e10vq
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2006
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o |
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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)
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Delaware
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86-0226984 |
(State or other jurisdiction of
incorporation or organization)
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(IRS Employer Identification No.) |
20410
North 19th Avenue, Suite 200
Phoenix, Arizona 85027
(Address of principal executive offices)
(623) 445-9500
(Registrants 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 is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer (in Rule 12b-2 of the Exchange Act).
Large accelerated filer þ Accelerated filer o Non-accelerated filer o
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 February 5, 2007, there were 28,191,034 shares outstanding of the registrants common
stock.
UNIVERSAL TECHNICAL INSTITUTE, INC.
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED DECEMBER 31, 2006
ii
PART I FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except per share amounts)
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September 30, |
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December 31, |
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2006 |
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2006 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
41,431 |
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$ |
46,763 |
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Receivables, net |
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16,702 |
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12,905 |
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Deferred tax assets |
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4,719 |
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5,837 |
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Prepaid expenses and other current assets |
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7,417 |
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5,958 |
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Total current assets |
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70,269 |
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71,463 |
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Property and equipment, net |
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117,298 |
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119,823 |
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Goodwill |
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20,579 |
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20,579 |
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Other assets |
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4,015 |
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3,934 |
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Total assets |
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$ |
212,161 |
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$ |
215,799 |
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Liabilities and Shareholders Equity |
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Current liabilities: |
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Accounts payable and accrued expenses |
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$ |
42,033 |
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$ |
33,797 |
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Deferred revenue |
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49,479 |
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49,960 |
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Income tax payable |
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5,161 |
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Accrued tool sets |
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4,019 |
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4,005 |
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Other current liabilities |
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747 |
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670 |
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Total current liabilities |
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96,278 |
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93,593 |
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Deferred tax liabilities |
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2,900 |
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2,038 |
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Other liabilities |
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10,081 |
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10,084 |
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Total liabilities |
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109,259 |
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105,715 |
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Commitments and contingencies (Note 7) |
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Shareholders equity: |
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Common stock, $.0001 par value, 100,000,000 shares authorized, 28,174,995 shares
issued and 26,744,050 shares outstanding at September 30, 2006 and
28,175,395 shares issued and 26,744,450 shares outstanding at
December 31, 2006 |
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3 |
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3 |
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Preferred stock, $.0001 par value, 10,000,000 shares authorized, 0 shares issued
and outstanding |
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Paid-in capital |
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124,804 |
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126,364 |
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Treasury stock, at cost, 1,430,945 shares at September 30, 2006 and
December 31, 2006 |
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(30,029 |
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(30,029 |
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Retained earnings |
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8,124 |
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13,746 |
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Total shareholders equity |
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102,902 |
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110,084 |
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Total liabilities and shareholders equity |
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$ |
212,161 |
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$ |
215,799 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
1
UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
(In thousands, except per share amounts)
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Three Months Ended |
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December 31, |
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2005 |
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2006 |
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Net revenues |
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$ |
85,512 |
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$ |
89,534 |
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Operating expenses: |
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Educational services and facilities |
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40,102 |
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44,195 |
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Selling, general and administrative |
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29,159 |
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34,814 |
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Total operating expenses |
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69,261 |
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79,009 |
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Income from operations |
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16,251 |
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10,525 |
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Other expense (income): |
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Interest income |
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(762 |
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(672 |
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Interest expense |
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16 |
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11 |
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Total other income |
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(746 |
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(661 |
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Income before income taxes |
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16,997 |
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11,186 |
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Income tax expense |
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6,732 |
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4,276 |
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Net income |
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$ |
10,265 |
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$ |
6,910 |
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Earnings per share: |
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Net income per share basic |
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$ |
0.37 |
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$ |
0.26 |
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Net income per share diluted |
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$ |
0.36 |
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$ |
0.26 |
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Weighted average number of common shares
outstanding: |
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Basic |
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27,984 |
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26,744 |
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Diluted |
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28,468 |
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27,092 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
2
UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY (UNAUDITED)
(In thousands, except per share amounts)
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Total |
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Common Stock |
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Paid-in |
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Treasury Stock |
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Retained |
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Shareholders |
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Shares |
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Amount |
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Capital |
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Shares |
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Amount |
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Earnings |
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Equity |
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Balance at September 30, 2006 |
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28,175 |
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$ |
3 |
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$ |
124,804 |
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1,431 |
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$ |
(30,029 |
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$ |
8,124 |
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$ |
