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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

(MARK ONE)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JULY 18, 2003

OR

[ ] 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 LEARNING CENTERS, INC.

(Exact Name Of Registrant As Specified In Its Charter)

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

21333 Haggerty Road, Suite 300
Novi, Michigan 48375
(Address of principal executive offices)

(248) 697-9000
(Registrants telephone number, including area code)

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 required for the past 90 days. Yes /x/ No / /

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes / / No /x/

The number of shares of Registrants Common Stock, no par value per share,
outstanding at August 7, 2003, was 19,516,210.





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TABLE OF CONTENTS



|                                                  |                                                                                               |                                                                                         |  |  |  |  |  | 
|------------------------------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                    
|                                                  | ITEM 1. Consolidated Financial Statements                                                    
|                                                  |                                                                                               | A. Consolidated Balance Sheets July 18, 2003 and March 28, 2003                        
|                                                  |                                                                                               | B. Consolidated Statements of Operations 16 weeks ended July 18, 2003 and July 19, 2002
|                                                  |                                                                                               | C. Consolidated Statements of Cash Flows 16 weeks ended July 18, 2003 and July 19, 2002
|                                                  |                                                                                               | D. Notes to Consolidated Financial Statements                                          
|                                                  | ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                  | ITEM 3. Quantitative and Qualitative Disclosures about Market Risks                          
|                                                  | ITEM 4. Controls and Procedures                                                              
|PART II  OTHER INFORMATION                      
|                                                  | ITEM 1. Legal Proceedings                                                                    
|                                                  | ITEM 4. Submission of Matters to a Vote of Security Holders                                  
|                                                  | ITEM 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                       
|EXHIBIT INDEX                                    
|EX-31.1 302 Certification-Chief Executive Officer
|EX-31.2 302 Certification-Chief Financial Officer
|EX-32.1 906 Certification-Chief Executive Officer
|EX-32.2 906 Certification-Chief Financial Officer



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CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES

FORM 10-Q

INDEX

For the Quarterly Period Ended July 18, 2003

|                              |                                                                     |                                               |                                                |       |        |   | 
|----------------------------- | ------------------------------------------------------------------- | --------------------------------------------- | ---------------------------------------------- | ----- | ------ | - | 
|                              |                                                                     |                                               |                                                |       | Page   |  
|                              |                                                                     |                                               |                                                |       | Number |  
|                              |                                                                     |                                               |                                                |       |        |  
|PART I. FINANCIAL INFORMATION |                                                                     |                                               |                                                |      
|                             
|                              | ITEM 1. Consolidated Financial Statements                           |                                               |                                                |       |       
|                              |                                                                     | A.
Consolidated Balance Sheets                |                                                |       |        |  
|                              |                                                                     |                                               | July 18, 2003 and March 28, 2003               |       |        | 3 | 
|                              |                                                                     | B. Consolidated Statements of Operations      |                                                |       |        |  
|                              |                                                                     |                                               | 16 weeks ended July 18, 2003 and July 19, 2002 |       |        | 4 | 
|                              |                                                                     | C. Consolidated Statements of Cash Flows      |                                                |       |        |  
|                              |                                                                     |                                               | 16 weeks ended July 18, 2003 and July 19, 2002 |       |        | 5 | 
|                              |                                                                     | D. Notes to Consolidated Financial Statements |                                                |       | 6-14   |  
|                              | ITEM 2. Managements Discussion and Analysis of Financial
Condition |                                               |                                                |       |       
|and Results of Operations     |                                                                     |                                               | 15-19                                          |      
|                              | ITEM 3. Quantitative and Qualitative Disclosures about Market Risks |                                               |                                                | 19    |       
|                              | ITEM 4. Controls and Procedures                                     |                                               |                                                | 19-20 |       
|PART II. OTHER INFORMATION    |                                                                     |                                               |                                                |      
|                             
|                              | ITEM 1. Legal Proceedings                                           |                                               |                                                | 20    |       
|                              | ITEM 4. Submission of Matters to a Vote of Security Holders         |                                               |                                                | 20    |       
|                              | ITEM 6. Exhibits, Reports on Form 8-K                               |                                               |                                                | 21    |       
|SIGNATURES                    |                                                                     |                                               |                                                |      
|EXHIBIT
INDEX                 |                                                                     |                                               |                                                |      

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PART I: FINANCIAL INFORMATION

ITEM 1. Consolidated Financial Statements

CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

|                                       |                                                                                                                                                             |                                            |        |                |        |  |           |         |        | 
|-------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------ | -------------- | ------ |  | --------- | ------- | ------ | 
|                                       |                                                                                                                                                             |                                            |        | July 18,       |        |  | March 28, |        
|                                       |                                                                                                                                                             |                                            |        | 2003           |        |  | 2003      |        
|                                       |                                                                                                                                                             |                                            |        |                |        |  |           |        
|                                       |                                                                                                                                                             |                                            |        | (Unaudited)    |        |  |           |         |       
|                                       |                                                                                                                                                             |                                            |        | (In thousands) |       
|ASSETS                                 |                                                                                                                                                             |                                            |        |                |        |  |           |        
|CURRENT ASSETS:                        |                                                                                                                                                             |                                            |        |                |        |  |           |        
|                                       | Cash and cash equivalents                                                                                                                                   |                                            | $      | 1,791          |        |  | $         | 2,499   |       
|                                       | Accounts receivable, net                                                                                                                                    |                                            |        | 10,051         |        |  |           | 8,112   |       
|                                       | Prepaid expenses and other current assets                                                                                                                   |                                            |        | 4,185          |        |  |           | 1,771   |       
|                                       | Income tax receivable                                                                                                                                       |                                            |        | 305            |        |  |           | 1,965   |       
|                                       |                                                                                                                                                             |                                            |        |                |        | 
|                                       |                                                                                                                                                             | Total current assets                       |        |                | 16,332 |  |           |         | 14,347 | 
|                                       |                                                                                                                                                             |                                            |        |                |        | 
|LAND, BUILDINGS AND EQUIPMENT:         |                                                                                                                                                             |                                            |        |                |        |  |           |        
|                                       | Land                                                                                                                                                        |                                            |        | 9,362          |        |  |           | 9,362   |       
|                                       | Buildings                                                                                                                                                   |                                            |        | 19,103         |        |  |           | 19,924  |       
|                                       | Leasehold improvements                                                                                                                                      |                                            |        | 11,456         |        |  |           | 10,304  |       
|                                       | Vehicles, furniture and equipment                                                                                                                           |                                            |        | 12,796         |        |  |           | 13,202  |       
|                                       |                                                                                                                                                             |                                            |        |                |        | 
|                                       |                                                                                                                                                             |                                            | 52,717 |                |        |  | 52,792    |        
|                                       | Less: accumulated depreciation and amortization                                                                                                             |                                            |        | (17,066        | )      |  |           | (16,663 | )     
|                                       |                                                                                                                                                             |                                            |        |                |        | 
|                                       |                                                                                                                                                             |                                            | 35,651 |                |        |  | 36,129    |        
|                                       |                                                                                                                                                             |                                            |        |                |        | 
|OTHER NONCURRENT ASSETS:               |                                                                                                                                                             |                                            |        |                |        |  |           |        
|                                       | Intangible assets, net                                                                                                                                      |                                            |        | 30,583         |        |  |           | 30,812  |       
|                                       | Refundable deposits and other                                                                                                                               |                                            |        | 2,658          |        |  |           | 2,657   |       
|                                       |                                                                                                                                                             |                                            |        |                |        | 
|                                       |                                                                                                                                                             |                                            | 33,241 |                |        |  | 33,469    |        
|                                       |                                                                                                                                                             |                                            |        |                |        | 
|                                       |                                                                                                                                                             | TOTAL ASSETS                               |        | $              | 85,224 |  |           | $       | 83,945 | 
|                                       |                                                                                                                                                             |                                            |        |                |        | 
|LIABILITIES AND SHAREHOLDERS EQUITY   |                                                                                                                                                             |                                            |        |                |        |  |           |        
|CURRENT LIABILITIES:                   |                                                                                                                                                             |                                            |        |                |        |  |           |        
|                                       | Accounts and drafts payable                                                                                                                                 |                                            | $      | 6,516          |        |  | $         | 5,929   |       
|                                       | Accrued wages and benefits                                                                                                                                  |                                            |        | 6,185          |        |  |           | 6,491   |       
|                                       | Current portion of long-term debt                                                                                                                           |                                            |        | 5,313          |        |  |           | 1,280   |       
|                                       | Exit and closure expense accrual                                                                                                                            |                                            |        | 933            |        |  |           | 1,270   |       
|                                       | Other current liabilities                                                                                                                                   |                                            |        | 11,253         |        |  |           | 12,110  |       
|                                       |                                                                                                                                                             |                                            |        |                |        | 
|                                       |                                                                                                                                                             | Total current liabilities                  |        |                | 30,200 |  |           |         | 27,080 | 
|LONG-TERM DEBT, NET OF CURRENT PORTION |                                                                                                                                                             |                                            | 16,469 |                |        |  | 29,631    |        
|DEFERRED RENT LIABILITY                |                                                                                                                                                             |                                            | 1,386  |                |        |  | 1,421     |        
|                                       |                                                                                                                                                             |                                            |        |                |        | 
|                                       | Total Liabilities                                                                                                                                           |                                            |        | 48,055         |        |  |           | 58,132  |       
|                                       |                                                                                                                                                             |                                            |        |                |        | 
|SHAREHOLDERS EQUITY                   |                                                                                                                                                             |                                            |        |                |        |  |           |        
|                                       | Common Stock, 40,000,000 shares authorized, no par value; 19,516,210 and
5,416,210 issued and outstanding at July 18, 2003 and March 28, 2003,
respectively |                                            |        | 43,291         |        |  |           | 31,665  |       
|                                       | Preferred Stock, 100,000 shares authorized, no par value; no shares
issued or outstanding                                                                   |                                            |        |               |        |  |           |        |       
|                                       | Retained earnings (accumulated deficit)                                                                                                                     |                                            |        | (6,122         | )      |  |           | (5,852  | )     
|                                       |                                                                                                                                                             |                                            |        |                |        | 
|                                       |                                                                                                                                                             | Total shareholders equity                 |        |                | 37,169 |  |           |         | 25,813 | 
|                                       |                                                                                                                                                             |                                            |        |                |        | 
|                                       |                                                                                                                                                             | TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |        | $              | 85,224 |  |           | $       | 83,945 | 
|                                       |                                                                                                                                                             |                                            |        |                |        | 

