<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
(Mark One)
[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934

                FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2001, OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                        FOR THE TRANSITION PERIOD FROM TO

                         COMMISSION FILE NUMBER 0-21485

                    SUPERIOR CONSULTANT HOLDINGS CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                 DELAWARE                                38-3306717
      (State or Other Jurisdiction of      (I.R.S. Employer Identification No.)
      Incorporation or Organization)

17570 WEST 12 MILE ROAD, SOUTHFIELD, MICHIGAN               48076
(Address of Principal Executive Offices)                 (Zip Code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (248) 386-8300

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

                SECURITIES PURSUANT TO SECTION 12(G) OF THE ACT:
                     COMMON STOCK, PAR VALUE $.01 PER SHARE
                                (TITLE OF CLASS)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filings requirements for the past 90 days. Yes |X| No |_|

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |X|

The aggregate market value of voting stock held by non-affiliates of the
registrant based upon the closing sale price of the stock as reported on the
Nasdaq National Market on March 28, 2002 was $34,772,846. At March 28, 2002,
11,095,888 shares of the registrant's Common Stock were outstanding.

                       DOCUMENT INCORPORATED BY REFERENCE

The registrant's definitive proxy statement for the annual meeting of
stockholders, to be held in July 2002, expected to be filed with the Commission
not later than April 30, 2002, is incorporated by reference into Part III of
this Form 10-K.



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                                     PART I

ITEM 1. BUSINESS

SUMMARY

         Superior Consultant Holdings Corporation (the "Company") is a
nationally deployed, integrated technology services company that provides
Digital Business Transformation(TM) services to the healthcare industry,
connecting online technologies to business processes that have traditionally
been conducted offline. We conduct our business through our primary operating
subsidiary, Superior Consultant Company, Inc. ("Superior"). The term "Company"
as used herein refers collectively to the Company together with its principal
operating subsidiary, Superior. Superior offers business process and information
technology ("IT") outsourcing, management and information technology consulting
services and solutions to healthcare organizations including health plans and
technology providers with special emphasis on hospital systems and integrated
delivery networks. Superior has deep expertise in clinical, financial and
administrative systems consulting, including planning, selection and
implementation. With extensive industry application bench strength and
specialists in business process improvement, Superior brings significant
industry expertise to bear in its engagements. Superior's business process and
information technology outsourcing segment offers clients a creative, dynamic
services relationship that helps control IT costs and stabilize labor market
dynamics -- including turnover, training and compensation -- while improving
information systems team performance. Superior's flexible outsourcing solutions
leverage the Company's extensive experience, and clients can choose any
combination of support, including full outsourcing with data center
consolidation, 24/7/365 network monitoring and help desk, as well as facility
management, application of business process and IT operations, unification,
application outsourcing and interim management of business process and IT
operations.

         Our major offerings are specifically designed to assist our clients in
addressing the cost pressures, resource restraints and regulatory requirements,
including the Health Insurance Portability and Accountability Act ("HIPAA").
Each offering described below is constructed to improve our client's
profitability, achieve clinical and operational excellence, improve our clients'
quality of patient care, ensure digital security and address the challenges of a
complex HIPAA implementation timetable and the increased regulations that may
result from HIPAA.

         Our consulting and outsourcing services are delivered through these
primary market offerings:

               -    Strategic Business Consulting
               -    Revenue Cycle
               -    IT Excellence
               -    Compliance
               -    Digital Trust
               -    Patient Safety
               -    Provider Interaction
               -    Consumer Interaction
               -    Employee Productivity
               -    Connectivity
               -    Supply Chain

         We serve clients across a broad cross-section of the healthcare
industry. From January 1, 2000 through December 31, 2001, the Company provided
services to over 1,100 healthcare clients on approximately 2,900 engagements.
Because of our deep knowledge of healthcare operations and workflow, IT and
clinical systems, we are able to work with clients to enable them to leverage
their existing legacy information system investments and accelerate their return
on those investments by connecting them to Internet and other technologies. We
believe that our long-term relationships, in-depth knowledge of the healthcare
industry and our clients' needs, our strategic partnerships and range of service
offerings endow us with significant advantages over our competitors in marketing
additional services and winning new engagements. Because of these assets, we
believe we are well positioned to help healthcare providers bridge traditional
services to a digital environment and capitalize on inherent market, care
delivery and efficiency benefits. Our goal is to be the preferred, if not sole,
provider of a broad range of solutions for each of our clients.



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INDUSTRY BACKGROUND

GENERAL

         Healthcare providers today face external and internal pressures to meet
the competitive demands of the marketplace, pursue their strategic initiatives
and comply with increasing government regulations, while also improving their
bottom line. The United States healthcare industry continues to undergo rapid,
profound change. In recent years, healthcare expenditures have increased at
approximately twice the rate of inflation and are expected to outpace the
nominal gross domestic product (GDP) by 2.5% per year during the period of
2001-2011 reaching $2.8 trillion in 2011, double the projected 2001 expenditures
of $1.4 trillion, according to a recent CMS Office of the Actuary report
published in Health Affairs. There is a greater emphasis placed on issues of
patient safety and the prevention of medical errors, competition in clinical
care quality and IT innovation, as well as heightened awareness of the urgency
to implement digital security measures and HIPAA compliance strategies. We
believe that these factors, combined with the continuing effects of the Balanced
Budget Act of 1997, HIPAA, changes in private healthcare reimbursement, slowed
growth of Medicare payments, the aging of the U.S. population and the growing
acceptance of the Internet spurred by the increasingly vocal demands of
consumers for quality care, will result in continued dramatic change in the
healthcare industry.

HEALTHCARE INFORMATION TECHNOLOGY

         The healthcare IT environment is growing increasingly complex and
costly as a result of the challenges inherent in deploying new technologies,
maintaining or integrating older systems and deploying an IT function capable of
meeting new objectives designed to improve clinical quality and patient safety,
achieve HIPAA compliance and ensure secure digital transactions while at the
same time improving business operations and reducing supply costs. With all
these pressures, healthcare organizations have to become more efficient and
effective. As a result, we believe that the healthcare industry will increase
its spending for IT solutions. Integrating Internet technology, automated
physician order entry, computer-based patient record systems and other
technologies into the healthcare delivery process can enable organizations to
improve their bottom line. These technologies help healthcare organizations
reduce costs through clinical and supply chain efficiencies, enhance
communications with physicians, patients, payers and other constituencies,
improve care delivery and patient safety and streamline activities such as
claims processing, eligibility verification and billing.

         With the increased move to digital communications by virtually all
segments of the industry -- providers, payers, consumers, health plans,
employers and employees -- all participants have the opportunity to effectively
address the cost-containment pressures of the Balanced Budget Act of 1997 and to
meet the strict privacy and standards mandates of HIPAA and related regulations
that are expected to affect every segment of the industry as they unfold.
Superior's extensive experience with all major healthcare software vendors along
with a multitude of other applications, enables our company to implement and
integrate "best practices" IT solutions that will improve our clients'
performance and make the most of their existing IT investments.

         We believe that healthcare participants will continue to turn to
outside consultants, external management of internal information systems,
application support and full outsourcing arrangements as a means of coping with
the financial and technical demands of information systems management and
Internet integration. Superior responds to these demands by providing flexible
business process and information technology outsourcing solutions from which
clients can choose any combination of support, including full outsourcing with
data center consolidation, 24/7/365 network monitoring and help desk, as well as
facility management, application unification, application outsourcing
and interim management of business process and IT operations. Through
outsourcing, clients can achieve their business process and information
technology goals while remaining focused on expanding their primary businesses
and reducing related capital outlay.

OUTSOURCING

         We believe that the competitive, technical and economic challenges
facing healthcare providers today will spur those providers, in increasing
numbers, to consider outsourcing of their business processes and/or information
technology function. With the range of business process, management and
information technology outsourcing solutions the Company offers, we can assist
clients to address several of the challenges they face while allowing them to
focus on their primary business objectives. The Company's outsourcing solutions
offer clients cost effective operation of their business processes and
information technology function and potential reduction in related capital
outlay. The Company delivers to its outsourcing clients the technical advances
and expertise that Superior develops through its consulting services. Our
flexible continuum of



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outsourcing solutions allows our clients to select the level of support most
suitable to their situation. Superior offers full Business Process and IT
Management and Operations Outsourcing, including data center consolidation. The
Company also offers 24/7/365 network monitoring and help desk support. The
Company's outsourcing solutions can assist our clients to meet critical
completion timetable needs by providing availability of the expertise resident
in the Company's nationally deployed specialists, thus allowing the clients to
pursue a greater number of IT initiatives concurrently. Further, the Company's
experience and expertise in the implementation and operation of various
applications provides its outsourcing clients with ever-evolving, best practices
operational models. Other outsourcing alternatives offered by the Company
include facility management, application unification, application outsourcing
and interim management of business process and IT operations.

CONSULTING

         The changing business environment has also produced an evolving range
of strategic and operating options for healthcare entities, many of which are
unfamiliar to an industry that had long operated under a non-aligned,
third-party payer environment. In response, healthcare participants are
formulating and implementing new strategies and tactics, including developing
e-commerce abilities, redesigning business processes and workflows, acquiring
better technology, integrating legacy systems with the Internet and adopting or
remodeling customer service, patient care and marketing programs. We believe
that healthcare participants will continue to turn to outside consultants to
assist in this vast array of initiatives for several reasons: the pace of change
is eclipsing the capacity of their own internal resources to identify, evaluate
and implement the full range of options; consultants enable healthcare
participants to develop better solutions in less time and can be more cost
effective. By employing outside expertise, healthcare providers can often
improve their ability to compete by more rapidly deploying new processes.

         In 2001, the healthcare consulting industry was highly fragmented and
consisted primarily of:

               -    Larger systems integration firms and Internet consulting
                    firms, including the consulting divisions of the national
                    accounting firms, which may or may not have a particular
                    healthcare focus or offer healthcare consulting as one of
                    several specialty areas;

               -    Healthcare information systems vendors that focus on
                    services relating to the software solutions they offer;

               -    Healthcare consulting firms, many of which focus on selected
                    specialty areas, such as strategic planning or
                    vendor-specific implementation;

               -    Large general management consulting firms that may or may
                    not specialize in healthcare consulting and/or do not offer
                    systems implementation; and

               -    Boutique firms that offer one or two specialized services,
                    or who service a particular geographic market.

         Increasingly, the competitive advantage in healthcare consulting will
be gained by those consulting firms which:

               -    Are able to marshal the necessary expertise and resources to
                    offer comprehensive skill sets and packaged solutions to
                    clients;

               -    Have the vision, strength and consistency to advise clients
                    along the entire service continuum, from strategy to
                    selection to implementation to operation;

               -    Offer the flexibility to meet the challenges of the rapidly
                    changing healthcare, e-commerce and IT environment; and

               -    Have assets to bring total solutions including offerings
                    that address the clients' need for market expansion and
                    capital replacement.

THE SUPERIOR SOLUTION

         We specialize in business transformation services that enable clients
to thrive in the information-driven economy by connecting the power and speed of
the online world to their offline processes. Our business and technical
expertise is available through a comprehensive suite of solutions designed to
support, enable, streamline, secure and expedite business and healthcare
delivery processes. We use our intellectual capital, in-depth institutional
knowledge of healthcare organizations, expertise in information technology,
Internet and other technologies and our nationally deployed group of experienced
colleagues to help clients plan and execute better business strategies. We have
constructed repeatable, pre-packaged solutions that can be implemented quickly
and for less cost.


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         We offer our clients a continuum of solutions, including: strategy
formulation, information technology and e-commerce planning and capital
resources planning; operations and revenue cycle management, supply chain
management, organizational change and business process redesign and outsourcing;
automation of workflows, physician order entry, clinical activities and patient
records; information technology design and construction, applications
implementation, information systems implementation and integration; and IT
interim management, application unification, application support, business
process and information technology outsourcing. For each client and engagement,
we structure a project team that understands the impact of the changing
healthcare environment on that particular client and can address the management,
operational and technical ramifications of change and improvement. In
structuring an engagement, we draw upon our solutions framework to bring our
clients the most efficient, cost effective solution to meet their needs. As each
client relationship evolves, our professionals add their experiences to our
proprietary databases to accumulate a detailed and intimate understanding of
each client and its specific needs. Our nationally deployed professionals are
aided by instant access, via our proprietary information and communication
system, to our knowledge and client resource databases and to collaboration with
colleagues. Our unified team approach helps to ensure high quality, consistent
and geographically seamless client service.

         We have a national focus on promoting the use of electronic information
exchange to address the opportunities and challenges of the healthcare industry.
We provide information technology, as well as strategic and operations
management consulting, pre-packaged solutions and outsourcing services to a
broad cross-section of healthcare industry participants and information systems
vendors. In our quest to continue to bring world-class solutions to the
healthcare industry, we assist select companies in various industries, including
healthcare, with network and telecommunication design and acquisition,
enterprise messaging, intranet and web strategies and design, workgroup
consulting, as well as software and application development solutions. We
provide a bridge between existing and emerging technologies by supplying vendors
with needed knowledge to develop innovations focused on the changing needs of
the marketplace and by assisting healthcare industry participants to assess,
select and implement new technologies. This enables us to help our clients take
advantage of the opportunities presented by technologies such as the Internet
and intranets, local and wide area communication networks and network medicine.

         To assist our clients in achieving the optimal strategic, clinical,
operational, IT and e-commerce solutions for their business needs, we draw upon
our expertise with the products of a vast array of vendors. Through this
in-depth product knowledge, we are able to fully assess the advantages and
disadvantages of each particular strategic, clinical, operational, IT and
e-commerce solution. Additionally, through select alliances and partnerships, we
are able to bring an aggregation of products and services packaged to suit
client needs.

         Our comprehensive, state-of-the-art Solution Center in Alpharetta,
Georgia, provides clients with education, demonstrations and hands-on experience
with advanced technologies. The Solution Center presents a collaborative
environment where our clients can work alongside our consultants, utilizing all
of our consulting, information technology, systems integration, systems security
and connectivity and outsourcing expertise to develop components or entire
frameworks for managerial and technical solutions to the challenges facing
healthcare organizations, including financial performance, HIPAA, digital
security, clinical quality and patient safety. Providing value both from a
business and a technical perspective, the Solution Center also includes an
executive briefing center where clients can learn about technology trends in
healthcare and develop strategies to implement emerging solutions in their own
organizations. Clients may take advantage of the Solution Center assets through
yearly memberships or at a per diem rate. In addition, Superior provides
technology education to clients at the Solution Center site.

SERVICES

         Through our consulting, solution delivery and outsourcing services we
provide all segments of the healthcare industry with the tools and strategies
they need to effectively serve customers, manage patient care and workflows, and
capitalize on e-commerce and other new technology opportunities. We offer
custom-tailored and packaged solutions based on an assessment of each client's
needs. We offer our consulting and outsourcing services and solutions in the
following broadly defined categories:

         Strategic Business Consulting. Combining the knowledge of healthcare
managers and consultants, clinicians, and renowned futurists, we help clients
develop and execute business strategies that address market dynamics, financial
performance, technology development, and resource allocation across their entire
organizations.

         Revenue Cycle. We can manage the revenue cycle -- from redesigning
business processes to installing or troubleshooting information systems -- to
help clients accelerate cash flow and positively affect their bottom line. We
work closely with client staff to reduce accounts receivable, re-deploy assets
and improve operational efficiencies.


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         IT Excellence. Combining our extensive, in-depth experience with all
major healthcare software vendors and our familiarity with leading-edge
technology, we help clients implement an IT strategy that enables return on
their IT investments by leveraging current technology and taking advantage of
Web-based solutions. We also offer a full range of IT management services from
project management to interim management of IT departments, to management of
discrete operations such as 24/7/365 network monitoring and help desk, facility
management, application unification and application outsourcing, as well as full
IT outsourcing with data center consolidation.

         Compliance. We approach compliance as an opportunity -- not just a
requirement. From readiness assessments to strategic planning to implementation,
we help clients seize the opportunities of HIPAA, HCFA, JCAHO, NCQA and others.
Our solutions help clients take advantage of new technologies and processes to
improve compliance and achieve digital proficiency.

         Digital Trust. By integrating our comprehensive methodologies for
security / HIPAA / policy assessment and strategy formulation with pre-built
healthcare policy frameworks and ComTrust (a Superior subsidiary) managed
public key infrastructure (PKI) solutions, health organizations can securely
leverage their online market strategies, protect their assets and brand image,
while substantially progressing towards HIPAA compliance. This approach to
establishing Digital Trust delivers clients a systematic foundation for issuance
of Digital IDs, authentication, access control, policy development and
education, authorization, auditing, digital signatures for non-repudiation, and
encryption for confidentiality and data integrity.

         Patient Safety. Our integrated solutions are designed to automate,
track and assure the quality of the medication process to dramatically reduce
medication errors -- the most common and costly of medical mistakes. Decision
support tools tap into clients' legacy systems reducing medical mishaps,
identifying high-risk populations and empowering caregivers with the knowledge
they need at the point of care.

         Provider Interaction. Clear communication among patients, physicians
and other caregivers is the bedrock of high-quality care delivery, customer
satisfaction, physician loyalty and efficient processes. Our solutions integrate
best-of-breed components and eliminate geographic boundaries. We focus on
providing the right information to the right person at the right time, enhancing
quality.

         Consumer Interaction. Combining Internet technology with improved
processes, we help clients meet or exceed the expectations of the healthcare
consumer. We work with clients to design interactive consumer/patient portals
that provide branding, content, scheduling and consumer interaction.

         Employee Productivity. Enhanced communication among employees -- and
between employees and employers, physicians, patients and families -- leads to
better performance. We provide enterprise portals, allowing access to
administrative services and work tools that dramatically lower the costs of
managing employees.

         Connectivity. By connecting disparate systems across multiple channels,
clients can link stakeholders inside and outside of their organizations. Built
on our experience in understanding clients' business and technology needs, our
solutions unlock clients' data and connect them to an integrated world.

         Supply Chain Management. Controlling supply chain costs -- streamlining
redundant processes, eliminating unnecessary steps, and capitalizing on
Web-based technology -- leads to immediate improvement in clients' operating
margins. Superior's solutions offer immediate opportunities to improve margins
by allowing clients to analyze purchasing patterns and use the data to manage
their supply utilization costs.

