<PAGE> 1
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 OCTOBER 16, 1998
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 (I.R.S. Employer
of incorporation) Identification No.)
38345 West Ten Mile Road, Suite 100
Farmington Hills, Michigan 48335
(Address of principal executive offices)
(248) 476-3200
(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 of 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports, and (2) has
been subject to such filing required for the past 90 days. Yes[X] No [ ]
The number of shares of Registrant's Common Stock, no par value per
share, outstanding at November 16, 1998 was 5,429,655.
Total number of pages included in Form 10-Q: 14
Index to Exhibits is located on page 13
1
<PAGE> 2
CHILDTIME LEARNING CENTERS, INC. AND CONSOLIDATED SUBSIDIARY
Index
FORM 10-Q
For the Quarterly Period Ended October 16, 1998
<TABLE>
<CAPTION>
Page
Number
-----------
PART I. FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
<S> <C>
A. Consolidated Balance Sheet 3
October 16, 1998 and April 3, 1998
B. Consolidated Statement of Income 4
Twelve Weeks Ended October 16, 1998 and October 10, 1997
Twenty-Eight Weeks Ended October 16, 1998 and October 10, 1997
C. Consolidated Statement of Cash Flows 5
Twenty-Eight Weeks Ended October 16, 1998 and October 10, 1997
D. Notes to Consolidated Financial Statements 6-7
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-12
PART II. OTHER INFORMATION
ITEM 5. Other Information 13
ITEM 6. Exhibits, Reports on Form 8-K, Signatures 13
</TABLE>
2
<PAGE> 3
PART I
FINANCIAL INFORMATION
FORM 10-Q
CHILDTIME LEARNING CENTERS, INC. AND CONSOLIDATED SUBSIDIARY
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
OCTOBER 16, APRIL 3,
1998 1998
(UNAUDITED)
-------------- ------------
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 4,412,612 $ 5,541,122
Accounts receivable, net 3,164,500 2,485,811
Reimbursable construction costs 410,377 930,688
Prepaid expenses and other 1,982,979 1,853,812
Deferred income taxes 1,037,000 945,000
------------ ------------
Total current assets 11,007,468 11,756,433
------------ ------------
Land, buildings and equipment:
Land 10,220,000 10,220,000
Buildings 19,781,647 19,640,018
Vehicles, furniture and equipment 9,508,350 8,783,584
Leasehold improvements 6,147,003 5,674,308
------------ ------------
45,657,000 44,317,910
Less accumulated depreciation and amortization (10,172,807) (9,359,509)
------------ ------------
35,484,193 34,958,401
Land held for disposal 512,450 512,450
------------ ------------
35,996,643 35,470,851
------------ ------------
Other noncurrent assets:
Intangible assets, net 12,714,808 10,179,240
Refundable deposits and other 732,154 711,146
------------ ------------
TOTAL ASSETS $ 60,451,073 $ 58,117,670
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 1,025,645 $ 818,781
Accounts payable 1,165,168 1,535,590
Accrued wages and payroll taxes 2,256,783 3,492,206
Accrued vacation 885,455 913,835
Other current liabilities 4,212,973 3,108,890
------------ ------------
Total current liabilities 9,546,024 9,869,302
Long-term debt 2,369,822 2,242,790
Deferred rent liability 1,411,798 1,400,000
Deferred income taxes 3,276,000 3,319,000
------------ ------------
Total liabilities 16,603,644 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 October 16, 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 13,031,889 10,474,701
------------ ------------
Total shareholders' equity 43,847,429 41,286,578
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 60,451,073 $ 58,117,670
============ ============
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
3
<PAGE> 4
FINANCIAL INFORMATION
FORM 10-Q
CHILDTIME LEARNING CENTERS, INC. AND CONSOLIDATED SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER-TO-DATE YEAR-TO-DATE
TWELVE WEEKS ENDED TWENTY-EIGHT WEEKS ENDED
------------------------------------ ----------------------------------
OCTOBER 16, OCTOBER 10, OCTOBER 16, OCTOBER 10,
1998 1997 1998 1997
-------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Revenues $ 25,323,358 $ 21,524,126 $ 59,351,198 $ 50,067,402
Cost of revenues 21,940,482 18,620,088 50,823,016 42,723,755
------------- ------------- ------------- -------------
GROSS PROFIT 3,382,876 2,904,038 8,528,182 7,343,647
Marketing expenses 347,697 300,711 800,476 701,210
General and administrative expenses 1,565,179 1,375,564 3,671,961 3,192,342
------------- ------------- ------------- -------------