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)

|                                        |                                                         |   |                                       |       |   |          |        |       |  
|--------------------------------------- | ------------------------------------------------------- | - | ------------------------------------- | ----- | - | -------- | ------ | ----- | -
|                                        |                                                         |   | 16 Weeks Ended                        |      
|                                        |                                                         |   |                                       |      
|                                        |                                                         |   | July 18,                              |       |   | July 19, |       
|                                        |                                                         |   | 2003                                  |       |   | 2002     |       
|                                        |                                                         |   |                                       |       |   |          |       
|                                        |                                                         |   | (In thousands, except per share data) |      
|Revenue from Learning Center Operations |                                                         | $ | 61,060                                |       |   | $        | 44,448 |      
|Revenue from Franchise Operations       |                                                         |   | 1,860                                 |       |   |          |       |      
|                                        |                                                         |   |                                       |       |   |         
|Revenue, net                            |                                                         |   | 62,920                                |       |   |          | 44,448 |      
|Operating expenses of Learning Centers  |                                                         |   | 54,852                                |       |   |          | 39,862 |      
|                                        |                                                         |   |                                       |       |   |         
|Gross profit                            |                                                         |   | 8,068                                 |       |   |          | 4,586  |      
|General and administrative expenses     |                                                         |   | 5,844                                 |       |   |          | 3,528  |      
|Depreciation and amortization expenses  |                                                         |   | 1,240                                 |       |   |          | 763    |      
|Provision for doubtful accounts         |                                                         |   | 337                                   |       |   |          | 175    |      
|Exit and closure expenses               |                                                         |   |                                      |       |   |          | 312    |      
|                                        |                                                         |   |                                       |       |   |         
|                                        | OPERATING INCOME (LOSS)                                 |   |                                       | 647   |   |          |        | (192  | )
|Interest expense, net                   |                                                         |   | 712                                   |       |   |          | 106    |      
|                                        |                                                         |   |                                       |       |   |         
|                                        | (LOSS) BEFORE INCOME TAXES AND DISCONTINUED
OPERATIONS  |   |                                       | (65   | ) |          |        | (298  | )
|Income tax provision (benefit)          |                                                         |   |                                      |       |   |          | (85    | )    
|                                        |                                                         |   |                                       |       |   |         
|                                        | (LOSS) BEFORE DISCONTINUED OPERATIONS                   |   |                                       | (65   | ) |          |        | (213  | )
|Discontinued operations, net of taxes   |                                                         |   | (205                                  | )     |   |          | (195   | )    
|                                        |                                                         |   |                                       |       |   |         
|                                        | NET (LOSS)                                              |   | $                                     | (270  | ) |          | $      | (408  | )
|                                        |                                                         |   |                                       |       |   |         
|EARNINGS (LOSS) PER SHARE:              |                                                         |   |                                       |       |   |          |        |      
|                                        | Basic and diluted (loss) before discontinued operations |   | $                                     | (0.00 | ) |          | $      | (0.04 | )
|                                        | Discontinued operations, net of taxes                   |   |                                       | (0.02 | ) |          |        | (0.04 | )
|                                        |                                                         |   |                                       |       |   |         
|                                        | Net (loss)                                              |   | $                                     | (0.02 | ) |          | $      | (0.08 | )
|                                        |                                                         |   |                                       |       |   |         
|Weighted average shares outstanding     |                                                         |   | 13,347                                |       |   |          | 5,241  |      
|                                        |                                                         |   |                                       |       |   |         

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)

|                                                                                   |                                                   |                                                          |       |                |        |   |               |         |        |  
|---------------------------------------------------------------------------------- | ------------------------------------------------- | -------------------------------------------------------- | ----- | -------------- | ------ | - | ------------- | ------- | ------ | -
|                                                                                   |                                                   |                                                          |       | 16 Weeks Ended |       
|                                                                                   |                                                   |                                                          |       |                |       
|                                                                                   |                                                   |                                                          |       | July 18, 2003  |        |   | July 19, 2002 |        
|                                                                                   |                                                   |                                                          |       |                |        |   |               |        
|                                                                                   |                                                   |                                                          |       | (In thousands) |       
|OPERATING ACTIVITIES:                                                              |                                                   |                                                          |       |                |        |   |               |        
|Net (loss)                                                                         |                                                   | $                                                        | (270  | )              |        | $ | (408          | )      
|Adjustments to reconcile net loss to cash
provided (used) by operating activities: |                                                   |                                                          |       |                |        |   |               |        
|                                                                                   | Depreciation and amortization                     |                                                          |       | 1,240          |        |   |               | 917     |       
|                                                                                   | Provision for doubtful accounts                   |                                                          |       | 351            |        |   |               | 194     |       
|                                                                                   | Deferred rent liability                           |                                                          |       | 164            |        |   |               | (23     | )     
|                                                                                   | Deferred income taxes                             |                                                          |       |               |        |   |               | 163     |       
|                                                                                   | Gains (loss) on sale of assets                    |                                                          |       | 87             |        |   |               | (149    | )     
|                                                                                   | Changes in operating assets and liabilities:      |                                                          |       |                |        |   |               |         |       
|                                                                                   |                                                   | Accounts receivable                                      |       |                | (2,276 | ) |               |         | (428   | )
|                                                                                   |                                                   | Prepaid expenses and other current assets                |       |                | (752   | ) |               |         | 696    |  
|                                                                                   |                                                   | Accounts payable, accruals and other current liabilities |       |                | (1,775 | ) |               |         | 1,812  |  
|                                                                                   |                                                   | Exit and closure expense accrual                         |       |                | (298   | ) |               |         | (1,601 | )
|                                                                                   |                                                   |                                                          |       |                |        |  
|                                                                                   | Net cash provided (used) by operating activities  |                                                          |       | (3,529         | )      |   |               | 1,173   |       
|                                                                                   |                                                   |                                                          |       |                |        |  
|INVESTING ACTIVITIES:                                                              |                                                   |                                                          |       |                |        |   |               |        
|                                                                                   | Acquisition of Tutor Time  (net of cash of $682) |                                                          |       |               |        |   |               | (23,790 | )     
|                                                                                   | Capital spending                                  |                                                          |       | (1,457         | )      |   |               | (739    | )     
|                                                                                   | Proceeds from sale of assets                      |                                                          |       | 836            |        |   |               | 555     |       
|                                                                                   | Payments for refundable deposits and other assets |                                                          |       | (18            | )      |   |               | (5      | )     
|                                                                                   |                                                   |                                                          |       |                |        |  
|                                                                                   | Net cash used in investing activities             |                                                          |       | (639           | )      |   |               | (23,979 | )     
|                                                                                   |                                                   |                                                          |       |                |        |  
|FINANCING ACTIVITIES:                                                              |                                                   |                                                          |       |                |        |   |               |        
|                                                                                   | Net borrowings on revolving line of credit        |                                                          |       | 2,094          |        |   |               | 8,462   |       
|                                                                                   | Repayments under long-term debt                   |                                                          |       | (14,723        | )      |   |               | (275    | )     
|                                                                                   | Issuance of long-term debt                        |                                                          |       | 3,500          |        |   |               | 14,000  |       
|                                                                                   | Changes in drafts payable                         |                                                          |       | 963            |        |   |               | (2,053  | )     
|                                                                                   | Issuance of common shares (net of issuance costs) |                                                          |       | 11,626         |        |   |               |        |       
|                                                                                   |                                                   |                                                          |       |                |        |  
|                                                                                   | Net cash provided by financing activities         |                                                          |       | 3,460          |        |   |               | 20,134  |       
|                                                                                   |                                                   |                                                          |       |                |        |  
|Net decrease in cash and cash equivalents                                          |                                                   |                                                          | (708  | )              |        |   | (2,672        | )      
|Cash and cash equivalents, beginning of year                                       |                                                   |                                                          | 2,499 |                |        |   | 4,891         |        
|                                                                                   |                                                   |                                                          |       |                |        |  
|Cash and cash equivalents, end of period                                           |                                                   | $                                                        | 1,791 |                |        | $ | 2,219         |        
|                                                                                   |                                                   |                                                          |       |                |        |  