         Our ready-to-market solutions draw on the skills and expertise across
Competency Centers throughout our organization. By combining these skills with
our best practices, tools and methodologies and the applications and services of
select market-leading alliance partners, we have constructed a broad array of
market focused, repeatable solutions with less development time and faster
implementation. Set forth below is a list of healthcare consulting services and
skills offered by the Company through its market solutions:

STRATEGIC BUSINESS CONSULTING      -    Business process outsourcing
                                   -    Business strategy
                                   -    Financial improvement strategy
                                   -    Operations improvement strategy
                                   -    Facilities/capital investment strategy
                                   -    Information technology strategy

REVENUE CYCLE                      -    Business process redesign
                                   -    Accounts receivable/managed care
                                        contract analysis, improvements and
                                        resolution
                                   -    Technology benefits realization and
                                        optimization



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                                   -    Readiness assessment
                                   -    Strategy development
                                   -    Network assessment implementation
                                   -    Custom intranet, extranet portal
                                        development
                                   -    Digital Trust
                                   -    Application evaluation
                                   -    Application delivery

IT EXCELLENCE                      -    Strategic information system
                                        planning, budgeting, development
                                        and implementation
                                   -    Systems and departmental audits
                                        and assessments
                                   -    Interim management and facilities
                                        management
                                   -    Data Warehousing and Data Mart
                                   -    Remote network administration
                                   -    Thin client solutions
                                   -    Enterprise connectivity initiatives,
                                        including emerging wireless
                                        technologies
                                   -    Systems pre-implementation assessment
                                        and preparation
                                   -    Vendor selection and negotiation
                                   -    Applications testing and quality
                                        assurance
                                   -    Application implementation and
                                        integration including products of
                                        SMS/Siemens, Cerner, McKesson/HBOC, IDX,
                                        MEDITECH, Lawson, PeopleSoft, Per Se and
                                        others
                                   -    Executive and technical education and
                                        end-user training
                                   -    Legacy system maximization
                                   -    Technology architecture
                                   -    Commerce integration
                                   -    Executive Planning Systems (EPS)
                                   -    Digital Trust
                                   -    IT Outsourcing including:
                                        - Full outsourcing with data center
                                          consolidation
                                        - 24/7/365 network monitoring and
                                          help desk
                                        - Facility management
                                        - Application implementation and
                                          application unification
                                        - Application outsourcing
                                        - Interim management
                                        - IT planning, budgeting and
                                          management
                                        - Operations and management staffing
                                          and resources
                                        - Project management

COMPLIANCE                         -    HIPAA education and understanding
                                   -    Gap analysis and impact assessment
                                   -    Strategic plan for HIPAA compliance
                                        and implementing electronic commerce
                                   -    Business policy and process
                                        implementation
                                   -    HIPAA security audit and assessment
                                   -    HIPAA implementation and compliance
                                        assistance
                                   -    Electronic security (Digital Trust)
                                   -    Business process redesign
                                   -    Compliance (APC, JCAHO, HIPAA, etc.)
                                        assessment and gap analysis

DIGITAL TRUST                      -    Managed Trust Services
                                        - Managed PKI and Certificate Authority
                                          services
                                        - Authentication solutions (biometrics,
                                          smart cards, tokens, etc.)
                                        - Managed identity, authorization and
                                          credentialing services
                                        - Policy frameworks


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                                        - Business and access control policies
                                        - Healthcare Certificate Policy (CP)
                                          and Certification Practice Statements
                                          (CPS)
                                        - Acceptance, subscriber and relying
                                          party policies
                                        - Comprehensive Trust Plan
                                        - Awareness and education
                                        - Assessment (HIPAA, security and
                                          policy)
                                        - External vulnerability analysis
                                        - Trust strategy formulation and
                                          implementation planning
                                        - Program and project management

                                   -    Certified Trust Application - Program
                                        - Independent security audit and
                                          channel program for softwarevendors
                                        - PKI enabling services and SDK for
                                          software vendors
                                        - Technology services
                                        - PKI implementation
                                        - Directory development and integration
                                          services
                                        - Security architecture planning
                                        - VPN solutions

PATIENT SAFETY                     -    Vendor selection and negotiation
                                   -    Assessment
                                   -    Design and business case
                                   -    Implementation support
                                   -    Project management
                                   -    Clinical/medical staff education
                                   -    Automation of clinical activities
                                   -    Technology acquisition and installation
                                   -    Operations/workflow improvements
                                   -    System integration
                                   -    Testing and training
                                   -    Job descriptions and recruiting
                                   -    Risk/trend reporting

PROVIDER AND CONSUMER INTERACTION  -    Strategic planning
AND EMPLOYEE PRODUCTIVITY          -    Business process redesign
                                   -    Web portal design and implementation
                                   -    Technology architecture
                                   -    Call center
                                   -    Voice solutions
                                   -    Digital Trust
                                   -    Applications implementation

CONNECTIVITY                       -    Wireless and thin client services
                                   -    Information technology
                                   -    Strategic information system planning,
                                        budgeting, development and
                                        implementation
                                   -    Remote network administration
                                   -    Vendor selection and negotiation
                                   -    Legacy system maximization
                                   -    Technology architecture
                                   -    Commerce integration
                                   -    Web portal design and implementation
                                   -    Call center
                                   -    Voice solutions
                                   -    Digital Trust

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SUPPLY CHAIN                       -    Assessment of supply chain improvement
                                        opportunities
                                   -    Assessment of supply chain operations
                                   -    Assessment of supply chain technology
                                        enablers
                                   -    Development of supply chain redesign
                                        and implementation plan
                                   -    Implementation assistance
                                   -    Business process redesign
                                   -    Application evaluation
                                   -    Application delivery
                                   -    Digital Trust

DEVELOPMENTS IN 2001

         In 2001 we saw a slight improvement in the difficult market conditions
that have existed since mid-1999. Driven, we believe, by the impact of the
Balanced Budget Act of 1997 and an ongoing slowdown in our clients' rate of
investment in IT initiatives, and exacerbated by the shakeout in the Internet
sector, the market reflected reduced demand for many of our services. The
healthcare and technology sectors in which we operate were adversely impacted by
weak demand throughout the year.

         We have begun, however, to see some benefits arising from strategies we
announced and implemented during 2000 and 2001. Significant actions include:

     -   Construction and sales of new, broader outsourcing and consulting
         solutions, leading to larger sales including our first full outsourcing
         contract in December with a planned data center consolidation;

     -   Positive cash flow from operations achieved in three consecutive
         quarters;

     -   Enhanced leadership team with addition of highly skilled
         senior executives;

     -   Improved sales performance through implementation of a new sales
         methodology and disciplined sales activities;

     -   Implemented disciplined cost controls resulting in a reduction in
         operating expenses, excluding one-time charges, to $97.6 million for
         the year ended December 31, 2001 from $151.0 million for the year ended
         December 31, 2000.

     -   Other developments in our business in 2001 are summarized below:

               -    In February 2001, our subsidiary ComTrust, LLC announced the
                    launch of ComTrust QuickStart(TM), a managed PKI solution
                    that enables healthcare enterprises to address HIPAA
                    requirements of authentication, authorization, access
                    control, policy, data integrity and audit.

               -    In April 2001, we signed a four-year, $6.5 million contract
                    with the U.S. Department of Health and Human Services to
                    provide web support, information and referral services and
                    user outreach for the department's Office of Disease
                    Prevention and Health Promotion.

               -    In April 2001, we announced a teaming contract with Computer
                    Sciences Corporation ("CSC") for a major project under CSC's
                    multi-year outsourcing agreement to provide management and
                    technology services to Saint Vincent Catholic Medical
                    Centers of New York, a $1.5 billion health system.
                    Superior's initial endeavor, under its three-year
                    application unification project with CSC, is expected to
                    generate $12.3 million to Superior over the two year period
                    beginning April 2001.

               -    In September 2001, the Company purchased 267,100 shares of
                    Superior stock for approximately $1 million.

               -    In December 2001, we announced a partnership with CSC to
                    redesign the finance and supply chain business processes of
                    Bon Secours Health System, Inc., a $2 billion,
                    not-for-profit Catholic healthcare system based in
                    Marriottsville, Maryland.

               -    In December 2001, we signed a full outsourcing contract with
                    a planned data center consolidation valued at $26.7 million
                    over five years.


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EMPLOYEES

         We believe that one of our key strengths lies in our ability to
attract, develop, motivate and retain a talented, creative and highly skilled
work force of senior-level professionals who are specialists in one or more
areas of healthcare, information technology and e-commerce. Our consultants are
highly experienced and many have established their credentials as healthcare
executives and senior management of healthcare organizations, senior technical
officers, business office managers, medical records administrators, nurse
administrators, nurses, laboratory technicians, physician assistants, medical
technologists, physicians, hospital admissions directors and information
management and information systems technical personnel. As of December 31, 2001,
we employed 669 employees, 498 of whom were consultants. Of the 171
non-consultants, a significant number, including some of the Company's senior
and middle management, perform a variety of line functions, including client
billable consulting and advisory services.

         We believe we have a unique corporate culture built upon open
communication across geographic regions and Competency Centers fostered by our
proprietary information and communications system, which currently runs on a
robust intranet, and a motivational and interactive work environment that
features professional development opportunities and productivity incentives.
Through the establishment of our Superior Institute, our education and training
encompasses multiple approaches to professional development. As part of this
effort, we provide training curricula in new trends in healthcare, information
technology, business management and worklife topics. We offer a variety of
managerial, technical and personal courses which are designed to provide sound
fundamental principles for each subject. Many of the courses have advanced
editions. These education offerings are delivered through multiple settings
including distance learning, self-study, group classroom, individual mentorship
and case study.

         An integral part of the on-going education process at Superior takes
place through our communications system. This allows our consultants to continue
to upgrade their skills while remaining deployed in the field. In addition, we
have developed an employee orientation program that features a sophisticated
presentation to provide new employees with a comprehensive understanding of our
structure and approach to consulting. We also maintain a formal and active
network of former employees. These alumni provide expertise on projects,
introduce us to new client leads and in many cases have returned to Superior
from experiences elsewhere in the healthcare industry.

SALES AND MARKETING

         Superior's senior vice president of sales and marketing and our client
relationship leadership (Client Partner Organization leaders) focus intensely on
client development strategies, geographic market penetration, cross-selling
clients, and on securing larger and more profitable engagements. Business
development is an integral part of the formal responsibilities at all levels of
our management, including Competency Center leaders, and we set business
development goals on both a departmental and individual basis. During 2001,
Superior implemented a new sales methodology which is successfully employed by
many Fortune 500 companies. The Company also restructured its sales
organization, adding highly skilled sales executives with proven track records
in outsourcing and other large transactions and solution sales.

         Our business development efforts focus primarily on identifying key
decision makers in the healthcare industry, determining the value we can bring
to each potential client and then managing the sales process to completion
through a sophisticated sales program and proprietary client resource database,
developed and maintained internally. Potential client leads are entered into the
database and the profiles are updated for subsequent developments and
information throughout the life of our relationship with the potential client,
as well as after a client retains Superior for services. At any given time, many
of our professionals are active in the development of business from either a new
or existing client and the client resource database enables our personnel to
access information on our efforts with respect to a client or client prospect,
identify other Superior contacts with that client and highlight the particular
needs expressed by the client.

         We further our business development efforts through our reputation in
the marketplace, the personal contacts and networking of our professionals,
direct industry marketing programs, trade shows, our Internet web site, located
at www.superiorconsultant.com, and the industry presence maintained by our
professionals. Our marketing profile within the healthcare industry is enhanced
by our employees' speaking engagements and publications on topics affecting
healthcare. Our views on a wide range of healthcare and IT topics are frequently
solicited and quoted for articles in major industry journals and books. Our
healthcare consultants have been published extensively on current and emerging
topics in healthcare information and management and have participated in
external speaking engagements and presentations to industry associations and
client audiences internationally.

         We operate our healthcare outsourcing and consulting businesses through
a combination of our national presence, regional relationships and our
Competency Centers. Each Competency Center offers a selected variety of our
healthcare



                                        9


<PAGE>

consulting services and often two or more of these areas work synergistically
together and with other industry leaders to develop and package repeatable
solutions or market offerings for clients. Each Competency Center is managed by
a leader who is responsible for achieving performance-based goals for the
specific area and is responsible for its growth. We actively market the
subject-matter expertise of our Competency Centers through the focus of our
Client Partner Organizations. Each Competency Center and market offering leader
is responsible for developing and enhancing knowledge of local regulation and
market factors, as well as developing and nurturing relationships with specific
client and partner organizations. This enables us to combine the expertise of
our Competency Centers to form customized, as well as repeatable packaged
solutions that are responsive to local conditions and of value to specific
clients.

         We provide a compensation system designed to foster an active focus on
growth and business development at all levels within the organization.
Management earns incentive compensation on a quarterly and/or annual basis based
on individual, group and company-wide performance goals.

COMPETITION

         The market for our services is highly fragmented, highly competitive
and is subject to rapid change. We believe that we currently compete principally
with systems integration firms, national consulting firms, including the
consulting divisions of the national accounting firms and their spin-offs,
outsourcers, Internet consulting firms, information system vendors, service
groups of computer equipment companies, facilities management companies, general
management consulting firms and regional and specialty consulting firms. Many of
our competitors have significantly greater financial, technical and marketing
resources than we have, generate greater revenues and have greater name
recognition than we have. Moreover, those competitors that sell or license their
own software may in the future attempt to limit or eliminate the use of third
party consultants, such as Superior, to implement and/or customize such
software. In addition, vendors whose systems may enjoy wide market acceptance
and large market share could enter into exclusive or restrictive agreements with
other consulting firms which could eliminate or substantially reduce our
implementation work for those systems. There are relatively low barriers to
entry into our markets (other than outsourcing) and we have faced and expect to
continue to face additional competition from new entrants into our markets. In
addition, combinations and consolidations in the consulting and outsourcing
industry will give rise to larger competitors, whose relative strengths we
cannot predict. We also compete with our clients' internal resources,
particularly where these resources represent a fixed cost to the client. This
internal client competition may heighten as consolidation of healthcare
providers creates organizations large enough to support internal information
management capabilities. Superior competes with new entrants and other smaller
companies which often compete very aggressively on price, and at the same time
we compete, particularly on outsourcing and other large engagements, with
companies that enjoy greater financial and technical resources than our own, as
well as greater brand recognition and marketing resources.

         We believe that the principal competitive factors in our market include
reputation, size and capital resources, highly experienced workforce, industry
expertise, full array of offerings, project management expertise, price, quality
of service, responsiveness, speed of implementation and delivery, assured
performance and willingness to share risk. There can be no assurance that we
will be able to compete effectively on pricing or other requirements with
current and future competitors or that competitive pressures faced by us will
not cause our revenue or operating margins to decline, or otherwise materially
adversely affect our business, financial condition and results of operations.

INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS

         Our success is in part dependent upon our proprietary internal
information and communications systems, databases, market offerings, best
practices, tools and the methods and procedures that we have developed
specifically to serve our clients. In addition, we have and will continue to
develop proprietary groupware/collaborative tools and applications. Through
acquisitions, we have acquired numerous development tools and methodologies. We
have no patents or registered copyrights and, consequently, we rely on a
combination of non-disclosure and other contractual arrangements and copyright,
trademark and trade secret laws to protect our proprietary systems, information
and procedures. There can be no assurance that the steps taken by us to protect
our proprietary rights will be adequate to prevent misappropriation of such
rights or that we will be able to detect unauthorized use and take appropriate
steps to enforce our proprietary rights. We believe that our systems and
procedures and other proprietary rights do not infringe upon the proprietary
rights of third parties. There can be no assurance, however, that third parties
will not assert infringement claims against us in the future or that any such
claims will not require us to enter into materially adverse license arrangements
or result in protracted and costly litigation, regardless of the merits of such
claims.


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<PAGE>


RISK FACTORS

         Some of the information in this report contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "estimate," "intend," "promise," "should," "conditioned
upon," "project," "predict," "continue" and similar words. You should read
statements that contain these words carefully because they discuss our future
expectations, contain projections of our future results of operations or of our
financial condition or state other "forward-looking" information. We believe it
is important to communicate our expectations to our investors. However, there
will be events in the future that we are not able to accurately predict or over
which we will have no control. The risk factors listed in this section, as well
as any other cautionary language in this report, provide examples of just a few
of the many risks, uncertainties and events that may cause our actual results to
differ materially from the expectations we describe in our forward-looking
statements. You should be aware that the occurrence of the events described in
the following risk factors and elsewhere in this report, or in our other
publicly filed reports which we may file from time to time, could have a
material adverse effect on our business, operating results and financial
condition. In addition, any one or more of the risks outlined below could have a
greater or lesser impact on our business at any particular point in time and you
should not give any greater or lesser emphasis or weight to any single factor
merely by virtue of the order of its presentation or the depth of its discussion
in this report.

VARIABILITY OF QUARTERLY OPERATING RESULTS

         We have experienced significant quarterly fluctuations in our operating
results. Variations in our revenues and operating results may continue from
quarter to quarter as a result of a number of factors, including, but not
limited to:

         -     The relatively longer sales cycle in obtaining new clients and
               larger contracts, including outsourcing;

         -     Fluctuations in sales of our market offerings and in consultant
               billing and utilization rates;

         -     Client and employee retention;

         -     The failure to secure and deliver new client contracts at the
               budgeted rate and the resulting negative impact on utilization of
               our consultants;

         -     Industry spending patterns and market conditions that may
               adversely affect the buying decisions of our current and
               prospective clients, such as the reduced level of spending on
               information technology which began in 1999, driven by the
               continuing impacts of the Balanced Budget Act of 1997, the
               fallout in Internet initiatives, year 2000 conversions, the
               continued consolidation among healthcare provider entities and
               the projected reduction in reimbursements available to healthcare
               providers;

         -     The number and significance of active client engagements during a
               quarter;

         -     Increased investment by us in new services and other strategic
               initiatives;

         -     The decision of clients to defer commitments on new projects
               until after the end of the calendar year or the client's fiscal
               year;

         -     Client budgetary cycles and pressures;

         -     The loss or reduction in scope of significant client
               relationships;

         -     Unforeseen disruptions in transportation, communications or other
               infrastructure components; and

         -     General economic conditions and adverse developments in the
               financial condition of our clients.

         Our existing clients can generally reduce the scope of or cancel their
use of our services without penalty and with little or no notice. If a client
defers, modifies or cancels an engagement or chooses not to retain us for
additional phases of a project, we must be able to rapidly redeploy our
employees to other engagements in order to minimize underutilization of
employees and the resulting harm to our operating results.

