                                                               | (10,216 | )        |         |   | (7,825       | )     |         |               | (1,418  | )      |              |   |        |              |        |   | (19,459 | )     
|                                                                                |                  |                                                                                               |         |          |         |   |              |       |         |               |         |        |              |   |        
|                                                                                |                  | Income (loss) before income taxes, minority
interests, and equity in net losses of affiliates |         |          | (10,216 | ) |              |       | 472     |               |         |        | 9,256        |   |         |              |       |   |         |        | (488    | )
|Income tax provision (benefit)                                                  |                  |                                                                                               | (3,558  | )        |         |   | 2,262        |       |         |               | 3,192   |        |              |   |        |              |        |   | 1,896   |       
|Minority interests and equity in net income/losses of affiliates, net of taxes  |                  |                                                                                               | (34,350 | )        |         |   | (14,462      | )     |         |               | (333    | )      |              |   | 48,623  |              |        |   | (522    | )     
|                                                                                |                  |                                                                                               |         |          |         |   |              |       |         |               |         |        |              |   |        
|                                                                                |                  | Income (loss) before cumulative effect of
accounting change for goodwill impairment           |         |          | (41,008 | ) |              |       | (16,252 | )             |         |        | 5,731        |   |         |              | 48,623 |   |         |        | (2,906  | )
|Cumulative effect of accounting change for goodwill impairment,
net of taxes    |                  |                                                                                               |        |          |         |   | (18,098      | )     |         |               | (20,004 | )      |              |   |        |              |        |   | (38,102 | )     
|                                                                                |                  |                                                                                               |         |          |         |   |              |       |         |               |         |        |              |   |        
|                                                                                |                  | Net income (loss)                                                                             |         | $        | (41,008 | ) |              | $     | (34,350 | )             |         | $      | (14,273      | ) |         | $            | 48,623 |   |         | $      | (41,008 | )
|                                                                                |                  |                                                                                               |         |          |         |   |              |       |         |               |         |        |              |   |        
|Fiscal Nine Months Ended September 30, 2001:                                    |                  |                                                                                               |         |          |         |   |              |       |         |               |         |        |              |   |         |              |        |   |         |       
|Net sales                                                                       |                  | $                                                                                             |        |          |         | $ | 438,182      |       |         | $             | 287,312 |        |              | $ | (13,030 | )            |        | $ | 712,464 |       
|Cost of sales                                                                   |                  |                                                                                               |        |          |         |   | 372,082      |       |         |               | 262,084 |        |              |   | (13,030 | )            |        |   | 621,136 |       
|                                                                                |                  |                                                                                               |         |          |         |   |              |       |         |               |         |        |              |   |        
|                                                                                |                  | Gross profit                                                                                  |         |          |        |   |              |       | 66,100  |               |         |        | 25,228       |   |         |              |       |   |         |        | 91,328  |  
|Selling, general and administrative expenses                                    |                  |                                                                                               |        |          |         |   | 41,762       |       |         |               | 17,415  |        |              |   |        |              |        |   | 59,177  |       
|Amortization of goodwill and other intangibles                                  |                  |                                                                                               |        |          |         |   | 3,505        |       |         |               | 1,155   |        |              |   |        |              |        |   | 4,660   |       
|                                                                                |                  |                                                                                               |         |          |         |   |              |       |         |               |         |        |              |   |        
|                                                                                |                  | Operating income                                                                              |         |          |        |   |              |       | 20,833  |               |         |        | 6,658        |   |         |              |       |   |         |        | 27,491  |  
|Interest income (expense), net                                                  |                  |                                                                                               | (811    | )        |         |   | (17,772      | )     |         |               | (2,757  | )      |              |   |        |              |        |   | (21,340 | )     
|                                                                                |                  |                                                                                               |         |          |         |   |              |       |         |               |         |        |              |   |        
|                                                                                |                  | Income (loss) before income taxes, minority
interests, and equity in net losses of affiliates |         |          | (811    | ) |              |       | 3,061   |               |         |        | 3,901        |   |         |              |       |   |         |        | 6,151   |  
|Income tax provision (benefit)                                                  |                  |                                                                                               | (255    | )        |         |   | 1,202        |       |         |               | 1,609   |        |              |   |        |              |        |   | 2,556   |       
|Minority interests and equity in net income/
losses of affiliates, net of taxes |                  |                                                                                               | 2,894   |          |         |   | 1,035        |       |         |               | (770    | )      |              |   | (4,416  | )            |        |   | (1,257  | )     
|                                                                                |                  |                                                                                               |         |          |         |   |              |       |         |               |         |        |              |   |        
|                                                                                |                  | Income (loss) before cumulative effect of
accounting change for goodwill impairment           |         |          | 2,338   |   |              |       | 2,894   |               |         |        | 1,522        |   |         |              | (4,416 | ) |         |        | 2,338   |  
|Cumulative effect of accounting change for goodwill impairment,
net of taxes    |                  |                                                                                               |        |          |         |   |             |       |         |               |        |        |              |   |        |              |        |   |        |       
|                                                                                |                  |                                                                                               |         |          |         |   |              |       |         |               |         |        |              |   |        
|                                                                                |                  | Net income                                                                                    |         | $        | 2,338   |   |              | $     | 2,894   |               |         | $      | 1,522        |   |         | $            | (4,416 | ) |         | $      | 2,338   |  
|                                                                                |                  |                                                                                               |         |          |         |   |              |       |         |               |         |        |              |   |        