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
(UNAUDITED)

NOTE 1  DESCRIPTION OF BUSINESS

Childtime Learning Centers, Inc. conducts business through its wholly-owned
subsidiary Childtime Childcare, Inc. and its other wholly-owned subsidiaries
(collectively, the Company). The Company and its predecessors began
operations in 1967. The Company operates in three business segments: Childtime
Learning Centers, Tutor Time Learning Centers and Franchise Operations. The
Company provides center-based educational services and child care to children
between the ages of six weeks and 12 years under two distinct brand identities:
Childtime Learning Centers (Childtime) and Tutor Time Childcare Learning
Centers (Tutor Time). As of July 18, 2003, the Company operated or
franchised a total of 472 centers system-wide under three major lines of
business and had system-wide licensed capacity capable of serving over 50,000
children. The Companys three lines of business are:



| |  |  | Childtime Learning Centers:273 centers operated by the Company,
consisting of:                
| | - |  | ----------------------------------------------------------------------------------------------
|
| |   |  |  262 Childtime centers and                                                                   
|
| |   |  |  11 Childtime-branded centers operated for third parties;                                    
|
| |  |  | Tutor Time Learning Centers:64 Tutor Time centers operated by the Company; and                
|
| |  |  | Tutor Time Franchise:royalties and other fees received from 135 franchised Tutor Time centers.

Childtime and Tutor Time corporate centers are located in the United States (in
27 states), with the exception of one Tutor Time center located in Canada. The
vast majority of these centers are operated on leased premises, with typical
lease terms ranging from 1 to 25 years; 51 of the Childtime centers are
operated on Company-owned premises.

The 11 Childtime centers the Company operates under management contracts are
all located in the U.S., serving hospitals, corporations and the federal
government. Under these contracts, the Company receives an annual operating fee
and, in some cases, is eligible to receive incentives for improving revenues
and/or managing costs. These contracts are typically up for renewal on an
annual basis.

Tutor Time franchise centers are also predominantly located in the U.S., with
123 centers operating in 12 states. An additional 12 centers are operated in
Canada, Hong Kong, Indonesia, and the Philippines, for the most part under
master franchise agreements. The Company currently guarantees leases for 66 of
its franchise centers, including sites under development.

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NOTE 2  ACQUISITION AND PRO FORMA INFORMATION

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

The Tutor Time acquisition was financed, in part, by Bank One, NA through its
secured revolving line of credit with the Company. Subordinated loans (the
Subordinated Notes) in the aggregate amount of $14 million were provided by a
group of lenders organized by Jacobson Partners to fund the balance of the
Tutor Time acquisition purchase price and to provide related working capital.
The Subordinated Notes were subject to a Subordination Agreement in favor of
Bank One, NA, matured December 31, 2004 and bore interest at 15%, of which 7%
was payable in cash, and the balance was payable in kind by the issuance of
Additional Subordinated Notes, with interest and principal payable on the
earlier of December 31, 2004 or such date on which the Company consummated the
Rights Offering (see Note 6), provided that interest on the Subordinated Notes
(including the Additional Subordinated Notes and interest thereon) could be
paid only to the extent the aggregate proceeds of the Rights Offering exceeded
$14 million. Although Jacobson Partners received no consideration for
arranging this financing, lenders included JP Acquisition Fund II, L.P. and JP
Acquisition Fund III, L.P., entities controlled and managed by affiliates of
Jacobson Partners (for an aggregate of $10,497,154), and three directors of the
Company (Mr. Jacobson, Mr. Morgan and Mr. Kellner) (for an aggregate of
$515,132). The Subordinated Notes were repaid upon completion of the Companys
Rights Offering (see Note 6).

In connection with the Tutor Time acquisition, JP Acquisition Fund II, L.P., JP
Acquisition Fund III, L.P., and certain of their co-investors (collectively,
the Optionees), including Messrs. Jacobson, Morgan and Kellner, agreed to
arrange for the Company to obtain a standby purchase commitment in connection
with the Companys proposed Rights Offering which was completed on May 16, 2003
(See Note 6). As consideration for obtaining such commitment, a Special
Committee of the Board of Directors approved the grant to the Optionees of
options to purchase, in the aggregate, up to 400,000 shares of common stock,
until July 19, 2006, at an exercise price of $5.00 per share.

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

|                                                     |  |                |        |  
|---------------------------------------------------- |  | -------------- | ------ | -
|                                                     |  | 16 Weeks Ended |       
|                                                     |  | July 19, 2002  |       
|                                                     |  |                |       
|Revenue, net                                         |  | $              | 61,431 |  
|Operating loss                                       |  |                | (219   | )
|Loss before income taxes and discontinued
operations |  |                | (298   | )
|Net loss                                             |  |                | (358   | )
|Earnings per share                                   |  | $              | (0.07  | )

In connection with the Tutor Time bankruptcy proceedings, Tutor Time, at the
request of the Company was able to reject numerous leases and franchise
agreements. The accompanying pro forma information includes only the revenues
and costs from those Tutor Time centers and franchises that were not rejected
as part of the bankruptcy proceedings. No pro forma adjustments were made to
the historical Tutor Time corporate overhead expenses ($2.0 million for the 16
weeks ended July 19, 2002). Additional interest expense was included in the pro
forma results based upon the additional debt incurred to finance the Tutor Time
acquisition.

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NOTE 3  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

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

The accompanying financial statements have been prepared by the Company in
accordance with the accounting policies described in the Companys audited
financial statements included in the Companys Annual Report on Form 10-K for
the year ended March 28, 2003, and should be read in conjunction with the notes
thereto.

In the opinion of the Companys management, the accompanying unaudited
consolidated financial statements contain all adjustments which are necessary
to present fairly its financial position as of July 18, 2003, and the results
of its operations and cash flows for the 16 weeks ended July 18, 2003 and July
19, 2002, respectively, and are of a normal and recurring nature. The results
of operations for interim periods are not necessarily indicative of the
operating results to be expected for the full 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.

Fiscal Year

The Company utilizes a 52-53 week fiscal year ending on the Friday closest to
March 31. For fiscal year 2004, the first quarter contained 16 weeks, and the
fiscal year contains 53 weeks. For fiscal year 2003, the first quarter
contained 16 weeks, and the fiscal year contained 52 weeks.