         Because a substantial percentage of our expenses, particularly
personnel, facilities and technology, are relatively fixed in advance of any
particular quarter, variations in the size or number of client assignments or
the timing of the initiation or the


                                       11


<PAGE>
completion of client assignments can cause significant variations in operating
results from quarter to quarter. Given the possibility of such fluctuations, we
believe that comparisons of our results of operations for preceding quarters are
not necessarily meaningful and that you should not rely upon the results for one
quarter as an indication of future performance. Based on the preceding factors,
or others, it is possible that we may experience a shortfall in revenue or
earnings from expected levels or otherwise fail to meet expectations of
securities analysts or the market in general. In such event, the price of our
common stock could be materially adversely affected.

OUR LONG SALES AND PROJECT DELIVERY CYCLES EXPOSE US TO POTENTIAL LOSSES

         Our sales process for outsourcing and network related projects is often
subject to delays associated with the lengthy approval process that typically
accompanies significant capital expenditures by our clients. During this
process, we expend substantial time, effort and resources marketing our
services, preparing contract proposals and negotiating contracts. Any failure or
delay in obtaining a signed contract and receiving payment for our services
after expending significant time, effort and resources could materially and
adversely affect our revenues and financial condition. As the Company places
increasing focus and emphasis on the sale of outsourcing, network-related and
other large scale engagements, these potential adverse effects of the longer
sales and delivery cycles can be magnified. Moreover, outsourcing,
network-related and other related large scale projects generate more intense
competition and competition from larger and better financed competitors. This
contributes to lengthening the sales cycle and also makes the winning of the
engagements more difficult. Any failure of the Company to close its budgeted
number of large scale transactions on its budgeted schedule could contribute to
a shortfall in revenue or earnings from expected levels and a failure to meet
expectations of securities analysts or the market in general. In such an event,
the price of our common stock could be materially adversely affected.

HEALTHCARE INDUSTRY CONCENTRATION

         We derive a substantial majority of our revenues from clients
involved in the healthcare industry. As a result of our focus on healthcare
outsourcing and consulting, our business, financial condition and results of
operations are influenced by conditions affecting this industry, including
changing political, economic and regulatory influences that may affect the
procurement practices and operation of healthcare providers. Current conditions
affecting the healthcare industry and some of the risks they create include, but
are not limited to:

         -     Regulatory Change. The Balanced Budget Act of 1997 has resulted
               in substantial limitations on capital expenditures and
               investments in the healthcare industry. In addition, many federal
               and state legislators have announced that they intend to propose
               programs to reform the United States healthcare system at both
               the federal and state level and government agencies have
               intensified efforts to monitor fraud and abuse in healthcare
               programs reimbursed by federal and state agencies. Further,
               HIPAA requires that providers and other healthcare participants
               comply with a complex set of new regulations under an aggressive
               and complex timetable. Although these efforts could increase
               demand for our services, they could also adversely affect our
               clients, result in lower reimbursement rates and change the
               environment in which providers operate and could otherwise
               adversely affect service providers such as ourselves. The ongoing
               impact of the Balanced Budget Act of 1997 on the Company's
               healthcare industry clients cannot be predicted with certainty.
               Reduced revenues to the healthcare industry could adversely
               affect service providers like us.

         -     HIPAA Implementation. Many of our clients use our services as
               part of their effort to bring themselves into compliance with
               HIPAA. If the implementation of HIPAA is delayed or cancelled,
               there may be less demand for our HIPAA compliance services.
               Although we believe that our clients will continue to demand
               security and privacy and other digital solutions even if HIPAA is
               delayed or not implemented at all, without the need to comply
               with HIPAA our clients may delay or cancel their privacy and
               security and other digital activities, which would adversely
               affect our business.

         -     Cost Pressure. Large private purchasers of healthcare services
               are placing increasing cost pressure on providers. Healthcare
               providers have and may continue to react to these cost pressures
               and other uncertainties by curtailing or deferring investments,
               including investments in our services.

         -     Industry Consolidation. Many healthcare providers are
               consolidating to create larger healthcare organizations and are
               forming affiliations for purchasing products and services. These
               consolidations and affiliations reduce the number of potential
               customers for our services and the increased bargaining power of
               these organizations could lead to reductions in the amounts paid
               for our services. In addition, this consolidation is likely to
               result in



                                       12


<PAGE>



               the acquisition of certain of our clients and such clients may
               scale back or terminate their relationship with us following
               their acquisition. In addition, the larger healthcare providers
               resulting from such consolidation are likely to be better able to
               support internal IT resources sufficient to execute
               implementation and other IT projects, thereby reducing the need
               for external consulting services provided by companies such as
               ours.

         The impact of these developments in the healthcare industry is
difficult to predict and could have a material adverse effect on our business.

OUTSOURCING RISKS

         We provide healthcare business process and IT outsourcing solutions
which include any combination of support from full outsourcing with data center
consolidation, 24/7/365 network monitoring and help desk, facility management,
application unification, application outsourcing, business process and interim
management. These solutions may involve personnel acquisition and/or the
transfer of a client's information system assets -- hardware/software and human
resources -- from an internal business function to an outsourced service. To
implement our outsourcing program, we are required to make substantial
investments in capital assets and personnel for certain outsourcing contracts.
We may also be dependent upon our ability to hire and retain some or all of an
outsourcing client's former IT staff or certain business operations in order to
provide appropriate service levels. We cannot predict whether we will in each
instance be able to either assess accurately the investment required for an
outsourcing contract or negotiate and perform any of our outsourcing contracts
in a profitable manner. We anticipate that competitors will continue to increase
their focus on this market. Our business plan depends upon our ability to secure
new outsourcing contracts. The increased focus from competitors has to date and
may continue to adversely affect our ability to obtain new outsourcing contracts
as well as the profitability of any such contracts. In addition, any failure,
perceived or actual, to perform adequately under our outsourcing agreements
could adversely affect our ability to obtain future consulting engagements from
these or other clients. In addition, one key to the success of the expansion of
our outsourcing business is to operate one or more data centers to run the data
processing, network monitoring and other IT functions of our outsourcing
clients. Our ability to achieve optimum economies of scale is dependent upon our
ability to win outsourcing engagements of a sufficient number and size. Further,
a demonstrated ability to successfully close and execute outsourcing engagements
is critical to the development of increasing recognition and credibility in the
marketplace which, in turn, is important to the future growth of the outsourcing
business. An inability to successfully win, execute and manage outsourcing
engagements could have a material adverse affect on our business and on the
price of our common stock.

RISK OF NEW BUSINESS INITIATIVES

         We will continue to evaluate opportunities from time to time for
strategic affiliations with alliance partners and investments in solution sets
and expanded outsourcing, e-commerce and other web based initiatives focused on
the healthcare industry. There is no assurance that an investment, if made, in
any particular venture will yield any investment return or produce any
appreciable amount of services revenue.

         During 2000 and 2001, we expanded our e-commerce, solution sales and
systems integration capabilities. As healthcare and other sectors move
increasingly to Internet and web-based technologies and applications and as we
continue to innovate services and solutions to develop and capitalize on this
growing market, we will incur risks related to our participation in such
untested opportunities, markets and quickly evolving lines of business. Such
risks can include, but are not limited to, new and unforeseen technologies
superseding development of the Internet and/or the systems integration platforms
and other technologies in which we invest; the e-commerce and/or systems
integration markets taking turns not foreseen by us and adverse to the
positioning and investments undertaken by us; potential government regulation of
the Internet; slowness of traditional healthcare clients to adopt new
technologies; and increased competition for consultant talent in the e-commerce
field, increasing our cost of providing services.

         As a result of the financial and technological pressures that face the
healthcare industry, and as a result of the rapid rate of evolution in
technology, the technical solutions and marketing initiatives in which the
Company invests may fail to gain acceptance in the marketplace. As a result, the
Company may be forced to abandon certain initiatives without having recouped its
costs of development. In addition, solutions and market offerings invested in by
the Company may encounter competitive products in the marketplace that enjoy
competitive pricing advantages, better brand recognition or other advantages
over solutions offered by the Company. A failure by the Company to invest in and
develop successful market offerings could have a material adverse affect on the
Company's business and the price of the Company's common stock.


                                       13


<PAGE>
         Superior offers its Digital Trust services through its wholly-owned
subsidiary, ComTrust LLC, formed in 2000. ComTrust has a business and
contractual relationship with an alliance partner, and has generally provided
its services in collaboration with its alliance partner. Superior has invested
in the development of ComTrust's Digital Trust offerings and in the marketing,
sale and delivery of those services to ComTrust clients. ComTrust competes in a
new and rapidly evolving market. It is likely that ComTrust will face increasing
competition from competitors who may be in a position to compete more
effectively based on price, brand recognition and other competitive factors.
There can be no assurance that ComTrust's offerings will find favor in the
marketplace or that ComTrust will be successful in its endeavors to increase
its sales, revenues and customer base. Therefore, there can be no assurance that
Superior will recover its investment in the ComTrust business.

         The Company is actively completing negotiations with a business
partner to modify the obligations of both parties to better align those
obligations with current market conditions that affect performance of the
agreement. Both parties have indicated a willingness to amend the existing
agreement in light of market experience and market expectations, and we
anticipate that a mutually satisfactory amendment will be finalized in the near
term. However, if these negotiations do not result in a satisfactory revised
agreement, a dispute may arise concerning both parties' performance to date
under the existing agreement and the extent of the parties' financial
obligations to each other. If such a dispute were to arise, it could have a
material, adverse financial impact on the Company.

PROJECT RISKS

         Many of our engagements involve projects which are critical to the
operations of our clients' business and which provide benefits that may be
difficult to measure. A failure, perceived or actual, to meet a client's
expectations in the performance of our services could damage our reputation and
adversely affect our ability to attract new business. In addition, we could
incur substantial costs and expend significant resources correcting errors in
our work and could possibly become liable for damages caused by such errors. A
negative impact on client relationships could materially and adversely affect
our business whether or not we bear any responsibility, legal or otherwise, for
the occurrence of those problems.

FIXED PRICE CONTRACTS

         As a result of our obtaining additional outsourcing contracts and
introducing and selling repeatable, pre-packaged solutions, an increasing
portion of our projects are billed on a fixed-fee basis as opposed to time and
materials. Our inability to estimate accurately the resources and related
expenses required for a fixed-fee project or failure to complete our contractual
obligations in a manner consistent with the project plan upon which our
fixed-fee contract was based could materially and adversely affect our business.

RECRUITMENT AND RETENTION OF PROFESSIONAL STAFF

         Our business involves the delivery of professional services and is
labor-intensive. Our success depends in large part upon our ability to attract,
develop, motivate and retain highly skilled consultants. Other consulting firms,
healthcare providers and other healthcare industry participants, including
health information systems vendors, clients, systems integrators and many other
enterprises, compete with us for employees with the skills required to perform
the services we offer. We may not be able to attract and retain a sufficient
number of highly skilled employees in the future and we may not continue to be
successful in training, retaining and motivating employees. The loss of a
significant number of consultants and/or our inability to hire a sufficient
number of qualified consultants would adversely affect our ability to secure,
service and complete client engagements and could have a material adverse effect
on our business.

MANAGEMENT OF GROWTH

         We may identify opportunities to continue to expand our geographic
presence, industry expertise and technical scope through strategic acquisitions
and alliances with companies that provide additional and complementary products,
services or skills or have strategic client relationships. If suitable
acquisition candidates are identified, we may not be able to acquire such
companies on suitable terms. Moreover, many other companies are competing for
acquisition candidates, which could increase the price of acquisition targets
and decrease the number of attractive companies available for acquisition.
Acquisitions also involve a number of special risks, including but not limited
to:

         -     Adverse effects on our reported operating results including
               increased intangible asset amortization and interest expense;

         -     Diversion of management attention;

         -     Risks associated with unanticipated problems, liabilities or
               contingencies;

         -     Difficulties related to the integration and management of the
               acquired business;

         -     Risks of entering markets in which we have limited or no direct
               expertise; and


                                       14


<PAGE>
         - The potential loss of key employees of the acquired companies.

         In addition, acquisitions may require us to spend significant funds. An
acquisition may not result in long-term benefits and management may not be able
to manage effectively the resulting business. The occurrence of some or all of
the events described in these risks could have a material adverse effect on our
business.

         In May 1999 we entered into a strategic alliance with Microsoft
Corporation under which Microsoft and the Company will advance the Microsoft
enterprise products and solutions as the premier information management platform
for the healthcare industry. In furtherance of this alliance, we have made
substantial investments and financial commitments for software licenses,
facilities development, joint marketing and recruitment and training of
personnel. There is no assurance we will be successful in our efforts to recruit
and train necessary personnel, nor as to how rapidly, if at all, we will be able
to deploy these newly trained personnel in billable engagements. Additionally,
there can be no assurance as to what extent the Microsoft platform will be
embraced by the healthcare community. The lack of such acceptance could
materially and adversely affect the Company's return on these investments.

CLIENT CONCENTRATION

         We derive a significant portion of our revenues from a relatively
limited number of clients. For example, during 2000 and 2001 our five largest
clients accounted for approximately 30.5% and 29.1%, respectively, of our
revenues. Three of our top five clients in 2000 were also among our five largest
clients during 2001. Except for our outsourcing contracts, which typically are
for more than one year, clients engage us on an assignment-by-assignment basis
and a client can generally terminate an assignment at any time without penalty.
In addition, the level of our consulting services required by any individual
client can diminish over the life of its relationship with us and we cannot give
any assurance that we will be successful in establishing relationships with new
clients as this occurs. Moreover, we cannot give any assurance that our existing
clients will continue to engage us for additional projects or do so at the same
revenue level. The loss of any significant client or significant contract (such
as a large outsourcing agreement) could materially and adversely affect our
business.

VENDOR SYSTEMS CONCENTRATION

         The healthcare industry can choose among numerous healthcare
information systems solutions. Vendors of these products come into and out of
favor depending on a variety of factors. Although our consultants have expertise
with the information systems developed by numerous healthcare information system
vendors, we have historically experienced periodic revenue concentration from
client projects involving the products of an evolving but relatively small group
of vendors. We believe that this concentration generally reflects the current
preference of the healthcare industry participants that we serve for these
vendors. Should any one or more of these vendors (or any other vendors with
whose products we have substantial involvement) lose favor in the healthcare
industry, we would be required to refocus our efforts on alternative information
systems products of other vendors. The loss of a major portion of our business
with respect to any one of these vendors could materially and adversely affect
our business.

DEPENDENCE ON ALLIANCE PARTNERS

         We have formed alliances and partnerships with select healthcare
product and service vendors, combining their applications and services with our
best practices to bring pre-packaged solutions to our clients. Should any one or
more of these alliance partners lose favor in the healthcare industry, we would
be required to refocus our efforts on alternative products and services of other
vendors. The loss of a major portion of our solution sales with respect to any
one of these vendors could materially and adversely affect our business.

DEPENDENCE ON SENIOR MANAGEMENT

         Our success is highly dependent upon the efforts, abilities and
business generation capabilities of our senior management team. Although we
manage client relationships at many levels, the unplanned loss of the services
of one or more of the Company's key executives for any reason could adversely
affect our business. Moreover, certain client and industry relationships and
areas of expertise depend on the efforts, abilities and business generation
capabilities of other members of our management team. The loss of any of these
management team members could materially and adversely affect our business.



                                       15


<PAGE>
COMPETITION

         The market for our services is highly fragmented, highly competitive
and is subject to rapid change. We believe that we currently compete principally
with a variety of companies, including but not limited to:

         -     outsourcing firms;
         -     systems integration firms;
         -     national consulting firms, including the consulting divisions
               of large accounting firms;
         -     general management consulting firms;
         -     regional and specialty consulting firms;
         -     internet development and e-commerce firms;
         -     information system vendors;
         -     service groups of computer equipment companies; and
         -     facilities management companies.

         Many of our competitors have significantly greater financial, technical
and marketing resources, generate greater revenues and have greater name
recognition than we do. Moreover, those competitors that sell or license their
own software may in the future attempt to limit or eliminate the use of third
party consultants, such as ourselves, to implement and/or customize such
software. In addition, vendors whose systems may enjoy wide market acceptance
and large market share could enter into exclusive or restrictive agreements with
other consulting firms which could eliminate or substantially reduce our
implementation work for those systems. Entry barriers into our markets are
relatively low and we have faced and expect to face additional competition from
new entrants into the healthcare consulting industry. Our competitors may prove
better able to leverage their financial and technological resources to develop
and market their competitive services; to introduce innovative solutions to the
market; and to compete on price and other factors with the products and services
offered by the Company. As a result, there is no certainty that the Company will
be able to retain or expand its existing base of clients. In addition,
combinations and consolidations in the consulting industry will give rise to
larger competitors whose relative strengths we cannot predict. We also compete
with our clients' internal resources, particularly where these resources
represent a fixed cost to the client. This internal client competition may
heighten as consolidation of healthcare providers creates organizations large
enough to support more sophisticated internal information management
capabilities. Our inability to compete effectively with current and future
competitors and competitive pressures facing us may reduce our revenue or
operating margins or otherwise materially and adversely affect our business and
the price of our common stock

LIMITED PROTECTION OF PROPRIETARY SYSTEMS AND PROCEDURES

         Our success depends in part upon our information and communication
systems, databases, market offerings, best practices, tools and the methods and
procedures that we have developed specifically to serve our clients. In
addition, we offer enterprise-wide communications services and will continue to
develop groupware/collaboration tools and applications. Because we have no
patents or registered copyrights, we rely on a combination of nondisclosure and
other contractual arrangements and copyright, trademark and trade secret laws to
protect our proprietary systems, information and procedures. We can offer no
assurance that the steps we have taken to protect these rights will be adequate
to prevent theft or detect unauthorized use and we may not take appropriate
steps to enforce our proprietary rights. We believe that our systems and
procedures and other proprietary rights do not infringe upon the rights of third
parties. However, if a party sues us in the future claiming that our business or
systems infringe on their intellectual property, we may have to enter into
expensive litigation regardless of the merits of such claims. In addition, any
infringement claim that causes us to discontinue use of, or having to acquire
licenses for, applications, tools, systems or software used or marketed by the
Company, could have a material adverse affect on the Company's business.

INFLUENCE OF PRINCIPAL STOCKHOLDER

         Our principal stockholder and Chief Executive Officer, Richard D.
Helppie, Jr., beneficially owns approximately 31.0% of our outstanding shares of
common stock. As a result, Mr. Helppie will retain the voting power to exercise
significant influence over the outcome of matters requiring a stockholder vote,
including the election of directors and the approval of significant corporate
matters. In addition, several executive officers and directors, including
Messrs. Helppie and our Chairman, Ronald V. Aprahamian, have filed a Report on
Schedule 13D, as amended, disclosing their intention to purchase shares of our
Common Stock in the open market from time to time using a common broker.
Although the members of this "group" have disclaimed any agreement or
understanding to vote or otherwise act in concert with respect to their
respective shares, we have no assurance that they would not act together and we
presume that their interests would be aligned on any number of matters that
might affect the Company. The beneficial ownership attributed to this group, as
of November 21, 2001, the date of the latest amendment, was



                                       16

<PAGE>



approximately 47.7%. Concentrations of control could adversely affect the market
price of the common stock or could delay or prevent a change in control.