13



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##### Table of Contents



MSX International, Inc.
Notes to Consolidated Financial Statements (Unaudited)  continued
(dollars in thousands unless otherwise stated)



|9. |  | Guarantor and Non-Guarantor Subsidiaries:  continued
|-- |  | -----------------------------------------------------

MSX INTERNATIONAL, INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWSfor the fiscal nine months ended September 29, 2002

|                                                                     |                                                       |                                            |                                                                |         |          |        |        |              |   |         |               |         |   |              |        |        |              |         |        |         |   |         |  
|-------------------------------------------------------------------- | ----------------------------------------------------- | ------------------------------------------ | -------------------------------------------------------------- | ------- | -------- | ------ | ------ | ------------ | - | ------- | ------------- | ------- | - | ------------ | ------ | ------ | ------------ | ------- | ------ | ------- | - | ------- | -
|                                                                     |                                                       |                                            |                                                                |         | MSXI     |        |        | Guarantor    |   |         | Non-Guarantor |         |   |              |        |        |              | MSXI    |       
|                                                                     |                                                       |                                            |                                                                |         | (Issuer) |        |        | Subsidiaries |   |         | Subsidiaries  |         |   | Eliminations |        |        | Consolidated |        
|                                                                     |                                                       |                                            |                                                                |         |          |        |        |              |   |         |               |         |   |              |        |        |              |        
|Cash flows from operating activities:                                |                                                       |                                            |                                                                |         |          |        |        |              |   |         |               |         |   |              |        |        |              |         |        |        
|                                                                     | Net loss                                              |                                            | $                                                              | (41,008 | )        |        | $      | (34,350      | ) |         | $             | (14,273 | ) |              | $      | 48,623 |              |         | $      | (41,008 | )
|                                                                     | Adjustments to reconcile net loss to                  |                                            |                                                                |         |          |        |        |              |   |         |               |         |   |              |        |        |              |         |        |         |  
|                                                                     |                                                       | net cash provided by operating activities: |                                                                |         |          |        |        |              |   |         |               |         |   |              |        |        |              |         |        |         |   |        
|                                                                     |                                                       |                                            | Cumulative effect of accounting change for
goodwill impairment |         |          |       |        |              |   | 18,098  |               |         |   | 20,004       |        |        |              |        |        |         |   | 38,102  |  
|                                                                     |                                                       |                                            | Equity in earnings of subsidiaries                             |         |          | 34,350 |        |              |   | 14,462  |               |         |   | 333          |        |        |              | (48,623 | )      |         |   | 522     |  
|                                                                     |                                                       |                                            | Depreciation                                                   |         |          |       |        |              |   | 6,791   |               |         |   | 7,130        |        |        |              |        |        |         |   | 13,921  |  
|                                                                     |                                                       |                                            | Amortization                                                   |         |          | 1,332  |        |              |   |        |               |         |   |             |        |        |              |        |        |         |   | 1,332   |  
|                                                                     |                                                       |                                            | Deferred taxes                                                 |         |          | (4,078 | )      |              |   | 2,345   |               |         |   | (383         | )      |        |              |        |        |         |   | (2,116  | )
|                                                                     |                                                       |                                            | (Gain) loss on sale/disposal of property
and equipment         |         |          |       |        |              |   | 26      |               |         |   | 238          |        |        |              |        |        |         |   | 264     |  
|                                                                     |                                                       |                                            | (Increase) decrease in receivables                             |         |          | (154   | )      |              |   | 11,613  |               |         |   | 1,795        |        |        |              |        |        |         |   | 13,254  |  
|                                                                     |                                                       |                                            | (Increase) decrease in inventory                               |         |          |       |        |              |   | 2,288   |               |         |   | (278         | )      |        |              |        |        |         |   | 2,010   |  
|                                                                     |                                                       |                                            | (Increase) decrease in prepaid expenses
and other assets       |         |          | 95     |        |              |   | 1,534   |               |         |   | (2,566       | )      |        |              |        |        |         |   | (937    | )
|                                                                     |                                                       |                                            | Increase (decrease) in current liabilities                     |         |          | (3,527 | )      |              |   | (23,292 | )             |         |   | 15,416       |        |        |              |        |        |         |   | (11,403 | )
|                                                                     |                                                       |                                            | Other, net                                                     |         |          | (75    | )      |              |   | (352    | )             |         |   | 513          |        |        |              |        |        |         |   | 86      |  
|                                                                     |                                                       |                                            |                                                                |         |          |        |        |              |   |         |               |         |   |              |       
|Net cash provided by (used for) operating activities                 |                                                       |                                            | (13,065                                                        | )       |          |        | (837   | )            |   |         | 27,929        |         |   |              |       |        |              |         | 14,027 |        
|                                                                     |                                                       |                                            |                                                                |         |          |        |        |              |   |         |               |         |   |              |       
|Cash flows from investing activities:                                |                                                       |                                            |                                                                |         |          |        |        |              |   |         |               |         |   |              |        |        |              |         |        |        
