<PAGE>
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended March 31, 1998 Commission File No. 0-16992
-------------- -------
CONCORDE CAREER COLLEGES, INC.
------------------------------
(exact name of registrant as specified in its charter)
Delaware 43-1440321
------------ ------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
4th Floor, City Center Square
12th & Baltimore, P.O. Box 26610
Kansas City, Missouri 64196
- -------------------------------------------------------------------------------
(Address of Principal Exectuive Office) (Zip Code)
Registrant's telephone number, including area code: (816) 474-8002
-----------------------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.10 Par Value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
As of April 23, 1998 Concorde Career Colleges, Inc. had 7,190,176 shares of
Common Stock outstanding.
===============================================================================
<PAGE>
CONCORDE CAREER COLLEGES, INC
Form 10-Q
Three Months Ended March 31, 1998
INDEX
PART I -- FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
----
<S> <C>
Item 1. Financial Statements
Notes to Condensed Consolidated Financial Statements
Note 1 and 2................................................ 1
Condensed Consolidated Balance Sheets........................ 2,3
Condensed Consolidated Statements of Operations.............. 4,5
Condensed Consolidated Statements of Cash Flows.............. 6
Consolidated Statement of Changes in Stockholders' Equity.... 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 8
PART II--OTHER INFORMATION
Item 1. Legal Proceedings........................................... 11
Item 2. Change in Securities........................................ 11
Item 3. Defaults Upon Senior Securities............................. 11
Item 4. Submission of Matters to a Vote of Security Holders......... 11
Item 5. Other Information........................................... 11
Item 6. Exhibits and Reports on Form 8-K............................ 11
Signatures........................................................... 12
</TABLE>
<PAGE>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
CONCORDE CAREER COLLEGES, INC., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
Overview
The discussion set forth below, as well as other portions of this Form
10-Q, may contain forward-looking comments. Such comments are based upon
information currently available to management and management's perception
thereof as of the date of this Form 10-Q. Actual results of the Company's
operations could materially differ from those forward-looking comments. The
differences could be caused by a number of factors or combination of factors
including, but not limited to, potential adverse effects of regulations;
impairment of federal funding; adverse legislative action; student loan default
rates; changes in federal or state authorization or accreditation; changes in
market needs and technology; changes in competition and the effects of such
changes; changes in the economic, political or regulatory environments;
litigation involving the Company; changes in the availability of a stable labor
force; or changes in management strategies. Readers should take these factors
into account in evaluating any such forward-looking comments.
Notes to Financial Statements
Note 1:
- ------
The condensed interim consolidated financial statements included herein
have been prepared by the Company, without audit, pursuant to the rules and
regulations of the SEC. Certain information and footnote disclosures normally
included in financial statements prepared according to generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's 1997 Annual Report on
Form 10-K that was filed by the Company with the Commission on March 30, 1998
(the "1997 Form 10-K") incorporated herein by reference.
The information included in these interim financial statements reflects all
normal recurring adjustments that are, in the opinion of management, necessary
to fairly state the results of the periods presented. Annualization of amounts
in these interim financial statements may not necessarily be indicative of the
actual operating results for the full year.
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 revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
Company has litigation pending which arose in the normal course of business.
See further discussion in Part I, Item 2 - "Contingencies", and Part II, Item 1
- - "Legal Proceedings".
Note 2:
- ------
Basic earnings per share is computed by deducting accrued and imputed
preferred dividends from net income, and for 1997 adding the excess of the
carrying value of the preferred stock retired over the amount of cash paid in
order to determine net income attributable to common shareholders. This amount
is then divided by weighted average number of common shares outstanding.
Diluted earnings per share is computed by deducting imputed preferred
dividends and adding convertible subordinated debt interest net of income taxes
(if dilutive). In addition for 1997, deducting accrued preferred dividends from
net income and adding the excess of the carrying value of the preferred stock
retired over the amount of cash paid. This amount is then divided by the
weighted average number of common shares outstanding during the year after
giving effect for common stock equivalents (if dilutive) arising from stock
options and for warrants and preferred stock assumed converted to common stock.
