<PAGE> 1
As filed with the Securities and Exchange Commission on January 8, 1999
Registration Statement No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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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
incorporation or organization) Identification No.)
4000 TOWN CENTER, SUITE 1100
SOUTHFIELD, MICHIGAN 48075
(248) 386-8300
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
RICHARD D. HELPPIE, JR., CHIEF EXECUTIVE OFFICER
SUPERIOR CONSULTANT HOLDINGS CORPORATION
4000 TOWN CENTER, SUITE 1100
SOUTHFIELD, MICHIGAN 48075
(248) 386-8300
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
---------------------------------------------
COPIES TO:
WILLIAM E. DORAN
SACHNOFF & WEAVER, LTD.
30 S. WACKER DRIVE, 29TH FLOOR
CHICAGO, ILLINOIS 60606
(312) 207-6412
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Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
---------------------
If this Form is a post effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
----------------------
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
---------------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=======================================================================================================================
PROPOSED PROPOSED
TITLE OF SHARES AMOUNT TO MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED BE REGISTERED(1) PRICE PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value ... 44,823 $ 43.69 (2) $ 1,958,317 (2) $544
=======================================================================================================================
</TABLE>
(1) In accordance with Rule 416 under the Securities Act of 1933, Common
Stock offered hereby shall also be deemed to cover additional securities to be
offered or issued in connection with stock splits, stock dividends or similar
transactions.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c), based on the average of the high and
low reported price of the Company's Common Stock on December 31, 1998.
---------------------------------
THE REGISTRANT AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
SUBJECT TO COMPLETION, DATED JANUARY 8, 1999.
The information in this Prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This Prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
44,823 SHARES
SUPERIOR CONSULTANT HOLDINGS CORPORATION
COMMON STOCK
$0.01 PAR VALUE
THE COMPANY:
- - We are a leading national healthcare consulting firm providing a wide range
of information technology consulting and strategic and operations
management consulting services to the healthcare industry
- - Superior Consultant Holdings Corporation
4000 Town Center, Suite 1100
Southfield Michigan 48075
- - Nasdaq Symbol: SUPC
THE OFFERING:
- - The Selling Stockholder (or its successors, distributees or permitted
assigns) is offering 44,823 shares. The Company will not receive any of
the proceeds from the sale of the shares.
- - The Selling Stockholder may sell the shares from time to time, using a
broker, dealer or agent, or directly, in open market transactions, block
trades, ordinary brokers trades, in privately negotiated transactions or
other types of transactions described under "Plan of Distribution." The
Selling Stockholder or any broker or dealer may use the prospectus. The
price at which the Selling Stockholder will sell the shares and
commissions, if any, to be paid, may vary based on prevailing market prices
or may be privately negotiated and as a result are not known at this time.
- - There is an existing trading market for these shares. The last reported
sale price on January 7, 1999 was $44.
THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 3
-----------------------
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS DETERMINED WHETHER THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. NOR HAVE THEY MADE, NOR WILL THEY MAKE, ANY
DETERMINATION AS TO WHETHER ANY ONE SHOULD BUY THESE SECURITIES. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------
The date of this Prospectus is , 1999.
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<PAGE> 3
TABLE OF CONTENTS
RISK FACTORS...................................................................3
AVAILABLE INFORMATION.........................................................10
INFORMATION INCORPORATED BY REFERENCE.........................................11
THE COMPANY...................................................................12
USE OF PROCEEDS...............................................................12
SELLING STOCKHOLDERS..........................................................13
PLAN OF DISTRIBUTION AND OFFERING PRICE.......................................13
VALIDITY OF STOCK.............................................................14
EXPERTS.......................................................................14
We have not authorized any dealer, salesperson or other person to give you
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. You must not rely on unauthorized
information. This prospectus is not an offer to sell these securities or our
solicitation of your offer to buy the securities in any jurisdiction where that
would not be permitted or legal. Neither the delivery of this prospectus nor any
sales hereunder after the date of this prospectus shall create an implication
that the information contained herein or the affairs of the Company have not
changed since the date hereof.
