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FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

|                                               |  |                                                                                                                                                                
|---------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|(Mark one)                                     |  |                                                                                                                                                                
|X IN BALLOT BOX                                |  | Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934                                                                    
|                                              
|For the
Quarterly Period Ended January 4, 2002
|                                              
|OPEN BALLOT BOX                                |  | Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period from _________________ to _________________.

Commission File Number 0-27656

CHILDTIME LOGO

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

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

38345 West 10 Mile Road, Suite 100, Farmington Hills, Michigan 48335-2883
(Address of principal executive offices, including zip code)

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

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.

Yes X IN BALLOT BOX No OPEN BALLOT BOX

As of February 1, 2002, there were 5,240,772 outstanding shares of Common
Stock, no par value per share, of the registrant.



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TABLE OF CONTENTS



|                                             |                                                                                               |                                               |                                                    |  |  |  |  | 
|-------------------------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------------- | -------------------------------------------------- |  |  |  |  | 
|Part I. Financial Information               
|                                             | Item 1. Consolidated Financial Statements                                                    
|                                             |                                                                                               | A. Consolidated Balance Sheets               
|                                             |                                                                                               |                                               | January 4, 2002 and March 30, 2001                
|                                             |                                                                                               | B. Consolidated Statements of Operations     
|                                             |                                                                                               |                                               | 12 weeks ended January 4, 2002 and January 5, 2001
|                                             |                                                                                               |                                               | 40 weeks ended January 4, 2002 and January 5, 2001
|                                             |                                                                                               | C. Consolidated Statements of Cash Flows     
|                                             |                                                                                               |                                               | 40 weeks ended January 4, 2002 and January 5, 2001
|                                             |                                                                                               | D. Notes To Consolidated Financial Statements
|                                             | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|Part II. Other Information                  
|                                             | Item 1. Legal Proceedings                                                                    
|                                             | Item 6. Exhibits and Reports on Form 8-K                                                     
|Signatures                                  
|EX-4.1 Amended and Restated Credit Agreement



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CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

|           |  |                       |  |                                                                                       |  |      
|---------- |  | --------------------- |  | ------------------------------------------------------------------------------------- |  | -----
|PART I.    |  | FINANCIAL INFORMATION |  |                                                                                      
|          
|           |  | Item 1.               |  | Consolidated Financial Statements                                                     |  |      
|          
|           |  |                       |  | A. Consolidated Balance Sheets                                                        |  | 3    
|           |  |                       |  | January 4,
2002 and March 30, 2001                                                    |  |      
|          
|           |  |                       |  | B. Consolidated Statements of Operations                                              |  | 4    
|           |  |                       |  | 12 weeks ended January 4, 2002 and January 5, 2001                                    |  |      
|           |  |                       |  | 40 weeks ended January 4, 2002 and January 5, 2001                                    |  |      
|          
|           |  |                       |  | C. Consolidated Statements of Cash Flows                                              |  | 5    
|           |  |                       |  | 40 weeks ended January 4, 2002 and January 5, 2001                                    |  |      
|          
|           |  |                       |  | D. Notes to Consolidated Financial Statements                                         |  | 6-10 
|          
|           |  | Item 2.               |  | Managements Discussion and Analysis of Financial
Condition and Results of Operations |  | 11-14
|          
|PART II.   |  | OTHER INFORMATION     |  |                                                                                      
|          
|           |  | Item 1.               |  | Legal Proceedings                                                                     |  | 15   
|          
|           |  | Item 6.               |  | Exhibits and Reports on Form 8-K                                                      |  | 15   
|          
|SIGNATURES |  | 15                   

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Part I: FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements

CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets

|                                       |                                                                                                                                                               |                                                 |        |             |           |   |        |        |         |  
|-------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | ------ | ----------- | --------- | - | ------ | ------ | ------- | -
|(In thousands, except share data)      |                                                                                                                                                               | January 4,                                      |        |             | March 30, |  
|                                       |                                                                                                                                                               | 2002                                            |        |             | 2001      |  
|                                       |                                                                                                                                                               |                                                 |        |             |           |   |        |       
|                                       |                                                                                                                                                               |                                                 |        | (Unaudited) |           |   |        |        |        
|ASSETS                                 |                                                                                                                                                               |                                                 |        |             |           |   |        |       
|                                      
|CURRENT ASSETS:                        |                                                                                                                                                               |                                                 |        |             |           |   |        |       
|                                       | Cash and cash equivalents                                                                                                                                     |                                                 | $      | 3,209       |           |   | $      | 3,379  |        
|                                       | Accounts receivable, net                                                                                                                                      |                                                 |        | 5,948       |           |   |        | 4,697  |        
|                                       | Reimbursable construction costs                                                                                                                               |                                                 |        | 1,841       |           |   |        | 1,065  |        
|                                       | Prepaid expenses and other current assets                                                                                                                     |                                                 |        | 2,041       |           |   |        | 2,773  |        
|                                       | Deferred income taxes                                                                                                                                         |                                                 |        | 5,057       |           |   |        | 3,342  |        
|                                       |                                                                                                                                                               |                                                 |        |             |           |  
|                                       |                                                                                                                                                               | Total current assets                            |        |             | 18,096    |   |        |        | 15,256  |  
|                                      
|LAND, BUILDINGS AND EQUIPMENT:         |                                                                                                                                                               |                                                 |        |             |           |   |        |       
|                                       | Land                                                                                                                                                          |                                                 |        | 9,503       |           |   |        | 9,730  |        
|                                       | Buildings                                                                                                                                                     |                                                 |        | 19,107      |           |   |        | 19,161 |        
|                                       | Leasehold improvements                                                                                                                                        |                                                 |        | 9,884       |           |   |        | 8,245  |        
|                                       | Vehicles, furniture and equipment                                                                                                                             |                                                 |        | 14,660      |           |   |        | 13,960 |        
|                                       |                                                                                                                                                               |                                                 |        |             |           |  
|                                       |                                                                                                                                                               |                                                 | 53,154 |             |           |   | 51,096 |       
|                                       |                                                                                                                                                               | Less: accumulated depreciation and amortization |        |             | (15,794   | ) |        |        | (14,399 | )
|                                       |                                                                                                                                                               |                                                 |        |             |           |  
|                                       |                                                                                                                                                               |                                                 | 37,360 |             |           |   | 36,697 |       
|                                      
|OTHER NONCURRENT ASSETS:               |                                                                                                                                                               |                                                 |        |             |           |   |        |       
|                                       | Intangible assets, net                                                                                                                                        |                                                 |        | 19,640      |           |   |        | 21,079 |        
|                                       | Refundable deposits and other                                                                                                                                 |                                                 |        | 1,087       |           |   |        | 1,079  |        
|                                       |                                                                                                                                                               |                                                 |        |             |           |  
|                                       |                                                                                                                                                               |                                                 | 20,727 |             |           |   | 22,158 |       
|                                       |                                                                                                                                                               |                                                 |        |             |           |  
|TOTAL                                  |                                                                                                                                                               | $                                               | 76,183 |             |           | $ | 74,111 |       
|                                       |                                                                                                                                                               |                                                 |        |             |           |  
|LIABILITIES AND SHAREHOLDERS EQUITY   |                                                                                                                                                               |                                                 |        |             |           |   |        |       
|                                      
|CURRENT LIABILITIES:                   |                                                                                                                                                               |                                                 |        |             |           |   |        |       
|                                       | Accounts and drafts payable                                                                                                                                   |                                                 | $      | 4,833       |           |   | $      | 5,256  |        
|                                       | Accrued wages and benefits                                                                                                                                    |                                                 |        | 4,365       |           |   |        | 4,757  |        
|                                       | Revolving line of credit                                                                                                                                      |                                                 |        | 3,919       |           |   |        |        |        
|                                       | Current portion of long-term debt                                                                                                                             |                                                 |        | 1,205       |           |   |        | 1,321  |        
|                                       | Restructuring accrual                                                                                                                                         |                                                 |        | 1,910       |           |   |        | 2,410  |        
|                                       | Other current liabilities                                                                                                                                     |                                                 |        | 6,441       |           |   |        | 4,517  |        
|                                       |                                                                                                                                                               |                                                 |        |             |           |  
|                                       |                                                                                                                                                               | Total current liabilities                       |        |             | 22,673    |   |        |        | 18,261  |  
|                                      
|LONG-TERM DEBT, net of current portion |                                                                                                                                                               |                                                 | 3,463  |             |           |   | 4,224  |       
|                                      
|DEFERRED RENT LIABILITY                |                                                                                                                                                               |                                                 | 970    |             |           |   | 1,074  |       
|                                      
|DEFERRED INCOME TAXES                  |                                                                                                                                                               |                                                 | 3,103  |             |           |   | 3,316  |       
|                                       |                                                                                                                                                               |                                                 |        |             |           |  
|                                       |                                                                                                                                                               | Total liabilities                               |        |             | 30,209    |   |        |        | 26,875  |  
|                                       |                                                                                                                                                               |                                                 |        |             |           |  
|SHAREHOLDERS EQUITY:                  |                                                                                                                                                               |                                                 |        |             |           |   |        |       
|                                       | Common stock, 10,000,000 shares authorized, no par value; 5,240,772 and
5,225,772 issued and outstanding, at January 4, 2002 and March 30,
2001, respectively |                                                 |        | 31,208      |           |   |        | 30,902 |        
|                                       | Preferred stock, 1,000,000 shares authorized, no par value; no shares
issued or outstanding                                                                   |                                                 |        |             |           |   |        |        |        
|                                       | Retained earnings                                                                                                                                             |                                                 |        | 14,766      |           |   |        | 16,334 |        
|                                       |                                                                                                                                                               |                                                 |        |             |           |  
|                                       |                                                                                                                                                               | Total shareholders equity                      |        |             | 45,974    |   |        |        | 47,236  |  
|                                       |                                                                                                                                                               |                                                 |        |             |           |  
|TOTAL                                  |                                                                                                                                                               | $                                               | 76,183 |             |           | $ | 74,111 |       
|                                       |                                                                                                                                                               |                                                 |        |             |           |  