1
<PAGE>
CONCORDE CAREER COLLEGES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
(unaudited)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---------- -------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................ $ 5,740,000 $ 5,393,000
Accounts receivable................... 9,913,000 10,523,000
Notes receivable...................... 3,551,000 3,758,000
Allowance for uncollectible accounts.. (1,205,000) (1,309,000)
----------- -----------
Net receivables....................... 12,259,000 12,972,000
Recoverable income taxes................. 448,000 340,000
Deferred income taxes.................... 843,000 916,000
Supplies and prepaid expenses............ 780,000 794,000
----------- -----------
Total current assets.................. 20,070,000 20,415,000
FIXED ASSETS, NET:......................... 2,505,000 2,533,000
INTANGIBLE ASSETS, NET
less accumulated amortization of
$1,183,000 at March 31, 1998 and
$1,139,000 at December 31, 1997,
respectively............................. 551,000 594,000
----------- -----------
OTHER ASSETS:
Long-term notes receivable............... 1,779,000 1,992,000
Allowance for uncollectible notes........ (575,000) (616,000)
Other.................................... 381,000 383,000
Deferred income taxes.................... 359,000 223,000
----------- -----------
Total other assets.................... 1,944,000 1,982,000
----------- -----------
$25,070,000 $25,524,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
2
<PAGE>
CONCORDE CAREER COLLEGES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
<S> <C> <C>
CURRENT LIABILITIES:
Deferred student tuition................................................. $10,377,000 $10,878,000
Accrued salaries and wages............................................... 781,000 821,000
Accrued interest......................................................... 190,000 190,000
Accounts payable and other accrued liabilities........................... 3,036,000 3,040,000
----------- -----------
Total current liabilities........................................... 14,384,000 14,929,000
OTHER LONG-TERM LIABILITIES................................................ 353,000 360,000
SUBORDINATED DEBT DUE TO RELATED PARTY, CAHILL-WARNOCK..................... 3,500,000 3,500,000
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock, ($.10 par value, 600,000 shares authorized)
Class B, 55,147 shares issued and outstanding......................... 6,000 6,000
Common stock, ($.10 par value, 19,400,000 shares
authorized), 7,216,976 shares issued and 7,190,176 shares outstanding.... 722,000 713,000
Capital in excess of par................................................. 8,033,000 8,000,000
Accumulated deficit...................................................... (1,867,000) (1,923,000)
Less-treasury stock, 26,800 shares, at cost.............................. (61,000) (61,000)
----------- -----------
Total stockholders' equity............................................ 6,833,000 6,735,000
----------- -----------
$25,070,000 $25,524,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
3
<PAGE>
CONCORDE CAREER COLLEGES, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1998 and 1997
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
----------- -----------
<S> <C> <C>
NET REVENUES..................................................... $ 9,094,000 $ 9,388,000
COSTS AND EXPENSES:
Instruction costs and services................................. 3,562,000 3,307,000
Selling and promotional........................................ 1,346,000 1,352,000
General and administrative..................................... 3,749,000 3,772,000
Provision for uncollectable accounts........................... 246,000 476,000
----------- -----------
Total.......................................................... 8,903,000 8,907,000
----------- -----------
OPERATING INCOME................................................. 191,000 481,000
INTEREST EXPENSE................................................. 46,000 136,000
----------- -----------
INCOME BEFORE INCOME TAXES AND GAIN ON SALE..................... 145,000 345,000
GAIN ON SALE OF ASSETS.......................................... 313,000
----------- -----------
INCOME BEFORE INCOME TAXES....................................... 145,000 658,000
PROVISION FOR INCOME TAXES...................................... 56,000 178,000
----------- -----------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE............................................. 89,000 480,000
CUMULATIVE EFFECT ON PRIOR YEARS (TO DECEMBER 31,
1996) OF CHANGE IN REVENUE RECOGNITION METHOD,
NET OF TAX....................................................... (659,000)
----------- -----------
NET (LOSS) INCOME............................................... $ 89,000 $ (179,000)
=========== ===========
</TABLE>
(Continued)
(The remainder of this page left intentionally blank.)
4
<PAGE>
CONCORDE CAREER COLLEGES, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------
1998 1997
---- ----
WEIGHTED AVERAGE SHARES OUTSTANDING:
<S> <C> <C>
Basic....................................................... 7,124,000 6,967,000
Diluted..................................................... 8,194,000 9,281,000
BASIC EARNINGS PER SHARE:
Income before cumulative effect of change in accounting
principle................................................. .01 .24
Cumulative effect on prior years (to December 31, 1996) of
change in revenue recognition method...................... (.10)
--------- ---------
NET INCOME PER SHARE............................................. .01 .14
========= =========
DILUTED EARNINGS PER SHARE:
Income before cumulative effect of change in accounting
principle.................................................... .01 .18
Cumulative effect on prior years (to December 31, 1996) of
change in revenue recognition method......................... (.07)
--------- ---------
NET INCOME PER SHARE............................................. .01 .11
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
(The remainder of this page left intentionally blank.)
