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| |           
| | ----------
| | (MARK ONE)















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







Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by
Section 13 of 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 required for the past 90 days. Yes No

The number of shares of Registrants Common Stock, no par value per share, outstanding
at January 26, 2001 was 5,225,772.





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TABLE OF CONTENTS



|                                   |                                                                                               |                                                                                                                                                  |  |  |  |  |  | 
|---------------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------ |  |  |  |  |  | 
|Part I Financial Information      
|                                   | Item 1. Consolidated Financial Statements                                                    
|                                   |                                                                                               | A. Consolidated Balance Sheet January 5, 2001 and March 31, 2000                                                                                
|                                   |                                                                                               | B. Consolidated Statement of Income Twelve Weeks Ended January 5, 2001 and January 7, 2000 Forty Weeks Ended January 5, 2001 and January 7, 2000
|                                   |                                                                                               | C. Consolidated Statement of Cash Flows Forty Weeks Ended January 5, 2001 and January 7, 2000                                                   
|                                   |                                                                                               | 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 6 Exhibits and Reports on Form 8-K                                                      
|Signatures                        
|Consulting Agreement Dated 1/16/01
|Consulting Agreement Dated 1/19/01



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|PART I. FINANCIAL INFORMATION
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|                              | ITEM 1. Consolidated Financial Statements                                                    
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|                              |                                                                                               | A. Consolidated Balance Sheet                 |                                                        |       | 3      | 
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|                              |                                                                                               |                                               | January 5, 2001 and March 31, 2000                    
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|                              |                                                                                               | B. Consolidated Statement of Income           |                                                        |       | 4      | 
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|                              |                                                                                               |                                               | Twelve Weeks Ended January 5, 2001 and January 7, 2000
|                              |                                                                                               |                                               | Forty Weeks Ended January 5, 2001 and January 7, 2000 
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|                              |                                                                                               | C. Consolidated Statement of Cash Flows       |                                                        |       | 5      | 
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|                              |                                                                                               |                                               | Forty Weeks Ended January 5, 2001 and January 7, 2000 
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|                              |                                                                                               | D. Notes to Consolidated Financial Statements |                                                        |       | 6-9    | 
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|                              | ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |                                               |                                                        | 10-13 |       
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|PART II. OTHER INFORMATION   
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|                              | ITEM 6. Exhibits, Reports on Form 8-K                                                         |                                               |                                                        | 14    |       
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|SIGNATURES                    |                                                                                               |                                               | 14                                                     |      

