10-Q

______________________________________________________________________________________________________

______________________________________________________________________________________________________

U. S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 _____________________________________________

Form 10-Q

(Mark One)

TQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

£TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

 _____________________________________________

Commission File Number 1-31923

 _____________________________________________

UNIVERSAL TECHNICAL INSTITUTE, INC.

(Exact name of registrant as specified in its charter)

Delaware	86-0226984
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

16220 North Scottsdale Road, Suite 100

Scottsdale, Arizona 85254

(Address of principal executive offices)

(623) 445-9500

(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 requirements for the past 90 days.    Yes þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   þ    No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨    Accelerated filer  þ                       Non-accelerated filer  ¨                        Smaller reporting company  ¨

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ

At April 24, 2014, there were24,658,261 shares outstanding of the registrant’s common stock.

UNIVERSAL TECHNICAL INSTITUTE, INC.

INDEX TO FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2014

		Page
		Number
Special Note Regarding Forward-Looking Statements		ii
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets at March 31, 2014 and September 30, 2013 (unaudited)	1
	Condensed Consolidated Income Statements for the three months and six months ended March 31, 2014 and 2013 (unaudited)	2
	Condensed Consolidated Statement of Shareholders’ Equity for the six months ended March 31, 2014 (unaudited)	3
	Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2014 and 2013 (unaudited)	4
	Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	24
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 6.	Exhibits	26
	SIGNATURES	27

Special Note Regarding Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933, as amended, which include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation and availability of resources. From time to time, we also provide forward-looking statements in other materials we release to the public as well as verbal forward-looking statements. These forward-looking statements include, without limitation, statements regarding: proposed new programs; scheduled openings of new campuses and campus expansions; expectations that regulatory developments, or agency interpretations of such regulatory developments or other matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity and anticipated timing for ongoing regulatory initiatives; statements concerning projections, predictions, expectations, estimates or forecasts as to our business, financial and operational results and future economic performance; and statements of management’s goals and objectives and other similar expressions. Such statements give our current expectations or forecasts of future events; they do not relate strictly to historical or current facts. Words such as “may,” “will,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements.

We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and potentially inaccurate assumptions. Many events beyond our control may determine whether results we anticipate will be achieved. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could differ materially from past results and those anticipated, estimated or projected. You should bear this in mind as you consider forward-looking statements.

Except as required by law, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Form 10-Q, 8-K and 10-K reports to the Securities and Exchange Commission (“SEC”). The Form 10-K that we filed with the SEC on December 4, 2013 listed various important factors that could cause actual results to differ materially from expected and historical results. We note these factors for investors within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933, as amended. Readers can find them under the heading “Risk Factors” in the Form 10-K and in this Form 10-Q and investors should refer to them. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties. Our filings with the SEC may be accessed at the SEC’s web site at www.sec.gov.

ii

PART I – FINANCIAL INFORMATION

Item 1.    FINANCIAL STATEMENTS

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

	March 31, 2014			September 30, 2013
Assets	(In thousands)
Current assets:
Cash and cash equivalents	$	34,343		$	35,657
Restricted cash	4,811			5,748
Investments, current	55,563			57,531
Receivables, net	10,470			11,406
Deferred tax assets, net	5,564			7,452
Prepaid expenses and other current assets	17,065			15,553
Total current assets	127,816			133,347
Investments, less current	11,996			4,188
Property and equipment, net	105,049			103,070
Goodwill	20,579			20,579
Deferred tax assets, net	9,936			8,835
Other assets	9,836			9,444
Total assets	$	285,212		$	279,463
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	38,132		$	39,229
Deferred revenue	50,482			46,890
Accrued tool sets	3,937			3,971
Lease financing obligation, current	546			—
Other current liabilities	2,333			2,271
Total current liabilities	95,430			92,361
Deferred rent liability	11,207			11,932
Lease financing obligation, less current	32,787			—
Construction liability	—			27,632
Other liabilities	10,104			8,768
Total liabilities	149,528			140,693
Commitments and contingencies (Note 10)
Shareholders’ equity:
Common stock, $0.0001 par value, 100,000,000 shares authorized, 30,581,588 shares issued and 24,658,261 shares outstanding at March 31, 2014 and 30,535,847 shares issued and 24,643,520 shares outstanding as of September 30, 2013	3			3
Preferred stock, $0.0001 par value, 10,000,000 shares authorized; 0 shares issued and outstanding	—			—
Paid-in capital	173,190			171,087
Treasury stock, at cost, 5,923,327 shares at March 31, 2014 and 5,892,327 shares at September 30, 2013	(89,756		)	(89,346		)
Retained earnings	52,247			57,026
Total shareholders’ equity	135,684			138,770
Total liabilities and shareholders’ equity	$	285,212		$	279,463

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

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UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)

	Three Months Ended March 31,						Six Months Ended March 31,
	2014			2013			2014			2013
	(In thousands, except per share amounts)
Revenues	$	94,702		$	95,075		$	191,731		$	193,516
Operating expenses:
Educational services and facilities	50,652			50,456			101,763			100,148
Selling, general and administrative	45,554			46,558			88,469			89,301
Total operating expenses	96,206			97,014			190,232			189,449
Income (loss) from operations	(1,504		)	(1,939		)	1,499			4,067
Other income:
Interest income (expense), net	(491		)	72			(623		)	119
Equity in earnings of unconsolidated affiliate	127			—			208			—
Other income	104			245			379			364
Total other income (expense)	(260		)	317			(36		)	483
Income (loss) before income taxes	(1,764		)	(1,622		)	1,463			4,550
Income tax expense (benefit)	(259		)	(702		)	1,308			1,908
Net income (loss)	$	(1,505	)	$	(920	)	$	155		$	2,642
Earnings per share:
Net income (loss) per share - basic	$	(0.06	)	$	(0.04	)	$	0.01		$	0.11
Net income (loss) per share - diluted	$	(0.06	)	$	(0.04	)	$	0.01		$	0.11
Weighted average number of shares outstanding:
Basic	24,661			24,396			24,653			24,581
Diluted	24,661			24,396			24,888			24,651
Cash dividends declared per common share	$	0.10		$	0.10		$	0.20		$	0.20

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

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UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (UNAUDITED)

															Total
	Common Stock				Paid-in			Treasury Stock				Retained			Shareholders’
	Shares		Amount		Capital			Shares	Amount			Earnings			Equity
	(In thousands)
Balance at September 30, 2013	30,536		$	3	$	171,087		5,892	$	(89,346	)	$	57,026		$	138,770
Net income	—		—		—			—	—			155			155
Issuance of common stock under employee plans	50		—		—			—	—			—			—
Shares withheld for payroll taxes	(4	)	—		(58		)	—	—			—			(58		)
Tax charge from employee stock plans	—		—		(945		)	—	—			—			(945		)
Stock-based compensation	—		—		3,106			—	—			—			3,106
Treasury stock repurchases	—		—		—			31	(410		)	—			(410		)
Cash dividend declared	—		—		—			—	—			(4,934		)	(4,934		)
Balance at March 31, 2014	30,582		$	3	$	173,190		5,923	$	(89,756	)	$	52,247		$	135,684

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

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UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six Months Ended March 31,
	2014			2013
	(In thousands)
Cash flows from operating activities:
Net income	$	155		$	2,642
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	9,861			11,349
Amortization of assets subject to financing obligation	620			—
Amortization of held-to-maturity investments	1,235			919
Bad debt expense	1,990			2,620
Stock-based compensation	3,106			3,005
Excess tax benefit from stock-based compensation	(7		)	—
Deferred income taxes	(158		)	521
Equity in earnings of unconsolidated affiliate	(208		)	—
Net training equipment credits earned	(601		)	(881		)
Loss on disposal of property and equipment	150			62
Changes in assets and liabilities:
Receivables	174			940
Prepaid expenses and other current assets	(1,318		)	1,511
Other assets	(189		)	(707		)
Accounts payable and accrued expenses	(1,147		)	(8,112		)
Deferred revenue	3,592			(5,839		)
Income tax payable/receivable	(1,307		)	(1,291		)
Accrued tool sets and other current liabilities	242			805
Deferred rent liability	(725		)	(462		)
Other liabilities	397			534
Net cash provided by operating activities	15,862			7,616
Cash flows from investing activities:
Purchase of property and equipment	(5,488		)	(4,160		)
Proceeds from disposal of property and equipment	5			42
Purchase of investments	(33,132		)	(44,046		)
Proceeds received upon maturity of investments	26,057			33,362
Decrease in restricted cash	944			—
Net cash used in investing activities	(11,614		)	(14,802		)
Cash flows from financing activities:
Payment of cash dividend	(4,934		)	(4,912		)
Repayment of long-term financing obligation	(167		)	—
Payment of payroll taxes on stock-based compensation through shares withheld	(58		)	(62		)
Proceeds from issuance of common stock under employee plans	—			395
Excess tax benefit from stock-based compensation	7			—
Purchase of treasury stock	(410		)	(5,364		)
Net cash used in financing activities	(5,562		)	(9,943		)
Net decrease in cash and cash equivalents	(1,314		)	(17,129		)
Cash and cash equivalents, beginning of period	35,657			45,665
Cash and cash equivalents, end of period	$	34,343		$	28,536

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

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UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED), continued

	Six Months Ended March 31,
	2014		2013
	(In thousands)
Supplemental disclosure of cash flow information:
Taxes paid	$	2,772	$	2,679
Training equipment obtained in exchange for services	$	1,937	$	950
Change in accrued capital expenditures during the period	$	112	$	(1,223	)
Construction in progress financed by construction liability during the period	$	5,868	$	8,326
Construction liability recognized as financing obligation	$	33,500	$	—
Interest paid	$	757	$	1

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

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UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

($’s in thousands, except per share amounts)

1.    Nature of the Business

We are the leading provider of postsecondary education for students seeking careers as professional automotive, diesel, collision repair, motorcycle and marine technicians as measured by total average undergraduate full-time student enrollment and graduates. We offer undergraduate degree and diploma programs at 11 campuses across the United States under the banner of several well-known brands, including Universal Technical Institute, Motorcycle Mechanics Institute and Marine Mechanics Institute and NASCAR Technical Institute. We also offer manufacturer specific training (MSAT) programs, including student paid electives, at our campuses and manufacturer or dealer sponsored training at certain campuses and dedicated training centers.

We work closely with leading original equipment manufacturers (OEMs) in the automotive, diesel, motorcycle and marine industries to understand their needs for qualified service professionals. Revenues generated from our schools consist primarily of tuition and fees paid by students. To pay for a substantial portion of their tuition, the majority of students rely on funds received from federal financial aid programs under Title IV Programs of the Higher Education Act of 1965, as amended (HEA), as well as from various veterans benefits programs. For further discussion, see Concentration of Risk and Note 16 “Governmental Regulation and Financial Aid” included in our 2013 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on December 4, 2013.

2.    Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, our condensed consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all normal and recurring adjustments considered necessary for a fair statement of the results for the interim periods have been included. Operating results for the three months and six months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending September 30, 2014. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2013 Annual Report on Form 10-K filed with the SEC on December 4, 2013.

The unaudited condensed consolidated financial statements include the accounts of Universal Technical Institute, Inc. and our wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.

Historically, we have calculated income tax expense for interim periods based on estimated annual effective tax rates. These rates have been derived, in part, from expected income before taxes for the year. However, authoritative accounting guidance indicates that companies should not apply the estimated annual tax rate to interim financial results if the estimated annual tax rate is not reliably predictable. We are not able to reasonably estimate the annual effective tax rate for the year ending September 30, 2014 because small fluctuations in our earnings before taxes could result in a material change in the estimated annual effective tax rate based on our current projections. Therefore, for the three months and six months ended March 31, 2014, we calculated income taxes for each of the discrete periods using the actual year-to-date results.

We have no items which affect comprehensive income other than net income.

3.  Investments

We invest in pre-funded municipal bonds which are generally secured by escrowed-to-maturity U.S. Treasury notes. Municipal bonds represent debt obligations issued by states, cities, counties and other governmental entities, which earn interest that is exempt from federal income taxes. Additionally, we invest in certificates of deposit issued by financial institutions and corporate bonds from large cap industrial and selected financial companies with a minimum credit rating of A. We have the ability and intent to hold our investments until maturity and therefore classify these investments as held-to-maturity and report them at amortized cost.

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UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

($’s in thousands, except per share amounts)

Amortized cost and fair value for investments classified as held-to-maturity as of March 31, 2014 were as follows:

								Estimated
	Amortized		Gross Unrealized					Fair Market
	Cost		Gains		Losses			Value
Due in less than 1 year:
Municipal bonds	$	39,808	$	17	$	—		$	39,825
Corporate bonds	13,624		4		(11		)	13,617
Certificates of deposit	2,131		—		—			2,131
Due in 1 - 2 years:
Municipal bonds	6,578		6		(1		)	6,583
Corporate bonds	3,186		—		(6		)	3,180
Certificates of deposit	2,232		—		—			2,232
	$	67,559	$	27	$	(18	)	$	67,568

Amortized cost and fair value for investments classified as held-to-maturity as of September 30, 2013 were as follows:

								Estimated
	Amortized		Gross Unrealized					Fair Market
	Cost		Gains		Losses			Value
Due in less than 1 year:
Municipal bonds	$	40,942	$	22	$	—		$	40,964
Corporate bonds	11,684		2		(7		)	11,679
Certificates of deposit	4,905		—		—			4,905
Due in 1 - 2 years:
Municipal bonds	3,943		4		—			3,947
Certificates of deposit	245		—		—			245
	$	61,719	$	28	$	(7	)	$	61,740

Investments are exposed to various risks, including interest rate, market and credit risk. As a result, it is possible that changes in the values of these investments may occur and that such changes could affect the amounts reported in the condensed consolidated balance sheets and condensed consolidated statements of income.

4.  Fair Value Measurements

The accounting framework for determining fair value includes a hierarchy for ranking the quality and reliability of the information used to measure fair value, which enables the reader of the financial statements to assess the inputs used to develop those measurements. The fair value hierarchy consists of three tiers: Level 1, defined as quoted market prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, model-based valuation techniques for which all significant assumptions are observable in the market or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities and Level 3, defined as unobservable inputs that are not corroborated by market data.

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UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

($’s in thousands, except per share amounts)

Assets measured at fair value on a recurring basis consisted of the following:

			Fair Value Measurements Using
	March 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds	$	25,320	$	25,320	$	—	$	—
Corporate bonds	16,797		16,797		—		—
Municipal bonds	46,408		—		46,408		—
Certificates of deposit	4,363		—		4,363		—
Total assets at fair value on a recurring basis	$	92,888	$	42,117	$	50,771	$	—
			Fair Value Measurements Using
	September 30, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds	$	23,135	$	23,135	$	—	$	—
Corporate bonds	11,679		11,679		—		—
Municipal bonds	44,911		—		44,911		—
Certificates of deposit	5,150		—		5,150		—
Total assets at fair value on a recurring basis	$	84,875	$	34,814	$	50,061	$	—

5.  Postemployment Benefits

We periodically enter into agreements which provide postemployment benefits to personnel whose employment is terminated. The postemployment benefit liability, which is included in accounts payable and accrued expenses on the accompanying condensed consolidated balance sheets, is generally paid out ratably over the terms of the agreements, which range from 1 month to 24 months, with the final agreement expiring in December 2015.

The postemployment activity for the six months ended March 31, 2014 was as follows:

	Liability Balance at September 30, 2013		Postemployment Benefit Charges		Cash Paid			Other Non-cash (1)			Liability Balance at March 31, 2014
Severance	$	1,714	$	712	$	(605	)	$	(12	)	$	1,809
Other	2		43		(11		)	—			34
Total	$	1,716	$	755	$	(616	)	$	(12	)	$	1,843

(1) Primarily relates to the expiration of benefits not used within the time offered under the separation agreement and non-cash severance.