5
<PAGE>
CONCORDE CAREER COLLEGES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(unaudited)
<TABLE>
<CAPTION>
1998 1997
---- ----
CASH FLOWS--OPERATING ACTIVITIES:
<S> <C> <C>
Net (loss) income...................................... $ 89,000 $ (179,000)
Adjustments to reconcile net income (loss) to net
Cash provided by operating activities -
Gain on sale of assets.............................. (313,000)
Depreciation and amortization....................... 215,000 232,000
Provision for losses on accounts receivable......... 246,000 476,000
Cumulative effect of change in accounting principle. 659,000
Change in assets and liabilities, net -
Change in receivables............................ 649,000 1,840,000
Change in deferred student tuition............... (500,000) (1,220,000)
Change in deferred income taxes.................. (63,000) (287,000)
Change in recoverable income taxes............... (108,000) (337,000)
Other changes in assets and liabilities, net..... (47,000) (1,095,000)
---------- -----------
Total adjustments............................ 392,000 (45,000)
---------- -----------
Net operating activities...................... 481,000 (224,000)
---------- -----------
CASH FLOWS--INVESTING ACTIVITIES:
Proceeds from sales.................................... 1,025,000
Capital expenditures................................... (143,000) (190,000)
---------- -----------
Net investing activities...................... (143,000) 835,000
---------- -----------
CASH FLOWS--FINANCING ACTIVITIES:
Class A Preferred stock redemption..................... (1,302,000)
Class A Preferred stock dividend payments.............. (467,000)
Principal payments on debt due CenCor.................. (2,819,000)
Class B Preferred stock issued......................... 1,500,000
Subordinated debt issued to Cahill-Warnock............. 3,500,000
Stock options exercised................................ 9,000
---------- -----------
Net financing activities...................... 9,000 412,000
---------- -----------
Net increase in cash & cash equivalents....... 347,000 1,023,000
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD................................. 5,393,000 4,261,000
---------- -----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD....................................... 5,740,000 5,284,000
---------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest............................................. 46,000 132,000
Income taxes......................................... 235,000 379,000
Cash received during the period for:
Interest............................................. 96,000 102,000
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
6
<PAGE>
CONCORDE CAREER COLLEGES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(unaudited)
<TABLE>
<CAPTION>
Capital
Preferred Common in Excess Accumulated Treasury
Stock Stock of Par Deficit Stock
--------- ------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1997........... $6,000 $713,000 $8,000,000 $(1,923,000) $(61,000)
Net Income......................... 89,000
Class B Preferred Stock Accretion.. 33,000 (33,000)
Stock Options Exercised............ 9,000
------ -------- ---------- ----------- --------
BALANCE, March 31, 1998.............. $6,000 $722,000 $8,033,000 $(1,867,000) $(61,000)
====== ======== ========== =========== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Company owns and operates twelve proprietary postsecondary campuses
that offer career education, primarily in the allied health field (the
"Campuses").
The following table presents the relative percentage of revenues of
certain consolidated statement of operations items as a percentage of total
revenue for periods indicated.
<TABLE>
<CAPTION>
Three Months
Ended
March 31,
-------------
1998 1997
----- -----
<S> <C> <C>
Revenue................................................ 100% 100%
Operating expenses:
Instruction costs & services......................... 39.2 35.2
Selling & Promotional................................ 14.8 14.4
General & administrative............................. 41.2 40.3
Provision for uncollectible accounts................. 2.7 5.0
---- ----
Total operating expenses............................. 97.9% 94.9%
Operating income....................................... 2.1 5.1
Interest expense....................................... .5 1.4
---- ----
Income before income taxes and gain on sale........... 1.6% 3.7%
Gain on sale of assets................................. 3.3
---- ----
Income before income taxes............................. 1.6% 7.0%
Provision (benefit) for income taxes................... .6 1.9
---- ----
Income before cumulative effect of change in
accounting principle................................. 1.0 5.1
Cumulative effect in prior years of change in revenue
recognition method................................... [7.0)
---- ----
Net (loss) income...................................... 1.0% (1.9%)
==== ====
</TABLE>
8
<PAGE>
Result of Operations
QUARTER ENDED MARCH 31, 1998 COMPARED TO
QUARTER ENDED MARCH 31, 1997
Net income increased $268,000 to $89,000 for the three months ended March
31, 1998 compared to a loss of $179,000 for the same period in 1997. In 1997,
the Company benefited from a $313,000 gain from the sale of its Michigan
building. The cumulative effect of the revenue recognition change in 1997 was a
decrease of net income by $659,000.