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

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CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)

|                                                                                                           |                                                                                |                |            |       |                |               |        |       |            |   |         |               |   |   |         |       | 
|---------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | -------------- | ---------- | ----- | -------------- | ------------- | ------ | ----- | ---------- | - | ------- | ------------- | - | - | ------- | ----- | 
|(In thousands, except per share data)                                                                      |                                                                                | 12 weeks ended |            |       | 40 weeks ended |              
|                                                                                                           |                                                                                |                |            |       |                |              
|                                                                                                           |                                                                                |                | January 4, |       |                | January 5,    |        |       | January 4, |   |         | January 5,    |  
|                                                                                                           |                                                                                |                | 2002       |       |                | 2001          |        |       | 2002       |   |         | 2001          |  
|                                                                                                           |                                                                                |                |            |       |                | (as restated) |        |       |            |   |         | (as restated) |  
|                                                                                                           |                                                                                |                |            |       |                |               |        |       |            |   |         |              
|Revenues, net                                                                                              |                                                                                | $              | 30,979     |       |                | $             | 33,109 |       |            | $ | 109,658 |               |   | $ | 112,449 |      
|                                                                                                           |                                                                                |                |            |       |                |               |        |       |            |   |         |              
|Operating expenses of Learning Centers                                                                     |                                                                                |                | 27,761     |       |                |               | 28,650 |       |            |   | 96,456  |               |   |   | 97,471  |      
|Provision for doubtful accounts                                                                            |                                                                                |                | 208        |       |                |               | 82     |       |            |   | 978     |               |   |   | 248     |      
|General and administrative expenses                                                                        |                                                                                |                | 2,574      |       |                |               | 1,955  |       |            |   | 8,399   |               |   |   | 6,717   |      
|Depreciation and amortization expense                                                                      |                                                                                |                | 1,055      |       |                |               | 1,130  |       |            |   | 3,555   |               |   |   | 3,534   |      
|Restructuring and unusual charges                                                                          |                                                                                |                | 169        |       |                |               |        |       |            |   | 2,449   |               |   |   |         |      
|                                                                                                           |                                                                                |                |            |       |                |               |        |       |            |   |         |              
|                                                                                                           | OPERATING EARNINGS (LOSS)                                                      |                |            | (788  | )              |               |        | 1,292 |            |   |         | (2,179        | ) |   |         | 4,479 | 
|                                                                                                          
|Interest expense, net                                                                                      |                                                                                |                | 95         |       |                |               | 220    |       |            |   | 345     |               |   |   | 732     |      
|Other income, net                                                                                          |                                                                                |                |           |       |                |               | (39    | )     |            |   | 1       |               |   |   | (147    | )    
|                                                                                                           |                                                                                |                |            |       |                |               |        |       |            |   |         |              
|                                                                                                           | EARNINGS (LOSS) BEFORE INCOME TAXES AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE |                |            | (883  | )              |               |        | 1,111 |            |   |         | (2,525        | ) |   |         | 3,894 | 
|                                                                                                          
|Income tax provision (benefit)                                                                             |                                                                                |                | (339       | )     |                |               | 418    |       |            |   | (958    | )             |   |   | 1,486   |      
|                                                                                                           |                                                                                |                |            |       |                |               |        |       |            |   |         |              
|                                                                                                           | NET EARNINGS (LOSS) BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE              |                |            | (544  | )              |               |        | 693   |            |   |         | (1,567        | ) |   |         | 2,408 | 
|                                                                                                          
|Cumulative effect on prior years of changing to different
revenue recognition methods (net of tax of $148) |                                                                                |                |            |       |                |               |        |       |            |   |         |               |   |   | 275     |      
|                                                                                                           |                                                                                |                |            |       |                |               |        |       |            |   |         |              
|                                                                                                           | NET EARNINGS (LOSS):                                                           |                | $          | (544  | )              |               | $      | 693   |            |   | $       | (1,567        | ) |   | $       | 2,133 | 
|                                                                                                           |                                                                                |                |            |       |                |               |        |       |            |   |         |              
|NET EARNINGS (LOSS) PER SHARE:                                                                             |                                                                                |                |            |       |                |               |        |       |            |   |         |               |   |   |         |      
|                                                                                                          
|Basic and diluted earnings (loss) per share before cumulative
effect of accounting change                  |                                                                                | $              | (0.10      | )     |                | $             | 0.13   |       |            | $ | (0.30   | )             |   | $ | 0.48    |      
|Cumulative effect of accounting change                                                                     |                                                                                |                |            |       |                |               |        |       |            |   |         |               |   |   | (0.06   | )    
|                                                                                                           |                                                                                |                |            |       |                |               |        |       |            |   |         |              
|                                                                                                           | NET EARNINGS (LOSS) PER SHARE                                                  |                | $          | (0.10 | )              |               | $      | 0.13  |            |   | $       | (0.30         | ) |   | $       | 0.42  | 
|                                                                                                           |                                                                                |                |            |       |                |               |        |       |            |   |         |              