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|                                                          |                                                                                                                                    |                                                |            |             |             |   |            |            |             |  
|--------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | ---------- | ----------- | ----------- | - | ---------- | ---------- | ----------- | -
|                                                          |                                                                                                                                    |                                                |            | January 5,  |             |   | March 31,  |           
|                                                          |                                                                                                                                    |                                                |            | 2001        |             |   | 2000       |           
|                                                          |                                                                                                                                    |                                                |            | (Unaudited) |             |   |            |           
|                                                          |                                                                                                                                    |                                                |            |             |             |   |            |           
|Assets
Current assets:                                   
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Cash and cash equivalents                                                                                                          |                                                | $          | 2,442,926   |             |   | $          | 2,704,465  |            
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Accounts receivable, net                                                                                                           |                                                |            | 5,103,860   |             |   |            | 4,216,880  |            
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Reimbursable construction costs                                                                                                    |                                                |            | 3,975,589   |             |   |            | 1,279,348  |            
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Prepaid expenses and other                                                                                                         |                                                |            | 2,394,569   |             |   |            | 2,547,200  |            
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Deferred income taxes                                                                                                              |                                                |            | 1,515,000   |             |   |            | 1,437,000  |            
|                                                          |                                                                                                                                    |                                                |            |             |             |   |           
|                                                          |                                                                                                                                    | Total current assets                           |            |             | 15,431,944  |   |            |            | 12,184,893  |  
|                                                          |                                                                                                                                    |                                                |            |             |             |   |           
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|Land, buildings and equipment:                           
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|                                                          | Land                                                                                                                               |                                                |            | 9,663,715   |             |   |            | 9,930,239  |            
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|                                                          | Buildings                                                                                                                          |                                                |            | 19,092,365  |             |   |            | 19,232,936 |            
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|                                                          | Vehicles, furniture and equipment                                                                                                  |                                                |            | 13,635,734  |             |   |            | 11,954,127 |            
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|                                                          | Leasehold improvements                                                                                                             |                                                |            | 9,016,122   |             |   |            | 8,072,998  |            
|                                                          |                                                                                                                                    |                                                |            |             |             |   |           
|                                                          |                                                                                                                                    |                                                | 51,407,936 |             |             |   | 49,190,300 |           
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|                                                          |                                                                                                                                    | Less accumulated depreciation and amortization |            |             | (14,170,995 | ) |            |            | (12,410,551 | )
|                                                          |                                                                                                                                    |                                                |            |             |             |   |           
|                                                          |                                                                                                                                    |                                                | 37,236,941 |             |             |   | 36,779,749 |           
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|                                                          | Land held for disposal                                                                                                             |                                                |            | 65,600      |             |   |            | 65,600     |            
|                                                          |                                                                                                                                    |                                                |            |             |             |   |           
|                                                          |                                                                                                                                    |                                                | 37,302,541 |             |             |   | 36,845,349 |           
|                                                          |                                                                                                                                    |                                                |            |             |             |   |           
|Other noncurrent assets:                                 
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|                                                          | Intangible assets, net                                                                                                             |                                                |            | 23,224,038  |             |   |            | 21,131,029 |            
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|                                                          | Refundable deposits and other                                                                                                      |                                                |            | 1,173,456   |             |   |            | 1,012,254  |            
|                                                          |                                                                                                                                    |                                                |            |             |             |   |           
|                                                          |                                                                                                                                    | Total assets                                   |            | $           | 77,131,979  |   |            | $          | 71,173,525  |  
|                                                          |                                                                                                                                    |                                                |            |             |             |   |           
|Liabilities and shareholders equity
Current liabilities:
|                                                         
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|                                                          | Revolving line of credit                                                                                                           |                                                | $          | 2,757,943   |             |   | $          | 1,357,800  |            
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|                                                          | Current maturities of long-term debt                                                                                               |                                                |            | 2,008,509   |             |   |            | 2,413,063  |            
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|                                                          | Accounts payable                                                                                                                   |                                                |            | 4,163,629   |             |   |            | 5,220,182  |            
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|                                                          | Accrued wages and payroll taxes                                                                                                    |                                                |            | 3,303,476   |             |   |            | 3,477,878  |            
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|                                                          | Accrued vacation                                                                                                                   |                                                |            | 1,180,677   |             |   |            | 1,214,755  |            
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|                                                          | Other current liabilities                                                                                                          |                                                |            | 4,087,169   |             |   |            | 3,473,891  |            
|                                                          |                                                                                                                                    |                                                |            |             |             |   |           
|                                                          |                                                                                                                                    | Total current liabilities                      |            |             | 17,501,403  |   |            |            | 17,157,569  |  
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|Long-term debt                                            |                                                                                                                                    |                                                | 4,722,482  |             |             |   | 4,214,146  |           
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|Deferred rent liability                                   |                                                                                                                                    |                                                | 1,076,137  |             |             |   | 1,129,153  |           
|                                                         
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|Deferred income taxes                                     |                                                                                                                                    |                                                | 3,572,000  |             |             |   | 3,734,000  |           
|                                                          |                                                                                                                                    |                                                |            |             |             |   |           
|                                                          |                                                                                                                                    | Total liabilities                              |            |             | 26,872,022  |   |            |            | 26,234,868  |  
|                                                          |                                                                                                                                    |                                                |            |             |             |   |           
|                                                         
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|Commitments and contingencies                             |                                                                                                                                    |                                                |           |             |             |   |           |           
|                                                          |                                                                                                                                    |                                                |            |             |             |   |           
|                                                         
|Shareholders equity:                                    
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Common stock, 10,000,000 shares authorized, no par value; 5,225,772
outstanding at January 5, 2001 and 4,931,655 at March 31, 2000 |                                                |            | 30,794,125  |             |   |            | 27,996,180 |            
|                                                         
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|                                                          | Preferred stock, 1,000,000 shares authorized, no par value; no shares
issued or outstanding                                        |                                                |            |            |             |   |            |           |            
|                                                         
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|                                                         
|                                                          | Retained earnings                                                                                                                  |                                                |            | 19,465,832  |             |   |            | 16,942,477 |            
|                                                          |                                                                                                                                    |                                                |            |             |             |   |           
|                                                          |                                                                                                                                    | Total shareholders equity                     |            |             | 50,259,957  |   |            |            | 44,938,657  |  
|                                                          |                                                                                                                                    |                                                |            |             |             |   |           
|                                                         
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|                                                          | Total liabilities and shareholders equity                                                                                         |                                                | $          | 77,131,979  |             |   | $          | 71,173,525 |            
|                                                          |                                                                                                                                    |                                                |            |             |             |   |           



