Copart (CPRT) 10-K risk factor changes: FY2010 vs FY2009

In assessing the risks described below, you should also refer to the other information contained in this Form 10-K, including our consolidated financial statements and the related notes and schedules, and other filings with the [removed: SEC before deciding to purchase any shares of our common stock._][added: SEC._]

[removed: Historically,] [added: Although no single customer accounted for more than 10% of our revenue during the fiscal year ended July 31, 2010, historically,] a limited number of vehicle sellers have [added: collectively] accounted for a substantial portion of our revenues.

There can be no assurance that our existing agreements will not be [removed: cancelled.]

A reduction in vehicles from a significant vehicle seller or any material changes in the terms of an arrangement with a [removed: substantial] [added: significant] vehicle seller could have a material adverse effect on our results of operations and financial condition.

We may acquire additional companies in the UK or other countries [removed: in Europe] or seek to establish new yards or facilities to complement the acquired companies' operations.

[removed: We have limited experience operating outside North America, and any] [added: Any] failure to [added: successfully] integrate [removed: these recently] [added: businesses] acquired [removed: companies or future UK or other European acquisitions] [added: outside of North America] into our operations [removed: successfully] could have an adverse effect on our financial position, results of operations or cash flows.

In fiscal 2008, we completed the acquisitions of Century Salvage Sales Limited, [removed: or Century,] [added: (Century),] Simpson Bros.

(York) Holdings, Limited and AG Watson Auto Salvage & Motor Spares (Scotland) [removed: Limited,] [added: Limited (AG Watson),] all located within the UK.

[added: In addition, our] operating expenses were adversely affected in the second quarter of fiscal 2008 by incremental integration expenses.

Among other things, we have deployed [removed: our] VB2 [removed: online vehicle auction] technologies at all of our operations in the UK and we cannot predict whether this deployment will be successful or will result in increases in the revenues or operating efficiencies of any acquired companies relative to their historic operating performance.

[removed: We] [added: As we continue to expand our business internationally, we] will need to develop policies and procedures to manage our business on a global scale.

Operationally, the businesses of Universal, [removed: Century and] [added: Century,] AG Watson [added: and D Hales] have depended on key seller relationships, and our failure to maintain those relationships would have an adverse effect on our operating objectives for the UK and could have an adverse effect on our future operating results.

exposure to foreign currency exchange rate risk, which [removed: we] [added: may] have [removed: not been previously subject to in any material amounts and which had] an adverse impact on our revenues and revenue growth [removed: rates during the twelve months ended July 31, 2009.][added: rates.]

If we determine that our goodwill has become impaired, we could incur significant charges that would have a material adverse [removed: affect] [added: effect] on our [added: consolidated] results of operations.

As of July 31, [removed: 2009,] [added: 2010,] the amount of goodwill on our balance sheet subject to future impairment testing was approximately [removed: $166] [added: $175.9] million.

Pursuant to [removed: SFAS No. 142, _Goodwill] [added: FASB ASC 350, _Intangibles—Goodwill] and [removed: Other Intangible Assets_,] [added: Other_,] we are required to annually test goodwill and intangible assets with indefinite lives to determine if impairment has occurred.

The testing of goodwill and other intangible assets for impairment requires us to make significant estimates about our future [added: performance and cash flows, as well as other assumptions.]

In the [removed: UK we operate primarily] [added: UK, a significant portion of our business is conducted] on a principal basis, purchasing the salvage vehicle outright from the insurance companies and reselling the vehicle to buyers.

In particular, the UK acquisitions, because of their size and, [removed: also,] because the UK operates primarily on the principal model versus the agency model employed in North America, will have a significant impact on the comparability of revenues, margins and margin percentages in future periods.

Continued operations on a principal basis will have a negative impact on our future consolidated gross margin percentages, and exposes us to inventory risks [removed: including:][added: including losses from theft, damage, and obsolescence.]

During [removed: 2004,] [added: 2004] in North America and during 2008 in the UK we converted all of our sales from a live auction process to an entirely Internet-based auction-style model based on technology developed internally by us.

The conversion represented a significant change in the way we conduct business and [removed: currently] presents numerous risks, including our increased reliance on the availability and reliability of our network systems.

The change in our business model may make it more difficult for management, investment analysts, and investors to model or predict our future operating results until sufficient historic [added: data is available to evaluate the effect of the VB2 implementation over a longer period of time and in different economic environments.]

[added: In] addition, extreme weather conditions, although they increase the available supply of salvage cars, can have an adverse effect on our operating results.

These additional costs, characterized as "abnormal" under [removed: Statement of Financial Accounting Standards 151,] [added: FASB ASC 330, _Inventory,_] were recognized during the year ended July 31, 2006, and included the additional [removed: subhauling, payroll, equipment and facilities expenses directly related to the operating conditions created by the hurricanes.]

[removed: Continued volatility] [added: Volatility] in fuel, commodity, and used car prices could have a material adverse effect on our revenues and revenue growth rates in future periods.

While most vehicle sellers have abandoned or reduced efforts to sell salvage vehicles directly without the use of service [added: providers such as us, there can be no assurance that this trend will continue, which could adversely affect our market share, results of operations and financial condition.]

[removed: buyer] [added: member] participation in the Internet bidding process;

Our reliance on intellectual property rights has increased significantly in recent years as we have implemented our VB2 auction-style sales technologies across our business and ceased conducting live [removed: auctions in our North American operations.][added: auctions.]

As we face increasing competition, the possibility of intellectual property [added: rights claims against us grows.]

Participants in the salvage vehicle sales industry are subject to, and may be required to expend funds to ensure compliance with a variety of governmental, regulatory and administrative rules, [removed: regulations, land use ordinances, licensure requirements and procedures, including those governing vehicle registration, the environment, zoning and land use.]

New accounting pronouncements or new interpretations of existing standards could require us to make adjustments to accounting policies that could adversely affect the [added: consolidated] financial statements.

The Financial Accounting Standards Board, or the FASB, the Public Company Accounting Oversight Board, [added: and] the SEC, [removed: and other accounting organizations or governmental entities] from time to time issue new pronouncements or new interpretations of existing accounting standards that require changes to our accounting policies and procedures.

The operation of our storage facilities poses certain environmental risks, which could adversely [removed: effect] [added: affect] our financial position, results of operations or cash flows.

[removed: Further, an] increase in fuel cost may lead to increased prices charged by our independent subhaulers, which may significantly increase our cost.

In addition to using independent [removed: subhaulers] [added: subhaulers,] in the UK, we utilize a fleet of company trucks to pick up and deliver vehicles from our UK storage facilities.

Our executive officers, directors and their affiliates beneficially own, in the aggregate, approximately [removed: 16%] [added: 15%] of our common stock as of July 31, [removed: 2009.][added: 2010.]

If they were to act together, these shareholders would have significant influence over most matters requiring approval by shareholders, [added: including the election of directors, any amendments to our articles of incorporation and certain significant corporate transactions, including potential merger or acquisition transactions.]

[removed: Johnson,] [added: Jayson Adair,] our Chief Executive [removed: Officer,] [added: Officer;] and [removed: A.][added: Vincent W.]

[removed: Jayson Adair,] [added: Mitz,] our President, or if one or more of them decides to join a competitor or otherwise compete directly or indirectly with us, we may not be able to successfully manage our business or achieve our business objectives.

cancelled.

In fiscal 2010, we completed the acquisition of D Hales Limited (D Hales) which is also located in the UK.

Certain acquisitions in the United Kingdom may be reviewed by the Office of Fair Trade (OFT) and/or Competition Commission (UK Regulators).

If an inquiry is made by the UK Regulators, we may be required to demonstrate our acquisitions will not result, or be expected to result, in a substantial lessening of competition in a UK market.

Although we believe that there will not be a substantial lessening of competition in a UK market, based on our analysis of the relevant UK markets, there can be no assurance that the UK Regulators will agree with us if they decide to make an inquiry.

If the UK Regulators determine that by our acquisitions of certain assets, there is or likely will be a substantial lessening of competition in a UK market, we could be required to divest some portion of our UK assets.

In the event of a divestiture order by the UK Regulators, the assets disposed may be sold for substantially less than their carrying value.

Accordingly, any divestiture could have a material adverse effect on our operating results in the period of the divestiture.

Further, an

Johnson, our Chairman; A.

The impairment of capitalized development costs could adversely affect our consolidated results of operations and financial condition.

We capitalize certain costs associated with the development of new software products, new software for internal use and major software enhancements to existing software.

These costs are amortized over the estimated useful life of the software beginning with its introduction or roll out.

If, at any time, it is determined that capitalized software provides a reduced economic benefit, the unamortized portion of the capitalized development costs will be expensed, in part or in full, as an impairment, which may have a material impact on our consolidated results of operations and financial condition.