Total revenue decreased 3.1% or $294,000 to $9,094,000 for the three months
ended March 31, 1998 compared to $9,388,000 for the same period in 1997. The
revenue decrease was a result of decreased student population. Total operating
expenses decreased $4,000 to $8,903,000 compared to $8,907,000 for the three
months ended March 31, 1997.
Instruction costs and services - increased $255,000 or 7.7% to $3,562,000
compared to $3,307,000 in 1997. The increase was a result of increased faculty
wages.
Selling and promotional - decreased $6,000 to $1,346,000 compared to
$1,352,000 in 1997. Advertising expense increased $73,000 to $ 820,000 compared
to $747,000 in 1997. The offsetting decrease resulted from wages in these areas
decreasing compared to 1997.
General and administrative - decreased $23,000 to $3,749,000 compared to
$3,772,000 in 1997. Professional fees decreased $119,000 compared to 1997. The
offsetting increase was primarily due to increased travel and employee
procurement costs compared to 1997.
Provision for uncollectible accounts - decreased $230,000 or 48.4% to
$246,000 compared to $476,000 in 1997. The decrease is due to a reduction in
notes receivable and improved collections.
Interest expense - decreased $90,000 to $46,000 compared to $136,000 in
1997. The decrease is due to the Company satisfying the interest obligation due
CenCor on February 25, 1997 as a result of the Cahill-Warnock Transaction.
In 1998, a tax provision of $56,000 or 39% was recorded compared to
$178,000 or 27% in 1997.
EPS and Weighted Average Common Shares - Basic weighted average common
shares increased to 7,124,000 in 1998 from 6,967,000 in 1997 and decreased to
8,194,000 in 1998 from 9,281,000 in 1997 for diluted earnings per share. Basic
EPS before accounting change was $.01 for the three months ended March 31, 1998,
and $.24 for the same period in 1997. Basic EPS is shown after a reduction for
preferred stock dividends of $33,000 in 1998 and $38,000 in 1997 and an addition
of $1,210,000 for the Class A preferred stock redemption in 1997. Diluted EPS
before accounting change was $.01 for the three months ended March 31, 1998, and
$.18 for the same period in 1997. Diluted EPS is shown after a reduction for
preferred stock dividends of $33,000 in 1998 and an addition of $9,000 for
convertible debt interest, an addition of $1,210,000 for the gain on the Class A
Preferred Stock Redemption and a reduction of $28,000 for preferred stock
dividends in 1997.
Liquidity and Capital Resources
Asset Sales
CenCor, Inc. Agreement
The Restructuring Agreement between the Company and CenCor, Inc. (CenCor)
was effective for the period between October 30, 1992 and February 25, 1997. See
the Company's 1997 Form 10-K for additional information concerning transactions
related to this agreement. In January 1998, all remaining commitments to CenCor
were satisfied.
9
<PAGE>
Bank Financing
On February 25, 1997, the Company entered into agreements described as the
"Cahill-Warnock Transactions" in the Company's 1997 Form 10-K, and referred to
as the "Refinancing".
In conjunction with the Refinancing, the Company negotiated a $3,000,000
secured revolving credit facility on March 13, 1997 with Security Bank of Kansas
City. This facility was recently extended and expires on April 30, 1999. Funds
borrowed under this facility will be used for working capital purposes. This
facility has a variable interest rate of prime plus one percent, and no
commitment fee. It is secured by all cash, accounts and notes receivable,
furniture and equipment, and capital stock of the subsidiaries. As of April
30, 1998, the Company had not borrowed any funds against the line of credit.