<PAGE> 4
RISK FACTORS
Before you invest in our common stock, you should be aware that there
are various risks, including those described below. You should carefully
consider these risk factors, together with all of the other information included
in this prospectus, before you decide whether to purchase shares of our common
stock.
Some of the information in this prospectus 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," and "continue" or similar words. You should
read statements that contain these words carefully because they: (1) discuss our
future expectations; (2) contain projections of our future results of operations
or of our financial condition; or (3) state other "forward-looking" information.
We believe it is important to communicate our expectations to our investors.
However, there may be events in the future that we are not able to accurately
predict or over which we have no control. The risk factors listed in this
section, as well as any other cautionary language in this prospectus, provide
examples of risks, uncertainties and events that may cause our actual results to
differ materially from the expectations we describe in our forward-looking
statements. Before you invest in our common stock, you should be aware that the
occurrence of the events described in these risk factors and elsewhere in this
prospectus could have a material adverse effect on our business, operating
results and financial condition.
In addition to the other information in this prospectus, you should
consider the following factors carefully in evaluating an investment in the
shares offered by this prospectus:
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, health
information systems vendors, clients, systems integrators and many other
enterprises significantly 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 an adverse effect
on our business.
VARIABILITY OF QUARTERLY OPERATING RESULTS
Variations in our revenues and operating results can occur from quarter
to quarter as a result of a number of factors, including:
- The number and significance of active client engagements during a
quarter;
- Delays incurred in connection with a project;
- Employee hiring and billing and utilization rates;
- The length of the sales cycle;
- Possible inability to collect billings from clients that are
experiencing financial difficulty
<PAGE> 5
- Vacation days and total business days in a quarter;
- The ability of clients to defer commitments on new projects until
after the end of the calendar year or the client's fiscal year;
- The size and scope of assignments;
- Whether our annual employees' meeting occurs during a particular
quarter;
- Budgetary cycles and pressures; and
- General economic conditions.
Because a substantial percentage of our expenses, particularly
personnel and rent, 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 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, 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.
MANAGEMENT OF GROWTH
We are growing rapidly. In the past, our growth has strained our
internal resources, and this strain could continue in the future. We attempt to
manage the demands on our resources by: (1) implementing and improving our
operational, financial and management information systems, and (2) expanding,
motivating and effectively managing our evolving and expanding workforce. In
addition, our success will depend in large part on our ability to maintain high
levels of consultant utilization, maintain or increase billing rates, maintain
quality and accurately set and meet schedules. Our inability to manage
effectively any of these variables could adversely affect the quality of our
services, our ability to retain key personnel and our results of operations.
CLIENT CONCENTRATION
We derive a significant portion of our revenues from a relatively
limited number of clients. For example, during 1996 and 1997 our five largest
clients accounted for approximately 25.8% and 23.6%, respectively, of our
revenues. During the first nine months of 1998 our five largest clients
accounted for approximately 28.6% of our revenues. Two of our top five clients
in 1996 were also among our five largest clients during 1997. 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 levels. The
loss of any significant client could adversely affect our business.
<PAGE> 6
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 group of vendors. Our
concentration of revenue is derived from the planning, management, process
design and implementation of the products of three leading healthcare
information systems vendors, Shared Medical Systems Corporation, HBO & Company
and Cerner Corp. We believe that this concentration generally reflects the
current favor of the healthcare industry participants that we serve to these
vendors. Client projects involving the products of these three vendors,
together, represented approximately 44.2% and 29.6% of our revenues in 1996 and
1997, respectively, and represented approximately 28.2% for the first nine
months of 1998. Should one 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 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, including our
three most senior executive officers: Richard D. Helppie, Jr., President and
Chief Executive Officer of the Company; Charles O. Bracken, Executive Vice
President of Superior; and Robert R. Tashiro, Senior Vice President and Chief
Operating Officer of Superior. Although we manage client relationships at many
levels, the loss of the services of any of these 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 adversely affect our
business.