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

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CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)

|                                             |                                                                                            |                                           |                                           |        |            |        |       |               |       |        |  
|-------------------------------------------- | ------------------------------------------------------------------------------------------ | ----------------------------------------- | ----------------------------------------- | ------ | ---------- | ------ | ----- | ------------- | ----- | ------ | -
|(In thousands)                               |                                                                                            | 40 Weeks Ended                            |                                          
|                                             |                                                                                            |                                           |                                          
|                                             |                                                                                            |                                           |                                           |        | January 4, |        |       | January 5,    |      
|                                             |                                                                                            |                                           |                                           |        | 2002       |        |       | 2001          |      
|                                             |                                                                                            |                                           |                                           |        |            |        |       | (as restated) |      
|                                             |                                                                                            |                                           |                                           |        |            |       
|OPERATING ACTIVITIES:                        |                                                                                            |                                           |                                           |        |            |        |       |              
|                                             | Net earnings (loss)                                                                        |                                           | $                                         | (1,567 | )          |        | $     | 2,133         |      
|                                             | Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities: |                                           |                                           |        |            |        |       |               |      
|                                             |                                                                                            | Depreciation and amortization             |                                           |        | 3,555      |        |       |               | 3,534 |       
|                                             |                                                                                            | Provision for doubtful accounts           |                                           |        | 978        |        |       |               | 33    |       
|                                             |                                                                                            | Stock option compensation expense         |                                           |        | 185        |        |       |               | 298   |       
|                                             |                                                                                            | Deferred rent liability                   |                                           |        | (137       | )      |       |               | (53   | )     
|                                             |                                                                                            | Deferred income taxes                     |                                           |        | (1,927     | )      |       |               | (240  | )     
|                                             | Changes in operating assets and liabilities:                                               |                                           |                                           |        |            |        |       |               |      
|                                             |                                                                                            | Accounts receivable                       |                                           |        | (2,229     | )      |       |               | (920  | )     
|                                             |                                                                                            | Prepaid expenses and other current assets |                                           |        | 732        |        |       |               | 153   |       
|                                             |                                                                                            | Restructuring accrual                     |                                           |        | (500       | )      |       |               |       |       
|                                             |                                                                                            | Accounts payable                          |                                           |        | (497       | )      |       |               | 1,056 |       
|                                             |                                                                                            | Accruals and other current liabilities    |                                           |        | 1,649      |        |       |               | (299  | )     
|                                             |                                                                                            |                                           |                                           |        |            |       
|                                            
|                                             |                                                                                            |                                           | Net cash provided by operating activities |        |            | 242    |       |               |       | 5,695  |  
|                                             |                                                                                            |                                           |                                           |        |            |       
|                                            
|INVESTING ACTIVITIES:                        |                                                                                            |                                           |                                           |        |            |        |       |              
|                                             | Capital spending                                                                           |                                           |                                           | (3,377 | )          |        |       | (3,036        | )    
|                                             | Expenditures for reimbursable construction costs                                           |                                           |                                           | (1,005 | )          |        |       | (5,451        | )    
|                                             | Acquisition of intangible assets                                                           |                                           |                                           |        |            |        |       | (1,940        | )    
|                                             | Proceeds from sales of land, buildings and equipment                                       |                                           |                                           | 514    |            |        |       | 626           |      
|                                             | Payments for refundable deposits and other assets                                          |                                           |                                           | (10    | )          |        |       | (161          | )    
|                                             |                                                                                            |                                           |                                           |        |            |       
|                                            
|                                             |                                                                                            |                                           | Net cash used in investing activities     |        |            | (3,878 | )     |               |       | (9,962 | )
|                                             |                                                                                            |                                           |                                           |        |            |       
|                                            
|FINANCING ACTIVITIES:                        |                                                                                            |                                           |                                           |        |            |        |       |              
|                                             | Net borrowings on revolving line of credit                                                 |                                           |                                           | 3,919  |            |        |       | 1,400         |      
|                                             | Repayments under long-term debt                                                            |                                           |                                           | (877   | )          |        |       | (1,628        | )    
|                                             | Changes in drafts payable                                                                  |                                           |                                           | 74     |            |        |       | (1,021        | )    
|                                             | Repayments of reimbursable construction                                                    |                                           |                                           | 229    |            |        |       | 2,755         |      
|                                             | Issuance of common shares                                                                  |                                           |                                           | 121    |            |        |       | 2,500         |      
|                                             |                                                                                            |                                           |                                           |        |            |       
|                                            
|                                             |                                                                                            |                                           | Net cash provided by financing activities |        |            | 3,466  |       |               |       | 4,006  |  
|                                             |                                                                                            |                                           |                                           |        |            |       
|                                            
|Net decrease in cash and cash equivalents    |                                                                                            |                                           | (170                                      | )      |            |        | (261  | )            
|Cash and cash equivalents, beginning of year |                                                                                            |                                           | 3,379                                     |        |            |        | 2,704 |              
|                                             |                                                                                            |                                           |                                           |        |            |       
|Cash and cash equivalents, end of period     |                                                                                            | $                                         | 3,209                                     |        |            | $      | 2,443 |              
|                                             |                                                                                            |                                           |                                           |        |            |       

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

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CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES
Notes To Consolidated Financial Statements

Note 1  Description of Business

Childtime Learning Centers, Inc. and subsidiaries (Childtime or the
Company) began operations in 1967, and operates for-profit childcare Learning
Centers in 23 states and the District of Columbia. As of January 4, 2002,
Childtime operated 287 Learning Centers with a licensed capacity for nearly
40,000 children.

Note 2  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 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 30, 2001.
The results for the 12 weeks and 40 weeks ended January 4, 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.

REVENUE RECOGNITION

Effective April 1, 2000, the Company changed its method of recognizing
registration and material fees in accordance with Staff Accounting Bulletin No.
101, Revenue Recognition. Previously, all registration and material fees had
been recorded when received. Under the accounting method adopted retroactive
to April 1, 2000, the Company now recognizes registration and material fees
over the typical school year of September through August. The cumulative
effect of the change on prior years resulted in a charge of ($0.3) million to
Net Earnings that was recognized during the first quarter in Fiscal 2001. Prior
period Consolidated Statements of Earnings and Cash Flows have been restated to
reflect this adoption.