|                                                                     | Capital expenditures                                  |                                            |                                                                |        |          |        |        | (5,689       | ) |         |               | (2,172  | ) |              |        |       |              |         |        | (7,861  | )
|                                                                     | Acquisition of businesses, net of cash acquired       |                                            |                                                                |        |          |        |        | (199         | ) |         |               | (2,933  | ) |              |        |       |              |         |        | (3,132  | )
|                                                                     | Proceeds from sale/disposal of property and
equipment |                                            |                                                                |        |          |        |        | 36           |   |         |               | 134     |   |              |        |       |              |         |        | 170     |  
|                                                                     | Other, net                                            |                                            |                                                                |        |          |        |        | 1,857        |   |         |               |        |   |              |        |       |              |         |        | 1,857   |  
|                                                                     |                                                       |                                            |                                                                |         |          |        |        |              |   |         |               |         |   |              |       
|Net cash used for investing activities                               |                                                       |                                            |                                                               |         |          |        | (3,995 | )            |   |         | (4,971        | )       |   |              |       |        |              |         | (8,966 | )      
|                                                                     |                                                       |                                            |                                                                |         |          |        |        |              |   |         |               |         |   |              |       
|Cash flows from financing activities:                                |                                                       |                                            |                                                                |         |          |        |        |              |   |         |               |         |   |              |        |        |              |         |        |        
|                                                                     | Intercompany                                          |                                            |                                                                | (5,747  | )        |        |        | 12,392       |   |         |               | (6,645  | ) |              |        |       |              |         |        |        |  
|                                                                     | Transactions with subsidiaries                        |                                            |                                                                | (2,955  | )        |        |        | (2,456       | ) |         |               | (470    | ) |              |        | 5,881  |              |         |        |        |  
|                                                                     | Proceeds from issuance of debt                        |                                            |                                                                | 15,450  |          |        |        |             |   |         |               |        |   |              |        |       |              |         |        | 15,450  |  
|                                                                     | Repayment of debt                                     |                                            |                                                                | (28,746 | )        |        |        |             |   |         |               |        |   |              |        |       |              |         |        | (28,746 | )
|                                                                     | Debt issuance costs                                   |                                            |                                                                | (1,445  | )        |        |        |             |   |         |               |        |   |              |        |       |              |         |        | (1,445  | )
|                                                                     | Changes in revolving debt, net                        |                                            |                                                                | 33,762  |          |        |        |             |   |         |               | (14,105 | ) |              |        |       |              |         |        | 19,657  |  
|                                                                     | Changes in book overdraft, net                        |                                            |                                                                |        |          |        |        | (8,448       | ) |         |               | 27      |   |              |        |       |              |         |        | (8,421  | )
|                                                                     | Repurchase of common and preferred stock              |                                            |                                                                | (209    | )        |        |        |             |   |         |               |        |   |              |        |       |              |         |        | (209    | )
|                                                                     |                                                       |                                            |                                                                |         |          |        |        |              |   |         |               |         |   |              |       
|Net cash provided by (used for) financing activities                 |                                                       |                                            | 10,110                                                         |         |          |        | 1,488  |              |   |         | (21,193       | )       |   |              | 5,881  |        |              |         | (3,714 | )      
|                                                                     |                                                       |                                            |                                                                |         |          |        |        |              |   |         |               |         |   |              |       
|Effect of foreign exchange rate changes on cash and
cash equivalents |                                                       |                                            | 2,955                                                          |         |          |        | 2,955  |              |   |         | 215           |         |   |              | (5,881 | )      |              |         | 244    |        
|                                                                     |                                                       |                                            |                                                                |         |          |        |        |              |   |         |               |         |   |              |       
|Cash and cash equivalents:                                           |                                                       |                                            |                                                                |         |          |        |        |              |   |         |               |         |   |              |        |        |              |         |        |        
|                                                                     | Increase (decrease) for the period                    |                                            |                                                                |        |          |        |        | (389         | ) |         |               | 1,980   |   |              |        |       |              |         |        | 1,591   |  
|                                                                     | Balance, beginning of period                          |                                            |                                                                |        |          |        |        | 638          |   |         |               | 4,286   |   |              |        |       |              |         |        | 4,924   |  
|                                                                     |                                                       |                                            |                                                                |         |          |        |        |              |   |         |               |         |   |              |       
|                                                                     | Balance, end of period                                |                                            | $                                                              |        |          |        | $      | 249          |   |         | $             | 6,266   |   |              | $      |       |              |         | $      | 6,515   |  
|                                                                     |                                                       |                                            |                                                                |         |          |        |        |              |   |         |               |         |   |              |       

