<PAGE>   1

                                                                   Exhibit 13.01

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

OVERVIEW
The Company develops, markets and supports next-generation performance
management solutions. Substantially all of the Company's revenues have been
derived from the Network Health product family which began shipping in the first
quarter of 1995.

The Company does not provide forecasts of its future financial performance. From
time to time, however, the information provided by the Company or statements
made by its employees may contain forward looking statements. In particular,
some statements contained in this Annual Report and the Company's Form 10-K, for
the fiscal year ended December 31, 1999, are not historical statements
(including, but not limited to, statements concerning the plan and objectives of
management; increases in sales and marketing, research and development and
general and administrative expenses; expenses associated with Year 2000 and the
Company's expected liquidity and capital resources). This document contains
forward looking statements. Any statements contained herein that do not describe
historical facts are forward looking statements. The Company makes such forward
looking statements under the provisions of the "safe harbor" section of the
Private Securities Litigation Reform Act of 1995. The forward looking statements
contained herein are based on current expectations, but are subject to a number
of risks and uncertainties. The facts that could cause actual results to differ
materially from current expectations include the following: risks of
intellectual property rights and litigation, risks in technology development and
commercialization, risks in product development and market acceptance of and
demand for the Company's products, risks of downturns in economic conditions
generally, and in the software, networking and telecommunications industries
specifically, risks associated with competition and competitive pricing
pressures, risks associated with international sales, risks associated with the
Company's recent acquisitions and other risks detailed in the Company's filings
with the Securities and Exchange Commission.

On October 19, 1999, the Company entered into an Agreement and Plan of
Reorganization (the "Merger Agreement") providing for the merger (the "Merger")
of E Acquisition Corp., a Georgia corporation and wholly-owned subsidiary of the
Company ("Merger Sub"), with and into Empire Technologies, Inc. ("Empire"). The
Merger was effected on October 29, 1999 (the "Effective Date") pursuant to a
Certificate of Merger filed with the Secretary of State of the State of Georgia
on that date. Pursuant to the Merger Agreement, at the effective time of the
Merger, each issued and outstanding share of the common stock, no par value per
share, of Empire (the "Empire Common Stock") was converted into 815,248 shares
of common stock, $.01 par value per share, of the Company (the "Concord Common
Stock"). Concord issued an aggregate of 815,248 shares of Concord Common Stock
to the stockholders of Empire in the Merger in a private placement transaction
pursuant to Section 4(2) under the Securities Act of 1933. Empire is a provider
of solutions for proactive self-management of UNIX and Windows NT systems, as
well as mission-critical applications. The Merger was accounted for as a
pooling-of-interests. All transactions between the two companies have been
eliminated in the combined results. The Results of Operations reflect these
combined results.

SUBSEQUENT EVENT
On February 4, 2000, the Company completed a merger with privately-held
FirstSense Software, Inc. FirstSense is a provider of application and service
response management solutions. The Company has reserved for issuance in
connection with the merger, 1,940,000 shares of Concord's common stock. The
transaction is being accounted for as a pooling-of-interests.


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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain
financial data as percentages of the Company's total revenue. All prior-period
financial statements presented have been reinstated for the acquisition of
Empire Technologies, Inc. (See Note 3 to financial statements).

                                                    Fiscal Year
                                          1999         1998         1997
--------------------------------------------------------------------------------
Revenues:
License revenues                          78.3 %       83.5 %      89.2 %
Service revenues                          21.7 %       16.5 %      10.8 %
                                         ---------------------------------------
Total revenues                           100.0 %      100.0 %     100.0 %
Cost of revenues                          12.0 %       11.3 %      14.1 %
                                         ---------------------------------------
Gross Profit                              88.0 %       88.7 %      85.9 %
                                         ---------------------------------------
Operating expenses:
Research and development                  16.9 %       17.8 %      24.5 %
Sales and marketing                       38.1 %       42.3 %      49.2 %
General and administrative                 5.5 %        6.8 %      10.0 %
Stock-based compensation                   3.8 %        2.4 %        --
Acquisition-related charges                0.8 %         --          --
                                         ---------------------------------------
Operating income                          22.9 %       19.5 %       2.2 %
Other income, net                          4.6 %        5.5 %       1.5 %
                                         ---------------------------------------
Income before income taxes                27.5 %       25.0 %       3.7 %
Provision for income taxes                 8.8 %        1.3 %        --
                                         ---------------------------------------
Net income                                18.7 %       23.7 %       3.7 %
                                         ---------------------------------------

