CONCORDE CAREER COLLEGES INC
10-Q, 2000-08-04
EDUCATIONAL SERVICES
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<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 June 30, 2000           Commission File No.      0-16992
                      -------------                                    -------


                        CONCORDE CAREER COLLEGES, INC.
--------------------------------------------------------------------------------
            (exact name of registrant as specified in its charter)


         Delaware                                        43-1440321
-------------------------------              ---------------------------------
(State of other jurisdiction of              (I. R. S. Employer Identification
Incorporation or Organization)               Number)


5800 Foxridge, Suite 500
Mission, Kansas                                                          66202
--------------------------------------------------------------------------------
(Address of Principal Executive Office)                               (Zip Code)

Registrant's telephone number, including area code:     (913)  831-9977
                                                     -------------------------


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 August 4, 2000 Concorde Career Colleges, Inc. had 7,968,129 shares of
Common Stock outstanding.

================================================================================
<PAGE>

                         CONCORDE CAREER COLLEGES, INC

                                   Form 10-Q

                        Six Months Ended June 30, 2000


                                     INDEX


                        PART I - FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                   Page
                                                                                   ----
<S>                                                                                 <C>
Item 1.  Financial Statements
         Notes to Condensed Consolidated Financial Statements
               Note 1, 2 and 3....................................................    1
         Condensed Consolidated Balance Sheets....................................  3,4
         Condensed Consolidated Statements of Operations..........................    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........................................................   14

Item 2.  Change in Securities.....................................................   15

Item 3.  Defaults Upon Senior Securities..........................................   15

Item 4.  Submission of Matters to a Vote of Security Holders......................   15

Item 5.  Other Information........................................................   15

Item 6.  Exhibits and Reports on Form 8-K.........................................   15

Signatures........................................................................   16
</TABLE>
<PAGE>

     PART I -- FINANCIAL INFORMATION

Item 1.  Financial Statements
         --------------------

               CONCORDE CAREER COLLEGES, INC., AND SUBSIDIARIES

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                    FOR THE SIX MONTHS ENDED JUNE 30, 2000

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 Securities and Exchange Commission ("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 1999 Annual Report on Form 10-K that was filed by the Company with
the Commission on March 30, 2000 (the "1999 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 imputed preferred
dividends from net income or loss. This amount is then divided by weighted
average number of common shares outstanding.

     Diluted earnings per share is computed by deducting imputed preferred
dividends from net income. 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.

Note 3:
-------

     On January 1, 2000, the Company adopted Securites and Exchange Commission
"SEC" Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements."  SAB No. 101 contains guidance for the recognition,
<PAGE>

presentation and disclosure of revenue in financial statements filed with the
SEC. As it relates to the Company, SAB101 requires course registration fees to
be recognized ratably over the life of the course rather than in the month the
student starts the program. Previously, the registration fees were recognized
the month the student started the program. The Company reported an $86,000, or
 .01 per share, cumulative effect of change in accounting principle, net of tax
in the first quarter 2000. As a result of the deferral of new student
registration fees, revenue increased $30,000 and $36,000 for the six months and
quarter ended June 30, 2000 respectively.

     Consistent with the guidance in SAB 101, the Company now reports revenue
from health screens net of the related costs provided by the companies
administering health screens. Prior year information has been reclassified for
comparative purposes.

     The pro forma effect of adopting SAB101 for the second quarter of 1999
would have resulted in a revenue reduction of $4,000 and net income reduction of
$2,000 from the previously reported results. The pro forma effect for the six
months ended June 30, 1999 would have resulted in a revenue reduction of $18,000
and net income reduction of $11,000 from the previously reported results. The
pro forma effect of this change in accounting principle had no effect on the
earnings per share for the quarter or six months ended June 30, 1999.

                                       2
<PAGE>

                        CONCORDE CAREER COLLEGES, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                      JUNE 30, 2000 AND DECEMBER 31, 1999

                                  (unaudited)


                                    ASSETS

<TABLE>
<CAPTION>
                                                                             June 30,      December 31,
                                                                               2000           1999
                                                                             --------      ------------
<S>                                                                        <C>            <C>
CURRENT ASSETS:
  Cash and cash equivalents..............................................   $ 3,205,000    $ 2,229,000
     Accounts receivable.................................................    12,486,000     10,927,000
     Notes receivable....................................................     2,567,000      2,531,000
     Allowance for uncollectible accounts................................    (1,063,000)    (1,234,000)
                                                                            -----------    -----------
     Net receivables.....................................................    13,990,000     12,224,000
  Recoverable income taxes...............................................                      422,000
  Deferred income taxes..................................................       417,000        287,000
  Supplies and prepaid expenses..........................................     1,140,000        766,000
                                                                            -----------    -----------
          Total current assets                                               18,752,000     15,928,000

FIXED ASSETS, NET........................................................     2,990,000      3,033,000

INTANGIBLE ASSETS, NET
  less accumulated amortization of $567,000 at June 30, 2000
  and $538,000 at December 31, 1999, respectively........................       346,000        375,000