Stock-Based Compensation

The Company has adopted the disclosure
provisions of SFAS No. 123,
Accounting for Stock-Based Compensation, and continues to measure compensation
cost using the intrinsic value method in accordance with Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to
Employees. Had stock
option compensation cost for these plans been determined based on the fair
value at the grant dates for awards under those plans consistent with the
methodology of SFAS No. 123, the Companys net loss and net
loss per share
would have been increased to the pro forma amounts indicated below
(in thousands):

|                                                                                                                                    |  |  |  |   |       |                |      |   |          |   |      | 
|----------------------------------------------------------------------------------------------------------------------------------- |  |  |  | - | ----- | -------------- | ---- | - | -------- | - | ---- | 
|                                                                                                                                    |  |  |  |   |       | 16 Weeks Ended |     
|                                                                                                                                    |  |  |  |   |       |                |     
|                                                                                                                                    |  |  |  |   |       | July 18,       |      |   | July 19, |  
|                                                                                                                                    |  |  |  |   |       | 2003           |      |   | 2002     |  
|                                                                                                                                    |  |  |  |   |       |                |      |   |          |  
|Net loss as reported                                                                                                                |  |  |  | $ | (270  | )              |      | $ | (408     | )
|Total
stock-based employee compensation expense determined under fair value
based method for all awards, net of related tax effects |  |  |  |   | 150   |                |      |   | 6        |  
|                                                                                                                                    |  |  |  |   |       |                |      |   |          |  
|Pro
forma net loss                                                                                                                  |  |  |  | $ | (420  | )              |      | $ | (414     | )
|                                                                                                                                    |  |  |  |   |       |                |      |   |          |  
|Basic
and diluted net loss per share:                                                                                               |  |  |  |   |       |                |      |   |          |  
|As
reported                                                                                                                         |  |  |  | $ | (0.02 | )              |      | $ | (0.08    | )
|Total
stock-based employee compensation expense determined under fair value
based method for all awards, net of related tax effects |  |  |  |   | 0.01  |                |      |   | 0.00     |  
|                                                                                                                                    |  |  |  |   |       |                |      |   |          |  
|Pro
forma                                                                                                                           |  |  |  | $ | (0.03 | )              |      | $ | (0.08    | )
|Weighted average fair value of
options granted during the period                                                                    |  |  |  |   |       | $              | 0.45 |   |          | $ | 1.15 | 
|                                                                                                                                    |  |  |  |   |       |                |      |   |          |  

The fair value of the options used to
compute pro forma net loss and net loss
per share disclosures is the estimated present value at grant date using the
Black-Scholes option-pricing model with the following weighted average
assumptions for the 16 weeks ended July 18, 2003 and
July 19, 2002, respectively; no dividend yield; expected
volatility of 56.4 percent and 37.3 percent, respectively;
risk free interest rate of 2.0 percent and 3.2 percent,
respectively; and expected holding periods of
5.0 years.

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NOTE 4  ACCOUNTS RECEIVABLE

Accounts receivable is presented net of an allowance for doubtful accounts. At
July 18, 2003 and March 28, 2003, the allowance for doubtful accounts was $2.9
million and $2.7 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 July 18,
2003 and March 28, 2003, the aggregate drafts payable were $4.1 million and
$3.2 million, respectively.

NOTE 6  FINANCING ARRANGEMENTS

On May 16, 2003, the Company completed a Rights Offering under which it issued
100,000 units at $158.52 per unit. Total proceeds from the offering were $15.9
million, of which $11.6 million (net of issuance expenses) was for the issuance of 14.1 million shares of
common stock and $3.5 million was new subordinated notes (New Subordinated
Notes). The proceeds of the offering were used to pay off the balance, which
included accrued interest, on the Subordinated Notes (see Note 2). The New
Subordinated Notes bear interest at 15%, payable quarterly, and are due May 15,
2008. Subject to the applicable subordination provisions, these New
Subordinated Notes may be redeemed, at the option of the Company, at any time
and must be redeemed following the occurrence of a change of control. In
either case, the redemption price is 100% of the principal balance of the
Notes, plus accrued and unpaid interest on such principal balance to the date
of redemption.

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NOTE 7  CONTINGENCIES

The Company is primarily liable on approximately $1.0 million for lease
assignments already negotiated in connection with certain lease terminations
resulting from the fiscal 2001 restructuring program (see Note 11). The Company
has recorded a liability for estimates of future liabilities under these
leases. A subsidiary of the Company is primarily or contingently liable for
many of the leases of Tutor Times franchisees. In an effort to build its
franchisee network, Tutor Time either leased the prospective site for a
franchisee, with a subsequent sublease of the site to the franchisee, or
provided a lease guarantee to the landlord for the benefit of the franchisee in
exchange for a monthly lease guarantee fee payable by the franchisee that is
based upon the monthly rent expense of the guaranteed lease. The aggregate
liability is approximately $92.8 million related to leases and $27.2 million
related to guarantees. The leases have durations from 1-20 years. The Company
would be required to pay the related lease obligations in the case of default
by the franchisee. Should the Company be required to make payments under these
leases, it may assume obligations for operating the center. Should the center
not be economically viable, the Company will make provision for the lease
termination at that time. The Company has taken over operations for a center
previously operated by a franchisee as a result of a default under the
franchisees lease and intends to continue to operate this center. Other than
with respect to the foregoing center, the Company has not been notified that it
will be required to make payments under any of these leases or guarantees, does
not believe that any payments are likely and has not recorded any related
liability.

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

Various legal actions and other claims are pending or could be asserted against
the Company. In addition, the Company has and will continue to vigorously
protect its rights against parties that violate franchise agreements or
infringe on its intellectual property rights. Litigation is subject to many
uncertainties; the outcome of individual litigated matters is not predictable
with assurance; and it is reasonably possible that some of these matters may be
decided unfavorably to the Company. It is the opinion of management that the
ultimate liability, if any, with respect to these matters will not materially
affect the financial position, results of operations or cash flows of the
Company.

NOTE 8  OPTION GRANTS AND PAYMENTS FOR CONSULTING SERVICES

In July 2000, the Company retained Jacobson Partners, of which Benjamin R.
Jacobson, the Companys Chairman of the Board, is the managing general partner,
to provide management and financial consulting services. As part of the
consideration paid with respect to, and to add further incentive, for such
services, Jacobson Partners was granted stock options to purchase 557,275
shares. Jacobson Partners has exercised options totaling 294,117 shares at a
cost of $2,500,000. The remaining 263,158 shares expired in July 2002.
Additionally, Jacobson Partners receives an annual consulting fee in the amount
of $250,000, plus reimbursement of reasonable out-of-pocket expenses. In
connection with the Tutor Time acquisition, Jacobson Partners was paid an
advisory fee consisting of $333,336 and the issuance of 175,438 shares, and
options were granted to certain related parties to acquire up to 400,000 shares
of the Companys common stock (see Note 2). Total expenses incurred for
Jacobson Partners (exclusive of the Tutor Time fee) were $77,000 and $77,000
for the 16 weeks ended July 18, 2003 and July 19, 2002, respectively, and are
included in General and administrative expenses in the accompanying
Consolidated Statement of Operations.

NOTE 9  INCOME TAXES

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

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

|                    |  |   |        |  
|------------------- |  | - | ------ | -
|Deferred tax assets |  | $ | 4,802  |  
|Valuation allowance |  |   | (4,497 | )
|                    |  |   |       
|Net deferred taxes  |  | $ | 305    |  
|                    |  |   |       

NOTE 10  LOSS PER SHARE

For the 16 weeks ended July 18, 2003 and July 19, 2002, basic loss per share
has been calculated by dividing earnings available to common shareholders by
the weighted average number of common shares outstanding for the period. The
calculation of basic and diluted shares is as follows (in thousands):

|                                         |  |                                   |        |  |               |  |       | 
|---------------------------------------- |  | --------------------------------- | ------ |  | ------------- |  | ----- | 
|                                         |  | Calculation of Incremental Shares |       
|                                         |  | 16 weeks ended                    |       
|                                         |  |                                   |       
|                                         |  | July 18, 2003                     |        |  | July 19, 2002 | 
|                                         |  |                                   |        |  |               | 
|Basic shares (based on
weighted average) |  |                                   | 13,347 |  |               |  | 5,241 | 
|Stock options (1)                        |  |                                   |       |  |               |  |      | 
|                                         |  |                                   |        |  |               | 
|Diluted shares                           |  |                                   | 13,347 |  |               |  | 5,241 | 
|                                         |  |                                   |        |  |               | 

(1)  For the 16 weeks ended July 18, 2003 and July 19, 2002, respectively, the
above calculation does not include 80,599 and 0 shares issuable from employee
stock options that have the potential to dilute earnings per share in the
future. These shares were not included in the above calculation of diluted
shares because to do so would have been antidilutive.