6.   Earnings per Share

Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares outstanding for the period. Diluted net income (loss) per share reflects the assumed conversion of all dilutive securities, if any. For the six months ended March 31, 2014 and 2013, 576,837 shares and 1,437,686 shares, respectively, which could be issued under outstanding stock-based grants, were not included in the determination of our diluted shares outstanding as they were anti-dilutive.For the three months ended March 31, 2014 and 2013, diluted loss per share equals basic loss per share as the assumed activity related to outstanding stock-based grants would have an anti-dilutive effect.

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UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

($’s in thousands, except per share amounts)

The calculation of the weighted average number of shares outstanding used in computing basic and diluted net income per share was as follows:

	Three Months Ended March 31,		Six Months Ended March 31,
	2014	2013	2014	2013
Weighted average number of shares	(In thousands)
Basic shares outstanding	24,661	24,396	24,653	24,581
Dilutive effect related to employee stock plans	—	—	235	70
Diluted shares outstanding	24,661	24,396	24,888	24,651

7.   Property and Equipment, net

Property and equipment, net consisted of the following:

	Depreciable Lives (in years)	March 31, 2014			September 30, 2013
Land	—	$	1,456		$	1,456
Buildings and building improvements	35	50,306			13,741
Leasehold improvements	1-28	39,238			48,062
Training equipment	3-10	84,071			82,270
Office and computer equipment	3-10	37,471			37,206
Curriculum development	5	18,716			18,716
Software developed for internal use	3-5	10,645			10,895
Vehicles	5	1,045			1,005
Construction in progress	—	4,469			33,158
		247,417			246,509
Less accumulated depreciation and amortization		(142,368		)	(143,439		)
		$	105,049		$	103,070

The following amounts, which are included in the above table, represent assets financed by financing obligations:

	March 31, 2014
Buildings and building improvements	$	33,500
Less accumulated depreciation and amortization	(620		)
Assets financed by financing obligation, net	$	32,880

As previously disclosed, we entered into a build-to-suit facility lease agreement and a construction management agreement related to the relocation of our Glendale Heights, Illinois campus to, and the design and construction of a new campus in, Lisle, Illinois. Under these agreements, we retained all construction risk and therefore, for accounting purposes, were considered the owner during the construction period. We recorded approximately $27.6 million in construction in progress and $27.6 million in the related construction liability on our condensed consolidated balance sheet as of September 30, 2013.

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UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

($’s in thousands, except per share amounts)

Construction was completed during November 2013 and the facility was placed into service effective December 1, 2013. The investment in the joint venture related to the lease of this facility represents continuing involvement after the construction period was completed. Therefore, we will continue to account for the arrangement as a financing obligation and have an imputed operating lease related to our use of the land. Accordingly, the asset and a corresponding lease financing obligation are included in our condensed consolidated balance sheet. The asset will be depreciated over the initial lease term of 18 years. The financing obligation is amortized through the effective interest method in which a portion of the lease payments is recognized as interest expense, a portion is allocated to the imputed land lease and the remaining portion will decrease the financing obligation. Future minimum lease payments under this lease as of March 31, 2014 are as follows:

Years ending September 30,	Financing Obligations			Operating Leases
2014 (Remaining)	$	1,397		$	146
2015	2,845			291
2016	2,907			291
2017	2,971			291
2018	3,037			291
Thereafter	46,719			3,832
Total future minimum lease obligation	$	59,876		$	5,142
Less imputed interest on financing obligation	(26,178		)
Less imputed accrued land lease obligation	(365		)
Net present value of financing obligation	$	33,333

Amended Leases

In January 2014, we entered into amended lease agreements for certain buildings on our Orlando, Florida campus which extended the lease terms to August 31, 2022 and modified the scheduled rental payments. Additionally, one of the amendments included a provision which allows us to expand the square footage at one building by approximately 13,500 square feet with an associated tenant improvement allowance of approximately $1.7 million.

Under the agreement, we have retained all construction risk and are responsible for all budget overruns. Therefore, for accounting purposes, we are considered the owner during the construction period. Additionally, during the construction period, the existing building and the addition are considered one unit of account. Accordingly, when construction begins, we will record the existing building and a corresponding financing obligation on our condensed consolidated balance sheet of approximately $5.6 million and discontinue recognizing rent expense.

During construction of the addition, we will record construction costs as construction in progress with a corresponding construction liability on our condensed consolidated balance sheet. Although we are owners during the construction period, we do not own the underlying land. Therefore, we will have an imputed operating lease expense related to our use of the land that will be recognized from the time we begin construction through the end of the construction period. During the construction period, the rental payment on the existing building will be allocated to imputed land lease expense and interest expense, which will then be capitalized, and the remaining portion will decrease the financing obligation.

Upon occupancy of the expanded building under this lease agreement, we believe that we will not have continuing involvement after the construction period is complete, and we anticipate that the lease will be accounted for as an operating lease. As such, we anticipate we will derecognize the existing building, addition, financing obligation and construction liability. Furthermore, we will record prepaid rent related to the rent paid during construction, which will be amortized over the initial lease term.

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UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

($’s in thousands, except per share amounts)

8.   Investment in Unconsolidated Affiliate

During the year ended September 30, 2012, we invested $4.0 million to acquire an equity interest of approximately 28% in a joint venture (JV) related to the lease of our Lisle, Illinois campus facility. In connection with this investment, we do not possess a controlling financial interest as we do not hold a majority of the equity interest, nor do we have the power to make major decisions without approval from the other equity member. Therefore, we do not qualify as the primary beneficiary. Accordingly, this investment is accounted for under the equity method of accounting and is included in other assets in our condensed consolidated balance sheet. We recognize our proportionate share of the JV’s net income or loss during each accounting period as a change in our investment. For the three months and six months ended March 31, 2014, our equity in earnings was $0.1 million and $0.2 million, respectively. We did not recognize any equity in earnings during the three months or six months ended March 31, 2013.

Investment in unconsolidated affiliate consists of the following:

	March 31, 2014				September 30, 2013
	Carrying Value (In thousands)		Ownership Percentage		Carrying Value (In thousands)		Ownership Percentage
Investment in unconsolidated affiliate	$	4,208	27.972	%	$	4,000	27.972	%

9.   Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following:

	March 31, 2014		September 30, 2013
Accounts payable	$	13,839	$	13,758
Accrued compensation and benefits	16,920		16,858
Other accrued expenses	7,373		8,613
	$	38,132	$	39,229

10.   Commitments and Contingencies

Operating Leases

Since 1991, certain of our properties have been leased from entities controlled by John C. White, a member of our Board of Directors. We have leased two of our Phoenix properties under one lease from City Park LLC, a successor in interest of 2844 West Deer Valley LLC and in which the John C. and Cynthia L. White 1989 Family Trust holds a 25% interest, since April 1994. During the three months ended March 31, 2014, City Park LLC sold the properties to an unrelated third party. Our existing lease remains in effect through December 31, 2022.

Executive Employment Agreements

Effective April 8, 2014, we entered into new employment agreements with two of our key executives and into an amended employment agreement with another key executive that provide for certain payments and benefits upon specified terminations of employment as defined within each agreement. Each agreement provides payments and benefits for termination for reasons other than cause and resignation for good reason, without or following a change in control. The new employment agreements also provide for payments for certain terminations following Company non-renewal of the agreement, for payments and benefits upon termination due to death or disability and require future stock unit awards, if any, to provide for continued vesting for 12 months after a qualifying retirement as defined within the agreements. There have been no grants of stock unit awards with retirement provisions. The range of the aggregate commitment upon termination of employment under these agreements and existing equity award agreements is approximately $2.7 million to $9.7 million.

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UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

($’s in thousands, except per share amounts)

Legal

In the ordinary conduct of our business, we are periodically subject to lawsuits, demands in arbitration, investigations, regulatory proceedings or other claims, including, but not limited to, claims involving current or former students, routine employment matters, business disputes and regulatory demands. When we are aware of a claim or potential claim, we assess the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, we would accrue a liability for the loss. When a loss is not both probable and estimable, we do not accrue a liability. Where a loss is not probable but is reasonably possible, including if a loss in excess of an accrued liability is reasonably possible, we determine whether it is possible to provide an estimate of the amount of the loss or range of possible losses for the claim. Because we cannot predict with certainty the ultimate resolution of the legal proceedings (including lawsuits, investigations, regulatory proceedings or claims) asserted against us, such current pending legal proceedings to which we are a party may have a material adverse effect on our business, cash flows, results of operations or financial condition.

In September 2012, we received a Civil Investigative Demand (CID) from the Attorney General of the Commonwealth of Massachusetts related to a pending investigation in connection with allegations that we caused false claims to be submitted to the Commonwealth relating to student loans, guarantees and grants provided to students at our Norwood, Massachusetts campus. The CID required us to produce documents and provide written testimony regarding a broad range of our business from September 2006 to the present.  We responded timely to the request, as well as to follow-up requests for additional information made in December 2012 and February 2013. At this time, we cannot predict the eventual scope, duration, outcome or associated costs of this request and accordingly we have not recorded any liability in the accompanying condensed consolidated financial statements.

As previously disclosed, in October 2012 and January 2013, the ACCSC requested certain documentation related to a  preliminary investigation by the United States Department of Justice (“DOJ”) of certain previously disclosed claims under the False Claims Act (31 U.S.C. § 3729, et seq.) (the “FCA Claims”).  Pursuant to applicable law and the United States’ request, we were not able to provide the information requested at that time and notified ACCSC as such. In October 2013, we informed the ACCSC of the declination of intervention and closing of investigation by the DOJ into the FCA Claims, as well as the settlement of such claims with a former employee, and the final agency closing of a related Department of Labor suit.  In addition, at the ACCSC’s request, in November 2013, we provided the ACCSC with certain documentation relating to the resolution of these claims. On March 19, 2014, we received notification from the ACCSC that it voted to accept our response and closed their inquiry.

Proprietary Loan Program

In order to provide funding for students who are not able to fully finance the cost of their education under traditional governmental financial aid programs, commercial loan programs or other alternative sources, we established a private loan program with a bank.

Under terms of the proprietary loan program, the bank originates loans for our students who meet our specific credit criteria with the related proceeds used exclusively to fund a portion of their tuition. We then purchase all such loans from the bank at least monthly and assume all of the related credit risk. The loans bear interest at market rates; however, principal and interest payments are not required until six months after the student completes or withdraws from his or her program. After the deferral period, monthly principal and interest payments are required over the related term of the loan.

The bank provides these services in exchange for a fee at a percentage of the principal balance of each loan and related fees. Under the terms of the related agreement, we transfer funds for loan purchases to a deposit account with the bank in advance of the bank funding the loan which secures our related loan purchase obligation. Such funds are classified as restricted cash in our condensed consolidated balance sheet.

In substance, we provide the students who participate in this program with extended payment terms for a portion of their tuition and as a result, we account for the underlying transactions in accordance with our tuition revenue recognition policy. However, due to the nature of the program coupled with the extended payment terms required under the student loan agreements, collectability is not reasonably assured. Accordingly, we recognize tuition and loan origination fees financed by the loan and any related interest income required under the loan when such amounts are collected. All related expenses incurred with the bank or other service providers are expensed as incurred and were approximately $0.4 million and $0.8 million for the three months and six months ended March 31, 2014, respectively, and $0.5 million and $1.1 million for the three months and six months ended March 31, 2013, respectively. Since loan collectability is not reasonably assured, the loans and related deferred tuition revenue are not recognized in our condensed consolidated balance sheets.

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UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

($’s in thousands, except per share amounts)

The following table summarizes the impact of the proprietary loan program on our tuition revenue and interest income during the period as well as on a cumulative basis at the end of each period in our condensed consolidated income statements. Tuition revenue and interest income excluded represents amounts which would have been recognized during the period had collectability of the related amounts been assured. Amounts collected and recognized represent actual cash receipts during the period and amounts written-off represent amounts which have been turned over to third party collectors.

	Three Months Ended March 31,						Six Months Ended March 31,						Inception
	2014			2013			2014			2013			to date
Tuition and interest income excluded	$	7,252		$	6,095		$	14,253		$	12,832		$	84,112
Amounts collected and recognized	(846		)	(568		)	(1,546		)	(1,018		)	(6,568		)
Amounts written off	(2,468		)	(1,469		)	(4,263		)	(2,456		)	(25,258		)
Net amount excluded during the period	$	3,938		$	4,058		$	8,444		$	9,358		$	52,286

At March 31, 2014, we had committed to provide loans to our students for approximately $97.3 million since inception.

The following table summarizes the activity related to the balances outstanding under our proprietary loan program, including loans outstanding, interest and origination fees, which are not reflected in our condensed consolidated balance sheets:

	Six Months Ended March 31,
	2014			2013
Balance at beginning of period	$	59,767		$	42,880
Loans extended	16,125			14,336
Interest accrued	1,427			1,860
Amounts collected and recognized	(1,546		)	(1,018		)
Amounts written off	(4,263		)	(2,456		)
Balance at end of period	$	71,510		$	55,602

11.  Common Shareholders’ Equity

Common Stock

Holders of our common stock are entitled to receive dividends when and as declared by our Board of Directors and have the right to one vote per share on all matters requiring shareholder approval. On December 20, 2013 and March 31, 2014, we paid cash dividends of $0.10 per share to common stockholders of record as of December 10, 2013 and March 17, 2014, respectively, totaling approximately $4.9 million.

Share Repurchase Program

On December 20, 2011, our Board of Directors authorized the repurchase of up to $25.0 million of our common stock in the open market or through privately negotiated transactions. The timing and actual number of shares purchased will depend on a variety of factors such as price, corporate and regulatory requirements and prevailing market conditions. We may terminate or limit the share repurchase program at any time without prior notice. During the three months and six months ended March 31, 2014, we purchased 31,000 shares at an average price per share of $13.17 and a total cost of approximately $0.4 million. As of March 31, 2014, we have purchased 736,000 shares at an average price per share of $10.40 and a total cost of approximately $7.7 million under this program.

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UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

($’s in thousands, except per share amounts)

12.   Segment Information

Our principal business is providing postsecondary education. We also provide manufacturer-specific training and these operations are managed separately from our campus operations. These operations do not currently meet the quantitative criteria for segments and therefore are reflected in the Other category. Corporate expenses are allocated to Postsecondary Education and the Other category based on compensation expense.

Summary information by reportable segment is as follows:

	Three Months Ended March 31,						Six Months Ended March 31,
	2014			2013			2014			2013
Revenues
Postsecondary education	$	91,891		$	93,243		$	188,236		$	189,163
Other	2,811			1,832			3,495			4,353
Consolidated	$	94,702		$	95,075		$	191,731		$	193,516
Income (loss) from operations
Postsecondary education	$	(921	)	$	(1,333	)	$	2,674		$	5,323
Other	(583		)	(606		)	(1,175		)	(1,256		)
Consolidated	$	(1,504	)	$	(1,939	)	$	1,499		$	4,067
Depreciation and amortization
Postsecondary education	$	4,528		$	5,541		$	9,673		$	11,162
Other	87			86			188			187
Consolidated	$	4,615		$	5,627		$	9,861		$	11,349
Net income (loss)
Postsecondary education	$	(1,250	)	$	(575	)	$	678		$	3,359
Other	(255		)	(345		)	(523		)	(717		)
Consolidated	$	(1,505	)	$	(920	)	$	155		$	2,642
							March 31, 2014			September 30, 2013
Goodwill
Postsecondary education							$	20,579		$	20,579
Other							—			—
Consolidated							$	20,579		$	20,579
Total assets
Postsecondary education							$	278,051		$	272,178
Other							7,161			7,285
Consolidated							$	285,212		$	279,463

13.   Government Regulation and Financial Aid

Gainful Employment

In 2013, the Department of Education (ED) established a negotiated rulemaking committee (the committee) to prepare proposed regulations to establish standards for programs that prepare students for gainful employment in a recognized occupation. The negotiation sessions occurred in September, November and December of 2013.  The committee did not reach consensus on proposed draft regulatory language by the December 13, 2013 deadline.  Without consensus, ED was authorized to write the final rule without the committee shaping its language. On March 25, 2014, ED issued a Notice of Proposed Rulemaking, which has a 60 day public comment period, to establish measures for determining whether certain postsecondary educational programs prepare students for gainful employment in a recognized occupation. ED proposed a set of conditions under which these educational programs remain eligible to participate in Title IV programs. The effective date of these regulations cannot be determined at this time, but it is likely that the rules, if adopted, would be effective on or after July 1, 2015. We cannot predict the form of the final rules that may be adopted following the comment period.