FISCAL YEAR

The Company utilizes a 52-53 week fiscal year ending on the Friday closest to
March 31. For Fiscal 2001 and 2002, the first quarter contained 16 weeks, and
the fiscal years contain 52 weeks.

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RECLASSIFICATIONS

Certain 2001 amounts have been reclassified to conform to the 2002
presentation. In that regard, marketing expenses directly attributable to
center operations are now classified as Operating expenses of Learning Centers.

Note 3  Accounts Receivable

Accounts receivable is presented net of an allowance for doubtful accounts. At
January 4, 2002, and March 30, 2001, the allowance for doubtful accounts was
$1.1 million and $0.4 million, respectively.

The Company implemented a new center based management information system during
Fiscal 2002 that provides management with significantly more information on its
receivables, particularly subsidized accounts. As a result of this
information, coupled with the current recessionary environment, the Company
recorded a provision for bad debts and allowances during the 40 weeks ended
January 4, 2002 of $1.4 million. Of this amount, $1.0 million was recorded as
a provision for doubtful accounts and $0.4 million was recorded as a reduction
in revenues.

Note 4  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 40 weeks ended January 4, 2002,
and the year ended March 30, 2001, the Company financed construction costs of
$1.0 million and $7.0 million, respectively, while related repayments received
under reimbursement agreements were $0.2 million and $7.2 million,
respectively.

Note 5  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 January 4,
2002, and March 30, 2001, the aggregate drafts payable are $2.9 million and
$2.8 million, respectively.

Note 6  Financing Arrangements

At January 4, 2002, the Companys unsecured revolving line of credit provided
for borrowings up to $10.0 million, with interest payable at a variable rate,
at the Companys option, based on either the prime rate (4.75% at January 4,
2002) or the Eurodollar rate. There were outstanding borrowings of $3.9
million at January 4, 2002, and no outstanding borrowings at March 30, 2001.

On January 31, 2002, the Company amended and
restated its revolving line of credit
agreement and entered into a $17.5 million revolving line of credit
agreement with its existing lender. The credit agreement will mature on
September 30, 2004, and is secured by the Companys receivables, equipment and
certain real estate.

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Note 7  Contingencies

The Company was a defendant in a personal injury lawsuit. During the 12 weeks
ended January 4, 2002, the Company settled the case and the entire amount of
the settlement was covered under the Companys insurance policy. In addition
to the above matter, there are various legal actions and other claims pending
or that 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.

Note 8  Option Grants For Consulting Services

During Fiscal 2001, options previously granted to the Companys former CEO were
extended and the executive was also granted an additional 50,000 options with
an exercise price of $11.00 and an expiration date in September, 2006. As a
result of these stock option grants and modifications, the Company has recorded
additional compensation expense of $0.2 million for the 40 weeks ended January
4, 2002. The Company will continue to record additional compensation expense
during the vesting period of the options granted in September 2001.

The interim Chief Financial Officer, Leonard Tylka, was granted 10,000 options
in March 2001. The options have a $7.98 exercise price, vest evenly over three
years and expire in March 2007. In September 2001, Mr. Tylka was granted an
additional 20,000 options. These 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 has recorded additional compensation expense of less than
$0.1 million for the 40 weeks ended January 4, 2002. The Company will record
additional compensation expense during the vesting period of these options.

In July 2000, the Company retained Jacobson Partners, of which Benjamin R.
Jacobson, a director of the Company, 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, of
which 294,117 shares were exercised at $8.50 per share in July 2000. The
remaining options are exercisable not later than July 2002 at $9.50 per share.
Additionally, Jacobson Partners receives an annual fee in the amount of $0.3
million, plus reimbursement of reasonable out-of-pocket expenses. As a result
of these stock option grants, the Company recorded additional compensation
expense of $0.3 million for the 40 weeks ended January 5, 2001. For the 40
weeks ended January 4, 2002, and January 5, 2001, the Company has recorded
approximately $0.2 million in consulting fees during each respective period.

Note 9  Income Taxes

The Company provides for income taxes in accordance with Statement of Financial
Accounting Standards (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.

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Note 10  Restructuring and Unusual Charges

During the fourth quarter of Fiscal 2001, the Company instituted a
restructuring program that resulted in a charge of $4.0 million and established
a restructuring reserve of $2.4 million. In this regard, the Company closed
all ten of its Oxford Learning Centers and identified 19 underperforming
centers to be closed in Fiscal 2002. As of January 4, 2002, all but one of the
19 underperforming centers has been closed. During the 40 weeks ended January
4, 2002, these 19 centers generated revenues of $1.1 million and incurred
operating losses of $0.3 million as compared to revenues of $4.7 million and
operating losses of $0.4 million during the 40 weeks ended January 5, 2001.
Additionally, Oxford Learning Centers generated revenues of $0.4 million and
operating losses totaling $0.7 million for the 40 weeks ended January 5, 2001.
A summary of the restructuring reserve is as follows (in thousands):