REVENUES
The Company's revenues consist of software license revenues and service
revenues. Software license revenues are recognized in accordance with the
American Institute of Certified Public Accountants' Statement of Position
("SOP") No. 97-2, Software Revenue Recognition, as modified by SOP 98-9,
Modification of SOP 97-2, Software Revenue Recognition with respect to Certain
Transactions. Software license revenues are recognized upon execution of a
contract and delivery of software, provided that the license fee is fixed and
determinable, no significant production, modification or customization of the
software is required and collection is considered probable by management.
Service revenues are recognized as the services are performed. Maintenance
revenues are derived from customer support agreements generally entered into in
connection with initial license sales and subsequent renewals. Maintenance
revenues are recognized ratably over the term of the maintenance period.
Payments for maintenance fees are generally made in advance.

INTERNATIONAL REVENUES
The Company recognized $16.3 million, $7.3 million and $2.4 million of
revenues from international locations in 1999, 1998 and 1997, representing
24.2%, 17.6% and 11.6% of total revenues, respectively. The Company's revenues
from international locations were primarily generated from customers located in
Europe. Revenues from customers located in Europe accounted for 13.1%, 12.6% and
10.3% of total revenues in 1999, 1998 and 1997, respectively. The continued
increase in revenues from international locations as a percentage of total
revenues is primarily the result of the Company's expansion of its operations
outside the United States which has included both the hiring of additional
personnel as well as the establishment of additional reseller agreements. The
Company believes that continued growth and profitability will require further
expansion of its sales in international markets. The Company expects to commit
additional time and development resources to customizing its products and
services for selected international markets.

TOTAL REVENUES
Total revenues were $67.3 million, $41.5 million and $20.7 million in 1999, 1998
and 1997, respectively, representing increases of 62.4% from 1998 to 1999 and
100.5% from 1997 to 1998.

LICENSE REVENUES
The Company's license revenues are derived from the licensing of software
products. License revenues were $52.7 million, $34.6 million and $18.5 million,
in 1999, 1998 and 1997, respectively, representing increases of 52.3% from 1998
to 1999 and 87.5% from 1997 to 1998. License revenues accounted for 78.3%, 83.5%
and 89.2% of total revenues in 1999, 1998 and 1997, respectively. The increase
in license revenues in absolute dollars resulted from increased sales to new
customers and additional sales to existing customers for new products and
upgrades of existing licenses. The decrease in license revenues as a percent of
total revenues was the result of a significant increase in service revenues due
to larger service opportunities in the installed customer base. There were no
price increases for products during 1999.


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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)

SERVICE REVENUES
The Company's service revenues consist of fees for maintenance, training and
professional services. Service revenues were $14.6 million, $6.9 million and
$2.2 million in 1999, 1998 and 1997, respectively, representing increases of
113.4% from 1998 to 1999 and 208.2% from 1997 to 1998. Service revenues
accounted for 21.7%, 16.5% and 10.8% of total revenues in 1999, 1998 and 1997,
respectively. The increase in service revenues was attributed to an increase in
revenue from maintenance contracts, training and professional services generated
by new and existing service offerings into an expanded installed customer base.