OTHER ASSETS:
  Long-term notes receivable.............................................     1,084,000      1,173,000
  Allowance for uncollectible notes......................................       (81,000)      (186,000)
  Deferred income taxes..................................................       948,000        832,000
  Other..................................................................        26,000        295,000
                                                                            -----------    -----------
     Total other assets..................................................     1,977,000      2,114,000
                                                                            -----------    -----------
                                                                            $24,065,000    $21,450,000
                                                                            ===========    ===========
</TABLE>

  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

                                       3
<PAGE>

                         CONCORDE CAREER COLLEGES, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                      JUNE 30, 2000 AND DECEMBER 31, 1999

                                  (unaudited)


                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                    June 30,    December 31,
                                                                      2000          1999
                                                                  -----------    -----------
<S>                                                              <C>            <C>
CURRENT LIABILITIES:
  Deferred revenue..............................................  $12,761,000    $10,249,000
  Accrued salaries and wages....................................      489,000        410,000
  Accounts payable and other accrued liabilities................    2,097,000      1,580,000
  Current income taxes payable..................................       10,000
                                                                  -----------    -----------
       Total current liabilities................................   15,357,000     12,239,000

OTHER LONG-TERM LIABILITIES.....................................      158,000        300,000
SUBORDINATED DEBT DUE TO RELATED PARTY, CAHILL-WARNOCK..........    3,500,000      3,500,000
                                                                  -----------    -----------

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)
     7,978,929 shares issued and 7,953,129 shares outstanding...      797,000        794,000
   Capital in excess of par......................................    8,694,000      8,589,000
  Accumulated deficit...........................................   (4,388,000)    (3,919,000)
  Less-treasury stock, 25,800 shares, at cost...................      (59,000)       (59,000)
                                                                  -----------    -----------
     Total stockholders' equity.................................    5,050,000      5,411,000
                                                                  -----------    -----------
                                                                  $24,065,000    $21,450,000
                                                                  ===========    ===========
</TABLE>

  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

                                       4
<PAGE>

                         CONCORDE CAREER COLLEGES, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999

             AND FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999

                                  (unaudited)
<TABLE>
<CAPTION>
                                                                      Six Months                    Three Months
                                                                     Ended June 30,                Ended June 30,
                                                                -------------------------   ---------------------------
                                                                    2000          1999         2000             1999
                                                                -----------   -----------   ----------       ----------
<S>                                                             <C>           <C>           <C>              <C>
Net Revenue..................................................   $18,845,000   $16,569,000   $9,426,000       $8,426,000

Costs and Expenses:
  Instruction costs and services.............................     7,700,000     6,731,000    3,893,000        3,287,000
  Selling and promotional....................................     3,288,000     2,666,000    1,720,000        1,334,000
  General and administrative.................................     8,141,000     7,715,000    4,026,000        4,083,000
  Provision for uncollectible accounts.......................       106,000       261,000       40,000          (23,000)
                                                                -----------   -----------   ----------       ----------
  Total......................................................    19,235,000    17,373,000    9,679,000        8,681,000
                                                                -----------   -----------   ----------       ----------

Operating Loss...............................................      (390,000)     (804,000)    (253,000)        (255,000)

Interest Expense.............................................        91,000        90,000       44,000           45,000
                                                                -----------   -----------   ----------       ----------

Loss Before Benefit from Income Taxes and Cumulative Effect
of Change in Accounting Principle............................      (481,000)     (894,000)    (297,000)        (300,000)

Benefit from Income Taxes....................................      (189,000)     (349,000)    (117,000)        (117,000)
                                                                -----------   -----------   ----------       ----------

Loss Before Cumulative Effect of Change in Accounting
Principle....................................................      (292,000)     (545,000)    (180,000)        (183,000)
                                                                -----------   -----------   ----------       ----------

Cumulative Effect of Change in Accounting Principle, Net
Of Tax.......................................................       (86,000)
                                                                -----------   -----------   ----------       ----------

Net Loss.....................................................   $  (378,000)  $  (545,000)  $ (180,000)      $ (183,000)
                                                                ===========   ===========   ==========       ==========

Weighted Average Shares Outstanding:
      Basic..................................................     7,942,000     7,742,000    7,951,000        7,851,000
                                                                ===========   ===========   ==========       ==========
      Diluted................................................     7,942,000     7,742,000    7,951,000        7,851,000
                                                                ===========   ===========   ==========       ==========

Basic Loss Per Share:

Loss Before Cumulative Effect of Change in Accounting
Principle....................................................          (.05)         (.08)        (.03)            (.03)
Cumulative Effect of Change in Accounting Principle, Net
Of Tax.......................................................          (.01)
                                                                -----------   -----------   ----------       ----------

  Net Loss Per Share.........................................          (.06)         (.08)        (.03)            (.03)
                                                                ===========   ===========   ==========       ==========

Diluted Loss Per Share:

Loss Before Cumulative Effect of Change in Accounting
Principle....................................................          (.05)         (.08)        (.03)            (.03)
Cumulative Effect of Change in Accounting Principle, Net
Of Tax.......................................................          (.01)
                                                                -----------   -----------   ----------       ----------

  Net Loss Per Share.........................................          (.06)         (.08)        (.03)            (.03)
                                                                ===========   ===========   ==========       ==========
</TABLE>

                                       5
<PAGE>

                        CONCORDE CAREER COLLEGES, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
                                  (unaudited)