STOCK PRICE VOLATILITY

         The trading price of our common stock has fluctuated widely. In
addition, in recent years the stock market has experienced extreme price and
volume fluctuations. The overall market and the price of our common stock may
continue to fluctuate greatly in the future.

         Our common stock has been publicly traded since our initial public
offering of common stock to the public in 1996. In 2001, the sale price ranged
from a low of $2.72 per share to a high of $8.99 per share. The market price of
our common stock could continue to fluctuate substantially due to a variety of
factors, including, but not limited to:

         -     Quarterly fluctuations in results of operations;
         -     Acquisition or loss of material outsourcing contracts and other
               material engagements;
         -     Changes in the healthcare and IT consulting environments;
         -     Announcement and market acceptance of acquisitions;
         -     Adverse circumstances affecting the introduction or market
               acceptance of new solutions and services we might offer in
               the future;
         -     Announcements of key developments by competitors;
         -     Changes in earnings estimates by analysts;
         -     Sales of common stock by existing holders;
         -     General economic or market conditions; and
         -     Loss of key personnel.

         The market price for our common stock has and could also be affected by
our ability to meet analysts' expectations. Failure to meet such expectations,
has in the past and could in the future, have a material adverse effect on the
market price of our common stock. In addition, the stock market is subject to
extreme price and volume fluctuations. This volatility has had a significant
effect on the market prices of securities issued by many companies for reasons
unrelated to the operating performance of these companies. In the past,
following periods of volatility in the market price of a company's securities,
securities class action litigation has often been instituted against such a
company. If similar litigation were instituted against us, it could result in
substantial costs and a diversion of our management's attention and resources,
which could have a material adverse effect on our business, operating results
and financial condition.

IMPACT OF ANTI-TAKEOVER PROVISIONS AND OTHER FACTORS ON OUR STOCK PRICE

         Our certificate of incorporation and by-laws and the Delaware General
Corporation Law include provisions that may be deemed to have anti-takeover
effects and may delay, defer or prevent a takeover attempt that stockholders
might consider in their best interests. Our board of directors is divided into
three classes, each of which is elected for staggered, three-year terms. Our
by-laws contain provisions under which only the chairman of the board, a
majority of the board of directors or stockholders owning at least 50% of our
capital stock may call meetings of stockholders and which require certain
advance notice procedures for nominating candidates for election to the board of
directors. Our board of directors is empowered to issue up to 1,000,000 shares
of preferred stock and to determine the price, rights, preferences and
privileges of such shares, without any further stockholder action. The existence
of this "blank-check" preferred stock could make more difficult or discourage an
attempt to obtain control of the Company by means of a tender offer, merger,
proxy contest or otherwise. In addition, this "blank check" preferred stock and
an issuance thereof, may have an adverse effect on the market price of our
common stock. Furthermore, we are subject to the anti-takeover provisions of
Section 203 of the Delaware General Corporation Law that prohibit us from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
first becomes an "interested stockholder," unless the business combination is
approved in a prescribed manner. The application of Section 203 and certain
other provisions of the certificate of incorporation could also have the effect
of delaying or preventing a change of control of the Company, which could
adversely affect the market price of our common stock.

         Our obligation to pay certain amounts to a business partner under an
existing agreement could be accelerated if we are involved in certain change of
control transactions without that partner's prior consent. The amounts payable
by the Company in such event could potentially be material. Acceleration of the
payment obligation could increase the cost of acquiring control of the Company,
which could discourage attempts to obtain control of the Company that
stockholders might otherwise consider in their best interests, or lower the
price of any such transaction.


                                       17


<PAGE>
                      EXECUTIVE OFFICERS OF THE REGISTRANT

         Our executive officers are as follows:

         Richard D. Helppie, Jr., age 46, has served as our Chief Executive
Officer since he founded Superior in 1984. He served as our President and CEO
from May 1984 to January 1999, and as Chairman from May 1984 to October 2000.
Mr. Helppie also currently serves as a Director of the Company. Mr. Helppie has
more than 27 years of experience in the healthcare and information systems
industries.

         George S. Huntzinger, age 52, has served as our President and Chief
Operating Officer since October 2000. Previously, Mr. Huntzinger served in
senior management roles for several healthcare organizations, including a
12-year term as President of CSC Healthcare. He is a member of numerous national
organizations and associations and previously served on the boards of several
healthcare and financial organizations and has served the healthcare industry
for over 30 years.

         Charles O. Bracken, age 52, has served as a Director since January 1999
and has served as our Executive Vice President since joining Superior in
March 1987. Mr. Bracken has more than 30 years of experience in the healthcare
and information systems industries. Prior to joining Superior, Mr. Bracken spent
three years as Vice President of Marketing of a healthcare information software
firm, preceded by 10 years of related experience in healthcare information
systems management, including positions as Chief Information Officer for single
and multi-hospital corporations.

         Richard R. Sorensen, age 46, has provided his financial expertise to
Superior in an advisory capacity since our inception in 1984. He joined Superior
as Controller in August of 1998 and became Chief Financial Officer in October
2000. Previously, he served as an audit partner with Plante & Moran, LLP. He is
a Certified Public Accountant.

ITEM 2.  PROPERTIES

         Our headquarters is located in approximately 24,000 square feet of
owned office space in Southfield, Michigan. We also lease an aggregate of
approximately 179,000 square feet of additional office space in Alpharetta,
Georgia; Atlanta, Georgia; San Diego, California; Woodland Hills, California;
Southfield, Michigan; Ann Arbor, Michigan; Cheshire, Connecticut; Englewood,
Colorado; Minneapolis, Minnesota; and Pittsburgh, Pennsylvania. We also own an
approximately 6,200 square foot building in Safety Harbor, Florida, for use as
an office and training facility. Of our total space described above, we have
sublet approximately 75,000 square feet. After giving effect to space reductions
from our recent restructuring, we believe that our facilities are adequate for
our current needs and that additional facilities can be leased or acquired to
meet future needs. We continue to consolidate offices and have undertaken
initiatives to sublet office space in Woodland Hills, California, San Diego,
California, Cheshire, Connecticut, Ann Arbor, Michigan and Southfield, Michigan.

ITEM 3.  LEGAL PROCEEDINGS

         We are a party to litigation from time to time. However, we are not now
a party to, and are not aware of, any pending or threatened litigation that we
currently anticipate would have a material adverse effect on our company.

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

         Not Applicable.

                                     PART II

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

         Our common stock is traded on the Nasdaq National Market under the
symbol SUPC. The following table shows high and low closing prices as reported
by Nasdaq for the fiscal years 2000 and 2001.


                                       18

<PAGE>


                                                             HIGH       LOW
                                                             ----       ---
FISCAL 2000
       First Quarter.................................       20.88      13.63
       Second Quarter................................       18.00       3.75
       Third Quarter.................................        4.81       1.81
       Fourth Quarter................................        3.94       1.25
FISCAL 2001
       First Quarter.................................        4.25       2.75
       Second Quarter................................        4.99       2.72
       Third Quarter.................................        6.26       3.25
       Fourth Quarter................................        8.99       4.06

         At March 28, 2002, we had approximately 105 stockholders of record.

         We have not paid cash dividends to the holders of our common stock. It
is our present intention to retain earnings for use in the growth of our
business. Accordingly, we do not anticipate that cash dividends will be paid in
the foreseeable future.

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

         You should read the following selected financial data in conjunction
with our financial statements, the related notes and "Management's Discussion
and Analysis of Financial Condition and Results of Operations," included
elsewhere in this report. The selected financial data as of December 31, 1999,
2000 and 2001 have been derived from our audited financial statements included
elsewhere in this report. The selected financial data as of December 31, 1997
and 1998 have been derived from our audited financial statements not included
elsewhere in this report.

<TABLE>
<CAPTION>
                                                                         YEAR ENDED DECEMBER 31,
                                                                         -----------------------
                                                    1997(1)      1998(1)      1999(1)       2000            2001
                                                    -------      -------      -------       ----            ----
                                                               (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                               <C>          <C>           <C>         <C>            <C>
STATEMENT OF OPERATIONS DATA:
Revenues ......................................   $   76,895   $  124,746    $ 149,349   $    99,237    $    86,721
Cost of services ..............................       39,260       65,026       91,714        77,674         56,721
Selling, general and administrative expenses          31,236       48,333       65,597        73,278         40,833
Costs incurred in connection with new
   business initiative ........................           --           --        4,840            --             --
Restructuring charges, net ....................           --           --           --         4,165          3,112
Impairment of goodwill .......................            --           --           --        10,221             --
                                                  ----------   ----------    ---------   -----------    -----------
Earnings (loss) from operations ...............        6,399       11,387      (12,802)      (66,101)       (13,945)
Other income (expense), net ...................        2,728        4,572        1,874         6,056         (3,620)
Costs incurred in connection with mergers......         (917)          --           --            --             --
                                                  ----------   ----------    ---------   -----------    -----------
Earnings (loss) before income taxes............        8,210       15,959      (10,928)      (60,045)       (17,565)
Provision (benefit) for income taxes ..........        3,625        6,331       (3,967)       (2,492)            --
                                                  ----------   ----------    ---------   ------------   -----------
Net earnings (loss) ...........................   $    4,585   $    9,628    $  (6,961)  $   (57,553)   $   (17,565)
                                                  ==========   ==========    =========   ===========    ============
Net earnings (loss) per share - basic..........   $     0.54   $     0.94    $   (0.67)  $     (5.48)   $     (1.61)
Net earnings (loss) per share - diluted........   $     0.53   $     0.91    $   (0.67)  $     (5.48)   $     (1.61)
Shares used in calculating net
   earnings (loss) per share - basic...........        8,519       10,266       10,340        10,511         10,920
Shares used in calculating net
   earnings (loss) per share - diluted.........        8,670       10,580       10,340        10,511         10,920

                                                                       AT DECEMBER 31,
BALANCE SHEET DATA:                                  1997         1998          1999        2000            2001
                                                     ----         ----          ----        ----            ----

Working capital................................   $   97,632   $   78,445    $  61,811   $   29,622    $    19,033
Total assets...................................      119,401      133,726      186,597       78,632         58,607
Total debt.....................................          189           61            -        5,125          2,925
Total stockholders' equity.....................      108,363      121,494      150,935       58,340         42,224
</TABLE>

(1)  Statement of operations data for fiscal 1997, 1998 and 1999 includes
     results of acquired businesses.


                                       19



<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW

         We are organized into the two business segments of outsourcing and
consulting. The outsourcing segment helps healthcare providers simplify their
management agendas, improve their return on information systems investment and
strengthen their technology management by ensuring client access to an
outsourcer's ability to deliver higher quality at lower cost and help them avoid
or reduce certain capital expenses. The outsourcing segment offers the client an
array of services, functions and economic elements that can be tailored to the
specific client program/agenda, including business process management, IT
management, IT planning and budgeting, applications support, applications
implementation, IT operations, data center consolidation, 24/7/365 network
monitoring and help desk, financial management and risk sharing, facility
management, application unification, application outsourcing, and interim
management. The consulting segment provides information technology, as well as
strategic and operations management consulting, solutions and application
support to a broad cross-section of healthcare industry participants and
information systems vendors. We also assist clients to leverage the power, speed
and value of Internet technologies to achieve efficiencies in business and
operations, realize measurable return on investment, connect with consumers,
physicians and trading partners and provide total solutions in secure
business-to-business and business-to-consumer e-commerce. From strategic
planning and go-to-market strategies to Internet enabling and development,
integration and implementation, we assist our clients to achieve supply chain
efficiencies, accelerate revenue, achieve HIPAA compliance and improve patient
safety and clinical quality.

         We derive a substantial portion of our revenues from fees for
professional services. We establish standard-billing guidelines based on the
type and level of service offered. Actual billing rates are established on a
project-by-project basis and may vary from the standard guidelines. Billings for
time and materials engagements are generally contracted to be made on a
bi-weekly basis to monitor client satisfaction and manage outstanding accounts
receivable balances. Revenue on time and materials contracts is recognized as
the services are provided. Billings for fixed-fee projects and pre-packaged
solution sales are billed by deliverable or on a periodic basis, generally
monthly. Increased use of fixed-fee contracts subjects us to increased risks,
including cost overruns. For outsourcing engagements, fixed-fee projects and
pre-packaged solution sales, we generally recognize revenue ratably over the
life of the contract or on a percentage of completion basis. As of December 31,
2001, we have six significant contracts to provide healthcare IT outsourcing
services. In addition, we provide help desk and call center support, which are
typically billable on a per seat per month basis and managed trust (digital
security) services, which are generally billed annually and recognized ratably
over the life of the contract. We also derive revenues from fees generated from
our Digital Business Transformation(TM) partnerships. This revenue is generally
recognized ratably over the life of the contract. There can be no assurance that
we will be able to achieve profit margins on existing and new contracts which
are consistent with our historical levels of profitability. In addition, profit
margins on outsourcing and support contracts are generally lower than other
traditional consulting engagements. As the Company moves to incorporate
proprietary software tools or applications in its client offerings it expects to
recognize revenue from license fees and annual support and maintenance fees. We
anticipate that license fees will generally be recognized upon the licensing of
the tools or applications, and the support and maintenance fees will generally
be recognized ratably over the support or maintenance term.

         We seek to increase revenue through various means, including an
increased emphasis on outsourcing engagements and an increase in the number of
projects for existing and new clients. In addition, we seek to increase revenues
by expanding our range of specialty services with a focus on opportunities
arising from the demand for clinical quality and patient safety, digital
communications, system security and HIPAA expertise. We manage our client
development efforts through our internal Client Partner Organizations ("CPO")
having specific geographic responsibility and focus. Within a geography, our CPO
members develop relationships and pursue opportunities at strategic clients,
maintain relationships with all stakeholders (buyers, suppliers and advisors)
and develop other business opportunities.



                                       20




<PAGE>
         Our most significant expense is cost of services, which consists
primarily of consultant salaries and benefits. Historically, consultant
compensation expense has grown faster than consultant billing rates, resulting
in an increase in our cost of services as a percentage of revenues. During 2001,
cost of services declined in total and as a percentage of revenues due primarily
to workforce reductions. This trend may or may not continue depending on whether
competition for recruiting and retaining skilled consultants intensifies. We
have sought to address this issue by adding an additional variable portion of
compensation payable upon the achievement of measurable performance goals. In
addition, we have sought to address compensation expense pressures through
increased use of stock options as an overall part of our compensation package.
These efforts have been hampered in the past by the impact of our stock price
and could be affected in the future depending upon market conditions.

         Our cost of services as a percentage of revenues is also impacted by
how efficiently we utilize our consultant resources and deliver our consulting
and outsourcing services and solutions. We attempt to optimize efficient
deployment of our consultants through initial engagement planning and by
continuously monitoring project requirements, timetables, and service and
solution deliveries. The number of consultants assigned to a project will vary
according to the type, size, complexity, duration and demands of the project.
Project terminations, completions and scheduling delays have and can result in
periods when we experience lower gross margins.

         During 2000, the healthcare industry experienced a slow-down in
consulting expenditures as fiscal constraints imposed by factors such as the
Balanced Budget Act of 1997, changes in the private reimbursement environment
and lingering Y2K transition effects combined forces to dampen overall industry
demand for new IT service consulting projects. These forces continued to hamper
demand for our services in 2001. Furthermore, the Balanced Budget Act of 1997
and other forces such as private reimbursement changes may continue to adversely
affect the financial stability of our clients and may impact their ability to
pay for professional services rendered.

         In 2001, the events of September 11 and resulting disruptions in air
travel adversely affected our business. We believe that certain client decisions
on pending projects were delayed, and that some third quarter work was deferred
to later periods. In addition, the aftermath of September 11, including
increased federal spending on defense and homeland security, could adversely
affect the federal government's spending on Medicare, Medicaid and other
healthcare initiatives which could adversely affect our clients' revenues and
cause them to defer or cancel projects that would create demand for our
services. Further, potential increases to the cost of and time consumed by
travel could have a material adverse affect on our business.

         In addition, our establishment of new Competency Centers, services and
market offerings and hiring of consultants in peak hiring periods have and can
from time to time adversely affect margins. Also, seasonal factors, such as
vacation days and total business days in a quarter have and can affect margins.
Variations in market offering solution sales, longer outsourcing sales cycles,
deployment of resources and failure to secure large engagements can also result
in quarterly variability of our cost of services as a percentage of revenues.
Our consultants are generally employed on a full-time basis and therefore we
will, in the short run, incur substantially all of our employee-related costs
even during periods of low utilization, as the majority of employment costs of
these personnel are fixed.

         Selling, general and administrative expenses include the costs of
recruiting, training and re-training, continuing education, technology, sales
and marketing, facilities, administration, outside professional fees,
depreciation and amortization of goodwill.

         In connection with our continuing efforts to reduce our cost structure,
we incurred restructuring charges of approximately $3.1 million during the year
ended December 31, 2001. These charges primarily related to the accelerated
expense associated with certain lease obligations, the write-off of property and
equipment and leasehold improvements, and severance costs related to our
continued organizational restructuring, partially off set by a reduction to the
accrual for restructuring costs included in accrued liabilities as of December
31, 2000. As a result of our restructuring plan and cost savings initiatives, we
have reduced operating expenses, excluding one-time charges, to $97.6 million
for the year ended December 31, 2001 from $151.0 million for the year ended
December 31, 2000.

                                       21



<PAGE>
RESULTS OF OPERATIONS

         The following table sets forth, for the periods indicated, selected
statement of operations data expressed as a percentage of revenues. The trends
illustrated in the following table may not necessarily be indicative of future
results.