COST OF REVENUES
Cost of revenues includes expenses associated with royalty costs, production,
fulfillment and product documentation, along with personnel costs associated
with providing customer support in connection with maintenance, training and
professional services contracts. Royalty costs are composed of third party
software costs. Cost of revenues were $8.1 million, $4.7 million and $2.9
million in 1999, 1998 and 1997, respectively, representing increases of 72.9%
from 1998 to 1999 and 59.9% from 1997 to 1998. Cost of revenues accounted for
12.0%, 11.3% and 14.1% of total revenues in 1999, 1998 and 1997, respectively,
resulting in gross margins of 88.0%, 88.7% and 85.9% in each respective period.
The increase in cost of revenues, as well as the decrease in the gross margin
percentages from 1998 to 1999 was primarily the result of increased spending in
customer support to be more responsive to growing customer needs. The
improvement in the gross margin percentages from 1997 to 1998 was attributable
to lower royalty unit costs associated with the higher sales volumes during the
1998 period.

RESEARCH AND DEVELOPMENT
Expenses Research and development expenses consist primarily of personnel costs
associated with software development. Research and development expenses were
$11.4 million, $7.4 million and $5.1 million in 1999, 1998 and 1997,
respectively, representing an increase of 54.5% from 1998 to 1999 and 45.7% from
1997 to 1998. Research and development expenses accounted for 20.7%, 20.2% and
24.5% of total revenues in 1999, 1998 and 1997, respectively. The increase in
absolute dollars was primarily due to increased headcount in research and
development from 57 to 81 people from 1998 to 1999 and 42 to 57 people from 1997
to 1998. The Company anticipates that it will continue to commit substantial
resources to research and development in the future and that product development
expenses may increase in absolute dollars in future periods.

SALES AND MARKETING EXPENSES
Sales and marketing expenses consist primarily of salaries, commissions to sales
personnel and agents, travel, tradeshow participation, public relations and
other promotional expenses. Sales and marketing expenses were $25.7 million,
$17.5 million and $10.2 million in 1999, 1998 and 1997, respectively,
representing an increase of 46.6% from 1998 to 1999 and 72.2% from 1997 to 1998.
Sales and marketing expenses accounted for 38.1%, 42.3% and 49.2% of total
revenues in 1999, 1998 and 1997, respectively. The increase in absolute dollars
was primarily the result of increased headcount to continue to build the direct
sales force along with additional marketing and promotional activities to
penetrate the market. The decline in sales and marketing expenses as a
percentage of total revenues is due to sales productivity improvements resulting
from the expansion of the Network Health product family, increased revenues from
existing customers and improved lead generation. Headcount in sales and
marketing at the end of 1999, 1998 and 1997 was 119, 76 and 45 people,
respectively.

GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses consist primarily of salaries for financial,
administrative and management personnel and related travel expenses, as well as
legal and accounting expenses. General and administrative expenses were $3.7
million, $2.8 million and $2.1 million in 1999, 1998 and 1997, respectively,
representing an increase of 31.3% from 1998 to 1999 and 36.1% from 1997 to 1998.
General and administrative expenses accounted for 5.5%, 6.8% and 10.0% of total
revenues in 1999, 1998 and 1997, respectively. The increase in absolute dollars
reflects personnel growth and associated costs in general support areas. General
and administrative expenses declined as a percentage of total revenues due to a
significant increase in revenues.

ACQUISITION-RELATED EXPENSES
Acquisition-related expenses included accounting, legal and investment banking
fees associated with the acquisition of Empire Technologies, Inc.

OTHER INCOME (EXPENSE), NET
Other income consists of interest earned on funds available for investment net
of interest expense in connection with the financing of capital equipment. The
Company realized net other income of $3.1 million, $2.3 million and $306,000,
respectively, in 1999, 1998 and 1997.

INCOME TAXES
The difference between the expected combined federal and state tax rate and the
Company's effective tax rate in 1999 relates primarily to the use of
currently-generated tax credits and tax assets acquired as a part of the Empire
acquisition. The difference in 1998 and 1997 relates primarily to the use of
substantially all of the Company's unrestricted NOL carryforwards. In addition,
the Company received a tax benefit of approximately $500,000 pursuant to the
exercise of employee stock options in 1998 and a tax benefit of approximately
$4.9 million pursuant to the exercise of employee stock options in 1999. The
Company recorded this benefit as a component of additional paid-in capital.