RISKS OF COMPLETED ACQUISITIONS; RISKS OF ACQUISITION STRATEGY
Since our initial public offering, we have consummated nine
acquisitions and we expect to continue to expand through acquisitions as a part
of our growth strategy. However, we may not achieve the anticipated benefits of
these acquisitions and may not fully implement our growth strategies, unless we
successfully integrate and market our acquired services in a timely manner. The
necessity of integrating personnel with disparate business backgrounds and
corporate cultures may initially increase the difficulties of such integration.
Management's focus on the integration of acquired companies and the
implementation of our strategy may cause interruption, or loss of momentum, in
our ongoing activities or one or more of the acquired companies. Such
interruption or loss of momentum could adversely affect our business.
We intend 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. We may not be able to identify suitable
acquisition candidates or, if 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
<PAGE> 7
price of acquisition targets and decrease the number of attractive companies
available for acquisition. Acquisitions also involve a number of special risks,
including:
- Adverse effects on our reported operating results including
increased goodwill 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
- 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.
HEALTHCARE INDUSTRY CONCENTRATION
We derived substantially all of the revenues of our wholly-owned
healthcare consulting subsidiary, Superior, in 1996 and 1997, from clients
involved in the healthcare industry. These revenues represented 91.6% and 89.1%,
respectively, of our total revenues on a consolidated basis for the same
periods, and approximately 84.6% for the first nine months of 1998 . In
addition, for 1997, our other wholly-owned subsidiary, Enterprise, derived 16.1%
of its revenues from healthcare clients. As a result of our focus on healthcare
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 the risks they create include:
- Regulatory Change. 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. These
efforts could 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.
- Cost Pressure. Large private purchasers of healthcare services are
placing increasing cost pressure on providers. Healthcare providers
may 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 delivery 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
<PAGE> 8
result in the acquisition of certain of our clients, and such
clients may scale back or terminate their relationship with us
following their acquisition.
The impact of these developments in the healthcare industry is
difficult to predict and could have a material adverse effect on our business.
PROJECT RISKS; LIMITED OUTSOURCING EXPERIENCE
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. Our inability 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. For example, the
healthcare industry faces potential difficulties with its information systems
and business operations arising out of potential Year 2000 problems. We
currently assist clients in auditing Year 2000 compliance and in taking steps to
render information systems Year 2000 compliant. The year 2000 problem is the
result of prior computer programs being written using two digits, rather than
four digits, to define the applicable year. Any of our client's programs that
have time-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in major system failure or
miscalculations. Additionally, we have assisted and continue to assist our
clients in selecting and implementing software applications for the clients' use
in their business. While we are not aware of any existing or potential claims,
if Year 2000 related systems failures in the information systems or other
systems of our clients occur, we could become involved in disputes which could
negatively impact client relationships. A negative impact on client
relationships could adversely affect our business whether or not we bear any
responsibility, legal or otherwise, for the occurrence of those problems.
We have established a program to provide healthcare IT outsourcing
which includes interim management, personnel acquisition and facilities
management, 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 may
be 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 in order to
provide appropriate service levels. The recent increase in government scrutiny
of provider reimbursement practices could also adversely affect the provision of
outsourcing services and its profitability. We have limited experience to date
as an outsourcing provider, and we may not 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. If we are successful in
implementing our outsourcing strategy, we anticipate that competitors may
increase their focus on this market. This increased focus could adversely affect
our ability to obtain new outsourcing contracts as well as the profitability of
any such contracts. In addition, any failure to perform adequately under our
outsourcing agreements could adversely affect our ability to obtain future
consulting engagements from these or other clients. As a result of our success
in obtaining outsourcing contracts and the nature of the practices of certain
recently acquired companies, an increasing portion of our projects are billed on
a fixed-fee basis as opposed to our general method of billing on a time and
materials basis. Any failure 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 adversely affect our business.