102,902 |
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Cumulative effect of the adoption of SAB 108, net
of $830 for taxes |
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(1,288 |
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(1,288 |
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Balance at October 1, 2006 |
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28,175 |
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3 |
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124,804 |
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1,431 |
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(30,029 |
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6,836 |
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101,614 |
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Net income |
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6,910 |
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6,910 |
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Issuance of common stock under employee plans |
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8 |
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8 |
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Tax charge from employee stock plans |
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(8 |
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(8 |
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Tax benefit from preferred stock issuance |
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Stock compensation |
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1,560 |
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1,560 |
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Treasury stock purchases |
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Balance at December 31, 2006 |
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28,175 |
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$ |
3 |
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$ |
126,364 |
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1,431 |
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$ |
(30,029 |
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$ |
13,746 |
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$ |
110,084 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
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For the Three Months Ended |
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December 31, |
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2005 |
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2006 |
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Cash flows from operating activities: |
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Net income |
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$ |
10,265 |
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$ |
6,910 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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3,239 |
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4,124 |
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Bad debt expense |
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1,176 |
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683 |
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Stock-based compensation |
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1,042 |
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1,560 |
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Deferred income taxes |
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(1,374 |
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(1,158 |
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Loss on sale of property and equipment |
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18 |
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40 |
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Changes in assets and liabilities: |
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Receivables |
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1,502 |
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1,346 |
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Prepaid expenses and other current assets |
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401 |
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1,459 |
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Other assets |
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144 |
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78 |
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Accounts payable and accrued expenses |
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(6,511 |
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(11,615 |
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Deferred revenue |
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2,210 |
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481 |
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Income tax payable (receivable) |
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5,848 |
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6,967 |
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Accrued tool sets and other current liabilities |
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88 |
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(91 |
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Other liabilities |
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(34 |
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(60 |
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Net cash provided by operating activities |
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18,014 |
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10,724 |
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Cash flows from investing activities: |
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Purchase of property and equipment |
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(6,800 |
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(5,408 |
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Proceeds from sale of property and equipment |
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8 |
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Proceeds received upon maturity of investments |
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16,260 |
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Net cash provided by (used in) investing activities |
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9,460 |
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(5,400 |
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Cash flows from financing activities: |
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Repayment of long-term debt borrowings |
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(2 |
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Proceeds from issuance of common stock under employee plans |
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248 |
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8 |
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Excess tax benefit from stock-based compensation |
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51 |
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Net cash provided by financing activities |
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297 |
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8 |
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Net increase in cash and cash equivalents |
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27,771 |
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5,332 |
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Cash and cash equivalents, beginning of period |
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52,045 |
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41,431 |
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Cash and cash equivalents, end of period |
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$ |
79,816 |
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$ |
46,763 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
UNIVERSAL TECHNICAL INSTITUTE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED), continued
(In thousands)
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For the Three Months Ended |
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December 31, |
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2005 |
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2006 |
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Supplemental disclosure of cash flow information: |
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Taxes paid |
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$ |
1,988 |
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$ |
13 |
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Interest paid |
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$ |
5 |
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$ |
10 |
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Training equipment obtained in exchange for services |
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$ |
630 |
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$ |
194 |
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Accrued capital expenditures |
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$ |
1,749 |
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$ |
1,208 |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
UNIVERSAL TECHNICAL INSTITUTE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except per share amounts)
1. Nature of the Business
We are a 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 advanced training
(MSAT) 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.
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 ended December 31, 2006
are not necessarily indicative of the results that may be expected for the year ending September
30, 2007. The accompanying condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto included in our 2006
Annual Report on Form 10-K filed with the Securities and Exchange Commission on December 13, 2006.
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.
Certain reclassifications have been made to the prior period condensed consolidated financial
statements to conform to the current period presentation. These reclassifications have no impact
on previously reported net income.
3. Recent Accounting Pronouncements
In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No.
48 (FIN 48), Accounting for Uncertainty in Income Taxes. FIN 48 clarifies the manner in which
uncertainties in income taxes that are recognized in accordance with SFAS No. 109, Accounting for
Income Taxes should be accounted for by providing recognition and measurement guidance and
disclosure provisions. FIN 48 is effective for fiscal
years beginning after December 15, 2006. We expect to adopt FIN 48 effective October 1, 2007
and are currently assessing the impact on our consolidated financial statements.
6
UNIVERSAL TECHNICAL INSTITUTE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except per share amounts)
In September 2006, the U.S. Securities and Exchange Commission
(SEC) issued Staff Accounting Bulletin No. 108 (SAB 108), Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements. SAB 108 provides guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of a materiality
assessment. The SEC staff believes registrants must quantify errors using both a balance sheet and income statement approach and evaluate whether either approach results in quantifying
a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. SAB 108 is effective for the fiscal years ending after November 15, 2006 with early
application encouraged. We have adopted the provisions of SAB 108 effective October 1, 2006 with a net charge to retained earnings of $1.3 million for the matter described below. Prior
to adopting SAB 108, we used the balance sheet approach for quantifying misstatements.