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|                                       |                            |   |                    |           |  |                   |            |           |            |   |             |            |  |   |            |            | 
|-------------------------------------- | -------------------------- | - | ------------------ | --------- |  | ----------------- | ---------- | --------- | ---------- | - | ----------- | ---------- |  | - | ---------- | ---------- | 
|                                       |                            |   | Quarter-to-Date    |           |  | Year-to-Date      |           
|                                       |                            |   | Twelve Weeks Ended |           |  | Forty Weeks Ended |           
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|                                       |                            |   | January 5,         |           |  | January 7,        |            |           | January 5, |   |             | January 7, | 
|                                       |                            |   | 2001               |           |  | 2000              |            |           | 2001       |   |             | 2000       | 
|                                       |                            |   |                    |           |  |                   |            |           |            |   |             |            | 
|Revenues                               |                            | $ | 33,072,783         |           |  | $                 | 28,864,923 |           |            | $ | 112,626,512 |            |  | $ | 96,371,955 |           
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|Cost of revenues                       |                            |   | 29,430,200         |           |  |                   | 25,827,302 |           |            |   | 99,936,098  |            |  |   | 84,564,615 |           
|                                       |                            |   |                    |           |  |                   |            |           |            |   |             |           
|                                       | Gross profit               |   |                    | 3,642,583 |  |                   |            | 3,037,621 |            |   |             | 12,690,414 |  |   |            | 11,807,340 | 
|                                      
|Marketing expenses                     |                            |   | 440,521            |           |  |                   | 390,414    |           |            |   | 1,360,531   |            |  |   | 1,288,922  |           
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|General and administrative expenses    |                            |   | 1,946,002          |           |  |                   | 1,728,815  |           |            |   | 6,670,097   |            |  |   | 5,463,738  |           
|                                       |                            |   |                    |           |  |                   |            |           |            |   |             |           
|                                       | Operating income           |   |                    | 1,256,060 |  |                   |            | 918,392   |            |   |             | 4,659,786  |  |   |            | 5,054,680  | 
|                                      
|Interest expense                       |                            |   | 223,693            |           |  |                   | 126,100    |           |            |   | 761,572     |            |  |   | 252,338    |           
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|Interest income                        |                            |   | (3,092             | )         |  |                   | (4,403     | )         |            |   | (29,366     | )          |  |   | (154,297   | )         
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|Other income, net                      |                            |   | (38,856            | )         |  |                   | (14,799    | )         |            |   | (143,774    | )          |  |   | (100,417   | )         
|                                       |                            |   |                    |           |  |                   |            |           |            |   |             |           
|                                       | Income before income taxes |   |                    | 1,074,315 |  |                   |            | 811,494   |            |   |             | 4,071,354  |  |   |            | 5,057,056  | 
|                                      
|Income tax provision                   |                            |   | 405,000            |           |  |                   | 304,000    |           |            |   | 1,548,000   |            |  |   | 1,895,000  |           
|                                       |                            |   |                    |           |  |                   |            |           |            |   |             |           
|                                       | Net income                 |   | $                  | 669,315   |  |                   | $          | 507,494   |            |   | $           | 2,523,354  |  |   | $          | 3,162,056  | 
|                                       |                            |   |                    |           |  |                   |            |           |            |   |             |           
|                                      
|Weighted average shares outstanding    |                            |   | 5,225,772          |           |  |                   | 5,107,891  |           |            |   | 5,065,058   |            |  |   | 5,328,533  |           
|                                       |                            |   |                    |           |  |                   |            |           |            |   |             |           
|                                      
|Earnings per share  basic and diluted |                            | $ | 0.13               |           |  | $                 | 0.10       |           |            |   | 0.50        |            |  |   | 0.59       |           
|                                       |                            |   |                    |           |  |                   |            |           |            |   |             |           