NOTE 11  EXIT AND CLOSURE EXPENSES AND DISCONTINUED OPERATIONS

The Company instituted a restructuring program in fiscal 2001 and incurred a
charge of $4.0 million for fiscal year ended March 30, 2001 to close various
under-performing centers. During the 16 weeks ended July 19, 2002, the
Company incurred a charge of $0.5 million to increase reserves and provide for
an additional center closure. During the 16 weeks ended July 18, 2003, no
additional charges were made. The Company made payments related to this
restructuring program of $0.3 million and $0.2 million for the 16 weeks ended
July 18, 2003 and July 19, 2002, respectively. A summary of the accrual is as
follows (in thousands):

|                                      |  |                                                                        |       |  |          |   |    |          |      |   |               |         |        |   |     | 
|------------------------------------- |  | ---------------------------------------------------------------------- | ----- |  | -------- | - | -- | -------- | ---- | - | ------------- | ------- | ------ | - | --- | 
|                                      |  | Exit and Closure Expenses and Discontinued operations Accrual Analysis |      
|                                      |  |                                                                        |      
|                                      |  | Beginning                                                              |       |  |          |   |    |          |      |   |               |         | Ending |  
|                                      |  | Accrual                                                                |       |  |          |   |    |          | Cash |   |               | Accrual |       
|                                      |  | March 28, 2003                                                         |       |  | Expenses |   |    | Payments |      |   | July 18, 2003 |        
|                                      |  |                                                                        |       |  |          |   |    |          |      |   |               |        
|Continuing operations lease costs     |  | $                                                                      | 951   |  |          | $ |   |          |      | $ | 289           |         |        | $ | 662 | 
|Discontinued operations  lease costs |  |                                                                        | 319   |  |          |   | 91 |          |      |   | 139           |         |        |   | 271 | 
|                                      |  |                                                                        |       |  |          |   |    |          |      |   |               |        
|Total                                 |  | $                                                                      | 1,270 |  |          | $ | 91 |          |      | $ | 428           |         |        | $ | 933 | 
|                                      |  |                                                                        |       |  |          |   |    |          |      |   |               |        

The lease liability for the centers closed during the 16 weeks ended July 18,
2003 has been recorded at managements estimate of cost.

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A summary of discontinued operations is as follows (in thousands):

|                                       |                                           |   |                |      |   |               |      |      |  
|-------------------------------------- | ----------------------------------------- | - | -------------- | ---- | - | ------------- | ---- | ---- | -
|                                       |                                           |   | 16 Weeks Ended |     
|                                       |                                           |   |                |     
|                                       |                                           |   | July 18, 2003  |      |   | July 19, 2002 |     
|                                       |                                           |   |                |      |   |               |     
|Revenues, net                          |                                           | $ | 129            |      |   | $             | 435  |     
|Operating expenses of Learning Centers |                                           |   | 240            |      |   |               | 560  |     
|                                       |                                           |   |                |      |   |              
|Gross profit                           |                                           |   | (111           | )    |   |               | (125 | )   
|Provision for doubtful accounts        |                                           |   |               |      |   |               | 19   |     
|Depreciation and amortization expenses |                                           |   | 3              |      |   |               | 5    |     
|Exit and closure expenses              |                                           |   | 91             |      |   |               | 200  |     
|                                       |                                           |   |                |      |   |              
|                                       | Discontinued operations before income tax |   |                | (205 | ) |               |      | (349 | )
|Income tax provision (benefit)         |                                           |   |               |      |   |               | (154 | )   
|                                       |                                           |   |                |      |   |              
|                                       | Discontinued operations, net of tax       |   | $              | (205 | ) |               | $    | (195 | )
|                                       |                                           |   |                |      |   |              

NOTE 12  INTANGIBLE ASSETS AND GOODWILL

The changes in the carrying amounts of goodwill and other intangible assets for
the 16 weeks ended July 18, 2003 were as follows (in thousands):

|                          |  |         |        |  |              |   |     |         |         |   |             |  |  |            |    | 
|------------------------- |  | ------- | ------ |  | ------------ | - | --- | ------- | ------- | - | ----------- |  |  | ---------- | -- | 
|                          |  | Balance |        |  |              |   |     |         | Balance |  
|                          |  | 3/28/03 |        |  | Amortization |   |     | 7/18/03 |         |   | Useful life | 
|                          |  |         |        |  |              |   |     |         |         |   |             | 
|Goodwill                  |  | $       | 17,866 |  |              | $ |    |         |         | $ | 17,866      |  |  | Indefinite
|Franchise Agreements      |  |         | 8,775  |  |              |   | 140 |         |         |   | 8,635       |  |  |            | 20 | 
|Trade Name and trademarks |  |         | 3,770  |  |              |   | 60  |         |         |   | 3,710       |  |  |            | 20 | 
|Curriculum                |  |         | 396    |  |              |   | 28  |         |         |   | 368         |  |  |            | 5  | 
|Covenants                 |  |         | 5      |  |              |   | 4   |         |         |   | 1           |  |  |            | 5  | 

Estimated amortization of intangible assets is expected to be $0.7 million for
fiscal 2004 and approximately $0.7 million annually for the next four years.

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NOTE 13  SEGMENT INFORMATION

The Company has three reportable segments: Childtime Learning Centers, Tutor
Time Learning Centers and Tutor Time Franchise. Childtime operates childcare
centers primarily under the Childtime Learning Centers brand name, Tutor Time
operates childcare centers under the Tutor Time brand name and Franchise
licenses and provides developmental and administrative support to franchisees
operating under the Tutor Time brand name. Corporate and other represent all
general and administrative costs associated with supporting the Companys
segments. For the Tutor Time Franchise segment, revenues and operating income
represent royalties and other fees payable by franchisees and support costs are
included in general and administrative expenses. The accounting polices of the
segments are the same as those described in the summary of significant
accounting policies. The Companys reportable segments are reported separately
because the Companys chief operating decision maker uses the segment
information in determining the allocation of resources among segments and
assessing the performance of the segments.

Information about the Companys operating segments are presented below (in
thousands):

|                         |                               |       |   |                |        |  |          |        |        |  
|------------------------ | ----------------------------- | ----- | - | -------------- | ------ |  | -------- | ------ | ------ | -
|                         |                               |       |   | 16 Weeks Ended |       
|                         |                               |       |   |                |       
|                         |                               |       |   | July 18,       |        |  | July 19, |       
|                         |                               |       |   | 2003           |        |  | 2002     |       
|                         |                               |       |   |                |        |  |          |       
|Revenues:                |                               |       |   |                |        |  |          |       
|                         | Childtime                     |       | $ | 44,573         |        |  | $        | 44,448 |       
|                         | Tutor Time                    |       |   | 16,487         |        |  |          |       |       
|                         | Franchise                     |       |   | 1,860          |        |  |          |       |       
|                         |                               |       |   |                |        | 
|                         |                               | Total |   | $              | 62,920 |  |          | $      | 44,448 |  
|                         |                               |       |   |                |        | 
|Operating income (loss): |                               |       |   |                |        |  |          |       
|                         | Childtime                     |       | $ | 5,368          |        |  | $        | 4,411  |       
|                         | Tutor Time                    |       |   | 503            |        |  |          |       |       
|                         | Franchise                     |       |   | 1,860          |        |  |          |       |       
|                         | Depreciation and amortization |       |   | (1,240         | )      |  |          | (763   | )     
|                         | Corporate and other           |       |   | (5,844         | )      |  |          | (3,840 | )     
|                         |                               |       |   |                |        | 
|                         |                               | Total |   | $              | 647    |  |          | $      | (192   | )
|                         |                               |       |   |                |        | 
|Goodwill:                |                               |       |   |                |        |  |          |       
|                         | Childtime                     |       | $ | 7,215          |        |  | $        | 17,273 |       
|                         | Tutor Time (1)                |       |   | 5,578          |        |  |          | 5,937  |       
|                         | Franchise (1)                 |       |   | 5,073          |        |  |          | 5,399  |       
|                         |                               |       |   |                |        | 
|                         |                               | Total |   | $              | 17,866 |  |          | $      | 28,609 |  
|                         |                               |       |   |                |        | 
|All other assets:        |                               |       |   |                |        |  |          |       
|                         | Childtime                     |       | $ | 46,172         |        |  | $        | 51,909 |       
|                         | Tutor Time                    |       |   | 10,163         |        |  |          | 5,711  |       
|                         | Franchise                     |       |   | 11,023         |        |  |          | 13,850 |       
|                         |                               |       |   |                |        | 
|                         |                               | Total |   | $              | 67,358 |  |          | $      | 71,470 |  
|                         |                               |       |   |                |        | 

(1)  For the 16 weeks ended July 19, 2002, Tutor Time and Franchise
Operations goodwill includes estimated amounts associated with the previously
unallocated purchase price. The purchase price allocations were adjusted as of
March 28, 2003, and these adjustments are reflected in the consolidated balance
sheet as of that date.