In fiscal year 2010, we increased and in fiscal year 2011, we may increase our spending on advertising and marketing relative to 2009.

subhauling, payroll, equipment and facilities expenses directly related to the operating conditions created by the hurricanes.

regulations, land use ordinances, licensure requirements and procedures, including those governing vehicle registration, the environment, zoning and land use.

Adverse credit conditions may also affect the ability of members

Fluctuations in the rate of exchange between the US dollar

Fluctuations in the US unemployment rates could result in declines in revenue from processing insurance cars.

Increases in unemployment may lead to an increase in the number of uninsured motorists.

Uninsured motorists are responsible for disposition of their vehicle if involved in an accident.

Disposition generally is either the repair or disposal of the vehicle.

In the situation where the owner of the wrecked vehicle, and not an insurance company, is responsible for its disposition, we believe it is more likely that vehicle will be repaired or, if disposed, disposed through channels other than us.

_

During fiscal 2009, no single customer accounted for more than 10% of our revenues.

We have limited experience operating our business outside North America, which presents numerous strategic, operational, and financial risks to us.

Although historical practice in the UK market has been to accept credit cards, we have not accepted them in North America and may need to further enhance our security systems to reduce the risk of credit card fraud.

In addition, our

We have limited experience operating our business outside North America and lack familiarity with local laws, regulations and business practices.

performance and cash flows, as well as other assumptions.

loss from theft or damage;

loss from devaluation; and

loss from obsolescence.

data is available to evaluate the effect of the VB2 implementation over a longer period of time and in different economic environments.

In

Recently, the markets in which we operate have been particularly affected by changes in fuel prices, commodity prices, and decreases in the prices of used cars.

In particular, declines in scrap metal and used car prices had an adverse impact on our revenue growth rates during the twelve months ended July 31, 2009.

providers such as us, there can be no assurance that this trend will continue, which could adversely affect our market share, results of operations and financial condition.

the availability of subhaulers at competitive rates;

rights claims against us grows.

including the election of directors, any amendments to our articles of incorporation and certain significant corporate transactions, including potential merger or acquisition transactions.

Should we choose to engage in

We have, in fiscal 2009, and will continue in fiscal 2010 to invest in advertising and sponsorship programs with NASCAR and other events in the motorsports industry.

In the United Kingdom, or UK, [removed: we operate primarily] [added: a significant portion of our business is conducted] on a principal basis, purchasing salvage vehicles outright from insurance companies and reselling the vehicles for our own account.

Under the [added: consignment, or] fixed [removed: fee] [added: fee,] program, we generally [removed: charge an]

[added: charge an] additional fee for title processing and special preparation.

During fiscal 2004 and fiscal 2008, we converted all of our North American and UK sales, respectively, to an Internet-based auction-style model using our VB2 Internet sales [removed: technology.][added: technology which employs a two-step bidding process.]

The first step, called the preliminary bid, allows [removed: buyers] [added: members] to submit bids up to one hour before a real time virtual auction begins.

The second step allows [removed: buyers] [added: members] to bid against each other, and the high bidder from the preliminary bidding process, in a real-time process over the Internet.

We have experienced significant growth in facilities as we have acquired [removed: twenty three] [added: fourteen] facilities and established [removed: thirteen] [added: twelve] new facilities since the beginning of fiscal [removed: 2006.][added: 2008.]

We believe that these acquisitions and openings strengthen our coverage as we have [removed: 147] [added: 152] facilities located in North America and the UK [added: as of July 31, 2010] and are able to provide national coverage for our sellers.

The following table sets forth facilities that we have acquired or opened from August 1, [removed: 2006] [added: 2007] through July 31, [removed: 2009:][added: 2010:]

(York) Holdings Limited, a UK limited liability company (Simpson), which [removed: operates] [added: operated] one location in York, England.

In the same month, we also completed the acquisition of Bob Lowe Salvage Pool, Inc., which [removed: operates] [added: operated] one location in Sikeston, Missouri.

In February 2008, we completed the purchase of the assets and business of AG Watson Auto Salvage & Motors Spares (Scotland) Limited (AG [removed: Watson)] [added: Watson),] which [removed: operates] [added: operated] two salvage locations in Scotland and two salvage locations in northern England.

On June 14, 2007, we acquired all the issued share capital of Universal Salvage plc, [removed: or Universal,] [added: (Universal),] for £2.00 per share (approximately $3.94 based on currency exchange rates on June 14, 2007).

[removed: The aggregate acquisition consideration] paid by us totaled approximately £60.7 million (approximately $120.0 million based on currency exchange rates on June 14, 2007) and was funded from our available cash resources.

The acquisition was our first acquisition outside North [removed: America and included the seven facilities discussed above.][added: America.]

In addition to growth through acquisitions, we seek to increase revenues and profitability by, among other things, (i) acquiring and developing additional vehicle storage facilities in key markets, (ii) pursuing national and regional vehicle seller agreements, (iii) expanding our service offerings to sellers and [removed: buyers,] [added: members,] and (iv) expanding the application of VB2 into new markets.

In addition, we implement our pricing structure and [removed: merchandising] [added: auction] procedures and attempt to [removed: effect] [added: introduce] cost efficiencies at each of our acquired facilities by implementing our operational procedures, integrating our management information systems and redeploying personnel, when necessary.

Service Revenues. Service revenues were approximately $615.4 million during fiscal 2009 compared to $619.7 million for fiscal 2008, a decline of [removed: $4.4, million] [added: $4.4 million,] or [removed: 0.7%,below] [added: 0.7%, below] fiscal 2008.

The average dollar to pound exchange rate was 1.59 dollars to the pound and 2.00 dollars to the pound for fiscal 2009 and fiscal 2008, respectively, and [removed: lead] [added: led] to a reduction in service revenue of $9.5 million.

[removed: Over] [added: The increase in the revenue per car sold was driven by increased selling prices as over] 50% of our service revenue is tied in some manner to the ultimate selling price of the [removed: vehicles.][added: vehicle at the auction.]

[removed: However,] [added: We cannot determine the movement of these influences nor can] we [removed: do not have sufficient information to] determine which vehicles are sold [added: directly to the end user or] for scrap, dismantling, [removed: retailing] [added: retailing,] or export and, accordingly, cannot quantify the [added: specific] impact that commodity [removed: pricing,] [added: pricing and] used car pricing [removed: and foreign currency exchange rates] had on the selling price of vehicles.

The decline in vehicle sales revenue was due to the negative impact on recorded vehicle sales revenue due to the change in the GBP to USD exchange rate, the decline in unit volume, and [removed: the decline in revenue per transaction.]

The decline in the average USD to GBP exchange rate [removed: lead] [added: led] to a reduction in vehicle sales revenue of $29.7 million.

The decline in the average revenue per transaction [removed: lead] [added: led] to a reduction of revenue of $2.3 million.

Unit volume decline was responsible for $4.3 million of the total decline and was due primarily to the migration of certain contracts in the UK from a principal basis to a fee [added: basis.]

The growth in general and administrative costs was due primarily to: i) increased IT payroll and technology costs as we expanded our development and network departments, ii) increased advertising costs as we invested in events and media promotions to generate public awareness, and iii) the additional costs associated with the CEO and President's [removed: non cash] [added: non-cash] compensation package approved by the shareholders in April 2009.

Discontinued Operations. During fiscal [removed: 2009] [added: 2009,] we received a $12 million payment for a note receivable resulting from the sale of certain MAG business assets and real estate.

The following sets forth information on customer revenue by [removed: geographic region based on the location of the selling entity] [added: class] (in thousands, except percentages):

Service Revenues. Service revenues were approximately [removed: $619.7] [added: $642.1] million during fiscal [removed: 2008] [added: 2010] compared to [removed: $535.8] [added: $615.4] million for fiscal [removed: 2007,] [added: 2009,] an increase of [removed: $83.9] [added: $26.8] million, or [removed: 15.7%, over] [added: 4.4%, above] fiscal [removed: 2007.][added: 2009.]

[removed: Growth] [added: The increase] in [added: service] revenue [removed: yield per transaction] was [removed: primarily] due [added: primarily] to an increase in the average [removed: selling price of the vehicles.][added: revenue per car sold.]

We believe the increase in the average selling price was [removed: due] primarily [added: due] to: (i) [removed: the increases] [added: an increase] in commodity pricing, [removed: as we believe that commodity pricing,] particularly the per ton price for crushed car [removed: bodies,] [added: bodies which] has an impact on the ultimate selling price of vehicles sold for scrap and vehicles sold for dismantling; [added: and] (ii) the [added: general] increase in used car pricing, [removed: as we believe used car pricing] [added: which] has an impact on the [removed: ultimate] [added: average] selling price of vehicles [removed: sold to rebuilders and retailers; (iii) the weakening of the dollar, as we believe a weaker dollar decreases the purchase price of US vehicles paid for in our international buyers' local currencies;] [added: that are either repaired] and [removed: (iv)] [added: retailed or purchased by] the [removed: decline in salvaged cars sold as a percentage of total cars sold as salvaged cars generally sell for less than non-salvaged cars.][added: end user.]