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

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|-------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------------------- | --------- | ----------------- | --------- | - | ---------- | ---------- | ---------- | -
|                                             |                                                                                   |                                                          |           | Year-to-Date      |          
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|                                             |                                                                                   |                                                          |           |                   |          
|                                             |                                                                                   |                                                          |           | January 5,        |           |   | January 7, |           
|                                             |                                                                                   |                                                          |           | 2001              |           |   | 2000       |           
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|Cash
flows from operating activities:       
|                                            
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|                                             | Net income                                                                        |                                                          | $         | 2,523,354         |           |   | $          | 3,162,056  |           
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|                                             | Adjustments
to reconcile net income to net
cash provided by operating activities:
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|                                             |                                                                                   | Depreciation and amortization                            |           |                   | 3,514,492 |   |            |            | 2,519,095  |  
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|                                             |                                                                                   | Stock option compensation expense                        |           |                   | 297,950   |  
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|                                             |                                                                                   | Deferred rent liability                                  |           |                   | (53,016   | ) |            |            | (99,620    | )
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|                                             |                                                                                   | Deferred income taxes                                    |           |                   | (240,000  | ) |            |            | (91,000    | )
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|                                             |                                                                                   | Loss on land, buildings and equipment                    |           |                   | 17,188    |   |            |            | 6,208      |  
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|                                             |                                                                                   | Impairment loss on long-lived assets                     |           |                   |           |   |            |            | 281,891    |  
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|                                             | Changes in assets and liabilities providing (consuming) cash:                    
|                                            
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|                                             |                                                                                   | Accounts receivable                                      |           |                   | (886,980  | ) |            |            | (1,490,826 | )
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|                                            
|                                            
|                                             |                                                                                   | Prepaid expenses, refundable deposits and other assets   |           |                   | 152,631   |   |            |            | (334,850   | )
|                                            
|                                            
|                                            
|                                            
|                                             |                                                                                   | Accounts payable, accruals and other current liabilities |           |                   | 369,160   |   |            |            | 65,450     |  
|                                             |                                                                                   |                                                          |           |                   |           |   |           
|                                            
|                                             | Net cash provided by operating activities                                         |                                                          |           | 5,694,779         |           |   |            | 4,018,404  |           
|                                             |                                                                                   |                                                          |           |                   |           |   |           
|                                            
|Cash
flows from investing activities:       
|                                            
|                                            
|                                            
|                                            
|                                             | Expenditures for land, buildings and equipment                                    |                                                          |           | (3,036,059        | )         |   |            | (2,552,550 | )         
|                                            
|                                            
|                                            
|                                            
|                                             | Expenditures for reimbursable construction costs                                  |                                                          |           | (5,451,390        | )         |   |            | (2,032,128 | )         
|                                            
|                                            
|                                            
|                                            
|                                             | Acquisition of intangible assets                                                  |                                                          |           | (1,939,787        | )         |   |            | (1,849,448 | )         
|                                            
|                                            
|                                            
|                                            
|                                             | Proceeds from sales of land, buildings and equipment                              |                                                          |           | 626,465           |           |   |            | 628,309    |           
|                                            
|                                            
|                                            
|                                            
|                                             | Payments for refundable deposits and other assets                                 |                                                          |           | (161,202          | )         |   |            | (36,386    | )         
|                                             |                                                                                   |                                                          |           |                   |           |   |           
|                                            
|                                             | Net cash used in investing activities                                             |                                                          |           | (9,961,973        | )         |   |            | (5,842,203 | )         
|                                             |                                                                                   |                                                          |           |                   |           |   |           
|                                            
|Cash flows from financing activities:       
|                                            
|                                            
|                                            
|                                            
|                                             | Net borrowings on revolving line of credit                                        |                                                          |           | 1,400,143         |           |   |            | 2,486,000  |           
|                                            
|                                            
|                                            
|                                            
|                                             | Changes in book overdraft                                                         |                                                          |           | (1,020,915        | )        
|                                            
|                                            
|                                            
|                                            
|                                             | Repurchase of common stock                                                        |                                                          |           |                   |           |   |            | (4,777,431 | )         
|                                            
|                                            
|                                            
|                                            
|                                             | Payments on long-term debt                                                        |                                                          |           | (1,628,718        | )         |   |            | (1,925,694 | )         
|                                            
|                                            
|                                            
|                                            
|                                             | Repayments of reimbursable construction                                           |                                                          |           | 2,755,149         |           |   |            | 1,538,755  |           
|                                            
|                                            
|                                            
|                                            
|                                             | Issuance of shares                                                                |                                                          |           | 2,499,996         |          
|                                             |                                                                                   |                                                          |           |                   |           |   |           
|                                             | Net cash provided (used) by financing activities                                  |                                                          |           | 4,005,655         |           |   |            | (2,678,370 | )         
|                                             |                                                                                   |                                                          |           |                   |           |   |           
|                                            
|Net decrease in cash and cash equivalents    |                                                                                   |                                                          | (261,539  | )                 |           |   | (4,502,169 | )         
|                                            
|Cash and cash equivalents, beginning of year |                                                                                   |                                                          | 2,704,465 |                   |           |   | 5,843,329  |           
|                                             |                                                                                   |                                                          |           |                   |           |   |           
|                                            
|Cash and cash equivalents, end of period     |                                                                                   | $                                                        | 2,442,926 |                   |           | $ | 1,341,160  |           
|                                             |                                                                                   |                                                          |           |                   |           |   |           