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NOTE 14  FINANCIAL INSTRUMENT

The Company has exposure to market risk for changes in interest rates related
to its debt obligations. The Company did not have cash flow exposure due to
rate changes on its 15% New Subordinated Notes in the amount of $3.5 million at
July 18, 2003. As of July 18, 2003, the Company had cash flow exposure on the
revolving line of credit, with an outstanding balance of $15.0 million, and its
notes payable, with an outstanding balance of $3.1 million, which has been
partially offset by the Company entering into $5.0 million notional amount of
interest rate swap contracts. These contracts, which have maturity
dates of November 2005 and January 2006, provide for the Company to pay
interest at an average fixed rate of 2.98% in return for receiving interest at
a floating rate of three month LIBOR, which is reset in three month intervals.
The fair value of interest rate swap agreements is subject to changes in value
due to changes in interest rates and the fair value of less than $0.1 million, is
included in other current liabilities on the consolidated balance sheet as of
July 18, 2003.

NOTE 15  NEW ACCOUNTING PRONOUNCEMENTS

In April 2003, the FASB issued SFAS No. 149, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 149 amends SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS No. 149
improves financial reporting by requiring that contracts with comparable
characteristics be accounted for similarly. SFAS No. 149 is effective for
contracts entered into or modified after June 30, 2003 and should be applied
prospectively. The Company anticipates the adoption of SFAS No. 149 will not
have a material impact on its financial condition or results of operations.

During May 2003, the FASB issued SFAS 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS 150
clarifies the accounting for certain financial instruments with characteristics
of both liabilities and equity and requires that those instruments be
classified as liabilities in statements of financial position. Previously, many
of those financial instruments were classified as equity. SFAS 150 is effective
for financial instruments entered into or modified after May 31, 2003 and
otherwise is effective at the beginning of the first interim period beginning
after June 15, 2003. The Company does not expect the adoption of SFAS 150 to
have a significant impact on its operating results or financial position.

In January 2003, the FASB issued FIN 46, Consolidation of Variable
Interest Entities, an interpretation of Accounting Research Bulletin (ARB) 51.
FIN 46 addresses the consolidation of entities for which control is achieved
through means other than through voting rights (variable interest entities or
VIE) by clarifying the application of ARB No. 51, Consolidated Financial
Statements,to certain entities in which equity investors do not have the
characteristics of a controlling financial interest or do not have sufficient
equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. FIN 46 provides guidance on
how to determine when and which business enterprise (the primary beneficiary)
should consolidate the VIE. In addition, FIN 46 requires that both the primary
beneficiary and all other enterprises with a significant variable interest in a
VIE make additional disclosures.

The disclosure provisions of FIN 46 are effective in all financial statements
initially issued after January 31, 2003. FIN 46 is required to be immediately
applied by all entities with a variable interest in a VIE created after January
31, 2003. A public entity with a variable interest in a VIE created before
February 1, 2003 is required to apply FIN 46 to that entity no later than the
beginning of the first interim or annual reporting period beginning after June
15, 2003. This accounting pronouncement is not expected to have a significant
impact on the Companys financial position or results of operations.

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ITEM 2. Managements Discussion and Analysis

GENERAL

The information presented herein refers to the 16 weeks ended July 18, 2003
(first quarter 2004), compared to the 16 weeks ended July 19, 2002 (first
quarter 2003).

The results of Learning Centers opened, acquired or disposed of are included in
the Companys consolidated financial statements from the date of opening or
acquisition and through the date of disposition, except for those centers
treated as discontinued operations in accordance with SFAS 144. The timing of
such new openings, acquisitions or dispositions could influence comparisons of
year over year results. These comparisons were particularly influenced by the
Companys acquisition of substantially all of the assets of Tutor Time Learning
Systems, Inc., a Florida Corporation (Tutor Time), on July 19, 2002.

During the first quarter 2004, the Company closed three Learning Centers. The
Company closed two Learning Centers during the first quarter 2003.

RESULTS OF OPERATIONS

Revenue, net. Net revenue for first quarter 2004 increased $18.5 million, or
41.6%, from the same period last year to $62.9 million. The increase was
primarily a result of additional revenues of $16.5 million contributed by Tutor
Time centers and $1.9 million contributed by Franchise Operations, both of
which were acquired at the end of first quarter 2003. Childtime center revenues
increased $0.1 million, with continuing center revenue increases of $0.7
million partially offset by the loss of revenues from closed centers of $0.6
million. Comparable Childtime center revenues, defined as centers opened 18
months or longer, increased 1.6%. Revenues from closed centers relate to
centers closed in fiscal 2002 or fiscal 2003 that are not considered
discontinued operations under SFAS 144.

Operating expenses of Learning Centers.Operating expenses for first quarter
2004 increased $15.0 million, or 37.6%, from the same period last year to $54.9
million. The increase was a result of additional operating expenses of $15.9
million for Tutor Time centers, offset by a decrease of operating expenses of
$0.9 million for Childtime centers. The decrease in Childtime centers
operating expenses was a result of closed centers, along with improvements in
labor and center operating costs, partially offset by increased occupancy
costs. Operating expenses as a percentage of revenue from Learning Center
Operations increased to 89.8% for first quarter 2004 from 89.7% from the same
period last year. The increase was attributable to the acquisition of the Tutor
Time centers, which experienced higher operating expenses for first quarter
2004, partially offset by an improvement in operating expenses on the Childtime
centers over the same period last year.

Gross profit. Gross profit for first quarter 2004 increased $3.5 million, or
75.9%, from the same period last year to $8.1 million. The increase was
attributable to $0.6 million contributed by Tutor Time centers, $1.9 million
contributed by Franchise Operations and $1.0 million contributed by Childtime
centers. Gross profit percentages for first quarter 2004 by segment were 12.7%
for Childtime centers (as compared to 10.3% for 2003), 3.4% for Tutor Time
centers and 100% for Franchise Operations. The increase in Childtime centers
gross profit is a result of closed centers, along with improvements in labor
and center operating costs, partially offset by increased occupancy costs.

Provision for doubtful accounts. Provision for doubtful accounts for first
quarter 2004 increased to $0.3 million from $0.2 million for the same period
last year. This increase was attributable to increased revenues.

General and administrative expenses. General and administrative expenses for
first quarter 2004 increased $2.3 million, or 64.8%, from the same period last
year to $5.8 million. This increase was a result of costs associated with
supporting the Tutor Time centers and Franchise Operations, and costs
associated with staffing leadership and support positions that were unfilled in
the same period last year.

Depreciation and amortization expense. Depreciation and amortization expense
for first quarter 2004 increased $0.5 million, or 62.5%, from the same period
last year to $1.2 million. This was a result of depreciation and amortization
expense attributable to the Tutor Time centers.

Exit and closure expenses. The Company instituted a restructuring program in
fiscal 2001 and incurred a charge of $4.0 million for fiscal year ended March
30, 2001 to close various under-performing centers. During first quarter
2003, the Company incurred a

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charge of $0.3 million to increase the reserves.
During first quarter 2004, no additional charges were made. The Company made
payments related to this restructuring program of $0.3 and $0.2 for first
quarter 2004 and first quarter 2003, respectively.

Interest expense. Interest expense for first quarter 2004 was $0.8 million,
compared to $0.1 million for the same period last year. This increase was a
result of indebtedness incurred in connection with the acquisition of Tutor
Time, partially offset by the reduction of interest rates on variable rate
indebtedness.

Income tax benefit.Income tax benefit for first quarter 2004 was $0.0 million,
compared to $0.2 million for the same period last year. The effective tax rate
was 0.0% for first quarter 2004 compared to 36.9% for the same period last
year. The tax benefit and rate for first quarter 2004 was reduced by a
valuation reserve.

Discontinued operations, net of taxes.Discontinued operations, net of taxes,
for first quarter 2004 was a loss of ($0.2 million), compared to a loss of
($0.2 million) for the same period last year. These losses include operating
and lease termination costs associated with closed centers.

Net loss. As a result of the foregoing changes, net loss decreased to ($0.3)
million for first quarter 2004, compared to a net loss of ($0.4) million for
the same period last year.

LIQUIDITY AND CAPITAL RESOURCES

The Companys primary cash requirements currently consist of its funding of
losses from operations, expenses associated with planned center openings,
repayment of debt, maintenance and capital improvement of existing centers, and
funding lease termination costs in conjunction with its restructuring program.
The Company expects to fund cash needs through the revolving credit facility,
described below, and cash generated from operations, although alternative forms
of funding continue to be evaluated and new arrangements may be entered into in
the future. While new enrollments are generally highest during the traditional
fall back to school period and after the calendar year-end holidays,
enrollment generally decreases during the summer months and calendar year-end
holidays, resulting in decreased liquidity. Should cash flow generated from
operations and borrowings available under the revolving credit facility not be
adequate to provide for its working capital and debt service needs, the Company
will attempt to make other arrangements to provide needed liquidity. No
assurance can be given that such sources of liquidity will be sufficient.