<TABLE>
<CAPTION>
Cash Flows --Operating Activities:                                                    2000           1999
                                                                                      ----           ----
<S>                                                                             <C>            <C>
Net loss......................................................................   $  (378,000)   $  (545,000)
   Adjustments to reconcile net loss to net cash provided by
      operating activities -
      Cumulative effect of change in accounting principle.....................         86,000
      Depreciation and amortization...........................................        607,000        534,000
      Provision for uncollectible accounts....................................        106,000        261,000
      Deferred income taxes...................................................       (246,000)      (349,000)
      Change in assets and liabilities -
      Increase in receivables, net............................................     (1,888,000)    (2,342,000)
      Increase in deferred student tuition....................................      2,426,000      2,582,000
      Decrease in income taxes recoverable....................................        432,000          4,000
      Other changes in assets and liabilities, net............................        348,000        186,000
                                                                                  -----------    -----------
              Total adjustments...............................................      1,871,000        876,000
                                                                                  -----------    -----------
      Net operating activities................................................      1,493,000        331,000
                                                                                  -----------    -----------

Cash Flows --Investing Activities:
   Capital expenditures.......................................................       (534,000)      (410,000)
                                                                                  -----------    -----------
               Net investing activities.......................................       (534,000)      (410,000)
                                                                                  -----------    -----------

Cash Flows --Financing Activities:
   Stock options exercised....................................................          2,000        104,000
   Stock purchase plan........................................................         15,000
                                                                                  -----------    -----------
              Net financing activities........................................         17,000        104,000
                                                                                  -----------    -----------

Net Increase In Cash and Cash Equivalents.....................................        976,000         25,000

Cash and Cash Equivalents at Beginning of Period..............................      2,229,000      2,433,000
                                                                                  -----------    -----------

Cash and Cash Equivalents at End of Period....................................    $ 3,205,000    $ 2,458,000
                                                                                  ===========    ===========

Supplemental Disclosures of Cash Flow Information:

   Cash paid during the period for:
      Interest................................................................    $    91,000    $   239,000
      Income taxes............................................................         37,000         11,000
</TABLE>

 The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

                                       6
<PAGE>

                         CONCORDE CAREER COLLEGES, INC.
           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                     FOR THE SIX MONTHS ENDED JUNE 30, 2000
                                  (unaudited)

<TABLE>
<CAPTION>
                                                             Capital
                                      Preferred   Common    in Excess   Accumulated    Treasury
                                        Stock      Stock      of Par      Deficit       Stock        Total
                                      ---------  ---------  ----------  ------------  ----------  ----------
<S>                                   <C>        <C>        <C>         <C>           <C>         <C>
BALANCE, December 31, 1999..........  $   6,000   $794,000  $8,589,000  $(3,919,000)   $(59,000)  $5,411,000

 Net Loss...........................                                      ( 378,000)                (378,000)

 Class B Preferred Stock Accretion..                            91,000    (  91,000)

 Stock Options Exercised............                 1,000       1,000                                 2,000

 Employee Stock Purchase Plan.......                 2,000      13,000                                15,000
                                      ---------   --------  ----------  -----------   ---------   ----------

BALANCE, June 30, 2000..............  $   6,000   $797,000  $8,694,000  $(4,388,000)   $(59,000)  $5,050,000
                                      =========   ========  ==========  ===========   =========   ==========
</TABLE>



   The accompanying notes are an integral part of these condensed consolidated
                             financial statements.



           (The remainder of this page was left intentionally blank.)

                                       7
<PAGE>

Item 2.    Management's Discussion and Analysis of Financial Condition and
           ---------------------------------------------------------------
           Results of Operations
           ---------------------

     The Company owns and operates eleven proprietary postsecondary campuses
that offer career vocational 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>
                                                                  Six Months               Three Months
                                                                Ended June 30,            Ended June 30,
                                                               ---------------           ---------------

                                                               2000       1999           2000        1999
                                                               ----       ----           ----        ----
<S>                                                            <C>       <C>             <C>         <C>
Revenue......................................................   100.0%   100.0%          100.0%     100.0%

Operating expenses:
  Instruction costs and services.............................    40.9     40.6            41.3       39.0
  Selling and Promotional....................................    17.4     16.1            18.2       15.8
  General and administrative.................................    43.2     46.6            42.7       48.5
  Provision for uncollectible accounts.......................      .6      1.6              .4        (.3)
                                                                -----    -----           -----      -----
  Total operating expenses...................................   102.1    104.9           102.6      103.0

Operating loss...............................................    (2.1)    (4.9)           (2.6)      (3.0)

Interest expense.............................................      .5       .5              .5         .5
                                                                -----    -----           -----      -----

Loss Before Benefit from Income Taxes and Cumulative Effect
of Change in Accounting Principle............................    (2.6)    (5.4)           (3.1)      (3.5)

Benefit from Income Taxes....................................    (1.0)    (2.1)           (1.2)      (1.4)
                                                                -----    -----           -----      -----

Loss Before Cumulative Effect of Change in
Accounting Principle.........................................    (1.6)    (3.3)           (1.9)      (2.1)