During the three months ended December 31, 2006, we evaluated the calculation of the accrual
for our field sales representative bonus plan and subsequently determined there was an error in the
calculation. More specifically, we determined that not all tuition revenue for students with
multiple enrollment sequences was being included in the related calculations resulting in an
understatement of compensation expense during the period from June 2002 through September 30, 2006.
We determined, as of September 30, 2006, that the cumulative effect of this error totaled $2.1
million on a pretax basis and $1.3 million after tax. We have also determined that this amount
accumulated over time and that the financial statements of all prior annual and interim periods
were not materially misstated as a result of this error. Not all of our field sales representatives
were impacted by this error; however, we plan to make retroactive payments to the impacted sales
representatives as soon as possible. The following is a summary of the adjustments made to
our consolidated balance sheet as of October 1, 2006 to reflect our adoption of SAB 108:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SAB 108 |
|
|
|
|
September 30, 2006 |
|
Adoption |
|
October 1, 2006 |
|
|
as Reported |
|
Adjustment |
|
as Adjusted |
|
|
(In thousands) |
Deferred tax assets |
|
$ |
4,719 |
|
|
$ |
830 |
|
|
$ |
5,549 |
|
Total current assets |
|
$ |
70,269 |
|
|
$ |
830 |
|
|
$ |
71,099 |
|
Total assets |
|
$ |
212,161 |
|
|
$ |
830 |
|
|
$ |
212,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
42,033 |
|
|
$ |
2,118 |
|
|
$ |
44,151 |
|
Total current liabilities |
|
$ |
96,278 |
|
|
$ |
2,118 |
|
|
$ |
98,396 |
|
Total liabilities |
|
$ |
109,259 |
|
|
$ |
2,118 |
|
|
$ |
111,377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings |
|
$ |
8,124 |
|
|
$ |
(1,288 |
) |
|
$ |
6,836 |
|
Total shareholders equity |
|
$ |
102,902 |
|
|
$ |
(1,288 |
) |
|
$ |
101,614 |
|
The cumulative effect of this error on our consolidated retained earnings totaled $0.5 million, $0.9 million and $1.3 million as of September 30, 2004, 2005 and 2006, respectively.
7
UNIVERSAL TECHNICAL INSTITUTE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except per share amounts)
4. 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 ended December 31, 2005 and 2006,
592,421 and 1,047,386 shares, respectively, which could be issued under outstanding options, were
not included in the determination of our diluted shares outstanding as they were anti-dilutive.
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 |
|
|
|
December 31, |
|
|
|
2005 |
|
|
2006 |
|
Basic common shares outstanding |
|
|
27,984 |
|
|
|
26,744 |
|
Dilutive effect of: |
|
|
|
|
|
|
|
|
Options and shares related to employee stock plans |
|
|
484 |
|
|
|
348 |
|
|
|
|
|
|
|
|
Diluted common shares outstanding |
|
|
28,468 |
|
|
|
27,092 |
|
|
|
|
|
|
|
|
8
UNIVERSAL TECHNICAL INSTITUTE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except per share amounts)
5. Property and Equipment
Property and equipment, net consist of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2006 |
|
|
2006 |
|
Land |
|
$ |
3,832 |
|
|
$ |
3,832 |
|
Building and building improvements |
|
|
42,349 |
|
|
|
43,566 |
|
Leasehold improvements |
|
|
24,405 |
|
|
|
27,253 |
|
Training equipment |
|
|
46,539 |
|
|
|
48,660 |
|
Office and computer equipment |
|
|
25,879 |
|
|
|
25,587 |
|
Curriculum development |
|
|
508 |
|
|
|
508 |
|
Internally developed software |
|
|
4,720 |
|
|
|
4,775 |
|
Vehicles |
|
|
739 |
|
|
|
788 |
|
Construction in progress |
|
|
12,187 |
|
|
|
11,079 |
|
|
|
|
|
|
|
|
|
|
|
161,158 |
|
|
|
166,048 |
|
Less accumulated depreciation and amortization |
|
|
(43,860 |
) |
|
|
(46,225 |
) |
|
|
|
|
|
|
|
|
|
$ |
117,298 |
|
|
$ |
119,823 |
|
|
|
|
|
|
|
|
At September 30, 2006, construction in progress includes $6.8 million related to construction
of our new Sacramento, California campus building and $2.7 million related to construction at our
Orlando, Florida campus.
At December 31, 2006, construction in progress includes $8.7 million related to construction
of our new Sacramento, California campus building. We anticipate completing the construction
during the third quarter of 2007.
6. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consist of the following:
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
|
December 31, |
|
|
|
2006 |
|
|
2006 |
|
Accounts payable |
|
$ |
6,257 |
|
|
$ |
5,377 |
|
Accrued compensation and benefits |
|
|
22,582 |
|
|
|
19,439 |
|
Other accrued expenses |
|
|
13,194 |
|
|
|
8,981 |
|
|
|
|
|
|
|
|
|
|
$ |
42,033 |
|
|
$ |
33,797 |
|
|
|
|
|
|
|
|
7. 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.