|                        |  |                                |       |  |             |   |       |          |  |   |                 |   |  |        |       | 
|----------------------- |  | ------------------------------ | ----- |  | ----------- | - | ----- | -------- |  | - | --------------- | - |  | ------ | ----- | 
|                        |  | Restructuring Reserve Analysis |      
|                        |  |                                |      
|                        |  |                                |       |  |             |   |       |          |  |   |                 |   |  | Ending |      
|                        |  | Beginning accrual              |       |  | Accrual     |   |       | Cash     |  |   | accrual         |  
|                        |  | March 30, 2001                 |       |  | adjustments |   |       | payments |  |   | January 4, 2002 |  
|                        |  |                                |       |  |             |   |       |          |  |   |                 |  
|Lease termination costs |  | $                              | 1,958 |  |             | $ | 1,053 |          |  | $ | (1,251          | ) |  | $      | 1,760 | 
|Severance costs         |  |                                | 452   |  |             |   | 60    |          |  |   | (362            | ) |  |        | 150   | 
|                        |  |                                |       |  |             |   |       |          |  |   |                 |  
|Total                   |  | $                              | 2,410 |  |             | $ | 1,113 |          |  | $ | (1,613          | ) |  | $      | 1,910 | 
|                        |  |                                |       |  |             |   |       |          |  |   |                 |  

The Company is contingently liable for approximately $1.0 million for subleases
negotiated in connection with the above noted restructuring lease
terminations.

During the 12 weeks and 40 weeks ended January 4, 2002, the Company accrued
$0.2 and $2.4 million, respectively, as Restructuring and Unusual Charges. The charges pertain
to estimated noncapital environmental remediation costs based upon an
evaluation of currently available facts with respect to each individual center,
estimated lease termination costs and additional severance accrual for
separated employees. The remediation costs are expected to be incurred over
the ensuing 12 months.

Note 11  Supplemental Cash Flow Information

In connection with the acquisition of certain centers, the Company incurred
seller-financed debt of $1.7 million during the 40 weeks ended January 5, 2001.
The Company has not incurred any seller-financed debt during the current
fiscal year.

Note 12  Earnings (Loss) Per Share

For the 12 and 40 weeks ended January 4, 2002, and January 5, 2001, basic
earnings (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. Diluted earnings (loss) per share has been calculated by
dividing earnings (loss) available to common shareholders by the weighted
average number of common shares outstanding for the period and the assumed
conversion of all potentially dilutive stock options. There were no dilutive
stock options outstanding during the 40 weeks ended January 4, 2002 and January
5, 2001. The number of the weighted average basic and diluted shares
outstanding for each period is as follows (in thousands):

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|                                        |  |                 |       |  |                 |  |       |                 |  |  |                 |  |  |  |       | 
|--------------------------------------- |  | --------------- | ----- |  | --------------- |  | ----- | --------------- |  |  | --------------- |  |  |  | ----- | 
|                                        |  | 12 weeks ended  |       |  | 40 weeks ended  | 
|                                        |  |                 |       |  |                 | 
|                                        |  | January 4, 2002 |       |  | January 5, 2001 |  |       | January 4, 2002 |  |  | January 5, 2001 | 
|                                        |  |                 |       |  |                 |  |       |                 |  |  |                 | 
|Basic/Diluted shares (weighted average) |  |                 | 5,241 |  |                 |  | 5,226 |                 |  |  | 5,232           |  |  |  | 5,065 | 

Note 13  New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets,
effective for fiscal years beginning after December 15, 2001. Under the new
standards, 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 is currently reviewing the
impact of SFAS Nos. 141 and 142 and will be performing a fair-value analysis at
a later date in connection with the adoption of SFAS No. 142 in the first
quarter of Fiscal 2003.

SFAS No. 143, Accounting for Asset Retirement Obligationswas 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 is evaluating the impact this
Statement will have on its consolidated financial statements and will adopt
SFAS No. 144 in the first quarter of Fiscal 2003.

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

The following discussion should be read in conjunction with the consolidated
financial statements of the Company and the notes thereto included herein.

General

The information presented herein refers to the 12 weeks (third quarter 2002)
and the 40 weeks (year to date 2002) ended January 4, 2002, compared to the
12 weeks (third quarter 2001) and the 40 weeks (year to date 2001) ended
January 5, 2001.

The results of Learning Centers opened, acquired or closed are included in the
Companys consolidated financial statements from the date of opening or
acquisition and through the date of closure, as applicable. The timing of such
new openings, acquisitions or closures could influence comparisons of year over
year results.

During the third quarter 2002, the Company closed two Learning Centers. This
compares to the addition of one Learning Center and the closing of two Learning
Centers during the third quarter 2001. During year to date 2002, the Company
added four Learning Centers and closed 20. The closings were part of the
senior management teams restructuring program to close underperforming centers
in order to reduce negative cash flowing centers. As of January 4, 2002, the
Company operated 287 Learning Centers, as compared to 306 at January 5, 2001.

Results of Operations

Third quarter 2002 revenues decreased to $31.0 million from $33.1 million for
the third quarter 2001, a 6.4% decrease. Of this decrease, $1.8 million was
attributable to the loss of revenue from Learning Centers closed subsequent to
the third quarter 2001. These decreases were partially offset by revenue
increases of $0.6 million from Learning Centers opened subsequent to the third
quarter 2001. Year to date 2002 revenues decreased to $109.7 million from
$112.4 million for year to date 2001, a 2.5% decrease. The loss of revenue from
the above mentioned closed Learning Centers of $6.6 million and a decrease in
utilization percentage were primarily responsible for the decrease. However,
these decreases were partially offset by increases from Learning Centers opened
during Fiscal 2001 and Fiscal 2002 totaling $3.9 million and an increase in
tuition prices.