Cumulative Effect of Change in Accounting Principle, Net
Of Tax.......................................................     (.5)
                                                                -----    -----           -----      -----

Net loss.....................................................    (2.1)%   (3.3)%          (1.9)%     (2.1)%
                                                                =====    =====           =====      =====
</TABLE>

                                       8
<PAGE>

Results of Operations

                  SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO
                        SIX MONTHS ENDED JUNE 30, 1999


     A net loss of $378,000 was recorded for the six months ended June 30, 2000
compared to $545,000 for the same period in 1999.  The $167,000 net loss
decrease was primarily due to increased revenue compared to 1999.  Revenue
increased 13.7% or $2,276,000 to $18,845,000 for the six months ended June 30,
2000 compared to $16,569,000 for the same period in 1999. Most of the increase
was due to increased enrollments and additional average student population
compared to 1999.  Student enrollments increased 6.0% for the six months ended
June 30, 2000 compared to the same period in 1999.  The average student
population increased 11.5% to 3,478 at June 30, 2000 compared to 3,119 at June
30, 1999.  Total operating expenses increased $1,862,000 to $19,235,000 compared
to $17,373,000 for the six months ended June 30, 1999.  The increase was due to
increased instruction costs, selling expenses and general and administrative
expenses.

     Instruction costs and services - increased $969,000 or 14.4% to $7,700,000
compared to $6,731,000 in 1999.  Salary and textbook expenses increased due to
additional enrollments and student population.  Average student population
increased 11.5% to 3,478 compared to 3,119 at June 30, 1999 which resulted in
the additional expenses.

     Selling and promotional - increased $622,000 to $3,288,000 compared to
$2,666,000 in 1999. The increase was the result of additional admissions staff
and more frequent advertising placements to increase enrollments.

     General and administrative - increased $426,000 to $8,141,000 compared to
$7,715,000 in 1999.  The increase was a result of additional salaries, rent,
depreciation, outside services and collection expense. The increased collection
expense was a result of better collection efforts by the Company's outside
collection agency.

     Provision for uncollectible accounts - decreased $155,000 or 59.4% to
$106,000 compared to $261,000 in 1999.  The decrease was a result of improved
collection efforts and fewer notes receivables compared to 1999.  The 1998
Higher Education Act ("HEA") reauthorization increased Title IV Programs cash
basis revenue from 85 percent to 90 percent which resulted in the Company
financing fewer students compared to 1999.

     Interest expense - increased $1,000 to $91,000 compared to $90,000 in 1999.

     Income taxes - In 2000, a tax benefit of $189,000 or 39% was recorded
compared to a tax benefit of $349,000 or 39% in 1999.

     EPS and Weighted Average Common Shares - Basic and diluted weighted average
common shares increased to 7,942,000 in 2000 from 7,742,000 in 1999.  Basic and
diluted loss per share was $.06 for the six months ended June 30, 2000 compared
to $.08 for the same period in 1999.  Basic and diluted loss per share is shown
after a reduction for preferred stock dividends of $91,000 in 2000 and $79,000
in 1999.

     Cumulative Effect of Change in Accounting Principle - On January 1, 2000,
the Company adopted Securities and Exchange Commission "SEC" Staff Accounting
Bulletin (SAB) No. 101, "Revenue Recognition in Financial Statements."  SAB No.
101 contains guidance for the recognition, presentation and disclosure of
revenue in financial statements filed with the SEC. As it relates to the
Company, SAB101 requires course registration fees to be recognized ratably over
the life of the course rather than in the month the student starts the program.
Previously, the registration fees were recognized the month the student started
the program. The Company reported an $86,000, or $.01 per share, cumulative
effect of change in accounting principle, net of tax in the first quarter 2000.


                                       9
<PAGE>

Results of Operations

                    QUARTER ENDED JUNE 30, 2000 COMPARED TO
                          QUARTER ENDED JUNE 30, 1999


     A net loss of $180,000 was recorded for the three months ended June 30,
2000 compared to $183,000 for the same period in 1999.  Revenue increased 11.9%
or $1,000,000 to $9,426,000 for the three months ended June 30, 2000 compared to
$8,426,000 for the same period in 1999.  Most of the increase was due to
increased enrollments and additional average student population compared to
1999. Student enrollments increased 6.0% for the three months ended June 30,
2000 compared to the same period in 1999.  The average student population
increased 10.7% to 3,451 at June 30, 2000 compared to 3,117 at June 30, 1999.
Total operating expenses increased $998,000 to $9,679,000 compared to $8,681,000
for the three months ended June 30, 1999.  The increase was due to increased
instruction costs, selling expenses and provision for uncollectible accounts.

     Instruction costs and services - increased $606,000 or 18.4% to $3,893,000
compared to $3,287,000 in 1999.  Salary and textbook expenses increased due to
additional enrollments and student population.  Average student population
increased 10.7% to 3,451 compared to 3,117 at June 30, 1999 which resulted in
the additional expenses.

     Selling and promotional - increased $386,000 to $1,720,000 compared to
$1,334,000 in 1999. The increase was the result of additional admissions staff
and more frequent advertising placements to increase enrollments.

     General and administrative - decreased $57,000 to $4,026,000 compared to
$4,083,000 in 1999.  The decrease was a result of decreased administrative
salaries, professional fees and travel compared to 1999.

