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The following is an excerpt from a 10-Q SEC Filing, filed by CHILDTIME LEARNING CENTERS INC on 9/1/1998.
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LEARNING CARE GROUP, INC - 10-Q - 19980901 - FINANCIAL_STATEMENTS

FINANCIAL INFORMATION
FORM 10-Q

CHILDTIME LEARNING CENTERS, INC. AND CONSOLIDATED SUBSIDIARY
CONSOLIDATED BALANCE SHEET

                                                                                    JULY 24,           APRIL 3,
                                                                                     1998                1998
                                                                                 (UNAUDITED)
                                                                                 ------------        ------------
ASSETS
Current assets:
  Cash and cash equivalents                                                      $  4,630,943        $  5,541,122
  Accounts receivable, net                                                          2,650,247           2,485,811
  Reimbursable construction costs                                                     820,142             930,688
  Prepaid expenses and other                                                        2,336,851           1,853,812
  Deferred income taxes                                                               924,000             945,000
                                                                                 ------------        ------------
       Total current assets                                                        11,362,183          11,756,433
                                                                                 ------------        ------------

Land, buildings and equipment:
  Land                                                                             10,220,000          10,220,000
  Buildings                                                                        19,715,187          19,640,018
  Vehicles, furniture and equipment                                                 9,254,495           8,783,584
  Leasehold improvements                                                            5,920,339           5,674,308
                                                                                 ------------        ------------
                                                                                   45,110,021          44,317,910

       Less accumulated depreciation and amortization                              (9,850,225)         (9,359,509)
                                                                                 ------------        ------------
                                                                                   35,259,796          34,958,401

  Land held for disposal                                                              512,450             512,450
                                                                                 ------------        ------------
                                                                                   35,772,246          35,470,851
                                                                                 ------------        ------------

Other noncurrent assets:
  Intangible assets, net                                                           11,160,272          10,179,240
  Refundable deposits and other                                                       719,933             711,146
                                                                                 ------------        ------------
       TOTAL ASSETS                                                              $ 59,014,634        $ 58,117,670
                                                                                 ============        ============

LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities:
  Current maturities of long-term debt                                           $    874,980        $    818,781
  Accounts payable                                                                  1,479,970           1,535,590
  Accrued wages and payroll taxes                                                   2,444,777           3,492,206
  Accrued vacation                                                                    891,102             913,835
  Other current liabilities                                                         3,412,309           3,108,890
                                                                                 ------------        ------------
       Total current liabilities                                                    9,103,138           9,869,302

Long-term debt                                                                      2,234,319           2,242,790
Deferred rent liability                                                             1,406,728           1,400,000
Deferred income taxes                                                               3,337,000           3,319,000
                                                                                 ------------        ------------
       Total liabilities                                                           16,081,185          16,831,092
                                                                                 ------------        ------------

Commitments and contingencies                                                            --                  --
                                                                                 ------------        ------------
Shareholders' equity:
  Common stock, 10,000,000 shares authorized, no par value; 5,429,655
    issued and outstanding at July 24, 1998 and 5,429,322 at April 3, 1998         30,815,540          30,811,877
  Preferred stock, 1,000,000 shares authorized, no par value; no shares
    issued or outstanding                                                                --                  --
  Retained earnings                                                                12,117,909          10,474,701
                                                                                 ------------        ------------
       Total shareholders' equity                                                  42,933,449          41,286,578
                                                                                 ------------        ------------

  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                     $ 59,014,634        $ 58,117,670
                                                                                 ============        ============

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

3

FINANCIAL INFORMATION
FORM 10-Q

CHILDTIME LEARNING CENTERS, INC. AND CONSOLIDATED SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)

                                                     QUARTER-TO-DATE
                                                   SIXTEEN WEEKS ENDED
                                             ------------------------------
                                               JULY 24,          JULY 18,
                                                 1998              1997
                                             ------------      ------------

Revenues                                     $ 34,027,840      $ 28,543,276
Cost of revenues                               28,882,534        24,103,667
                                             ------------      ------------
      GROSS PROFIT                              5,145,306         4,439,609


Marketing expenses                                452,779           400,499
General and administrative expenses             2,106,782         1,816,778
                                             ------------      ------------
      OPERATING INCOME                          2,585,745         2,222,332


Interest expense                                   89,667            69,368
Interest income                                   (94,745)          (71,494)
Other income, net                                 (49,385)           (5,863)
                                             ------------      ------------
      INCOME BEFORE INCOME TAXES                2,640,208         2,230,321


Income tax provision                              997,000           861,000
                                             ------------      ------------

      NET INCOME                             $  1,643,208      $  1,369,321
                                             ============      ============




Weighted average shares outstanding             5,429,473         5,429,322
                                             ============      ============