[removed: The increase was due almost entirely to the UK acquisitions in which we] [added: Vehicle Sales. We have] assumed certain contracts [added: through our UK acquisitions] that [removed: required] [added: require] us to act as a principal, purchasing vehicles from the insurance companies and reselling them for our own account.

Cost of [removed: Vehicles] [added: Vehicle] Sales. The cost of vehicles sold was approximately [removed: $133.7] [added: $104.7] million during fiscal [removed: 2008] [added: 2010] compared to [removed: $22.4] [added: $106.0] million for fiscal [removed: 2007, an increase] [added: 2009, a decline] of [removed: $111.3] [added: approximately $1.4] million, or [removed: 497.4%, over fiscal 2007.][added: 1.3%.]

Other [removed: Income.] [added: Income (Expense).] Total other income was approximately [removed: $11.7] [added: $0.4] million during fiscal [removed: 2008,] [added: 2010] compared to [removed: $14.3] [added: $2.4] million for fiscal [removed: 2007,] [added: 2009,] a decline of approximately [removed: $2.5] [added: $2.0] million, or [removed: 17.8%, over fiscal 2007.][added: 82.3%.]

Income Taxes. Our effective income tax rates for fiscal [removed: 2008] [added: 2010] and [removed: 2007] [added: 2009] were approximately [removed: 37.1%] [added: 36.7%] and [removed: 37.3%,] [added: 38.7%,] respectively.

Net Income. Due to the foregoing factors, we realized net income of approximately [removed: $156.9] [added: $151.6] million for fiscal [removed: 2008,] [added: 2010,] compared to net income of approximately [removed: $136.3] [added: $141.1] million for fiscal [removed: 2007.][added: 2009.]

Our primary source of cash generated by operations is from the collection on sellers' fees, [removed: buyers'] [added: members'] fees and reimbursable advances from the proceeds of auctioned salvage vehicles.

[removed: Because our primary source of working capital is net income,] [added: Accordingly,] factors affecting net income are the principal factors affecting the generation of working capital.

As of July 31, [removed: 2009,] [added: 2010,] we had working capital of approximately [removed: $212.3] [added: $330.2] million, including cash, and cash equivalents of approximately [removed: $162.7] [added: $268.2] million.

Cash and cash equivalents consisted primarily of [added: US Treasury Bills and] funds invested in money market accounts, which bear interest at a variable rate.

| Bristol, England | | Acquisition | | January 2010 | | United Kingdom |

| Bedford, England | | Acquisition | | January 2010 | | United Kingdom |

| Colchester, England | | Acquisition | | January 2010 | | United Kingdom |

| Gainsborough, England | | Acquisition | | *January 2010 | | United Kingdom |

| Luton, England | | Acquisition | | January 2010 | | United Kingdom |

| Scranton, Pennsylvania | | Greenfield | | February 2010 | | Pennsylvania |

*

Closed in fiscal 2010

In January 2010, the Company completed the acquisition of D Hales Limited (D Hales) which operated five locations in the United Kingdom.

This acquisition was undertaken because of its strategic fit with our business in the United Kingdom.

The aggregate acquisition consideration

_Fiscal 2010 Compared to Fiscal 2009_

| | | 2010 | | | Percentage of Revenue | | | 2009 | | | Percentage of Revenue | | |

| Service revenues | | $ | 642,134 | | | 83 | % | $ | 615,352 | | | 83 | % |

| Vehicle sales | | | 130,745 | | | 17 | % | | 127,730 | | | 17 | % |

| | | $ | 772,879 | | | 100 | % | $ | 743,082 | | | 100 | % |

Unit volume grew by over one percent resulting in an increase in revenue of $7.1 million.

The average dollar to pound exchange rate was 1.57 dollars to the pound and 1.59 dollars to the pound for fiscal 2010 and fiscal 2009, respectively, and led to a reduction in service revenue of $0.2 million.

Vehicle sales revenues were approximately $130.7 million during fiscal 2010 compared to $127.7 million for fiscal 2009, an increase of $3.0 million, or 2.4%, above fiscal 2009.

The increase in vehicle sales revenue was due to the rise in the average selling price of vehicles which resulted in increased revenue of $30.0 million.

The rise in the average selling price per unit was primarily due to: (i) the increase in commodity pricing, particularly the per ton price for crushed car bodies, which has an impact on the ultimate selling price of vehicles sold for scrap and vehicles sold for dismantling, (ii) the general increase in used car pricing, which has an impact on the average selling price of vehicles that are either repaired and retailed or purchased by the end user; and (iii) in the UK, the continuing beneficial impact of VB2 which we introduced to the UK in 2008 and which expands our buyer base by opening vehicle sales to buyers worldwide.

We cannot determine which vehicles are sold directly to the end user or for scrap, dismantling, retailing, or export and, accordingly, cannot quantify the specific impact of commodity pricing and used car pricing, nor can we isolate the impact that VB2 had on the ultimate selling price of vehicles sold in the UK.

The change in volume reflects the migration of certain contracts in the UK from the principal model to the agency model and resulted in a reduction in vehicle sales revenue of $25.0 million.

The negative impact on recorded vehicle sales revenue due to the change in the GBP to USD exchange rate was $2.0 million.

Yard Operation Expenses. Yard operation expenses were approximately $320.2 million during fiscal 2010 compared to $324.8 million for fiscal 2009, a decline of approximately $4.6 million, or 1.4%, below fiscal 2009.

The decline was driven primarily by operational efficiencies and by reductions in subhauling costs relative to the first two quarters of fiscal 2009 when the cost of diesel fuel peaked.

Included in yard operation costs were depreciation and amortization expenses which were $34.9 million and $32.8 million for the fiscal years ended July 31, 2010 and 2009, respectively.

Unit volume decline led to a reduction of $18.0 million and was primarily due to the migration of certain contracts in the UK from a principal basis to a fee basis.

Cost per unit sold was up and represented a $17.1 million increase relative to last year.

The negative impact on the cost of sales due to the change in the GBP to USD exchange rate was $0.5 million.

General and Administrative Expenses. General and administrative expenses were approximately $108.9 million for fiscal 2010 compared to $86.9 million for fiscal 2009, an increase of approximately $22.0 million, or 25.3%.

The growth in general and administrative costs was due primarily to: (i) increased advertising costs as we invested in events and media promotions, including NASCAR and NHRA sponsorships, to generate new member activity; (ii) the additional costs associated with the Chairman and Chief Executive Officer's non-cash compensation package approved by the shareholders in April 2009 and (iii) increased headcount.

These changes increased general and administrative expenses by $8.6 million, $6.1 million, and $4.8 million, respectively.

Also included in general and administrative expenses were depreciation and amortization expenses which were $8.3 million and $9.0 million for the years ended July 31, 2010 and 2009, respectively.

Net interest income declined $1.4 million due primarily to reduced interest yields.

Other income, net, declined $0.6 million primarily due a decline in rental income of $1.7 million and the loss of $0.8 million on the sale of an airplane in the current year and was offset by a $1.1 million impairment of a note receivable, relating to the disposal of the assets of a discontinued business, and a $1.0 million loss on the sale of an airplane in the prior year.

The decrease was driven primarily by the reduction of state income taxes and the favorable tax treatment we received relating to certain interest expenses in the UK.

the decline in revenue per transaction.

Our primary source of working capital is net income.

During the fiscal year ended July 31, 2010, we used approximately $21.4 million in cash for the acquisition of D Hales.

This process employs a two-step bidding process.

| Baltimore Maryland | | Greenfield | | November 2006 | | Central Maryland |

| Woodburn, Oregon | | Greenfield | | January 2007 | | Central Oregon |

| Sandy, England | | Acquisition | | June 2007 | | East England and Midlands |

| Sandtoft, England | | Acquisition | | June 2007 | | Northern England |

| Sandwich, England | | Acquisition | | June 2007 | | London and South East England |

| Westbury, England | | Acquisition | | June 2007 | | South Wales and South West England |

| Chester, England | | Acquisition | | June 2007 | | North Wales and North West England |

| Denny, Scotland | | Acquisition | | *June 2007 | | Scotland |

| Wootton, England | | Acquisition | | June 2007 | | Central England |

| Punta Gorda, Florida | | Greenfield | | July 2007 | | Southwest Florida |

basis.