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UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

($’s in thousands, except per share amounts)

Program Integrity and Improvement

In February, March and April of 2014, ED conducted negotiated rulemaking sessions covering a variety of topics, the following of which may be impactful to us: the definition of adverse credit as it applies to Federal Direct PLUS loans, clock-to-credit hour conversion regulations and Title IV cash management.

Congressional Action and Financial Aid Funding

In January 2014, Congress passed an omnibus spending bill to fund the federal government through September 30, 2014, which the President signed on January 17, 2014.  The bill includes several elements related to higher education and restores campus-based funding programs to pre-sequester levels. Additionally, it increases the maximum Pell grant for the 2014-15 award year from $5,645 to $5,730 per student.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included in this report and those in our 2013 Annual Report on Form 10-K filed with the SEC on December 4, 2013. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in such forward-looking statements as a result of certain factors, including but not limited to those described under “Risk Factors” in our 2013 Annual Report on Form 10-K and included in Part II, Item 1A of this report. See also "Special Note Regarding Forward-Looking Statements" on page ii of this report.

Overview

We are the leading provider of postsecondary education for students seeking careers as professional automotive, diesel, collision repair, motorcycle and marine technicians as measured by total average undergraduate full-time student enrollment and graduates. We offer undergraduate degree and diploma programs at 11 campuses across the United States under the banner of several well-known brands, including Universal Technical Institute, Motorcycle Mechanics Institute and Marine Mechanics Institute and NASCAR Technical Institute. We also offer manufacturer specific training (MSAT) programs, including student paid electives, at our campuses and manufacturer or dealer sponsored training at certain campuses and dedicated training centers.

We work closely with leading original equipment manufacturers (OEMs) in the automotive, diesel, motorcycle and marine industries to understand their needs for qualified service professionals. Through our relationships with OEMs, we are able to continuously refine and expand our programs and curricula. We believe our industry-oriented educational philosophy and national presence have enabled us to develop valuable industry relationships which provide us with significant competitive strength and support our market leadership. We are a primary, and often the sole, provider of MSAT programs, and we have relationships with over 25 OEMs.

Participating manufacturers typically assist us in the development of course content and curricula, while providing us with vehicles, equipment, specialty tools and parts at reduced prices or at no charge. In some instances they pay for students’ tuition. Our collaboration with OEMs enables us to provide highly specialized education to our students, resulting in enhanced employment opportunities and the potential for higher wages for our graduates. Our industry partners and their dealers benefit from a supply of technicians who are certified or credentialed by the manufacturer as graduates of the MSAT programs. The MSAT programs offer a cost-effective alternative for sourcing and developing technicians for both OEMs and their dealers. These relationships also support the development of incremental revenue opportunities from training the OEMs’ existing employees.

2014 Overview

Operations

We started approximately 3,100 students during the three months ended March 31, 2014, which represents an increase of 6.9% as compared to the prior year comparable period. For the six months ended March 31, 2014, we started approximately 5,300 students, which represents a decrease of 5.4% as compared to the prior year comparable period. We began 2014 with a lower student population and experienced a decline in new student starts during the six months ended March 31, 2014, which contributed to declines of 2.0% and 4.5% in our average undergraduate full-time student enrollment to approximately 14,700 and 15,000 students, respectively, for the three months and six months ended March 31, 2014, respectively.

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Several factors continue to challenge our ability to start new students including the following:

• The amount of Title IV financial aid available decreased during 2012 which increased the difference between the amount of Title IV financial aid our students are eligible for and the cost of education; this difference requires students and their families to obtain additional financing;

• Incentive compensation changes which became effective July 1, 2011 limited the means by which we may compensate our admissions representatives and required significant changes to our compensation and performance management processes. We are continuing to adapt to those changes within the organization;

• Competition for prospective students continues to increase from within our sector as well as with traditional post secondary educational institutions;

• The state of the general macro-economic environment and its impact on price sensitivity and the ability and willingness of students and their families to incur debt; and

• Unemployment; during periods when the unemployment rate declines or remains stable as it has in recent years, prospective students have more employment options.

The decline in our average undergraduate full-time student enrollment contributed to the following financial results:

• For the three months ended March 31, 2014, revenues decreased $0.4 million, or 0.4%, to $94.7 million. The decline in revenues resulted in an operating loss of $1.5 million and a net loss of $1.5 million.

• For the six months ended March 31, 2014, revenues decreased $1.8 million, or 0.9%, to $191.7 million. The decline in revenues resulted in operating income of $1.5 million and net income of $0.2 million.

Additionally, our results of operations were impacted by an increase in advertising expenses, as we continue to invest in efforts to optimize our media mix. The decline in revenues and increase in advertising expenses were partially offset by an overall decrease in compensation and benefits expenses. Our revenues for the three months and six months ended March 31, 2014 excluded $6.6 million and $12.8 million, respectively, of tuition related to students participating in our proprietary loan program.

Balancing the impact of our lower student populations and our highly fixed cost structure with our commitment to invest in our future resulted in lower operating margins for the six months ended March 31, 2014.

In response to these challenges, we continue to manage discretionary operating costs, to develop our strong industry relationships and to provide alternative financial solutions to help students achieve their educational goals. During 2013 and 2014, we increased our need-based scholarships offerings. Additionally, we continue to optimize our advertising spend, balancing the quality and quantity of inquiries, and we have implemented programs to improve the effectiveness of our admissions processes.

Build-to-Suit Lease and Investment in Unconsolidated Affiliate

As previously disclosed, in 2012 we entered into a build-to-suit lease, a construction management agreement and a joint venture related to the relocation of our Glendale Heights, Illinois campus to Lisle, Illinois. We moved into our Lisle, Illinois campus during the three months ended December 31, 2013. The transaction was structured based on the desired economic outcome which has resulted in accounting for the lease as a financing obligation and the joint venture using the equity method. See footnotes 7 and 8 to our condensed consolidated financial statements included in this Report on Form 10-Q for further discussion.

Amended Leases

In January 2014, we entered into amended lease agreements for certain buildings on our Orlando, Florida campus which extended the lease terms to August 31, 2022 and modified the scheduled rental payments. Additionally, one of the amendments included a provision which allows us to expand the square footage at one of the buildings by approximately 13,500 square feet with an associated tenant improvement allowance of approximately $1.7 million. Total project costs are estimated at approximately $2.0 million to $2.3 million and we anticipate construction will be completed in late calendar 2014. We intend to utilize this space to support the integration of our Diesel Technology II program at this campus.

Under the agreement, we have retained all construction risk and therefore, for accounting purposes, are considered the owner during the construction period. During the construction period, the existing building and the addition are considered one unit of account and accordingly we will record the existing building and a corresponding financing obligation of approximately $5.6 million on our condensed consolidated balance sheet.

16

Additionally, we have an imputed operating lease related to our use of the land during construction. During the construction period, the rental payment on the existing building will be allocated to imputed land lease expense and interest expense, which will then be capitalized, and the remaining portion will decrease the financing obligation, resulting in a decrease to occupancy costs of approximately $0.4 million for the year ending September 30, 2014.

We believe that we will not have continued involvement in the facility after the construction period is complete, and we anticipate that the lease will be accounted for as an operating lease. See footnote 7 to our condensed consolidated financial statements included in this Report on Form 10-Q for further discussion.

Automotive Technology and Diesel Technology II Integration

In March 2014, we began integrating the Automotive Technology and Diesel Technology II curricula at our Sacramento, California campus. We intend to integrate the new curricula at an additional campus in calendar year 2015. Currently, veteran’s benefits cannot be used for funding the curricula at our California campuses but have been authorized for our Dallas/Ft. Worth, Texas and Avondale, Arizona campuses. We are in discussion with the California State Approving Agency for Veterans Education regarding the necessary approval; however we are not able to determine when, or if, the state agency will approve the funding.

As we continue to integrate the curricula at our other automotive campuses in future years, we expect to make additional capital investments and incur higher than usual operating expenses. We anticipate capitalizing an additional $3.0 million to $3.4 million of training aids and leasehold improvements and incurring an additional $1.6 million to $1.8 million in operating expenses related to these integration activities during the remainder of the year ending September 30, 2014.

Graduate Employment

Our consolidated graduate employment rate for our 2013 graduates during the six months ended March 31, 2014 is above the rate at the same time in the prior year. The rate has improved for our Automotive and Diesel Technology, Collision Repair and Motorcycle programs while the rate has declined for our Marine program.

Regulatory Environment

Gainful Employment

In 2013, the Department of Education (ED) established a negotiated rulemaking committee (the committee) to prepare proposed regulations to establish standards for programs that prepare students for gainful employment in a recognized occupation. The negotiation sessions occurred in September, November and December of 2013.  The committee did not reach consensus on proposed draft regulatory language by the December 13, 2013 deadline.  Without consensus, ED was authorized to write the final rule without the committee shaping its language. On March 25, 2014, ED issued a Notice of Proposed Rulemaking, which has a 60 day public comment period, to establish measures for determining whether certain postsecondary educational programs prepare students for gainful employment in a recognized occupation. ED proposed a set of conditions under which these educational programs remain eligible to participate in Title IV programs. The effective date of these regulations cannot be determined at this time, but it is likely that the rules, if adopted, would be effective on or after July 1, 2015. We cannot predict the form of the final rules that may be adopted following the comment period. Compliance with final rules could have a material impact on the manner in which we conduct our business and our results of operations. We are not able to develop reliable estimates as to the potential outcome or impact of the proposed rules because the rules are not final, the data previously provided by ED is dated and we do not have access to recent data which would be used in the proposed calculations. We continue to monitor this activity.

Program Integrity and Improvement

In February, March and April 2014, ED conducted negotiated rulemaking sessions covering a variety of topics, the following of which may be impactful to us: to the definition of adverse credit as it applies to Federal Direct PLUS loans, clock-to-credit hour conversion regulations and Title IV cash management. We continue to monitor activities relative to ED’s negotiations and proposed rules for any impact toour business.

17

Congressional Action and Financial Aid Funding

In January 2014, Congress passed an omnibus spending bill to fund the federal government through September 30, 2014, which the President signed on January 17, 2014.  The bill includes several elements related to higher education and restores campus-based funding programs to pre-sequester levels. Additionally, it increases the maximum Pell grant for the 2014-15 award year from $5,645 to $5,730 per student.

2014 Outlook

Despite reporting meaningful start growth this quarter, with economic headwinds and affordability challenges persisting, we expect second half starts to be down slightly from last year. Continued expense management efforts should fund investments in the front end of the business and longer-term growth opportunities yet still lead to reductions in absolute operating expense levels both on a linked quarter basis from this quarter as well as on a year over year basis. While we expect third quarter results to be very close to break-even, we currently anticipate a stronger fourth quarter, which should lead to second half operating results being significantly better than last year’s.

Results of Operations

The following table sets forth selected statements of operations data as a percentage of revenues for each of the periods indicated.

	Three Months Ended March 31,				Six Months Ended March 31,
	2014		2013		2014		2013
Revenues	100.0	%	100.0	%	100.0	%	100.0	%
Operating expenses:
Educational services and facilities	53.5	%	53.0	%	53.1	%	51.8	%
Selling, general and administrative	48.1	%	49.0	%	46.1	%	46.1	%
Total operating expenses	101.6	%	102.0	%	99.2	%	97.9	%
Income (loss) from operations	(1.6	)%	(2.0	)%	0.8	%	2.1	%
Interest income (expense), net	(0.5	)%	0.1	%	(0.3	)%	0.1	%
Other income	0.2	%	0.2	%	0.3	%	0.2	%
Total other income (expense)	(0.3	)%	0.3	%	—	%	0.3	%
Income (loss) before income taxes	(1.9	)%	(1.7	)%	0.8	%	2.4	%
Income tax expense (benefit)	(0.3	)%	(0.7	)%	0.7	%	1.0	%
Net income (loss)	(1.6	)%	(1.0	)%	0.1	%	1.4	%

Three Months Ended March 31, 2014 Compared to Three Months Ended March 31, 2013 and Six Months Ended March 31, 2014 Compared to Six Months Ended March 31, 2013

Revenues. Our revenues for the three months ended March 31, 2014 were $94.7 million, a decrease of $0.4 million, or 0.4%, as compared to revenues of $95.1 million for the three months ended March 31, 2013. The 2.0% decrease in our average undergraduate full-time student enrollment resulted in a decrease in revenues of approximately $2.0 million. The decrease was partially offset by tuition rate increases between 2% and 4%, depending on the program. Our revenues for the three months ended March 31, 2014 and 2013 excluded $6.6 million and $5.2 million, respectively, of tuition related to students participating in our proprietary loan program. In accordance with our accounting policy, we recognize the related revenues as payments are received from the students participating in this program. We recognized $0.8 million and $0.6 million of revenues and interest under the program during the three months ended March 31, 2014 and 2013, respectively.

18

Our revenues for the six months ended March 31, 2014 were $191.7 million, a decrease of $1.8 million, or 0.9%, as compared to revenues of $193.5 million for the six months ended March 31, 2013. The 4.5% decrease in our average undergraduate full-time student enrollment resulted in a decrease in revenues of approximately $8.0 million. The decrease was partially offset by tuition rate increases between 2% and 4%, depending on the program. Our revenues for the six months ended March 31, 2014 and 2013 excluded $12.8 million and $11.0 million, respectively, of tuition related to students participating in our proprietary loan program. In accordance with our accounting policy, we recognize the related revenues as payments are received from the students participating in this program. We recognized $1.5 million and $1.0 million of revenues and interest under the program during the three months ended March 31, 2014 and 2013, respectively.

Over the past year, we have increased the amount of scholarships offered to our students in an effort to improve the percentage of students who start school after applying. Because scholarships are recognized ratably over the term of the student’s course or program in accordance with our revenue recognition policy, an increase in scholarships accepted does not immediately impact revenues. During the six months ended March 31, 2014, a decline in revenues of approximately $0.6 million is attributable to the increase in scholarship discounts applied for students currently attending classes.

Educational services and facilities expenses. Our educational services and facilities expenses for the three months and six months ended March 31, 2014 were $50.7 million and $101.8 million, respectively. This represents increases of $0.2 million and $1.7 million, as compared to $50.5 million and $100.1 million, respectively, for the three months and six months ended March 31, 2013, respectively.