14



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##### Table of Contents



MSX International, Inc.
Notes to Consolidated Financial Statements (Unaudited)  continued
(dollars in thousands unless otherwise stated)



|9. |  | Guarantor and Non-Guarantor Subsidiaries:  continued
|-- |  | -----------------------------------------------------

MSX INTERNATIONAL, INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWSfor the fiscal nine months ended September 30, 2001

|                                                                     |                                                                                   |                                                          |        |          |        |   |              |         |         |               |         |        |              |   |        |              |       |  |         |         |         |  
|-------------------------------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------------------- | ------ | -------- | ------ | - | ------------ | ------- | ------- | ------------- | ------- | ------ | ------------ | - | ------ | ------------ | ----- |  | ------- | ------- | ------- | -
|                                                                     |                                                                                   |                                                          |        | MSXI     |        |   | Guarantor    |         |         | Non-Guarantor |         |        |              |   |        |              | MSXI  | 
|                                                                     |                                                                                   |                                                          |        | (Issuer) |        |   | Subsidiaries |         |         | Subsidiaries  |         |        | Eliminations |   |        | Consolidated |      
|                                                                     |                                                                                   |                                                          |        |          |        |   |              |         |         |               |         |        |              |   |        |              |      
|Cash flows from operating activities:                                |                                                                                   |                                                          |        |          |        |   |              |         |         |               |         |        |              |   |        |              |       |  |         |        
|                                                                     | Net income                                                                        |                                                          | $      | 2,338    |        |   | $            | 2,894   |         |               | $       | 1,522  |              |   | $      | (4,416       | )     |  | $       | 2,338   |        
|                                                                     | Adjustments to reconcile net income to net
cash provided by operating activities: |                                                          |        |          |        |   |              |         |         |               |         |        |              |   |        |              |       |  |         |         |        
|                                                                     |                                                                                   | Equity in earnings of subsidiaries                       |        |          | (2,894 | ) |              |         | (1,035  | )             |         |        | 770          |   |        |              | 4,416 |  |         |         | 1,257   |  
|                                                                     |                                                                                   | Depreciation                                             |        |          |       |   |              |         | 6,050   |               |         |        | 6,302        |   |        |              |      |  |         |         | 12,352  |  
|                                                                     |                                                                                   | Amortization, including goodwill                         |        |          | 837    |   |              |         | 3,505   |               |         |        | 1,155        |   |        |              |      |  |         |         | 5,497   |  
|                                                                     |                                                                                   | Deferred taxes                                           |        |          | (552   | ) |              |         | 361     |               |         |        | (1,675       | ) |        |              |      |  |         |         | (1,866  | )
|                                                                     |                                                                                   | (Gain) loss on sale/disposal of property
and equipment   |        |          |       |   |              |         | 45      |               |         |        | 1            |   |        |              |      |  |         |         | 46      |  
|                                                                     |                                                                                   | (Increase) decrease in receivables                       |        |          | 51     |   |              |         | 24,623  |               |         |        | 5,610        |   |        |              |      |  |         |         | 30,284  |  
|                                                                     |                                                                                   | (Increase) decrease in inventory                         |        |          |       |   |              |         | (196    | )             |         |        | 487          |   |        |              |      |  |         |         | 291     |  
|                                                                     |                                                                                   | (Increase) decrease in prepaid expenses
and other assets |        |          | 95     |   |              |         | (770    | )             |         |        | (1,375       | ) |        |              |      |  |         |         | (2,050  | )
|                                                                     |                                                                                   | Increase (decrease) in current liabilities               |        |          | 1,570  |   |              |         | (32,001 | )             |         |        | (10,155      | ) |        |              |      |  |         |         | (40,586 | )
|                                                                     |                                                                                   | Other, net                                               |        |          |       |   |              |         | (1,221  | )             |         |        | 303          |   |        |              |      |  |         |         | (918    | )
|                                                                     |                                                                                   |                                                          |        |          |        |   |              |         |         |               |         |        |              |   |       
|Net cash provided by operating activities                            |                                                                                   |                                                          | 1,445  |          |        |   | 2,255        |         |         |               | 2,945   |        |              |   |       |              |       |  | 6,645   |        
|                                                                     |                                                                                   |                                                          |        |          |        |   |              |         |         |               |         |        |              |   |       
|Cash flows from investing activities:                                |                                                                                   |                                                          |        |          |        |   |              |         |         |               |         |        |              |   |        |              |       |  |         |        
|                                                                     | Capital expenditures                                                              |                                                          |        |         |        |   |              | (7,984  | )       |               |         | (5,921 | )            |   |        |             |       |  |         | (13,905 | )      
|                                                                     | Acquisition of businesses, net of cash acquired                                   |                                                          |        |         |        |   |              | (11,533 | )       |               |         | (4,599 | )            |   |        |             |       |  |         | (16,132 | )      
|                                                                     | Proceeds from sale/disposal of property and
equipment                             |                                                          |        |         |        |   |              | 47      |         |               |         | 100    |              |   |        |             |       |  |         | 147     |        
|                                                                     | Other, net                                                                        |                                                          |        |         |        |   |              | 44      |         |               |         |       |              |   |        |             |       |  |         | 44      |        
|                                                                     |                                                                                   |                                                          |        |          |        |   |              |         |         |               |         |        |              |   |       
|Net cash used for investing activities                               |                                                                                   |                                                          |       |          |        |   | (19,426      | )       |         |               | (10,420 | )      |              |   |       |              |       |  | (29,846 | )      
|                                                                     |                                                                                   |                                                          |        |          |        |   |              |         |         |               |         |        |              |   |       
|Cash flows from financing activities:                                |                                                                                   |                                                          |        |          |        |   |              |         |         |               |         |        |              |   |        |              |       |  |         |        
|                                                                     | Intercompany                                                                      |                                                          |        | (31,564  | )      |   |              | 27,846  |         |               |         | 3,718  |              |   |        |             |       |  |         |        |        
|                                                                     | Transactions with subsidiaries                                                    |                                                          |        | (2,184   | )      |   |              | (2,220  | )       |               |         | 70     |              |   |        | 4,334        |       |  |         |        |        
|                                                                     | Proceeds from issuance of debt                                                    |                                                          |        |          |        |   |              |         |         |               |         |        |              |   |        |              |       |  |         |         |        
|                                                                     | Repayment of debt, net                                                            |                                                          |        | (3,938   | )      |   |              |        |         |               |         |       |              |   |        |             |       |  |         | (3,938  | )      
|                                                                     | Debt issuance costs, net                                                          |                                                          |        | (28      | )      |   |              |        |         |               |         |       |              |   |        |             |       |  |         | (28     | )      
|                                                                     | Changes in revolving debt, net                                                    |                                                          |        | 34,646   |        |   |              | (10,196 | )       |               |         | 596    |              |   |        |             |       |  |         | 25,046  |        
|                                                                     | Changes in book overdraft, net                                                    |                                                          |        |         |        |   |              | (675    | )       |               |         | (103   | )            |   |        |             |       |  |         | (778    | )      
|                                                                     | Repurchase of common and preferred stock                                          |                                                          |        | (566     | )      |   |              | (3,612  | )       |               |         |       |              |   |        |             |       |  |         | (4,178  | )      
|                                                                     | Sale of common and preferred stock                                                |                                                          |        |         |        |   |              | 3,612   |         |               |         |       |              |   |        |             |       |  |         | 3,612   |        
|                                                                     |                                                                                   |                                                          |        |          |        |   |              |         |         |               |         |        |              |   |       
|Net cash provided by (used for) financing activities                 |                                                                                   |                                                          | (3,634 | )        |        |   | 14,755       |         |         |               | 4,281   |        |              |   | 4,334  |              |       |  | 19,736  |        
|                                                                     |                                                                                   |                                                          |        |          |        |   |              |         |         |               |         |        |              |   |       
|Effect of foreign exchange rate changes on cash and
cash equivalents |                                                                                   |                                                          | 2,189  |          |        |   | 2,189        |         |         |               | 2,463   |        |              |   | (4,334 | )            |       |  | 2,507   |        
|                                                                     |                                                                                   |                                                          |        |          |        |   |              |         |         |               |         |        |              |   |       
|Cash and cash equivalents:                                           |                                                                                   |                                                          |        |          |        |   |              |         |         |               |         |        |              |   |        |              |       |  |         |        
|                                                                     | Decrease for the period                                                           |                                                          |        |         |        |   |              | (227    | )       |               |         | (731   | )            |   |        |             |       |  |         | (958    | )      
|                                                                     | Balance, beginning of period                                                      |                                                          |        |         |        |   |              | 569     |         |               |         | 4,117  |              |   |        |             |       |  |         | 4,686   |        
|                                                                     |                                                                                   |                                                          |        |          |        |   |              |         |         |               |         |        |              |   |       
|                                                                     | Balance, end of period                                                            |                                                          | $      |         |        |   | $            | 342     |         |               | $       | 3,386  |              |   | $      |             |       |  | $       | 3,728   |        
|                                                                     |                                                                                   |                                                          |        |          |        |   |              |         |         |               |         |        |              |   |       