     Provision for uncollectible accounts - increased $63,000 to $40,000
compared to a $23,000 decrease in 1999.  The increase was a result of additional
written off accounts and an increase in the bad debt accrual expense compared to
1999. The bad debt accrual expense increased as a result of an increase in
accounts and notes receivable compared to the second quarter of 1999.

     Interest expense - decreased $1,000 to $44,000 compared to $45,000 in 1999.

     Income taxes - In 2000, a tax benefit of $117,000 or 39% was recorded
compared to $117,000 or 39% in 1999.

     EPS and Weighted Average Common Shares - Basic and diluted weighted average
common shares increased to 7,951,000 in 2000 from 7,851,000 in 1999.  Basic and
diluted loss per share was $.03 for the three months ended June 30, 2000 and
1999.  Basic and diluted loss per share is shown after a reduction for preferred
stock dividends of $46,000 in 2000 and $41,000 in 1999.

Liquidity and Capital Resources

Asset Sales

     On August 2, 1996, the assets of Person/Wolinsky Associates, a wholly owned
subsidiary of the Company, which taught the CPA review course, were sold. As a
result of the sale the Company received proceeds of $879,000. In addition, a
$750,000 non-compete agreement was payable to the Company in ten equal annual
installments commencing December 15, 1996. The income from the non-compete
agreement was being recognized as the payments were earned over the legally
enforceable period. The Company received $300,000 through December 31, 1999.

     The Company entered into an agreement with Person/Wolinsky, Inc. to satisfy
certain contractual obligations between Person/Wolinsky, Inc. and the Company
for a cash payment of $200,000, which was received during March 2000.  The
$200,000 is being recognized ratably over the remaining life of the non-compete
agreement which expires August 2006.

                                       10
<PAGE>

Bank Financing

     On April 19, 2000 Security Bank of Kansas City issued a $589,000 letter of
credit as security for a lease on the Company's Garden Grove, California
location.  The letter of credit expires October 2000 and will be replaced by
replacement letters of credit expiring annually through October 2004.  The
replacement letters of credit will be issued at amounts decreasing 20% annually
from the original issue amount.  The letter can only be drawn upon if there is a
default under the lease agreement.

     The Company negotiated a $3,000,000 secured revolving credit facility with
Security Bank of Kansas City.  This facility expires on April 30, 2001.  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. The Company may
borrow approximately $2,400,000 for working capital purposes.  The original
amount was reduced by the Garden Grove letter of credit.  The Company had not
borrowed any funds under this facility as of June 30, 2000.

Cash Flows and Other

     Net cash flows provided by operating activities were $1,493,000 in 2000
compared to $331,000 in 1999. The increased cash flows are primarily a result of
improved operating results and cash collections.  In March 2000, the Company
received $200,000 as an early payoff for the non-compete agreement with Person
Wolinsky.

     Investing activities decreased cash $534,000 in 2000 compared to $410,000
in 1999. For both years, capital expenditures were primarily for additional
computer equipment, classroom equipment and leasehold improvements.

     Financing activities increased cash $17,000 in 2000 compared to $104,000 in
1999.  The change is due to a greater number of stock options exercised in 1999.

     The Company meets its working capital, capital equipment requirements and
cash requirements with funds generated internally.  Management currently expects
its cash on hand, funds from operations and borrowings available under existing
credit facilities to be sufficient to cover both short-term and long-term
operating requirements.

     The Company believes that by leveraging faculty and administration wages it
will be able to control payroll expense as enrollments and student population
increase. The Company should return to profitability in the fourth quarter of
2000 as long as the current enrollment and retention trends continue and no
unforeseen events occur.

     The Company is currently updating its website and hopes to begin an
internet marketing campaign in the fall of 2000.  In addition,  the Company
recently signed an agreement to license programming curriculum from a company
currently providing IT training.  The Company believes the first IT programming
class will begin at one campus in late 2000.

Contingencies

Department of Education Matters

     The Company generally relies on the availability of various federal and
state student financial assistance programs to provide funding for students
attending the Campuses.  The Company also relies on the availability of lending
institutions willing to participate in these programs and to approve loans to
these students.  Both federal and state financial aid programs contain numerous
and complex regulations which require compliance not only by the recipient
student but also by the institution which the student attends.  If the Company
should fail to materially comply with such regulations at any of the Campuses,
such failure could have serious consequences, including limitation, suspension,
or termination of the eligibility of that Campus to participate in the funding
programs.  The Company is not aware of any material violation of these
regulations.

     After January 1, 1991, the Secretary of Education was authorized to
initiate proceedings to limit, suspend or terminate the eligibility of a Campus
to participate in the Federal Loan Programs if the Cohort Default Rate for three
consecutive years exceeds the prescribed threshold.  Beginning with the release
of 1992 Cohort Default Rates in the summer of 1994, a Cohort Default Rate equal
to or exceeding 25% for each of the three most recent fiscal years may be used
as grounds for terminating Family Federal Education Loan eligibility.