                                               PERCENTAGE OF REVENUES
                                               YEAR ENDED DECEMBER 31,
                                               -----------------------
                                      1999            2000             2001
                                      ----            ----             ----

Revenues                              100.0%          100.0%          100.0%
Cost of services                       61.4%           78.3%           65.4%
Selling, general and
  administrative expenses              43.1%           72.6%           46.2%
Amortization of goodwill                0.9%            1.2%            0.9%
Costs incurred in connection
  with new business initiative          3.2%            0.0%            0.0%
Restructuring charges, net              0.0%            4.2%            3.6%
Impairment of goodwill                  0.0%           10.3%            0.0%
                                   ---------       ---------       ---------
Loss from operations                   (8.6%)         (66.6%)         (16.1%)
Other income (expense), net             1.3%            6.1%           (4.2%)
                                   ---------       ---------       ---------
Loss before income tax benefit         (7.3%)         (60.5%)         (20.3%)
Income tax benefit                     (2.6%)          (2.5%)           0.0%
                                   ---------       ---------       ---------
Net loss                               (4.7%)         (58.0%)         (20.3%)
                                   =========       =========       =========

2001 COMPARED TO 2000

         Revenues. Revenues in the consulting segment decreased by $13.8
million, or 19.3%, to $57.4 million for the year ended December 31, 2001, as
compared to $71.2 million for the year ended December 31, 2000. The revenue
decrease was primarily due to a decline in demand for this segment's services.
Revenues in the outsourcing segment increased by $1.3 million, or 4.5%, to $29.3
million for the year ended December 31, 2001, as compared to $28.0 million for
the year ended December 31, 2000. The revenue increase was primarily the result
of the signing of a significant outsourcing agreement during the second quarter
of 2001, partially offset by the discontinuance of two outsourcing agreements
during 2001.

         Cost of Services. Cost of services in the consulting segment decreased
by $21.0 million, or 37.1%, to $35.4 million for the year ended December 31,
2001, as compared to $56.4 million for the year ended December 31, 2000. The
decrease was due primarily to lower consultant compensation expenses as a result
of the reduction in consultant headcount in this segment. Cost of services as a
percentage of revenues for the consulting segment decreased to 61.7% for the
year ended December 31, 2001, as compared to 79.2% for the year ended December
31, 2000. The decrease was attributable to lower consultant headcount in this
segment. Cost of services in the outsourcing segment were $21.3 million for the
year ended December 31, 2001, which is consistent with the year ended December
31, 2000. Cost of services as a percentage of revenues for the outsourcing
segment decreased to 72.6% for the year ended December 31, 2001, as compared to
76.0% for the year ended December 31, 2000. The decrease was attributable to
increased consultant utilization in this segment.

         Selling, general and administrative expenses. Selling, general and
administrative expenses decreased by $32.5 million, or 44.3%, to $40.8 million
for the year ended December 31, 2001, as compared to $73.3 million for the year
ended December 31, 2000. The decrease was primarily attributable to planned
reductions in: compensation, continuing education, marketing, communication,
depreciation, facility, outside professional fee expenses, goodwill amortization
and charges related to the accounts receivable allowance, litigation and claims.
Selling, general and administrative expenses as a percentage of revenues
decreased to 47.1% from 73.8%. The decrease is primarily attributable to
increased operating efficiencies as a result of our cost-cutting measures.

         Restructuring charges. Restructuring charges were $3.1 million for the
year ended December 31, 2001, as compared to $4.2 million for the year ended
December 31, 2000. The decrease was primarily due to the majority of the charges
associated with the implementation of the restructuring plan during the year
ended December 31, 2000, being recorded during the third and fourth quarter of
2000. Restructuring charges recorded during the year ended December 31, 2001,
consisted primarily of costs incurred as a result of the acceleration of lease
costs associated with office space we determined was no longer necessary in our
current business model and had been unable to sublet as of December 31, 2001.
The restructuring charges also consisted of the write-off of property and
equipment associated with closed office facilities, the write-off of



                                       22


<PAGE>
leasehold improvements related to closed or sublet office space and severance
costs related to our continued organizational restructuring, partially offset by
a reduction to the accrual for restructuring costs included in accrued
liabilities as of December 31, 2000. Restructuring charges recorded during the
year ended December 31, 2000, consisted primarily of severance costs related to
the reduction in workforce, the write-off of property and equipment and the
closing of various office facilities. Refer to Note 10 ("Costs Incurred in
Connection with New Business Initiative and Restructuring") of our consolidated
financial statements included herein, for further details on the components of
the restructuring charges.

         The Company considers its accounting policy relating to the
restructuring accrual to be critical. As of December 31, 2001, the accrual
amounted to $2.2 million, which represents the present value of future operating
lease obligations for facilities no longer used by the Company, but not sublet
or sublet at amounts less than the Company's obligation. If the Company is
successful in subletting additional space in the future, this accrual may be
reduced.

         Other income and expense. Other expense was $3.6 million for the year
ended December 31, 2001, as compared to other income of $6.1 million for the
year ended December 31, 2000. The change was primarily the result of the $4.1
million loss recognized on the sale of investment securities during the year
ended December 31, 2001, compared to the $5.2 million net gain recognized on the
sale of investment securities during the year ended December 31, 2000. We
received proceeds of $571,000 from the sale of our remaining 81,678 shares of
Neoforma, Inc. common stock in 2001.

2000 COMPARED TO 1999

         Revenues. Revenues in the consulting segment decreased by $41.3
million, or 36.7%, to $71.2 million for the year ended December 31, 2000, as
compared to $112.5 million for the year ended December 31, 1999. The revenue
decrease was due primarily to lower consultant headcount and a decline in demand
for this segment's services due to the weaker healthcare and technology markets.
Revenues in the outsourcing segment decreased by $8.8 million, or 23.9%, to
$28.0 million for the year ended December 31, 2000, as compared to $36.8 million
for the year ended December 31, 1999. The revenue decrease was primarily
attributable to lower consultant utilization in this segment due to our decision
to withdraw from an outsourcing agreement as a result of the client's decision
in 1999 to compete against us in the local outsourcing market, which was
partially offset by two new outsourcing agreements signed during 2000.

         Cost of Services. Cost of services in the consulting segment decreased
by $9.7 million, or 14.7%, to $56.4 million for the year ended December 31,
2000, as compared to $66.1 million for the year ended December 31, 1999. The
decrease was due primarily to adjustments we made to optimize our workforce.
Cost of services as a percentage of revenues for the consulting segment
increased to 79.2% for the year ended December 31, 2000, as compared to 58.8%
for the year ended December 31, 1999. The increase was attributable to lower
consultant utilization and a lower revenue base for this segment. Cost of
services in the outsourcing segment decreased by $4.3 million, or 16.8%, to
$21.3 million for the year ended December 31, 2000, as compared to $25.6 million
for the year ended December 31, 1999. The decrease was primarily the result of
reduced consultant compensation expenses in this segment. Cost of services as a
percentage of revenues for the outsourcing segment increased to 76.0% for the
year ended December 31, 2000, as compared to 69.5% for the year ended December
31, 1999. The increase is primarily attributable to the development of
additional capacity within outsourcing to capitalize on anticipated future
demand and lower consultant utilization in this segment.

         Selling, general and administrative expenses. Selling, general and
administrative expenses increased by $7.7 million, or 11.7%, to $73.3 million
for the year ended December 31, 2000, as compared to $65.6 million for the year
ended December 31, 1999. The increase was due to charges related to the accounts
receivable allowance, primarily for specifically identified clients and amounts,
litigation and claims, as well as increased facility expenses. Selling, general
and administrative expenses as a percentage of revenues increased to 73.8% from
43.9%. The increase was due to the additional charges discussed above, as well
as a lower revenue base than anticipated.

         Restructuring charges. We incurred approximately $4.2 million of
restructuring charges in connection with the implementation of a restructuring
plan during the year ended December 31, 2000. The restructuring charges
consisted primarily of severance costs related to a reduction in workforce, the
write-off of property and equipment and the closing of various office
facilities. The restructuring plan was aimed at improving future overall
financial performance through operating cost reductions and the optimization of
our workforce. Refer to Note 10 ("Costs Incurred in Connection with New Business
Initiative and Restructuring,") of our consolidated financial statements
included herein, for further details on the components of the restructuring
charges.

                                       23


<PAGE>
         Impairment of goodwill. During the year ended December 31, 2000, as a
result of management's strategic review of our operations, including relevant
cash flows, estimated future operating results, industry trends and other
available information, it was determined that the carrying value of goodwill
exceeded its current fair value. The current fair value of goodwill was
determined using estimated discounted future cash flows. During the year ended
December 31, 2000, we recorded a non-cash impairment loss of approximately $10.2
million to write down the carrying value of goodwill.

         Other income and expense. Other income was $6.1 million for the year
ended December 31, 2000, as compared to $1.9 million for the year ended December
31, 1999. The increase was primarily due to the $5.2 million net gain recognized
on the sale of investment securities during the year ended December 31, 2000. We
received proceeds of $27.9 million from the sale of our debt securities,
5,172,930 shares of drkoop.com, Inc., 331,541 shares of WebMD Corporation and
63,500 shares of Neoforma, Inc. common stock.

LIQUIDITY AND CAPITAL RESOURCES

         During the year ended December 31, 2000, we implemented a restructuring
plan, which was endorsed by our Board of Directors, as the result of
experiencing a decline in demand for our services as compared to prior years. In
connection with the restructuring plan, we have undertaken various actions
designed to reduce our cost structure, improve our competitiveness and restore
sustainable profitability. As a result, we recorded restructuring charges of
approximately $4.2 million during the year ended December 31, 2000. The majority
of these charges, which consisted primarily of severance costs related to the
reduction in workforce, the write-off of property and equipment and the closing
of various office facilities, were paid in fiscal 2000. During the year ended
December 31, 2001, we recorded additional restructuring charges of approximately
$3.1 million, primarily related to the accelerated expense associated with
certain lease obligations, the write-off of property and equipment and leasehold
improvements, and severance costs related to our continued organizational
restructuring, partially offset by a reduction to the accrual for restructuring
costs included in accrued liabilities as of December 31, 2000. During the year
ended December 31, 2001, we had cash outflows associated with the implementation
of the restructuring plan of approximately $529,000, related primarily to
severance costs, of which $314,000 was included in accrued liabilities as of
December 31, 2000, net of $166,000 that was reversed during 2001 and $215,000
included in additional charges recorded during 2001. The current accrued
liability for additional cash outflows, related to the accelerated expense
associated with certain lease obligations, is approximately $2.2 million and
will be payable as follows: $840,000 during 2002, $865,000 during 2003, $294,000
during 2004, $205,000 during 2005 and $27,000 during 2006.

         Our primary capital needs have been, and will be, to fund our
outsourcing and solution sales initiatives, as well as our capital expenditures.
We believe after giving effect to the restructuring plan and assuming revenue
consistent with current levels, that our current cash and cash equivalents, cash
generated from operations, plus available credit under our bank credit facility,
will be sufficient to finance our working capital and capital expenditure
requirements for at least the next twelve months. The nature, the amount and the
timing of the Company's long-term capital needs can be affected by a number of
factors. For example, the Company's strategic plan includes a heightened focus
on the development of the Company's outsourcing business and the winning of
large engagements. The implementation of a new outsourcing engagement can
involve the need for capital investment by the Company, including the hiring of
new personnel and the acquisition of a client's IT assets, including hardware
and software. An additional element of the Company's outsourcing business
strategy includes offering data center consolidation to its clients, which, in
turn, requires investment by the Company in data center facilities. The timing,
number and scale of potential future outsourcing engagements can impact the
Company's need for capital resources. In addition, the Company's future
long-term capital needs will be affected by the timing of the Company's market
and service offerings, in addition to outsourcing, and the degree and timing
of success enjoyed by such offerings in the market. A failure of the Company's
offerings to meet success in the market, and the Company's ability to adjust its
operating expenses to an appropriate level commensurate with operating expenses
can also affect the Company's need for capital resources. For all of these
reasons and those identified in the other risk factors discussed herein, the
Company's ability to project long-term revenue levels and capital needs are
subject to substantial uncertainty. If our available funds and cash generated
from operations are insufficient to satisfy our long-term liquidity
requirements, or if an event of default occurs under our credit agreement with
our lenders and we are required to repay all outstanding indebtedness under the
credit agreement, we might need to seek additional sources of funding, such as
selling additional equity or debt securities or obtaining additional lines of
credit. We could also, in such event, face the need to delay or reduce the
development of services or the pursuit of engagements that would require
significant investment to complete. The Company could also face the need to
reduce staffing levels and related expenses or potentially to liquidate selected
assets. If the Company's management decides that it is in the Company's best
interest to raise cash to strengthen the Company's balance sheet, broaden our
investor base, increase liquidity of our pool of publicly traded stock or for
any other reason, the Company may decide to issue equity or debt,
notwithstanding that our currently available funds are sufficient to meet our
anticipated needs for working capital and capital expenditures through the next
twelve months. The Company may decide to enter into such a



                                       24


<PAGE>
transaction to raise cash even if all of our current funding sources remain
available to us. If the Company issues additional securities to raise funds,
those securities may have rights, preferences, or privileges senior to those of
our common stock and our stockholders may experience dilution. We cannot be
certain that additional financing will be available to us on favorable terms
when required, or at all. The inability of the Company to obtain additional
financing when needed could impair the Company's ability to develop products and
services for the market; to implement its business strategies; and may otherwise
materially and adversely affect the Company's business.

         At December 31, 2001, we had cash and cash equivalents of $16.9 million
and working capital of $19.0 million, as compared with cash and cash equivalents
of $20.8 million and working capital of $29.6 million at December 31, 2000.

         As of December 31, 2001, we had a line of credit arrangement at
Comerica Bank N.A. allowing for borrowings of up to $8.0 million, based on
qualifying accounts receivable. Based on the eligibility provisions in the loan
agreement, we could have borrowed $7.1 million on the line of credit as of
December 31, 2001; $2.9 million was outstanding. Borrowings bear interest at the
greater of the prime rate or 1% plus the Federal funds effective rate. The
effective interest rate at December 31, 2001, was 4.75%. The line is
collateralized by accounts receivable and any deposits held by the bank. We did
not meet a certain financial operating covenant as of December 31, 2001.
Subsequent to December 31, 2001, the credit agreement was amended to waive the
covenant default as of December 31, 2001, extend the maturity date to September
30, 2002, and modify the financial covenants for 2002. We have recently repaid
all borrowings under the commercial credit agreement. In addition, we have
letters of credit totaling $1.0 million issued by a bank secured by bank
deposits.

         Net cash provided by operations was $1.1 million for the year ended
December 31, 2001, as compared to net cash used in operations of $23.8 million
for the year ended December 31, 2000. The increase in net cash provided by
operations was primarily due to the reduction in the net operating loss.

         Net cash of $1.8 million used in investing activities during the year
ended December 31, 2001, consisted of additions to property, equipment and
software, partially off set by the proceeds received from the sale of investment
securities.

         Net cash of $3.2 million used in financing activities during the year
ended December 31, 2001, was primarily the result of the payment on our line of
credit and the repurchase of 267,100 shares of our common stock.

         We do not believe that inflation has had a material effect on the
results of our operations.

                                       25




<PAGE>
Quarterly Results

         The following table sets forth certain unaudited quarterly operating
information for each of the last eight quarters.
<TABLE>
<CAPTION>

                                                                   QUARTER ENDED
                                    MAR. 31,   JUNE 30,    SEPT. 30,   DEC. 31,    MAR. 31,    JUNE 30,    SEPT. 30,   DEC. 31
                                      2000       2000        2000        2000        2001       2001         2001       2001
                                      ----       ----        ----        ----        ----       ----         ----       ----
                                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                <C>         <C>         <C>        <C>         <C>         <C>         <C>         <C>
Revenues........................   $  28,073   $  25,495   $ 23,312   $  22,357   $  21,778   $  22,115   $  21,308   $  21,520
Cost of services................      23,029      21,325     18,368      14,952      15,298      14,221      13,649      13,553
Selling, general and
  administrative expenses.......      18,370      18,056     23,378      13,474      10,903      10,825       9,615       9,490
Restructuring charges, net......           -           -      2,322       1,843           -         169         216       2,727
Impairment of goodwill..........           -           -     10,221           -           -           -           -           -
                                   ---------   ---------   --------   ---------   ---------   ---------   ---------   ---------
Loss from operations............     (13,326)    (13,886)   (30,977)     (7,912)     (4,423)     (3,100)     (2,172)     (4,250)
Other income (expense), net.....       9,340         414     (3,761)         63          (8)        235         129      (3,976)
                                   ---------   ---------   --------   ---------   ----------  ---------   ---------   ---------

Loss before income tax benefit..      (3,986)    (13,472)   (34,738)     (7,849)     (4,431)     (2,865)     (2,043)     (8,226)
Income tax benefit..............      (1,404)     (1,088)         -           -           -           -           -           -
                                   ---------   ---------   --------   ---------   ---------   ---------   ---------   ---------
Net loss........................   $  (2,582)  $ (12,384)  $(34,738)  $  (7,849)  $  (4,431)  $  (2,865)  $  (2,043)  $  (8,226)
                                   =========   =========   ========   =========   =========   =========   =========   =========
Net loss per share - basic......   $   (0.25)  $   (1.19)  $  (3.34)  $   (0.72)  $   (0.40)  $   (0.26)  $   (0.19)  $   (0.77)
Net loss per share - diluted....   $   (0.25)  $   (1.19)  $  (3.34)  $   (0.72)  $   (0.40)  $   (0.26)  $   (0.19)  $   (0.77)
Shares used in calculating net
  loss per share - basic........      10,342      10,384     10,390      10,925      10,990      10,990      10,977      10,725
Shares used in calculating net
  loss per share - diluted......      10,342      10,384     10,390      10,925      10,990      10,990      10,977      10,725
</TABLE>

         Revenues and operating results fluctuate from quarter to quarter due to
several factors, such as the number and significance of client engagements
commenced and completed during a quarter, delays incurred in connection with
projects, fluctuations in sales of our market offerings, slow adoption rate of
new solutions, and deployment of resources. The timing of revenues varies from
quarter to quarter because our sales cycle can be relatively long and may depend
on factors such as the size and scope of assignments, the general ability of
clients to terminate engagements without penalty, long outsourcing sales cycles
and general economic conditions. In addition, the timing of the establishment of
new Competency Centers, services and market offerings, geographic expansion and
the hiring of key individuals have and can adversely affect margins. Seasonal
factors such as vacation days, total business days in a quarter or the business
practices of clients, such as deferred commitments on new projects until after
the end of the calendar or the client's fiscal year, have and can affect
margins. Because a significant percentage of our expenses are relatively fixed,
a variation in the number or size of client assignments or the timing of the
initiation or the completion of client assignments can cause significant
variations in operating results from quarter to quarter.

         As a result of the factors above, and others, period-to-period
comparison of our revenues and operating results may not be meaningful. You
should not rely on these comparisons as indicators of future performance as no
assurances can be given that quarterly results will not fluctuate, causing a
material adverse effect on our operating results and financial conditions.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         We are exposed to interest rate change market risk in connection with
our credit facilities with our bank. The interest rates on these facilities are
tied to the bank's prime rate, and changes in the variable rate will have an
impact on our interest expense.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The financial statements are annexed to this Report as pages F-2
through F-17. An index to such statements appears on page F-l.

ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

         Not applicable.


                                       26



<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         We are incorporating the information required by this item with respect
to our directors by reference from our definitive proxy statement, which we
expect to file with the Commission on or prior to April 30, 2002. We have set
forth information regarding executive officers in Part I of this report.

ITEM 11. EXECUTIVE COMPENSATION

         We are incorporating the information required by this item by reference
from our definitive proxy statement, which we expect to file with the Commission
on or prior to April 30, 2002.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         We are incorporating the information required by this item by reference
from our definitive proxy statement, which we expect to file with the Commission
on or prior to April 30, 2002.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         We are incorporating the information required by this item by reference
from our definitive proxy statement, which we expect to file with the Commission
on or prior to April 30, 2002.

                                     PART IV

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

         The financial statements filed as part of this report are listed in the
accompanying Index to Consolidated Financial Statements. The exhibits filed as
part of this report are listed in the accompanying Index to Exhibits. The
Company will furnish a copy of any exhibit listed to requesting stockholders
upon payment of the Company's reasonable expenses in furnishing those materials.
No reports on Form 8-K were filed by the Company during the last quarter of the
period covered by this report.



                                       27



<PAGE>

ITEM 8.  FINANCIAL STATEMENTS




            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                          PAGE
                                                                          ----

Report of Independent Certified Public Accountants...................      F-2

Consolidated Balance Sheets as of December 31, 2000 and 2001.........      F-3

Consolidated Statements of Operations for the years ended
  December 31, 1999, 2000 and 2001...................................      F-4

Consolidated Statements of Stockholders' Equity for the years
  ended December 31, 1999, 2000 and 2001.............................      F-5

Consolidated Statements of Cash Flows for the years ended
  December 31, 1999, 2000 and 2001...................................      F-6

Notes to Consolidated Financial Statements...........................      F-7


                                       F-1



<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS





To the Board of Directors
Superior Consultant Holdings Corporation

     We have audited the accompanying consolidated balance sheets of Superior
Consultant Holdings Corporation (a Delaware corporation) and Subsidiaries as of
December 31, 2000 and 2001, and the related statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 2001. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Superior Consultant Holdings Corporation and Subsidiaries as of December 31,
2000 and 2001, and the results of their consolidated operations and their
consolidated cash flows for each of the three years in the period ended December
31, 2001, in conformity with accounting principles generally accepted in the
United States of America.


/s/ GRANT THORNTON LLP


Southfield, Michigan
February 28, 2002




                                      F-2
<PAGE>
            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                                             December 31,
                                                         --------------------
                      ASSETS                                2000       2001
                                                         --------    --------
                                                             (In thousands)
Current assets
    Cash and cash equivalents..........................  $ 20,825    $ 16,902
    Accounts receivable, net...........................    19,474      14,164
    Accrued interest receivable and prepaid expenses...     3,516       3,644
    Refundable income taxes............................     6,099         706
                                                         --------    --------
                 Total current assets..................    49,914      35,416

Property and equipment, net............................    17,239      14,071
Goodwill, net..........................................     8,973       8,223
Investments............................................       664           -
Deferred income taxes..................................     1,615           -
Other long-term assets.................................       227         897
                                                         --------    --------
                 Total Assets..........................  $ 78,632    $ 58,607
                                                         ========    ========

            LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities
    Notes payable to bank..............................  $  5,125    $  2,925
    Accounts payable...................................     7,629       8,565
    Accrued liabilities, deferred bonuses
      and compensation.................................     3,773       2,752
    Deferred revenue...................................     3,765       2,141
                                                         --------    --------
                 Total current liabilities.............    20,292      16,383

Commitments and contingencies (Note 15)................         -           -
Stockholders' equity
    Preferred stock; authorized, 1,000,000 shares of
       $.01 par value; 1,000 shares issued and
       outstanding as of December 31, 2000 and no
       shares issued or outstanding as of
       December 31, 2001...............................         -           -
    Common stock; authorized, 30,000,000 shares of
       $.01 par value; issued and outstanding,
       11,074,846 shares as of December 31, 2000 and
       11,080,042 shares as of December 31, 2001.......       111         111
    Additional paid-in capital.........................   116,003     116,062
    Stockholders' notes receivable.....................    (1,553)     (1,536)
    Accumulated other comprehensive loss...............    (2,373)          -
    Treasury stock - at cost; 85,000 shares as
       of December 31, 2000 and 352,100 shares
       as of December 31, 2001.........................    (2,270)     (3,270)
    Accumulated deficit................................   (51,578)    (69,143)
                                                         --------    --------
                 Total stockholders' equity............    58,340      42,224
                                                         --------    --------
                 Total Liabilities and
                   Stockholders' Equity................  $ 78,632    $ 58,607
                                                         ========    ========







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

                                       F-3


<PAGE>


            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                   Year Ended December 31,
                                                                          ---------------------------------------
                                                                            1999          2000             2001
                                                                          --------        -------         -------
                                                                           (In thousands, except per share data)

<S>                                                                      <C>             <C>             <C>
Revenues.........................................................        $ 149,349       $ 99,237        $ 86,721

Operating costs and expenses
    Cost of services.............................................           91,714         77,674          56,721
    Selling, general and administrative expenses.................           65,597         73,278          40,833
    Costs incurred in connection with new business initiative....            4,840              -               -
    Restructuring charges, net...................................                -          4,165           3,112
    Impairment of goodwill.......................................                -         10,221               -
                                                                         ---------       --------        --------
         Total operating costs and expenses......................          162,151        165,338         100,666
                                                                         ---------       --------        --------
         Loss from operations....................................          (12,802)       (66,101)        (13,945)

Other income (expense), net......................................            1,874          6,056          (3,620)
                                                                         ---------       --------        --------
         Loss before income tax benefit..........................          (10,928)       (60,045)        (17,565)

Income tax benefit...............................................           (3,967)        (2,492)              -
                                                                         ---------       --------        --------
         Net loss................................................        $  (6,961)      $(57,553)       $(17,565)
                                                                         =========       ========        ========


Net loss per share
    Basic........................................................        $   (0.67)      $  (5.48)       $  (1.61)
                                                                         =========       ========        ========
    Diluted......................................................        $   (0.67)      $  (5.48)       $  (1.61)
                                                                         =========       ========        ========
Weighted average number of common shares outstanding
    Basic........................................................           10,340         10,511          10,920
                                                                         =========       ========        ========
    Diluted......................................................           10,340         10,511          10,920
                                                                         =========       ========        ========
</TABLE>




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

                                       F-4


<PAGE>

           SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<Table>
<Caption>

                                                                Preferred Stock   Common Stock     Additional  Stockholders'
                                                                ---------------  --------------     Paid-In       Notes
                                                                Shares   Amount  Shares   Amount    Capital     Receivable
                                                                ------   ------  ------   ------    --------    ----------
                                                                                     (In thousands)
<S>                                                             <C>      <C>     <C>      <C>       <C>         <C>
Balance at January 1, 1999....................................       2   $    -  10,322   $  103    $109,113    $     (658)
Net loss......................................................       -        -       -        -           -             -
Net unrealized gain on investment securities..................       -        -       -        -           -             -
                                                                ------   ------  ------   ------    --------    ----------
    Total comprehensive income................................
Shares issued in connection with acquisitions.................       -        -      46        -         640             -
Exercise of stock options.....................................       -        -      58        1       1,253             -
Tax benefit relating to stock options exercised...............       -        -       -        -         160             -
Expense recognized for fair value of stock options
  and warrants granted........................................       -        -       -        -       3,008             -
Purchase of 85,000 shares of treasury stock...................       -        -       -        -           -             -
Payment on stockholders' notes receivable.....................       -        -       -        -           -            22
                                                                ------   ------  ------   ------    --------    ----------
Balance at December 31, 1999..................................       2        -  10,426      104     114,174          (636)
Net loss......................................................       -        -       -        -           -             -
Net unrealized loss on investment securities..................       -        -       -        -           -             -
                                                                ------   ------  ------   ------    --------    ----------
    Total comprehensive loss..................................
Issuance of common stock......................................       -        -     600        6         917          (917)
Shares issued (cancelled) in connection with acquisition......      (1)       -      47        1         652             -
Exercise of stock options.....................................       -        -       2        -          32             -
Expense recognized for fair value of stock options
  and warrants granted........................................       -        -       -        -         228             -
                                                                ------   ------  ------   ------    --------    ----------
Balance at December 31, 2000..................................       1        -  11,075      111     116,003        (1,553)
Net loss......................................................       -        -       -        -           -             -
Net unrealized gain on investment securities..................       -        -       -        -           -             -
                                                                ------   ------  ------   ------    --------    ----------
    Total comprehensive loss..................................
Tax benefit relating to stock options exercised...............       -        -       -        -           6             -
Exercise of stock options.....................................       -        -       5        -          16             -
Purchase of 267,100 shares of treasury stock..................       -        -       -        -           -             -
Cancellation of shares issued in connection with acquisition..      (1)       -       -        -          (1)            -
Compensation expense recognized for fair value
  of stock options granted....................................       -        -       -        -          38             -
Payment on stockholders' notes receivable.....................       -        -       -        -           -            17
                                                                ------   ------  ------   ------    --------    ----------
Balance at December 31, 2001..................................       -   $    -  11,080   $  111    $116,062    $   (1,536)
                                                                ======   ======  ======   ======    ========    ==========
</Table>


<Table>
<Caption>
                                                                                         Accumulated
                                                                Treasury     Retained       Other
                                                                 Stock       Earnings    Comprehensive
                                                                 Amount     (Deficit)    Income (Loss)    Total
                                                                --------    ---------    -------------   --------
                                                                                 (In thousands)
<S>                                                             <C>         <C>          <C>             <C>
Balance at January 1, 1999....................................  $      -    $  12,936    $           -   $ 121,494
Net loss......................................................         -       (6,961)               -      (6,961)
Net unrealized gain on investment securities..................         -            -           33,588      33,588
                                                                --------    ---------    -------------   ---------
    Total comprehensive income................................                                              26,627
Shares issued in connection with acquisitions.................         -            -                -         640
Exercise of stock options.....................................         -            -                -       1,254
Tax benefit relating to stock options exercised...............         -            -                -         160
Expense recognized for fair value of stock options
  and warrants granted........................................         -            -                -       3,008
Purchase of 85,000 shares of treasury stock...................    (2,270)           -                -      (2,270)
Payment on stockholders' notes receivable.....................         -            -                -          22
                                                                --------    ---------    -------------   ---------
Balance at December 31, 1999..................................    (2,270)       5,975           33,588     150,935
Net loss......................................................         -      (57,553)               -     (57,553)
Net unrealized loss on investment securities..................         -            -          (35,961)    (35,961)
                                                                --------    ---------    -------------   ---------
    Total comprehensive loss..................................                                             (93,514)
Issuance of common stock......................................         -            -                -           6
Shares issued (cancelled) in connection with acquisition......         -            -                -         653
Exercise of stock options.....................................         -            -                -          32
Expense recognized for fair value of stock options
  and warrants granted........................................         -            -                -         228
                                                                --------    ---------    -------------   ---------
Balance at December 31, 2000..................................    (2,270)     (51,578)          (2,373)     58,340
Net loss......................................................         -      (17,565)               -     (17,565)
Net unrealized gain on investment securities..................         -            -            2,373       2,373
                                                                --------    ---------   --------------   ---------
    Total comprehensive loss..................................                                             (15,192)
Tax benefit relating to stock options exercised...............         -            -                -           6
Exercise of stock options.....................................         -            -                -          16
Purchase of 267,100 shares of treasury stock..................    (1,000)           -                -      (1,000)
Cancellation of shares issued in connection with acquisition..         -            -                -          (1)
Compensation expense recognized for fair value
  of stock options granted....................................         -            -                -          38
Payment on stockholders' notes receivable.....................         -            -                -          17
                                                                --------    ---------    -------------   ---------
Balance at December 31, 2001..................................  $ (3,270)   $ (69,143)   $           -   $  42,224
                                                                ========    =========    =============   =========
</Table>




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

                                      F-5



<PAGE>




            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                               Year Ended December 31,
                                                                                       ----------------------------------------
                                                                                          1999          2000             2001
                                                                                       ---------     ----------     -----------
                                                                                                  (In thousands)
<S>                                                                                    <C>           <C>            <C>
Cash flows from operating activities:
    Net loss.......................................................................    $  (6,961)    $  (57,553)    $   (17,565)
    Adjustments to reconcile net loss to net
       cash provided by (used in) operating activities:
          Depreciation and amortization of property and equipment..................        5,817          5,290           4,083
          Goodwill amortization....................................................        1,338          1,203             749
          Impairment of goodwill...................................................            -         10,221               -
          Bad debt expense.........................................................          927          6,378             395
          Loss (gain) on sale of property and equipment............................          180            (85)              -
          Restructuring charge - write-off of property and equipment...............            -          2,356             527
          Restructuring charge - write-off of leasehold improvements...............            -              -             305
          (Gain) loss on sale of investment securities.............................            -         (5,161)          4,081
          Interest income on marketable debt security..............................         (323)          (239)              -
          Options and warrants issued to non-employees.............................        3,008            228              38
          Warrants from business partner...........................................          (29)            29               -
          Deferred income taxes (benefits).........................................       (3,065)         3,171               -
          Changes in operating assets and liabilities, 1999 is net of
              effect from acquisition:
                Accounts receivable................................................        1,539         12,876           4,915
                Accrued interest receivable and prepaid expenses...................       (1,259)        (1,090)           (128)
                Refundable income taxes............................................       (5,322)          (617)          5,399
                Accounts payable...................................................        1,984          1,536             936
                Accrued liabilities, deferred bonuses and compensation.............       (1,200)           149          (1,021)
                Deferred revenue...................................................        3,829         (2,489)         (1,624)
                                                                                       ---------     ----------     -----------
                 Net cash provided by (used in) operating activities...............          463        (23,797)          1,090

Cash flows from investing activities:
    Purchase of businesses.........................................................       (3,235)          (873)              -
    Purchase of investment securities..............................................      (15,103)             -               -
    Proceeds from sale of investment securities....................................            -         27,861             571
    Purchase of property and equipment.............................................      (10,210)        (4,382)         (1,747)
    Proceeds from sale of property and equipment...................................            -            277               -
    Changes in other long-term assets..............................................           (2)          (115)           (670)
                                                                                       ---------     ----------     -----------
                 Net cash provided by (used in) investing activities...............      (28,550)        22,768          (1,846)

 Cash flows from financing activities:
    (Repayment of) proceeds from line of credit....................................            -          5,125          (2,200)
    Repayments of long-term debt...................................................          (61)             -               -
    Proceeds from issuance of common stock.........................................            -              6               -
    Principal payments on stockholders' notes receivable...........................           22              -              17
    Exercise of stock options......................................................        1,254             32              16
    Stock repurchased..............................................................       (2,270)             -          (1,000)
                                                                                       ---------     ----------     -----------
                 Net cash provided by (used in) financing activities...............       (1,055)         5,163          (3,167)
                                                                                       ---------     ----------     -----------
Net increase (decrease) in cash and cash equivalents...............................      (29,142)         4,134          (3,923)
Cash and cash equivalents, beginning of period.....................................       45,833         16,691          20,825
                                                                                       ---------     ----------     -----------
Cash and cash equivalents, end of period...........................................    $  16,691     $   20,825         $16,902
                                                                                       =========     ==========       =========

 Supplemental disclosure of cash flow information - cash paid for income taxes.....    $   4,110     $       25     $         6
                                                    cash paid for interest.........           26            247             281

 Non-Cash Transactions:
    Shares issued in connection with acquisitions..................................    $     640     $      653     $         -
    Net unrealized gain (loss) on investments, net of deferred income taxes........       33,588        (35,961)          2,373
    Tax benefit from exercise of stock options.....................................          160              -               6

</TABLE>


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

                                       F-6


<PAGE>
            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
              (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT SHARE DATA)



1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Principles of Consolidation

     The accompanying consolidated financial statements include the accounts of
Superior Consultant Holdings Corporation and its wholly-owned subsidiaries. All
material intercompany accounts and transactions have been eliminated.

     Business Activities and Reportable Segments

     Effective October 1, 2000, the Company organized into the two business
segments of consulting and outsourcing. The consulting segment provides
information technology, strategic and operations management consulting,
application implementation and support, as well as solutions to a broad
cross-section of healthcare industry participants and information systems
vendors. The outsourcing segment helps healthcare providers simplify their
management agendas, improve their return on information systems investment and
strengthen their technology management by ensuring client access to an
outsourcer's ability to deliver higher quality at lower cost and help them avoid
or reduce certain capital expenses.

     Cash and Cash Equivalents

     For purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with a maturity of three months or less to
be cash equivalents. At December 31, 2001, the Company has $1,000,000 of cash
restricted for letters of credit.

     Property and Equipment

     Property and equipment are stated at cost. Expenditures for renewals and
improvements that extend the useful life of property and equipment are
capitalized. Expenditures for maintenance and repairs are charged to expense as
incurred. Depreciation is provided over the estimated useful lives of
depreciable assets using the straight-line method.

     Investment Securities

     The Company follows Statement of Financial Accounting Standards No. 115,
Accounting for Certain Investments in Debt and Equity Securities. Under
Statement No. 115, debt and marketable equity securities must be classified in
one of three categories: trading, available-for-sale, or held to maturity. A
decline in the market value of an available-for-sale security below cost that is
deemed other than temporary would be charged to earnings and result in the
establishment of a new cost basis for the security. Realized gains and losses
are determined on the specific identification method and reflected in earnings.

     Income Taxes

     The Company accounts for income taxes using the asset and liability
approach. Deferred income taxes are provided for the differences between the tax
bases of assets or liabilities and their reported amounts in the financial
statements. This method also requires the recognition of future tax benefits
such as net operating loss carryforwards, to the extent that realization of such
benefits is more likely than not. The tax benefit from the exercise of certain
stock options reduces the Company's accrued income tax liability and increases
additional paid-in capital.

     Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from these estimates.

     Fair Value of Financial Instruments

     The carrying value of the cash equivalents and the investment in Neoforma,
Inc. approximates their estimated fair values based upon quoted market prices.
The fair value of stockholders' notes receivable approximate their carrying
values based on current rates for instruments with similar characteristics.




