U. S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)

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

o		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		(IRS Employer Identification No.)
incorporation or organization)

20410 North 19^th Avenue, Suite 200
Phoenix, Arizona 85027
(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 o

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 o No o

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 o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o
				(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 o No þ

At July 29, 2009, there were 23,709,846 shares outstanding of the registrant’s common stock.

 

 

UNIVERSAL TECHNICAL INSTITUTE, INC.
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED June 30, 2009

		Page
		Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets at June 30, 2009 and September 30, 2008 (unaudited)			1
Condensed Consolidated Income Statements for the three months and nine months ended June 30, 2009 and 2008 (unaudited)			2
Condensed Consolidated Statement of Shareholders’ Equity for the nine months ended June 30, 2009 (unaudited)			3
Condensed Consolidated Statements of Cash Flows for the nine months ended June 30, 2009 and 2008 (unaudited)			4
Notes to Condensed Consolidated Interim Financial Statements (unaudited)			5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			12
Item 3. Quantitative and Qualitative Disclosures About Market Risk			21
Item 4. Controls and Procedures			22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			22
Item 1A. Risk Factors			22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			24
Item 6. Exhibits			25
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

PART I — FINANCIAL INFORMATION

Item 1.		FINANCIAL STATEMENTS

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

		June 30,				September 30,
		2009				2008
		($’s in thousands)
Assets
Current assets:
Cash and cash equivalents		$	50,149			$	80,878
Restricted cash			—				2,000
Investments, current portion			9,106				—
Receivables, net			13,207				20,222
Deferred tax assets			7,156				5,951
Prepaid expenses and other current assets			9,146				8,568
Total current assets			88,764				117,619
Investments, less current portion			8,181				—
Property and equipment, net			70,391				68,258
Goodwill			20,579				20,579
Other assets			4,703				2,919
Total assets		$	192,618			$	209,375
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and accrued expenses		$	40,295			$	37,995
Deferred revenue			36,628				44,695
Accrued tool sets			4,256				3,870
Other current liabilities			80				44
Total current liabilities			81,259				86,604
Deferred tax liabilities			1,419				2,908
Deferred rent liability			5,600				5,354
Other liabilities			6,725				6,322
Total liabilities			95,003				101,188
Commitments and contingencies (Note 11)
Shareholders’ equity:
Common stock, $0.0001 par value, 100,000,000 shares authorized, 28,570,160 shares issued and 23,699,934 shares outstanding at June 30, 2009 and 28,406,762 shares issued and 25,089,517 shares outstanding at September 30, 2008			3				3
Preferred stock, $0.0001 par value, 10,000,000 shares authorized; 0 shares issued and outstanding			—				—
Paid-in capital			139,316				137,100
Treasury stock, at cost, 4,870,226 shares and 3,317,245 shares at June 30, 2009 and September 30, 2008, respectively			(76,506	)			(59,571	)
Retained earnings			34,802				30,655
Total shareholders’ equity			97,615				108,187
Total liabilities and shareholders’ equity		$	192,618			$	209,375

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

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

		Three Months Ended								Nine Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
Net revenues		$	87,852			$	80,639			$	267,098			$	258,831
Operating expenses:
Educational services and facilities			47,307				46,378				143,947				139,386
Selling, general and administrative			37,579				35,690				116,799				109,295
Total operating expenses			84,886				82,068				260,746				248,681
Income (loss) from operations			2,966				(1,429	)			6,352				10,150
Other income (expense):
Interest income			43				521				181				2,758
Interest expense			(16	)			(10	)			(37	)			(29	)
Other income			64				183				207				183
Total other income			91				694				351				2,912
Income (loss) before income taxes			3,057				(735	)			6,703				13,062
Income tax expense (benefit)			1,134				(11	)			2,556				5,397
Net income (loss)		$	1,923			$	(724	)		$	4,147			$	7,665
Earnings per share:
Net income (loss) per share — basic		$	0.08			$	(0.03	)		$	0.17			$	0.30
Net income (loss) per share — diluted		$	0.08			$	(0.03	)		$	0.17			$	0.30
Weighted average number of common shares outstanding:
Basic			23,626				25,059				24,451				25,736
Diluted			23,953				25,059				24,836				25,978

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

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

																										Total
		Common Stock								Paid-in				Treasury Stock								Retained				Shareholders’
		Shares				Amount				Capital				Shares				Amount				Earnings				Equity
		(In thousands)
Balance at September 30, 2008			28,407			$	3			$	137,100				3,317			$	(59,571	)		$	30,655			$	108,187
Net income																							4,147				4,147
Issuance of common stock under employee plans			239				—				261																261
Shares withheld for payroll taxes			(76	)			—				(1,049	)															(1,049	)
Tax charge from employee stock plans											(676	)															(676	)
Stock-based compensation											3,680																3,680
Treasury stock purchases															1,553				(16,935	)							(16,935	)
Balance at June 30, 2009			28,570			$	3			$	139,316				4,870			$	(76,506	)		$	34,802			$	97,615