<PAGE>   4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)

LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations, prior to its initial public offering,
primarily through the private sale of equity securities and a credit line for
equipment purchases. On October 24, 1997, the Company completed its initial
public offering of 3,335,000 shares of Common Stock at a price of $14.00 per
share. Of these shares, 2,735,000 were issued by the Company and 600,000 were
sold by selling shareholders. The Company received net proceeds of approximately
$34.7 million. The Company had working capital of $55.4 million at December 31,
1999.

Net cash provided by operating activities was $11.6 million, $16.1 million and
$2.3 million in 1999, 1998 and 1997, respectively. Cash, cash equivalents and
marketable securities were $62.0 million, $51.2 million and $36.9 million in
1999, 1998 and 1997, respectively. Deferred revenues increased for the year
ended December 31, 1999 by $4.4 million due to an increase in overall sales
activity; $4.1 million of this increase came from deferred maintenance contracts
and $294,000 was the result of service and software license sales with remaining
contingencies such as completion of services, product acceptance and credit
worthiness.

Investing activities have consisted of the acquisition of property and
equipment, most notably computer and networking equipment to support the growing
employee base and corporate infrastructure and also investments in marketable
securities. The Company manages its market risk on its investment securities by
selecting investment grade securities with the highest credit ratings of
relatively short duration that trade in highly liquid markets. Financing
activities consisted primarily of the issuance of common stock and exercise of
options during 1999 and 1998 and from the proceeds from and repayments of bank
borrowings in connection with equipment purchases during 1997.

Pursuant to the Tax Reform Act of 1986, the utilization of net operating loss
carryforwards for tax purposes may be subject to an annual limitation if a
cumulative change of ownership of more than 50% occurs over a three-year period.
As a result of the Company's 1995 preferred stock financings, such a change in
ownership has occurred. As a result of this ownership change, the use of the net
operating loss carryforwards will be limited. The Company has determined that
its initial public offering did not cause another ownership change. The Company
has deferred tax assets of approximately $13.9 million composed primarily of net
operating loss carryforwards and research and development credits. The Company
has fully reserved for these deferred tax assets by recording a valuation
allowance of $13.9 million, as the Company believes that it is more likely than
not that it will not be able to realize this asset.

Pursuant to paragraphs 20 to 25 of Statement of Financial Accounting Standards
No. 109, the Company considered both positive and negative evidence in assessing
the need for a valuation allowance at December 31, 1998 and 1999. The factors
that weighed most heavily on the Company's decision to record a full valuation
allowance were (i) the substantial restrictions on the use of its existing net
operation loss (NOL) carryforwards and (ii) the uncertainty of future
profitability.

As a result of the ownership change described above, the future use of
approximately $10.9 million of the Company's NOL carryforwards are limited to
only $330,000 per year; the substantial majority of such NOL carryforwards will
expire before they can be used. Pursuant to the provisions of SFAS No. 109, the
Company used all of its remaining unrestricted NOL and credit carryforwards in
computing the 1998 tax provision. The Company is also subject to rapid
technology changes, competition from substantially larger competitors, a limited
family of products and other related risks, as more thoroughly described in the
"Risk Factors" section of the Company's Form 10-K, for the fiscal year ended
December 31, 1999. The Company's dependence on a single product family in an
emerging market makes the prediction of future results difficult, if not
impossible, especially in the highly competitive software industry. As a result,
the Company found the evidence described above to be the most reliable objective
evidence available in determining that a full valuation allowance against its
tax assets would be necessary.

The Company's net operating loss deferred tax asset includes approximately $3.4
million pertaining to the benefit associated with the exercise and subsequent
disqualifying disposition of incentive stock options by the Company's employees.
When and if the Company realizes this asset, the resulting change in the
valuation allowance will be credited directly to additional paid-in capital,
pursuant to the provisions of SFAS No. 109.

The difference between the expected combined federal and state tax rate and the
Company's effective tax rate in 1999 relates primarily to the use of
currently-generated tax credits and tax assets acquired as a part of the Empire
acquisition. The difference in 1998 and 1997 relates primarily to the use of
substantially all of the Company's unrestricted NOL carryforwards.