<PAGE> 9
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 market segments, including:
- systems integration firms;
- national consulting firms, including the consulting divisions of
large accounting 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, 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. In addition, combinations
and consolidations in the consulting industry will give rise to larger
competitors whose relative strengths are impossible to 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 (including wage pressures as
the consultant labor market tightens) may reduce our revenue or operating
margins or otherwise adversely affect our business.
LIMITED PROTECTION OF PROPRIETARY SYSTEMS AND PROCEDURES
Our success depends in part upon our information and communication
systems, databases, tools, and the methods and procedures that we have developed
specifically to serve our clients. 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.
<PAGE> 10
INFLUENCE OF PRINCIPAL STOCKHOLDER
When this offering is complete, our principal stockholder and Chief
Executive Officer Richard D. Helppie, Jr., will beneficially own approximately
31% 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. Such a concentration of control
could adversely affect the market price of the common stock or could delay or
prevent a change in control.
LIMITED TRADING HISTORY OF COMMON STOCK; 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 was first publicly traded on October 10, 1996 after
our initial public offering of common stock to the public at $16 per share.
Between October 10, 1996 and January 7, 1999 the sale price has ranged from a
low of $14-3/4 per share to a high of $48-1/4 per share. The market price of our
common stock could continue to fluctuate substantially due to a variety of
factors, including:
- Quarterly fluctuations in results of operations;
- Changes in the healthcare and IT consulting environments;
- Announcement and market acceptance of acquisitions;
- Adverse circumstances affecting the introduction or market
acceptance of new 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; and
- Loss of key personnel.
The market price for our common stock may also be affected by our
ability to meet analysts' expectations. Failure to meet such expectations, even
if minor, could 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 an adverse effect on
our business, operating results and financial condition.
<PAGE> 11
IMPACT OF ANTI-TAKEOVER PROVISIONS 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 antitakeover
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 antitakeover 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.
AVAILABLE INFORMATION
We file reports, proxy statements and other information with the
Commission. Those reports, proxy statements and other information may be
obtained:
- - At the Public Reference Room of the Commission, Room 1024 - Judiciary Plaza,
450 Fifth Street, N.W., Washington, DC 20549;
- - At the public reference facilities at the Commission's regional offices
located at Seven World Trade Center, 13th Floor, New York, New York 10048 or
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661;
- - By writing to the Commission, Public Reference Section, Judiciary Plaza, 450
Fifth Street, N.W., Washington, DC 20549;
- - At the offices of the National Association of Securities Dealers, Inc.,
Reports Section, 1735 K Street, N.W., Washington, DC 20006; or
- - From the Internet site maintained by the Commission at http://www.sec.gov.
which contains reports, proxy and information statements and other
information regarding issuers that file electronically with the Commission.
Some locations may charge prescribed or modest fees for copies.
The Company has filed with the Commission a Registration Statement on
Form S-3 (together with any amendments or supplements thereto, the "Registration
Statement") under the Securities Act covering the shares of Common Stock offered
by this prospectus. As permitted by the Commission,
<PAGE> 12
this prospectus, which constitutes a part of the Registration Statement, does
not contain all the information included in the Registration Statement. You may
obtain such additional information from the locations described above.
Statements contained in this prospectus as to the contents of any contract or
other document are not necessarily complete. You should refer to the contract or
other document for all the details.
INFORMATION INCORPORATED BY REFERENCE
We have previously filed the following documents with the Commission under
the Securities Exchange Act of 1934, as amended, and they are incorporated into
this prospectus by reference:
(a) Our Annual Report on Form 10-K for the fiscal year ended December
31, 1997, filed on March 31, 1998;
(b) Our Proxy Statement for our Annual Meeting of Stockholders held on
May 13, 1998, filed on April 10, 1998;
(c) Our Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 1998 (filed on May 15, 1998), June 30, 1998 (filed on August 14, 1998)
and September 30, 1998 (filed on November 16,1998);
(d) Our Current Report on Form 8-K filed on September 2, 1998, as
amended; and
(e) the description of our Common Stock contained in the Company's
Registration Statement on Form 8-A, declared effective October 9, 1996.