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

UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES

		For the Nine Months Ended
		June 30,
		2009				2008
		(In thousands)
Cash flows from operating activities:
Net income		$	4,147			$	7,665
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			13,092				13,177
Bad debt expense			5,048				3,377
Stock-based compensation			3,630				4,151
Deferred income taxes			(3,370	)			149
Loss on disposal of property and equipment			727				720
Changes in assets and liabilities:
Receivables			2,439				(8,177	)
Prepaid expenses and other current assets			(650	)			495
Other assets			128				493
Accounts payable and accrued expenses			1,441				(3,703	)
Deferred revenue			(8,067	)			(12,387	)
Income tax payable (receivable)			(668	)			636
Accrued tool sets and other current liabilities			422				(716	)
Other liabilities			143				167
Net cash provided by operating activities			18,462				6,047
Cash flows from investing activities:
Purchase of property and equipment			(14,411	)			(13,385	)
Proceeds from disposal of property and equipment			35				32,688
Purchase of investments			(17,287	)			—
Net cash (used in) provided by investing activities			(31,663	)			19,303
Cash flows from financing activities:
Proceeds from issuance of common stock under employee plans			261				652
Payment of payroll taxes on stock-based compensation through shares withheld			(1,049	)			(313	)
Excess tax benefit from stock-based compensation			195				250
Purchase of treasury stock			(16,935	)			(29,542	)
Net cash used in financing activities			(17,528	)			(28,953	)
Net decrease in cash and cash equivalents			(30,729	)			(3,603	)
Cash and cash equivalents, beginning of period			80,878				75,594
Cash and cash equivalents, end of period		$	50,149			$	71,991
Supplemental disclosure of cash flow information:
Taxes paid		$	6,420			$	4,676
Interest paid		$	37			$	38
Training equipment obtained in exchange for services		$	1,338			$	1,395
Accrued capital expenditures		$	1,482			$	311
Capitalized stock-based compensation		$	50			$	—

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

UNIVERSAL TECHNICAL INSTITUTE, INC.

1. Nature of the Business

We are a leading provider of post-secondary education for students seeking careers as professional automotive, diesel, collision repair, motorcycle and marine technicians. We offer undergraduate degree, diploma and certificate programs at 10 campuses and manufacturer specific training programs that are sponsored by the manufacturer or dealer at 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 and to develop recruitment, training and employment strategies that are driven by end market demand.

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 nine months ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ending September 30, 2009. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2008 Annual Report on Form 10-K filed with the Securities and Exchange Commission on November 26, 2008.

The unaudited condensed consolidated financial statements include the accounts of Universal Technical Institute, Inc. (UTI) 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.

Subsequent events have been evaluated through August 4, 2009, which is the date financial statements were issued.

3. Significant Accounting Policies

Investments

In May 2009, we began investing a portion of our cash in pre-refunded municipal bonds, which are primarily 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. We have the ability and intention to hold municipal bonds until maturity and therefore classify these investments as held-to-maturity and report them at amortized cost. Investments with a maturity date greater than one year are classified as non-current. Interest income, including the amortization of any premium or discount, is included in Interest Income on our Condensed Consolidated Statement of Income. Please refer to Note 5, Investments, for further discussion.

UNIVERSAL TECHNICAL INSTITUTE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
($’s in thousands, except per share amounts)

4. Recent Accounting Pronouncements

In June 2009, the FASB approved the “FASB Accounting Standards Codification” (Codification) as the single source of authoritative nongovernmental U.S. GAAP to be launched on July 1, 2009. The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. All existing accounting standard documents will be superseded and all other accounting literature not included in the Codification will be considered nonauthoritative. The Codification is effective for interim and annual periods ending after September 15, 2009. The Codification is effective for us during our year-ended September 30, 2009 and will not have an impact on our financial condition or results of operations.

5. Investments

In May 2009, we began investing a portion of our cash in pre-refunded municipal bonds which are primarily 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. We have the ability and intention to hold municipal bonds until maturity and therefore classify these investments as held-to-maturity and report them at amortized cost.

Amortized cost and estimated fair market value for investments classified as held-to-maturity at June 30, 2009 are as follows:

						Gross				Gross
						Unrealized				Unrealized				Fair Market
		Amortized Cost				Gains				Losses				Value
Bonds due in less than 1 year		$	9,106			$	14			$	(1	)		$	9,119
Bonds due in 1 – 2 years			8,181				16				(3	)			8,194
		$	17,287			$	30			$	(4	)		$	17,313

Marketable securities are exposed to various risks, including interest rate, market and credit risk. Due to the risks associated with marketable security investments, 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.

UNIVERSAL TECHNICAL INSTITUTE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
($’s in thousands, except per share amounts)

6. Fair Value Measurements

Statement of Financial Accounting Standards (SFAS) No.157 defines fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. SFAS No. 157 confirms that the valuation techniques used to determine fair value are consistent with either the market approach, income approach and/or cost approach. SFAS No. 157 also establishes the following three-tier fair value hierarchy that prioritizes the inputs used in the valuation techniques to measure fair value:

Level 1 — Observable inputs that reflect quoted market prices (unadjusted) for identical assets and liabilities in active markets;

Level 2 — Observable inputs, other than quoted market prices, that are either directly or indirectly observable in the marketplace for identical or similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities; and

Level 3 — Unobservable inputs that are supported by little or no market activity that are significant to the fair value of assets or liabilities.

SFAS No. 157 requires that valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. We use prices and inputs that are current as of the measurement date, including during periods of market volatility. Therefore, classification of inputs within the hierarchy may change from period to period depending upon the observability of those prices and inputs. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value for certain assets and liabilities and their placement within the fair value hierarchy.

Assets measured at fair value on a recurring basis in accordance with SFAS No. 157 consist of the following as of June 30, 2009:

		Fair Value Measurements at Reporting Date
						Quoted Prices in Active
						Markets for Identical
		June 30, 2009				Assets (Level 1)
Assets:
Cash equivalents:
Money market funds		$	47,142			$	47,142
		$	47,142			$	47,142

UNIVERSAL TECHNICAL INSTITUTE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
($’s in thousands, except per share amounts)

We measure our money market funds included in cash and cash equivalents at fair value. Our money market funds are classified within Level 1 and were valued primarily using real-time quotes for transactions in active exchange markets involving identical assets.