9
UNIVERSAL TECHNICAL INSTITUTE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(In thousands, except per share amounts)
8. Segment Reporting
We follow SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information.
SFAS No. 131 establishes standards for the way that public business enterprises report certain
information about operating segments in their financial reports. Operating segments are defined as
components of an enterprise about which separate financial information is available that is
evaluated on a regular basis by the chief operating decision maker, or decision-making group, in
assessing performance of the segment and in deciding how to allocate resources to an individual
segment. SFAS No. 131 also established standards for related disclosures about products and
services, geographic areas and major customers.
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 not deemed reportable under SFAS No. 131 and are reflected in the Other category.
Corporate expenses are allocated to Post-Secondary Education and the Other category.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
|
December 31, 2005 |
|
December 31, 2006 |
|
|
Post- Secondary |
|
|
|
|
|
|
|
|
|
Post- Secondary |
|
|
|
|
|
|
Education |
|
Other |
|
Total |
|
Education |
|
Other |
|
Total |
Net revenues |
|
$ |
81,646 |
|
|
$ |
3,866 |
|
|
$ |
85,512 |
|
|
$ |
85,527 |
|
|
$ |
4,007 |
|
|
$ |
89,534 |
|
Operating income (loss) |
|
$ |
16,068 |
|
|
$ |
183 |
|
|
$ |
16,251 |
|
|
$ |
10,885 |
|
|
$ |
(360 |
) |
|
$ |
10,525 |
|
Depreciation and amortization |
|
$ |
3,136 |
|
|
$ |
103 |
|
|
$ |
3,239 |
|
|
$ |
4,026 |
|
|
$ |
98 |
|
|
$ |
4,124 |
|
Goodwill |
|
$ |
20,579 |
|
|
$ |
|
|
|
$ |
20,579 |
|
|
$ |
20,579 |
|
|
$ |
|
|
|
$ |
20,579 |
|
Assets |
|
$ |
212,625 |
|
|
$ |
3,109 |
|
|
$ |
215,734 |
|
|
$ |
212,412 |
|
|
$ |
3,387 |
|
|
$ |
215,799 |
|
10
Item 2. MANAGEMENTS 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 2006 Annual Report on Form
10-K filed with the Securities and Exchange Commission on December 13, 2006. 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 Cautionary Factors That May Affect
Future Results.
Critical Accounting Policies and Estimates
Our critical accounting policies are disclosed in our 2006 Annual Report on Form 10-K. During
the three months ended December 31, 2006, there have been no significant changes in our critical
accounting policies.
Recent Accounting Pronouncements
For information regarding recent accounting pronouncements, see Note 3 to our unaudited
condensed consolidated financial statements within Part I, Item 1 of this report.
Overview
Our net revenues for the first quarter were $89.5 million, an increase of 4.7% from the prior
year and our net income for the first quarter was $6.9 million, a decrease of 32.7% from the prior
year. Our decrease in net income is due to lower capacity utilization in conjunction with higher
compensation and related costs, sales and marketing costs, depreciation and occupancy costs,
partially offset by lower bad debt expense.
We increased available seating capacity by approximately 14% since September 30, 2005. We
opened the first building of our permanent location in Sacramento, California in June 2006 with
seating capacity of 1,800 students, which includes 400 seats in our temporary facility, and
expanded our capacity at our Orlando, Florida location by 790 seats.
Recruitment efforts and student starts lag the prior year due to a variety of factors.
Average undergraduate full-time student enrollment decreased 0.9% to 17,265 for the three months
ended December 31, 2006, as compared to 17,427 for the three months ended December 31, 2005. A
strong labor market across the country coupled with affordability concerns associated with climbing
interest rates and increased gas and housing prices have made it more challenging and expensive to
recruit and start students. Poor service levels with our previous providers created the need to
transition to a new advertising agency and call center which was completed during the second
quarter of 2006. These factors contributed to a disruption in lead flow. Since the third quarter
of 2006, our lead flow has improved and we believe the improvement is associated with the
completion of the transition of our advertising agency and call center vendor relationships as well
as the development of new creative advertisements and promotional materials and additional spending
in advertising. However, we have not fully realized the conversion of our leads into student
applicants. As a result, we are focused on evaluating our lead and conversion trends to re-deploy
our spending to areas that have proven successful and eliminate spending in areas that have not
been productive.
11
Historically, we have been able to overcome such external forces by modifying educational
programs, utilizing different pricing strategies and investing in sales and marketing. In response
to both the external environment and internal operational issues, we have implemented a plan that
focuses on stabilizing and improving key operating efforts. We are uncertain when we will fully
realize the benefits of these efforts.