All documents filed by us pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this prospectus and before the
termination of this offering are incorporated by reference and become a part of
this prospectus from their date of filing. Any statements contained in this
prospectus or in a document incorporated by reference are modified or superseded
for purposes of this prospectus to the extent that a statement contained in any
such document modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
On request, we will provide anyone who receives a copy of this
prospectus with a copy of any or all of the documents incorporated in this
prospectus by reference. Written or telephone requests for such copies should be
directed to our principal office: Superior Consultant Holdings Corporation,
Investor Relations Department, 4000 Town Center, Suite 1100, Southfield, MI
48075.
<PAGE> 13
THE COMPANY
Superior Consultant Holdings Corporation, through our wholly owned
subsidiary, Superior Consultant Company, Inc., is a national healthcare
consulting firm that provides a wide range of information technology ("IT")
consulting and strategic and operations management consulting services to a
broad cross-section of healthcare industry participants and healthcare
information system vendors. We use our in-depth institutional knowledge and
nationally deployed group of experienced consultants to help clients plan and
execute business strategies. Our comprehensive continuum of solutions includes:
strategic planning and operations management consulting; information systems
planning, implementation and integration; and interim management and
outsourcing.
Our wholly-owned subsidiary, Enterprise Consulting Group, Inc., assists
clients in various industries with network and telecommunication design and
acquisition, enterprise messaging, intranet and web strategies, workgroup
consulting, and software and application development solutions.
Our executive offices are located at 4000 Town Center, Suite 1100,
Southfield, MI 48075. Our telephone number is (248) 386-8300.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of any of the
Shares by the Selling Stockholders herein.
<PAGE> 14
SELLING STOCKHOLDERS
We issued 6,328 shares of Common Stock to ACA Holding, Inc. (the "Selling
Stockholder") pursuant to an Asset Purchase Agreement, dated as of December 7,
1998, among Superior Consultant Company, Inc., the Selling Stockholder and
certain shareholders of the Selling Stockholder, under which we acquired certain
assets and business operations of the Selling Stockholder (the "Purchase
Agreement"). In addition, we issued to the Selling Stockholder pursuant to the
Purchase Agreement shares of our Convertible Preferred Stock which may become
convertible into up to 83,318 shares of Common Stock over the two years
following the date of this prospectus depending upon the extent to which the
acquired business meets certain financial performance criteria, and based on an
assumed market price for our Common Stock of approximately $36 at the time of
conversion. The Selling Stockholder does not have a material relationship with
the Company.
The following table sets forth for the Selling Stockholder the number of
shares beneficially owned by the Selling Stockholder prior to this offering, the
maximum number of shares to be offered and the number of shares beneficially
owned by the Selling Shareholder after this offering, assuming that all of the
shares being offered for sale are actually sold by the Selling Stockholder. The
percentage of outstanding shares held by the Selling Stockholder is less than
one percent.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES BEING NUMBER OF SHARES
---------------- ---------------------- ----------------
OWNED PRIOR TO OFFERED (1) AFTER OFFERING (1)
-------------- ----------- ------------------
SELLING STOCKHOLDER OFFERING(1)
------------------- -----------
<S> <C> <C> <C>
ACA Holding, Inc. (2) 89,646 44,823 44,823
</TABLE>
- ----------------------
(1) The shares owned and offered hereby assume that the Convertible Preferred
Stock is ultimately convertible for (and is in fact converted into) the
maximum number of possible shares of Common Stock. The shares owned and
offered hereby shall include, in addition to the numbers indicated, any
additional shares of our Common Stock that become issuable by reason of any
stock dividend, stock split, recapitalization or other similar transaction
effected without the receipt of consideration that results in an increase
in the number of outstanding shares of the Company's Common Stock.
(2) The Selling Stockholder may, in the event of its dissolution prior to the
completion of this offering, distribute all or any part of the shares which
it beneficially owns to the following persons: Lawrence J. Arthur, Bruce M.