     The Company has a pending suit against the United States Department of
Education ("ED") challenging past Cohort Default Rates published for the
Company's Campuses and the rate correction regulations, which ED adopted in
1994.  ED's rate correction regulations contain a very restrictive standard for
removal of defaulted loans from a Campus Cohort Default Rate due to improper
servicing and collection, and the Company's suit contends that the regulations
are unlawful because they contravene provisions of the Higher Education Act of
1965 (as amended) and are arbitrary and capricious. All of the Company's
Campuses, currently have one or more of their three most recent default rates
below 25%, following


                                       11
<PAGE>

administrative appeal rulings and continuing aggressive default management
efforts by the Company, and as a result, proceedings in the suit are inactive.

     In 1994, ED established a policy of recertifying all institutions
participating in Title IV programs every five years.  Several of the Company's
campuses received provisional certification during 1999.  Provisional
certification limits the Campus' ability to add programs and change the level of
educational award.  In addition, the Campus is required to accept certain
restrictions on due process procedures under ED guidelines.  The Campuses that
received provisional certification in 1999 are:  Anaheim, Jacksonville,
Lauderdale Lakes, Memphis, North Hollywood, Portland, San Bernardino and San
Diego.  The provisional certifications expire during 2001.  Provisional
certification was received due to default rates and financial responsibility
described below. The Company does not believe provisional certification would
have a material impact on its liquidity, results of operations or financial
position.

     The Company is subject to extensive regulation by federal and state
governmental agencies and accrediting bodies.  In particular, the HEA of 1965,
and the regulations promulgated thereunder by ED subject the Campuses to
significant regulatory scrutiny on the basis of numerous standards that Campuses
must satisfy in order to participate in the various federal student financial
assistance programs under Title IV of the HEA.

     To participate in the Title IV Programs, an institution must be accredited
by an association recognized by ED.  ED will certify an institution to
participate in the Title IV Programs only after an institution has demonstrated
compliance with the HEA and the ED's extensive regulations regarding
institutional eligibility.  Under the HEA, accrediting associations are required
to include the monitoring of certain aspects of Title IV Program compliance as
part of their accreditation evaluations.

     Congress must reauthorize the HEA approximately every six years.  The most
recent reauthorization in October 1998 reauthorized the HEA until September 30,
2004.  Changes made by the 1998 HEA reauthorization include (i) expanding the
adverse effects on Campuses with high student loan default rates, (ii)
increasing from 85 percent to 90 percent the portion a proprietary Campuses cash
basis revenue that may be derived each year from the Title IV Programs, (iii)
revising the refund standards that require an institution to return a portion of
the Title IV Program funds for students who withdraw from the Campus and (iv)
giving the ED flexibility to continue an institution's Title IV participation
without interruption in some circumstances following a change of ownership or
control.  The Company believes the majority of changes made by the 1998 HEA
reauthorization will have no material impact on its operations.  However, the
Company believes the refund revision may have a material impact on the Company's
results of operations, financial condition and cash flows.

     The 1998 HEA reauthorization imposes a limit on the amount of Title IV
funds a withdrawing student can use to pay their education costs.  This
limitation permits a student to use only a pro rata portion of the Title IV
Program funds that the student would otherwise be eligible to use, if the
student withdraws during the first 60% of any period of enrollment.  The
institution must refund to the appropriate lenders or Title IV Programs any
Title IV funds that the institution receives on behalf of a withdrawing student
in excess of the amount the student can use for such period of enrollment.
Under the new HEA requirements, students will be obligated to the Company for
education costs that the students can no longer pay with Title IV funds. The
Company expects that many withdrawing students will be unable to pay such costs
and that the Company will be unable to collect a significant portion of such
costs.  Title IV Program funds are generally paid sooner and are more
collectible than tuition payments from other sources.  As a result, the new HEA
requirements could have a material adverse effect on the Company's results of
operations, financial condition and cash flows beginning with the fourth quarter
of 2000.  The Company is currently evaluating the impact but has not yet
determined the monetary effect of this regulation.  The Company should be able
to estimate the monetary impact of this regulation at the end of the third
quarter of 2000. These new requirements contained in the 1998 HEA
reauthorization must be implemented by all institutions no later than October 7,
2000, but an institution may elect to begin complying with these new standards
at an earlier date. The Company does not plan to elect to comply with these new
standards prior to October 7, 2000.

                                       12
<PAGE>

     ED also established certain "Factors of Financial Responsibility" which
institutions are required to meet to be eligible to participate in Title IV
programs.  The three principal standards of financial responsibility applicable
prior to July 1, 1998 were (i) satisfy an acid test ratio of at least 1:1 at the
end of each fiscal year, (ii) have a positive tangible net worth at the end of
each fiscal year, and (iii) not have a cumulative net operating loss during its
two most recent fiscal years that results in a decline of more than 10% of the
institution's tangible net worth at the beginning of that two-year period.  An
institution that is determined by the ED not to meet any one of the standards
of financial responsibility would be entitled to participate in the Title IV
programs if it can demonstrate financially responsibility on an alternative
basis.  ED issued a new financial responsibility regulation that became
effective July 1, 1998. ED instituted a transitional period which allows an
institution to use either the old or new regulations for a fiscal year that
begins between July 1, 1997 and June 30, 1998.  This transition period applied
to the Company's 1998 fiscal year.  The new regulation uses a composite score
based upon three financial ratios.  An institution demonstrates that it is
financially responsible by achieving a composite score of at least 1.5, or by
achieving a composite score in the zone from 1.0 to 1.4 and meeting certain
provisions.