As described in Note 3 to the interim condensed consolidated financial statements, we adopted
Staff Accounting Bulletin No. 108 (SAB 108), Considering the Effects of Prior Year Misstatements
when Quantifying Misstatements in Current Year financial Statements effective October 1, 2006. During the three months ended December 31, 2006, we evaluated the
calculation of the accrual for our field sales representative bonus plan and subsequently
determined there was an error in the calculation. More specifically, we determined that not all
tuition revenue for students with multiple enrollment sequences was being included in the related
calculations resulting in an understatement of compensation expense during the period from June
2002 through September 30, 2006. We determined, as of September 30, 2006, that the cumulative
effect of this error totaled $2.1 million on a pretax basis and $1.3 million after tax. We have
also determined that this amount accumulated over time and that the financial statements of all
prior annual and interim periods were not materially misstated as a result of this error. Not all
of our field sales representatives were impacted by this error; however, we plan to make
retroactive payments to the impacted sales representatives as soon as possible. The following is a
summary of the adjustments made to our consolidated balance sheet as of October 1, 2006 to
reflect our adoption of SAB 108:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SAB 108 |
|
|
|
|
September 30, 2006 |
|
Adoption |
|
October 1, 2006 |
|
|
as Reported |
|
Adjustment |
|
as Adjusted |
|
|
(In thousands) |
Deferred tax assets |
|
$ |
4,719 |
|
|
$ |
830 |
|
|
$ |
5,549 |
|
Total current assets |
|
$ |
70,269 |
|
|
$ |
830 |
|
|
$ |
71,099 |
|
Total assets |
|
$ |
212,161 |
|
|
$ |
830 |
|
|
$ |
212,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
42,033 |
|
|
$ |
2,118 |
|
|
$ |
44,151 |
|
Total current liabilities |
|
$ |
96,278 |
|
|
$ |
2,118 |
|
|
$ |
98,396 |
|
Total liabilities |
|
$ |
109,259 |
|
|
$ |
2,118 |
|
|
$ |
111,377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings |
|
$ |
8,124 |
|
|
$ |
(1,288 |
) |
|
$ |
6,836 |
|
Total shareholders equity |
|
$ |
102,902 |
|
|
$ |
(1,288 |
) |
|
$ |
101,614 |
|
The cumulative effect of this error on our consolidated retained earnings totaled $0.5 million, $0.9 million and $1.3 million as of September 30, 2004, 2005 and 2006, respectively.
12
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 |
|
|
December 31, |
|
|
2005 |
|
2006 |
Net Revenues |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Educational services and facilities |
|
|
46.9 |
% |
|
|
49.3 |
% |
Selling, general and administrative |
|
|
34.1 |
% |
|
|
38.9 |
% |
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
81.0 |
% |
|
|
88.2 |
% |
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
19.0 |
% |
|
|
11.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
-0.9 |
% |
|
|
-0.7 |
% |
|
|
|
|
|
|
|
|
|
Total other income |
|
|
-0.9 |
% |
|
|
-0.7 |
% |
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
|
19.9 |
% |
|
|
12.5 |
% |
Income tax expense |
|
|
7.9 |
% |
|
|
4.8 |
% |
|
|
|
|
|
|
|
|
|
Net income |
|
|
12.0 |
% |
|
|
7.7 |
% |
|
|
|
|
|
|
|
|
|
The following table sets forth our average capacity utilization during each of the periods
indicated and the number of seats available at the end of each of the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
December 31, |
|
|
2005 |
|
2006 |
Average capacity utilization |
|
|
76.0 |
% |
|
|
68.8 |
% |
Seating available |
|
|
22,925 |
|
|
|
25,110 |
|
13
The following table sets forth data for our new campuses in each of the periods indicated. We
begin to incur a majority of new campus costs in the nine month period prior to the new campus
opening. Our new campuses typically become profitable within the first 12 months of operations and
are no longer considered to be a new campus after one full fiscal year of operation.