The carrying value of cash equivalents, accounts receivable and payable, accrued liabilities and deferred tuition approximates their respective fair value at June 30, 2009 and September 30, 2008 due to the short-term nature of these instruments.

7. Severance Agreements

During the nine months ended June 30, 2009, we entered into severance agreements with personnel who left the company and recorded related charges of approximately $1.8 million. The severance liability will be paid out ratably over the terms of the agreements, which range from 1 to 18 months, with the final agreement expiring in December 2010. Approximately $0.4 million of this liability was paid in the nine months ended June 30, 2009.

8. Weighted Average Number of Common Shares Outstanding

Basic net income per share is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted net income per share reflects the assumed conversion of all dilutive securities. For the three months and nine months ended June 30, 2009, 1,795,861 shares and 1,865,858 shares, respectively, and for the nine months ended June 30, 2008, 2,133,162 shares, which could be issued under outstanding options or unvested restricted stock, were not included in the determination of our diluted shares outstanding as they were anti-dilutive. For the three months ended June 30, 2008, diluted loss per share equaled basic loss per share as the assumed exercise of outstanding stock options, vesting of unvested restricted stock and the assumed purchases under the employee stock purchase plan would have an anti-dilutive effect.

The table below reflects the calculation of the weighted average number of common shares outstanding used in computing basic and diluted net income per common share:

		Three Months Ended								Nine Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
Basic common shares outstanding			23,626				25,059				24,451				25,736
Dilutive effect related to employee stock			327				—				385				242
Diluted common shares outstanding			23,953				25,059				24,836				25,978

UNIVERSAL TECHNICAL INSTITUTE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
($’s in thousands, except per share amounts)

9. Property and Equipment, net

Property and equipment, net consist of the following:

		Depreciable				June 30,				September 30,
		Lives (in years)				2009				2008
Training equipment			3-10			$	63,063			$	62,184
Office and computer equipment			3-10				28,423				27,847
Software developed for internal use			3				7,392				6,962
Curriculum development			5				643				584
Vehicles			5				695				761
Leasehold improvements			1-28				35,121				33,675
Construction in progress			—				9,276				2,332
							144,613				134,345
Less accumulated depreciation and amortization							(74,222	)			(66,087	)
						$	70,391			$	68,258

10. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:

		June 30,				September 30,
		2009				2008
Accounts payable		$	4,890			$	5,126
Accrued compensation and benefits			25,618				24,675
Other accrued expenses			9,787				8,194
		$	40,295			$	37,995

11. Commitments and Contingencies

Legal

In the ordinary conduct of our business, we are periodically subject to lawsuits, investigations and claims, including, but not limited to, claims involving students or graduates and routine employment matters. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, we do not believe that any currently pending legal proceeding to which we are a party will have a material adverse effect on our business, results of operations, cash flows or financial condition.

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 national chartered bank in June 2008. Under terms of the related agreement, 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 on a monthly basis 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 his or her program. After the deferral period, monthly principal and interest payments are required over the related term of the loan.

UNIVERSAL TECHNICAL INSTITUTE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
($’s in thousands, except per share amounts)

The bank agreed to provide these services in exchange for a fee equivalent to 0.4% of the principal balance of each loan and related fees. Under the terms of the related agreement, we placed a $2.0 million deposit with the bank in July 2008 in order to secure our related loan purchase obligation. This balance was reclassified from Restricted Cash to Other Assets in our Condensed Consolidated Balance Sheet during 2009 because our Board of Directors extended the loan program and we do not anticipate the return of the deposit during the next 12 months.

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, collectibility is not reasonably assured. Accordingly, we will recognize tuition revenue and loan origination fees financed by the loan and any related interest income required under the loan when such amounts are collected. We will reevaluate this policy on the basis of our historical collection experience under the program and will accelerate recognition of the related revenue if appropriate. Since loan collectibility is not reasonably assured, the loans and related deferred tuition revenue will not be recognized in our consolidated balance sheet until sufficient collection history has been obtained.

Our Board of Directors authorized the extension of up to $10 million of credit at the inception of the proprietary loan program during 2008 and authorized an additional $10 million of credit under the program during the three months ended March 31, 2009. At June 30, 2009, we had committed to provide loans to our students for approximately $13.0 million and of that amount there was approximately $11.0 million in loans outstanding. During the three months and nine months ended June 30, 2009, we expensed approximately $0.2 million and $0.5 million, respectively related to the fees incurred with the bank and other service providers.

12. Stock Repurchase Program

On November 26, 2007 and April 28, 2009, our Board of Directors authorized the repurchase of up to $50.0 million and $20.0 million, respectively, 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 stock repurchase program at any time without prior notice. Through September 30, 2008, we had purchased 1,886,300 shares at a total cost of approximately $29.5 million under this program. During the three months ended March 31, 2009 we purchased 1,552,981 shares at an average price per share of $10.87 and a total cost of approximately $16.9 million. We did not make any purchases during the three months ended June 30, 2009. At June 30, 2009, we have purchased 3,439,281 shares at an average price per share of $13.50 and a total cost of approximately $46.4 million under this program.

UNIVERSAL TECHNICAL INSTITUTE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
($’s in thousands, except per share amounts)

13. Segment Reporting

Our principal business is providing post-secondary 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 Post-Secondary Education and the Other category based on compensation expense.

