SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q/A
Amendment No. 1
to

Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarter ended October 11, 2002

Commission File Number 0-27656

CHILDTIME LEARNING CENTERS, INC.
(Exact name of registrant as specified in its charter)

Michigan
(State or other jurisdiction of
incorporation or organization) 38-3261854
(I.R.S. Employer
Identification No.)

38345 West 10 Mile Road, Suite 100, Farmington Hills, Michigan
(Address of principal executive offices) 48335
(Zip Code)

Registrant’s telephone number, including area code: (248) 476-3200

The undersigned registrant hereby amends the Consolidated Financial Statements of its Quarterly Report for the period ended October 11, 2002 as set forth herein. This amendment is being filed to correct the “Total shareholders’ equity” as of October 11, 2002, as set forth in the Consolidated Balance Sheets included in Part I, Item 1 of the Quarterly Report.

PART I: FINANCIAL INFORMATION

ITEM 1. Consolidated Financial Statements

CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(In thousands)

				October 11,				March 29,
				2002				2002
				(Unaudited)
ASSETS
CURRENT ASSETS:
	Cash and cash equivalents			$	2,101			$	4,891
	Accounts receivable, net				9,722				5,235
	Prepaid expenses and other current assets				3,120				2,329
	Income tax receivable				2,500				2,509
	Deferred income taxes				1,833				3,764
		Total current assets			19,276				18,728
LAND, BUILDINGS AND EQUIPMENT:
	Land				9,362				9,503
	Buildings				19,156				19,180
	Leasehold improvements				8,800				10,010
	Vehicles, furniture and equipment				13,219				14,820
					50,538				53,513
		Less: accumulated depreciation and amortization			(15,326	)			(16,531	)
					35,212				36,982
OTHER NONCURRENT ASSETS:
	Intangible assets, net				28,101				17,325
	Refundable deposits and other				2,246				1,080
					30,346				18,405
TOTAL ASSETS				$	84,834			$	74,115
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
	Accounts and drafts payable			$	5,209			$	6,271
	Accrued wages and benefits				5,574				4,508
	Revolving line of credit				13,900				2,500
	Current portion of long-term debt				1,168				1,133
	Restructuring accrual				1,072				829
	Other current liabilities				12,393				8,094
		Total current liabilities			39,316				23,335
LONG-TERM DEBT, NET OF CURRENT PORTION					17,383				3,196
DEFERRED RENT LIABILITY					936				983
DEFERRED INCOME TAXES					—				3,119
		Total liabilities			57,635				30,633
SHAREHOLDERS’ EQUITY:
	Common stock, 10,000,000 shares authorized, no par value; 5,416,210 and 5,240,772 issued and outstanding at October 11, 2002 and March 29, 2002, respectively				31,665				31,183
	Preferred stock, 1,000,000 shares authorized, no par value; no shares issued or outstanding
	Retained earnings (deficit)				(4,466	)			12,299
		Total shareholders’ equity			27,199				43,482
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY				$	84,834			$	74,115

The accompanying footnotes are an integral part of the consolidated financial statements.

CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

(In thousands, except per share data)

				12 Weeks Ended								28 Weeks Ended
				October 11,				October 12,				October 11,				October 12,
				2002				2001				2002				2001
Revenue from Learning Center Operations				$	42,813			$	31,950			$	87,696			$	78,680
Revenue from Franchise Operations					1,142				—				1,142				—
Revenue, net					43,955				31,950				88,838				78,680
Operating expenses of Learning Centers					41,302				28,830				81,725				68,807
Provision for doubtful accounts					288				699				482				771
General and administrative expenses					4,277				2,808				7,805				5,714
Depreciation and amortization expenses					988				1,116				1,756				2,499
Restructuring expenses					190				2,280				702				2,280
Intangible asset impairment charges					4,191				—				4,191				—
Long lived fixed asset impairment charges					3,464				—				3,464				—
	OPERATING (LOSS)			$	(10,745	)		$	(3,783	)		$	(11,287	)		$	(1,391	)
Interest expense, net					696				113				807				250
Other income, net					(53	)			—				(58	)			—
	(LOSS) BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE			$	(11,388	)		$	(3,896	)		$	(12,036	)		$	(1,641	)
Income tax provision (benefit)					—				(1,469	)			(239	)			(619	)
	(LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE			$	(11,388	)		$	(2,427	)		$	(11,797	)		$	(1,022	)
Cumulative effect of change in accounting principle (net of tax of $910)					—				—				4,967				—
	NET (LOSS)			$	(11,388	)		$	(2,427	)		$	(16,764	)		$	(1,022	)
NET (LOSS) PER SHARE:
	Basic and diluted (loss) before cumulative effect of change in accounting principle			$	(2.10	)		$	(0.46	)		$	(2.21	)		$	(0.20	)
	Cumulative effect of change in accounting principle				—				—				0.94				—
	Basic and diluted (loss) per share			$	(2.10	)		$	(0.46	)		$	(3.15	)		$	(0.20	)
WEIGHTED AVERAGE SHARES OUTSTANDING					5,416				5,230				5,329				5,228

The accompanying footnotes are an integral part of the consolidated financial statements.

CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

(In thousands)

			28 Weeks Ended
			October 11, 2002				October 12, 2001
OPERATING ACTIVITIES:
Net loss			$	(16,764	)		$	(1,022	)
Adjustments to reconcile net loss to cash provided by operating activities:
	Depreciation and amortization			1,889				2,499
	Intangible and long lived fixed asset impairment charges			13,532				—
	Provision for doubtful accounts			482				947
	Stock option compensation expense			—				184
	Deferred rent liability			8				(125	)
	Deferred income taxes			(1,188	)			(663	)
	Gains (loss) on sale of assets			(131	)			—
Changes in operating assets and liabilities:
	Accounts receivable			(777	)			(1,879	)
	Prepaid expenses and other current assets			(60	)			1,006
	Accounts payable			798				(648	)
	Income taxes payable			110				—
	Restructuring accrual			242				(150	)
	Accruals and other current liabilities			(913	)			633
Net cash provided (used) by operating activities				(2,772	)			782
INVESTING ACTIVITIES:
Acquisition of Tutor Time — net of cash acquired of $682				(21,621	)			—
Capital spending				(2,111	)			(2,466	)
Expenditures from reimbursable construction costs				—				(942	)
Proceeds from sale of assets				555				514
Payments for refundable deposits and other assets				11				(2	)
Net cash used in investing activities				(23,166	)			(2,896	)
FINANCING ACTIVITIES:
Net borrowings on revolving line of credit				11,400				949
Repayments under long-term debt				(117	)			(577	)
Issuance of long-term debt				14,000				—
Changes in drafts payable				(2,135	)			(20	)
Repayments of reimbursable construction				—				229
Issuance of common shares				—				121
Net cash provided by financing activities				23,148				702
Net decrease in cash and cash equivalents				(2,790	)			(1,412	)
Cash and cash equivalents, beginning of year				4,891				3,379
Cash and cash equivalents, end of period			$	2,101			$	1,967

The accompanying footnotes are an integral part of the consolidated financial statements.

CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1 — DESCRIPTION OF BUSINESS

Childtime Learning Centers, Inc. and subsidiaries (“Childtime” or the “Company”) began operations in 1967, and operates for-profit childcare centers in 27 states, the District of Columbia and Canada. On July 19, 2002, the Company acquired substantially all of the assets of Tutor Time Learning Systems, Inc., a Florida corporation (“Tutor Time”), for an aggregate purchase price of approximately $22.8 million including acquisition costs plus the assumption of certain liabilities. The acquisition was consummated pursuant to an asset purchase agreement dated June 28, 2002, approved by the U.S. Bankruptcy Court, Southern District of Florida and closed on July 19, 2002. The assets acquired by the Company consisted of substantially all of the operating assets and contract rights used by Tutor Time in its child care operations, which were comprised of 198 company-owned and franchised child care centers operating in 23 states and internationally, and were purchased to improve its product offering and to enter the childcare franchise business. This total included one center that was not yet open whose lease had commenced and an additional two centers that were assigned to franchisees subsequent to the purchase. In addition, the Company purchased nine Tutor Time centers, whose leases were rejected, that were closed within 60 days of the purchase. The Tutor Time centers are on average newer and larger than Childtime’s centers, and the Company believes Tutor Time is the largest franchisor in the childcare industry. Additionally, the Company gained access to approximately 34 sites that are under development and are expected to open as either franchise or corporate centers over the next 18 months. As of October 11, 2002, Childtime operated 337 Company owned centers and franchised an additional 129 centers with an aggregate licensed capacity for over 50,000 children.

NOTE 2 — ACQUISITION AND PRO FORMA INFORMATION

As previously mentioned, on July 19, 2002, the Company acquired substantially all of the assets of Tutor Time Learning Systems, Inc., a Florida corporation (“Tutor Time”), for an aggregate purchase price of approximately $22.8 million, including acquisition costs plus the assumption of certain liabilities. In consideration for the provision of investment advisory services with respect to the acquisition, Jacobson Partners was paid an advisory fee consisting of a cash payment of $333,336 and the issuance of 175,438 shares of common stock. These costs have been capitalized as part of the acquisition costs. Jacobson Partners is the management and financial consultant to the Company of which Benjamin R. Jacobson, the Company’s Chairman of the Board is the managing general partner, James J. Morgan, the Company’s former Chairman of the Board, is a partner, and George A. Kellner, the Company’s Vice Chairman of the Board, is a special advisor.