Cash Flows and Other
Net cash provided by operating activities increased to $481,000 for the
three months ended March 31, 1998 compared to a decrease of $224,000 during the
same period in 1997. Net receivables after provision for losses on receivables
decreased $649,000 in 1998 compared to decrease of $1,840,000 in 1997. Deferred
student tuition increased in 1998 by $500,000 compared to an increase of
$1,220,000 in 1997.
Capital expenditures for the three months ended March 31, 1998 were
$143,000 compared to $190,000 in 1997. Capital expenditures in 1998 were
primarily for additional computer equipment. In 1997, the Company received
approximately $725,000 from the sale of the Michigan land and building and
$300,000 from the San Jose sale.
Financing activities increased cash $9,000 in 1998. In 1997, financing
activities increased cash $412,000 as the Company retired the outstanding debt
and preferred stock due CenCor, Inc. and received cash from the issuance of new
debentures and preferred stock.
Contingencies
In September 1997, the Bureau of Consumer Protection of the United States
Federal Trade Commission (the "FTC") notified the Company that it was conducting
an inquiry related to the Company's offering and promotion of vocational or
career training. The Company is cooperating with the FTC to the fullest extent
possible, and believes it has not engaged in any activity that would violate FTC
regulations. The Company believes the inquiry is one of several being conducted
by the FTC pertaining to vocational postsecondary training institutions. There
is not sufficient information available at this stage to determine the financial
impact on the Company, if any.
The Company generally relies on the availability of various federal and
state student financial aid programs to provide funding for the students
attending the Campuses. The Company also relies on the availability of lending
institutions willing to participate in these programs and to grant loans to
these students. If all of the Campuses would be limited, suspended or
terminated from participation in the federal or state student financial aid
programs, or if lending institutions withdrew access to student loans, the
Company's continuing operations would be in doubt.
During July 1993, nine former students of the Jacksonville, Florida School
filed individual lawsuits against the School, alleging deceptive trade
practices, breach of contract, and fraud and misrepresentation. These cases
were dismissed by the plaintiffs; however, over time three others were filed
seeking similar relief on behalf of a total of 95 plaintiffs. See Part II, Item
1 "Legal Proceedings".
The Company's San Diego campus received notification in September 1997,
that it was no longer eligible to participate in the Federal Family Education
Loan Program (FFEL). Except for the San Diego, California Campus, all of the
Company's campuses are eligible to continue participating in the FFEL program.
The San Diego campus, which enrolls approximately 5.6 percent of the Company's
total student population as of March 31, 1998, has continued to operate since
September 1997, by providing qualified students with access to Federal Pell
grants and alternative sources of student financing.
In 1991, ED notified the Company that the Southern Career Institute (the
"SCI"), a proprietary, post-secondary vocational home study school acquired
through a wholly owned subsidiary in 1990, was ineligible to participate in
federal student financial assistance programs. The Company subsequently
received notices requesting payments to ED of approximately $2.7 million
relating to student financial assistance funds disbursed between June and
November 1990. See
10
<PAGE>
the Company's 1997 Form 10-K, Item 7 "Contingencies". In September 1997, ED
again sent notices to the Company requesting payment. The Company responded by
restating its offer to settle for the amount in the SCI bank account which is
currently $30,000 and requested an opportunity to review documents and for a
hearing. In April, the Company was verbally informed that ED is sending the
account to the Department of Treasury ("Treasury"). The Company has not been
contacted by Treasury as of April 29, 1998.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
Other
During July 1993, nine former students of the Jacksonville, Florida Campus
filed individual lawsuits against the Campus, alleging deceptive trade
practices, breach of contract, and fraud and misrepresentation. These suits
have since been dismissed by the plaintiffs; however, over time, three others
were filed seeking similar relief on behalf of a total of 95 plaintiffs.
Conversion of one of the three cases to a class action has been attempted;
however the plaintiff's motion for class certification was denied on April 18,
1997. The Company received a Notice of Appeal on May 17, 1997, which appealed
the order denying certification of the class. The purported class
representative and the Company filed all appropriate briefs, and oral argument
before the appellate court was held on January 15, 1998. On February 5, 1998,
the appellate court issued a per curium decision without opinion affirming the
trial courts denial of class certification. As no motion concerning the opinion
was filed timely by the class representative, the opinion is now final. Any
further attempted appeal, if filed, should be dismissed. During the appeal, all
activity and progress in the other suits was stayed. On April 20, 1998 the
plaintiffs initiated requests for discovery despite the stay on all activity.