Earnings per share - basic and diluted       $       0.30      $       0.25
                                             ============      ============

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

4

FINANCIAL INFORMATION
FORM 10-Q

CHILDTIME LEARNING CENTERS, INC. AND CONSOLIDATED SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

                                                                                      YEAR-TO-DATE
                                                                                   SIXTEEN WEEKS ENDED
                                                                              -----------------------------
                                                                                JULY 24,          JULY 18,
                                                                                  1998              1997
                                                                              -----------       -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                  $ 1,643,208       $ 1,369,321
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Depreciation and amortization                                               821,945           702,888
      Deferred rent liability                                                       6,728           123,077
      Deferred income taxes                                                        39,000           (73,000)
      Loss (gain) on land, buildings and equipment                                  1,580              (231)
  Changes in assets and liabilities providing (consuming) cash:
      Accounts receivable                                                        (164,436)         (143,235)
      Prepaid expenses, refundable deposits and other assets                     (483,039)          265,083
      Accounts payable, accruals and other current liabilities                   (822,363)          578,867
                                                                              -----------       -----------

  Net cash provided by operating activities                                     1,042,623         2,822,770
                                                                              -----------       -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Expenditures for land, buildings and equipment                                 (808,329)         (680,309)
  Expenditures for reimbursable construction costs                               (739,508)         (997,215)
  Acquisition of intangible assets                                               (860,782)       (1,321,429)
  Proceeds from sales of land, buildings and equipment                                659           100,324
  Payments for refundable deposits and other assets                                (8,787)          (70,936)
                                                                              -----------       -----------

  Net cash used in investing activities                                        (2,416,747)       (2,969,565)
                                                                              -----------       -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments on long-term debt                                                     (389,772)         (222,801)
  Repayments of reimbursable construction costs                                   850,054              --
  Issuance of shares                                                                3,663             1,349
                                                                              -----------       -----------

  Net cash provided by (used in) financing activities                             463,945          (221,452)
                                                                              -----------       -----------

Net decrease in cash and cash equivalents                                        (910,179)         (368,247)


Cash and cash equivalents, beginning of year                                    5,541,122         3,733,174
                                                                              -----------       -----------

Cash and cash equivalents, end of period                                      $ 4,630,943       $ 3,364,927
                                                                              ===========       ===========

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

5

CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FORM 10-Q

(1) GENERAL

The consolidated financial statements of Childtime Learning Centers, Inc. (the "Company") are unaudited and, in the opinion of management, include all adjustments necessary to fairly state the Company's financial condition, results of operations and its cash flows, for the interim periods presented. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full fiscal year. These statements should be read in conjunction with the Company's annual report for the fiscal year ended April 3, 1998.

(2) PRINCIPALS OF CONSOLIDATION

The consolidated financial statements include the accounts of Childtime Learning Centers, Inc. and its wholly owned subsidiary, Childtime Childcare, Inc. (together referred to as the "Company"). All significant intercompany transactions have been eliminated.

(3) FISCAL YEAR

The Company utilizes a 52-53 week fiscal year ending on the Friday closest to March 31. Fiscal year 1999 will contain 52 weeks, while fiscal year 1998 contained 53 weeks. For both fiscal years 1998 and 1999, the first quarter contained sixteen weeks.

(4) ACCOUNTS RECEIVABLE

Accounts receivable is presented net of an allowance for doubtful accounts. At July 24, 1998 and April 3, 1998 the allowance for doubtful accounts was $225,000.

(5) INCOME TAXES

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

6

CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -CONTINUED

FORM 10-Q

(6) EARNINGS PER SHARE

For the sixteen-week periods ended July 24, 1998 and July 18, 1997, basic earnings per share have been calculated by dividing earnings available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share have been calculated by dividing earnings available to common stockholders by the weighted average number of common shares outstanding for the period and the assumed conversion of all potentially dilutive stock options (47,763,shares for the sixteen weeks ended July 24, 1998 and 824 shares for the sixteen weeks ended July 18, 1997).

(7) RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS

In June 1997, the FASB issued SFAS No.130, "Reporting Comprehensive Income" and SFAS 131, "Disclosure about Segments of an Enterprise and Related Information". The Company has adopted the provisions of these statements, as required, for the year ended April 2, 1999. These statements had no impact on the Company's financial position, results of operations or cash flows.

(8) SUPPLEMENTAL CASH FLOW INFORMATION

In connection with the acquisition of certain centers, the Company incurred seller-financed debt of $438,000 during the sixteen weeks ended July 24, 1998 and $1,062,000 during the sixteen weeks ended July 18, 1997.

(9) RECLASSIFICATIONS

Certain prior year amounts have been reclassified to conform with the presentation adopted in the current year.

7

BROKERAGE PARTNERS