The Tutor Time acquisition was financed, in part, by Bank One, NA through its secured credit facility with Childtime Childcare, Inc., a wholly-owned subsidiary of the Company, as amended by the Second Amendment to Amended and Restated Credit Agreement (“Second Amendment”) dated as of July 19, 2002.

Subordinated loans (the “Subordinated Notes”) in the aggregate amount of $14 million were provided by a group of lenders organized by Jacobson Partners to fund the balance of the Tutor Time acquisition purchase price and to provide related working capital. The Subordinated Notes are subject to a Subordination Agreement in favor of Bank One, NA, mature December 31, 2004 and bear interest at 15% of which 7% is payable in cash, with the balance payable in kind by the issuance of additional subordinated notes (the “Additional Subordinated Notes”) with interest and principal payable on the earlier of December 31, 2004 or such date on or after March 31, 2003, on which the Company is in compliance with the Senior Debt to EBITDA covenant of the Second Amendment, provided that the Company has consummated the Rights Offering (defined below) and received net cash proceeds (and/or cancelled Subordinated Notes) of at least $7.5 million from the issuance of common stock in such Rights Offering (the “Minimum Equity Agreement”). If the Rights Offering is not consummated and the Minimum Equity Amount is not received on or before July 19, 2003, then until the earlier of December 31, 2004 or the date on which the Company consummates the Rights Offering and receives the Minimum Equity Amount, all interest on the Subordinated Notes will be payable by the issuance of Additional Subordinated Notes. Although Jacobson Partners received no consideration for arranging this financing, lenders included JP Acquisition Fund II, L.P. and JP Acquisition Fund III, L.P., entities controlled and managed by affiliates of Jacobson Partners (for an aggregate of $10,536,432), and three directors of the Company (Mr. Jacobson, Mr. Morgan and Mr. Kellner) and trusts for the benefit of their adult children (for an aggregate of $307,472).

CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 2 — ACQUISITION AND PRO FORMA INFORMATION (CONTINUED)

In connection with the Tutor Time acquisition, JP Acquisition Fund II, L.P., JP Acquisition Fund III, L.P., and certain of their co-investors (collectively, the “Optionees”), including Messrs. Jacobson, Morgan and Kellner, agreed to arrange for the Company to obtain a standby purchase commitment in connection with the Company’s proposed rights offering contemplated for the purpose of refinancing the subordinated debt incurred by the Company in connection with the Tutor Time acquisition (the “Rights Offering”). As consideration for obtaining such commitment, a Special Committee of the Board of Directors approved, subject to shareholder approval, the grant to the Optionees of options to purchase, in the aggregate, up to 400,000 shares of common stock, until July 19, 2006, at an exercise price of $5.00 per share. All shares acquired by the Optionees would be subject to registration rights, pursuant to which, until July 6, 2007, the Optionees would have the right to cause the Company to register, at the Company’s expense, their shares of common stock, whenever the Company is otherwise registering shares (except in certain circumstances). This option grant was approved by shareholders at the Company’s 2002 Annual Meeting of Shareholders held August 15, 2002, and, because the terms of the underlying rights offering have changed (see discussion below), reapproved by shareholders at a Special Meeting held December 17, 2002. Despite the change in terms of the Rights Offering, the terms of the options, are not being changed. In particular, the option price will remain at $5.00 per share.

The Rights Offering is expected to take place during the first calendar quarter of 2003 and will refinance the subordinated debt incurred by the Company in connection with the Tutor Time acquisition. As originally contemplated, each Rights Offering unit (“Unit”) would consist of 30 shares of common stock, valued at $3.50 per share, and a $35 subordinated debenture, giving an aggregate value to each Unit of $140. Due to the substantial decline in the trading price of the Company’s common stock, however, the pricing of the common stock portion of the rights offering has been revised. As currently contemplated, the offering price per share of the common stock under the rights offering would, except under limited circumstances, be the four-week average trading price of the common stock on The Nasdaq SmallCap Market, prior to the commencement date of the offering; provided, however, that if the one-week average closing price of the common stock, calculated during the one-week period immediately prior to the commencement date of the offering, was more than 10% less than such four-week average closing price, the offering price related to the common stock portion of the rights offering will equal 110% of such one-week average closing price. In no event, however, will the offering price related to the common stock portion of the rights offering be less than the last trading price of the common stock on The Nasdaq SmallCap Market on or prior to the day immediately preceding the commencement date of the offering. Subject to certain shareholder ownership requirements, all common shareholders as of the Rights Offering record date will be able to participate in the offering and will be allowed to acquire Units on a pro rata basis. The subordinated debentures will bear interest at 15%, have a five-year maturity, and be redeemable by the Company at any time at par, subject to restrictions under its senior lending agreements. As indicated above, JP Acquisition Fund II, L.P., JP Acquisition Fund III, L.P., and certain of their co-investors, including Messrs. Jacobson, Morgan and Kellner, have provided a commitment to purchase all Units not subscribed for in the Rights Offering.