_Fiscal 2008 Compared to Fiscal 2007_

| | | 2008 | | | Percentage of Revenue | | | 2007 | | | Percentage of Revenue | | |

| Service revenues | | $ | 619,728 | | | 79 | % | $ | 535,794 | | | 96 | % |

| Vehicle sales | | | 165,120 | | | 21 | % | | 24,886 | | | 4 | % |

| | | $ | 784,848 | | | 100 | % | $ | 560,680 | | | 100 | % |

The growth in revenue came from an increase in units sold and an increase in revenue per transaction.

The growth in units sold came from acquisitions, primarily in the UK, market share wins and the development of non-insurance markets and represented $59.7 million of the increase and

service revenue yield represented $24.2 million of the total increase.

Vehicle Sales. Vehicle sales revenues were approximately $165.1 million during fiscal 2008 compared to $24.9 million for fiscal 2007, an increase of $140.2 million, or 563.5% over fiscal 2007.

In North America we have no contracts in which we are required to purchase the vehicle from the seller.

Yard Operation Expenses. Yard operation expenses from continuing operations were approximately $328.9 million during fiscal 2008 compared to $271.5 million for fiscal 2007, an increase of $57.4 million, or 21.1%, over fiscal 2007.

Yard operating expenses in the UK, excluding depreciation, increased by $49.6 million as we made our first acquisition in our fourth quarter of fiscal 2007 and, accordingly, had a full year of expenses in fiscal 2008.

In North America, excluding depreciation, yard operating expenses grew by $6.3 million due primarily to increased volume.

Included in yard operation costs were depreciation and amortization expenses which grew by $1.5 million to $32.2 million due primarily to increased amortization associated with intangible assets acquired in the UK.

The increase was due primarily to the UK acquisitions in which we assume certain contracts that require us to act as a principal, purchasing vehicles from the insurance companies and reselling them for our own account.

General and Administrative. General and administrative expenses from continuing operations were approximately $84.3 million for fiscal 2008, compared to $63.6 million for fiscal 2007, an increase of approximately $20.7 million, or 32.5%, over fiscal 2007.

The increase came primarily from the additional management, finance, technology, systems and administrative resources required to support international operations, increased resources required to accelerate the development and deployment of the enhancements to VB2 and to our seller support software and interfaces, and the incremental costs associated with the UK integration.

Included in general and administrative expenses is depreciation and amortization of $10.6 million, an increase of $4.9 million over fiscal 2007 and includes amortization expenses relating to intangible assets acquired as part of the UK acquisitions.

Interest income declined $6.0 million due to lower interest rates and a lower average cash and investment balance.

Net other income increased approximately $1.3 million.

Equity in loss

of unconsolidated entity reflected a $2.2 million write down, in fiscal 2007, to the carrying value of our investment in Lanelogic Corporation (Lanelogic).

The increase in net income is primarily the result of increased revenue in fiscal 2007 and the loss on discontinued operations in the amount of $17.9 million in fiscal 2006, which did not recur in fiscal 2007.

(York), Ltd; AG Watson Auto Salvage and Motor Spares (Scotland) Limited; and Bob Lowe's Salvage Pool.

During the fiscal year ended July 31, 2007, we used approximately $120.0 million in cash for the acquisition of Universal which includes the following seven locations in the UK: Sandy, Sandtoft, Sandwich, Westbury, Chester, Denny, and Wootton.

For the year ended July 31, 2007, we repurchased 2,995,405 shares at a weighted average price of $29.91.

From February 2003 through July 31, 2009, we repurchased a total of 13,649,469 shares at a weighted average price of $29.21.

In December 2008, our President exercised 600,000 options at an exercise price of $4.47 per share.

To achieve this objective in the current uncertain global financial markets, as of July 31, [removed: 2009,] [added: 2010,] all of our total cash and cash equivalents were held in bank [removed: deposits] [added: deposits, US Treasury Bills,] and money market funds.

As of July 31, [removed: 2009,] [added: 2010,] we held no direct investments in auction rate securities, collateralized debt obligations, structured investment vehicles or mortgaged-backed securities.

Based on the average cash balance held during the twelve months ended July 31, [removed: 2009,] [added: 2010,] a 10% change in our interest yield would not materially affect our operating results.

A hypothetical uniform 10% strengthening or weakening in the value of the US dollar relative to the Canadian dollar and British pound in which our revenues and profits are denominated would result in a decrease/increase to revenue of approximately [removed: $15.2] [added: $17.1] million for the twelve months ended July 31, [removed: 2009.][added: 2010.]

At July 31, [removed: 2009,] [added: 2010,] the cumulative effect of foreign exchange rate fluctuations on our consolidated financial position was a net translation loss of approximately [removed: $27.1] [added: $32.7] million.

In the US and [removed: Canada, or North America,] [added: Canada (North America),] we sell vehicles primarily as an agent and derive revenue primarily from fees paid by vehicle sellers and vehicle buyers as well as related fees for services such as towing and storage.

In the [removed: UK] [added: UK,] we operate [removed: primarily] [added: both] on a principal basis, purchasing the salvage vehicle outright from the insurance companies and reselling the vehicle for our own [removed: account.][added: account, and as an agent.]

During fiscal 2004 and fiscal 2008, we converted all of our North American and UK [removed: sales] [added: sales,] respectively, to [removed: our Internet based auction-style selling platform which we call] VB2.

[removed: This] [added: The VB2] technology and model employs a two-step bidding process.

The first step is an open preliminary bidding feature that allows a [removed: buyer] [added: member] to enter bids either at a bidding station at the storage facility during the preview days or over the Internet.

To improve the effectiveness of bidding, the VB2 system lets a [removed: buyer] [added: member] see the current high bid on the vehicle they want to purchase.

[removed: Buyers] [added: Members] enter the maximum price they are willing to pay for a vehicle and VB2's BID4U feature will incrementally bid [added: on] the vehicle on their behalf during all phases of the auction.

The bidders enter bids via the Internet in real [removed: time,] [added: time while] BID4U submits bids for the high preliminary bidder, up to their maximum bid.

VB2 opens our sales process to registered [removed: buyers] [added: members] anywhere in the world who have Internet access.

For fiscal [removed: 2009,] [added: 2010,] sales of North American vehicles, on a unit basis, to [removed: buyers] [added: members] registered outside the state where the vehicle is located accounted for [removed: 46.8%] [added: 50.2%] of total vehicles [removed: sold (25.3%] [added: sold; 27.5%] of vehicles were sold to out of state [removed: buyers] [added: members] and [removed: 21.5%] [added: 22.7%] were sold to out of country [removed: buyers,] [added: members,] based on [removed: registration).][added: registration.]

For fiscal [removed: 2009,] [added: 2010,] sales of UK vehicles, on a unit basis, to [removed: buyers] [added: members] registered outside the country where the vehicle is located accounted for [removed: 18.4%] [added: 17.7%] of total vehicles sold.

applying technology to enhance operating efficiency through Internet bidding, web-based order processing, salvage value quotes, electronic communication with [removed: buyers] [added: members] and sellers, vehicle imaging, and an online used vehicle parts locator service; and

Historically, we believe our business has grown as a result of (i) acquisitions, (ii) increases in the overall volume in the salvage car market, (iii) growth in market share, (iv) increases in amount of revenue generated per sales transaction resulting from increases in the gross selling price and the addition of value-added services for both [removed: buyers] [added: members] and sellers, and (v) the growth in non-insurance company sellers.

For fiscal year [removed: 2009,] [added: 2010,] which ended July 31, [removed: 2009,] [added: 2010,] our revenues were approximately [removed: $743.1] [added: $772.9] million and our operating income was approximately [removed: $225.3] [added: $239.1] million.

In fiscal 2008, we made the following additional acquisitions: Century Salvage Sales Limited (Century) on August 1, 2007; AG Watson Auto Salvage & Motors Spares (Scotland) Limited (AG Watson) on February 29, 2008; [removed: and] Simpson Bros.

Universal, [removed: Century and] [added: Century, AG] Watson [added: and D Hales] were all leading providers of vehicle auctions and services to the motor insurance and automotive industries.

In fiscal 2008, we initiated two new programs [added: using VB2,] (i) Copart Dealer Services (CDS), by which we sell dealer-trade-ins [removed: using our VB2 application] and (ii) CopartDirect, whereby we sell cars on behalf of the general [removed: public, using our VB2 application, so that individuals can avoid the inconvenience of selling the cars themselves.][added: public.]

In fiscal 2009, we opened our website to the public, initiated our Registered Broker program by which the public can purchase vehicles through a [removed: registered buyer,] [added: member,] and initiated our Market Maker program by which [removed: registered buyers] [added: members] can open Copart storefronts with [removed: internet] [added: Internet] kiosks that enable the general public to browse and view our inventory and purchase vehicles from us through the Market Maker.

As of July 31, [removed: 2009,] [added: 2010,] we had [removed: 133] [added: 134] facilities in the US, 2 facilities in Canada and [removed: 12] [added: 16] facilities in the UK.