		Three Months Ended								Nine Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
Net revenues
Post-secondary education		$	84,375			$	75,976			$	254,942			$	245,141
Other			3,477				4,663				12,156				13,690
Consolidated		$	87,852			$	80,639			$	267,098			$	258,831
Income (loss) from operations
Post-secondary education		$	3,229			$	(1,330	)		$	8,345			$	10,391
Other			(263	)			(99	)			(1,993	)			(241	)
Consolidated		$	2,966			$	(1,429	)		$	6,352			$	10,150
Depreciation and amortization
Post-secondary education		$	4,073			$	4,239			$	12,577			$	12,751
Other			193				147				515				426
Consolidated		$	4,266			$	4,386			$	13,092			$	13,177
Goodwill
Post-secondary education		$	20,579			$	20,579			$	20,579			$	20,579
Other			—				—				—				—
Consolidated		$	20,579			$	20,579			$	20,579			$	20,579
Total assets
Post-secondary education		$	188,329			$	190,506			$	188,329			$	190,506
Other			4,289				5,046				4,289				5,046
Consolidated		$	192,618			$	195,552			$	192,618			$	195,552

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 2008 Annual Report on Form 10-K filed with the Securities and Exchange Commission on November 26, 2008. 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” included in Part II, Item IA of this report.

2009 Overview

Operations

Our net revenues for the three months and nine months ended June 30, 2009 were $87.9 million and $267.1 million, respectively, increases of $7.2 million, or 8.9%, and $8.3 million, or 3.2%, respectively, from the prior year. Our net income for the three months and nine months ended June 30, 2009 was $1.9 million and $4.1 million, respectively, an increase of $2.6 million and decrease of $3.5 million, respectively, from the prior year. The increase in net revenues for the three months and nine months ended June 30, 2009 was a result of an increase in average undergraduate student enrollment, higher tuition prices, and a decrease in tuition discounts. The increase was partially offset by the tuition revenue and loan origination fees financed under our proprietary loan program, which because collectibility is not reasonably assured, we will recognize as tuition revenue when such amounts have been collected. Additionally, we had one less earning day in the nine months ended June 30, 2009, which offset the increase in revenue during that period. Net income was impacted by higher compensation and related benefits expense, bad debt expense, and lower interest income. The higher costs were partially offset by lower advertising expense.

Average undergraduate full-time student enrollment increased 10.1% to 14,813 and 3.4% to 15,531 for the three months and nine months ended June 30, 2009, respectively. Student starts for the three months and nine months ended June 30, 2009 were 2,946 and 9,646, respectively, an increase of 32.4% and 17.9%, respectively, as compared to 2,225 and 8,180 for the three months and nine months ended June 30, 2008, respectively. The increase in starts is a result of the growth in contracts written for future students during the period of January 2008 through March 2009, growth which continued during the three months ended June 30, 2009. The growth in contracts is the result of the investments we made in our national advertising campaign and our adult-focused representatives throughout 2008. Furthermore, during 2008, in response to the growth in contracts, we invested in the recruitment, training and development of additional financial aid and future student advisors to ensure we provide the level of service to our future students, which has contributed to our growth in starts and average undergraduate full-time student enrollment during the three months and nine months ended June 30, 2009. We anticipate we will experience improved efficiencies based on the continued investments we have made in these areas; however, we are uncertain when we will realize margin improvements.

Student Lending Environment

There is legislation under consideration which would discontinue the Federal Family Education Loan (FFEL) program under which banks and other lending institutions make loans to students or their parents. The legislation would make such loans available through the Federal Direct Loan Program. All of our institutions have been approved to process loans under the Direct Loan Program. We are modifying our processes and systems and believe we will be prepared to make the transition to the Direct Loan Program when necessary.

Sallie Mae discontinued one of its loan products at the end of April 2009. We received $7.9 million from the product during the nine months ended June 30, 2009 as compared to $17.6 million during the nine months ended June 30, 2008. The product will be replaced by a new Sallie Mae loan program. The new loan program requires interest-only payments while borrowers are in school and has repayment terms of 6-7 years. The discontinued loan product did not require in-school payments, and had a repayment term of 15 years.

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 proprietary loan program with a national chartered bank in June 2008. For a detailed discussion, see “Proprietary Loan Program” in Note 11 to our Condensed Consolidated Financial Statements within Part I, Item 1 of this report.

Our Board of Directors authorized the extension of up to $10 million of credit at the inception of the proprietary loan program during 2008 and authorized an additional $10 million of credit under the program during the three months ended March 31, 2009. As of June 30, 2009, we had committed to provide loans to our students for approximately $13.0 million and of that amount there was approximately $11.0 million in loans outstanding. During the three months and nine months ended June 30, 2009, we expensed approximately $0.2 million and $0.5 million, respectively, related to the fees incurred with the bank and other service providers.

Stock Repurchase Program

On November 26, 2007 and April 28, 2009, our Board of Directors authorized the repurchase of up to $50.0 million and $20.0 million, respectively, 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 stock repurchase program at any time without prior notice. Through September 30, 2008, we had purchased 1,886,300 shares at a total cost of approximately $29.5 million under this program. During the three months ended March 31, 2009 we purchased 1,552,981 shares at an average price per share of $10.87 and a total cost of approximately $16.9 million. We did not make any purchases during the three months ended June 30, 2009. At June 30, 2009, we have purchased 3,439,281 shares at an average price per share of $13.50 and a total cost of approximately $46.4 million under this program.

New Campus

We are planning to open a new campus in Dallas, Texas during the summer of 2010, providing our automotive training program at the time of opening and adding our automotive/diesel training program during the following three to six months. The campus will contain approximately 100,000 square feet and accommodate 750 students on average, primarily from the Dallas-Fort Worth metro area. There are several factors that influenced our choice of Dallas, Texas for our new campus: Dallas is a large market with favorable demographics and high population growth; there is a high potential for acquiring students in the Dallas market that are currently not attending a UTI campus; and Dallas offers excellent employment potential for our graduates in the immediate and surrounding areas.