The acquisition of Tutor Time is reflected in the consolidated balance sheet of the Company as of October 11, 2002 and has been accounted for in accordance with Statement of Financial Accounting Standards (“SFAS”) No 141, Business Combinations. The results of operations of Tutor Time since July 19, 2002 are included in the Company’s results of operations. The purchase price has been tentatively allocated as follows and is subject to further change (in thousands):

Current assets				$	5,594
Property and notes					2,869
Intangible assets:					—
	Trade name and trademarks				3,905
	Franchise agreements				9,090
	Curriculum				460
	Goodwill and unallocated purchase price				7,584
		Total Intangible assets			21,039
Total assets					29,502
Liabilities assumed					(6,717	)
Purchase price				$	22,785

CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 2 — ACQUISITION AND PRO FORMA INFORMATION (CONTINUED)

Pro forma information for the Company and Tutor Time follows (in thousands, except per share data):

		12 Weeks Ended				28 Weeks Ended
		October 12, 2001				October 11, 2002				October 12, 2001
Revenue, net		$	43,130			$	105,386			$	106,594
Operating earnings (loss)			3,666				10,245				133
Loss before income taxes and cumulative effect of change in accounting principle			(4,387	)			(11,804	)			(1,534	)
Cumulative effect of change in accounting principle			—				4,967				—
Net (loss)		$	(2,687	)		$	(16,532	)		$	(376	)
Loss per share		$	(0.50	)		$	(3.10	)		$	(0.07	)

Since Tutor Time was acquired at the end of the first quarter, the 12 weeks ended October 11, 2002, includes a full 12 weeks of Tutor Time operations.

In connection with the Tutor Time Learning Systems, Inc. bankruptcy proceedings, Tutor Time, at the request of the Company was able to reject numerous leases and franchise agreements. The accompanying pro forma information includes only the revenues and costs from those Tutor Time centers and franchises that were not rejected as part of the bankruptcy proceedings. No pro forma adjustments were made to the historical Tutor Time corporate overhead expenses ($2.2 million for the 12 weeks ended October 11, 2001 and $2.0 million and $5.8 million for the 28 weeks ended October 11, 2002 and October 12, 2001, respectively). Additional interest expense was included in the pro forma results based upon the additional debt incurred to finance the Tutor Time acquisition.

CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Childtime Learning Centers, Inc. and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation.

The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles and, accordingly, include all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the periods represented to fairly state the Company’s financial condition, results of operations and its cash flows, for the interim periods presented.

These statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the 52 weeks ended March 29, 2002. The results for the 12 weeks and the 28 weeks ended October 11, 2002, are not necessarily indicative of results for the entire year.

USE OF ESTIMATES

The preparation of consolidated financial statements in accordance with generally accepted accounting principles requires management to render estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

FRANCHISE FEES AND ROYALTY INCOME

Franchise fees are recognized as revenue at the time the franchise center receives a certificate of occupancy. Royalty income related to franchise operations is recognized as revenue is earned by franchisees.

FISCAL YEAR

The Company utilizes a 52-53 week fiscal year ending on the Friday closest to March 31. For Fiscal years 2002 and 2003, the first quarter contained 16 weeks, and the fiscal year contained 52 weeks.

NOTE 4 — ACCOUNTS RECEIVABLE

Accounts receivable is presented net of an allowance for doubtful accounts. At October 11, 2002 and March 29, 2002, the allowance for doubtful accounts was $0.8 million and $1.3 million, respectively.

CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 5 — REIMBURSABLE CONSTRUCTION COSTS

In connection with certain build-to-suit centers to be leased, the Company enters into arrangements, whereby the Company accumulates costs during the construction process and is then reimbursed by the developer. The Company has various legal remedies available pursuant to the construction agreements to minimize the risk of nonreimbursement. For the 28 weeks ended October 11, 2002, and the year ended March 29, 2002, the Company financed construction costs of $0.0 million and $0.9 million, respectively, while related repayments received under reimbursement agreements were $0.0 million and $2.0 million, respectively.