Bird, Scott Buckley, Richard L. Clark, Bradley A. Cochennet, Trustee of the
Bradley A. Cochennet Trust U/T/A dated August 18, 1995, Deborah S. Lewis,
Edward J. Lewis, C. Sue Martin, Marcia Petrie, Nelson A. Tilden and Marcia
Petrie. In the event of such distribution, the shares will be offered by
such persons pursuant to the Plan of Distribution. None of such persons has
had any material relationship with us, except that certain of such persons,
including Larry Arthur, have become employees of our subsidiary, Superior
Consultant Company, Inc.
PLAN OF DISTRIBUTION AND OFFERING PRICE
The Selling Stockholder, or the persons named in Note 2 to the table under
"Selling Stockholders," above, or their respective pledgees, donees, transferees
or other successors in interest may sell the shares offered hereby from time to
time. Such sales may be made on one or more exchanges or in the over-the-counter
market, or otherwise, at prices and at terms then prevailing or at prices
related to the
<PAGE> 15
then current market price or in negotiated transactions. The Selling
Stockholder may effect sales of the shares directly to purchasers or to or
through broker-dealers, who may act as agents or principals. The shares may be
sold by any method including one or more of the following: (a) a block trade in
which the broker or dealer so engaged will attempt to sell the shares as agent
but may purchase and resell a portion of the block as principal to facilitate
the transaction; (b) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this prospectus; (c) an
exchange distribution in accordance with the rules of such exchange; (d)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers and (e) through put or call options transactions relating to the
shares. In effecting sales, brokers or dealers engaged by the Selling
Stockholder may arrange for other brokers or dealers to participate. Brokers and
dealers will receive commissions or discounts from the Selling Stockholder in
amounts to be negotiated prior to the sale. The Selling Stockholder and any
brokers or dealers participating in the distribution of the shares may be deemed
to be "underwriters" within the meaning of the Securities Act in connection with
such sales, and any commissions received by such broker-dealers and any profits
realized on the resale of shares by them may be deemed to be underwriting
discounts and commissions under the Securities Act. The Selling Stockholder may
agree to indemnify such broker-dealers with respect to the shares offered hereby
against certain liabilities, including certain liabilities under the Securities
Act. In addition, the Company has agreed to indemnify the Selling Stockholder
with respect to the shares offered hereby against certain liabilities, including
certain liabilities under the Securities Act or, if such indemnity is
unavailable, to contribute toward amounts required to be paid in respect of such
liabilities. In addition, any securities covered by this Prospectus which
qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than
pursuant to this Prospectus.
The Company will pay the registration expenses incident to the offering and
sale of the shares by the Selling Stockholder to the public. Such expenses
(estimated to be $20,000) include legal and accounting expenses, filing fees
payable to the Commission, applicable state "blue sky" filing fees and printing
expenses. The Company, however, will not pay for any expenses, commissions or
discounts of underwriters, dealers or agents for the Selling Stockholder.
Because the Selling Shareholder may be deemed to be an "underwriter"
within the meaning of Section 2(11) of the Securities Act, the Selling
Shareholder will be subject to the prospectus delivery requirements of the
Securities Act.
Any underwriters, brokers, dealers and agents who participate in any such
sale may also be customers of, engage in transactions with or perform services
for us or the Selling Stockholder in the ordinary course of business.
Our Common Stock is currently traded on the Nasdaq National Market. The
public offering price for any shares that are sold will be determined by the
price indicated on such system at the time such sale occurs, or at such price as
shall be determined through private negotiations between the buyer and the
Selling Stockholder, or its agent.
VALIDITY OF STOCK
The validity of the shares will be passed upon for the Company by Sachnoff
& Weaver, Ltd., Chicago, Illinois ("S&W").
EXPERTS
The consolidated financial statements of the Company as of December 31,
1997 and 1996 and the related statements of operations, stockholders' equity and
cash flows for each of the three years in the period ended December 31, 1997
have been incorporated by reference herein in reliance upon the
<PAGE> 16
report of Grant Thornton LLP, independent certified public accountants,
incorporated by reference herein and upon the authority of said firm as experts
in accounting and auditing.