The amount of damages sought is not determinable. The Company believes these
suits are without merit, and will continue to defend against them vigorously.
The Company's Campuses are sued from time to time by a student or students
who claim to be dissatisfied with the results of their program of study.
Typically, the claims allege a breach of contract, deceptive advertising and
misrepresentation and the student or students seek reimbursement of tuition.
Punitive damages sometimes are also sought. In addition, ED may allege
regulatory violations found during routine program reviews. The Company has,
and will continue to dispute these findings as appropriate in the normal course
of business. In the opinion of the Company's management such pending litigation
and disputed findings are not material to the Company's financial condition or
its results of operation.
The Company has litigation pending which arose in the ordinary course of
business. Litigation is subject to many uncertainties and the outcome of the
individual matters is not presently determinable. It is management's opinion
that this litigation will not result in liabilities that will have a material
adverse effect on the Company's financial position or results of operation.
The Company is not aware of any material violation by the Company of
applicable local, state and federal laws.
Item 2. Change in Securities -- None
-----------------------------
Item 3. Defaults upon Senior Securities -- None
---------------------------------------
Item 4. Submission of Matters to a Vote of Security Holders -- None
------------------------------------------------------------
Item 5. Other Information -- None
--------------------------
Item 6. Exhibits
--------
11 Computation of per share earnings
27 Financial Data Schedule
* No Reports on Form 8-K were filed during the period.
11
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONCORDE CAREER COLLEGES, INC.
DATED: April 30, 1998
By:___________________________________________
Robert R. Roehrich, Chief Executive Officer
By:___________________________________________
Gregg Gimlin, Chief Financial Officer
12
<PAGE>
(EXHIBIT 11)
CONCORDE CAREER COLLEGES, INC.
COMPUTATION OF PER SHARE EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
<TABLE>
<CAPTION>
Basic EPS Diluted EPS
Three Months Three Months
Ended March 31, Ended March 31,
---------------- ----------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Weighted Average Shares Outstanding........... 7,124,000 6,967,000 7,124,000 6,967,000
Options....................................... 1,070,000 925,000
Debt/Non Detachable Warrants (1).............. 972,000
Class B Preferred Stock (1)................... 417,000
---------- ---------- ---------- ----------
Adjusted Weighted Average Shares.............. 7,124,000 6,967,000 8,194,000 9,281,000
---------- ---------- ---------- ----------
Income before accounting change............... $ 89,000 $ 480,000 $ 89,000 $ 480,000
Class A Preferred Stock Redemption (2)........ 1,210,000 1,210,000
Class A Preferred Dividends................... (28,000) (28,000)
Class B Preferred Dividends-Imputed........... (33,000) (10,000) (33,000)
Interest on Convertible Debt, Net of Tax (1).. 9,000
---------- ---------- ---------- ----------
Income Available to Common Shareholders....... 56,000 1,652,000 56,000 1,671,000
---------- ---------- ---------- ----------
Earnings per Weighted Average Shares.......... $ .01 $ .24 $ .01 $ .18
========== ========== ========== ==========
</TABLE>
(1) Anti-dilutive for 3 months ended March 31, 1998.
(2) Represents the excess of the carrying value of the preferred stock over the
amount of cash paid to the holder of the preferred stock retired on
February 25, 1997.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Mar-31-1998
<CASH> 5,740,000
<SECURITIES> 0
<RECEIVABLES> 13,464,000
<ALLOWANCES> (1,205,000)
<INVENTORY> 0
<CURRENT-ASSETS> 20,070,000
<PP&E> 6,837,000
<DEPRECIATION> 4,332,000
<TOTAL-ASSETS> 25,070,000
<CURRENT-LIABILITIES> 14,384,000
<BONDS> 3,500,000
<COMMON> 722,000
0
6,000
<OTHER-SE> 6,105,000
<TOTAL-LIABILITY-AND-EQUITY> 25,070,000
<SALES> 9,094,000
<TOTAL-REVENUES> 9,094,000
<CGS> 0
<TOTAL-COSTS> 8,657,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 246,000
<INTEREST-EXPENSE> 46,000
<INCOME-PRETAX> 145,000
<INCOME-TAX> 56,000
<INCOME-CONTINUING> 89,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 89,000
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