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##### Table of Contents






ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Outlook

As reflected in our year to date operating results, our business continues
to be challenged by reduced demand in the IT staffing industry, cost
containment actions at our major customers, and postponed product development
initiatives in the automotive industry resulting from economic uncertainties.
In response to these challenges, we have taken, and continue to take, actions
to reduce our cost structure commensurate with current levels of business while
investing in our product portfolio. We are focused on bundling our customized
services into standardized and scalable product offerings. We believe that
this positioning of our services as integrated solutions will improve our value
proposition to existing and prospective customers. Our goal is to sell high
value solutions by leveraging our global organization and existing customer
base. Although we cannot provide assurance about the future, we believe our
efforts will result in improved profitability, operating efficiencies, and
expansion of our customer base, including growth in non-automotive markets.

Net Sales

For the first nine months of fiscal 2002, consolidated net sales decreased
$94.3 million, or 13.2%, from $712.5 million during fiscal 2001 to $618.2
million during fiscal 2002. For the third quarter of fiscal 2002, consolidated
net sales decreased $13.3 million, or 6.2%, from $213.9 million in fiscal 2001
to $200.6 million during fiscal 2002. Overall, the decline in sales reflects
weak demand for automotive engineering and human capital management services as
our customers have reduced or delayed spending on information technology
projects and product development programs. Our sales by service line were as
follows:

|                    |                                      |  |                        |         |  |      |   |         |   |  |        |         |   |  |  |       |   
|------------------- | ------------------------------------ |  | ---------------------- | ------- |  | ---- | - | ------- | - |  | ------ | ------- | - |  |  | ----- | --
|                    |                                      |  |                        |         |  |      |   |         |   |  | Change |        
|                    |                                      |  |                        |         |  |      |   |         |   |  |        |        
|                    |                                      |  | 2002                   |         |  | 2001 |   |         | $ |  |        | %       |  
|                    |                                      |  |                        |         |  |      |   |         |   |  |        |         |  
|                    |                                      |  | (dollars in thousands) |        
|Fiscal Quarter:     |                                      |  |                        |         |  |      |   |         |   |  |        |         |   |  |  |      
|                    | Collaborative Engineering Management |  | $                      | 55,191  |  |      | $ | 60,337  |   |  | $      | (5,146  | ) |  |  | (8.5  | %)
|                    | Human Capital Management Services    |  |                        | 79,662  |  |      |   | 95,026  |   |  |        | (15,364 | ) |  |  | (16.2 | %)
|                    | Other Collaborative Services         |  |                        | 65,703  |  |      |   | 58,543  |   |  |        | 7,160   |   |  |  | 12.2  | % 
|Fiscal Nine Months: |                                      |  |                        |         |  |      |   |         |   |  |        |         |   |  |  |      
|                    | Collaborative Engineering Management |  | $                      | 172,115 |  |      | $ | 199,032 |   |  | $      | (26,917 | ) |  |  | (13.5 | %)
|                    | Human Capital Management Services    |  |                        | 249,789 |  |      |   | 323,701 |   |  |        | (73,912 | ) |  |  | (22.8 | %)
|                    | Other Collaborative Services         |  |                        | 196,266 |  |      |   | 189,731 |   |  |        | 6,535   |   |  |  | 3.4   | % 