We are in the process of identifying the specific location for the facility and anticipate we will spend in the range of $4.5 million to $5.5 million on staffing and equipment for this campus over the next 15 months. We have begun the state licensing process. Once that process is complete, we will begin to incur sales and marketing costs, which have historically preceded the opening of a new campus by approximately nine months. We anticipate this new campus will become profitable within 9 months to 15 months after opening.

Results of Operations

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

		Three Months Ended								Nine Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
Net Revenues			100.0	%			100.0	%			100.0	%			100.0	%
Operating expenses:
Educational services and facilities			53.8	%			57.5	%			53.9	%			53.9	%
Selling, general and administrative			42.8	%			44.3	%			43.7	%			42.2	%
Total operating expenses			96.6	%			101.8	%			97.6	%			96.1	%
Income (loss) from operations			3.4	%			-1.8	%			2.4	%			3.9	%
Interest income			0.0	%			0.6	%			0.1	%			1.0	%
Other income			0.1	%			0.3	%			0.1	%			0.1	%
Total other income			0.1	%			0.9	%			0.2	%			1.1	%
Income (loss) before income taxes			3.5	%			-0.9	%			2.6	%			5.0	%
Income tax expense (benefit)			1.3	%			0.0	%			1.0	%			2.0	%
Net income (loss)			2.2	%			-0.9	%			1.6	%			3.0	%

Capacity utilization is the ratio of our average undergraduate full-time student enrollment to total seats available. The following table sets forth the calculation of our capacity utilization during the periods indicated:

		Three Months Ended								Nine Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
Average undergraduate full-time student enrollment			14,813				13,452				15,531				15,018
Total seats available			24,450				25,030				24,450				25,030
Average capacity utilization			60.6	%			53.7	%			63.5	%			60.0	%

We continue to seek alternate uses for our underutilized space at existing campuses. Alternate uses may include subleasing space to third parties, allocating space for use by our manufacturer specific advanced training programs, adding new industry relationships or consolidating administrative functions into campus facilities. Additionally, during 2010 as discussed in the Overview section, we are planning to open a new campus in Dallas, Texas.

Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2008 and Nine Months Ended June 30, 2009 Compared to Nine Months Ended June 30, 2008

Net revenues. Our net revenues for the three months ended June 30, 2009 were $87.9 million, representing an increase of $7.2 million, or 8.9%, as compared to net revenues of $80.6 million for the three months ended June 30, 2008. This increase was a result of an increase in the average undergraduate full-time student enrollment of 10.1%, tuition increases between 3% and 5%, depending on the program, and a decrease in tuition discounts of $1.3 million. Our net revenues were decreased by approximately $1.9 million primarily related to tuition revenue and loan origination fees financed under our proprietary loan program, which because collectibility is not reasonably assured, we will recognize as tuition revenue when such amounts have been collected.

Our net revenues for the nine months ended June 30, 2009 were $267.1 million, representing an increase of $8.3 million, or 3.2%, as compared to net revenues of $258.8 million for the nine months ended June 30, 2008. This increase was a result of an increase in the average undergraduate full-time student enrollment of 3.4% and tuition increases between 3% and 5%, depending on the program. Our net revenues were decreased by approximately $4.7 million primarily related to tuition revenue and loan origination fees financed under our proprietary loan program, which because collectibility is not reasonably assured, we will recognize as tuition revenue when such amounts have been collected. Additionally, our net revenues were decreased by approximately $1.4 million due to one less earning day in the nine months ended June 30, 2009.

Educational services and facilities expenses. Our educational services and facilities expenses for the three months and nine months ended June 30, 2009 were $47.3 million and $143.9 million, respectively, an increase of $0.9 million and $4.6 million, respectively, as compared to $46.4 million and $139.4 million for the three months and nine months ended June 30, 2008, respectively.

The following tables set forth the significant components of our educational services and facilities expenses:

		Three Months Ended								% of Net Revenues
		June 30,								Three Months Ended								Impact on
		2009				2008				June 30,								Operating
		(in thousands)								2009				2008				Margin
Compensation and related costs		$	24,921			$	23,984				28.4	%			29.7	%			1.3	%
Occupancy costs			8,934				9,026				10.2	%			11.2	%			1.0	%
Other educational services and facilities expenses			5,918				6,070				6.7	%			7.6	%			0.9	%
Depreciation expense			3,684				3,738				4.2	%			4.6	%			0.4	%
Tools and training aids expense			2,058				1,634				2.3	%			2.0	%			-0.3	%
Contract services expense			1,792				1,926				2.0	%			2.4	%			0.4	%
		$	47,307			$	46,378				53.8	%			57.5	%			3.7	%

		Nine Months Ended								% of Net Revenues
		June 30,								Nine Months Ended								Impact on
		2009				2008				June 30,								Operating
		(in thousands)								2009				2008				Margin
Compensation and related costs		$	75,987			$	72,613				28.4	%			28.1	%			-0.3	%
Occupancy costs			26,954				26,839				10.1	%			10.4	%			0.3	%
Other educational services and facilities expenses			18,429				18,267				6.9	%			7.0	%			0.1	%
Depreciation expense			11,173				11,179				4.2	%			4.3	%			0.1	%
Tools and training aids expense			6,644				6,359				2.5	%			2.5	%			0.0	%
Contract services expense			4,760				4,129				1.8	%			1.6	%			-0.2	%
		$	143,947			$	139,386				53.9	%			53.9	%			0.0	%

Total compensation and related costs increased by approximately $0.9 million and $3.4 million for the three months and nine months ended June 30, 2009, respectively. The increase is attributable to higher support staff salaries for both periods. Salaries expense increased $1.0 million and $3.1 million for the three months and nine months ended June 30, 2009, respectively, primarily due to the growth in contracts and our related investment in the recruitment, training, and development of additional financial aid and future student advisors to ensure we provide the highest level of service to our future students.