The following table sets forth the significant components of our educational services and facilities expenses:

	Three Months Ended March 31,					Six Months Ended March 31,
	2014			2013		2014		2013
	(In thousands)
Salaries expense	$	22,499		$	21,425	$	44,164	$	43,152
Employee benefits and tax	4,454			4,877		8,495		8,607
Stock-based compensation	149			44		301		264
Bonus expense	(87		)	113		271		661
Compensation and related costs	27,015			26,459		53,231		52,684
Occupancy costs	9,035			9,224		18,546		18,446
Depreciation and amortization expense	4,697			4,704		9,317		9,392
Other educational services and facilities expense	3,636			3,883		7,554		7,814
Supplies and maintenance	2,643			2,405		4,939		4,554
Tools and training aids expense	2,367			2,270		4,855		4,674
Contract services expense	1,259			1,511		3,321		2,584
	$	50,652		$	50,456	$	101,763	$	100,148

The increase in compensation and related costs was primarily attributable to increases of approximately $1.1 million and $1.0 million in salaries expense for the three months and six months ended March 31, 2014, respectively, as compared to the same periods in the prior year. The increases were primarily due to normal salary merit increases. Additionally, we are realizing the anticipated efficiencies from the integration of the Automotive Technology and Diesel Technology II curricula at our Avondale, Arizona campus; these efficiencies, when combined with lower new students starts at this campus, resulted in severance of approximately $0.2 million at this campus. The increases were partially offset by an overall decrease in employee headcount resulting from our focus on cost control. Bonus expense for the year ending September 30, 2014 is anticipated to be lower than the prior year due to the design of the plan, which includes a reduction in the bonus plan payout levels.

Contract services expense increased $0.7 million during the six months ended March 31, 2014, as compared to the same period in the prior year. The increase was primarily attributable to an increase in contract services in support of the relocation of our Glendale Heights, Illinois campus to Lisle, Illinois as well as expenses associated with outsourcing certain financial aid processes.

As discussed in footnote 7 to our condensed consolidated financial statements included in this Report on Form 10-Q, in December 2013, we recorded an asset and related financing obligation for our Lisle, Illinois campus. We anticipate the related

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depreciation expense will be approximately $1.6 million for the year ending September 30, 2014. We expect this increase will be offset by a decrease in depreciation expense on other assets, as a higher percentage of our fixed assets are fully depreciated.

Selling, general and administrative expenses. Our selling, general and administrative expenses for the three months and six months ended March 31, 2014 were $45.6 million and $88.5 million, respectively. This represents decreases of $1.0 million and $0.8 million, as compared to $46.6 million and $89.3 million, respectively, for the three months and six months ended March 31, 2013, respectively.

The following table sets forth the significant components of our selling, general and administrative expenses:

	Three Months Ended March 31,					Six Months Ended March 31,
	2014			2013		2014		2013
	(In thousands)
Salaries expense	$	18,076		$	18,433	$	36,179	$	36,434
Employee benefits and tax	3,854			4,582		7,548		8,029
Stock-based compensation	1,614			1,516		2,805		2,741
Bonus expense	(408		)	268		820		1,874
Compensation and related costs	23,136			24,799		47,352		49,078
Advertising expense	12,368			10,723		21,095		19,093
Other selling, general and administrative expenses	6,958			6,706		13,034		12,306
Contract services expense	1,213			1,584		2,598		2,918
Bad debt expense	649			1,076		1,990		2,620
Depreciation and amortization expense	846			1,205		1,744		2,502
Legal services expense	384			465		656		784
	$	45,554		$	46,558	$	88,469	$	89,301

Compensation and related costs decreased approximately $1.7 million for both the three months and six months ended March 31, 2014, as compared to the same periods in the prior year. Bonus expense for the year ending September 30, 2014 is anticipated to be lower than the prior year due to the design of the plan, which includes a reduction in the bonus plan payout levels. Additionally, employee benefits and tax decreased for the three months and six months ended March 31, 2014, primarily due to a decrease in self-insurance medical claims. We are implementing significant compensation changes for our field admissions representatives effective July 1, 2014. We anticipate that the changes will result in decreased compensation expense and, in future periods, could result in turnover in field representative positions and decreased representative efficiency.

Advertising expense increased $1.7 million and $2.0 million for the three months and six months ended March 31, 2014, respectively, as compared to the same periods in the prior year. A portion of the increases were attributable to higher inquiry generation expenses; competitive pressures led to price increases and a tighter market for television and internet advertising. We are focusing on identifying the optimal balance between quality and quantity of inquiries from potential students. Advertising expense as a percentage of revenues for the three months and six months ended March 31, 2014 was approximately 13% and 11%, respectively. We anticipate our advertising expense will be in the range of 10%—11% of revenue for the year ending September 30, 2014.

Legal services expense decreased for the three months and six months ended March 31, 2014, as compared to the same period in the prior year. As discussed in Part I, Item 3 of our Annual Report on Form 10-K filed with the SEC on December 4, 2013, during the year ended September 30, 2013, we settled legal matters for which we previously incurred significant legal costs. We anticipate lower legal services expense for the year ending September 30, 2014 compared to the year ended September 30, 2013.

Income taxes. Our income tax benefit for the three months ended March 31, 2014 and 2013 was $0.3 million, or 14.7% of pre-tax loss, and $0.7 million, or 43.3% of pre-tax loss, respectively. Our provision for income taxes for the six months ended March 31, 2014 and 2013 was $1.3 million, or 89.4% of pre-tax income, and $1.9 million, or 41.9% of pre-tax income, respectively. The effective income tax rate in each period differed from the federal statutory tax rate of 35% primarily as a result of state income taxes, net of related federal income tax benefits, and an increase in tax expense related to share-based compensation.

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At the time of our initial public offering in December 2003 we began awarding stock-based compensation in the form of stock options with a contractual life of 10 years. In subsequent years, we have awarded other forms of stock-based compensation with varying terms. In 2006, we adopted the authoritative guidance on accounting for stock-based compensation which gave rise to deferred tax assets related to stock-based compensation timing differences between book expense and tax deductions, as well as a pro forma pool of windfall tax benefits. When tax deductions from stock-based compensation awards are less than the cumulative book compensation expense, the tax effect of the resulting difference (shortfall) is charged first to additional paid-in capital to the extent of our pro forma pool of windfall tax benefits, with any remainder recognized as income tax expense. In December 2013 and March 2014, certain stock-based compensation awards expired, which required a write-off of the related deferred tax asset through income tax expense as our pro forma windfall pool of available excess tax benefits was no longer sufficient to absorb the shortfall. The write-off of the deferred tax asset was a non-cash charge during the period and was not a result of current operations.

The write-off of the deferred tax asset resulted in $0.4 million and $0.5 million in income tax expense for the three months and six months ended March 31, 2014. Although we cannot predict the price of our stock, if our stock price remains relatively consistent with the last quarter’s average price, the impact of any adjustments to the deferred tax asset and related income tax expense for the six months ending September 30, 2014 is expected to be less than $0.2 million, resulting in an impact on the year ending September 30, 2014 in the range of $0.4 million to $0.7 million.

In future periods, we may experience variability in our income tax expense and our pro forma pool of windfall tax benefits may fluctuate, both of which depend on the price of our common stock and the timing of expiration, exercise and vesting of stock-based compensation awards. This could result in variable income tax rates that are substantially different from the federal statutory tax rate, including the potential for recording income tax expense during periods incurring a loss before income taxes. While we will continue to experience an impact to our deferred tax asset in all future periods with stock-based compensation activity, the most significant impact to income tax expense is expected to occur through 2016, as stock options, which are currently underwater, expire.

Historically, we have calculated income tax expense for interim periods based on estimated annual effective tax rates. These rates have been derived, in part, from expected income before taxes for the year. However, authoritative accounting guidance indicates that companies should not apply the estimated annual tax rate to interim financial results if the estimated annual tax rate is not reliably predictable. We are not able to reasonably estimate the annual effective tax rate for the year ending September 30, 2014 because small fluctuations in our earnings before taxes could result in a material change in the estimated annual effective tax rate based on our current projections. Therefore, for the three months and six months ended March 31, 2014, we calculated income taxes for each of the discrete periods using the actual year-to-date results.

Non-GAAP financial measures. Earnings before interest, taxes, depreciation and amortization (EBITDA) for the three months and six months ended March 31, 2014 were $4.3 million and $13.1 million, respectively, as compared to $4.2 million and $16.3 million for the three months and six months ended March 31, 2013, respectively.

EBITDA is a non-GAAP financial measure which is provided to supplement, but not substitute for, the most directly comparable GAAP measure. We choose to disclose this non-GAAP financial measure because it provides an additional analytical tool to clarify our results from operations and helps to identify underlying trends. Additionally, this measure helps compare our performance on a consistent basis across time periods. To obtain a complete understanding of our performance, this measure should be examined in connection with net income determined in accordance with GAAP. Since the items excluded from this measure should be examined in connection with net income determined under GAAP, this measure should not be considered to be an alternative to net income as a measure of our operating performance or profitability. Exclusion of items in our non-GAAP presentation should not be construed as an inference that these items are unusual, infrequent or non-recurring. Other companies, including other companies in the education industry, may calculate EBITDA differently than we do, limiting its usefulness as a comparative measure across companies. Investors are encouraged to use GAAP measures when evaluating our financial performance.

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EBITDA reconciles to net income as follows:

	Three Months Ended March 31,						Six Months Ended March 31,
	2014			2013			2014		2013
	(In thousands)
Net income (loss)	$	(1,505	)	$	(920	)	$	155	$	2,642
Interest expense (income), net	491			(72		)	623		(119		)
Income tax expense (benefit)	(259		)	(702		)	1,308		1,908
Depreciation and amortization	5,543			5,909			11,061		11,894
EBITDA	$	4,270		$	4,215		$	13,147	$	16,325

Liquidity and Capital Resources

Based on past performance and current expectations, we believe that our cash flows from operations, cash on hand and investments will satisfy our working capital needs, capital expenditures, commitments and other liquidity requirements associated with our existing operations as well as the integration of our Automotive Technology and Diesel Technology II curricula to existing campuses through the next 12 months.

We believe that the strategic use of our cash resources includes supporting the integration of our Automotive Technology and Diesel Technology II curricula to existing campuses, as well as subsidizing funding alternatives for our students. Additionally, we evaluate the repurchase of our common stock, payment of dividends, consideration of strategic acquisitions, expansion of programs at existing campuses, opening additional campus locations and other potential uses of cash. We continue to evaluate locations and timing for a potential new campus on a scale similar to our Dallas/Ft. Worth, Texas campus. In December 2013 and March 2014, we paid cash dividends of $0.10 per share on our common stock. To the extent that potential acquisitions or opening additional campus locations are large enough to require financing beyond cash from operations, we may issue debt resulting in increased interest expense. Our aggregate cash and cash equivalents and current investments were $89.9 million as of March 31, 2014.

Our principal source of liquidity is operating cash flows. A majority of our revenues is derived from Title IV Programs. Federal regulations dictate the timing of disbursements of funds under Title IV Programs. Students must apply for a new loan for each academic year consisting of thirty-week periods. Loan funds are generally provided by lenders in two disbursements for each academic year. The first disbursement is usually received 30 days after the start of a student’s academic year and the second disbursement is typically received at the beginning of the sixteenth week from the start of the student’s academic year. We have a proprietary loan program in which we bear all credit and collection risk and students are not required to begin repayment until six months after the student completes or withdraws from his or her program. These factors, together with the timing of when our students begin their programs, affect our operating cash flow.

Operating Activities

Our net cash provided by operating activities was $15.9 million for the six months ended March 31, 2014 compared to $7.6 million for the six months ended March 31, 2013. For the six months ended March 31, 2014, changes in our operating assets and liabilities resulted in cash outflows of $0.3 million and were primarily attributable to changes in deferred revenue, prepaid expenses and other assets, income tax receivable and accounts payable and accrued expenses. The increase in deferred revenue resulted in a cash inflow of $3.6 million. The increase was primarily attributable to the timing of student starts, the number of students in school and where they were at period end in relation to the completion of their program at March 31, 2014 compared to September 30, 2013. The increase in prepaid expenses and other current assets resulted in a net cash outflow of $1.3 million and was primarily attributable to prepayments made for software maintenance and financial aid processing services. The change in income tax from a payable position to a receivable position resulted in cash used of $1.3 million and was primarily due to the timing of tax payments. The decrease in accounts payable and accrued expenses resulted in a cash outflow of $1.1 million was primarily due to the timing of our payroll cycle.

For the six months ended March 31, 2013, the changes in our operating assets and liabilities resulted in cash outflows of $12.6 million and were primarily attributable to changes in accounts payable and accrued expenses, deferred revenue, and prepaid expenses and other current assets. The decrease in accounts payable and accrued expenses resulted in a cash outflow of $8.1 million and was primarily due to the payment of our 2012 annual bonus as well as the timing of our payroll cycle. The decrease in deferred revenue resulted in a cash outflow of $5.8 million and was primarily attributable to the timing of student starts, the number of students in school and where they were at period end in relation to the completion of their program at March 31, 2013

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compared to September 30, 2012. The decrease in prepaid expenses and other current assets resulted in a net cash inflow of $1.5 million and was primarily as a result of the reimbursement of certain construction expenses related to the relocation of our Glendale Heights, Illinois campus to, and the design and construction of, a new campus in Lisle, Illinois.

Investing Activities

During the six months ended March 31, 2014, cash used in investing activities was $11.6 million. We had cash outflows of $33.1 million to purchase investments and cash inflows of $26.1 million from proceeds received upon maturity of investments. We had cash outflows of $5.5 million related to the purchase of new and replacement training equipment for our ongoing operations. We anticipate investing an additional $11.4 million to $11.7 million in capital expenditures during the year ending September 30, 2014, primarily related to Automotive Technology & Diesel Technology II Integration, the building expansion at our Orlando, Florida campus and purchases of new and replacement equipment for our ongoing operations.

During the six months ended March 31, 2013, cash used in investing activities was $14.8 million and was primarily related to our purchases of $44.0 million of investments and cash inflows of $33.4 million from proceeds received upon maturity of investments. We had cash outflows of $4.2 million related to the purchase of new and replacement training equipment for our ongoing operations.

Financing Activities

During the six months ended March 31, 2014, cash used in financing activities was $5.6 million and was primarily attributable to the payment of cash dividends on December 20, 2013 and March 31, 2014 of $0.10 per share totaling approximately $4.9 million.

During the six months ended March 31, 2013, cash used in financing activities was $9.9 million and was primarily attributable to the repurchase of approximately $5.4 million of treasury stock and the payment of cash dividends on December 21, 2012 and March 29, 2013 of $0.10 per share totaling approximately $4.9 million.

Seasonality and Trends

Our revenues and operating results normally fluctuate as a result of seasonal variations in our business, principally due to changes in total student population and costs associated with opening or expanding our campuses. Our student population varies as a result of new student enrollments, graduations and student attrition. Historically, our schools have had lower student populations in our third quarter than in the remainder of our year because fewer students are enrolled during the summer months. Additionally, our schools have had higher student populations in our fourth quarter than in the remainder of the year because more students enroll during this period. Our expenses, however, do not vary significantly with changes in student population and revenues and, as a result, such expenses do not fluctuate significantly on a quarterly basis. We expect quarterly fluctuations in operating results to continue as a result of seasonal enrollment patterns. Such patterns may change, however, as a result of new school openings, new program introductions, increased enrollments of adult students or acquisitions. Additionally, our revenues for the first quarter ending December 31 are impacted by the closure of our campuses for a week in December for a holiday break and, accordingly, we do not earn revenue during that closure period.

Critical Accounting Policies and Estimates

Our critical accounting policies are disclosed in our 2013 Annual Report on Form 10-K, filed with the SEC on December 4, 2013. During the six months ended March 31, 2014, there have been no significant changes in our critical accounting policies.

Recent Accounting Pronouncements

Recent accounting pronouncements are disclosed in our 2013 Annual Report on Form 10-K, filed with the SEC on December 4, 2013. During the six months ended March 31, 2014, there have been no new accounting pronouncements which are expected to significantly impact our consolidated financial statements.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to our market risk since September 30, 2013. For a discussion of our exposure to market risk, refer to our 2013 Annual Report on Form 10-K, filed with the SEC on December 4, 2013.