In the UK, upon release of interest by the vehicle owner, the insurance company notifies us that the vehicle is available for [removed: sale for our own account.][added: sale.]

Proceeds are then collected from the [removed: buyer,] [added: member,] seller fees are subtracted and the remainder is remitted to the seller.

Our growth strategy is to increase our revenues and profitability by, among other [removed: things] [added: things,] (i) acquiring and developing new facilities in key markets including foreign markets, (ii) pursuing national and regional vehicle supply agreements, (iii) expanding our online auctions and vehicle remarketing service offerings to sellers and [removed: buyers,] [added: members,] and (iv) expanding the application of VB2 into new markets and to new sellers within the vehicle market.

The following table sets forth facilities that we have acquired or opened from August 1, [removed: 2006] [added: 2007] through July 31, [removed: 2009:][added: 2010:]

Former [removed: MAG] [added: Motors Auction Group (MAG)] facility

_Expand Our Service Offerings to Sellers and [removed: Buyers_][added: Members_]

Over the past several years, we have expanded our available service offerings to vehicle sellers and [removed: buyers.][added: members.]

The primary focus of these new service offerings is to maximize returns to our sellers and maximize product value to our [removed: buyers.][added: members.]

[added: This includes, for our sellers, real-time access to sales] data over the Internet, national coverage, the ability to respond on a national scale and, for our [removed: buyers,] [added: members,] the implementation of VB2 real-time bidding at all of our facilities, permitting [removed: buyers] [added: members] at any location worldwide to participate in the sales at all of our yards.

[removed: We plan to continue to refine] and expand our services, including offering software that can assist our sellers in expediting claims and salvage management tools that help sellers integrate their systems with ours.

Since our inception in 1982, we have expanded from a single facility in Vallejo, California to an integrated network of [removed: 147] [added: 152] facilities located in the United States, Canada and the UK as of July 31, [removed: 2009.][added: 2010.]

We are able to offer integrated services to our vehicle sellers, which allow us to respond to the needs of our sellers and [removed: buyers] [added: members] with maximum efficiency.

online payment capabilities via our ePay [removed: product;][added: product and credit cards;]

sophisticated vehicle processing at storage sites, including ten-view digital imaging of each vehicle and the scanning of each vehicle's title and other significant documents such as body shop invoices, all of which are available from us [removed: through] [added: over] the Internet;

specialty sales, which allow buyers the opportunity to focus on select types of vehicles: i.e. motorcycles, heavy equipment, boats, recreational vehicles and rental cars; [removed: and]

Interactive Online Counter-bidding, which allows sellers who have placed a minimum bid or a bid to be approved on a vehicle to directly counter-bid the current high [removed: bidder.][added: bidder;]

Since becoming a public company in 1994, we have completed the acquisition of [removed: 74 facilities in North America and the UK.][added: 78]

We offer [removed: certain] [added: some] of our major insurance company sellers office and yard space to house vehicle inspection stations on-site at our facilities.

In addition, we provide merchandising services such as covering or taping openings to protect vehicle interiors from weather, washing vehicle exteriors, vacuuming [removed: vehicle interiors, cleaning and polishing dashboards and tires, making keys for drivable vehicles, and identifying drivable vehicles.]

We maintain a database of thousands of registered [removed: buyers] [added: members] in the vehicle dismantling, rebuilding, repair licensee, used vehicle [removed: dealer,] [added: dealer] and export industries.

Our database includes each [removed: buyer's] [added: member's] vehicle preference and purchasing history.

In fiscal 2010, we acquired D Hales Limited (D Hales) on January 22, 2010.

In fiscal 2010, we initiated two additional programs using VB2: (i) 2nd chance bidding, which allows the second highest bidder of a vehicle the opportunity to purchase the vehicle for the seller's current minimum bid after the high bidder declines and (ii) Night Cap Sales, which provides sellers an additional opportunity to have members bid on their vehicles, increasing exposure and minimizing cycle time.

In North America, we opened one new facility located in Scranton, Pennsylvania.

national coverage;

the ability to respond to natural disasters;

| Bristol, England | | Acquisition | | | | January 2010 | | United Kingdom |

| Bedford, England | | Acquisition | | | | January 2010 | | United Kingdom |

| Colchester, England | | Acquisition | | | | January 2010 | | United Kingdom |

| Gainsborough, England | | Acquisition | | * | | January 2010 | | United Kingdom |

| Luton, England | | Acquisition | | | | January 2010 | | United Kingdom |

| Scranton, Pennsylvania | | Greenfield | | | | February 2010 | | Pennsylvania |

*

Closed in fiscal 2010

We plan to continue to refine

2nd chance bidding which allow the second highest bidder the opportunity to purchase the vehicle for the seller's current minimum bid; and

Night Cap sales which include vehicles that did not achieve their minimum bid during the virtual sale, counter bidding, or 2nd chance bidding.

facilities in North America and the UK.

vehicle interiors, cleaning and polishing dashboards and tires, making keys for drivable vehicles, and identifying drivable vehicles.

_Member Network_

Sales

Please see Note 14 "Segments and Other Geographical Information" in our Notes to Consolidated Financial Statements for information regarding the geographic location of our sales and our long-lived assets.

Members

personal and business information, and have, in most states, a vehicle dismantler's, dealer's, resale, repair or export license.

sampling.

Pursuant to a settlement agreement between the parties, the case was dismissed in January 2010.

In North America, we opened five new facilities located in Louisville, Kentucky; Richmond, Virginia; Montgomery, Alabama; Greer, South Carolina; and Warren, Massachusetts.

In the UK, all sales were converted to VB2 during fiscal 2008.

This may result in an increased supply of total loss salvage vehicles from insurance companies.

national coverage and ability to respond on a national scale;

| Baltimore Maryland | | Greenfield | | | | November 2006 | | Central Maryland |

| Woodburn, Oregon | | Greenfield | | | | January 2007 | | Central Oregon |

| Sandy, England | | Acquisition | | | | June 2007 | | East England and Midlands |

| Sandtoft, England | | Acquisition | | | | June 2007 | | Northern England |

| Sandwich, England | | Acquisition | | | | June 2007 | | London and South East England |

| Westbury, England | | Acquisition | | | | June 2007 | | South Wales and South West England |

| Chester, England | | Acquisition | | | | June 2007 | | North Wales and North West England |

| Denny, Scotland | | Acquisition | | * | | June 2007 | | Scotland |

| Wootton, England | | Acquisition | | | | June 2007 | | Central England |

| Punta Gorda, Florida | | Greenfield | | | | July 2007 | | Southwest Florida |

This includes, for our sellers, real-time access to sales

_Buyer Network_

Public buyer information is included in this database as we sell directly to the general public at certain locations.

We utilize VB2, an auction-style sales methodology that we developed.

Seller Marketing

State Farm Insurance Company accounted for 10% of our revenues during fiscal year 2007.

Buyers

Strict admission procedures are intended

Our sale, Internet and imaging services are load balanced across different geographical data centers.

be disposed of as non-hazardous or hazardous waste, as appropriate.

ineffective, or if future testing of surface or ground water reflects concentrations of lead which exceed Texas surface or ground water quality standards.

We are vigorously defending the lawsuit.

This litigation includes the following [removed: matters:][added: matter:]

We believe the claim is without merit and [removed: we] are [removed: vigorously] defending the [removed: lawsuit.][added: lawsuit vigorously.]

Liberty Mutual's complaint [removed: seeks] [added: sought] reformation of an insurance contract and specific performance in relation to a policy issued to us with a $50,000 self-insured retention.

After settlement of a claim under the subject policy for $3.95 million, Liberty Mutual [removed: is seeking] [added: sought] to reform the contract and charge [removed: Copart] [added: us] for a $2 million self-insured retention which it [removed: claims] [added: claimed] was the original intent.

There is no assurance that there will be insurance coverage available when and if [removed: needed or that our insurers will not seek to deny or limit coverage.][added: needed.]

Pursuant to a settlement agreement between the parties, the case was dismissed in January 2010.

_

We are vigorously defending the lawsuit.

Form [removed: 10-K][added: 10-K]

[removed: ANNUAL] [added: ANNUAL] REPORTS PURSUANT TO SECTION 13 OR 15(d)

| þ | | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: July 31, [removed: 2009] [added: 2010] |

The aggregate market value of the voting and non-voting Common Stock held by non-affiliates of the registrant as of January 31, [removed: 2009] [added: 2010] (the last business day of the registrant's most recently completed second fiscal quarter) was [removed: $1,576,240,787] [added: $2,837,917,860] based upon the closing sales price reported for such date on the NASDAQ Global Select Market (formerly the NASDAQ National Market).

At September [removed: 29, 2009,] [added: 22, 2010,] registrant had [removed: 84,082,113] [added: 84,367,430] outstanding shares of Common Stock.

