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, 2014 are not necessarily indicative of the results that may be expected for the year ending September 30, 2015. The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2014 Annual Report on Form 10-K filed with the SEC on December 3, 2014.

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

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

Historically, we have calculated income tax expense for interim periods based on estimated annual effective tax rates. These rates have been derived, in part, from expected income before taxes for the year. However, authoritative accounting guidance indicates that companies should not apply the estimated annual tax rate to interim financial results if the estimated annual tax rate is not reliably predictable. We are not able to reasonably estimate the annual effective tax rate for the year ending September 30, 2015 because small fluctuations in our earnings before taxes could result in a material change in the estimated annual effective tax rate based on our current projections. Therefore, for the three months ended December 31, 2014, we calculated income taxes using actual income before income taxes.

Revision of Previously Issued Financial Statements

During the three months ended September 30, 2014, we identified approximately $0.5 million (pre-tax) of retake revenue and $0.2 million (pre-tax) of bad debt expense reduction related to fees for student retakes for the periods from October 1, 2008 through June 30, 2014 which were not recorded. Additionally, we identified approximately $0.2 million (pre-tax) of contract services expense related to the outsourcing of certain financial aid processes that should have been recognized during the quarterly periods from October 1, 2013 through June 30, 2014.

We evaluated the impact of the items on prior periods under the materiality guidance and determined that the amounts were not material. We also evaluated the impact of correcting these items through a cumulative adjustment to our fiscal 2014 financial statements and concluded that it was appropriate to revise our previously issued financial statements to reflect the cumulative impact of this correction.

Additionally, we recorded an immaterial balance sheet correction between cash and restricted cash related to funds held for students from Title IV financial program funds that result in credit balances on student accounts as of September 30, 2013 and 2012.

The following tables present the impact of this revision on our condensed consolidated statement of comprehensive income for the three months ended December 31, 2013 and our condensed consolidated statement of cash flows for the three months ended December 31, 2013:



	December 31, 2013
	As Reported		Adjustment			As Revised
Condensed Consolidated Statement of Comprehensive Income Data:
Revenues	$	97,029	$	11		$	97,040
Educational services and facilities	$	51,111	$	(37	)	$	51,074
Selling, general and administrative	$	42,915	$	(7	)	$	42,908
Total operating expenses	$	94,026	$	(44	)	$	93,982
Income from operations	$	3,003	$	55		$	3,058
Other income	$	275	$	(1	)	$	274
Total other income	$	224	$	(1	)	$	223
Income before income taxes	$	3,227	$	54		$	3,281
Income tax expense	$	1,567	$	7		$	1,574
Net income	$	1,660	$	47		$	1,707



	December 31, 2013
	As Reported			Adjustment			As Revised
Consolidated Statement of Cash Flows Data:
Net income	$	1,660		$	47		$	1,707
Bad debt expense	$	1,341		$	(8	)	$	1,333
Deferred income taxes	$	1,549		$	1		$	1,550
Restricted cash: Title IV credit balances	$	—		$	211		$	211
Receivables	$	(13	)	$	178		$	165
Prepaid expenses and other current assets	$	(1,344	)	$	(38	)	$	(1,382	)
Other assets	$	(316	)	$	(1	)	$	(317	)
Deferred revenue	$	201		$	23		$	224
Income tax payable/receivable	$	(79	)	$	(204	)	$	(283	)
Accrued tool sets and other current liabilities	$	163		$	2		$	165
Net cash provided by operating activities	$	9,410		$	211		$	9,621
Net increase in cash and cash equivalents	$	1,277		$	211		$	1,488
Cash and cash equivalents, beginning of period	$	35,657		$	(1,061	)	$	34,596
Cash and cash equivalents, end of period	$	36,934		$	(850	)	$	36,084