OPERATING INCOME 1,470,000 1,227,763 4,055,745 3,450,095
Interest expense 72,280 66,576 161,947 135,944
Interest income (62,393) (42,066) (157,138) (113,560)
Other income, net (6,867) (5,422) (56,252) (11,285)
------------- ------------- ------------- -------------
INCOME BEFORE INCOME TAXES 1,466,980 1,208,675 4,107,188 3,438,996
Income tax provision 553,000 464,000 1,550,000 1,325,000
------------- ------------- ------------- -------------
NET INCOME $ 913,980 $ 744,675 $ 2,557,188 $ 2,113,996
============= ============= ============= =============
Weighted average shares outstanding 5,429,655 5,429,322 5,429,551 5,429,322
============= ============= ============= =============
Earnings per share - basic and diluted $ 0.17 $ 0.14 $ 0.47 $ 0.39
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 5
FINANCIAL INFORMATION
FORM 10-Q
CHILDTIME LEARNING CENTERS, INC. AND CONSOLIDATED SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR-TO-DATE
TWENTY-EIGHT WEEKS ENDED
--------------------------------------
OCTOBER 16, OCTOBER 10,
1998 1997
------------------ ----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 2,557,188 $ 2,113,996
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,469,629 1,227,650
Deferred rent liability 11,798 215,384
Deferred income taxes (135,000) (128,000)
Loss (gain) on land, buildings and equipment 8,744 12,466
Changes in assets and liabilities providing (consuming) cash:
Accounts receivable (678,689) (497,486)
Prepaid expenses, refundable deposits and other assets (129,167) (184,847)
Accounts payable, accruals and other current liabilities (530,141) 848,025
------------- -------------
Net cash provided by operating activities 2,574,362 3,607,188
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for land, buildings and equipment (1,440,501) (1,325,151)
Expenditures for reimbursable construction costs (1,902,446) (1,688,414)
Acquisition of intangible assets (2,139,162) (1,406,618)
Proceeds from sales of land, buildings and equipment 2,429 105,324
Payments for refundable deposits and other assets (21,008) (93,880)
------------- -------------
Net cash used in investing activities (5,500,688) (4,408,739)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (628,604) (432,954)
Repayments of reimbursable construction costs 2,422,757 1,508,861
Issuance of shares, net of subscriptions receivable 3,663 2,385
------------- -------------
Net cash provided by financing activities 1,797,816 1,078,292
------------- -------------
Net increase (decrease) in cash and cash equivalents (1,128,510) 276,741
Cash and cash equivalents, beginning of year 5,541,122 3,733,174
------------- -------------
Cash and cash equivalents, end of period $ 4,412,612 $ 4,009,915
============= =============
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
5
<PAGE> 6
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 year-to-date
period contained twenty-eight weeks while the second quarter contained twelve
weeks.
(4) ACCOUNTS RECEIVABLE
Accounts receivable is presented net of an allowance for doubtful
accounts. At October 16, 1998 the allowance for doubtful accounts was $235,000
while at 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
<PAGE> 7
CHILDTIME LEARNING CENTERS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -CONTINUED
FORM 10-Q
(6) EARNINGS PER SHARE
For the twelve-week and twenty-eight-week periods ended October 16,
1998 and October 10, 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 (54,682 shares for
the twelve week period ended October 16, 1998; 58,423 shares for the
twenty-eight week period ended October 16, 1998; 12,808 shares for the twelve
period ended October 10, 1997; and 6,001 shares for the twenty-eight week period
ended October 10, 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 significant
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 $963,000 during the twenty-eight weeks ended
October 16, 1998 and $1,112,000 during the twenty-eight weeks ended October 10,
1997.
(9) RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform with the
presentation adopted in the current year.
7
<PAGE> 8
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Form 10-Q
GENERAL
The information presented herein refers to the twelve weeks ("second
quarter 1999") and the twenty-eight weeks ("year-to-date 1999") ended October
16, 1998, compared to the twelve weeks ("second quarter 1998") and the
twenty-eight weeks ("year-to-date 1998") ended October 10, 1997.