Selling, general and administrative expenses. Our selling, general and administrative expenses for the three months and nine months ended June 30, 2009 were $37.6 million and $116.8 million, respectively, representing an increase of $1.9 million and $7.5 million as compared to $35.7 million and $109.3 million for the three months and nine months ended June 30, 2008, respectively.

The following tables set forth the significant components of our selling, general and administrative expenses:

		Three Months Ended								% of Net Revenues
		June 30,								Three Months Ended								Impact on
		2009				2008				June 30,								Operating
		(in thousands)								2009				2008				Margin
Compensation and related costs		$	23,502			$	18,742				26.8	%			23.2	%			-3.6	%
Other selling, general and administrative expenses			5,791				6,547				6.5	%			8.3	%			1.8	%
Advertising costs			5,245				6,963				6.0	%			8.6	%			2.6	%
Contract services expense			1,660				2,297				1.9	%			2.8	%			0.9	%
Bad debt expense			1,381				1,141				1.6	%			1.4	%			-0.2	%
		$	37,579			$	35,690				42.8	%			44.3	%			1.5	%

		Nine Months Ended								% of Net Revenues
		June 30,								Nine Months Ended								Impact on
		2009				2008				June 30,								Operating
		(in thousands)								2009				2008				Margin
Compensation and related costs		$	68,322			$	58,293				25.6	%			22.5	%			-3.1	%
Other selling, general and administrative expenses			20,332				21,148				7.5	%			8.2	%			0.7	%
Advertising costs			18,398				20,238				6.9	%			7.8	%			0.9	%
Contract services expense			4,699				6,239				1.8	%			2.4	%			0.6	%
Bad debt expense			5,048				3,377				1.9	%			1.3	%			-0.6	%
		$	116,799			$	109,295				43.7	%			42.2	%			-1.5	%

Compensation and related costs increased primarily due to increases in salaries, bonuses and benefits expense. Salaries expense increased $2.6 million and $6.5 million for the three months and nine months ended June 30, 2009, respectively, primarily due to an increase in the number of sales force representatives in response to our increase in the number and quality of leads we have been experiencing and due to $1.2 million in accrued severance related to the departure of four executives during the three months ended June 30, 2009. Bonuses increased $1.6 million and $2.0 million for the three months and nine months ended June 30, 2009, respectively, as many of our campuses met or exceeded their bonus goals. Benefits expense increased $0.6 million and $1.5 million for the three months and nine months ended June 30, 2009, respectively, primarily due to increased expenses under our self-insured employee benefit plans, although benefits as a percentage of total compensation decreased for both current year periods.

Advertising expense decreased $1.7 million and $1.8 million for the three months and nine months ended June 30, 2009, respectively, primarily due to successful lead generation campaigns that require fewer sponsorships of national television programs and less local market promotion of specific campuses than in prior periods.

Contract services expense decreased $0.6 million and $1.5 million for the three months and nine months ended June 30, 2009, respectively, primarily due to decreases in information technology consulting services, financial consulting services, and set-up fees for the outsourcing of our proprietary loan program.

Bad debt expense increased $0.3 million and $1.7 million for the three months and nine months ended June 30, 2009, respectively, due to changes in the student funding environment, internal execution challenges, and the declining general economic conditions experienced over the past fifteen months.

Interest income. Our interest income was $0.04 million and $0.2 million for the three months and nine months ended June 30, 2009, respectively, representing a decrease of $0.5 million and $2.6 million, respectively, as compared to $0.5 million and $2.8 million for the three months and nine months ended June 30, 2008, respectively. During September 2008, we changed the investments of our cash and cash equivalents from a mutual fund invested in commercial paper, variable rate bonds, repurchase agreements, certificates of deposit, time deposits, municipal bonds, short-term corporate bonds and federal agency issues to a mutual fund that invests in U.S. treasury notes, U.S. treasury bills and repurchase agreements collateralized by U.S. treasury notes and U.S. treasury bills. During the three months ended June 30, 2009, we moved $17.3 million of our cash into investment in pre-refunded municipal bonds. During the nine months ended June 30, 2009 we used $16.9 million of cash to repurchase outstanding common stock of the company. These changes resulted in the decreases to interest income.

Income taxes. Our provision for income taxes was $1.1 million or 37.1% of pre-tax income and $2.6 million or 38.1% of pre-tax income for three months and nine months ended June 30, 2009, respectively. Our income tax benefit was $0.01 million or 1.5% of pre-tax loss and $5.4 million or 41.3% of pre-tax income for the three months and nine months ended June 30, 2008, respectively. The effective income tax rate in each year differed from the federal statutory tax rate of 35% primarily as a result of state income taxes, net of related federal income tax benefits. The decrease in the tax rate as a percentage of pretax income was primarily attributable to the establishment of a valuation allowance for the deferred tax assets related to certain state net operating losses in 2008.

Liquidity and Capital Resources

We finance our operating activities and our internal growth through cash generated from operations. Our net cash provided by operating activities was $18.5 million for the nine months ended June 30, 2009, as compared to $6.0 million for the nine months ended June 30, 2008.

A majority of our net revenues are 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. Five of our campuses and certain types of grants and other funding are not subject to a 30 day delay in receiving the first disbursement. Additionally, we established 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

Nine months ended June 30, 2009

For the nine months ended June 30, 2009, our cash flows provided by operating activities were $18.5 million resulting from net income of $4.1 million with adjustments of $19.1 million for non-cash and other items which were offset by $4.7 million related to the change in our operating assets and liabilities.

For the nine months ended June 30, 2009, the primary adjustments to our net income for non-cash and other items were depreciation and amortization of $13.1 million, substantially all of which was depreciation, bad debt expense of $5.0 million, stock-based compensation of $3.6 million and loss on disposal of property and equipment of $0.7 million, partially offset by a $3.3 million change in deferred tax benefit.