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Item 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), pursuant to Exchange Act Rule 13a-15 as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of March 31, 2014 were effective in ensuring that (i) information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Exchange Act Rule 13a-15(d) that occurred during the three months ended March 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

In the ordinary conduct of our business, we are periodically subject to lawsuits, demands in arbitrations, investigations, regulatory proceedings or other claims, including, but not limited to, claims involving current and former students, routine employment matters, business disputes and regulatory demands. When we are aware of a claim or potential claim, we assess the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, we would accrue a liability for the loss. When a loss is not both probable and estimable, we do not accrue a liability. Where a loss is not probable but is reasonably possible, including if a loss in excess of an accrued liability is reasonably possible, we determine whether it is possible to provide an estimate of the amount of the loss or range of possible losses for the claim. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations, regulatory proceedings or claims asserted against us, we do not believe that any currently pending legal proceeding to which we are a party, individually or in the aggregate, will have a material adverse effect on our business, cash flows, results of operations or financial condition.

In September 2012, we received a Civil Investigative Demand (CID) from the Attorney General of the Commonwealth of Massachusetts related to a pending investigation in connection with allegations that we caused false claims to be submitted to the Commonwealth relating to student loans, guarantees and grants provided to students at our Norwood, Massachusetts campus. The CID required us to produce documents and provide written testimony regarding a broad range of our business from September 2006 to the present.  We responded timely to the request, as well as to follow-up requests for additional information made in December 2012 and February 2013. At this time, we cannot predict the eventual scope, duration, outcome or associated costs of this request and accordingly we have not recorded any liability in the accompanying condensed consolidated financial statements.

As previously disclosed, in October 2012 and January 2013, the ACCSC requested certain documentation related to a  preliminary investigation by the United States Department of Justice (“DOJ”) of certain previously disclosed claims under the False Claims Act (31 U.S.C. § 3729, et seq.) (the “FCA Claims”).  Pursuant to applicable law and the United States’ request, we were not able to provide the information requested at that time and notified ACCSC as such. In October 2013, we informed the ACCSC of the declination of intervention and closing of investigation by the DOJ into the FCA Claims, as well as the settlement of such claims with a former employee, and the final agency closing of a related Department of Labor suit.  In addition, at the ACCSC’s request, in November 2013, we provided the ACCSC with certain documentation relating to the resolution of these claims. On March 19, 2014, we received notification from the ACCSC that it voted to accept our response and closed their inquiry.

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Item 1A. RISK FACTORS

There are no other material changes from the risk factors previously disclosed in Part I, Item 1A of our 2013 Annual Report on Form 10-K filed with the SEC on December 4, 2013, except as noted below. The risks described in this report and in our 2013 Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or operating results.

Our proprietary loan program could have a negative effect on our results of operations.

Our proprietary loan program enables students who have utilized all available government-sponsored or other financial aid and have not been successful in obtaining private loans from other financial institutions, for independent students, or PLUS loans, for dependent students, to borrow a portion of their tuition if they meet certain criteria.

Under the proprietary loan program, the bank originates loans for our students who meet our specific credit criteria with the related proceeds to be used exclusively to fund a portion of their tuition. We then purchase all such loans from the bank at least monthly and assume all the related credit and collection risk. See Note 10 of the notes to our condensed consolidated financial statements within Part I of this Report on Form 10-Q for further discussion of activity under our proprietary loan program.

Factors that may impact our ability to collect these loans include: current economic conditions; compliance with laws applicable to the origination, servicing and collection of loans; the quality of our loan servicers’ performance; a decline in graduate employment opportunities and the priority that the borrowers under this loan program, particularly students who did not complete or were dissatisfied with their programs of study, attach to repaying these loans as compared to other obligations. Because we record revenues upon the receipt of cash payments, if we are unable to collect on these loans, our revenues and profitability may continue to be adversely impacted.

Federal, state and local laws and public policy and general principles of equity relating to the protection of consumers apply to the origination, servicing and collection of the loans under our proprietary loan program. Any violation of the various federal, state and local laws, including, in some instances, violations of these laws by parties not under our control, may result in losses on the loans or may limit our ability to collect all or part of the principal or interest on the loans. This may be the case even if we are not directly responsible for the violations by such parties. Our proprietary loan program may be subject to oversight by the Consumer Financial Protection Bureau (CFPB), which could result in additional reporting requirements or increased scrutiny. Recently, other proprietary postsecondary institutions have been subject to information requests from the CFPB with regard to their private student loan programs. Changes in laws or public policy could negatively impact the viability of this student loan program and cause us to delay or suspend the program. Additionally, depending on the terms of the loans, state consumer credit regulators may assert that our activities in connection with the student loan program require us to obtain one or more licenses, registrations or other forms of regulatory approvals, any of which may not be able to be obtained in a timely manner, if at all. All of these factors could result in the proprietary loan program having a material adverse effect on our cash flows, results of operations and financial condition.

If we are unable to hire, retain and continue to develop and train our admissions representatives, the effectiveness of our student recruiting efforts would be adversely affected.

In order to support revenue growth and student enrollment, we need to hire and train new admissions representatives, as well as retain and continue to develop our existing admissions representatives, who are our employees dedicated to student recruitment. Our ability to develop a strong admissions representative team may be affected by a number of factors, including: our ability to integrate and motivate our admissions representatives; our ability to effectively train our admissions representatives; the length of time it takes new admissions representatives to become productive; the competition we face from other companies in hiring, compensating and retaining admissions representatives and our ability to effectively manage a multi-location educational organization. Effective July 1, 2011, we made modifications to our employee compensation structure in order to comply with the elimination of the safe harbors in the regulations in place prior to this date. These modifications affected the compensation structure for our admissions representatives, including the elimination of their variable compensation. As a result of this change and the macroeconomic conditions impacting our business, we have experienced a decrease in our enrollment rates. Our existing compensation structure and any future changes to admissions representative compensation may result in a continued decrease in our enrollment rates. If we are unable to hire, develop or retain quality admissions representatives, the effectiveness of our student recruiting efforts would be adversely affected.

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Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The following table summarizes the purchase of equity securities for the three months ended March 31, 2014:

ISSUER PURCHASES OF EQUITY SECURITIES
Period	(a) Total Number of Shares Purchased (1)	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans Or Programs	(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans Or Programs (In thousands) (2)
January 1-31, 2014	—	$	—	—	$	17,757
February 1-28, 2014	1,743	$	13.23	—	$	17,757
March 1-31, 2014	32,119	$	13.18	31,000	$	17,348
Total	33,862			31,000	$	17,348

(1) 1,743 shares and 1,119 shares purchased in February and March, respectively, represent shares of common stock withheld by us as payment of the individual's tax obligations on the vesting of shares of our common stock which were granted subject to forfeiture restrictions under our 2003 Incentive Compensation Plan (the 2003 Plan). Such shares are returned to the pool of shares issuable under the 2003 Plan.

(2) On December 20, 2011, our Board of Directors authorized the repurchase of up to $25.0 million of our common stock in the open market or through privately negotiated transactions. We may terminate or limit the share repurchase program at any time without prior notice.

Item 6. EXHIBITS

The exhibits required by Item 601 of Regulation S-K which are filed or furnished with this report, as applicable, are set forth in the Exhibit Index.

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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.

		UNIVERSAL TECHNICAL INSTITUTE, INC.
Dated:	April 30, 2014	By:	/s/ Eugene S. Putnam, Jr.
			Eugene S. Putnam, Jr.
			President and Chief Financial Officer
			(Principal Financial Officer and Duly Authorized Officer)

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EXHIBIT INDEX

Number	Description
10.1	Employment Agreement, by and between Kimberly J. McWaters and Universal Technical Institute, Inc., effective April 8, 2014. (Incorporated by reference to Exhibit 10.1 to a Form 8-K filed by the Registrant on April 11, 2014.)
10.2	Employment Agreement, by and between Eugene S. Putnam, Jr. and Universal Technical Institute, Inc., effective April 8, 2014. (Incorporated by reference to Exhibit 10.2 to a Form 8-K filed by the Registrant on April 11, 2014.)
10.3	Amended and Restated Employment Agreement, by and between Kenneth J. Cranston and Universal Technical Institute, Inc., effective April 8, 2014. (Incorporated by reference to Exhibit 10.3 to a Form 8-K filed by the Registrant on April 11, 2014.)
10.4	Second Amendment to Employment Agreement, by and between Kimberly J. McWaters and Universal Technical Institute, Inc., effective March 7, 2014. (Incorporated by reference to Exhibit 10.1 to a Form 8-K filed by the Registrant on March 11, 2014.)
10.5	Second Amendment to Employment Agreement, by and between Eugene S. Putnam, Jr. and Universal Technical Institute, Inc., effective March 7, 2014. (Incorporated by reference to Exhibit 10.2 to a Form 8-K filed by the Registrant on March 11, 2014.)
10.6	First Amendment to Employment Agreement, by and between Kenneth J. Cranston and Universal Technical Institute, Inc., effective March 7, 2014. (Incorporated by reference to Exhibit 10.3 to a Form 8-K filed by the Registrant on March 11, 2014.)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Filed herewith.)
101	The following financial information from our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014, formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Income Statements; (iii) Condensed Consolidated Statement of Shareholders’ Equity; (iv) Condensed Consolidated Statements of Cash Flows; and (v) Notes to Condensed Consolidated Financial Statements.

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Kimberly J. McWaters, certify that:

1. I have reviewed this Report on Form 10-Q of Universal Technical Institute, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: April 30, 2014

/s/ Kimberly J. McWaters

Kimberly J. McWaters

Chairman of the Board and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Eugene S. Putnam, Jr., certify that:

1. I have reviewed this Report on Form 10-Q of Universal Technical Institute, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: April 30, 2014

/s/ Eugene S. Putnam, Jr.

Eugene S. Putnam, Jr.

President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Universal Technical Institute, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kimberly J. McWaters, Chairman of the Board and Chief Executive Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented.

/s/ Kimberly J. McWaters

Kimberly J. McWaters

Chairman of the Board and Chief Executive Officer

Universal Technical Institute, Inc.

April 30, 2014

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Universal Technical Institute, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Eugene S. Putnam, President and Chief Financial Officer of the Company, certify, to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the periods presented.

/s/ Eugene S. Putnam, Jr.

Eugene S. Putnam, Jr.

President and Chief Financial Officer

Universal Technical Institute, Inc.

April 30, 2014

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Accounts Payable and Accrued Expenses (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Accounts Payable and Accrued Expenses
Accounts payable	$ 13,839	$ 13,758
Accrued compensation and benefits	16,920	16,858
Other accrued expenses	7,373	8,613
Accounts payable and accrued expenses, total	$ 38,132	$ 39,229

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Postemployment Activity (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Mar. 31, 2014
Postemployment Benefits Disclosure [Line Items]
Liability Beginning Balance	$ 1,716
Postemployment Benefit Charges	755
Cash Paid	(616)
Other Non-cash	12
Liability Ending Balance	1,843
Severance
Postemployment Benefits Disclosure [Line Items]
Liability Beginning Balance	1,714
Postemployment Benefit Charges	712
Cash Paid	(605)
Other Non-cash	12
Liability Ending Balance	1,809
Other
Postemployment Benefits Disclosure [Line Items]
Liability Beginning Balance	2
Postemployment Benefit Charges	43
Cash Paid	(11)
Other Non-cash	0
Liability Ending Balance	$ 34

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Investment in unconsolidated affiliate (Tables)

6 Months Ended

Mar. 31, 2014

Schedule of Investments in unconsolidated affiliate

Investment in unconsolidated affiliate

Investment in unconsolidated affiliate consists of the following:

	March 31, 2014				September 30, 2013
	Carrying Value (In thousands)		Ownership Percentage		Carrying Value (In thousands)		Ownership Percentage
Investment in unconsolidated affiliate	$	4,208	27.972	%	$	4,000	27.972	%

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Activity Related to Balances Outstanding Under Proprietary Loan Program (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		70 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014
Loans [Line Items]
Balance at beginning of period			$ 59,767	$ 42,880
Loans extended			16,125	14,336
Interest accrued			1,427	1,860
Amounts collected and recognized	(846)	(568)	(1,546)	(1,018)	(6,568)
Amounts written-off	(2,468)	(1,469)	(4,263)	(2,456)	(25,258)
Balance at end of period	$ 71,510	$ 55,602	$ 71,510	$ 55,602	$ 71,510

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Property and Equipment Net - Additional Information (Detail) (USD $)				3 Months Ended
	Mar. 31, 2014	Sep. 30, 2013	Sep. 30, 2013 Lisle Illinois Campus	Mar. 31, 2014 Orlando, Florida campus [Member]	Jan. 31, 2014 Orlando, Florida campus [Member]	Mar. 31, 2014 Build to Suit Lease [Member]	Mar. 31, 2014 Assets financed by financing obligation [Member]	Jun. 30, 2014 Subsequent Event [Member] Building and building improvements
Property, Plant and Equipment [Line Items]
Lease Expiration Date				Aug. 31, 2022
Property, Plant and Equipment, Gross							$ 33,500,000
2014 (Remaining)						1,397,000
2014 (Remaining)						146,000
2015						2,845,000
Construction in progress			27,600,000.0
Construction liability	0	27,632,000
2015						291,000
2016						2,907,000
2016						291,000
2017						2,971,000
2017						291,000
2018						3,037,000
2018						291,000
Thereafter						46,719,000
Thereafter						3,832,000
Total future minimum lease obligation						59,876,000
Total future minimum lease obligation						5,142,000
Less imputed interest on financing obligation						(26,178,000)
Less imputed accrued land lease obligation						(365,000)
Net present value of financing obligation						33,333,000
Tenant improvement allowance					1,700,000
Less accumulated depreciation and amortization	(142,368,000)	(143,439,000)					(620,000)
Property and equipment, net	105,049,000	103,070,000					32,880,000
Lease financing obligation, current	$ 546,000	$ 0						$ 5,600,000

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Investments

6 Months Ended

Mar. 31, 2014

Investments

Investments

We invest in pre-funded municipal bonds which are generally secured by escrowed-to-maturity U.S. Treasury notes. Municipal bonds represent debt obligations issued by states, cities, counties and other governmental entities, which earn interest that is exempt from federal income taxes. Additionally, we invest in certificates of deposit issued by financial institutions and corporate bonds from large cap industrial and selected financial companies with a minimum credit rating of A. We have the ability and intent to hold our investments until maturity and therefore classify these investments as held-to-maturity and report them at amortized cost.

Amortized cost and fair value for investments classified as held-to-maturity as of March 31, 2014 were as follows:

								Estimated
	Amortized		Gross Unrealized					Fair Market
	Cost		Gains		Losses			Value
Due in less than 1 year:
Municipal bonds	$	39,808	$	17	$	—		$	39,825
Corporate bonds	13,624		4		(11		)	13,617
Certificates of deposit	2,131		—		—			2,131
Due in 1 - 2 years:
Municipal bonds	6,578		6		(1		)	6,583
Corporate bonds	3,186		—		(6		)	3,180
Certificates of deposit	2,232		—		—			2,232
	$	67,559	$	27	$	(18	)	$	67,568

Amortized cost and fair value for investments classified as held-to-maturity as of September 30, 2013 were as follows:

								Estimated
	Amortized		Gross Unrealized					Fair Market
	Cost		Gains		Losses			Value
Due in less than 1 year:
Municipal bonds	$	40,942	$	22	$	—		$	40,964
Corporate bonds	11,684		2		(7		)	11,679
Certificates of deposit	4,905		—		—			4,905
Due in 1 - 2 years:
Municipal bonds	3,943		4		—			3,947
Certificates of deposit	245		—		—			245
	$	61,719	$	28	$	(7	)	$	61,740

Investments are exposed to various risks, including interest rate, market and credit risk. As a result, it is possible that changes in the values of these investments may occur and that such changes could affect the amounts reported in the condensed consolidated balance sheets and condensed consolidated statements of income.