During the second quarter 1999, the Company acquired 6 centers, opened
1 center and closed 1 center as compared to acquiring 1 center and opening 2
centers during the second quarter 1998. During year-to-date 1999, the Company
acquired 13 centers, opened 3 centers and closed 1 center as compared to
acquiring 15 centers, opening 6 centers and closing 1 center during year-to-date
1998. Accordingly, as of October 16, 1998, the Company operated 257 centers, as
compared to 231 centers at October 10, 1997. The results of centers opened,
acquired or disposed of are included in the Company's financial statements from
the date of opening or acquisition and through the date of disposition, as
applicable. The timing of such new openings, acquisitions or dispositions could
influence comparisons of year over year results.
RESULTS OF OPERATIONS
Second quarter 1999 revenues increased to $25,323,000 from $21,524,000
for the second quarter 1998, a 17.7% increase. This increase was principally
attributable to increased revenues from centers opened or acquired in fiscal
1998 ($2,262,000, or 10.5%) and centers opened or acquired in fiscal 1999
($967,000, or 4.5%). Year-to-date 1999 revenues increased to $59,351,000 from
year-to-date 1998 revenues of $50,067,000, an 18.5% increase. This increase was
principally attributable to increased revenues from centers opened or acquired
in fiscal 1998 ($6,571,000, or 13.1%) and centers opened or acquired in fiscal
1999 ($1,479,000, or 3.0%). The remaining increase for both the second quarter
and year-to-date 1999 was principally attributable to the growth in comparable
centers, partially offset by centers closed during fiscal 1999.
Comparable center revenues (centers operating during all of
year-to-date 1999 and year-to-date 1998) increased 3.7% ($797,000) for the
second quarter 1999. Year-to-date comparable center revenues increased 3.5%
($1,727,000). Both the second quarter and year-to-date 1999 increases, were
principally the result of increased tuition rates.
Second quarter 1999 gross profit increased to $3,383,000 (13.4% of
revenues) from $2,904,000 (13.5% of revenues) for the second quarter 1998, a
16.5% increase. The increase in gross profit was principally from centers opened
or acquired in fiscal 1998 ($388,000) and, to a lesser extent, comparable center
growth ($166,000). Second quarter gross operating losses from centers opened or
acquired in fiscal 1999 ($22,000) partially offset these increases. Year-to-date
1999 gross profit increased to $8,528,000 (14.4% of revenues) from $7,344,000
(14.8% of revenues), a 16.1% increase. The year-to-date 1999 increase in gross
profit was principally from centers opened or acquired in fiscal 1998
($1,114,000) and, to a lesser extent, comparable center growth ($313,000). Gross
operating losses from centers opened or acquired in fiscal 1999 ($153,000)
partially offset these increases.
8
<PAGE> 9
Management's Discussion and Analysis of
Financial Condition and Results of Operations - Continued
Form 10-Q
RESULTS OF OPERATIONS - CONTINUED
Comparable center gross profit (centers operating during all of
year-to-date 1999 and year-to-date 1998) increased 5.7% ($166,000) for the
second quarter 1999. Year-to-date 1999 comparable center revenues increased 4.3%
($313,000). Both the second quarter and year-to-date 1999 increases, were
principally the result of increased tuition rates.
Marketing expenses increased 15.6% to $348,000 for the second quarter
1999 from $301,000 for the second quarter 1998. Year-to-date 1999 marketing
expenses increased 14.1% to $800,000 from $701,000. These increases were
primarily due to the additional expenses associated with the promotion and
marketing activities for 257 centers as of the end of the second quarter 1999,
as compared to 231 centers at the end of the second quarter 1998. As a
percentage of revenues, marketing expenses remained constant for both
year-to-date and the second quarter 1999 and 1998, at 1.4% of revenues.
General and administrative expenses increased 13.8% to $1,565,000 for
the second quarter 1999 from $1,376,000 for the second quarter 1998.
Year-to-date 1999 general and administrative expenses increased 15.0% to
$3,672,000 from $3,192,000. However, as a percentage of revenues, general and
administrative expenses decreased to 6.2% of revenues for the second quarter
1999 and year-to-date 1999 from 6.4% of revenues for the comparable periods of
1998. These decreases were due primarily to operating leverage provided by
higher revenues.
As a result of the foregoing changes, operating income increased to
$1,470,000 for the second quarter 1999 from $1,228,000 for the second quarter
1998. The operating income change of $242,000 represents an increase of 19.7%
over the second quarter 1998. Year-to-date 1999 operating income increased 17.6%
to $4,056,000 from $3,450,000.