Nine months ended June 30, 2008

For the nine months ended June 30, 2008, our cash flows provided by operating activities were $6.0 million resulting from net income of $7.7 million with adjustments of $21.6 million for non-cash and other items which were offset by $23.2 million related to the change in our operating assets and liabilities.

For the nine months ended June 30, 2008, the primary adjustments to our net income for non-cash and other items were depreciation and amortization of $13.2 million, substantially all of which was depreciation, stock-based compensation of $4.2 million, bad debt expense of $3.4 million and loss on disposal of property and equipment of $0.7 million.

Changes in operating assets and liabilities

Nine months ended June 30, 2009

For the nine months ended June 30, 2009, changes in our operating assets and liabilities resulted in cash outflows of $4.7 million and were primarily attributable to changes in receivables, accounts payable and accrued expenses and deferred revenue.

The decrease in deferred revenue resulted in a use of cash of $8.1 million. The decrease 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 coupled with a decrease in student headcount at June 30, 2009 compared to September 30, 2008.

The decrease in receivables resulted in cash provided of $2.4 million. Receivables decreased primarily due to a lower number of students in school at June 30, 2009 when compared to September 30, 2008. In addition, our days sales outstanding (DSO) at June 30, 2009 and September 30, 2008 was approximately 19 days.

Accounts payable and accrued expenses increased $1.4 million primarily due to the timing of our accounts payable cycle and an increase in accrued payroll and benefits. The timing of our accounts payable cycle resulted in an increase in accounts payable and accrued expenses of $0.5 million. Accrued payroll and benefits increased $0.9 million due to an increase in accrued bonuses partially offset by the decrease in the payroll accrual due to fewer days accrued at June 30, 2009.

Nine months ended June 30, 2008

For the nine months ended June 30, 2008, changes in our operating assets and liabilities resulted in cash outflows of $23.2 million and were primarily attributable to changes in receivables, deferred revenue and accounts payable and accrued expenses.

The increase in receivables resulted in a use of cash of $8.2 million. In-school student receivables increased due to the challenges we have experienced in our student financial aid process due to the changing student funding environment and the resulting delay in receiving student financial aid funding used to settle the students in-school receivable. This was partially offset by a lower number of students in school at June 30, 2008 when compared to September 30, 2007. The increase in receivables also affected our days sales outstanding (DSO) which was approximately 17 days at June 30, 2008 compared to approximately 16 days at September 30, 2007.

The decrease in deferred revenue resulted in a use of cash of $12.4 million and was primarily due to the decrease in students in school at June 30, 2008 when compared to September 30, 2007.

Accounts payable and accrued expenses decreased $3.7 million primarily due to $5.7 million in bonus payments related to our field sales representative graduate bonus plan, $4.3 million in severance payments related to our reduction in force in September 2007, $2.9 million in bonus payments related to the year ended September 30, 2007 and $2.0 million related to the timing of our payroll cycle, partially offset by an increase of $8.9 million for the bonus accruals related to the year ending September 30, 2008.

Investing Activities

Nine months ended June 30, 2009

For the nine months ended June 30, 2009, cash used in investing activities was $31.7 million and was primarily related to $14.4 million for the purchase of property and equipment associated with information technology projects, curriculum development, campus improvements and ongoing replacement of equipment related to student training. In addition, during the three months ended June 30, 2009, we invested $17.3 million of cash equivalents in pre-refunded municipal bonds.

Nine months ended June 30, 2008

For the nine months ended June 30, 2008, cash flows provided by investing activities were $19.3 million and were primarily related to proceeds received from the sale of the Norwood, Massachusetts campus facility offset by capital expenditures associated with existing campus expansions and ongoing replacement of equipment related to student training.

Financing Activities

Nine months ended June 30, 2009

For the nine months ended June 30, 2009, cash flows used in financing activities were $17.5 million and were primarily attributable to the repurchase of our stock.

Nine months ended June 30, 2008

For the nine months ended June 30, 2008, cash flows used in financing activities were $29.0 million and were primarily attributable to the repurchase of our stock.

Debt Service

On October 26, 2007, we entered into a second modification agreement which extended our $30.0 million revolving line of credit agreement with a bank through October 26, 2009 and we intend to begin negotiations to renew the agreement. There was no amount outstanding on the line of credit at the date of the modification agreement or at June 30, 2009. We were in compliance with all covenants at June 30, 2009.

Future Liquidity Sources

Based on past performance and current expectations, we believe that our cash flows from operations and other sources of liquidity, including borrowings available under our revolving credit facility, will satisfy our working capital needs, capital expenditures, commitments, and other liquidity requirements associated with our operations through the next 12 months.

We believe that the strategic use of our cash resources includes funding the new campus, subsidizing funding alternatives for our students and we continue to evaluate repurchasing our common stock. In addition, our long term strategy includes the consideration of strategic acquisitions. To the extent that potential acquisitions are large enough to require financing beyond cash from operations and available borrowings under our credit facility, we may incur additional debt or issue debt resulting in increased interest expense.

Seasonality and Trends

Our net 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. 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, which ends on June 30, than in the remainder of the year because fewer students are enrolled during the summer months. Our expenses, however, do not vary significantly with changes in our student population and net 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, increased investment in sales and marketing or acquisitions. In addition, our net revenues for the first quarter ending December 31 are adversely affected by the fact that we have fewer earning days when our campuses are closed during the calendar year end holiday break and accordingly do not recognize revenue during that period.