NOTE 6 — DRAFTS PAYABLE

Drafts payable represent unfunded checks drawn on zero balance accounts that have not been presented for funding to the Company’s banks. The drafts are funded, without finance charges, as soon as they are presented. At October 11, 2002 and March 29, 2002, the aggregate drafts payable are $2.0 million and $4.0 million, respectively.

NOTE 7 — FINANCING ARRANGEMENTS

On January 31, 2002, the Company amended and restated its revolving line of credit agreement by entering into a new $17.5 million revolving line of credit agreement with its existing lender. The new credit agreement, as amended on July 19, 2002, will mature on September 30, 2004, and is secured by the Company’s receivables, equipment and certain real estate, with interest payable at a variable rate, at the Company’s option, based on either the prime rate or the Eurodollar rate. There were outstanding borrowings of $13.9 million at October 11, 2002, and outstanding borrowings of $2.5 million at March 29, 2002. Outstanding letters of credit reduced the availability under the line of credit in the amount of $2.5 million at October 11, 2002 and $1.8 million at March 29, 2002.

As previously discussed, subordinated loans in the aggregate amount of $14 million were provided by a group of lenders organized by Jacobson Partners to fund the balance of the Tutor Time acquisition purchase price and to provide related working capital. The Subordinated Notes are subject to a Subordination Agreement in favor of Bank One, NA, mature December 31, 2004 and bear interest at 15% of which 7% is payable in cash, with the balance payable in kind by the issuance of additional subordinated notes ($0.5 million accrued and included in subordinated notes), with interest and principal payable on the earlier of December 31, 2004 or such date on or after March 31, 2003, on which the Company is in compliance with the Senior Debt to EBITDA covenant of the Second Amendment, provided that the Company has consummated the Rights Offering (see Note 2) and received net cash proceeds (and/or cancelled Subordinated Notes) of at least $7.5 million from the issuance of common stock in such Rights Offering. If the Rights Offering is not consummated and the Minimum Equity Amount is not received on or before July 19, 2003, then until the earlier of December 31, 2004 or the date on which the Company consummates the Rights Offering and receives the Minimum Equity Amount, all interest on the Subordinated Notes will be payable by the issuance of Additional Subordinated Notes. Although Jacobson Partners received no consideration for arranging this financing, lenders included JP Acquisition Fund II, L.P. and JP Acquisition Fund III, L.P., entities controlled and managed by affiliates of Jacobson Partners (for an aggregate of $10,536,432), and three directors of the Company (Mr. Jacobson, Mr. Morgan and Mr. Kellner) and trusts for the benefit of their adult children (for an aggregate of $307,472).

At July 19, 2002 and at October 11, 2002, the Company had not maintained minimum consolidated EBITDA levels and had not provided timely reporting as required by the Amended and Restated Credit Agreement. The Company’s lender has approved waivers to the Amended and Restated Credit Agreement dated as of January 31, 2002. The latest waiver is effective through December 27, 2002, and is limited to the financial results for the quarter ended October 11, 2002. The Company anticipates that it will not be able to maintain minimum consolidated EBITDA levels in third quarter 2003, and is in the process of negotiating an amendment to the Amended and Restated Credit Agreement. No assurance can be given that the Company will be successful in amending this agreement.

CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 8 — CONTINGENCIES

During fiscal 2002, the Company decided not to pursue opening three new build-to-suit centers after leases for these centers had been signed with the developer of the centers. The Company was subsequently sued by the developer for breach of contract. This case was settled at the end of fiscal 2002, and a current liability was recorded on the balance sheet as of March 29, 2002 in the amount of $0.8 million, which was paid during first quarter 2003.

The Company is primarily liable on approximately $1.0 million for lease assignments already negotiated in connection with certain lease terminations resulting from the fiscal 2001 restructuring program (see Note 12). A subsidiary of the Company is primarily or contingently liable for many of the leases of Tutor Time’s franchisees. In an effort to build its franchisee network, Tutor Time either leased the prospective site for a franchisee, with a subsequent sublease of the site to the franchisee, or provided a lease guarantee to the landlord for the benefit of the franchisee in exchange for a monthly lease guarantee fee payable by the franchisee that is based upon the monthly rent expense of the guaranteed lease. The liability related to these leases and guarantees is approximately $177.0 million. The Company has not been notified that it will be required to make payments under any of these leases or guarantees, and does not believe that any payments are probable and therefore no liability has been recorded.