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(1) GENERAL

The consolidated financial statements of Childtime Learning Centers, Inc. (the Company) are unaudited and, in the opinion
of management, include all adjustments necessary to fairly state the Companys financial condition, results of operations and its
cash flows, for the interim periods presented. The results of operations for interim periods are not necessarily indicative of the
results to be expected for the full fiscal year. These statements should be read in conjunction with the Companys annual report for
the fiscal year ended March 31, 2000.

(2) PRINCIPALS OF CONSOLIDATION

The consolidated financial statements include the accounts of Childtime Learning Centers, Inc., and its wholly owned
subsidiaries (together referred to as the Company). All significant intercompany transactions have been eliminated. The Company
which began operations in 1967, provides for-profit child care through 306 child care centers located in 23 states and the District
of Columbia as of January 5, 2001.

(3) FISCAL YEAR

The Company utilizes a 52-53 week fiscal year ending on the Friday closest to March 31. For fiscal years 2000 and 2001, the
third quarter contained twelve weeks, and the fiscal years contain 52 weeks.

(4) ACCOUNTS RECEIVABLE

Accounts receivable is presented net of an allowance for doubtful accounts. At January 5, 2001 and March 31, 2000, the
allowance for doubtful accounts was $328,333 and $295,000, respectively.

(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 40 weeks ended January 5, 2001
and January 7, 2000, the Company financed construction costs of $5,451,390 and $2,032,128, respectively. Related repayments received
under reimbursement agreements were $2,755,149 and $1,538,755, respectively.

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(6) FINANCING ARRANGEMENTS

At January 5, 2001, the Companys unsecured revolving line of credit provides for borrowings up to $10,000,000, with
interest payable at a variable rate, at the Companys option, based on either the prime rate (9.0 percent at January 5, 2001) or the
Eurodollar rate. Under the line of credit, there were outstanding borrowings of $2,757,943 at January 5, 2001 and $1,357,800 at
March 31, 2000. Outstanding letters of credit further reduced the availability under the line of credit in the amount of $2,550,000
and $2,972,000 at January 5, 2001 and March 31, 2000, respectively. Due to the impact on rental expense from the Company's recent
acquisitions, the primary lender approved the appropriate waiver to the "Fixed Charge Ratio" covenant of its credit agreement. This
waiver, made after the fiscal 2001 third quarter close, was effective January 5, 2001, concurrent with the end of the fiscal quarter.

In connection with the acquisition of certain centers, the Company also incurred $1,732,500 in notes payable for the forty
weeks ended January 5, 2001. At January 5, 2001 and March 31, 2000, the total long-term debt was $4,722,482 and $4,214,146,
respectively. The Company also made payments in the amount of $1,628,718 during the forty weeks ended January 5, 2001 to reduce
portions of long-term debt.

(7) OPTION GRANTS FOR CONSULTING SERVICES

The Company has 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. As of the forty weeks
ended January 5, 2001, Jacobson Partners has exercised options totaling 294,117 shares at a cost of $2,499,996. The remaining
263,158 options can be exercised at a price of $9.50 per share until their expiration date of July 6, 2002. Additionally, Jacobson
Partners will receive an annual fee in the amount of $250,000, paid in quarterly installments, plus reimbursement of out-of-pocket
expenses. In the second quarter, as a result of the stock option grants, the Company has recorded additional compensation expense of
$297,950 resulting in a related income tax benefit of approximately $114,000 for the forty weeks ended January 5, 2001.

(8) INCOME TAXES

The Company provides for income taxes in accordance with Statement of Financial Accounting Standards 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 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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(9) EARNINGS PER SHARE

For the twelve week periods ended January 5, 2001 and January 7, 2000, basic earnings 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 per share has been calculated by dividing earnings 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 (no dilutive shares
for the twelve weeks ended January 5, 2001; 29,639 shares for the twelve weeks ended January 7, 2000; no dilutive shares for the
forty week period ended January 5, 2001; and 29,022 shares for the forty week period ended January 7, 2000).