                                       F-7


<PAGE>


            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
              (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT SHARE DATA)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Revenue Recognition

     The Company recognizes revenues as services are performed for projects
billed on a time and materials basis. For outsourcing engagements, fixed-fee
projects and pre-packaged solution sales, the Company generally recognizes
revenue ratably over the life of the contract or on a percentage of completion
basis. Deferred revenue represents collections made in advance of services being
performed.

     Stock-Based Compensation

     For options granted to employees and Board members, the Company follows the
provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees, and accordingly, recognizes no compensation expense for
these option grants. For options and warrants to non-employees, the Company
follows the provisions of Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation ("SFAS 123"), and accordingly,
recognizes expense using a fair market value method.

     Comprehensive Income (Loss)

     Comprehensive income (loss), which is included as a component of
stockholders' equity, includes net unrealized gains and losses on investments in
marketable equity and debt securities, primarily from the Company's investments
in drkoop.com, Inc., WebMD Corporation and Neoforma, Inc. The decrease during
2000 in accumulated other comprehensive income (loss) is a result of the
significant decrease in the market value of the Company's investments, as well
as the sale of the Company's entire holdings of debt securities, drkoop.com,
Inc. and WebMD Corporation common stock, and a portion of its holdings of
Neoforma, Inc. common stock. During 2001, the Company sold its remaining
holdings of Neoforma, Inc. common stock.

     Total comprehensive income (loss) is summarized as follows:
<TABLE>
<CAPTION>
                                                                                           Year Ended December 31,
                                                                                     --------------------------------
                                                                                       1999        2000        2001
                                                                                     --------    --------    --------
<S>                                                                                  <C>         <C>         <C>
     Net loss...................................................................     $ (6,961)   $(57,553)   $(17,565)

     Other comprehensive income (loss), net of tax:

        Unrealized holding gains (losses) on securities
           arising during the period............................................       33,588     (32,890)        (55)

        Less: Reclassification adjustment for realized gains (losses) on
              securities included in net loss, net of tax benefit (expense) of
              $0, $(2,090) and $1,653 for the years ended December 31, 1999,
              2000 and 2001, respectively.......................................          -         3,071      (2,428)
                                                                                     --------    --------    --------


     Other comprehensive income (loss), net of tax..............................       33,588     (35,961)      2,373
                                                                                     --------    --------    --------
     Total comprehensive income (loss)..........................................     $ 26,627    $(93,514)   $(15,192)
                                                                                     ========    ========    ========
</TABLE>

     New Accounting Pronouncements

     On July 1, 2001, the Company adopted Statement of Financial Accounting
Standards No. 141, "Business Combinations" ("SFAS 141"), which eliminates the
pooling-of-interest method of accounting for business combinations initiated
subsequent to July 1, 2001, and requires all business combinations initiated
subsequent to June 30, 2001, to be accounted for by the purchase method of
accounting. SFAS 141 also revised the criteria for recognizing intangible assets
apart from goodwill. SFAS 141 had no effect on the consolidated financial
statements.






                                       F-8


<PAGE>
            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
             (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT SHARE DATA)


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142, "Goodwill and Intangible Assets" ("SFAS
142"), which states that goodwill and indefinite lived intangible assets will no
longer be amortized, however, they will be required to be reviewed for
impairment at least annually. SFAS 142 also establishes accounting, reporting
and disclosure standards for goodwill and other intangible assets. The Company
intends to adopt the statement on January 1, 2002. The Company currently
anticipates the application of the non-amortization provisions of SFAS 142 will
result in a $750,000 reduction in selling, general and administrative expenses
in 2002. During 2002, the Company will perform an initial assessment to
determine whether its recorded goodwill is considered impaired under the
guidelines of the new standard, and will also perform an annual assessment. The
impact of adoption of SFAS 142, if any, in connection with these goodwill
impairment assessments is not reasonably estimable.

     In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations" ("SFAS 143"), which addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. The standard is effective for fiscal
years beginning after June 15, 2002. The Company anticipates the adoption of
SFAS 143 will not have a material effect on its consolidated financial
statements.

     In August 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS 144"), which addresses implementation
issues related to Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of". This standard is effective for fiscal years beginning after
December 15, 2001. The Company anticipates the adoption of SFAS 144 will not
have a material effect on its consolidated financial statements.

     Reclassifications

     Certain reclassifications were made to the 1999 and 2000 consolidated
financial statements to conform to 2001's presentation.

2.   ACQUISITIONS AND GOODWILL IMPAIRMENT

     In January 1999, the consulting segment completed a business combination
accounted for as a purchase, with a purchase price of $2,200,000. In connection
with the 1999 acquisition and previous acquisitions that contained contingent
payment provisions, the Company recorded goodwill totaling $3,118,000 and
$2,300,000 during the years ended December 31, 1999 and 2000, respectively. As
of December 31, 2001, there are no remaining contingent payments. Goodwill is
amortized on a straight-line basis over 15 years.

     During the year ended December 31, 2000 as a result of management's
strategic review of the Company's operations, including relevant cash flows,
estimated future operating results, industry trends and other available
information, it was determined that the carrying value of goodwill exceeded its
current fair value. The current fair value of goodwill was determined using
estimated discounted future cash flows. During the year ended December 31, 2000,
the Company recorded a non-cash impairment loss of approximately $10.2 million
to write down the carrying value of goodwill.

3.   INVESTMENTS

     Securities classified as available-for-sale under Statement No. 115 as of
December 31, 2000, consisted of the Company's investment in Neoforma, Inc.
common stock, which had a cost basis of $4,652,000, gross unrealized holding
losses of $3,988,000 and a market value of $664,000. As of December 31, 2000,
the excess of cost over market value of $3,988,000, less the deferred tax
benefit of $1,615,000, was charged to the separate component of stockholders'
equity called "accumulated other comprehensive income (loss)."

     During the year ended December 31, 2001, the Company sold its remaining
shares of Neoforma, Inc. common stock and recorded a $2,373,000 credit to
"accumulated other comprehensive income (loss)."






                                       F-9


<PAGE>
            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
             (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT SHARE DATA)


4.   ALLOWANCE FOR DOUBTFUL ACCOUNTS

     A summary of activity in connection with the allowance for doubtful
accounts follows:
<TABLE>
<CAPTION>

                                                                                    Year Ended December 31,
                                                                                  ----------------------------
                                                                                    1999      2000     2001
                                                                                  -------  --------  --------
<S>                                                                               <C>      <C>       <C>
     Allowance for doubtful accounts at beginning of year....................     $ 1,010  $  1,750  $   6,375
     Write-offs..............................................................        (187)   (1,753)    (1,570)
     Charged to bad debt expense.............................................         927     6,378        395
                                                                                  -------  --------  ---------
     Allowance for doubtful accounts at end of year..........................     $ 1,750  $  6,375  $   5,200
                                                                                  =======  ========  =========
5.   PROPERTY AND EQUIPMENT

     Property and equipment consists of the following:

                                                                                     December 31,    Range of
                                                                                  -----------------   Useful
                                                                                   2000      2001     Lives
                                                                                  -------  --------  ---------
                  Office furniture and equipment.............................     $6,166   $  6,020  5-7 Years
                  Computer equipment.........................................      9,128      7,942  3-5 Years
                  Computer software..........................................      4,427      5,439  3-5 Years
                  Buildings..................................................      3,766      4,113   40 Years
                  Leasehold improvements.....................................      3,291      2,777  2-7 Years
                                                                                  -------  --------
                                                                                   26,778    26,291

                        Less:  accumulated depreciation and amortization.....      (9,937)  (12,618)

                  Land.......................................................        398        398
                                                                                  -------  --------
                  Property and equipment, net................................     $17,239  $ 14,071
                                                                                  =======  ========
6.   GOODWILL

     Goodwill consists of the following:
                                                                                    December 31,
                                                                                  -----------------
                                                                                   2000       2001
                                                                                  -------  --------
         Goodwill............................................................     $12,604  $ 12,604
             Less:  accumulated amortization.................................      (3,631)   (4,381)
                                                                                  -------  --------
         Goodwill, net......................................................      $ 8,973  $  8,223
                                                                                  =======  ========
</TABLE>

7.   DEBT

     At December 31, 2000, borrowings under a bank line of credit bear interest
at the greater of the prime rate or 1% plus the Federal funds effective rate.
The interest rate at December 31, 2000 was 8.5%. The line is collateralized by
accounts receivable and any deposits held by the bank. There are no compensating
balance requirements. The loan agreement contains covenants, including financial
ratios concerning liquidity, working capital and operating results. The Company
did not meet a certain financial operating covenant as of December 31, 2000.
Subsequent to December 31, 2000, the credit agreement was amended to waive the
covenant default as of December 31, 2000.

     At December 31, 2001, the Company has a line of credit with a bank allowing
for borrowings of up to $8,000,000, based on qualifying accounts receivable.
Based on the eligibility provisions in the loan agreement, the Company could
have borrowed $7,100,000 on the line of credit as of December 31, 2001;
$2,925,000 was outstanding. Borrowings under the line mature in September 2002.
Borrowings bear interest at the greater of the prime rate or 1% plus the Federal
funds effective rate. The interest rate at December 31, 2001 was 4.75%. The line
is collateralized by accounts receivable and any deposits held by the bank.
There are no compensating balance requirements. The loan agreement contains
covenants, including financial ratios concerning liquidity, working capital and
operating results. The Company did not meet a certain financial operating
covenant as of December 31, 2001. Subsequent to December 31, 2001, the credit
agreement was amended to waive the covenant default as of December 31, 2001 and
extend the maturity to September 30, 2002. In addition, the Company has letters
of credit totaling $1,000,000 issued by a bank secured by bank deposits.

                                      F-10


<PAGE>
            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
             (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT SHARE DATA)


8.   ACCRUED LIABILITIES

     Accrued liabilities consist of the following:
                                                             December 31,
                                                         --------------------
                                                           2000          2001
                                                         --------     -------
         Payroll and withholding taxes..............     $  2,317     $ 2,032
         Commissions................................          433         400
         Bonuses....................................        1,023         320
                                                         --------     -------
                    Total accrued liabilities.......     $  3,773      $2,752
                                                         ========     =======
9.   STOCK OPTIONS AND WARRANTS

     Pursuant to the Company's Long-Term Incentive Plan, a maximum of 4,000,000
shares of common stock are reserved for the granting of incentive, nonstatutory
or formula options, restricted stock grants and other equity based compensation.
The options, other than the director formula options, may have terms not
exceeding ten years when granted. The exercise price of each option equals the
market price of the Company's stock on the date of grant.

     Had compensation cost been determined based on the fair value of all the
options at the grant dates consistent with SFAS 123, the Company would have
reported the pro forma amounts as follows:

                                                    Year Ended December 31,
                                                ------------------------------
                                                  1999       2000       2001
                                                --------   --------   --------
             Pro forma net loss...............  $(11,929)  $(67,925)  $(33,114)
             Pro forma net loss per share
                Basic.........................     (1.15)     (6.46)     (3.03)
                Diluted.......................     (1.15)     (6.46)     (3.03)

     For purposes of pro forma disclosures, the estimated fair value of the
stock options are amortized to expense over the options' vesting period. The
fair value of these stock options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions:
                                                   Year Ended December 31,
                                                ------------------------------
                                                  1999       2000       2001
                                                --------   --------   --------
             Risk free interest rate..........      6.14%      5.81%      3.95%
             Dividend yield...................         0%         0%         0%
             Volatility factor................       .75        .92        .93
             Expected option term life
               in years.......................       5.0        5.0        5.0

     A summary of the status of the Company's options and warrants as of
December 31, 1999, 2000 and 2001, and changes during the years then ended, is
presented below:

<TABLE>
<CAPTION>
                                                       1999                   2000                 2001
                                                -------------------   -------------------   -------------------
                                                           Weighted              Weighted             Weighted
                                                            Average               Average              Average
                                                Shares     Exercise    Shares    Exercise    Shares   Exercise
                                                 (000)       Price      (000)      Price      (000)     Price
                                                --------   --------   --------   --------   --------   --------
<S>                                             <C>        <C>        <C>        <C>        <C>       <C>
     Outstanding at beginning of year.........     1,106   $  27.57      2,311   $  32.13      2,924   $  24.42
     Granted..................................     1,454   $  34.82      1,308   $  11.97      1,483   $   3.32
     Exercised................................       (58)  $  21.59         (2)  $  16.00         (5)  $   3.18
     Forfeited................................      (191)  $  31.55       (693)  $  24.91     (1,022)  $  26.32
                                                --------              --------              --------
     Outstanding at year-end..................     2,311   $  32.13      2,924   $  24.42      3,380   $  14.03
     Exercisable at year-end..................         2   $  10.31      1,184   $  30.53      1,678   $  20.65
</TABLE>

     The weighted-average grant date fair value of grants during 1999, 2000 and
     2001 were $20.50, $8.80 and $2.43, respectively.

                                      F-11



<PAGE>


            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
             (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT SHARE DATA)


9.   STOCK OPTIONS AND WARRANTS (CONTINUED)

     The following information applies to options and warrants outstanding at
December 31, 2001:
<TABLE>
<CAPTION>

                                            Number     Weighted-Average    Weighted-Average
             Range of Exercise Prices    Outstanding   Exercise Price      Remaining Life
             ------------------------    -----------   ---------------     ---------------
<S>                                         <C>            <C>                <C>
             $ 1.75 - $10.31...........     1,540          $  3.21            3.58 years
             $11.75 - $24.75...........     1,049          $ 14.47            2.79 years
             $28.00 - $35.75...........       486          $ 32.15            1.46 years
             $36.00 - $45.13...........       305          $ 38.35            2.63 years
                                            -----
                                            3,380
                                            =====

</TABLE>

     Included in the options forfeited in 2001 are 677,455 options surrendered
by employees in July 2001. Upon terms offered by the Company, new options to
purchase 184,476 options were granted in January 2002 at the common stock fair
market value at the time of the grant of the new options. The terms of the
surrender and reissuance do not result in a repricing of such options.

10.  COSTS INCURRED IN CONNECTION WITH NEW BUSINESS INITIATIVE AND RESTRUCTURING

     In May 1999, the Company entered into an alliance agreement with a business
     partner and incurred certain one-time costs.

     These costs consist of:

             Issuance of warrants...........................          $2,856
             Additional depreciation expense due to change
                in estimated useful lives...................           1,507
             Bonuses........................................             477
                                                                      ------
                                                                      $4,840
                                                                      ======

     In addition, during the years ended December 31, 1999 and 2000, the Company
incurred other operating costs in connection with execution of the alliance
agreement commitments. A portion of these costs was funded by the business
partner, and was recorded as a reduction to expense. The reduction in cost of
services and selling, general and administrative expense for the year ended
December 31, 1999 was $700,000 and $2,549,000, respectively. The reduction in
cost of services and selling, general and administrative expense for the year
ended December 31, 2000 was $748,000 and $1,702,000, respectively.

     During the year ended December 31, 2000, the Company implemented a
restructuring plan, which was endorsed by the Company's Board of Directors, as
the result of the Company experiencing a decline in demand for its services as
compared to prior years. As a result, the Company recorded restructuring charges
of approximately $4,165,000 and $3,112,000 during the years ended December 31,
2000 and 2001, respectively. The restructuring plan was aimed at improving
future overall financial performance through operating cost reductions and
optimization of the Company's workforce.

     The restructuring charges are summarized as follows:
                                                               Year Ended
                                                              December 31,
                                                            ----------------
                                                             2000      2001
                                                            ------    ------

             Severance costs.............................   $1,615    $  215
             Write-off of property and equipment.........    2,356       527
             Write-off of leasehold improvements.........      -         305
             Closing of various office facilities........      103       (30)
             Future lease obligations....................      -       2,231
             Reduction of accrual related to estimated
                severance costs initially recorded
                during 2000..............................      -        (136)
             Other.......................................       91       -
                                                            ------    ------
                                                            $4,165    $3,112
                                                            ======    ======

                                      F-12


<PAGE>
            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
             (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT SHARE DATA)


10.  COSTS INCURRED IN CONNECTION WITH NEW BUSINESS INITIATIVE AND
     RESTRUCTURING (CONTINUED)

     A summary of the activity of the restructuring-related liabilities,
included in accounts payable, is as follows:

<TABLE>
<CAPTION>
                                                          Liabilities                                     Liabilities
                                                             as of                               2001        as of
                                                         December 31,      2001       2001     Change in  December 31,
                                                             2000       Additions   Payments   Estimate       2001
                                                         ------------   ---------   --------   ---------  ------------
<S>                                                         <C>          <C>         <C>        <C>          <C>
             Severance...............................       $  400       $   215     $ (479)    $ (136)      $    -
             One-time facilities closing.............           80             -        (50)       (30)           -
             Future lease obligations................            -         2,231          -          -        2,231
                                                            ------       -------     ------     ------       ------
                                                            $  480       $ 2,446     $ (529)    $ (166)      $2,231
                                                            ======       =======     ======     ======       ======
</TABLE>


     The 2001 expense for future lease obligations represents the present value
of the Company's operating lease commitments for facilities no longer being used
by the Company, but not sublet or sublet at amounts less than the Company's
obligation. This obligation is payable as follows: $840,000 during 2002,
$865,000 during 2003, $294,000 during 2004, $205,000 during 2005 and $27,000
during 2006.