In addition, various legal actions and other claims are pending or could be asserted against the Company. Litigation is subject to many uncertainties; the outcome of individual litigated matters is not predictable with assurance, and it is reasonably possible that some of these matters may be decided unfavorably to the Company. It is the opinion of management that the ultimate liability, if any, with respect to these matters will not materially affect the financial position, results of operations or cash flows of the Company.

NOTE 9 — OPTION GRANTS AND PAYMENTS FOR CONSULTING SERVICES

In July 2000, the Company retained Jacobson Partners, of which Benjamin R. Jacobson, the Company’s Chairman of the Board, is the managing general partner, to provide management and financial consulting services. As part of the consideration to be paid to, and to add further incentive for such services, Jacobson Partners was granted stock options to purchase 557,275 shares. Jacobson Partners has exercised options totaling 294,117 shares at a cost of $2,500,000. The remaining 263,158 shares expired in July 2002. Additionally, Jacobson Partners receives an annual consulting fee in the amount of $250,000, plus reimbursement of reasonable out-of-pocket expenses. In connection with the Tutor Time acquisition, Jacobson Partners was paid an advisory fee consisting of $333,336 and the issuance of 175,438 shares, and options were granted to certain related parties to acquire up to 400,000 shares of the Company’s common stock (see Note 2 “Acquisition and Pro Forma Information”). Total expenses incurred for Jacobson Partners (exclusive of the Tutor Time fee) were $135,000 and $135,000 for the 28 weeks ended October 11, 2002 and October 12, 2001, respectively, and are included in General and Administrative expense in the accompanying Consolidated Statement of Operations.

The Company’s former Chairman of the Board and Interim Chief Executive Officer was granted 60,000 options in January 2001. As initially granted, the options have a $7.00 exercise price, vest at the rate of 10,000 per month and expire January 2003. After the executive was appointed Chairman of the Board in August 2001, these options were extended to expire in September 2006. At that time, he was also granted an additional 50,000 options. These additional options have an $11.00 exercise price, vest after one year and expire in September 2006.

The former interim Chief Financial Officer was granted 10,000 options in March 2001. The options have a $7.97 exercise price, vest evenly over 3 years and expire in March 2007. In September 2001, the executive was granted an additional 20,000 options. These additional options have an $11.00 exercise price, vest after one year and expire in September 2006. As a result of these stock option grants, the Company recorded additional compensation expense of $18,004 at fiscal year end 2002.

NOTE 10 — INCOME TAXES

The Company provides for income taxes in accordance SFAS No. 109, Accounting for Income Taxes, which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Due to continued losses and uncertainties, the Company has determined that it is more likely than not that the deferred tax assets will not be recovered through future taxable income. As a result, a valuation reserve has been provided reducing deferred tax assets to an amount recoverable through the reversal of deferred tax liabilities or through carryback to prior tax years. The tax provision is as follows (in thousands):

Deferred tax assets		$	5,917
Valuation allowance			(4,084	)
Net deferred taxes		$	1,833

CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 11 — (LOSS) PER SHARE

For the 12 and 28 weeks ended October 11, 2002 and October 12, 2001, basic loss per share has been calculated by dividing earnings available to common shareholders by the weighted average number of common shares outstanding for the period. The potential effect of stock options has been excluded in computing the loss per share as the effect would be antidilutive. The calculation of basic and diluted shares is as follows (in thousands):

		Calculation of Incremental Shares
		Outstanding
		12 weeks ended												28 weeks ended
		October 11, 2002								October 12, 2001				October 11, 2002								October 12, 2001
Basic shares (based on weighted average)							5,416				5,230								5,329				5,228
Stock options							—				—								—				—
Diluted shares							5,416				5,230								5,329				5,228

NOTE 12 — RESTRUCTURING CHARGES

The Company instituted a restructuring program in fiscal 2001 and incurred a charge of $4,000,000 in March 2001. In this regard, the Company closed all 10 of its Oxford Learning Centers of America and identified 19 under-performing centers to be closed in fiscal 2002. As of October 11, 2002, all but one of the under-performing centers have been closed. Approximately 200 employees were involuntarily terminated in connection with the closures of Oxford Learning Centers of America and the 19 under-performing Childtime centers. The Company expects to complete its plan during fiscal 2003. For the 28 weeks ended October 11, 2002, the Company recorded restructuring expenses of $702,000. Of this amount, $346,000 is related to the closure of two additional centers, not included in the 2001 restructuring program. The remaining $356,000 is to increase reserves related to the 2001 restructuring program. This increase is necessary as a result of current real estate market conditions.