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
December 31, |
|
|
2005(1) |
|
2006(2) |
|
|
(In thousands) |
Net revenues |
|
|
3,034 |
|
|
|
3,261 |
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Educational services and facilities |
|
|
2,944 |
|
|
|
2,635 |
|
Selling general and administrative |
|
|
2,355 |
|
|
|
2,092 |
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
5,299 |
|
|
|
4,727 |
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
(2,265 |
) |
|
|
(1,466 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New campus costs as a percentage of total net revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues |
|
|
3.5 |
% |
|
|
3.6 |
% |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
Educational services and facilities |
|
|
3.4 |
% |
|
|
2.9 |
% |
Selling general and administrative |
|
|
2.7 |
% |
|
|
2.3 |
% |
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
6.1 |
% |
|
|
5.2 |
% |
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
-2.6 |
% |
|
|
-1.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average capacity utilization |
|
|
24.8 |
% |
|
|
34.6 |
% |
|
|
|
|
|
|
|
|
|
Seating available |
|
|
2,320 |
|
|
|
1,800 |
|
|
|
|
(1) |
|
Includes net revenue and operating expenses for our Norwood, Massachusetts campus
which opened in June 2005 and our Sacramento, California campus which opened in October 2005. |
|
(2) |
|
Includes net revenue and operating expenses for our Sacramento, California campus. |
14
Three Months Ended December 31, 2006 Compared to Three Months Ended December 31, 2005
Net revenues. Our net revenues for the three months ended December 31, 2006 were $89.5
million, representing an increase of $4.0 million, or 4.7%, as compared to net revenues of $85.5
million for the three months ended December 31, 2005. Net revenues, excluding revenues associated
with new campuses, for the three months ended December 31, 2006 were $86.3 million, representing an
increase of $3.8 million, or 4.6%, as compared to $82.5 million for the three months ended December
31, 2005.
The increase in net revenues, excluding revenues associated with new campuses, of $3.8 million
is attributable, in part, to the Norwood, Massachusetts campus, which had revenues of $5.3 million
and was no longer considered to be a new campus beginning in the three months ended December 31,
2006. The resulting $1.5 million decrease in net revenues was primarily due to a 7.1% decrease in
the average undergraduate full-time student enrollment, excluding average undergraduate full-time
student enrollment associated with new campuses, during the three months ended December 31, 2006.
The decrease was partially offset by tuition increases of between 3% and 5%, depending on the
program, an increase in the number of students taking two courses at a time and our change in
policy reducing the number of free course retakes from two to one. The increase in the number of
students taking two courses and the change in our policy resulted in additional revenue of $1.1
million and $0.6 million, respectively, during the three months ended December 31, 2006.
Educational services and facilities expenses. Our educational services and facilities
expenses for the three months ended December 31, 2006 were $44.2 million, an increase of $4.1
million, as compared to educational services and facilities expenses of $40.1 million for the three
months ended December 31, 2005. Educational services and facilities expenses, excluding costs
associated with new campuses, for the three months ended December 31, 2006 were $41.6 million,
representing an increase of $4.4 million, or 11.8%, as compared to $37.2 million for the three
months ended December 31, 2005.
The increase in costs, excluding expenses related to new campuses, of $4.4 million is
primarily associated with increased compensation and related costs of $1.8 million, depreciation
expense of $0.9 million, occupancy costs of $0.8 million and training supplies of $0.4 million.
The increase in costs is partially attributable to educational services and facilities expenses of
$2.9 million related to our Norwood, Massachusetts campus, which was no longer considered to be a
new campus beginning in the three months ended December 31, 2006. The $2.9 million in costs
included $1.7 million in compensation and related costs and $0.4 million in depreciation expense.
The remaining increases in depreciation expense, occupancy costs and training supplies are
primarily associated with program expansions at other campuses.
Educational services and facilities expenses as a percentage of net revenues increased to
49.3% for the three months ended December 31, 2006, as compared to 46.9% for the three months ended
December 31, 2005. Educational services and facilities expenses as a percentage of net revenues,
excluding activity for new campuses, was 48.2% for the three months ended December 31, 2006, as
compared to 45.1% for the three months ended December 31, 2005. In addition to increased costs
associated with new campuses, educational services and facilities expenses as a percentage of net
revenues, excluding new campus activity, was negatively impacted by 1.0% associated with increased
compensation, 0.9% related to depreciation expense, 0.6% related to increased occupancy costs and
0.4% related to increased training supplies. The increase in educational services and facilities
expense as a percentage of revenue is primarily attributable to decreased capacity utilization at
mature campuses.
Selling, general and administrative expenses. Our selling, general and administrative
expenses for the three months ended December 31, 2006 were $34.8 million, an increase of $5.7
million, or 19.4%, as compared to selling, general and administrative expenses of $29.2 million for
the three months ended December 31, 2005. Selling, general and administrative expenses, excluding
costs associated with new campuses, for the three months
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ended December 31, 2006 were $32.7 million, representing an increase of $5.9 million, or 22.1%, as
compared to $26.8 million for the three months ended December 31, 2005.