Engineering sales during the third quarter and first nine months of 2002
include about $4.5 million and $12.7 million, respectively, of incremental
sales from the consolidation of Cadform-MSX Engineering GmbH effective January
1, 2002. Excluding incremental sales from the consolidation of Cadform,
collaborative engineering sales declined 16.0% compared to the third quarter of
2001 and 19.9% compared to the first nine months of 2001. The decrease
reflects lower demand for automotive design and specialty work in substantially
all of our geographic markets. The decline in human capital management
services reflects reduced volumes in our engineering staffing business in North
America and Europe and reduced volumes of IT staffing services in our North
American markets. In addition, our human capital management programs have been
subject to customer mandated price reductions. Sales of other collaborative
services during the third quarter and first nine months of fiscal 2002 include
about $1.4 million and $5.3 million, respectively, of incremental sales from
the acquisition of Draupner Associates AB effective January 1, 2002. The
improvement in sales of other collaborative services, net of acquired sales,
primarily reflects changes in foreign exchange translation rates.

16



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##### Table of Contents



Operating Income

Our consolidated gross profit and operating income for the periods
presented were:

|                    |                  |  |                        |        |   |               |   |        |   |  |        |         |   |  |  |       |   
|------------------- | ---------------- |  | ---------------------- | ------ | - | ------------- | - | ------ | - |  | ------ | ------- | - |  |  | ----- | --
|                    |                  |  |                        |        |   |               |   |        |   |  | Change |        
|                    |                  |  | September 29,          |        |   | September 30, |   |        |   | 
|                    |                  |  | 2002                   |        |   | 2001          |   |        | $ |  |        | %       |  
|                    |                  |  |                        |        |   |               |   |        |   |  |        |         |  
|                    |                  |  | (dollars in thousands) |       
|Fiscal Quarter:     |                  |  |                        |        |   |               |   |        |   |  |        |         |   |  |  |      
|                    | Gross profit     |  | $                      | 27,437 |   |               | $ | 26,639 |   |  | $      | 798     |   |  |  | 3.0   | % 
|                    | % of net sales   |  |                        | 13.7   | % |               |   | 12.5   | % |  |        | n/a     |   |  |  | n/a   |   
|                    | Operating income |  | $                      | 6,691  |   |               | $ | 5,842  |   |  | $      | 849     |   |  |  | 14.5  | % 
|                    | % of net sales   |  |                        | 3.3    | % |               |   | 2.7    | % |  |        | n/a     |   |  |  | n/a   |   
|Fiscal Nine months: |                  |  |                        |        |   |               |   |        |   |  |        |         |   |  |  |      
|                    | Gross profit     |  | $                      | 79,967 |   |               | $ | 91,328 |   |  | $      | (11,361 | ) |  |  | (12.4 | %)
|                    | % of net sales   |  |                        | 12.9   | % |               |   | 12.8   | % |  |        | n/a     |   |  |  | n/a   |   
|                    | Operating income |  | $                      | 18,971 |   |               | $ | 27,491 |   |  | $      | (8,520  | ) |  |  | (31.0 | %)
|                    | % of net sales   |  |                        | 3.1    | % |               |   | 3.9    | % |  |        | n/a     |   |  |  | n/a   |   

Gross profit during the third quarter of 2002 reflects a $2.2 million
benefit related to the early termination of a long-term engagement. Gross
profit during 2002 also includes $1.9 million and $4.5 million for the quarter
and first nine months, respectively, of product development costs for our
supply chain management service offerings. Excluding these development costs
and the early termination benefit, gross profit as a percent of sales improved
during both the quarter and nine month periods. However, overall gross profit
values declined during the first nine months of 2002 versus 2001 on an adjusted
basis. Overall, the declines reflect reduced volumes and pricing pressures,
primarily in our collaborative engineering and human capital management
services. Reductions in sales volume and the impact of price reductions were
partially offset by cost reductions implemented throughout the company and
improved results from our other collaborative services. Overall our cost
reduction programs resulted in savings in excess of $17 million for the first
nine months of 2002, primarily in indirect labor, related fringe and benefit
costs, and other operating costs.