(10) SUPPLEMENTAL CASH FLOW INFORMATION

In connection with the acquisition of certain centers, the Company incurred seller-financed debt of $1,732,500 and
$5,000,918 for the forty weeks ended January 5, 2001 and January 7, 2000, respectively.

(11) BOOK OVERDRAFTS

Book overdrafts, which are included in accounts payable on the balance sheet, represent unfunded checks drawn on zero
balance accounts that have not been presented for funding to the Companys banks. The overdrafts are funded, without finance
charges, as soon as they are presented. At January 5, 2001 and March 31, 2000, the aggregate book overdrafts were $2,436,000 and
$3,457,000, respectively.

(12) IMPAIRMENT OF LONG-LIVED ASSETS

The Company periodically assesses the recoverability of the unamortized costs of acquired assets in excess of fair value
based on a review of projected undiscounted cash flows of the related centers. These cash flows are prepared and reviewed by
management in connection with the Companys annual long-range planning process. For the forty weeks ended January 5, 2001, the
Company has not recorded any impairment losses as compared to the forty weeks ended January 7, 2000, when it recorded losses of
$231,007 on intangible assets and $50,884 for a loss on tangible property. The loss is recorded under the Cost of revenues caption
in the Consolidated Statement of Income.

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(13) COMMON STOCK

During fiscal year 2000, the Companys board of directors authorized the repurchase of 500,000 shares of the Companys
common stock. The Company repurchased 373,000 shares during the forty weeks ended January 7, 2000 at a cost of $4,777,431. The
repurchase of shares
is recorded as a charge against common stock in an amount equal to the average paid in capital per share, multiplied by the number of
shares repurchased. The excess, if any, of aggregate repurchase price over the amount charged against common stock, is charged
against retained earnings. For the forty week period ended January 7, 2000, $2,658,791 was charged against retained earnings. The
Company has not been authorized to repurchase any additional shares over the 500,000 authorized in fiscal 2000.

(14) STAFF ACCOUNTING BULLETIN

In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin Number 101, Revenue Recognition
in Financial Statements (SAB 101). The guidelines in SAB 101 must be adopted during the fourth quarter of the Companys 2001 fiscal
year. The Company is evaluating the effect, if any, that such an adoption may have on its financial position and results of
operations.

(15) SUBSEQUENT EVENTS

In the fourth quarter of fiscal 2001, due to the previously announced management changes, the company will record additional
one time costs for severance and restructuring charges.

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General

The information presented herein refers to the twelve weeks (third quarter 2001) and the forty weeks (year-to-date 2001)
ended January 5, 2001, compared to the twelve weeks (third quarter 2000) and the forty weeks (year-to-date 2000) ended January 7,
2000.

During the third quarter 2001, the Company added 1 center and closed 2. The addition was a build-to-suit leased center.
This compares to the addition of 13 centers (12 acquisitions and 1 build-to-suit leased center) and the closing of 2 centers during
the third quarter 2000. During year-to-date 2001, the Company has added 17 centers and closed 4. The additions included 10
acquisitions and 7 build-to-suit leased centers. Accordingly, as of January 5, 2001, the Company operated 306 centers, as compared
to 285 at January 7, 2000. The Company also opened 2 additional Oxford Learning Centers during the quarter and now operates a total
of 10, all located in the state of Michigan.

The results of centers opened, acquired or disposed of are included in the Companys financial statements from the date of
opening or acquisition and through the date of disposition, as applicable. The timing of such new openings, acquisitions or
dispositions could influence comparisons of year over year results.

Results of Operations

Third quarter 2001 revenues increased to $33,073,000 from $28,865,000 for the third quarter 2000 ($4,208,000, or 14.6%).
This increase was principally attributable to increased revenues from centers opened or acquired in fiscal 2000 ($2,072,000) and
centers opened or acquired in fiscal 2001 ($1,731,000). Year-to-date 2001 revenues increased to $112,627,000 from year-to-date 2000
revenues of $96,372,000 ($16,255,000, or 16.9%). This increase was principally attributable to increased revenues from centers
opened or acquired in fiscal 2000 ($11,343,000) and centers opened in fiscal 2001 ($4,359,000). These increases were partially
offset by centers closed in fiscal 2001 ($1,760,000).