The increase in selling, general and administrative costs, excluding costs associated with new
campuses, of $5.9 million is primarily associated with increased advertising costs of $2.8 million,
compensation and related costs of $2.0 million, of which $0.5 million was related to increased
stock-based compensation, professional services of $0.4 million primarily attributable to a lower
legal recovery during the three months ended December 31, 2006, employee training and recruiting
costs of $0.3 million and $0.3 million related to contract services partially offset by a decrease
in bad debt expense of $0.4 million. The increase in costs is partially attributable to selling,
general and administrative expenses of $1.8 million, including $1.1 million in compensation and
related costs and $0.4 million in advertising costs, related to our Norwood, Massachusetts campus,
which was no longer considered to be a new campus beginning in the three months ended December 31,
2006. The remaining increase in compensation and related costs of $0.9 million is primarily due to
increased personnel associated with sales and marketing activities.
Selling, general and administrative expenses as a percentage of net revenues increased to
38.9% for the three months ended December 31, 2006, as compared to 34.1% for the three months ended
December 31, 2005. Selling, general and administrative costs as a percentage of net revenues,
excluding activity for new campuses, was 37.9% for the three months ended December 31, 2006, as
compared to 32.5% for the three months ended December 31, 2005. The increase in costs as a
percentage of revenue, excluding new campus expenses, was impacted by an increase of 3.1%
attributable to additional spending on advertising, 1.5% associated with increased compensation of
which 0.5% was attributable to increased stock based compensation expense, 0.4% associated with
increased professional services, 0.4% attributable to employee training and recruiting costs and
0.4% associated with contract services partially offset by 0.6% related to improved bad debt
expense.
Interest income. Our interest income for the three months ended December 31, 2006 was $0.7
million, representing a decrease of $0.1 million compared to interest income of $0.8 million for
the three months ended December 31, 2005. The decrease in interest income is primarily
attributable to the decrease in cash available for investment due to our use of cash during the
year ended September 30, 2006 to invest in our campus properties and to repurchase of shares of our
common stock.
Income taxes. Our provision for income taxes for the three months ended December 31, 2006 was
$4.3 million, or 38.2% of pretax income, as compared to $6.7 million, or 39.6% of pretax income for
the three months ended December 31, 2005. The decrease in the tax rate as a percentage of pretax
income is primarily attributable to an overall lower state statutory rate and a larger state tax
credit.
Liquidity and Capital Resources
We finance our operating activities and our internal growth through cash generated from
operations. Our net cash from operations was $10.7 million for the three months ended December 31,
2006, as compared to $18.0 million for the three months ended December 31, 2005.
A majority of our 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 students academic year and the second disbursement is typically received
at the beginning of the sixteenth week from the start of the students academic year. As
previously disclosed, 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. These factors, together with the
timing of when our students begin their programs, affect our operating cash flow.
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Operating Activities
For the three months ended December 31, 2006, our cash flows provided by operating activities
were $10.7 million resulting from net income of $6.9 million, adjustments of $5.2 million for
non-cash and other items, partially offset by $1.4 million related to the change in our operating
assets and liabilities.
For the three months ended December 31, 2006, the primary adjustments to our net income for
non-cash and other items were depreciation and amortization of $4.1 million, substantially all of
which was depreciation, stock-based compensation of $1.6 million and bad debt expense of $0.7
million, partially offset by a reduction in deferred income taxes of $1.2 million.
For the three months ended December 31, 2005, our cash flows provided by operating activities
were $18.0 million resulting from net income of $10.3 million, adjustments of $4.1 million for
non-cash and other items and $3.6 million related to the change in our operating assets and
liabilities.
For the three months ended December 31, 2005, the primary adjustments to our net income for
non-cash and other items were depreciation and amortization of $3.2 million, substantially all of
which was depreciation, bad debt expense of $1.2 million and stock-based compensation of $1.0
million, partially offset by a reduction in deferred income taxes of $1.4 million.
Changes in operating assets and liabilities
For the three months ended December 31, 2006, changes in our operating assets and liabilities
resulted in cash outflows of $1.4 million. A combination of operating efficiencies, a lower number
of student starts during the three months ended December 31, 2006, as compared to the three months
ended December 31, 2005, and our ability to request the first disbursement of Title IV funding
without a 30 day delay at five campuses resulted in a decrease in receivables of $1.3 million and
an increase in deferred revenue of $0.5 million resulting in positive cash flow of $1.8 million.
The timing of our accounts payable cycle resulted in a $1.5 million decrease in prepaid and other
current assets primarily attributable to $1.2 million in rent payments and a decrease in accounts
payable and accrued expenses primarily attributable to $3.9 million in capital expenditures. The
timing of our payroll cycle resulted in a decrease in accounts payable and accrued expenses
primarily attributable to $2.9 million in accrued payroll expenses and $4.2 million in bonus
payments related to the year ended September 30, 2006. The change in income taxes from a
receivable to a payable position was primarily related to accrual of our estimated taxes of $5.4
million and receipt of a federal tax refund of $1.6 million. These changes in our operating assets
and liabilities resulted in a decrease in our working capital deficit to $22.1 million at December
31, 2006, as compared to $26.0 million at September 30, 2006.