Comparable center revenues (centers operating during all of year to date 2002
and year to date 2001) decreased $1.2 million or 4.3% for the third quarter
2002. Year to date comparable center revenues also decreased $0.9 million, or
0.9%. The third quarter 2002 and year to date decreases were primarily due to
a decline in capacity utilization percentage. The year to date 2002 decrease,
however, was partially offset by tuition increases.

Third quarter 2002 operating expenses of Learning Centers (Operating
Expenses) decreased $0.9 million from the third quarter 2001. Operating
Expenses as a percentage of revenues, however, increased to 89.6% for the third
quarter 2002, from 86.5% for the third quarter 2001. Included in the third
quarter 2001 were $2.0 million of Operating Expenses associated with centers
that were closed subsequent to the third quarter of 2001. Adjusting for these
closed centers, Operating Expenses actually increased by $1.1 million in the
third quarter 2002 compared with the prior year quarter. This $1.1 million
increase was due to an increase of

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$0.7 million in other operating expenses, primarily center supplies, food,
transportation, janitorial and maintenance, and an increase in occupancy
expenses of $0.3 million.

Year to date 2002 Operating Expenses of $96.5 million decreased $1.1 million
from the prior year. Included in year to date 2002 and year to date 2001 were
$1.3 million and $7.2 million of Operating Expenses, respectively, applicable
to centers that were closed subsequent to the third quarter of 2001. Year to
date Operating Expenses as a percentage of revenues increased from 86.7% for
Fiscal 2001, to 88.0% for Fiscal 2002. Adjusting both years by the closed
centers Operating Expenses results in a current year increase of $4.9 million.
This increase was due to a $1.8 million increase in personnel costs, a $1.6
million increase in occupancy costs and a $1.5 million increase in the above
mentioned other operating expenses.

The Company implemented a new center based management information system during
Fiscal 2002 that provides management with significantly more information on its
receivables, particularly subsidized accounts. As a result of this information,
coupled with the current recessionary environment, the Company recorded a
provision for bad debts and allowances during the 40 weeks ended January 4,
2002 of $1.4 million. Of this amount, $1.0 million was recorded as a provision
for doubtful accounts and $0.4 million was recorded as a reduction in revenues.

General and administrative expenses increased $0.6 million to $2.6 million for
the third quarter 2002 from $2.0 million for the third quarter 2001. Of this
increase, $0.3 million was due to costs associated with establishing four new
regional offices during first quarter 2002, and $0.1 million represented
travel, lodging and training costs applicable to the implementation of the new
center level management information software system.

Year to date 2002 general and administrative expenses increased $1.7 million to
$8.4 million over year to date 2001. This increase was primarily attributable
to $0.7 million associated with opening four new regional offices in Fiscal
2002, $0.2 million relating to travel, lodging and training costs applicable to
the implementation of the new center level management information software
system, $0.2 million in higher legal, audit and professional fees and $0.3
million in higher consulting fees.

In conjunction with certain restructuring activities implemented at the end of
Fiscal 2001, the Company recorded restructuring charges during the 12
and 40 weeks of $0.2 million and
$1.1 million respectively. These additional charges related to severance,
recruiting and lease termination costs.
Furthermore, during the 40 weeks ended January 4, 2002
the Company accrued $1.3 million in estimated noncapital environmental
remediation costs based upon an evaluation of currently available facts with
respect to each individual Learning Center. These charges have been recorded as
Unusual Charges.

As a result of the foregoing changes, operating losses of ($0.8) million for
the third quarter 2002 compares to operating earnings of $1.3 million for the
third quarter 2001. Year to date operating losses of ($2.2) million for Fiscal
2002 compares to operating earnings of $4.5 million for Fiscal 2001.

Interest expense decreased to $0.1 million in the third quarter 2002 from $0.2
million for the third quarter 2001. Year to date interest expense also
decreased to $0.3 million for Fiscal 2002 from $0.7 million for Fiscal 2001.
These decreases are a result of having minimal borrowings against the Companys
outstanding line of credit during Fiscal 2002 and a reduction in the prime
rate, which is the rate used on the revolving line of credit.

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Effective April 1, 2000, the Company changed its method of revenue recognition
in accordance with SEC Staff Accounting Bulletin 101, Revenue Recognition.
Previously all registration and material fees had been recorded when received.
Under the accounting method adopted retroactive to April 1, 2000, the Company
now recognizes registration and material fees over the typical school year of
September through August. The cumulative effect of the change on prior years
resulted in a charge to earnings (net of taxes) of $0.3 million that was
recognized during the first quarter in Fiscal 2001.

As a result of the foregoing changes, net earnings (loss) decreased to a net
loss of ($0.5) million for the third quarter 2002 from $0.7 million in net
earnings for the third quarter 2001. For year to date 2002, the Company posted
a net loss of ($1.6) million, compared to net earnings of $2.1 million for year
to date 2001.