Comparable center revenues (centers operating during all of year-to-date 2001 and year-to-date 2000) increased 3.1%
($783,000) for the third quarter 2001. Year-to-date comparable center revenues increased 2.2% ($1,933,000). The third quarter and
year-to-date 2001 increases were primarily the result of tuition increases, partially offset by a decrease in the utilization
percentage for certain geographical areas.

Third quarter 2001 gross profit increased to $3,643,000 (11.0% of revenues) from $3,038,000 (10.5% of revenues) for the
third quarter 2000, a 19.9% increase. The increase in gross profit was principally from comparable centers ($649,000) and centers
opened or acquired in fiscal 2000 ($377,000), partially offset by gross operating losses from newly opened Oxford Learning Centers
($240,000) and centers closed during fiscal 2001 ($152,000).

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Results of Operations  ContinuedYear-to-date 2001 gross profit increased to $12,690,000 (11.3% of revenues) from $11,807,000 (12.3% of revenues), a 7.5% increase.
The year-to-date 2001 increase in gross profit was principally from centers opened or acquired in fiscal 2000 ($1,236,000) and to a
lesser extent an increase in comparable centers ($210,000), partially offset by gross operating losses from Oxford Learning Centers
($628,000).

Marketing expenses increased 13.1% to $441,000 for the third quarter 2001 from $390,000 for the third quarter 2000.
Year-to-date 2001 marketing expenses increased 5.6% to $1,361,000 from $1,289,000. These increases were primarily due to the
additional expenses associated with the promotion and marketing activities for 306 centers as of the end of the third quarter 2001,
compared to 285 centers at the end of the third quarter 2000. As a percentage of revenues, third quarter 2001 marketing expenses
decreased to 1.3% of revenues for the twelve weeks ended January 5, 2001 from 1.4% of revenues for the twelve weeks ended January 7,
2000. Year-to-date 2001 marketing expenses also decreased to 1.2% of revenues from 1.3% of revenues for year-to-date 2000 marketing
expenses. The decrease is attributable to cost containment and, to a lesser extent, operating leverage provided by higher revenues.

General and administrative expenses increased 12.6% to $1,946,000 for the third quarter 2001 from $1,729,000 for the third
quarter 2000. The increase is primarily due to the addition of three new area offices and the additional expenses associated with
the operation of 306 centers as of the end of the third quarter 2001, as compared to 285 centers at the end of the third quarter
2000. As a percentage of revenues, general and administrative expenses decreased to 5.9% for the third quarter 2001 from 6.0% for the
third quarter 2000.

Year-to-date 2001 general and administrative expenses increased 22.1% to $6,670,000 from $5,464,000 for year-to-date 2000.
The increases are due primarily to the increases mentioned for the third quarter in addition to a charge of $428,000 for the Jacobson
Partners options and related consulting fees. Year-to-date general and administrative expenses increased to 5.9% for year-to-date
2001 from 5.7% for year-to-date 2000.

As a result of the foregoing changes, operating income increased to $1,256,000 for the third quarter 2001 from $918,000 for
the third quarter 2000. The operating income change of $338,000 represents an increase of 36.8% from the third quarter 2000.
Year-to-date 2001 operating income decreased 7.8% to $4,660,000 from $5,055,000 for year-to-date 2000.

Interest expense increased to $224,000 for the third quarter 2001 from $126,000 for the third quarter 2000. Year-to-date
2001 interest expense increased to $762,000 from $252,000 for the prior year. The increase is a result of interest paid on new
acquisition debt, interest paid on funds borrowed to repurchase shares of the Companys common stock during fiscal 2000 and an
increase in the prime rate, partially offset by the cash benefit received from the exercise of the

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Results of Operations  Continued
Jacobson Partners options.

The provision for income taxes increased to $405,000 (an effective tax rate of 37.7%) for the third quarter 2001 from
$304,000 (an effective tax rate of 37.5%) for the third quarter 2000. Year-to-date 2001 provision for income taxes decreased to
$1,548,000 (an effective tax rate of 38.0%) from $1,895,000 (an effective tax rate of 37.5%).

As a result of the foregoing changes, net income increased to $669,000, or 2.0% of revenues, for the third quarter 2001,
from $507,000, or 1.8% of revenues, for the third quarter 2000. Year-to-date 2001 net income decreased to $2,523,000, or 2.2% of
revenues, from $3,162,000, or 3.3% of revenues, for year-to-date 2000.