For the three months ended December 31, 2005, the $3.6 million related to the change in our
operating assets and liabilities was primarily due to changes in receivables and deferred revenue,
income taxes and accounts payable and accrued expenses. The timing of tuition funding resulted in
a decrease in accounts receivable of $1.5 million and an increase in deferred revenue of $2.2
million resulting in a combined positive cash flow of $3.7 million. The increase in income tax
payable of $5.8 million was primarily attributable to overall higher state tax rates and a
reduction of state tax incentives. The increase in cash used in accounts payable and accrued
expenses was primarily attributable to a reduction in accrued salary and benefits as a result of
the payment of performance bonuses attributable to the year ended September 30, 2005.
Our days sales outstanding (DSO) in accounts receivable was approximately 15 days at December
31, 2006 compared to approximately 21 days at December 31, 2005. The improvement was primarily
attributable to operating efficiencies, the lower number of student starts during the three months
ended December 31, 2006, as
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compared to the three months ended December 31, 2005 and the ability to request the first
disbursement of Title IV funding without a 30 day delay at five of our campuses.
Investing Activities
For the three months ended December 31, 2006, cash flows used in investing activities were
$5.4 million and were primarily related to the capital expenditures associated with new campus
construction and existing campus expansions.
For the three months ended December 31, 2005, cash flows provided by investing activities were
$9.5 million and were primarily related to proceeds of $16.2 million from the release of our
restricted investments that provided cash collateral for our letter of credit issued in favor of
ED, partially offset by $6.8 million in capital expenditures primarily associated with new campus
construction and existing campus expansions.
Financing Activities
For the three months ended December 31, 2005 and 2006, cash flows provided by financing
activities were $0.3 million and $0.0 million, respectively, and were attributable to proceeds
received from issuance of common stock under employee stock option plans.
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 are potentially seeking to raise capital through a sale-leaseback transaction involving
buildings we own at our Norwood, Massachusetts and Sacramento, California campuses. We are
evaluating proposals from several parties, and we anticipate completing a transaction by June 30,
2007.
We believe that the most strategic uses of our cash resources include filling existing
capacity, completing the expansion of our existing campuses, expanding our program offerings, and
the repurchase of 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.
Debt Service
At December 31, 2006, we had no borrowings under our credit facility and we were in compliance
with all covenants.
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
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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.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Historically, our principal exposure to market risk relates to interest rate changes. As of
December 31, 2006, we do not have any term debt. Consequently, we believe that we have minimal
financial exposure to market risk.
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. Among the factors that could
cause actual results to differ materially are the following:
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our ability to maintain or renew any required regulatory approvals, standards,
accreditation or state authorization; |
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the effectiveness of our advertising and promotional efforts; |
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changes in laws and regulations affecting post-secondary education, including Title IV funding; |
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governmental inquiries, compliance reviews or investigations and the potential for
increased litigation; |
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regulatory investigations of, or actions commenced against, other companies in our industry; |
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our ability to fill our existing capacity; |
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competitive developments affecting our industry, including pricing pressures in newer markets; |
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our ability to maintain and expand existing industry relationships; |
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our ability to recruit and retain key personnel; |
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changes in demand for our programs; |
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increased investment in management and capital resources; |
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increases in interest rates or state budget constraints adversely affecting a
students ability to secure additional loans; |
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lower rates of unemployment; |
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the timing and number of new campuses that we open or acquire; |
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possible failure or inability to obtain regulatory consents and certifications for
new campuses and campus expansions; |
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growth in costs and expenses; |
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construction delays with respect to new or expanding campuses; |
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economic slowdown that affects any significant portion of the industry for which we
provide training, including economic slowdown in areas of limited geographic scope if
markets in which we have significant operations are impacted by such slowdown; |
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our ability to maintain compliance with Section 404 of Sarbanes-Oxley; |
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any changes in business, political and economic conditions due to the possibility of
wider armed conflicts; and |
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increased competition from both for-profit and non-profit educators. |
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. The Form 10-K that we filed with the SEC on December 13, 2006 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
SECs website 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 SECs 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 Companys 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
quarter ended December 31, 2006 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
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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 2006 Annual
Report on Form 10-K filed with the Securities and Exchange Commission on December 13, 2006.
Item 6. EXHIBITS
(a) Exhibits (filed herewith):
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Description |
31.1
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Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002. |
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31.2
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Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002. |
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32.1
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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. |
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32.2
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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. |
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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.
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UNIVERSAL TECHNICAL INSTITUTE, INC.
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Dated: February 8, 2007 |
By: |
/s/ Jennifer L. Haslip
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Jennifer L. Haslip |
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Senior Vice President, Chief Financial
Officer,
Treasurer and Assistant Secretary
(Principal Financial Officer and Duly
Authorized Officer) |
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