In addition, the Company received a tax benefit of approximately $500,000
pursuant to the exercise of employee stock options in 1998 and a tax benefit of
approximately $4.9 million pursuant to the exercise of employee stock options in
1999. The Company recorded this benefit as a component of additional paid-in
capital.


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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)

The Company's current export sales are denominated in United States dollars. To
the extent that international sales continue to be denominated in United States
dollars, an increase in the value of the United States dollar relative to other
currencies could make the Company's products and services more expensive and,
therefore, potentially less competitive in international markets.

As of December 31, 1999, the Company's principal sources of liquidity included
cash and marketable securities. The Company believes that its current cash and
market securities and cash provided by future operations will be sufficient to
meet its working capital and anticipated capital expenditure requirements for
the next 12 months. Although operating activities may provide cash in certain
periods, to the extent the Company experiences growth in the future, its
operating and investing activities may require significant cash. Consequently,
any such future growth may require the Company to obtain additional equity or
debt financing.

YEAR 2000 COMPLIANCE / YEAR 2000 READINESS DISCLOSURE STATEMENT
The Company was aware of the issues associated with the programming code in
existing computer systems and software products as the millennium (Year 2000)
approached. The Company set up a task force which consisted of the Director of
IT and Operations, the Manager of System Applications and representative
personnel from each functional area. This task force addressed the Year 2000
issue in the following categories: the Network Health product; internal business
computer systems and software applications; internal systems other than computer
hardware and software; and systems of the Company's external suppliers and
service providers. The Company also assessed its Year 2000 associated costs,
risks and potential contingency plans. Despite the Company's efforts with
respect to the Year 2000 issue, there can be no assurance that the Company's
business, results of operations or financial condition would not be materially
adversely affected by the failure of the Company's products, its internal
systems and applications or the systems of its third party suppliers and service
providers to properly operate or manage data beyond 1999.

NETWORK HEALTH PRODUCT
In 1997, the Company initiated the necessary development to ensure Year 2000
compliance in the Network Health family of applications and believes it has
achieved Year 2000 compliance in Network Health 4.1 which was released in August
1998. The Company's existing customers can receive this release, at no charge,
through their annual software maintenance contract. The Company requires its
customers to purchase software maintenance in order to receive product support.
Specifically, the Company defines Year 2000 Compliance as the following: no
value for current date will cause any interruption in operation; date-based
functionality must behave consistently for dates prior to, during, and after
Year 2000; in all interfaces and data storage, the century in any date must be
specified either explicitly or by unambiguous algorithms or inferencing rules;
Year 2000 must be recognized as a leap year. The Company's definition of Year
2000 Compliance is adopted from the British Standard Institute's Definition of
Year 2000 Conformity Requirements (PD2000-1). A copy of the standard is
available for review on the Company's website. The Company makes no guarantee
of, claims no responsibility for, and disclaims any liability to its customers,
with respect to Year 2000 compliance of operating platforms, hardware, software,
or other products not developed by the Company, including equipment monitored by
the Network Health product. None of the Company's customers have reported any
Year 2000 related problems with the Company's Network Health product.

INTERNAL BUSINESS COMPUTER SYSTEMS AND SOFTWARE APPLICATIONS
In 1998, the Company commenced a Year 2000 date conversion project to address
all internal existing computer systems, software applications, and related
computer equipment (e.g. printers) used in conjunction with its internal
operations. The Company identified, modified, upgraded, and/or replaced any
systems that had been identified as non-Year 2000 compliant to minimize the
possibility of a material disruption to its business. The Company finished
assessing all existing internal systems and completed the compliance process on
these systems before the end of 1999.

INTERNAL SYSTEMS OTHER THAN COMPUTER HARDWARE AND SOFTWARE
The operation of office and facilities equipment such as fax machines,
photocopiers, telephone switches, security systems, elevators, and other common
devices could also have been affected by the Year 2000 issue. The Company
identified and remedied any Year 2000 issues on its office and facilities
equipment.