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of the Common Stock being registered hereby. All the amounts shown
are estimated, except the SEC registration fee.
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee............................................ $ 544
Printing expenses............................................... 3,500
Legal fees and expenses......................................... 6,000
Accounting fees and expenses.................................... 6,000
Miscellaneous expenses.......................................... 3,956
---------
Total.................................. $ 20,000
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is a Delaware corporation, subject to the applicable
indemnification provisions of the General Corporation Law of the State of
Delaware (the "DGCL"). Section 145 of the DGCL empowers a Delaware corporation
to indemnify, subject to the standards therein prescribed, any person in
connection with any action, suit or proceeding brought or threatened because
such person is or was a director, officer, employee or agent of the corporation
or was serving as such with respect to another corporation or other entity at
the request of such corporation.
In accordance with Section 102(b)(7) of the DGCL, Article XIII of the
Company's Amended and Restated Certificate of Incorporation provides that "no
director of the Corporation shall be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
notwithstanding any provision of law imposing such liability except for
liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL, as the same exists or hereafter may be amended, or (iv)
for any transaction from which the director derived an improper personal
benefit. If the DGCL is amended to authorize the further elimination or
limitation of liability of directors, then the liability of a director of the
Corporation, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by an amended DGCL. Any
repeal or modification of this Article XIII by the stockholders of the
Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal or modification."
The Company's Certificate of Incorporation and By-Laws contain
provisions that require the Company to indemnify its directors and officers to
the fullest extent permitted by Delaware law.
The Company has entered into indemnification agreements with each of
its executive officers and directors in which the Company agrees to indemnify
and hold harmless the officer or director to the
<PAGE> 18
fullest extent permitted by applicable law against any and all attorneys' fees
and all other expense, cost, liability and loss (including a mandatory
obligation by the Company to advance reimbursement of legal fees and expenses)
paid or incurred by such officer or director or on his or her behalf in
connection with any threatened, pending or completed action, suit or proceeding,
or any inquiry or investigation not initiated by the officer or director that he
or she believes in good faith might lead to a proceeding, inquiry or
investigation (a proceeding) relating to the fact that the officer or director
is or was a director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, or by reason of any action or inaction
by the officer or director in such capacity. However, the Company's obligation
to indemnify the officer or director is subject to a determination by: (i) the
Company's Board of Directors, by vote of the majority of disinterested
directors, or such person or body appointed by the Board of Directors who is a
disinterested party; (ii) under certain circumstances, independent legal counsel
appointed by the Board of Directors in a written opinion; or (iii) a court of
competent jurisdiction in a final, nonappealable adjudication, that the officer
or director acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the Company and, with respect to
any criminal Proceeding, the officer or director acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Company, and with respect to any criminal Proceeding, the
officer or director had no reasonable cause to believe that his or her conduct
was unlawful.
ITEM 16. EXHIBITS.
(a) Exhibits:
4 Specimen Common Stock Certificate (1)
5 Opinion of Sachnoff & Weaver, Ltd. regarding the legality of the
securities being registered
23.1 Consent of Grant Thornton LLP
23.2 Consent of Sachnoff & Weaver, Ltd. (included in Exhibit 5)
24 Powers of Attorney (included on the Signature Page of this
Registration Statement)
(1) Incorporated by reference from the Registrant's Form S-1 Registration
Statement as filed with the SEC on August 15, 1996 (File No. 333-10213).
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
<PAGE> 19
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
the indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Southfield, State of Michigan, on January 8, 1999.