Items 10, 11, 12, 13, and 14 of Part III incorporate certain information by reference from the registrant's definitive proxy statement for its [removed: 2009] [added: 2010] Annual Meeting of Shareholders (Proxy Statement) to be filed pursuant to Regulation 14A within 120 days after the registrant's fiscal year end of July 31, [removed: 2009.][added: 2010.]

for the Fiscal Year Ended July 31, [removed: 2009][added: 2010]

| [removed: [](#da79401_corporate_information)] [added: [](#da40501_corporate_information)] [Corporate [removed: Information](#da79401_corporate_information)] [added: Information](#da40501_corporate_information)] | | | | [removed: [2](#da79401_corporate_information)] [added: [2](#da40501_corporate_information)] |

| [removed: [](#de79401_item_1._business)] [added: [](#de40501_item_1._business)] [Item [removed: 1.](#de79401_item_1._business)] [added: 1.](#de40501_item_1._business)] | | [removed: [](#de79401_item_1._business) [Business](#de79401_item_1._business)] [added: [](#de40501_item_1._business) [Business](#de40501_item_1._business)] | | [removed: [3](#de79401_item_1._business)] [added: [3](#de40501_item_1._business)] |

| | | [removed: [](#de79401_industry_overview)] [added: [](#dg40501_industry_overview)] [Industry [removed: Overview](#de79401_industry_overview)] [added: Overview](#dg40501_industry_overview)] | | [removed: [5](#de79401_industry_overview)] [added: [5](#dg40501_industry_overview)] |

| | | [removed: [](#dg79401_operating_and_growth_strategy)] [added: [](#dg40501_operating_and_growth_strategy)] [Operating and Growth [removed: Strategy](#dg79401_operating_and_growth_strategy)] [added: Strategy](#dg40501_operating_and_growth_strategy)] | | [removed: [6](#dg79401_operating_and_growth_strategy)] [added: [6](#dg40501_operating_and_growth_strategy)] |

| | | [removed: [](#dg79401_our_competitive_advantages)] [added: [](#dg40501_our_competitive_advantages)] [Our Competitive [removed: Advantages](#dg79401_our_competitive_advantages)] [added: Advantages](#dg40501_our_competitive_advantages)] | | [removed: [8](#dg79401_our_competitive_advantages)] [added: [8](#dg40501_our_competitive_advantages)] |

| | | [removed: [](#dg79401_our_service_offerings)] [added: [](#dg40501_our_service_offerings)] [Our Service [removed: Offerings](#dg79401_our_service_offerings)] [added: Offerings](#dg40501_our_service_offerings)] | | [removed: [9](#dg79401_our_service_offerings)] [added: [9](#dg40501_our_service_offerings)] |

| | | [removed: [](#di79401_management_information_systems)] [added: [](#di40501_management_information_systems)] [Management Information [removed: Systems](#di79401_management_information_systems)] [added: Systems](#di40501_management_information_systems)] | | [removed: [13](#di79401_management_information_systems)] [added: [13](#di40501_management_information_systems)] |

| | | [removed: [](#di79401_environmental_matters)] [added: [](#di40501_environmental_matters)] [Environmental [removed: Matters](#di79401_environmental_matters)] [added: Matters](#di40501_environmental_matters)] | | [removed: [13](#di79401_environmental_matters)] [added: [14](#di40501_environmental_matters)] |

| | | [removed: [](#di79401_governmental_regulations)] [added: [](#di40501_governmental_regulations)] [Governmental [removed: Regulations](#di79401_governmental_regulations)] [added: Regulations](#di40501_governmental_regulations)] | | [removed: [15](#di79401_governmental_regulations)] [added: [15](#di40501_governmental_regulations)] |

| | | [removed: [](#di79401_legal_proceedings)] [added: [](#di40501_legal_proceedings)] [Legal [removed: Proceedings](#di79401_legal_proceedings)] [added: Proceedings](#di40501_legal_proceedings)] | | [removed: [15](#di79401_legal_proceedings)] [added: [15](#di40501_legal_proceedings)] |

| | | [removed: [](#di79401_intellectual_property_and_proprietary_rights)] [added: [](#di40501_intellectual_property_and_proprietary_rights)] [Intellectual Property and Proprietary [removed: Rights](#di79401_intellectual_property_and_proprietary_rights)] [added: Rights](#di40501_intellectual_property_and_proprietary_rights)] | | [removed: [16](#di79401_intellectual_property_and_proprietary_rights)] [added: [16](#di40501_intellectual_property_and_proprietary_rights)] |

| [removed: [](#dk79401_item_1a._risk_factors)] [added: [](#item_1A)] [Item [removed: 1A.](#dk79401_item_1a._risk_factors)] [added: 1A.](#item_1A)] | | [removed: [](#dk79401_item_1a._risk_factors)] [added: [](#item_1A)] [Risk [removed: Factors](#dk79401_item_1a._risk_factors)] [added: Factors](#item_1A)] | | [removed: [17](#dk79401_item_1a._risk_factors)] [added: [16](#item_1A)] |

| [removed: [](#dm79401_item_1b._unresolved_staff_comments)] [added: [](#item_1B)] [Item [removed: 1B.](#dm79401_item_1b._unresolved_staff_comments)] [added: 1B.](#item_1B)] | | [removed: [](#dm79401_item_1b._unresolved_staff_comments)] [added: [](#item_1B)] [Unresolved Staff [removed: Comments](#dm79401_item_1b._unresolved_staff_comments)] [added: Comments](#item_1B)] | | [removed: [27](#dm79401_item_1b._unresolved_staff_comments)] [added: [27](#item_1B)] |

| [removed: [](#dm79401_item_2._properties)] [added: [](#item_2)] [Item [removed: 2.](#dm79401_item_2._properties)] [added: 2.](#item_2)] | | [removed: [](#dm79401_item_2._properties) [Properties](#dm79401_item_2._properties)] [added: [](#item_2) [Properties](#item_2)] | | [removed: [27](#dm79401_item_2._properties)] [added: [27](#item_2)] |

| [removed: [](#dm79401_item_3._legal_proceedings)] [added: [](#item_3)] [Item [removed: 3.](#dm79401_item_3._legal_proceedings)] [added: 3.](#item_3)] | | [removed: [](#dm79401_item_3._legal_proceedings)] [added: [](#item_3)] [Legal [removed: Proceedings](#dm79401_item_3._legal_proceedings)] [added: Proceedings](#item_3)] | | [removed: [27](#dm79401_item_3._legal_proceedings)] [added: [27](#item_3)] |

| [removed: [](#do79401_item_5._market_for_registrant___ite04649)] [added: [](#do40501_item_5._market_for_registrant___ite04649)] [Item [removed: 5.](#do79401_item_5._market_for_registrant___ite04649)] [added: 5.](#do40501_item_5._market_for_registrant___ite04649)] | | [removed: [](#do79401_item_5._market_for_registrant___ite04649)] [added: [](#do40501_item_5._market_for_registrant___ite04649)] [Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity [removed: Securities](#do79401_item_5._market_for_registrant___ite04649)] [added: Securities](#do40501_item_5._market_for_registrant___ite04649)] | | [removed: [29](#do79401_item_5._market_for_registrant___ite04649)] [added: [28](#do40501_item_5._market_for_registrant___ite04649)] |

| [removed: [](#dq79401_item_6._selected_financial_data)] [added: [](#dq40501_item_6._selected_financial_data)] [Item [removed: 6.](#dq79401_item_6._selected_financial_data)] [added: 6.](#dq40501_item_6._selected_financial_data)] | | [removed: [](#dq79401_item_6._selected_financial_data)] [added: [](#dq40501_item_6._selected_financial_data)] [Selected Financial [removed: Data](#dq79401_item_6._selected_financial_data)] [added: Data](#dq40501_item_6._selected_financial_data)] | | [removed: [32](#dq79401_item_6._selected_financial_data)] [added: [31](#dq40501_item_6._selected_financial_data)] |

| [removed: [](#ds79401_item_7._management_s_discussio__ite03668)] [added: [](#ds40501_item_7._management_s_discussio__ite03668)] [Item [removed: 7.](#ds79401_item_7._management_s_discussio__ite03668)] [added: 7.](#ds40501_item_7._management_s_discussio__ite03668)] | | [removed: [](#ds79401_item_7._management_s_discussio__ite03668)] [added: [](#ds40501_item_7._management_s_discussio__ite03668)] [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#ds79401_item_7._management_s_discussio__ite03668)] [added: Operations](#ds40501_item_7._management_s_discussio__ite03668)] | | [removed: [33](#ds79401_item_7._management_s_discussio__ite03668)] [added: [32](#ds40501_item_7._management_s_discussio__ite03668)] |