On June 25, 2003, the Company amended its $17.5 million Amended and Restated
Credit Agreement with its existing lender. This revolving line of credit will
mature on June 30, 2004, and is secured by the Companys receivables, equipment
and real estate, with interest payable at a variable rate, at the Companys
option, based on either the prime rate or the Eurodollar rate. There were
outstanding borrowings of $15.0 million at July 18, 2003, and $13.0 million at
March 28, 2003. Outstanding letters of credit reduced the availability under
the line of credit in the amount of $2.5 million at both July 18, 2003 and
March 28, 2003.

Under this agreement, the Company is required to maintain certain financial
ratios and other financial conditions. In addition, there are restrictions on
the incurrence of additional indebtedness, disposition of assets and
transactions with affiliates. During each of the first three fiscal quarters of
the year ended March 28, 2003, the Company had not maintained minimum
consolidated EBITDA levels and had not provided timely reporting as required by
the Amended and Restated Credit Agreement. The Companys lender provided
waivers for these events of non compliance. The Company is in compliance with
the Amended and Restated Credit Agreement as of July 18, 2003.

Net cash provided (used) by operating activities was ($3.5) million for first
quarter 2004, compared to $1.2 million for the same period last year. First
quarter 2004 cash provided (used) by operating activities was negatively
impacted by an increase in the accounts receivable balance and a decrease in
current liabilities and other accruals.

During first quarter 2004, the Company completed a Rights Offering under which
it issued 100,000 units at $158.52 per unit. Total proceeds from the offering
were $15.9 million, of which $12.4 million was for the issuance of 14.1 million
shares of common stock and $3.5 million was new subordinated notes (New
Subordinated Notes). The proceeds of the offering were used to pay off the
balance, which included accrued interest, on the Subordinated Notes (see Note 2
of the Companys Notes to Consolidated Financial Statements (unaudited)). The
New Subordinated Notes bear interest at 15%, payable quarterly, and are due May
15, 2008. Subject to the applicable subordination provisions, these New
Subordinated Notes may be redeemed, at the option of the Company, at any time
and must be redeemed following the occurrence of a change of control. In
either case, the redemption price is 100% of the principal balance of the
Notes, plus accrued and unpaid interest on such principal balance to the date
of redemption.

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As a result of the Rights Offering, the Company recorded in first quarter 2004,
the issuance of long-term debt of $3.5 million, the repayment of long-term debt
of $14.7 million and the issuance of common shares in the amount of $11.6
million. Additionally, the Company increased its borrowings on the line of
credit by $2.1 million. This compared to financing activities of $20.1 million
for the same period last year, consisting primarily of net borrowings on the
revolving line of credit of $8.5 million, the issuance of long-term debt of
$14.0 million offset by changes in drafts payable of $2.1 million. First
quarter 2003 financing activities primarily related to the acquisition of
substantially all of the assets of Tutor Time Learning Systems, Inc., as
discussed below.

Investing activities were $0.6 million for first quarter 2004, of which $1.5
million was used for capital spending partially offset by $0.8 million of
proceeds from asset sales. Investing activities were $24.0 million for the same
period last year, and consisted primarily of the acquisition of substantially
all of the assets of Tutor Time Learning Systems, Inc., as discussed below.

On July 19, 2002, the Company acquired the assets of Tutor Time Learning
Systems, Inc., for an aggregate purchase price of approximately $22.8 million,
including acquisition costs, plus the assumption of certain liabilities. The
assets acquired by the Company consisted of substantially all of the operating
assets and contract rights used by Tutor Time in its child care operations,
which were comprised of 198 company-owned and franchised child care centers
operating in 23 states and internationally, and were purchased to improve the
range of the Companys product offering and to enter the child care franchise
business. The Tutor Time acquisition was financed, in part, through the
Companys $17.5 million secured bank credit facility as well as the issuance of
$14 million of subordinated loans (the Subordinated Notes). The Subordinated
Notes were issued to the JP Acquisition Fund Group (see Related Party
Transactions below) to fund the balance of the Tutor Time acquisition purchase
price and to provide related working capital. The Subordinated Notes had an
original maturity of December 31, 2004 and bore interest at 15%, of which 7%
was payable in cash, with the balance payable in kind by the issuance of
additional subordinated notes.

During fiscal 2003, the Company entered into interest rate swap contracts to
manage its exposure to fluctuations in interest rates relating to the revolving
line of credit. Swap contracts fix the interest payments of floating rate debt
instruments. As of July 18, 2003, contracts representing $5.0 million of
notional amount were outstanding with maturity dates of November 2005 and
January 2006. These contracts provide for the Company to pay interest at an
average fixed rate of 2.98% in return for receiving interest at a floating rate
of three month LIBOR, which is reset in three month intervals. The fair value
of interest rate swap agreements is subject to changes in value due to changes
in interest rates. During first quarter 2004, the Company recognized a loss of
$19,000 as a result of a decline in the market value of the outstanding
interest rate contracts.

Contractual Obligations and Commitments

A subsidiary of the Company is primarily or contingently liable for many of the
leases of Tutor Times franchisees. In an effort to build its franchisee
network, Tutor Time either leased the prospective site for a franchisee, with a
subsequent sublease of the site to the franchisee, or provided a lease
guarantee to the landlord for the benefit of the franchisee in exchange for a
monthly lease guarantee fee payable by the franchisee that is based upon the
monthly rent expense of the guaranteed lease. The payments the Company could be
required to pay related to leases and guarantees aggregates $92.8 million and
$22.2 million, respectively, in case of default by the franchisee. Should the
Company be required to make payments under these leases, it may assume
obligations for operating the center. Should the center not be economically
viable, the Company will make provision for the lease termination at that time.
The Company has taken over operations for a center previously operated by a
franchisee as a result of a default under the franchisees lease and intends to
continue to operate this center. Other than with respect to the foregoing
center, the Company has not been notified that it will be required to make
payments under any of these leases or guarantees, does not believe that any
payments are likely and has not recorded any related liability. At July 18,
2003, aggregate potential payments on leases and guarantees over the next five
fiscal years and thereafter were as follows:

|                            |  |       |         |  |        |                |       |       |     |   |        |     |  |         |        |  |  |   |        | 
|--------------------------- |  | ----- | ------- |  | ------ | -------------- | ----- | ----- | --- | - | ------ | --- |  | ------- | ------ |  |  | - | ------ | 
|                            |  |       |         |  |        | Less Than      |       |       | 1-3 |   |        | 4-5 |  |         | After  | 
|                            |  | Total |         |  | 1 Year |                |       | Years |     |   | Years  |     |  | 5 Years |       
|                            |  |       |         |  |        |                |       |       |     |   |        |     |  |         |       
|                            |  |       |         |  |        | (In thousands) |       |       |     |   |       
|Franchise Lease Guarantees  |  | $     | 22,243  |  |        | $              | 1,805 |       |     | $ | 5,197  |     |  | $       | 2,736  |  |  | $ | 12,505 | 
|Franchise Lease Commitments |  |       | 92,807  |  |        |                | 5,239 |       |     |   | 22,073 |     |  |         | 13,714 |  |  |   | 51,781 | 
|                            |  |       |         |  |        |                |       |       |     |   |        |     |  |         |       
|Total                       |  | $     | 115,050 |  |        | $              | 7,044 |       |     | $ | 27,270 |     |  | $       | 16,450 |  |  | $ | 64,286 | 
|                            |  |       |         |  |        |                |       |       |     |   |        |     |  |         |       

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Related Party Transactions

In addition to the related party transactions described in the Companys Annual
Report on Form 10-K for the fiscal year ended March 28, 2003 (see Item 7,
Managements Discussion and Analysis of Financial Condition and Results of
Operations  Related Party Transactions), involving Jacobson Partners, see
Note 2, Acquisition and Pro Forma Information, of the Companys Notes to
Consolidated Financial Statements (unaudited), included in this Report under
Item 1, for additional transactions entered into with Jacobson Partners in
connection with the Companys Rights Offering. Jacobson Partners is a private
equity firm whose managing partner is Benjamin R. Jacobson, the Companys
Chairman of the Board. James J. Morgan, a director of the Company and former
interim Chairman of the Board and interim Chief Executive Officer, is also a
partner of Jacobson Partners, and George A. Kellner, the Companys Vice
Chairman of the Board, serves as a special advisor to Jacobson Partners.