     ED also allows institutions in the zone up to three consecutive years to
improve their financial condition without requiring surety.  An institution in
the zone may need to provide to ED timely information regarding certain
accrediting agency actions and certain financial events that may cause or lead
to a deterioration of the institution's financial condition. In addition,
financial and compliance audits may have to be submitted soon after the end of
the institution's fiscal year. Title IV HEA funds may be subject to cash
monitoring for institutions in the zone. The Company believes that on a
consolidated basis, it met the three principal financial responsibility
standards: profitability, acid test, and tangible net worth for the year ended
December 31, 1998. The Company believed that because of the transitional period
it would not be subject to zone requirements.

     The Company was notified by the ED, during 1999, that ED does not believe
the Company met the factors of financial responsibility for the year ended
December 31, 1998.  ED is requiring the Company to comply with the zone
regulation, which requires the Company to make disbursements to students under
the cash monitoring method and to provide timely notification to ED regarding
several oversight and financial events. The Company's financial responsibility
ratio was 1.2, which was below the 1.5 level required to avoid cash monitoring
and additional reporting. However, the Company believes that financial
responsibility standards were met because of the transition year regulations.
ED believes the Company failed the transition year regulations.  The Company has
not incurred any financial impact, due to cash monitoring. There has not been a
material impact to its balance sheet, cash flows or results of operations. The
Company's consolidated composite score under the new financial responsibility
regulations was 1.5 for the year ending December 31, 1999.  The Company believes
it will no longer be required to make disbursements to students under the cash
monitoring method since its consolidated corporate score is 1.5.

Southern Career Institute

     On May 31, 1990, a wholly-owned subsidiary of the Company, Concorde Career
Institute, Inc., a Florida corporation, acquired substantially all the assets of
Southern Career Institute, Inc. ("SCI"), a proprietary, postsecondary vocational
home-study school specializing in paralegal education. In 1991, an accrediting
commission failed to reaffirm accreditation of SCI under the ownership of
Concorde Career Institute, Inc.  Also in 1991, SCI received notice from the ED
alleging that commencing June 1, 1990, SCI was ineligible to participate in
federal student financial assistance programs.

     The ED gave notice that it intends to require SCI to repay all student
financial assistance funds disbursed from June 1, 1990, to November 7, 1990, the
effective date upon which ED discontinued disbursing student financial
assistance funds.  The amount being claimed by ED is not determinable, but the
total of the amounts shown on six separate notices dated January 13, 1994, is
approximately $2.7 million.  By letter dated February 24, 1994, counsel for SCI
provided certain information to the collection agency for ED and offered to
settle all claims of ED for the  amount on deposit in the SCI bank account which
was $29,452 at March 31, 2000.  In December 1996, SCI was informed verbally that
the matter had been referred to ED's General Counsel.  In March of 1999, SCI
received correspondence from ED's Financial Improvement and Receivables Group
requesting that SCI pay amounts totaling $2,901,497.  In May 1999, SCI received
a billing requesting $4,614,245.  The 1999 correspondence was similar to
correspondence received in 1997.  The Company has not received any further
correspondence since May 1999.  SCI has notified ED that it disputes these
claims.

     In light of applicable corporate law, which limits the liability of
stockholders and the manner in which SCI was operated by Concorde Career
Institute, Inc. as a subsidiary of the Company, management believes that the
Company is not liable for debts of SCI. Therefore, if SCI is required to pay
ED's claims it is the opinion of management it will not have a material adverse
impact on the Company's financial condition or its results of operations. In
addition, in light of applicable

                                       13
<PAGE>

statutory and regulatory provisions existing in 1991 and ED's interpretation of
those provisions, it is the opinion of management that any debt SCI might be
determined to owe to ED should have no impact on the existing participation of
the Campuses in federal financial aid programs.

Other

     During January 2000, the Company experienced water damage at one of its
locations due to the negligence of work performed by persons employed by the
building landlord.  A claim has been filed with the appropriate insurance
agencies representing those involved for damage to furniture, equipment,
supplies, salary and wage expense, and lost revenue.  The Company has expensed
all related costs as incurred.  The Company is unable to determine the
likelihood of realization of the claim.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk
         ----------------------------------------------------------

     The Company's exposure to market risk for changes in interest rates relate
to the increase or decrease in the amount of interest income the Company can
earn on short-term investments in certificate of deposits and cash balances.
Because the Company's investments are in short-term, investment-grade, interest-
bearing securities, the Company is exposed to minimum risk on the principal of
those investments.  The Company ensures the safety and preservation of its
invested principal funds by limiting default risks, market risk and investment
risk.  The Company does not use derivative financial instruments.

PART II -- OTHER INFORMATION

Item  1. Legal Proceedings
         -----------------

     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 management, the Company's pending litigation and
disputed findings are not material to the Company's financial condition or its
results of operation.