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Common Shareholders' Equity - Additional Information (Detail) (USD $)	0 Months Ended			6 Months Ended		27 Months Ended
	Mar. 31, 2014	Dec. 20, 2013	Dec. 20, 2011	Mar. 31, 2014	Mar. 31, 2013 vote	Mar. 31, 2014
Stockholders Equity Note [Line Items]
Number of voting right per share					1
Common Stock, Dividends, Per Share, Declared	$ 0.10	$ 0.10
Cash dividend				$ 4,934,000
Repurchase of common stock authorized by Board of Directors			25,000,000
Purchased shares				31,000		736,000
Average price per share				$ 13.17		$ 10.40
Aggregate cost of treasury stock repurchased during the period				$ 400,000		$ 7,700,000

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Nature of Business - Additional Information (Detail)	Mar. 31, 2014 Campus
Nature Of Operations [Line Items]
Number of campuses through which undergraduate degree and diploma programs are offered	11

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Segment Information (Tables)

6 Months Ended

Mar. 31, 2014

Summary of Information by Reportable Segment

Summary information by reportable segment is as follows:

	Three Months Ended March 31,						Six Months Ended March 31,
	2014			2013			2014			2013
Revenues
Postsecondary education	$	91,891		$	93,243		$	188,236		$	189,163
Other	2,811			1,832			3,495			4,353
Consolidated	$	94,702		$	95,075		$	191,731		$	193,516
Income (loss) from operations
Postsecondary education	$	(921	)	$	(1,333	)	$	2,674		$	5,323
Other	(583		)	(606		)	(1,175		)	(1,256		)
Consolidated	$	(1,504	)	$	(1,939	)	$	1,499		$	4,067
Depreciation and amortization
Postsecondary education	$	4,528		$	5,541		$	9,673		$	11,162
Other	87			86			188			187
Consolidated	$	4,615		$	5,627		$	9,861		$	11,349
Net income (loss)
Postsecondary education	$	(1,250	)	$	(575	)	$	678		$	3,359
Other	(255		)	(345		)	(523		)	(717		)
Consolidated	$	(1,505	)	$	(920	)	$	155		$	2,642
							March 31, 2014			September 30, 2013
Goodwill
Postsecondary education							$	20,579		$	20,579
Other							—			—
Consolidated							$	20,579		$	20,579
Total assets
Postsecondary education							$	278,051		$	272,178
Other							7,161			7,285
Consolidated							$	285,212		$	279,463

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Summary of Information by Reportable Segment (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013	Sep. 30, 2013
Revenues
Revenues	$ 94,702	$ 95,075	$ 191,731	$ 193,516
Income (loss) from operations
Income (loss) from operations	(1,504)	(1,939)	1,499	4,067
Depreciation and amortization
Depreciation and amortization		5,627	9,861	11,349
Depreciation and amortization	4,615
Net income (loss)
Net income (loss)	(1,505)	(920)	155	2,642
Goodwill
Goodwill	20,579		20,579		20,579
Total assets
Total assets	285,212		285,212		279,463
Postsecondary education
Revenues
Revenues	91,891	93,243	188,236	189,163
Income (loss) from operations
Income (loss) from operations	(921)	(1,333)	2,674	5,323
Depreciation and amortization
Depreciation and amortization		5,541	9,673	11,162
Depreciation and amortization	4,528
Net income (loss)
Net income (loss)	(1,250)	(575)	678	3,359
Goodwill
Goodwill	20,579		20,579		20,579
Total assets
Total assets	278,051		278,051		272,178
Other
Revenues
Revenues	2,811	1,832	3,495	4,353
Income (loss) from operations
Income (loss) from operations	(583)	(606)	(1,175)	(1,256)
Depreciation and amortization
Depreciation and amortization		86	188	187
Depreciation and amortization	87
Net income (loss)
Net income (loss)	(255)	(345)	(523)	(717)
Goodwill
Goodwill	0		0		0
Total assets
Total assets	$ 7,161		$ 7,161		$ 7,285

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Amortized Cost and Fair Value of Held to Maturity Investments (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 67,559	$ 61,719
Gross Unrealized Gains	27	28
Gross Unrealized Losses	(18)	(7)
Estimated Fair Market Value	67,568	61,740
Municipal bonds, due in less than 1 year
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	39,808	40,942
Gross Unrealized Gains	17	22
Gross Unrealized Losses	0	0
Estimated Fair Market Value	39,825	40,964
Corporate bonds, due in less than 1 year
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	13,624	11,684
Gross Unrealized Gains	4	2
Gross Unrealized Losses	(11)	(7)
Estimated Fair Market Value	13,617	11,679
Certificates of deposit, due in less than 1 year
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	2,131	4,905
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Market Value	2,131	4,905
Municipal bonds, due in 1 - 2 years
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	6,578	3,943
Gross Unrealized Gains	6	4
Gross Unrealized Losses	(1)	0
Estimated Fair Market Value	6,583	3,947
Corporate bonds, due in 1-2 years
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	3,186
Gross Unrealized Gains	0
Gross Unrealized Losses	(6)
Estimated Fair Market Value	3,180
Certificates of deposit, due in 1- 2 years
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	2,232	245
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Market Value	$ 2,232	$ 245

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Assets Measured at Fair Value on Recurring Basis (Detail) (Fair Value, Measurements, Recurring, USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets at fair value on a recurring basis	$ 92,888	$ 84,875
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets at fair value on a recurring basis	25,320	23,135
Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets at fair value on a recurring basis	16,797	11,679
Municipal bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets at fair value on a recurring basis	46,408	44,911
Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets at fair value on a recurring basis	4,363	5,150
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets at fair value on a recurring basis	42,117	34,814
Quoted Prices in Active Markets for Identical Assets (Level 1) | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets at fair value on a recurring basis	25,320	23,135
Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets at fair value on a recurring basis	16,797	11,679
Quoted Prices in Active Markets for Identical Assets (Level 1) | Municipal bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets at fair value on a recurring basis	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets at fair value on a recurring basis	0	0
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets at fair value on a recurring basis	50,771	50,061
Significant Other Observable Inputs (Level 2) | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets at fair value on a recurring basis	0	0
Significant Other Observable Inputs (Level 2) | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets at fair value on a recurring basis	0	0
Significant Other Observable Inputs (Level 2) | Municipal bonds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets at fair value on a recurring basis	46,408	44,911
Significant Other Observable Inputs (Level 2) | Certificates of deposit
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Total assets at fair value on a recurring basis	$ 4,363	$ 5,150

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Basis of Presentation

6 Months Ended

Mar. 31, 2014

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, our condensed consolidated financial statements do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all normal and recurring adjustments considered necessary for a fair statement of the results for the interim periods have been included. Operating results for the three months and six months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending September 30, 2014. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2013 Annual Report on Form 10-K filed with the SEC on December 4, 2013.

The unaudited condensed consolidated financial statements include the accounts of Universal Technical Institute, Inc. and our wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates.

Historically, we have calculated income tax expense for interim periods based on estimated annual effective tax rates. These rates have been derived, in part, from expected income before taxes for the year. However, authoritative accounting guidance indicates that companies should not apply the estimated annual tax rate to interim financial results if the estimated annual tax rate is not reliably predictable. We are not able to reasonably estimate the annual effective tax rate for the year ending September 30, 2014 because small fluctuations in our earnings before taxes could result in a material change in the estimated annual effective tax rate based on our current projections. Therefore, for the three months and six months ended March 31, 2014, we calculated income taxes for each of the discrete periods using the actual year-to-date results.

We have no items which affect comprehensive income other than net income.

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Postemployment Benefits - Additional Information (Detail)	3 Months Ended	6 Months Ended
	Mar. 31, 2014	Mar. 31, 2014 Minimum	Mar. 31, 2014 Maximum
Schedule of Postemployment Benefits [Line Items]
Period for payment of post employment benefit		0 years 1 month	0 years 24 months
Payment of post employment benefit expiry Date	2015-12

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Commitments and Contingencies - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013	Apr. 08, 2014 Subsequent Event Type Minimum	Apr. 08, 2014 Subsequent Event Type Maximum
Commitments and Contingencies
Supplemental Retirement Benefits Amount Committed	$ 0		$ 0
Supplemental Unemployment Benefits Continuation of Salary and Health Care					2,700,000	9,700,000
Expenses Incurred with bank and other services	400,000	500,000	800,000	1,100,000
Total amount of loans committed to provide	$ 97,300,000		$ 97,300,000

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Sep. 30, 2013
Current assets:
Cash and cash equivalents	$ 34,343	$ 35,657
Restricted cash	4,811	5,748
Investments, current	55,563	57,531
Receivables, net	10,470	11,406
Deferred tax assets, net	5,564	7,452
Prepaid expenses and other current assets	17,065	15,553
Total current assets	127,816	133,347
Investments, less current	11,996	4,188
Property and equipment, net	105,049	103,070
Goodwill	20,579	20,579
Deferred tax assets, net	9,936	8,835
Other assets	9,836	9,444
Total assets	285,212	279,463
Current liabilities:
Accounts payable and accrued expenses	38,132	39,229
Deferred revenue	50,482	46,890
Accrued tool sets	3,937	3,971
Lease financing obligation, current	546	0
Other current liabilities	2,333	2,271
Total current liabilities	95,430	92,361
Deferred rent liability	11,207	11,932
Lease financing obligation, noncurrent	32,787	0
Construction liability	0	27,632
Other liabilities	10,104	8,768
Total liabilities	149,528	140,693
Commitments and contingencies (Note 10)
Shareholders' equity:
Common stock, $0.0001 par value, 100,000,000 shares authorized, 30,542,393 shares issued and 24,650,066 shares outstanding at December 31, 2013 and 30,535,847 shares issued and 24,643,520 shares outstanding as of September 30, 2013	3	3
Preferred stock, $0.0001 par value, 10,000,000 shares authorized; 0 shares issued and outstanding	0	0
Paid-in capital	173,190	171,087
Treasury stock, at cost, 5,892,327 shares at December 31 and September 30, 2013	(89,756)	(89,346)
Retained earnings	52,247	57,026
Total shareholders' equity	135,684	138,770
Total liabilities and shareholders' equity	$ 285,212	$ 279,463

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities:
Net income	$ 155	$ 2,642
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	9,861	11,349
Amortization of assets subject to financing obligations	620	0
Amortization of held-to-maturity investments	1,235	919
Bad debt expense	1,990	2,620
Stock-based compensation	3,106	3,005
Excess tax benefit from stock-based compensation	(7)	0
Deferred income taxes	(158)	521
Equity in earnings of unconsolidated affiliate	(208)	0
Net training equipment credits earned	(601)	(881)
Loss on disposal of property and equipment	150	62
Changes in assets and liabilities:
Receivables	174	940
Prepaid expenses and other current assets	(1,318)	1,511
Other assets	(189)	(707)
Accounts payable and accrued expenses	(1,147)	(8,112)
Deferred revenue	3,592	(5,839)
Income tax payable/receivable	(1,307)	(1,291)
Accrued tool sets and other current liabilities	242	805
Deferred rent liability	(725)	(462)
Other liabilities	397	534
Net cash provided by operating activities	15,862	7,616
Cash flows from investing activities:
Purchase of property and equipment	(5,488)	(4,160)
Proceeds from disposal of property and equipment	5	42
Purchase of investments	(33,132)	(44,046)
Proceeds received upon maturity of investments	26,057	33,362
Increase in restricted cash	944	0
Net cash used in investing activities	(11,614)	(14,802)
Cash flows from financing activities:
Payment of cash dividend	(4,934)	(4,912)
Repayment of long-term lease financing obligations	(167)	0
Payment of payroll taxes on stock-based compensation through shares withheld	(58)	(62)
Proceeds from issuance of common stock under employee plans	0	395
Excess tax benefit from stock-based compensation	7	0
Purchase of treasury stock	(410)	(5,364)
Net cash used in financing activities	(5,562)	(9,943)
Net decrease in cash and cash equivalents	1,314	17,129
Cash and cash equivalents, beginning of period	35,657	45,665
Cash and cash equivalents, end of period	34,343	28,536
Supplemental disclosure of cash flow information:
Taxes paid	2,772
Training equipment obtained in exchange for services	1,937
Change in accrued capital expenditures during the period	112
Construction in progress financed by construction liability during the period	5,868
Construction liability recognized as financing obligation	33,500
Interest Paid	$ 757

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Weighted Average Number of Shares Outstanding Used in Computing Basic and Diluted Net Income Per Share (Detail) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Weighted average number of shares
Basic shares outstanding	24,661	24,396	24,653	24,581
Dilutive effect related to employee stock plans	0	0	235	70
Diluted shares outstanding	24,661	24,396	24,888	24,651

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Postemployment Benefits (Tables)

6 Months Ended

Mar. 31, 2014

Postemployment Activity

The postemployment activity for the six months ended March 31, 2014 was as follows:

	Liability Balance at September 30, 2013		Postemployment Benefit Charges		Cash Paid			Other Non-cash (1)			Liability Balance at March 31, 2014
Severance	$	1,714	$	712	$	(605	)	$	(12	)	$	1,809
Other	2		43		(11		)	—			34
Total	$	1,716	$	755	$	(616	)	$	(12	)	$	1,843

(1) Primarily relates to the expiration of benefits not used within the time offered under the separation agreement and non-cash severance.