Interest expense increased to $72,000 for the second quarter 1999 from
$67,000 for the second quarter 1998. Year-to-date 1999 interest expense
increased to $162,000 from $136,000. These increases were due to a net increase
in debt incurred with the acquisition of centers.
Year-to-date 1999 other income increased to $56,000 from $11,000. This
increase was principally due to a gain realized on the extinguishment of certain
acquisition indebtedness.
The provision for income taxes increased to $553,000 (an effective tax
rate of 37.7%) for the second quarter 1999 from $464,000 (an effective tax rate
of 38.4%) for the second quarter 1998. Year-to-date 1999 provision for income
taxes increased to $1,550,000 (an effective tax rate of 37.7%) from $1,325,000
(an effective tax rate of 38.5%). Both the second quarter and year-to-date 1999
decreases in the effective tax rate were principally due to anticipated savings
resulting from tax strategies implemented during the current fiscal year.
9
<PAGE> 10
Management's Discussion and Analysis of
Financial Condition and Results of Operations - Continued
Form 10-Q
RESULTS OF OPERATIONS - CONTINUED
As a result of the foregoing changes, net income increased to $914,000,
or 3.6% of revenues for the second quarter 1999, from $745,000, or 3.5% of
revenues for the second quarter 1998. Year-to-date 1999 net income increased to
$2,557,000, or 4.3% of revenues, from $2,114,000, or 4.2% of revenues.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary cash requirements currently consist of its new
center expansion program and maintenance of existing centers. The Company
believes that cash flow from operations, together with amounts available under a
$10 million unsecured revolving line of credit facility, will be sufficient to
satisfy the Company's anticipated cash requirements on both a long-term and
short-term basis. The line of credit bears annual interest at either the prime
rate or an adjusted Eurodollar based rate, at the Company's option.
Net cash provided by operations decreased to $2,574,000 for
year-to-date 1999, from $3,607,000 for year-to-date 1998. This decrease was
principally due to the timing of payment of accrued expenses. Year-to-date 1999
cash provided by operations, net repayments of reimbursable construction costs
of $520,000, and existing cash balances of $1,129,000 were principally used to
add 16 centers, make capital improvements to existing centers and upgrade
information technology systems aggregating $3,343,000, as well as to pay down
debt of $629,000. Expenditures related to information technology systems were
part of management's five-year information system plan to accommodate the growth
of the Company for the next five to ten years. In connection with this plan, the
Company purchased and capitalized financial software upgrades and related
hardware of approximately $144,000 during year-to-date 1998, $130,000 during
year-to-date fiscal 1999, and has plans to spend approximately $125,000 -
$200,000 to complete this plan during the next nine months. The Company has
incurred additional seller-financed notes payable of approximately $963,000
during year-to-date 1999, related to the acquisition of centers, and did not
utilize its unsecured revolving line of credit.
IMPACT OF YEAR 2000
The Year 2000 Issue is the result of computer programs that were
written using two digits rather than four to define the applicable year. If the
Company's computer programs with date-sensitive functions are not Year 2000
compliant, they may recognize a date using "00" as the Year 1900, rather than
the Year 2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions.
The Company has evaluated its Year 2000 risks and compliance by
identifying three major components: information technology systems,
non-information technology systems, including internal embedded chip technology
and third party risks.
10
<PAGE> 11
Management's Discussion and Analysis of
Financial Condition and Results of Operations - Continued
Form 10-Q
IMPACT OF YEAR 2000 - CONTINUED
Information Technology Systems
The Company has purchased and implemented general ledger and accounts
payable financial software during fiscal 1998 and fiscal 1999, which has been
certified as Year 2000 compliant from the software vendor. These systems have
been implemented as of October 1998. The Company has also purchased a center
information system, which has been certified as Year 2000 compliant from the
software vendor. This system is in the implementation phase, with full
implementation scheduled by July 31, 1999. Based on this schedule, the Company
expects to be in full compliance with its internal financial systems before the
Year 2000. However, if the implementation is not completed on a timely basis,
the Year 2000 Issue could have a material impact on the operations of the
Company. Because Year 2000 compliant information technology systems have been
purchased and implementation has either been completed or is currently in the
implementation phase, contingency plans have not been established. Each of the
above described information technology systems were purchased pursuant to
upgrades necessary to provide adequate financial reporting and control directly
connected to the growth of the Company, rather than to address the Year 2000
Issue. Accordingly, no information systems costs have been associated with the
Year 2000 Issue. However, see Liquidity and Capital Resources for costs
associated with general upgrades.