Liquidity and Capital Resources

The Companys primary cash requirements currently consist of its maintenance of existing centers, repayment of debt and
related interest and its new center expansion program. The Company believes that cash flow from operations, together with amounts
available under a $10.0 million unsecured revolving line of credit facility, will be sufficient to satisfy the Companys anticipated
cash requirements on both a long-term and short-term basis. The line of credit bears annual interest at either the prime rate or an
adjusted Eurodollar based rate, at the Companys option. Under the line of credit, there were outstanding borrowings of $2,758,000
at January 5, 2001 and borrowings of $1,358,000 at March 31, 2000. Outstanding letters of credit further reduced the availability
under the line of credit in the amount of $2,550,000 at January 5, 2001 and $2,972,000 at March 31, 2000. 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 and transactions with
affiliates.

Net cash provided by operations increased to $5,695,000 for year-to-date 2001, from $4,018,000 for year-to-date 2000.
Year-to-date 2001 cash provided by operations, $2,500,000 from the issuance of new shares, $1,400,000 of net borrowings on the line
of credit and $626,000 from the sale of fixed assets, were principally used for investment in capital expenditures and acquisitions
totaling $4,976,000 and for the net funding of $2,696,000 of reimbursable construction costs related to certain new build centers.
Additionally, $1,629,000 was used for repayments on long-term debt and $1,021,000 was used for the funding of zero balance checks
(see Item 11 in the Companys Notes to Consolidated Financial Statements). The Company incurred additional seller-financed notes
payable of approximately $1,732,500 during the year-to-date 2001, related to the acquisition of centers.

Expenditures related to information technology systems were part of management's five-year

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Liquidity and Capital Resources-continued
information system plan to accommodate the growth of the Company for the next five to ten
years. In connection with this plan, the Company purchased and capitalized financial software
upgrades and related hardware of approximately $163,000 during fiscal 1999 and $228,000 during fiscal 2000. As of March 31, 2000 the
Company completed the majority of the hardware and software purchases. Future costs related to the information system plan will
primarily consist of training costs, which are estimated to be approximately $400,000 and are anticipated to be completed over the
next 12 months.

Due to the impact on rental expense from the Company's recent acquisitions, the primary lender approved the appropriate
waiver to the "Fixed Charge Ratio" covenant of its credit agreement. This change, made after the fiscal 2001 third quarter close,
was effective January 5, 2001, concurrent with the end of the fiscal quarter.

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, funding
sources and the estimated training costs for completing the Companys information technology system upgrade, 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, the identification and availability of quality
acquisition or new development targets, the continuation of federal and state assistance programs, demand for child care, taxing
authority legislation, as well as general economic conditions, pricing and competition. Accordingly, actual results could differ
materially from those projected in such forward-looking statements.

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Item 6 Exhibits and Reports on Form 8-K

|                    
|--------------------
|(a)Index to Exhibits

|        |  |                                                                   
|------- |  | ------------------------------------------------------------------
|Exhibit
|Number  |  | Description                                                       
|        |  |                                                                   
|10.1    |  | Consulting agreement dated January 16, 2001 between the Registrant
|        |  | and James J. Morgan                                               
|       
|       
|       
|       
|10.2    |  | Consulting agreement dated January 19, 2001 between the Registrant
|        |  | and Leonard C. Tylka                                              

|                       
|-----------------------
|(b)Reports on Form 8-K:

|    |  |                                                                    
|--- |  | -------------------------------------------------------------------
|1.) |  | The Company filed a current Report on Form 8-K on February 1, 2001,
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|    |  | announcing the resignation of the Chief Executive Officer and the  
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|    |  | Chief Financial Officer.                                           

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.



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| | CHILDTIME LEARNING CENTERS, INC.
(REGISTRANT)                                                                                                                                                     
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| | /s/ Leonard C. Tylka                      
                    02/06/2001
Leonard C. Tylka
Interim Chief Financial Officer and Treasurer
(Duly Authorized Officer and Principal Financial Officer)

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EXHIBIT INDEX

|        |  |                                                                                           
|------- |  | ------------------------------------------------------------------------------------------
|EX-10.1 |  | Consulting Agreement Dated Jan. 16, 2001
Between Childtime L.C., Inc. and James Morgan    
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|EX-10.2 |  | Consulting Agreement Dated Jan. 19, 2001
Between Childtime L.C., Inc. and Leonard C. Tylka