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Property and Equipment Net (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Mar. 31, 2014	Sep. 30, 2013
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 247,417	$ 246,509
Less accumulated depreciation and amortization	(142,368)	(143,439)
Property and equipment, net	105,049	103,070
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,456	1,456
Building and building improvements
Property, Plant and Equipment [Line Items]
Depreciable Lives (in years)	35 years
Property and equipment, gross	50,306	13,741
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	39,238	48,062
Leasehold improvements | Minimum
Property, Plant and Equipment [Line Items]
Depreciable Lives (in years)	1 year
Leasehold improvements | Maximum
Property, Plant and Equipment [Line Items]
Depreciable Lives (in years)	28 years
Training equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	84,071	82,270
Training equipment | Minimum
Property, Plant and Equipment [Line Items]
Depreciable Lives (in years)	3 years
Training equipment | Maximum
Property, Plant and Equipment [Line Items]
Depreciable Lives (in years)	10 years
Office and computer equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	37,471	37,206
Office and computer equipment | Minimum
Property, Plant and Equipment [Line Items]
Depreciable Lives (in years)	3 years
Office and computer equipment | Maximum
Property, Plant and Equipment [Line Items]
Depreciable Lives (in years)	10 years
Software developed for internal use
Property, Plant and Equipment [Line Items]
Property and equipment, gross	10,645	10,895
Software developed for internal use | Minimum
Property, Plant and Equipment [Line Items]
Depreciable Lives (in years)	3 years
Software developed for internal use | Maximum
Property, Plant and Equipment [Line Items]
Depreciable Lives (in years)	5 years
Curriculum development
Property, Plant and Equipment [Line Items]
Depreciable Lives (in years)	5 years
Property and equipment, gross	18,716	18,716
Vehicles
Property, Plant and Equipment [Line Items]
Depreciable Lives (in years)	5 years
Property and equipment, gross	1,045	1,005
Construction in Progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 4,469	$ 33,158

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Property and Equipment, net (Tables)

6 Months Ended

Mar. 31, 2014

Property and Equipment Net

Property and equipment, net consisted of the following:

	Depreciable Lives (in years)	March 31, 2014			September 30, 2013
Land	—	$	1,456		$	1,456
Buildings and building improvements	35	50,306			13,741
Leasehold improvements	1-28	39,238			48,062
Training equipment	3-10	84,071			82,270
Office and computer equipment	3-10	37,471			37,206
Curriculum development	5	18,716			18,716
Software developed for internal use	3-5	10,645			10,895
Vehicles	5	1,045			1,005
Construction in progress	—	4,469			33,158
		247,417			246,509
Less accumulated depreciation and amortization		(142,368		)	(143,439		)
		$	105,049		$	103,070

Schedule of Assets subject to financing obligations

The following amounts, which are included in the above table, represent assets financed by financing obligations:

	March 31, 2014
Buildings and building improvements	$	33,500
Less accumulated depreciation and amortization	(620		)
Assets financed by financing obligation, net	$	32,880

Schedule of Future Minimum Lease Payments Under Financing Obligations

Future minimum lease payments under this lease as of March 31, 2014 are as follows:

Years ending September 30,	Financing Obligations			Operating Leases
2014 (Remaining)	$	1,397		$	146
2015	2,845			291
2016	2,907			291
2017	2,971			291
2018	3,037			291
Thereafter	46,719			3,832
Total future minimum lease obligation	$	59,876		$	5,142
Less imputed interest on financing obligation	(26,178		)
Less imputed accrued land lease obligation	(365		)
Net present value of financing obligation	$	33,333

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Nature of the Business

6 Months Ended

Mar. 31, 2014

Nature of the Business

Nature of the Business

We are the leading provider of postsecondary education for students seeking careers as professional automotive, diesel, collision repair, motorcycle and marine technicians as measured by total average undergraduate full-time student enrollment and graduates. We offer undergraduate degree and diploma programs at 11 campuses across the United States under the banner of several well-known brands, including Universal Technical Institute, Motorcycle Mechanics Institute and Marine Mechanics Institute and NASCAR Technical Institute. We also offer manufacturer specific training (MSAT) programs, including student paid electives, at our campuses and manufacturer or dealer sponsored training at certain campuses and dedicated training centers.

We work closely with leading original equipment manufacturers (OEMs) in the automotive, diesel, motorcycle and marine industries to understand their needs for qualified service professionals. Revenues generated from our schools consist primarily of tuition and fees paid by students. To pay for a substantial portion of their tuition, the majority of students rely on funds received from federal financial aid programs under Title IV Programs of the Higher Education Act of 1965, as amended (HEA), as well as from various veterans benefits programs. For further discussion, see Concentration of Risk and Note 16 “Governmental Regulation and Financial Aid” included in our 2013 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on December 4, 2013.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2014	Sep. 30, 2013
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	30,581,588	30,535,847
Common stock, shares outstanding	24,658,261	24,643,520
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Treasury stock, at cost	5,923,327	5,892,327

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Common Shareholders' Equity

6 Months Ended

Mar. 31, 2014

Common Shareholders' Equity

Common Shareholders’ Equity

Common Stock

Holders of our common stock are entitled to receive dividends when and as declared by our Board of Directors and have the right to one vote per share on all matters requiring shareholder approval. On December 20, 2013 and March 31, 2014, we paid cash dividends of $0.10 per share to common stockholders of record as of December 10, 2013 and March 17, 2014, respectively, totaling approximately $4.9 million.

Share Repurchase Program

On December 20, 2011, our Board of Directors authorized the repurchase of up to $25.0 million of our common stock in the open market or through privately negotiated transactions. The timing and actual number of shares purchased will depend on a variety of factors such as price, corporate and regulatory requirements and prevailing market conditions. We may terminate or limit the share repurchase program at any time without prior notice. During the three months and six months ended March 31, 2014, we purchased 31,000 shares at an average price per share of $13.17 and a total cost of approximately $0.4 million. As of March 31, 2014, we have purchased 736,000 shares at an average price per share of $10.40 and a total cost of approximately $7.7 million under this program.

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Document and Entity Information	6 Months Ended
	Mar. 31, 2014	Apr. 24, 2014
Document Information [Line Items]
Amendment Flag	false
Entity Common Stock, Shares Outstanding		24,658,261
Document Period End Date	Mar. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Trading Symbol	UTI
Entity Registrant Name	UNIVERSAL TECHNICAL INSTITUTE INC.
Entity Central Index Key	0001261654
Current Fiscal Year End Date	--09-30
Entity Filer Category	Accelerated Filer
Document Type	10-Q

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Segment Information

6 Months Ended

Mar. 31, 2014

Segment Information

Segment Information

Our principal business is providing postsecondary education. We also provide manufacturer-specific training and these operations are managed separately from our campus operations. These operations do not currently meet the quantitative criteria for segments and therefore are reflected in the Other category. Corporate expenses are allocated to Postsecondary Education and the Other category based on compensation expense.

Summary information by reportable segment is as follows:

	Three Months Ended March 31,						Six Months Ended March 31,
	2014			2013			2014			2013
Revenues
Postsecondary education	$	91,891		$	93,243		$	188,236		$	189,163
Other	2,811			1,832			3,495			4,353
Consolidated	$	94,702		$	95,075		$	191,731		$	193,516
Income (loss) from operations
Postsecondary education	$	(921	)	$	(1,333	)	$	2,674		$	5,323
Other	(583		)	(606		)	(1,175		)	(1,256		)
Consolidated	$	(1,504	)	$	(1,939	)	$	1,499		$	4,067
Depreciation and amortization
Postsecondary education	$	4,528		$	5,541		$	9,673		$	11,162
Other	87			86			188			187
Consolidated	$	4,615		$	5,627		$	9,861		$	11,349
Net income (loss)
Postsecondary education	$	(1,250	)	$	(575	)	$	678		$	3,359
Other	(255		)	(345		)	(523		)	(717		)
Consolidated	$	(1,505	)	$	(920	)	$	155		$	2,642
							March 31, 2014			September 30, 2013
Goodwill
Postsecondary education							$	20,579		$	20,579
Other							—			—
Consolidated							$	20,579		$	20,579
Total assets
Postsecondary education							$	278,051		$	272,178
Other							7,161			7,285
Consolidated							$	285,212		$	279,463

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CONDENSED CONSOLIDATED INCOME STATEMENTS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013
Revenues	$ 94,702	$ 95,075	$ 191,731	$ 193,516
Operating expenses:
Educational services and facilities	50,652	50,456	101,763	100,148
Selling, general and administrative	45,554	46,558	88,469	89,301
Total operating expenses	96,206	97,014	190,232	189,449
Income (loss) from operations	(1,504)	(1,939)	1,499	4,067
Total other income (expense)
Interest Income (Expense), Net	(491)	72	(623)	119
Equity in earnings of unconsolidated affiliate	127	0	208	0
Other income	104	245	379	364
Total other income	(260)	317	(36)	483
Income (loss) before income taxes	(1,764)	(1,622)	1,463	4,550
Income tax expense (benefit)	(259)	(702)	1,308	1,908
Net income (loss)	$ (1,505)	$ (920)	$ 155	$ 2,642
Earnings per share:
Net income (loss) per share - basic	$ (0.06)	$ (0.04)	$ 0.01	$ 0.11
Net income (loss) per share - diluted	$ (0.06)	$ (0.04)	$ 0.01	$ 0.11
Weighted average number of shares outstanding:
Basic	24,661	24,396	24,653	24,581
Diluted	24,661	24,396	24,888	24,651
Cash dividends declared per common share	$ 0.10	$ 0.10	$ 0.20	$ 0.20

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Earnings per Share

6 Months Ended

Mar. 31, 2014

Earnings per Share

Earnings per Share

Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares outstanding for the period. Diluted net income (loss) per share reflects the assumed conversion of all dilutive securities, if any. For the six months ended March 31, 2014 and 2013, 576,837 shares and 1,437,686 shares, respectively, which could be issued under outstanding stock-based grants, were not included in the determination of our diluted shares outstanding as they were anti-dilutive.For the three months ended March 31, 2014 and 2013, diluted loss per share equals basic loss per share as the assumed activity related to outstanding stock-based grants would have an anti-dilutive effect.

The calculation of the weighted average number of shares outstanding used in computing basic and diluted net income per share was as follows:

	Three Months Ended March 31,		Six Months Ended March 31,
	2014	2013	2014	2013
Weighted average number of shares	(In thousands)
Basic shares outstanding	24,661	24,396	24,653	24,581
Dilutive effect related to employee stock plans	—	—	235	70
Diluted shares outstanding	24,661	24,396	24,888	24,651

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Postemployment Benefits

6 Months Ended

Mar. 31, 2014

Postemployment Benefits

Postemployment Benefits

We periodically enter into agreements which provide postemployment benefits to personnel whose employment is terminated. The postemployment benefit liability, which is included in accounts payable and accrued expenses on the accompanying condensed consolidated balance sheets, is generally paid out ratably over the terms of the agreements, which range from 1 month to 24 months, with the final agreement expiring in December 2015.

The postemployment activity for the six months ended March 31, 2014 was as follows:

	Liability Balance at September 30, 2013		Postemployment Benefit Charges		Cash Paid			Other Non-cash (1)			Liability Balance at March 31, 2014
Severance	$	1,714	$	712	$	(605	)	$	(12	)	$	1,809
Other	2		43		(11		)	—			34
Total	$	1,716	$	755	$	(616	)	$	(12	)	$	1,843

(1) Primarily relates to the expiration of benefits not used within the time offered under the separation agreement and non-cash severance.

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Earnings per Share (Tables)

6 Months Ended

Mar. 31, 2014

Summary of Calculation of Weighted Average Number of Shares Outstanding Used in Computing Basic and Diluted Net Income Loss Per Share

The calculation of the weighted average number of shares outstanding used in computing basic and diluted net income per share was as follows:

	Three Months Ended March 31,		Six Months Ended March 31,
	2014	2013	2014	2013
Weighted average number of shares	(In thousands)
Basic shares outstanding	24,661	24,396	24,653	24,581
Dilutive effect related to employee stock plans	—	—	235	70
Diluted shares outstanding	24,661	24,396	24,888	24,651

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Government Regulation and Financial Aid

6 Months Ended

Mar. 31, 2014

Government Regulation and Financial Aid

Government Regulation and Financial Aid

Gainful Employment

In 2013, the Department of Education (ED) established a negotiated rulemaking committee (the committee) to prepare proposed regulations to establish standards for programs that prepare students for gainful employment in a recognized occupation. The negotiation sessions occurred in September, November and December of 2013.  The committee did not reach consensus on proposed draft regulatory language by the December 13, 2013 deadline.  Without consensus, ED was authorized to write the final rule without the committee shaping its language. On March 25, 2014, ED issued a Notice of Proposed Rulemaking, which has a 60 day public comment period, to establish measures for determining whether certain postsecondary educational programs prepare students for gainful employment in a recognized occupation. ED proposed a set of conditions under which these educational programs remain eligible to participate in Title IV programs. The effective date of these regulations cannot be determined at this time, but it is likely that the rules, if adopted, would be effective on or after July 1, 2015. We cannot predict the form of the final rules that may be adopted following the comment period.

Program Integrity and Improvement

In February, March and April of 2014, ED conducted negotiated rulemaking sessions covering a variety of topics, the following of which may be impactful to us: the definition of adverse credit as it applies to Federal Direct PLUS loans, clock-to-credit hour conversion regulations and Title IV cash management.

Congressional Action and Financial Aid Funding

In January 2014, Congress passed an omnibus spending bill to fund the federal government through September 30, 2014, which the President signed on January 17, 2014.  The bill includes several elements related to higher education and restores campus-based funding programs to pre-sequester levels. Additionally, it increases the maximum Pell grant for the 2014-15 award year from $5,645 to $5,730 per student.

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Accounts Payable and Accrued Expenses

6 Months Ended

Mar. 31, 2014

Accounts Payable and Accrued Expenses

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following:

	March 31, 2014		September 30, 2013
Accounts payable	$	13,839	$	13,758
Accrued compensation and benefits	16,920		16,858
Other accrued expenses	7,373		8,613
	$	38,132	$	39,229

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Property and Equipment, net

6 Months Ended

Mar. 31, 2014

Property and Equipment, net

Property and Equipment, net

Property and equipment, net consisted of the following:

	Depreciable Lives (in years)	March 31, 2014			September 30, 2013
Land	—	$	1,456		$	1,456
Buildings and building improvements	35	50,306			13,741
Leasehold improvements	1-28	39,238			48,062
Training equipment	3-10	84,071			82,270
Office and computer equipment	3-10	37,471			37,206
Curriculum development	5	18,716			18,716
Software developed for internal use	3-5	10,645			10,895
Vehicles	5	1,045			1,005
Construction in progress	—	4,469			33,158
		247,417			246,509
Less accumulated depreciation and amortization		(142,368		)	(143,439		)
		$	105,049		$	103,070

The following amounts, which are included in the above table, represent assets financed by financing obligations:

	March 31, 2014
Buildings and building improvements	$	33,500
Less accumulated depreciation and amortization	(620		)
Assets financed by financing obligation, net	$	32,880

As previously disclosed, we entered into a build-to-suit facility lease agreement and a construction management agreement related to the relocation of our Glendale Heights, Illinois campus to, and the design and construction of a new campus in, Lisle, Illinois. Under these agreements, we retained all construction risk and therefore, for accounting purposes, were considered the owner during the construction period. We recorded approximately $27.6 million in construction in progress and $27.6 million in the related construction liability on our condensed consolidated balance sheet as of September 30, 2013.

Construction was completed during November 2013 and the facility was placed into service effective December 1, 2013. The investment in the joint venture related to the lease of this facility represents continuing involvement after the construction period was completed. Therefore, we will continue to account for the arrangement as a financing obligation and have an imputed operating lease related to our use of the land. Accordingly, the asset and a corresponding lease financing obligation are included in our condensed consolidated balance sheet. The asset will be depreciated over the initial lease term of 18 years. The financing obligation is amortized through the effective interest method in which a portion of the lease payments is recognized as interest expense, a portion is allocated to the imputed land lease and the remaining portion will decrease the financing obligation. Future minimum lease payments under this lease as of March 31, 2014 are as follows:

Years ending September 30,	Financing Obligations			Operating Leases
2014 (Remaining)	$	1,397		$	146
2015	2,845			291
2016	2,907			291
2017	2,971			291
2018	3,037			291
Thereafter	46,719			3,832
Total future minimum lease obligation	$	59,876		$	5,142
Less imputed interest on financing obligation	(26,178		)
Less imputed accrued land lease obligation	(365		)
Net present value of financing obligation	$	33,333

Amended Leases

In January 2014, we entered into amended lease agreements for certain buildings on our Orlando, Florida campus which extended the lease terms to August 31, 2022 and modified the scheduled rental payments. Additionally, one of the amendments included a provision which allows us to expand the square footage at one building by approximately 13,500 square feet with an associated tenant improvement allowance of approximately $1.7 million.

Under the agreement, we have retained all construction risk and are responsible for all budget overruns. Therefore, for accounting purposes, we are considered the owner during the construction period. Additionally, during the construction period, the existing building and the addition are considered one unit of account. Accordingly, when construction begins, we will record the existing building and a corresponding financing obligation on our condensed consolidated balance sheet of approximately $5.6 million and discontinue recognizing rent expense.

During construction of the addition, we will record construction costs as construction in progress with a corresponding construction liability on our condensed consolidated balance sheet. Although we are owners during the construction period, we do not own the underlying land. Therefore, we will have an imputed operating lease expense related to our use of the land that will be recognized from the time we begin construction through the end of the construction period. During the construction period, the rental payment on the existing building will be allocated to imputed land lease expense and interest expense, which will then be capitalized, and the remaining portion will decrease the financing obligation.