Selling, general and administrative expenses increased $1.5 million and
$1.8 million compared to the third quarter and first nine months of 2001,
respectively. Included in selling, general and administrative expense are
severance costs totaling $1.3 million and $1.7 million for the third quarter
and first nine months of 2002, respectively. Excluding such severance costs,
selling, general and administrative expenses, as a percentage of net sales,
were 9.7% and 9.6% during the third quarter and first nine months of fiscal
2002 compared to 9.0% and 8.3% in the comparable periods of fiscal 2001. To
date, the impact of cost reductions that we started implementing during the
fourth quarter of 2001 have been more than offset by investments to develop our
marketing, sales, and product portfolio to support and grow our service
offerings and additional costs from the consolidation of acquisitions during
2002. We are continuing to review and take actions to optimize our cost
structure based on current and forecast business levels. Our results also
reflect a $1.5 million and $4.7 million reduction in goodwill amortization
during the quarter and nine months, respectively, as a result of the adoption
of Statement of Financial Accounting Standards (SFAS) No. 142 during the
first quarter of 2002. See below for additional information on the adoption of
these new accounting rules.

Interest Expense

Interest expense remained constant for the quarter and decreased $1.9
million for the first nine months of fiscal 2002. The year to date improvement
resulted from decreases in interest rates on our variable rate debt
outstanding. Interest rates on our variable rate debt remain favorable
compared to the third quarter of 2001. However, our third quarter interest
expense also includes amortization of additional debt issuance costs associated
with a second secured term loan and the second amendment to our credit facility
as well as a non-recurring write-off of issuance costs from our original credit
facility resulting from reductions in availability.

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Income taxes and minority interest/equity losses

Our income tax expense for the third quarter and first nine months of 2002
reflects the establishment of valuation allowances totaling $0.7 million and
$2.3 million, respectively, for certain deferred tax assets in our European
operations. The valuation allowances were required for selected operations
where, based on current facts and circumstances, management determined that the
likelihood of realization was not sufficient to allow for continued recognition
of the assets. Minority interest expense and equity losses during 2002 include
our portion of income/losses from MTE Groups LLC, an equity investee, and the
minority interest portion of earnings from Satiz Srl and MSX Engineering GmbH,
both consolidated subsidiaries. Equity losses during 2001 also include equity losses generated by Cadform-MSX Engineering GmbH.
The improvement during the third quarter and first nine months of 2002 reflects
improved earnings from MTE versus 2001 and the elimination of Cadform equity
losses resulting from consolidation effective January 1, 2002.

Cumulative effect of accounting change for goodwill impairment

During the first quarter of fiscal 2002 we adopted the provisions of SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 142 requires that
goodwill be evaluated for impairment charges based on a market value approach
instead of amortizing such intangibles over specified periods. Upon adoption,
we evaluated the market value of our operating units as of December 30, 2001
based on a discounted cash flow methodology as prescribed by the standard. The
result of this analysis was a net charge after taxes of $38.1 million. The
impairment charge relates to our collaborative engineering and human capital
management service lines. Both of these areas experienced significant
downturns during the 2001 fiscal year due to reduced demand for selected
services and price reductions implemented by our major customers. The impact
of the declines had a significant impact on current valuations when compared to
prior performance levels and growth rates. While we believe these lower
valuations are temporary in nature, adoption of SFAS No. 142 required that we
record this charge during the first quarter of 2002 as a cumulative adjustment
from adoption of the new rules.

Determining market values based on discounted cash flows requires
management to make significant estimates and assumptions including, but not
limited to, long term projections of cash flows, market conditions, and
appropriate discount rates. Management judgments are based on historical
experience, information from our customers, market and regional trends, and
other information. While we believe that the estimates and assumptions
underlying our valuation models are valid, different assumptions could result
in a different outcome.

Liquidity and Capital Resources

Cash Flows

General.Our principal capital requirements are for working capital,
product development initiatives, and capital expenditures for customer
programs. These requirements have been met through a combination of bank debt,
issuance of subordinated and secured notes and cash from operations. Cash
balances in excess of amounts required to fund daily operations are used to pay
down amounts outstanding under the revolving credit portion of our credit
facility. We typically pay our employees on a weekly basis and receive payment
from our customers within invoicing terms, which is generally a 60-day period
after the invoice date. However, in connection with certain of our supply chain
management and master vendor services, we collect related receivables at
approximately the same time we make payment to suppliers.

Operating Activities. Net cash provided by operating activities improved
$7.4 million to $14.0 million for the fiscal nine months ended September 29,
2002, compared to cash provided by operating activities of $6.6 million for the
fiscal nine-months ended September 30, 2001. The improvement, despite lower
cash earnings, reflects improved working capital as a result of our cash
management efforts.

Investing Activities.Net cash used for investing activities decreased
$20.9 million, from $29.8 million for the first nine months of fiscal 2001, to
$9.0 million for the first nine months of fiscal 2002. Capital expenditure
requirements for current programs decreased commensurate with the current lower
volumes in business and reductions in our internal development projects. Cash
used to acquired businesses during 2002 includes funding of the Draupner and
Cadform transactions while cash used to acquire businesses during fiscal 2001
includes the acquisition of a minority investment in MTE Groups L.L.C. and the
payment of contingent consideration related to certain prior year acquisitions.
Other cash from investing activities during the first nine months of 2002
primarily represents the return of funds that had been escrowed to cover
additional purchase price for the MTE investment had MTE achieved certain
earnings targets.

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Financing Activities. Net cash used for financing activities was $3.7
million during the first nine months of 2002 compared to cash provided by
financing activities of $19.7 million for the first nine months of fiscal 2001.
Financing requirements during 2002 decreased due to improvements in working
capital and the decline in investment requirements. Under the terms of our
credit agreement, we are subject to mandatory partial prepayments of amounts
outstanding under the term loan portion of our credit facility if excess cash
flows, as defined, are generated on an annual basis. Repayment of
debt during 2002 includes a mandatory prepayment during the second quarter
totaling $9.1 million as a result of cash flows generated during fiscal 2001. Repayment of
debt also includes a $15 million repayment of term loans due to refinancing
under a second secured term as described below.