11.  OTHER INCOME

     Other income (expense) consists of the following:

<TABLE>
<CAPTION>
                                                                                       Year Ended December 31,
                                                                                   ------------------------------
                                                                                     1999       2000       2001
                                                                                   --------   --------   --------
<S>                                                                                <C>        <C>        <C>
             Interest income...............................................        $  1,939   $  1,665   $    951
             Net realized gain (loss) on sale of investment securities.....               -      5,161     (4,081)
             Interest expense..............................................             (39)      (289)      (251)
             Sundry........................................................             (26)      (481)      (239)
                                                                                   --------   --------   --------
                                                                                   $  1,874   $  6,056   $ (3,620)
                                                                                   ========   ========   ========
</TABLE>

12.  INCOME TAXES

     The income tax benefit consists of the following:
<TABLE>
<CAPTION>
                                                                                       Year Ended December 31,
                                                                                   ------------------------------
                                                                                     1999      2000        2001
                                                                                   --------   --------   --------
<S>                                                                                <C>        <C>        <C>
             Current federal income tax benefit............................        $   (517)  $ (5,417)  $      -
             Deferred federal income taxes.................................          (2,557)   (14,649)    (5,805)
             Current state income taxes....................................            (545)      (243)         -
             Deferred state income taxes...................................            (508)    (2,800)    (1,070)
             Tax benefit from exercise of stock options credited
                directly to additional paid-in capital.....................             160          -          6
             Valuation allowance...........................................               -     20,617      6,869
                                                                                   --------   --------   --------
                                                                                   $ (3,967)  $ (2,492)  $      -
                                                                                   ========   ========   ========
</TABLE>











                                      F-13


<PAGE>
            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
             (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT SHARE DATA)


12.  INCOME TAXES (CONTINUED)

     The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31
are as follows:

<TABLE>
<CAPTION>
                                                                                         2000        2001
                                                                                       --------    --------
<S>                                                                                    <C>         <C>
         Deferred tax assets:
             Deferred compensation..............................................       $    496    $    379
             Allowance for bad debts............................................          2,582       2,106
             Deferred revenue...................................................          1,525         867
             Options or warrants issued to non-employees........................          1,323       1,338
             Other..............................................................            598         431
             Investment in Neoforma, Inc........................................          1,615           -
             Impairment of goodwill.............................................          4,140       4,140
             Net operating loss carryforward....................................         11,571      19,773
                                                                                       --------    --------
                Total deferred tax assets.......................................         23,850      29,034

         Deferred tax liabilities:
             Depreciation.......................................................         (1,607)     (1,531)

             Other..............................................................            (11)        (17)
                                                                                       --------    --------
                Total deferred tax liabilities..................................         (1,618)     (1,548)
                Deferred tax asset valuation allowance..........................        (20,617)    (27,486)
                                                                                       --------    --------
                Total net deferred tax asset....................................       $  1,615    $      -
                                                                                       ========    ========
</TABLE>


     A reconciliation of the provision for income taxes follows:
<TABLE>
<CAPTION>

                                                                                Year Ended December 31,
                                                                           --------------------------------
                                                                             1999        2000        2001
                                                                           --------    --------    --------
<S>                                                                        <C>         <C>         <C>
         Expected benefit at the statutory rate........................    $ (3,716)   $(20,415)   $ (5,972)
         Permanent differences; expenses recognized for book, not tax           402         349         173
         State income tax benefit, net of federal income tax benefit...        (688)     (3,043)     (1,070)
         Change in valuation allowance.................................           -      20,617       6,869
         Investment tax credits and other..............................          35           -           -
                                                                           --------    --------    --------
             Total income tax benefit..................................    $ (3,967)   $ (2,492)   $      -
                                                                           ========    ========    ========
</TABLE>


     The Company has net operating loss carryforwards for federal income tax
purposes of approximately $48,823,000, the last of which will expire in 2021 if
not utilized.

13.  PROFIT-SHARING

     The Company has a profit-sharing plan which qualifies under Section 401(a)
of the Internal Revenue Code. Eligible employees may contribute up to the
maximum allowable under tax regulations. Company contributions are fully
discretionary. There were no contributions made during the years ended December
31, 1999, 2000 and 2001.




                                      F-14


<PAGE>
            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
             (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT SHARE DATA)



14.  NET LOSS PER SHARE

     Loss per share data was computed as follows:
<TABLE>
<CAPTION>
                                                              Year Ended December 31,
                                                          ------------------------------
                                                            1999       2000       2001
                                                          --------   --------   --------
<S>                                                       <C>        <C>        <C>
         Basic:
             Net loss...................................  $ (6,961)  $(57,553)  $(17,565)
             Weighted-average common shares outstanding.    10,340     10,511     10,920
                                                          --------   --------   --------
             Basic loss per share.......................  $  (0.67)  $  (5.48)  $  (1.61)
                                                          ========   ========   ========
         Diluted:
             Net loss...................................  $ (6,961)  $(57,553)  $(17,565)
             Weighted-average common shares outstanding.    10,340     10,511     10,920
             Dilutive effect of stock options...........         -          -          -
                                                          --------   --------   --------
             Weighted-average shares assuming dilution..    10,340     10,511     20,920
             Diluted loss per share.....................  $  (0.67)  $  (5.48)  $  (1.61)
                                                          ========   ========   ========
</TABLE>


     Options and warrants to purchase approximately 2,311,000, 2,924,000 and
3,380,000 shares of common stock with a weighted average exercise price of
$32.13, $24.42 and $14.03 were outstanding at December 31, 1999, 2000 and 2001,
respectively, but were excluded from the computation of diluted net loss per
share because to do so would have been antidilutive for the periods presented.

15.  COMMITMENTS AND CONTINGENCIES

     The Company leases office facilities, certain equipment and vehicles under
lease agreements classified as operating leases. Future minimum lease payments
under such noncancelable operating leases as of December 31, 2001 are summarized
as follows:

<TABLE>
<CAPTION>

                                                          Related     All     Sublease
         Years ending December 31:                         Party     Other     Income     Total
         -------------------------                        -------   -------   --------   -------
<S>                                                       <C>       <C>       <C>        <C>
             2002.......................................  $   563   $ 4,288   $ (1,310)  $ 3,541
             2003.......................................      563     3,312     (1,185)    2,690
             2004.......................................      563     2,133       (950)    1,746
             2005.......................................      563     1,986       (801)    1,748
             2006.......................................      234       810       (110)      934
             Thereafter.................................        -       294          -       294
                                                          -------   -------   --------   -------
             Total future minimum lease payments........  $ 2,486   $12,823   $ (4,356)  $10,953
                                                          =======   =======   ========   =======

</TABLE>


     Net rent expense amounted to approximately $3,566,000, $5,032,000 and
$3,819,000 for the years ended December 31, 1999, 2000 and 2001, respectively,
and has been included in selling, general and administrative expenses in the
accompanying statements of operations. The rent expense was offset by sublease
income of approximately $196,000, $444,000 and $1,031,000 for the years ended
December 31, 1999, 2000 and 2001, respectively.












                                      F-15


<PAGE>
            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
             (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT SHARE DATA)


15.  COMMITMENTS AND CONTINGENCIES (CONTINUED)

     Effective July 1, 2001, Superior is required to pay a business partner a
royalty of approximately 3.4% of a certain portion of its systems integration
revenue. The royalty, up to an estimated cumulative maximum amount of $5.7
million, will be payable in the years the related revenue is recognized. Royalty
expense for the year ended December 31, 2001, was approximately $27,000. In
addition, as of December 31, 2000, the Company agreed to contribute a minimum of
$500,000 over the next two years to a joint marketing fund. We expect that an
amendment to that agreement under consideration by the parties will eliminate
the joint marketing obligation.

     The Company is involved in various legal proceedings, including business
and employment matters of a nature considered normal to its operations. The
Company accrues for amounts related to these legal matters if it is probable
that a liability has been incurred and an amount is reasonably estimable. In the
opinion of the Company, although the outcome of any legal proceeding cannot be
predicted with certainty, the ultimate liability of the Company in connection
with its legal proceedings will not have a material adverse effect on the
Company's financial position, but could be material to the results of operations
in any one accounting period.

16.  RELATED PARTY TRANSACTIONS

     The Company leases an office facility from an entity partially owned by two
stockholders. Net rent expense for this lease was approximately $469,000,
$470,000 and $488,000 for the years ended December 31, 1999, 2000 and 2001,
respectively. The rent expense was offset by sublease income of approximately
$69,000 for the years ended December 31, 1999, 2000 and 2001.

     During 2000, the Company sold 600,000 shares of its common stock for fair
market value to three newly-hired executives, in exchange for cash and
promissory notes. The notes total $916,620, bear interest at 9.5% per annum and
require payment of all accrued interest and principal in October 2002. During
1995, Superior issued 658,833 shares of its common stock to two stockholders in
exchange for promissory notes totaling $750,000, and the cancellation of
outstanding stock options. The notes bear interest at 7.7% per annum and require
periodic cash payments. Interest income on all notes totaled approximately
$53,000, $70,000 and $104,000 for the years ended December 31, 1999, 2000 and
2001, respectively.

     The Company charters aircraft from an entity owned by an
officer/stockholder. Payments to the entity were approximately $605,000,
$260,000 and $71,000 for the years ended December 31, 1999, 2000 and 2001,
respectively.

     During the years ended December 31, 1999, 2000 and 2001, the Company
recognized revenue of approximately $1,100,000, $4,100,000 and $1,587,000,
respectively, from entities in which it had an equity interest.

17.  SEGMENT FINANCIAL INFORMATION

     See Note 1 for a description of the Company's segments. The Company's
reportable segments are business units that offer and provide different services
through different means. The Company's, training, information technology,
accounting and finance, facilities, sales and marketing, legal, senior
management and other SG&A functions are combined into the unallocated SG&A
expenses. Unallocated assets consist principally of cash, accrued interest
receivable, prepaid expenses and investment securities.






                                      F-16


<PAGE>


            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

              FOR THE YEARS ENDED DECEMBER 31, 1999, 2000 AND 2001
             (TABULAR AMOUNTS ARE IN THOUSANDS, EXCEPT SHARE DATA)


17.   SEGMENT FINANCIAL INFORMATION (CONTINUED)

      The Company evaluates segment performance and allocates resources based
on gross profit. Intrasegment services are provided at cost. The accounting
policies of the reportable segments are the same as those described in the
summary of significant accounting policies in Note 1. Segment information for
1999 and 2000 have been restated to conform to the current year segments.

<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                                                          ------------------------------------
                                                                              1999        2000         2001
                                                                          ----------   ----------   ----------
<S>                                                                       <C>          <C>          <C>
         Revenues:
             Consulting................................................   $  112,554   $   71,242   $   57,463
             Outsourcing...............................................       36,795       27,995       29,258
                                                                          ----------   ----------   ----------
                   Consolidated revenues...............................   $  149,349   $   99,237   $   86,721
                                                                          ==========   ==========   ==========
         Gross Profit and Statement of Operations Reconciliation:
             Consulting................................................   $   46,408   $   14,843   $   21,993
             Outsourcing...............................................       11,227        6,720        8,007
                                                                          ----------   ----------   ----------
                   Consolidated gross profit...........................   $   57,635   $   21,563   $   30,000
                                                                          ==========   ==========   ==========
         Unallocated:
             SG&A expenses.............................................   $   65,597   $   73,278   $   40,833
             Costs incurred in connection with new
                business initiative....................................        4,840            -            -
             Restructuring charges, net................................            -        4,165        3,112
             Impairment of goodwill....................................            -       10,221            -
             Other (income) expense, net...............................       (1,874)      (6,056)       3,620
                                                                          ----------   ----------   ----------
                   Subtotal............................................       68,563       81,608       47,565
                                                                          ----------   ----------   ----------
                   Consolidated loss before income tax benefit.........   $  (10,928)  $  (60,045)  $  (17,565)
                                                                          ==========   ==========   ==========
         Depreciation and amortization:
             Consulting................................................   $    6,837   $    6,216   $    4,637
             Outsourcing...............................................          318          277          195
                                                                          ----------   ----------   ----------
                   Consolidated depreciation and amortization..........   $    7,155   $    6,493   $    4,832
                                                                          ==========   ==========   ==========
         Identifiable assets:
             Consulting................................................   $   65,667   $   37,788   $   31,082
             Outsourcing...............................................       11,853        7,898        6,982
             Unallocated...............................................      109,077       32,946       20,543
                                                                          ----------   ----------   ----------
                   Consolidated total assets...........................   $  186,597   $   78,632   $   58,607
                                                                          ==========   ==========   ==========
         Expenditures for long-term assets:
             Consulting................................................   $   13,172   $    4,463   $    1,747
             Outsourcing...............................................          273          792            -
                                                                          ----------   ----------   ----------
                                                                          $   13,445   $    5,255   $    1,747
                                                                          ==========   ==========   ==========

</TABLE>



                                      F-17



<PAGE>
                                INDEX TO EXHIBITS

EXHIBIT
NUMBER                          DESCRIPTION                               PAGE
------                          -----------                               ----

3.1   Amended and Restated Certificate of Incorporation of the Company,
      as amended.......................................................... (5)
3.2   Form of By-Laws of the Company...................................... (2)
4.1   Specimen Common Stock Certificate................................... (2)
10.1  Form of Indemnification Agreement between the Company and each
      of its directors and officers....................................... (2)
10.2  Form of Long-Term Incentive Compensation Plan....................... (2)
10.3  Amendment to Long-Term Incentive Plan............................... (3)
10.4  Second Amendment to Long-Term Incentive Plan........................ (6)
10.5  Lease dated March 21, 1996 between PMTC Limited Partnership
      and Superior........................................................ (2)
10.6  Form of Tax Indemnification Agreement............................... (1)
10.7  Compensation Agreement dated January 5, 1998, as amended,
      between Richard D. Helppie, Jr. and the Company..................... (5)
10.8  Amendment effective January 4, 1999, to Compensation Agreement dated
      January 5, 1998, between Richard D. Helppie, Jr. and the Company.... (*)
10.9  Employment Agreement dated January 5, 1998, as amended, between
      Charles O. Bracken and the Company.................................. (5)
10.10 Amendment effective January 4, 1999, to Employment Agreement dated
      January 5, 1998, between Charles O. Bracken and the Company......... (*)
10.11 Employment Agreement dated January 20, 1997, as amended,
      between Richard P. Saslow and the Company........................... (5)
10.12 Amendment effective January 4, 1999, to Employment Agreement dated
      January 20, 1997, between Richard P. Saslow and the Company......... (*)
10.13 Amendment effective January 7, 2001, to Employment Agreement dated
      January 20, 1997, between Richard P. Saslow and the Company......... (*)
10.14 Employment Agreement dated October 11, 2000, as amended,
      between George S. Huntzinger and the Company........................ (8)
10.15 Amendment effective June 29, 2001, to Employment Agreement dated
      October 11, 2000, between George S. Huntzinger and the Company...... (*)
10.16 Employment Agreement dated August 10, 1998, as amended
      January 7, 2001, between Richard R. Sorensen and the Company........ (8)
10.17 Promissory Note dated April 20, 1995, executed by
      Charles O. Bracken in favor of the Company.......................... (1)
10.18 Pledge Agreement dated April 20, 1995, between
      Charles O. Bracken and the Company.................................. (1)
10.19 Stock Purchase Agreement dated October 11, 2000, between
      Ronald V. Aprahamian and the Company................................ (7)
10.20 Promissory Note dated October 11, 2000, executed by
      Ronald V. Aprahamian in favor of the Company........................ (7)
10.21 Pledge Agreement dated October 11, 2000, between
      Ronald V. Aprahamian and the Company................................ (7)
10.22 Stock Purchase Agreement dated October 11, 2000, between
      George S. Huntzinger and the Company................................ (7)
10.23 Promissory Note dated October 11, 2000, executed by
      George S. Huntzinger in favor of the Company........................ (7)
10.24 Pledge Agreement dated October 11, 2000, between
      George S. Huntzinger and the Company................................ (7)



<PAGE>
EXHIBIT
NUMBER                          DESCRIPTION                               PAGE
------                          -----------                               ----

10.25 Shareholder Agreement, dated May 4, 2001, by and between
      Ronald V. Aprahamian and the Company................................ (*)
10.26 Amended and Restated Promissory Note dated May 4, 2001, executed
      by Ronald V. Aprahamian in favor of the Company..................... (*)
10.27 Asset Purchase Agreement, dated August 20, 1998 among the Company
      Enterprise Consulting Group, Inc., Whittaker Corporation and Aviant
      Information, Inc.................................................... (4)
10.28 Amended and Restated Credit Agreement, dated September 12, 2000,
      between the Company and Comerica Bank............................... (8)
10.29 First Amendment to Amended and Restated Credit Agreement,
      dated October 26, 2000, between the Company and Comerica Bank....... (8)
10.30 Second Amendment to Amended and Restated Credit Agreement,
      dated March 23, 2001, between the Company and Comerica Bank......... (8)
10.31 Third Amendment to Amended and Restated Credit Agreement, dated
      August 23, 2001, between the Company and Comerica Bank.............. (*)
10.32 Fourth Amendment to Amended and Restated Credit Agreement, dated
      March 29, 2002, between the Company and Comerica Bank............... (*)
21.1  Subsidiaries of Superior Consultant Holdings
      Corporation......................................................... (5)

*     Filed herewith.

(1)   Incorporated by reference from the Registrant's Amendment No. 1 to F
      orm S-1 Registration Statement No. 333-10213 as filed on September 20,
      1996.

(2)   Incorporated by reference from the Registrant's Form S-1 Registration
      Statement No. 333-10213 as filed on August 15, 1996.

(3)   Incorporated by reference from the Registrant's Information Statement on
      Form 14C as filed on November 7, 1997.

(4)   Incorporated by reference from the Registrant's Form 8-K as filed on
      September 2, 1998.

(5)   Incorporated by reference from the Registrant's Form 10-K as filed on
      March 31, 1999.

(6)   Incorporated by reference from the Registrant's Information Statement on
      Form 14A as filed April 9, 1999.

(7)   Incorporated by reference from the Schedule 13D filed with respect to the
      Company's securities on November 13, 2000.

(8)   Incorporated by reference from the Registrant's Form 10-K as filed on
      April 2, 2001.


<PAGE>
                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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.

                                       SUPERIOR CONSULTANT HOLDINGS
                                       CORPORATION

April 1, 2002                          By: /s/  RICHARD D. HELPPIE, JR.
                                          -----------------------------------
                                       Richard D. Helppie, Jr.
                                       Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

          SIGNATURES                     TITLE                        DATE
          ----------                     -----                        ----

/s/  RONALD V. APRAHAMIAN             Chairman                   April 1, 2002
----------------------------------
Ronald V. Aprahamian

/s/ REGINALD M. BALLANTYNE III        Director                   April 1, 2002
----------------------------------
Reginald M. Ballantyne III

/s/ CHARLES O. BRACKEN                Director and Executive     April 1, 2002
----------------------------------    Vice President
Charles O. Bracken

/s/ KENNETH S. GEORGE                 Director                   April 1, 2002
----------------------------------
Kenneth S. George

/s/ RICHARD D. HELPPIE, JR.           Chief Executive Officer    April 1, 2002
----------------------------------    (Principal Executive
Richard D. Helppie, Jr.               Officer)  and Director


/s/ DOUGLAS S. PETERS                 Director                   April 1, 2002
----------------------------------
Douglas S. Peters

/s/ RICHARD P. SASLOW                 Vice President, General    April 1, 2002
----------------------------------    Counsel and Director
Richard P. Saslow

/s/ JOHN L. SILVERMAN                 Director                   April 1, 2002
----------------------------------
John L. Silverman

/s/ RICHARD R. SORENSEN               Chief Financial Officer    April 1, 2002
----------------------------------    (Principal Financial and
Richard R. Sorensen                   Accounting Officer)


/s/ SATISH K. TYAGI                   Director                   April 1, 2002
----------------------------------
Satish K. Tyagi