Upon occupancy of the expanded building under this lease agreement, we believe that we will not have continuing involvement after the construction period is complete, and we anticipate that the lease will be accounted for as an operating lease. As such, we anticipate we will derecognize the existing building, addition, financing obligation and construction liability. Furthermore, we will record prepaid rent related to the rent paid during construction, which will be amortized over the initial lease term.

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Investment in unconsolidated affiliate (Notes)

6 Months Ended

Mar. 31, 2014

Schedule of Investments in unconsolidated affiliate

Investment in unconsolidated affiliate

Investment in Unconsolidated Affiliate

During the year ended September 30, 2012, we invested $4.0 million to acquire an equity interest of approximately 28% in a joint venture (JV) related to the lease of our Lisle, Illinois campus facility. In connection with this investment, we do not possess a controlling financial interest as we do not hold a majority of the equity interest, nor do we have the power to make major decisions without approval from the other equity member. Therefore, we do not qualify as the primary beneficiary. Accordingly, this investment is accounted for under the equity method of accounting and is included in other assets in our condensed consolidated balance sheet. We recognize our proportionate share of the JV’s net income or loss during each accounting period as a change in our investment. For the three months and six months ended March 31, 2014, our equity in earnings was $0.1 million and $0.2 million, respectively. We did not recognize any equity in earnings during the three months or six months ended March 31, 2013.

Investment in unconsolidated affiliate consists of the following:

	March 31, 2014				September 30, 2013
	Carrying Value (In thousands)		Ownership Percentage		Carrying Value (In thousands)		Ownership Percentage
Investment in unconsolidated affiliate	$	4,208	27.972	%	$	4,000	27.972	%

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Commitments and Contingencies

6 Months Ended

Mar. 31, 2014

Commitments and Contingencies

Commitments and Contingencies

Operating Leases

Since 1991, certain of our properties have been leased from entities controlled by John C. White, a member of our Board of Directors. We have leased two of our Phoenix properties under one lease from City Park LLC, a successor in interest of 2844 West Deer Valley LLC and in which the John C. and Cynthia L. White 1989 Family Trust holds a 25% interest, since April 1994. During the three months ended March 31, 2014, City Park LLC sold the properties to an unrelated third party. Our existing lease remains in effect through December 31, 2022.

Executive Employment Agreements

Effective April 8, 2014, we entered into new employment agreements with two of our key executives and into an amended employment agreement with another key executive that provide for certain payments and benefits upon specified terminations of employment as defined within each agreement. Each agreement provides payments and benefits for termination for reasons other than cause and resignation for good reason, without or following a change in control. The new employment agreements also provide for payments for certain terminations following Company non-renewal of the agreement, for payments and benefits upon termination due to death or disability and require future stock unit awards, if any, to provide for continued vesting for 12 months after a qualifying retirement as defined within the agreements. There have been no grants of stock unit awards with retirement provisions. The range of the aggregate commitment upon termination of employment under these agreements and existing equity award agreements is approximately $2.7 million to $9.7 million.

Legal

In the ordinary conduct of our business, we are periodically subject to lawsuits, demands in arbitration, investigations, regulatory proceedings or other claims, including, but not limited to, claims involving current or former students, routine employment matters, business disputes and regulatory demands. When we are aware of a claim or potential claim, we assess the likelihood of any loss or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, we would accrue a liability for the loss. When a loss is not both probable and estimable, we do not accrue a liability. Where a loss is not probable but is reasonably possible, including if a loss in excess of an accrued liability is reasonably possible, we determine whether it is possible to provide an estimate of the amount of the loss or range of possible losses for the claim. Because we cannot predict with certainty the ultimate resolution of the legal proceedings (including lawsuits, investigations, regulatory proceedings or claims) asserted against us, such current pending legal proceedings to which we are a party may have a material adverse effect on our business, cash flows, results of operations or financial condition.

In September 2012, we received a Civil Investigative Demand (CID) from the Attorney General of the Commonwealth of Massachusetts related to a pending investigation in connection with allegations that we caused false claims to be submitted to the Commonwealth relating to student loans, guarantees and grants provided to students at our Norwood, Massachusetts campus. The CID required us to produce documents and provide written testimony regarding a broad range of our business from September 2006 to the present.  We responded timely to the request, as well as to follow-up requests for additional information made in December 2012 and February 2013. At this time, we cannot predict the eventual scope, duration, outcome or associated costs of this request and accordingly we have not recorded any liability in the accompanying condensed consolidated financial statements.

As previously disclosed, in October 2012 and January 2013, the ACCSC requested certain documentation related to a  preliminary investigation by the United States Department of Justice (“DOJ”) of certain previously disclosed claims under the False Claims Act (31 U.S.C. § 3729, et seq.) (the “FCA Claims”).  Pursuant to applicable law and the United States’ request, we were not able to provide the information requested at that time and notified ACCSC as such. In October 2013, we informed the ACCSC of the declination of intervention and closing of investigation by the DOJ into the FCA Claims, as well as the settlement of such claims with a former employee, and the final agency closing of a related Department of Labor suit.  In addition, at the ACCSC’s request, in November 2013, we provided the ACCSC with certain documentation relating to the resolution of these claims. On March 19, 2014, we received notification from the ACCSC that it voted to accept our response and closed their inquiry.

Proprietary Loan Program

In order to provide funding for students who are not able to fully finance the cost of their education under traditional governmental financial aid programs, commercial loan programs or other alternative sources, we established a private loan program with a bank.

Under terms of the proprietary loan program, the bank originates loans for our students who meet our specific credit criteria with the related proceeds used exclusively to fund a portion of their tuition. We then purchase all such loans from the bank at least monthly and assume all of the related credit risk. The loans bear interest at market rates; however, principal and interest payments are not required until six months after the student completes or withdraws from his or her program. After the deferral period, monthly principal and interest payments are required over the related term of the loan.

The bank provides these services in exchange for a fee at a percentage of the principal balance of each loan and related fees. Under the terms of the related agreement, we transfer funds for loan purchases to a deposit account with the bank in advance of the bank funding the loan which secures our related loan purchase obligation. Such funds are classified as restricted cash in our condensed consolidated balance sheet.

In substance, we provide the students who participate in this program with extended payment terms for a portion of their tuition and as a result, we account for the underlying transactions in accordance with our tuition revenue recognition policy. However, due to the nature of the program coupled with the extended payment terms required under the student loan agreements, collectability is not reasonably assured. Accordingly, we recognize tuition and loan origination fees financed by the loan and any related interest income required under the loan when such amounts are collected. All related expenses incurred with the bank or other service providers are expensed as incurred and were approximately $0.4 million and $0.8 million for the three months and six months ended March 31, 2014, respectively, and $0.5 million and $1.1 million for the three months and six months ended March 31, 2013, respectively. Since loan collectability is not reasonably assured, the loans and related deferred tuition revenue are not recognized in our condensed consolidated balance sheets.

The following table summarizes the impact of the proprietary loan program on our tuition revenue and interest income during the period as well as on a cumulative basis at the end of each period in our condensed consolidated income statements. Tuition revenue and interest income excluded represents amounts which would have been recognized during the period had collectability of the related amounts been assured. Amounts collected and recognized represent actual cash receipts during the period and amounts written-off represent amounts which have been turned over to third party collectors.

	Three Months Ended March 31,						Six Months Ended March 31,						Inception
	2014			2013			2014			2013			to date
Tuition and interest income excluded	$	7,252		$	6,095		$	14,253		$	12,832		$	84,112
Amounts collected and recognized	(846		)	(568		)	(1,546		)	(1,018		)	(6,568		)
Amounts written off	(2,468		)	(1,469		)	(4,263		)	(2,456		)	(25,258		)
Net amount excluded during the period	$	3,938		$	4,058		$	8,444		$	9,358		$	52,286

At March 31, 2014, we had committed to provide loans to our students for approximately $97.3 million since inception.

The following table summarizes the activity related to the balances outstanding under our proprietary loan program, including loans outstanding, interest and origination fees, which are not reflected in our condensed consolidated balance sheets:

	Six Months Ended March 31,
	2014			2013
Balance at beginning of period	$	59,767		$	42,880
Loans extended	16,125			14,336
Interest accrued	1,427			1,860
Amounts collected and recognized	(1,546		)	(1,018		)
Amounts written off	(4,263		)	(2,456		)
Balance at end of period	$	71,510		$	55,602

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Earnings per Share - Additional Information (Detail)	6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Earnings Per Share [Line Items]
Shares not included in the determination of our diluted shares outstanding as they were anti-dilutive	576,837	1,437,686

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Fair Value Measurements (Tables)

6 Months Ended

Mar. 31, 2014

Assets measured at fair value on a recurring basis

Assets measured at fair value on a recurring basis consisted of the following:

			Fair Value Measurements Using
	March 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds	$	25,320	$	25,320	$	—	$	—
Corporate bonds	16,797		16,797		—		—
Municipal bonds	46,408		—		46,408		—
Certificates of deposit	4,363		—		4,363		—
Total assets at fair value on a recurring basis	$	92,888	$	42,117	$	50,771	$	—
			Fair Value Measurements Using
	September 30, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds	$	23,135	$	23,135	$	—	$	—
Corporate bonds	11,679		11,679		—		—
Municipal bonds	44,911		—		44,911		—
Certificates of deposit	5,150		—		5,150		—
Total assets at fair value on a recurring basis	$	84,875	$	34,814	$	50,061	$	—

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Accounts Payable and Accrued Expenses (Tables)

6 Months Ended

Mar. 31, 2014

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following:

	March 31, 2014		September 30, 2013
Accounts payable	$	13,839	$	13,758
Accrued compensation and benefits	16,920		16,858
Other accrued expenses	7,373		8,613
	$	38,132	$	39,229

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Amount Collected and Recognized (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended		70 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014
Commitments and Contingencies
Tuition and interest income excluded	$ 7,252	$ 6,095	$ 14,253	$ 12,832	$ 84,112
Amounts collected and recognized	(846)	(568)	(1,546)	(1,018)	(6,568)
Amounts written-off	(2,468)	(1,469)	(4,263)	(2,456)	(25,258)
Net amount excluded during the period	$ 3,938	$ 4,058	$ 8,444	$ 9,358	$ 52,286

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CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (USD $) In Thousands	Total	Common Stock	Paid-in Capital	Treasury Stock	Retained Earnings
Beginning Balance at Sep. 30, 2013	$ 138,770	$ 3	$ 171,087	$ (89,346)	$ 57,026
Beginning Balance (in shares) at Sep. 30, 2013		30,536		5,892
Net income	155				155
Issuance of common stock under employee plans, shares		50
Issuance of common stock under employee plans	0	0	0
Shares withheld for payroll taxes, shares		(4)
Shares withheld for payroll taxes	(58)	0	(58)
Tax benefit from employee stock plans	(945)		(945)
Stock-based compensation	3,106		3,106
Cash dividend declared	(4,934)				(4,934)
Treasury Stock, Shares, Acquired				31
Treasury Stock, Value, Acquired, Cost Method	410			410
Ending Balance at Mar. 31, 2014	$ 135,684	$ 3	$ 173,190	$ (89,756)	$ 52,247
Ending Balance (in shares) at Mar. 31, 2014		30,582		5,923

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Fair Value Measurements

6 Months Ended

Mar. 31, 2014

Fair Value Measurements

Fair Value Measurements

The accounting framework for determining fair value includes a hierarchy for ranking the quality and reliability of the information used to measure fair value, which enables the reader of the financial statements to assess the inputs used to develop those measurements. The fair value hierarchy consists of three tiers: Level 1, defined as quoted market prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, model-based valuation techniques for which all significant assumptions are observable in the market or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities and Level 3, defined as unobservable inputs that are not corroborated by market data.

Assets measured at fair value on a recurring basis consisted of the following:

			Fair Value Measurements Using
	March 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds	$	25,320	$	25,320	$	—	$	—
Corporate bonds	16,797		16,797		—		—
Municipal bonds	46,408		—		46,408		—
Certificates of deposit	4,363		—		4,363		—
Total assets at fair value on a recurring basis	$	92,888	$	42,117	$	50,771	$	—
			Fair Value Measurements Using
	September 30, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds	$	23,135	$	23,135	$	—	$	—
Corporate bonds	11,679		11,679		—		—
Municipal bonds	44,911		—		44,911		—
Certificates of deposit	5,150		—		5,150		—
Total assets at fair value on a recurring basis	$	84,875	$	34,814	$	50,061	$	—

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Commitments and Contingencies (Tables)

6 Months Ended

Mar. 31, 2014

Impact of the Proprietary Loan Program on Our Tuition Revenue and Interest Income During Period as well as on Cumulative Basis

	Three Months Ended March 31,						Six Months Ended March 31,						Inception
	2014			2013			2014			2013			to date
Tuition and interest income excluded	$	7,252		$	6,095		$	14,253		$	12,832		$	84,112
Amounts collected and recognized	(846		)	(568		)	(1,546		)	(1,018		)	(6,568		)
Amounts written off	(2,468		)	(1,469		)	(4,263		)	(2,456		)	(25,258		)
Net amount excluded during the period	$	3,938		$	4,058		$	8,444		$	9,358		$	52,286

Activity Related to Balances Outstanding under our Proprietary Loan Program, Including Loans Outstanding, Interest and Origination Fees

The following table summarizes the activity related to the balances outstanding under our proprietary loan program, including loans outstanding, interest and origination fees, which are not reflected in our condensed consolidated balance sheets:

	Six Months Ended March 31,
	2014			2013
Balance at beginning of period	$	59,767		$	42,880
Loans extended	16,125			14,336
Interest accrued	1,427			1,860
Amounts collected and recognized	(1,546		)	(1,018		)
Amounts written off	(4,263		)	(2,456		)
Balance at end of period	$	71,510		$	55,602

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Investment in unconsolidated affiliate (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2014	Mar. 31, 2013	Sep. 30, 2013	Sep. 30, 2012
Schedule of Investments in unconsolidated affiliate
Investment in unconsolidated affiliate	$ 4,208		$ 4,208		$ 4,000	$ 4,000
Investment in unconsolidated affiliate, Ownership Percentage	27.972%		27.972%		27.972%	28.00%
Equity in earnings of unconsolidated affiliate	$ 127	$ 0	$ 208	$ 0

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Investments (Tables)

6 Months Ended

Mar. 31, 2014

Amortized Cost and Estimated Fair Market Value for Investments Classified as Held-to-Maturity

Amortized cost and fair value for investments classified as held-to-maturity as of March 31, 2014 were as follows:

								Estimated
	Amortized		Gross Unrealized					Fair Market
	Cost		Gains		Losses			Value
Due in less than 1 year:
Municipal bonds	$	39,808	$	17	$	—		$	39,825
Corporate bonds	13,624		4		(11		)	13,617
Certificates of deposit	2,131		—		—			2,131
Due in 1 - 2 years:
Municipal bonds	6,578		6		(1		)	6,583
Corporate bonds	3,186		—		(6		)	3,180
Certificates of deposit	2,232		—		—			2,232
	$	67,559	$	27	$	(18	)	$	67,568

Amortized cost and fair value for investments classified as held-to-maturity as of September 30, 2013 were as follows:

								Estimated
	Amortized		Gross Unrealized					Fair Market
	Cost		Gains		Losses			Value
Due in less than 1 year:
Municipal bonds	$	40,942	$	22	$	—		$	40,964
Corporate bonds	11,684		2		(7		)	11,679
Certificates of deposit	4,905		—		—			4,905
Due in 1 - 2 years:
Municipal bonds	3,943		4		—			3,947
Certificates of deposit	245		—		—			245
	$	61,719	$	28	$	(7	)	$	61,740