| [removed: [](#du79401_item_7a._quantitative_and_qual__ite02669)] [added: [](#du40501_item_7a._quantitative_and_qual__ite02669)] [Item [removed: 7A.](#du79401_item_7a._quantitative_and_qual__ite02669)] [added: 7A.](#du40501_item_7a._quantitative_and_qual__ite02669)] | | [removed: [](#du79401_item_7a._quantitative_and_qual__ite02669)] [added: [](#du40501_item_7a._quantitative_and_qual__ite02669)] [Quantitative and Qualitative Disclosures About Market [removed: Risk](#du79401_item_7a._quantitative_and_qual__ite02669)] [added: Risk](#du40501_item_7a._quantitative_and_qual__ite02669)] | | [removed: [47](#du79401_item_7a._quantitative_and_qual__ite02669)] [added: [46](#du40501_item_7a._quantitative_and_qual__ite02669)] |

| [removed: [](#du79401_item_8._financial_statements_and_supplementary_data)] [added: [](#du40501_item_8._financial_statements_and_supplementary_data)] [Item [removed: 8.](#du79401_item_8._financial_statements_and_supplementary_data)] [added: 8.](#du40501_item_8._financial_statements_and_supplementary_data)] | | [removed: [](#du79401_item_8._financial_statements_and_supplementary_data)] [added: [](#du40501_item_8._financial_statements_and_supplementary_data)] [Financial Statements and Supplementary [removed: Data](#du79401_item_8._financial_statements_and_supplementary_data)] [added: Data](#du40501_item_8._financial_statements_and_supplementary_data)] | | [removed: [48](#du79401_item_8._financial_statements_and_supplementary_data)] [added: [47](#du40501_item_8._financial_statements_and_supplementary_data)] |

| [removed: [](#du79401_item_9._changes_in_and_disagre__ite03576)] [added: [](#du40501_item_9._changes_in_and_disagre__ite03576)] [Item [removed: 9.](#du79401_item_9._changes_in_and_disagre__ite03576)] [added: 9.](#du40501_item_9._changes_in_and_disagre__ite03576)] | | [removed: [](#du79401_item_9._changes_in_and_disagre__ite03576)] [added: [](#du40501_item_9._changes_in_and_disagre__ite03576)] [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#du79401_item_9._changes_in_and_disagre__ite03576)] [added: Disclosure](#du40501_item_9._changes_in_and_disagre__ite03576)] | | [removed: [48](#du79401_item_9._changes_in_and_disagre__ite03576)] [added: [47](#du40501_item_9._changes_in_and_disagre__ite03576)] |

| [removed: [](#du79401_item_9a._controls_and_procedures)] [added: [](#du40501_item_9a._controls_and_procedures)] [Item [removed: 9A.](#du79401_item_9a._controls_and_procedures)] [added: 9A.](#du40501_item_9a._controls_and_procedures)] | | [removed: [](#du79401_item_9a._controls_and_procedures)] [added: [](#du40501_item_9a._controls_and_procedures)] [Controls and [removed: Procedures](#du79401_item_9a._controls_and_procedures)] [added: Procedures](#du40501_item_9a._controls_and_procedures)] | | [removed: [48](#du79401_item_9a._controls_and_procedures)] [added: [47](#du40501_item_9a._controls_and_procedures)] |

| [removed: [](#dy79401_item_9b._other_information)] [added: [](#dy40501_item_9b._other_information)] [Item [removed: 9B.](#dy79401_item_9b._other_information)] [added: 9B.](#dy40501_item_9b._other_information)] | | [removed: [](#dy79401_item_9b._other_information)] [added: [](#dy40501_item_9b._other_information)] [Other [removed: Information](#dy79401_item_9b._other_information)] [added: Information](#dy40501_item_9b._other_information)] | | [removed: [52](#dy79401_item_9b._other_information)] [added: [51](#dy40501_item_9b._other_information)] |

| [removed: [](#dy79401_item_10._directors,_executive___ite03076)] [added: [](#dy40501_item_10._directors,_executive___ite03076)] [Item [removed: 10.](#dy79401_item_10._directors,_executive___ite03076)] [added: 10.](#dy40501_item_10._directors,_executive___ite03076)] | | [removed: [](#dy79401_item_10._directors,_executive___ite03076)] [added: [](#dy40501_item_10._directors,_executive___ite03076)] [Directors, Executive Officers of the Registrant and Corporate [removed: Governance](#dy79401_item_10._directors,_executive___ite03076)] [added: Governance](#dy40501_item_10._directors,_executive___ite03076)] | | [removed: [53](#dy79401_item_10._directors,_executive___ite03076)] [added: [52](#dy40501_item_10._directors,_executive___ite03076)] |

| [removed: [](#dy79401_item_11._executive_compensation)] [added: [](#dy40501_item_11._executive_compensation)] [Item [removed: 11.](#dy79401_item_11._executive_compensation)] [added: 11.](#dy40501_item_11._executive_compensation)] | | [removed: [](#dy79401_item_11._executive_compensation)] [added: [](#dy40501_item_11._executive_compensation)] [Executive [removed: Compensation](#dy79401_item_11._executive_compensation)] [added: Compensation](#dy40501_item_11._executive_compensation)] | | [removed: [53](#dy79401_item_11._executive_compensation)] [added: [52](#dy40501_item_11._executive_compensation)] |

| [removed: [](#dy79401_item_12._security_ownership_of__ite03987)] [added: [](#dy40501_item_12._security_ownership_of__ite03987)] [Item [removed: 12.](#dy79401_item_12._security_ownership_of__ite03987)] [added: 12.](#dy40501_item_12._security_ownership_of__ite03987)] | | [removed: [](#dy79401_item_12._security_ownership_of__ite03987)] [added: [](#dy40501_item_12._security_ownership_of__ite03987)] [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder [removed: Matters](#dy79401_item_12._security_ownership_of__ite03987)] [added: Matters](#dy40501_item_12._security_ownership_of__ite03987)] | | [removed: [53](#dy79401_item_12._security_ownership_of__ite03987)] [added: [52](#dy40501_item_12._security_ownership_of__ite03987)] |

| [removed: [](#dy79401_item_13._certain_relationships__ite03067)] [added: [](#dy40501_item_13._certain_relationships__ite03067)] [Item [removed: 13.](#dy79401_item_13._certain_relationships__ite03067)] [added: 13.](#dy40501_item_13._certain_relationships__ite03067)] | | [removed: [](#dy79401_item_13._certain_relationships__ite03067)] [added: [](#dy40501_item_13._certain_relationships__ite03067)] [Certain Relationships and Related Transactions, and Director [removed: Independence](#dy79401_item_13._certain_relationships__ite03067)] [added: Independence](#dy40501_item_13._certain_relationships__ite03067)] | | [removed: [54](#dy79401_item_13._certain_relationships__ite03067)] [added: [52](#dy40501_item_13._certain_relationships__ite03067)] |

| [removed: [](#dy79401_item_14._principal_accountant_fees_and_services)] [added: [](#dy40501_item_14._principal_accountant_fees_and_services)] [Item [removed: 14.](#dy79401_item_14._principal_accountant_fees_and_services)] [added: 14.](#dy40501_item_14._principal_accountant_fees_and_services)] | | [removed: [](#dy79401_item_14._principal_accountant_fees_and_services)] [added: [](#dy40501_item_14._principal_accountant_fees_and_services)] [Principal Accountant Fees and [removed: Services](#dy79401_item_14._principal_accountant_fees_and_services)] [added: Services](#dy40501_item_14._principal_accountant_fees_and_services)] | | [removed: [54](#dy79401_item_14._principal_accountant_fees_and_services)] [added: [52](#dy40501_item_14._principal_accountant_fees_and_services)] |

| [removed: [](#ea79401_item_15._exhibits_and_financial_statement_schedules)] [added: [](#ea40501_item_15._exhibits_and_financial_statement_schedules)] [Item [removed: 15.](#ea79401_item_15._exhibits_and_financial_statement_schedules)] [added: 15.](#ea40501_item_15._exhibits_and_financial_statement_schedules)] | | [removed: [](#ea79401_item_15._exhibits_and_financial_statement_schedules)] [added: [](#ea40501_item_15._exhibits_and_financial_statement_schedules)] [Exhibits and Financial Statement [removed: Schedules](#ea79401_item_15._exhibits_and_financial_statement_schedules)] [added: Schedules](#ea40501_item_15._exhibits_and_financial_statement_schedules)] | | [removed: [55](#ea79401_item_15._exhibits_and_financial_statement_schedules)] [added: [53](#ea40501_item_15._exhibits_and_financial_statement_schedules)] |

SPECIAL NOTE REGARDING FORWARD-LOOKING [removed: STATEMENTS][added: STATEMENTS]

_This Annual Report on Form 10-K for the fiscal year ended July 31, [removed: 2009,] [added: 2010,] or this Form 10-K, including the information incorporated by reference herein, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act).