A summary of the restructuring reserve is as follows (in thousands):

		Restructuring Reserve Analysis
		Beginning												Ending
		Accrual				Restructuring				Cash				accrual
		March 29, 2002				Charge				payments				October 11, 2002
Lease termination costs		$	755			$	702			$	405			$	1,052
Severance costs			74				—				54				20
Total		$	829			$	702			$	459			$	1,072

CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 13 — INTANGIBLE ASSETS AND LONG LIVED ASSET IMPAIRMENT

During the second quarter of 2003, the Company completed the implementation of SFAS 142, Goodwill and Other Intangible Assets. Under SFAS 142, goodwill is no longer amortized. Instead, goodwill and indefinite-lived intangible assets are tested for impairment in accordance with the provisions of SFAS 142. In accordance with its impairment policy, the Company employed a discounted cash flow analysis in conducting its impairment tests for the year ended March 29, 2002. The Company completed its impairment test and recorded an impairment loss of $5.0 million (net of a tax benefit of $0.9 million) as a cumulative effect of a change in accounting principle. In addition, as a result of continuing weakening economic conditions, the Company tested for goodwill impairment as of October 11, 2002, and recorded an impairment loss during the second quarter of $4.2 million.

In accordance with the provisions of SFAS 142, the Company did not amortize goodwill for the quarter and 28 weeks ended October 11, 2002. If goodwill amortization had not been recorded for the quarter and six months ended October 12, 2001, net loss would have decreased $0.4 and $1.0 million to an adjusted net loss of ($2.0) and ($0.0) million, respectively.

The changes in the carrying amounts of goodwill and other intangible assets for the six months ended October 11, 2002 were as follows (in thousands):

											Pre-Tax
			Balance								Impairment								Balance
			3/29/02				Additions (1)				Loss				Amortization				10/11/02				Useful life
Childtime:
	Covenants		$	52			$	—			$	—			$	25			$	27				2
	Goodwill			17,273				—				10,068				—				7,205			Indefinite
Tutor Time:
	Trade Name and trademarks			—				3,905				—				45				3,860				20
	Franchise Agreements			—				9,090				—				105				8,985				20
	Curriculum			—				460				—				21				439				5
	Goodwill and unallocated purchase price			—				7,584				—				—				7,584			Indefinite

(1) Additions relate to the July 19, 2002 acquisition of Tutor Time Learning Systems, Inc.

Due to the continuing weakening economic conditions, the Company tested for long-lived asset impairment, which consists primarily of equipment, leasehold improvements and other assets, as of October 11, 2002 in accordance with the provisions of SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets. The Company employed a cash flow analysis in conducting its impairment test. The Company completed its impairment test and recorded an impairment loss of $3.5 million, which impacted the Childtime reporting segment.

CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note 14 — SEGMENT INFORMATION

The Company has three reportable segments: Childtime, Tutor Time and Franchise Operations. Childtime operates childcare centers primarily under the Childtime Learning Centers brand name, Tutor Time operates childcare centers under the Tutor Time brand name and Franchise Operations licenses and provides developmental and administrative support to franchises operating under the Tutor Time brand name. The accounting polices of the segments are the same as those described in the summary of significant accounting policies. The Company’s reportable segments are reported separately because the Company’s chief operating decision maker uses the segment information in determining the allocation of resources among segments and appraising the performance of the segments.

Information about the Company’s operating segments are presented below:

		12 Weeks Ended October 11, 2002
		Childtime				Tutor Time				Franchise Operations				Total
External revenues		$	32,326			$	10,487			$	1,142			$	43,955
Intersegment revenues			—				—				—				—
Depreciation and amortization			725				158				105				988
Operating income (loss)			(9,494	)			(2,302	)			1,051				(10,745	)
Goodwill(1)			7,205				6,839				745				14,789
All other assets			47,927				10,418				11,700				70,045

		12 Weeks Ended October 12, 2001
		Childtime				Tutor Time				Franchise Operations				Total
External revenues		$	31,950			$	—			$	—			$	31,950
Intersegment revenues			—				—				—				—
Depreciation and amortization			1,116				—				—				1,116
Operating income (loss)			(3,783	)			—				—				(3,783	)
Goodwill			19,961				—				—				19,961
All other assets			53,244				—				—				53,244

		28 Weeks Ended October 11, 2002
		Childtime				Tutor Time				Franchise Operations				Total
External revenues		$	77,209			$	10,487			$	1,142			$	88,838
Intersegment revenues			—				—				—				—
Depreciation and amortization			1,493				158				105				1,756
Operating income (loss)			(10,036	)			(2,302	)			1,051				(11,287	)
Goodwill(1)			7,205				6,839				745				14,789
All other assets			47,927				10,418				11,700				70,045

		28 Weeks Ended October 12, 2001
		Childtime				Tutor Time				Franchise Operations				Total
External revenues		$	78,680			$	—			$	—			$	78,680
Intersegment revenues			—				—				—				—
Depreciation and amortization			2,499				—				—				2,499
Operating income (loss)			(1,391	)			—				—				(1,391	)
Goodwill			19,961				—				—				19,961
All other assets			53,244				—				—				53,244

(1)    Tutor Time and Franchise Operations goodwill includes amounts associated with the unallocated purchase price.