Liquidity and Capital Resources

The Companys primary cash requirements currently consist of its maintenance of
existing Learning Centers, funding lease termination costs in conjunction with
its fourth quarter Fiscal 2001 restructuring program and repayment of debt.
The Company believes that cash flow from operations, together with amounts
available under a new $17.5 million revolving line of credit facility entered
into on January 31, 2002 (see Note 6 to the Companys Notes to Consolidated
Financial Statements), will be sufficient to satisfy the Companys anticipated
cash requirements on both a long-term and short-term basis. Outstanding
letters of credit reduced the availability under the line of credit in the
amount of $2.2 million at January 4, 2002 and $2.5 million at March 30, 2001.
Under this agreement, the Company is required to maintain certain financial
ratios and other financial conditions, the most restrictive of which requires
the Company to maintain certain debt-to-equity ratios, a minimum fixed charge
coverage and a minimum amount of tangible net worth. In addition, there are
restrictions on the incurrence of additional indebtedness, disposition of
assets, transactions with affiliates. The credit facility is secured by
substantially all the Companys non real estate assets, including receivables
and equipment, and will be further secured by 15-20 of the Companys existing
53 owned centers.

Due to the impact of the Companys increased rental expense, the primary lender
approved the appropriate waiver to the Fixed Charge Coverage Ratio covenant
of the February 1, 1996 credit agreement. This waiver, made after the third
quarter 2002 close, was effective January 4, 2002, concurrent with the end of
the quarter. The waiver is no longer required as a result of the companys new
credit agreement entered into on January 31, 2002 (see Note 6 to the Companys
Notes to Consolidated Financial Statements).

Net cash provided by operations decreased to $0.2 million for the 40 weeks
ended January 4, 2002, from $5.7 million for 40 weeks ended January 5, 2001.
During Fiscal 2002, borrowings on the revolver of $3.9 million, $0.5 million in
proceeds on the sale of assets and cash on hand were used for capital
improvements to existing Learning Centers totaling $3.3 million, net funding of
reimbursable construction costs totaling $0.8 million and repayments on
long-term debt of $0.9 million.

The Company decided during Fiscal 2001 to implement a new Learning Center-based
management information system in order to provide the Learning Centers with the
latest and most efficient technology. The new plan required approximately $1.0
million in expenditures related to hardware purchases, Internet access for each
Learning Center, training costs for all directors and other key personnel on
the new system and travel and lodging costs. Implementation of the new system
began in May 2001 and was completed in December 2001, with approximately 400
employees attending a three-day training session at the Companys headquarters.

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On February 1, 2002, the Company announced the signing of a letter of intent
with regard to its proposed acquisition of Tutor Time Learning Systems, Inc.
(Tutor Time) by the Company. Privately held Tutor Time is the largest
childcare franchisor in the world, operating 235 centers in 25 states and four
countries. It owns and operates approximately 40% of its learning centers,
which accounts for approximately $73 million in annual revenues and a licensed
capacity of close to 19,000 children. Including its franchised centers, Tutor
Time has total systemwide revenues of approximately $175 million and a licensed
capacity of nearly 45,000 children. Consummation of the proposed transaction is
subject to a number of conditions, including satisfactory completion of the
parties respective due diligence reviews, execution of a definitive agreement
and the approval of Tutor Times shareholders.

SAFE HARBOR STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Statements included herein that are not historical facts, such as those related
to anticipated cash requirements and funding sources are forward-looking
statements pursuant to the safe harbor provisions of the Private/Securities
Litigation Reform Act of 1995. Forward-looking statements involve a number of
risks and uncertainties, including, but not limited to, ability to hire, train
and retain qualified personnel, continuation of federal and state assistance
programs, projected restructuring and unusual charges, pricing, competition,
insurability, demand for childcare and general economic conditions.
Accordingly, actual results could differ materially from those projected in
such forward-looking statements.

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PART 2: OTHER INFORMATION




Item 1. Legal Proceedings

Information regarding this item is set forth in Note 7 to the Companys Notes
to Consolidated Financial Statements included in Part I, Item 1 of this
Report.

Items 2-5 are not applicable.




Item 6. Exhibits and Reports on Form 8-K

(a)  Index to Exhibits:

|        |  |                                                                                                                              |  |  |  | 
|------- |  | ---------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|Exhibit |  |                                                                                                                              |  |  |  | 
|Number  |  | Description                                                                                                                  |  |  |  | 
|        |  |                                                                                                                              |  |  |  | 
|4.1     |  | Amended and Restated Credit Agreement dated as of January 31,
2002 between Childtime Childcare, Inc. and Bank One, Michigan.

(b)  Reports on Form 8-K:



| |                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company filed a Current Report on Form 8-K on February 6,
2002, announcing the signing of a letter of intent by the
Company and Tutor Time Learning Systems, Inc. with regard to
the proposed acquisition of Tutor Time by the Company.

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.




CHILDTIME LEARNING CENTERS, INC.(REGISTRANT)

________________________2/19/02Leonard C. Tylka
Chief Financial Officer and Treasurer             (Duly Authorized Officer and Principal Financial Officer)

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Index to Exhibits

|        |  |                                                                                                                              |  |  |  | 
|------- |  | ---------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|Exhibit |  |                                                                                                                              |  |  |  | 
|Number  |  | Description                                                                                                                  |  |  |  | 
|        |  |                                                                                                                              |  |  |  | 
|4.1     |  | Amended and Restated Credit Agreement dated as of January 31,
2002 between Childtime Childcare, Inc. and Bank One, Michigan.