During the first nine months of fiscal 2001, a subsidiary of MSX
International, Inc. completed a sale of unregistered securities of
MSXI to certain
directors and members of management. The securities were sold in units with
each unit comprised of MSX International Inc.s Series A Preferred Stock, par
value $0.01 per share, and Class A Common Stock, par value $0.01 per share. In
total, 9,936 shares of Series A Preferred Stock and 482,400 shares of Class A
Common Stock were sold. The shares of Series A Preferred Stock and Class A
Common Stock, which comprised the units sold, were acquired from Citigroup, our
majority stockholder, at a price equal to the price at which the units were
sold to management. The entire proceeds of $3.6 million were used to pay the
purchase price of the shares acquired from Citigroup. The remainder of cash
used to repurchase common and preferred stock during 2001 and 2002 arose from
the repurchase of shares pursuant to the Amended and Restated Stockholders
Agreement.

Available Financing Sources

On July 10, 2002, our lending group approved the second amendment to our
amended and restated credit agreement. The amendment waived a default of
certain financial covenants as of June 30, 2002 and amended other terms and
conditions contained in the agreement. As a result of the second amendment our
available funds under the revolving credit portion of the credit facility
declined from $100 million to $85 million. In conjunction with the amendment,
on July 31, 2002 we also entered into a second secured term loan with
Citigroup, our majority owners, totaling about $15.5 million. $15 million of
the proceeds from the second secured term loan were used to permanently pay
down amounts outstanding under the existing term loan portion of the credit
facility, as required by the second amendment. The remaining proceeds from the
second secured term loan were used to fund closing fees associated with the
loan. The net effect of these events was to reduce the maximum borrowing
capacity under our credit facility by $15 million. For additional information
and terms of the second amendment and second secured term loan, refer to Note 5
of our consolidated financial statements.

As of September 29, 2002, our total indebtedness consists of senior
subordinated notes, borrowings under our credit facilities and borrowings under
various short-term arrangements. In addition to our total indebtedness, we
also have contingent commitments under letters of credit totaling about $4.9
million at September 29, 2002. Fiat S.p.A. has exercised their option to sell
their remaining 25% interest in Satiz Srl to MSXI in accordance with the
original purchase agreement. The company is exploring alternatives that would
reduce the related funding requirement, which is expected to take place in the
fourth quarter of 2002, and which is not expected to be material to our
liquidity or financial position. Available borrowings under the revolving
credit portion of the credit facility are subject to adequate accounts
receivable balance requirements. As of September 29, 2002, we have $46.6
million of availability under our credit facility of which $33.3 million is
immediately available based on required levels of accounts receivable.

Forward  Looking Statements

This quarterly report on Form 10-Q contains statements that 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, MSXIs leverage, its reliance on major
customers in the automotive industry, the degree and nature of competition,
MSXIs ability to recruit and place qualified personnel, risks associated with
its acquisition strategy, and employment liability risk.

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PART II. OTHER INFORMATION




ITEM 6. Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits:
| | --- |  | ---------

|     |  |                                                                                                                         
|---- |  | ------------------------------------------------------------------------------------------------------------------------
|99.1 |  | Certification pursuant to 18 U.S.C. Section
1350, as adopted pursuant to section 906 of the Sarbanes -
Oxley Act of 2002



| | (b) |  | Reports on Form 8-K:
| | --- |  | --------------------
|
| |     |  | None.               

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##### Table of Contents






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.

Date: November 13, 2002

MSX INTERNATIONAL, INC.
(Registrant)

|    |  |                             
|--- |  | ----------------------------
|By: |  | /s/ Frederick K. Minturn    
|    |  | Frederick K. Minturn        
|    |  | Executive Vice President and
|    |  | Chief Financial Officer     

(Chief accounting officer
and authorized signatory)

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##### Table of Contents






CERTIFICATION

I, Frederick K. Minturn, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of MSX
International, Inc.;                                                                                                                                                                                                                                                
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:                                                                                                      



| | a) |  | designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the Evaluation
Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of the registrants board of directors:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation
of internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data
and have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officer and I have indicated
in this quarterly report whether or not there were significant
changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our
most recent evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: November 13, 2002

/s/Fredrick K. Minturn
Frederick K. Minturn
Executive Vice President and
Chief Financial Officer

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##### Table of Contents



CERTIFICATION

I, Thomas T. Stallkamp, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of MSX
International, Inc.;                                                                                                                                                                                                                                                
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly
present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this quarterly report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:                                                                                                      



| | a) |  | designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the Evaluation
Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officer and I have
disclosed, based on our most recent evaluation, to the registrants
auditors and the audit committee of the registrants board of
directors:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation
of internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data
and have identified for the registrants auditors any material
weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officer and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: November 13, 2002

/s/Thomas T. Stallkamp
Thomas T. Stallkamp
Vice Chairman and Chief
Executive Officer

23



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|            |  |                                                                                                                         
|----------- |  | ------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NO. |  | DESCRIPTION                                                                                                             
|            |  |                                                                                                                         
|EX-99.1     |  | Certification pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes -
Oxley Act of 2002

24