     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 other
cases were filed seeking similar relief on behalf of a total of 95 plaintiffs.
Conversion of one of the three cases to a class action was attempted; however,
the plaintiff's motion for class certification was denied on April 18, 1997.  On
May 19, 1997, the plaintiff appealed the order denying certification of the
class.  On February 5, 1998, the appellate court issued a per curiam decision
without opinion affirming the trial court's denial of class certification.  The
appellate opinion is now final, and no further appeal is available on the class
certification issue.  During the appeal, all activity and progress in the other
cases was stayed.  The plaintiffs have initiated efforts to begin to move the
cases forward; however, pleadings are not resolved and none are close to being
ready for trial. Several plaintiffs dropped from the case over time.  The
Company made offers in 1999 to the remaining plaintiffs to settle all claims for
$750 per plaintiff (which included all attorneys' fees and costs) and
forgiveness of any debt due the Company from that plaintiff.  Thirty nine of the
plaintiffs accepted the offer.  The remaining plaintiffs currently number 43. On
February 11, 2000 the court issued a decision dismissing the plaintiffs fraud
and misrepresentation allegations against the Company in one of the cases.  The
Company recently agreed to mediation of five cases.  If a reasonable settlement
is not reached, the cases may begin to go to trial in fall of 2000.  The amount
of damages sought is not determinable.  The Company believes these suits are
without merit,  and will continue to defend them vigorously.


                                       14
<PAGE>

     The Company has a pending suit against the United States Department of
Education (ED) challenging past Cohort Default Rates published for the Company's
Campuses and the rate correction regulations, which ED adopted in 1994. ED's
rate correction regulations contain a very restrictive standard for removal of
defaulted loans from a Campus Cohort Default Rate due to improper servicing and
collection, and the Company's suit contends that the regulations are unlawful
because they contravene provisions of the Higher Education Act of 1965 (as
amended) and are arbitrary and capricious. All of the Company's Campuses,
currently have one or more of their three most recent default rates below 25%,
following administrative appeal rulings and continuing aggressive default
management efforts by the Company, and as a result, proceedings in the suit are
inactive.

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.

                                       15
<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:   August 4, 2000

                              By: /s/ Jack L. Brozman
                                  -------------------------------------------
                                  Jack L. Brozman, Chief Executive Officer


                              By: /s/ Paul R. Gardner
                                  -------------------------------------------
                                  Paul R. Gardner, Chief Financial Officer





           (The remainder of this page was left intentionally blank.)

                                       16
<PAGE>

                                 (EXHIBIT 11)
                        CONCORDE CAREER COLLEGES, INC.
                       COMPUTATION OF PER SHARE EARNINGS
                FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
             AND FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                        Basic EPS                       Diluted EPS
                                                                        Six Months                      Six Months
                                                                      Ended June 30,                   Ended June 30,
                                                                      --------------                   --------------
                                                                   2000             1999             2000          1999
                                                                   ----             ----             ----          ----
<S>                                                              <C>             <C>            <C>            <C>
Weighted average shares outstanding............................     7,942,000      7,742,000      7,942,000      7,742,000
Loss before cumulative effect of change in accounting
principle......................................................   $  (292,000)   $  (545,000)   $  (292,000)   $  (545,000)
Class B preferred stock accretion..............................       (91,000)       (79,000)       (91,000)       (79,000)
                                                                  -----------    -----------    -----------    -----------
Loss available to common shareholders before cumulative effect
of change in accounting principle..............................      (383,000)      (624,000)      (383,000)      (624,000)
Cumulative effect of change in accounting principle,
net of tax.....................................................       (86,000)                      (86,000)
                                                                  -----------    -----------    -----------    -----------
Loss available to common shareholders..........................   $  (469,000)   $  (624,000)   $  (469,000)   $  (624,000)
                                                                  ===========    ===========    ===========    ===========
Loss per share before cumulative effect of change in accounting
principle......................................................   $      (.05)   $      (.08)   $      (.05)   $      (.08)
Cumulative effect of change in accounting principle,
net of tax.....................................................   $      (.08)                         (.01)
                                                                  -----------    -----------    -----------    -----------
Net loss per share.............................................   $      (.06)   $      (.08)   $      (.06)   $      (.08)
                                                                  ===========    ===========    ===========    ===========
<CAPTION>
                                                                          Basic EPS                     Diluted EPS
                                                                        Three Months                   Three Months
                                                                        Ended June 30,                 Ended June 30,
                                                                        ---------------                --------------
                                                                       2000          1999           2000             1999
                                                                       ----          ----           ----             ----
<S>                                                              <C>            <C>            <C>            <C>
Weighted average shares outstanding............................     7,951,000      7,851,000      7,951,000      7,851,000
Loss before cumulative effect of change in accounting
principle......................................................   $  (180,000)   $  (183,000)   $  (180,000)   $  (183,000)
Class B preferred stock accretion..............................       (46,000)       (41,000)       (46,000)       (41,000)
                                                                  -----------    -----------    -----------    -----------

Loss available to common shareholders..........................   $  (226,000)   $  (224,000)   $  (226,000)   $  (224,000)
                                                                  ===========    ===========    ===========    ===========

Net loss per share.............................................   $      (.03)   $      (.03)   $      (.03)   $      (.03)
                                                                  ===========    ===========    ===========    ===========
</TABLE>

                                       17


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