NOTE 15 — OPERATIONAL IMPROVEMENTS

The Company has continued to experience operating losses for the past five quarters. As described in Note 7, the Company has not maintained minimum consolidated EBITDA levels required by the Amended and Restated Credit Agreement and anticipates that it will not be able to maintain minimum consolidated EBITDA levels in third quarter 2003. The Company has taken steps to improve the profitability of its operations through pricing, more effective labor management and expense control and efforts aimed at boosting enrollment. During the first two periods of the third quarter, these measures have begun to show improvements in operating results.

CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 16 — NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board issued SFAS No. 142, Goodwill and Other Intangible Assets, effective for fiscal years beginning after December 15, 2001. Under the new standard, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized, but will be subject to annual impairment tests in accordance with the statements. Other intangible assets will continue to be amortized over their useful lives. The Company completed its impairment test and recorded an impairment loss of $4.3 million, or $0.81 per average basic and diluted share as a cumulative effect of a change in accounting principle. In addition, as a result of continuing weakening economic conditions, the Company tested for goodwill impairment as of October 11, 2002, and recorded an impairment loss during the second quarter of $6.5 million, or $1.19 per average basic and diluted share.

SFAS No. 143, Accounting for Asset Retirement Obligations was issued in August 2001, and addresses legal obligations (arising from laws, statutes, contracts, etc.) that an entity must satisfy when disposing of tangible, long-lived assets. The standard requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. The Company is evaluating the impact this Statement will have on its consolidated financial statements and is anticipating the adoption of SFAS No. 143 in the first quarter of Fiscal 2004.

SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets was issued in July 2001, and addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This statement supercedes SFAS No. 121 on the same topic and establishes an accounting model for the impairment of long-lived assets. The Company employed a cash flow analysis in conducting its impairment test. The Company completed its impairment test and recorded an impairment loss of $2.9 million, or $0.54 per average basic and diluted share which impacted the Childtime reporting segment.

SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections as of April 2002, was issued in April 2002, and rescinds FASB Statement No. 4, Reporting Gains and Losses from Extinguishments of Debt, and an amendment of that Statement, FASB Statement No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. This Statement also rescinds FASB Statement No. 44, Accounting for Intangible Assets of Motor Carriers. This Statement amends FASB Statement No. 13, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. This Statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. The Company adopted this Statement during the first quarter of Fiscal 2003 which had no significant effect on the Company.

SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities, was issued in June 2002, and addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” The Company is anticipating the adoption of SFAS No. 146 in the third quarter of Fiscal 2003.

SFAS No. 147, Acquisitions of Certain Financial Institutions—an amendment of FASB Statements No. 72 and 144 and FASB Interpretation No. 9, was issued in October 2002, and addresses FASB Statement No. 72, Accounting for Certain Acquisitions of Banking or Thrift Institutions, and FASB Interpretation No. 9, Applying APB Opinions No. 16 and 17 When a Savings and Loan Association or a Similar Institution Is Acquired in a Business Combination Accounted for by the Purchase Method, provided interpretive guidance on the application of the purchase method to acquisitions of financial institutions. Except for transactions between two or more mutual enterprises, this Statement removes acquisitions of financial institutions from the scope of both Statement 72 and Interpretation 9 and requires that those transactions be accounted for in accordance with FASB Statements No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets. The Company adopted this Statement during the second quarter of Fiscal 2003 which had no significant effect on the Company.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment to be signed on its behalf by the undersigned hereunto duly authorized.

		CHILDTIME LEARNING CENTERS, INC.
Date: January 7, 2003		By: /s/ Frank Jerneycic Frank M. Jerneycic Its: Chief Financial Officer and Treasurer

CERTIFICATIONS

I, William D. Davis, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of Childtime Learning Centers, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: January 7, 2003

/s/ William D. Davis William D. Davis, President and
Chief Executive Officer

CERTIFICATIONS

I, Frank M. Jerneycic, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A of Childtime Learning Centers, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: January 7, 2003

/s/ Frank M. Jerneycic Frank M. Jerneycic, Chief Financial Officer
and Treasurer

EXHIBIT INDEX

Exhibit		Description
99.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act
99.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act