SYSTEMS OF EXTERNAL SUPPLIERS AND SERVICE PROVIDERS
The Company initiated communications with third party suppliers of the
computers, software, and other equipment used, operated, or maintained by the
Company to identify and, to the extent possible, to resolve any issues regarding
the Year 2000 issue. The Company also initiated communications with facilities
service providers upon which the Company relies for daily operations. All
external suppliers and service providers had been asked to provide


<PAGE>   6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)

a written assurance that they were also preparing to be Year 2000 compliant in a
timely manner, and that their products/services will be available to the Company
up to and beyond the Year 2000, without interruption. A response was received
from 100% of these suppliers and service providers. There were no Y2000
associated problems with systems operated by other companies upon which the
Company relies.

ASSOCIATED COSTS
To date, the Company has not incurred any material costs related to the
assessment, upgrade or replacement of existing systems identified as non-Year
2000 compliant. Management has assessed the total Year 2000 compliance expense
and found that the amounts required to be expensed in 1999 did not have an
adverse material effect on its business, results of operations or financial
condition.

ASSOCIATED RISKS
The Company believes it has identified and resolved all Year 2000 issues that
could have materially adversely affected its business, financial condition or
results of operations. However, management realizes it may not be possible to
determine, at this time, with complete certainty that all Year 2000 problems
affecting the Company were corrected. As a result, the Company could be at risk
of experiencing a significant number of operational inconveniences and
inefficiencies that may divert management's time and attention from its ordinary
business activities and at risk of experiencing a lesser number of serious
system or product failures that may require significant efforts by the Company
to prevent or alleviate material business disruptions.

CONTINGENCY PLANS
The Company recognizes the importance of readiness for potential worst case
scenarios. As a result, the Company worked to identify scenarios with
significant risks, which could have required contingency plans and had
contingency plans in place before the end of 1999.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Derivative Financial Instruments, Other Financial Instruments and Derivative
Commodity Instruments. The Company does not invest in derivative financial
instruments, other financial instruments or derivative commodity instruments for
which fair value disclosure would be required under SFAS No. 107. All of the
Company's investments are in investment grade securities with high credit
ratings of relatively short duration that trade in highly liquid markets and are
carried at fair value on the Company's books. Accordingly, the Company has no
quantitative information concerning the market risk of participating in such
investments.

Primary Market Risk Exposures. The Company's primary market risk exposure is in
the area of interest rate risk. The Company's investment portfolio of cash
equivalents is subject to interest rate fluctuations, but the Company believes
this risk is immaterial due to the short-term nature of these investments.
Substantially all of the Company's business outside the United States is
conducted in U.S. dollar-denominated transactions, whereas the Company's
operating expenses in its international branches are denominated in local
currency. The Company has no foreign exchange contracts, option contracts or
other foreign hedging arrangements. The Company believes that the operating
expenses of its foreign operations are immaterial, and therefore any associated
market risk is unlikely to have a material adverse effect on the Company's
business, results of operations or financial condition.

PRICE RANGE OF COMMON STOCK
The Company effected its initial public offering on October 24, 1997 at a
price of $14.00 per share. Since that date, the Company's Common Stock has
traded on the Nasdaq National Market under the symbol CCRD. The following table
sets forth, for the period indicated, the high and low closing sales prices for
the Common Stock, all as reported by the Nasdaq National Market.

Period                                              High             Low
--------------------------------------------------------------------------------
October 16, 1997 - December 31, 1997              $ 23.25         $ 15.75

Fiscal 1998:
  First Quarter                                   $ 28.75         $ 15.13
  Second Quarter                                    29.38           21.25
  Third Quarter                                     45.13           26.00
  Fourth Quarter                                    56.75           31.25
Fiscal Year                                         56.75           15.13

Fiscal 1999:
  First Quarter                                   $ 68.25         $ 43.75
  Second Quarter                                    58.00           36.56
  Third Quarter                                     56.75           34.75
  Fourth Quarter                                    64.00           38.00
Fiscal Year                                         68.25           34.75