Non-Information and Internal Embedded Chip Technology
The Company is in the data-gathering phase with regard to imbedded chip
technology and the impact of the Year 2000 Issue on its non-financial systems.
Inquiries have been made to providers of alarm systems installed at various
locations. Written confirmations have been received, documenting that such
systems are either Year 2000 compliant or that the model installed does not
have any date-driven technology. Management believes that even if the Company is
unable to achieve Year 2000 compliance for its major non-financial systems,
Year 2000 Issues will not have a material impact on the operations of the
Company. Accordingly, the Company does not have a contingency plan in place for
its non-information and internal embedded chip technology risk.
Third Party Risks
The Company has identified and is in the process of contacting its
subsidy/funding providers, major vendors and financial service organizations to
determine the extent to which the Company's operations and interface systems
would be vulnerable to those third parties' failure to remedy their own Year
2000 Issues. The Company has received positive compliance status from
approximately twenty percent of identified major third party risks and is
expecting a significantly complete response by March 31, 1999. The Company
currently estimates that between ten to fifteen percent of its revenues are
related to subsidy/funding providers. In the event all third party
subsidy/funding providers fail to comply with Year 2000 requirements, the
Company could
11
<PAGE> 12
Management's Discussion and Analysis of
Financial Condition and Results of Operations - Continued
Form 10-Q
IMPACT OF YEAR 2000 - CONTINUED
Third Party Risks Continued
experience cash flow delays that could have a material impact on its operations.
Management believes that, while the Company could experience delays in
collecting receivables from such third parties, the collectibility of such
receivables would not be significantly adversely impacted. The Company is
currently reviewing contingency plans that include alternative reporting and
payment processing to subsidy/funding providers to minimize any collection
delays. To the extent that vendor responses to Year 2000 readiness are
unsatisfactory, the Company intends to change vendors to those who have
demonstrated Year 2000 readiness. There are no assurances, however, that the
Company would be successful in finding such alternative vendors.
"SAFE HARBOR" STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Statements included herein that are not historical facts, such as those
related to income tax strategies, anticipated cash requirements and compliance
with Year 2000 issues are forward-looking statements pursuant to the safe harbor
provisions of the Private / Securities Litigation Reform Act of 1995.
Forward-looking statements involve a number of risks and uncertainties,
including, but not limited to, identification and availability of quality
acquisition or new development targets, continuation of federal and state
assistance programs, demand for child care, the ability of the Company and key
suppliers and customers (including governmental agencies) to successfully comply
with Year 2000 issues, taxing authority legislation, as well as general economic
conditions, pricing and competition. Accordingly, actual results could differ
materially from those projected in such forward-looking statements.
12
<PAGE> 13
PART II
OTHER INFORMATION
FORM 10-Q
CHILDTIME LEARNING CENTERS, INC. AND CONSOLIDATED SUBSIDIARY
Item 6 Exhibits and Reports on Form 8-K
(a) Index to Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
27 Financial Data Schedule (For SEC use only)
</TABLE>
(b) Reports on Form 8-K: None
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)
/s/ Michael M. Yeager 11/24/98
-----------------------------------------------
Michael M. Yeager
Chief Financial Officer and Secretary-Treasurer
(Duly Authorized Officer and Principal Financial Officer)
13
<PAGE> 14
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CHILDTIME
LEARNING CENTERS, INC FORM 10-Q FOR THE QUARTERLY PERIOD ENDED OCTOBER 16, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> APR-02-1999
<PERIOD-START> APR-04-1998
<PERIOD-END> OCT-16-1998
<CASH> 4,413
<SECURITIES> 0
<RECEIVABLES> 3,400
<ALLOWANCES> 235
<INVENTORY> 0
<CURRENT-ASSETS> 11,007
<PP&E> 45,657
<DEPRECIATION> 10,173
<TOTAL-ASSETS> 60,451
<CURRENT-LIABILITIES> 9,546
<BONDS> 0
0
0
<COMMON> 30,816
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 60,451
<SALES> 0
<TOTAL-REVENUES> 59,351
<CGS> 0
<TOTAL-COSTS> 55,295
<OTHER-EXPENSES> (213)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 162
<INCOME-PRETAX> 4,107
<INCOME-TAX> 1,550
<INCOME-CONTINUING> 2,557
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,557
<EPS-PRIMARY> .47
<EPS-DILUTED> .47
</TABLE>