SUPERIOR CONSULTANT HOLDINGS
CORPORATION
BY: /s/ James T. House
------------------------------------------
James T. House, Chief Financial Officer
The undersigned officers and directors of Superior Consultant Holdings
Corporation, hereby severally constitute and appoint Richard P. Saslow and James
T. House, and each of them singly, our true and lawful attorneys and agents,
with full power to them, and each of them, to sign for us and in our names in
the capacities indicated below, the Registration Statement on Form S-3 filed
herewith and any and all pre-effective and post-effective amendments to said
Registration Statement, and generally to do all such things in our names and on
our behalf in our capacities as officers and directors to enable Superior
Consultant Holdings Corporation to comply with the provisions of the Securities
Act of 1933, as amended, and all requirements of the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they may be signed
by our said attorneys, or any of them, to said Registration Statement and any
and all amendments thereto.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ---------------------------------------------- -------------------
<S> <C> <C>
/s/ Richard D. Helppie, Jr. Chairman, Chief Executive Officer and
- ---------------------------------------- Director January 8, 1999
Richard D. Helppie, Jr.
/s/ James T. House
- ---------------------------------------- Chief Financial Officer January 8, 1999
James T. House
/s/ Richard P. Saslow Vice President, General Counsel and Director
- ---------------------------------------- Director January 8, 1999
Richard P. Saslow
/s/ Reginald M. Ballantyne III Director January 8, 1999
- ----------------------------------------
Reginald M. Ballantyne III
Director January 8, 1999
- ----------------------------------------
Bernard J. Lachner
/s/ Kenneth S. George Director January 8, 1999
- ----------------------------------------
Kenneth S. George
</TABLE>
<PAGE> 21
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ John L. Silverman
- ---------------------------------------- Director January 8, 1999
John L. Silverman
/s/ Douglas S. Peters
- ---------------------------------------- Director January 8, 1999
Douglas S. Peters
/s/ C. Everett Koop
- ---------------------------------------- Director January 8, 1999
C. Everett Koop
</TABLE>
<PAGE> 22
Exhibit Index
-------------
Exhibit No. Description
- ----------- -----------
5.1 Opinion of Sachnoff & Weaver, LTD
23.1 Consent of Grant Thronton LLP
<PAGE> 1
EXHIBIT 5.1
(312) 207-1000
January 7, 1999
Superior Consultant Holding Corporation
4000 Town Center, Suite 1100
Southfield, Michigan 48075
Re: Registration Statement on Form S-3. ("Registration Statement")
Gentlemen and Ladies:
In connection with the proposed registration for resale of 44,823 shares of
Common Stock, $0.01 par value (the "Common Stock"), of Superior Consultant
Holding Corporation (the "Company"), covered by the above-referenced
Registration Statement, we have examined such documents and have reviewed such
questions of law as we have considered necessary and appropriate for the
purposes of this opinion. We have assumed the genuineness of all signatures, the
authenticity of all documents submitted to as originals, the conformity to
original documents of all the documents submitted to us as certified or
photostatic copies and the authenticity of the originals of such latter
documents.
Based upon such examination, we advise you that, in our opinion:
(i) The Company had corporate authority to issue the shares of Common
Stock proposed to be offered as set forth in the Registration Statement.
(ii) The shares of Common Stock registered for resale as set forth in
the Registration Statement have been duly authorized and were validly
issued and fully paid and nonassessable, and will continue to be so when
sold as set forth in the Registration Statement.
We hereby consent to the filing of this opinion as an exhibit to the
above-referenced Registration Statement and the reference to this firm under the
caption "Validity of Stock" in the Prospectus constituting a part of such
Registration Statement. In giving this consent, we do not hereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission.
Very truly yours,
/s/ SACHNOFF & WEAVER, LTD.
Sachnoff & Weaver, Ltd.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated February 25, 1998 accompanying the
consolidated financial statements of Superior Consultant Holdings Corporation
and Subsidiaries appearing in the 1997 Annual Report on Form 10-K for the year
ended December 31, 1997 which is incorporated by reference in this Registration
Statement. We consent to the incorporation by reference in the Registration
Statement of the aforementioned report and to the use of our name as it appears
under the caption "Experts".
/s/ GRANT THORNTON LLP
Detroit, Michigan
January 7, 1999