Contingencies

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

Various legal actions and other claims are pending or could be asserted against
the Company. In addition, the Company has and will continue to vigorously
protect its rights against parties that violate franchise agreements or
infringe on its intellectual property rights. Litigation is subject to many
uncertainties; the outcome of individual litigated matters is not predictable
with assurance; and it is reasonably possible that some of these matters may be
decided unfavorably to the Company. It is the opinion of management that the
ultimate liability, if any, with respect to these matters will not materially
affect the financial position, results of operations or cash flows of the
Company.

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Critical Accounting Policies

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires that
management make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes. Predicting future events is
inherently an imprecise activity and as such requires the use of judgment.
Actual results may vary from estimates in amounts that may be material to the
financial statements.

For a description of the Companys significant accounting policies, see Note 3,
Summary of Significant Accounting Policies, to the Consolidated Financial
Statements (unaudited) included in this Report under Item 1. For a more
complete description, please refer to the Companys Annual Report on Form 10-K
for the fiscal year ended March 28, 2003.

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

This Form 10-Q contains certain forward-looking statements regarding, among
other things, the anticipated financial and operating results of the Company.
Investors are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company undertakes no
obligation to publicly release any modifications or revisions to these
forward-looking statements to reflect events or circumstances occurring after
the date hereof or to reflect the occurrence of unanticipated events. In
connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, the Company cautions investors that future
financial and operating results may differ materially from those projected in
forward-looking statements made by, or on behalf of, the Company. Such
forward-looking statements involve known and unknown risks, uncertainties, and
other factors that may cause the actual results, performance, or achievements
of the Company to be materially different from any future results, performance,
or achievements expressed or implied by such forward-looking statements.
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
exit and closure expenses, pricing, competition, insurability, demand for
childcare and general economic conditions. Accordingly, actual results could
differ materially from those projected in such forward-looking statements.




ITEM 3. Quantitative and Qualitative Disclosures about Market Risks

Market risk represents the risk of loss that may impact our consolidated
financial position, results of operations or cash flows. The Company is exposed
to market risk in the areas of interest rates and foreign currency exchange
rates.

Interest Rates

The Company has exposure to market risk for changes in interest rates related
to its debt obligations. The Company did not have cash flow exposure due to
rate changes on its 15% New Subordinated Notes in the amount of $3.5 million at
July 18, 2003. As of July 18, 2003, the Company had cash flow exposure on the
revolving line of credit, with an outstanding balance of $15.0 million, and its
notes payable, with an outstanding balance of $3.1 million, which has been
partially offset by the Company entering into $5.0 million notional amount of
interest rate swap contracts. Accordingly, a 2% (200 basis points) change in
the LIBOR rate or the prime rate would have resulted in interest expense
changing by approximately $0.1 million in the first quarter 2004.

Foreign Currency Exchange Rates

The Companys exposure to foreign currency exchange rates is limited to
revenues for one company owned center and franchise royalties for 12 franchised
centers. Based upon the relative size of our foreign operations, the Company
does not believe that the reasonably possible near-term change in the related
exchange rate would have a material effect on its financial position, results
of operations and cash flows.




ITEM 4. Controls and Procedures

Under the supervision and with the participation of our management, including
our chief executive officer and chief financial officer, we have evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this quarterly report, and,
based on their evaluation, our chief executive officer and chief financial
officer have concluded that these controls and procedures are effective. There
were no significant changes in our internal control over financial reporting
during the fiscal quarter ended July 18, 2003, that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.

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Disclosure controls and procedures are our controls and other procedures that
are designed to ensure that information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities
and Exchange Commissions rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by us in the reports that we file under
the Exchange Act is accumulated and communicated to our management, including
our chief executive officer and chief financial officer, as appropriate to
allow timely decisions regarding required disclosure.




PART II  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 (unaudited) included in Part I, Item 1 of
this Report.

ITEMS 2 and 3 are not applicable.




ITEM 4. Submission of Matters to a Vote of Security Holders

The Companys Annual Meeting of Shareholders was held on July 30, 2003. At the
meeting, the shareholders voted upon the election of directors and the approval
of the Childtime Learning Centers, Inc. 2003 Equity Compensation Plan. The
following is a tabulation of the votes:

(a)  Election of Directors

|                     |  |     |            |                |  |         | 
|-------------------- |  | --- | ---------- | -------------- |  | ------- | 
|                     |  | For |            | Votes Withheld | 
|                     |  |     |            |                | 
|Benjamin R. Jacobson |  |     | 17,410,609 |                |  | 305,470 | 
|Brett D. Shevack     |  |     | 17,552,452 |                |  | 163,627 | 
|Kenneth Johnsson     |  |     | 17,552,652 |                |  | 163,427 | 

|                                         |  |     |            |  |         |  |         |           |  |  |    | 
|---------------------------------------- |  | --- | ---------- |  | ------- |  | ------- | --------- |  |  | -- | 
|                                         |  | For |            |  | Against |  |         | Abstained | 
|                                         |  |     |            |  |         |  |         |           | 
|(b) Approval of Equity Compensation Plan |  |     | 15,198,040 |  |         |  | 184,033 |           |  |  | 76 | 

Other directors of the Company whose term of office as a director continued
after the Annual Meeting of Shareholders were: George A. Kellner, James J.
Morgan, William D. Davis, Jason K. Feld and Paula L. Gavin.

ITEM 5 is not applicable.

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ITEM 6. Exhibits and Reports on Form 8-K

(a) Exhibits

|     |  |                                                                                                                                                                                                              
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1 |  | Childtime Learning Centers, Inc. 2001 Equity Compensation Plan, filed as
Exhibit 99.1 to the Registrants Form S-8 Registration Statement
(Registration No. 333-107483), is incorporated herein by reference.
|31.1 |  | Rule 13a-14(a) Certification by William D. Davis, President and
Chief Executive Officer                                                                                                                      
|31.2 |  | Rule 13a-14(a) Certification by Frank M. Jerneycic, Treasurer and
Chief Financial Officer                                                                                                                    
|32.1 |  | Certification pursuant to 18 U.S.C. §1350, as adopted pursuant to §906
of the Sarbanes-Oxley Act of 2002                                                                                                     
|32.2 |  | Certification pursuant to 18 U.S.C. §1350, as adopted pursuant to §906
of the Sarbanes-Oxley Act of 2002                                                                                                     

(b) Reports on Form 8-K



| | 1) |  | The Company filed a Current Report on Form 8-K on April 15, 2003,
disclosing the issuance of a press release announcing the commencement
of its rights offering.                                                                                                                                                                                                 
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2) |  | The Company filed a Current Report on Form 8-K on May 13, 2003,
disclosing the issuance of a press release announcing the notification
from Nasdaq of its failure to meet listing requirements and timeframe
to regain compliance.                                                                                                                               
|
| | 3) |  | The Company filed a Current Report on Form 8-K on May 19, 2003,
disclosing that the Company entered into the Indenture and the First
Supplemental Indenture with U.S. Bank National Association on May 16,
2003, relating to its rights offering, and the issuance of a press
release announcing the completion of its rights offering effective on
May 16, 2003.
|
| | 4) |  | The Company filed a Current Report on Form 8-K on June 27, 2003,
disclosing the issuance of a press release announcing its operating
results for fiscal year ended March 28, 2003 and its fourth quarter
operating profit, as well as receipt of notification that it had
regained compliance with Nasdaq listing requirements.                                  

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                      |  |  |  |                                               |  |                                                                                                                                         
|--------------------- |  |  |  | --------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|                      |  |  |  | CHILDTIME LEARNING CENTERS, INC.
(REGISTRANT)
|                     
|Date: August 29, 2003 |  |  |  | By:                                           |  | /s/ Frank M. JerneycicFrank M. Jerneycic
Chief Financial Officer and Treasurer
(Duly Authorized Officer and
Principal Financial Officer)



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EXHIBIT INDEX

|        |  |                                                                                                                                                                                                              
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  | Description                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                              
|10.1    |  | Childtime Learning Centers, Inc. 2001 Equity Compensation Plan, filed as
Exhibit 99.1 to the Registrants Form S-8 Registration Statement
(Registration No. 333-107483), is incorporated herein by reference.
|31.1    |  | Rule 13a-14(a) Certification by William D. Davis, President and
Chief Executive Officer                                                                                                                      
|31.2    |  | Rule 13a-14(a) Certification by Frank M. Jerneycic, Treasurer and
Chief Financial Officer                                                                                                                    
|32.1    |  | Certification pursuant to 18 U.S.C. §1350, as adopted pursuant to §906
of the Sarbanes-Oxley Act of 2002                                                                                                     
|32.2    |  | Certification pursuant to 18 U.S.C. §1350, as adopted pursuant to §906
of the Sarbanes-Oxley Act of 2002