Critical Accounting Policies and Estimates

Our critical accounting policies are disclosed in our 2008 Annual Report on Form 10-K. During the nine months ended June 30, 2009 there have been no significant changes in our critical accounting policies, other than as described below.

During the three months ended June 30, 2009, we began investing cash in pre-refunded municipal bonds, which are primarily 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. We have both the ability and intention to hold municipal bonds until maturity and therefore classify these investments as held-to-maturity, and report them at amortized cost. Investments with a maturity date greater than one year are classified as non-current. Interest and dividend income, including the amortization of any premium or discount, is included in Interest Income in our Condensed Consolidated Statement of Income. Please refer to Note 5, Investments, to our Condensed Consolidated Financial Statements within Part I, Item 1 of this report, for further discussion.

Recent Accounting Pronouncements

For information regarding recent accounting pronouncements, see Note 4 to our unaudited condensed consolidated financial statements within Part I, Item 1 of this report.

Item 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our principal exposure to market risk relates to changes in interest rates. As of June 30, 2009, we held $50.1 million in cash and cash equivalents and $17.3 million in investments. During the nine months ended June 30, 2009, we earned interest income of $0.2 million. In September 2008, we changed the investments of our cash and cash equivalents from a mutual fund invested in commercial paper, variable rate bonds, repurchase agreements, certificates of deposit, time deposits, municipal bonds, short-term corporate bonds and federal agency issues to a mutual fund that invests in U.S. treasury notes, U.S. treasury bills and repurchase agreements primarily secured by U.S. treasury notes and U.S. treasury bills. Additionally, in May 2009, we began investing a portion of our cash in pre-refunded municipal bonds, collateralized by escrowed-to-maturity U.S. treasury notes. Lower interest rates may reduce our interest income for fiscal year 2009.

As of June 30, 2009, we did not have significant short-term or long-term borrowings. Any future borrowings under our Revolving Credit Facility will be subject to interest rate risk. Please refer to the Form 10-K that we filed with the SEC on November 26, 2008 for additional information.

Cautionary Factors That May Affect Future Results

This report contains forward-looking information about our financial results, estimates and our business prospects that involve substantial risks and uncertainties. From time to time, we also may provide oral or written forward-looking statements in other materials we release to the public. Forward-looking statements are expressions of our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historic or current facts. They often include words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results, expenses, the outcome of contingencies, such as legal proceedings, and financial results.

We cannot guarantee 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 inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. Investors should bear this in mind as they consider forward-looking statements.

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 November 26, 2008 listed various important factors that could cause actual results to differ materially from expected and historic results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. Readers can find them under the heading “Risk Factors” in the Form 10-K. We incorporate that section of the Form 10-K in this filing and investors should refer to it. 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.

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 are 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 June 30, 2009 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, investigations and claims including, but not limited to, claims involving students or graduates and routine employment matters. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and claims asserted against us, we do not believe that any currently pending legal proceeding to which we are a party will have a material adverse effect on our business, results of operations, cash flows or financial condition.

Item 1A.		RISK FACTORS

Information regarding risk factors appears in Part I, Item 3 of this report under the heading “Cautionary Factors That May Affect Future Results” and in Part I, Item 1A of our 2008 Annual Report on Form 10-K filed with the Securities and Exchange Commission on November 26, 2008.

The information presented below updates and should be read in conjunction with the risk factors and information disclosed in our 2008 Annual Report on Form 10-K.

Our business may be adversely affected by a general economic slowdown or recession in the U.S. or abroad.

The U.S. economy and the economies of other key industrialized countries are characterized by reduced economic activity, increased unemployment and substantial uncertainty about their financial services markets. The U.S. and other key economies may be in or heading toward recession. In addition, homeowners in the U.S. have experienced an unprecedented reduction in wealth due to the decline in residential real estate values across much of the country. These events may reduce the demand for our programs among students, the willingness of employers to sponsor educational opportunities for their employees, and the ability of our students to find employment in the auto, diesel, motorcycle or marine industries, any of which could materially and adversely affect our business, financial condition, results of operations and cash flows. In particular, the consolidation of automotive dealerships may result in a shift of employment opportunities for our graduates into automobile aftermarket service from automotive dealerships where, historically, the placement of our graduates has been concentrated. In addition, these events could adversely affect the ability or willingness of our former students to repay student loans, which could increase our student loan cohort default rate and require increased time, attention and resources to manage these defaults. See Risks Related to Our Industry—Our schools may lose eligibility to participate in Title IV programs if their student loan default rates are too high, which could reduce our student population, in our 2008 Annual Report on Form 10-K.

If the FFEL program is discontinued and our processes or information technology systems are not modified to accommodate the Direct Loan Program, we could experience a delay in obtaining funding for our students which could have a material impact on our cash flows and financial condition.

There is legislation under consideration which would discontinue the Federal Family Education Loan (FFEL) program under which banks and other lending institutions make loans to students or their parents. The legislation would make such loans available through the Federal Direct Loan Program. If we are not able to modify our process or systems to accommodate the Direct Loan Program, we could experience a delay in obtaining funding for our students which could have a material impact on our cash flows and financial condition.

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 June 30, 2009:

ISSUER PURCHASES OF EQUITY SECURITIES

														(d) Approximate Dollar
										(c) Total Number				Value of Shares that
		(a) Total								of Shares				May Yet Be Purchased
		Number of				(b) Average				Purchased as				Under the Plans Or
		Shares				Price Paid				Part of Publicly				Programs
Period		Purchased(1)				per Share				Announced Plans				(In thousands)(2)
April			—			$	—				—			$	23,660
May			—			$	—				—			$	23,660
June			50,332			$	15.13				—			$	23,660
Total			50,332								—			$	23,660

Item 6.		EXHIBITS

(a) Exhibits:

Number				Description
	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.)

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.