10-K 1 a2200235z10-k.htm 10-K

[PART IV](#ea40501_part_iv)

| | | [](#de40501_general) [General](#de40501_general) | | [3](#de40501_general) |

| | | [](#di40501_sales) [Sales](#di40501_sales) | | [12](#di40501_sales) |

| | | [](#di40501_members) [Members](#di40501_members) | | [12](#di40501_members) |

| | | [](#di40501_competition) [Competition](#di40501_competition) | | [13](#di40501_competition) |

| | | [](#di40501_employees) [Employees](#di40501_employees) | | [13](#di40501_employees) |

| | | [](#di40501_seasonality) [Seasonality](#di40501_seasonality) | | [16](#di40501_seasonality) |

| [](#item_4) [Item 4.](#item_4) | | [](#item_4) [Reserved](#item_4) | | [27](#item_4) |

10-K 1 a2194735z10-k.htm FORM 10-K

[PART IV](#ea79401_part_iv)

| | | [](#de79401_general) [General](#de79401_general) | | [3](#de79401_general) |

| | | [](#di79401_seller_marketing) [Seller Marketing](#di79401_seller_marketing) | | [12](#di79401_seller_marketing) |

| | | [](#di79401_buyers) [Buyers](#di79401_buyers) | | [12](#di79401_buyers) |

| | | [](#di79401_competition) [Competition](#di79401_competition) | | [13](#di79401_competition) |

| | | [](#di79401_employees) [Employees](#di79401_employees) | | [13](#di79401_employees) |

| | | [](#di79401_seasonality) [Seasonality](#di79401_seasonality) | | [16](#di79401_seasonality) |

| [](#dm79401_item_4._submission_of___dm702394) [Item 4.](#dm79401_item_4._submission_of___dm702394) | | [](#dm79401_item_4._submission_of___dm702394) [Submission of Matters to a Vote of Security Holders](#dm79401_item_4._submission_of___dm702394) | | [28](#dm79401_item_4._submission_of___dm702394) |

_

We also own or lease an additional [removed: 147] [added: 152] operating facilities.

In Canada, we [removed: are] [added: have facilities] only in the province of Ontario.

In the UK, as of July 31, [removed: 2009,] [added: 2010,] we owned or leased [removed: 12] [added: 16] operating facilities.

_

_

We did not submit any matters to a vote of our shareholders during the fourth quarter of our 2009 fiscal year.

As of July 31, [removed: 2009,] [added: 2010,] there were [removed: 83,938,814] [added: 84,363,063] shares outstanding.

Our common stock has been quoted on the Nasdaq [added: Global Select Market] under the symbol "CPRT" since March 17, 1994.

As of July 31, [removed: 2009,] [added: 2010,] we had [removed: 1,745] [added: approximately 1,755] shareholders of record.

On July 31, [removed: 2009,] [added: 2010,] the last reported sale price of our common stock on the Nasdaq Global Select Market was [removed: $35.31] [added: $36.44] per share.

| Fiscal Year [removed: 2008] [added: 2010] | | High | | | Low | | |

For the year ended July 31, 2008, we repurchased 6,615,764 shares [added: of our common stock] at a weighted average price of $40.70.

We remitted approximately [removed: $9.8] [added: $17.2] million to the proper taxing authorities in satisfaction of the [removed: employee's] [added: employees'] minimum statutory withholding requirements.

| First Quarter | | | [removed: — | | | — | | | —] [added: 38.47] | | | [removed: —] [added: 31.93] | |

| Second Quarter | | | [removed: — | | | — | | | —] [added: 37.10] | | | [removed: —] [added: 31.63] | |

| Third Quarter | | | [removed: — | | | — | | | —] [added: 37.01] | | | [removed: —] [added: 32.77] | |

There were no issuances of unregistered securities in the quarter ended July 31, [removed: 2009.][added: 2010.]

The following is a line graph comparing the cumulative total return to shareholders of our common stock at July 31, [removed: 2009] [added: 2010] since July 31, [removed: 2004,] [added: 2005,] to the cumulative total return over such period of (i) the NASDAQ Composite Index, (ii) [removed: a peer group consisting of Sterling Construction Company, Inc. (STRL) and Coast Distribution System, Inc. (CRV),] [added: the NASDAQ Industrial Index,] and (iii) the NASDAQ Q-50 (NXTQ).

[removed: A Peer Group,] [added: the NASDAQ Industrial Index,] and [removed: The] [added: the] NASDAQ Q-50 (NXTQ)

[removed: ][added: ]

Assumes that $100.00 was invested on July 31, [removed: 2004] [added: 2005] in our common [removed: stock and] [added: stock,] in the NASDAQ [removed: Stock Market (US)] [added: Composite] Index, the [removed: peer group,] [added: NASDAQ Industrial Index] and the NASDAQ Q-50 (NXTQ), and that all dividends were reinvested.

| Fourth Quarter | | | 37.83 | | | 33.96 | |

For the year ended July 31, 2010, we repurchased 121,251 shares of our common stock at a price of $36.76.

As of July 31, 2010, the total number of shares repurchased under the program was 13,770,720 and 15,229,280 shares were available for repurchase under our program.

In the second and fourth quarters of fiscal year 2009 and the first quarter of fiscal year 2010, Mr. Jay Adair, Chief Executive Officer (and then President), exercised stock options through cashless

exercises.

In the fourth quarter of fiscal year 2010, Mr. Willis J.

Johnson, Chairman of the Board, exercised stock options through a cashless exercise.

A portion of the options exercised were net settled in satisfaction of the exercise price and federal and state minimum statutory tax withholding requirements.

In fiscal year 2008 no stock options were exercised through the cashless exercise method.

The exercises are summarized in the following table:

| | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Period | | Options Exercised | | | Exercise Price | | | Shares Net Settled for Exercise | | | Shares Withheld for Taxes(1) | | | Net Shares to Employee | | | Share Price for Withholding | | | Tax Withholding (in 000's) | | |

| FY 2009—Q2 | | | 600,000 | | $ | 4.47 | | | 96,929 | | | 222,817 | | | 280,254 | | $ | 26.93 | | $ | 6,000 | |

| FY 2009—Q4 | | | 361,035 | | $ | 11.12 | | | 116,741 | | | 109,595 | | | 134,699 | | $ | 34.39 | | $ | 3,769 | |

| FY 2010—Q1 | | | 323,631 | | $ | 13.03 | | | 114,354 | | | 95,746 | | | 113,531 | | $ | 36.89 | | $ | 3,532 | |

| FY 2010—Q4 | | | 350,000 | | $ | 12.91 | | | 122,922 | | | 105,827 | | | 121,251 | | $ | 36.76 | | $ | 3,890 | |

(1)

Shares withheld for taxes are treated as a repurchase of shares for accounting purposes but do not count against our repurchase program.

| _Fiscal 2010_ | | | | | | | | | | | | | |

| First Quarter | | | — | | | — | | | — | | | 15,350,531 | |

| Second Quarter | | | — | | | — | | | — | | | 15,350,531 | |

| Third Quarter | | | — | | | — | | | — | | | 15,350,531 | |

| Fourth Quarter | | | 121,251 | | $ | 36.76 | | | 121,251 | | | 15,229,280 | |

| | | 7/05 | | | 7/06 | | | 7/07 | | | 7/08 | | | 7/09 | | | 7/10 | | |

| Copart, Inc. | | $ | 100.00 | | $ | 108.91 | | $ | 115.04 | | $ | 179.31 | | $ | 144.36 | | $ | 148.98 | |

| NASDAQ Composite | | $ | 100.00 | | $ | 97.54 | | $ | 120.58 | | $ | 107.55 | | $ | 92.26 | | $ | 106.16 | |

| NASDAQ Industrial | | $ | 100.00 | | $ | 99.18 | | $ | 122.73 | | $ | 100.96 | | $ | 78.83 | | $ | 94.92 | |

| NASDAQ Q-50 (NXTQ) | | $ | 100.00 | | $ | 103.86 | | $ | 129.89 | | $ | 103.07 | | $ | 97.22 | | $ | 134.84 | |

| Fourth Quarter | | | 49.34 | | | 39.50 | |

| Third Quarter | | | 42.83 | | | 33.81 | |

| Second Quarter | | | 43.27 | | | 33.44 | |

| First Quarter | | | 38.58 | | | 27.90 | |

For the year ended July 31, 2007, we repurchased 2,995,405 shares at a weighted average price of $29.91.

At the end of fiscal year 2009, the total number of shares repurchased under the program was 13,649,469.

As of July 31, 2009, 15,350,531 shares were available for repurchase under our program.

In December 2008, our President exercised 600,000 options at an exercise price of $4.47 per share.

In a cashless exercise, 96,929 shares of the 600,000 options exercised were net settled in

satisfaction of the exercise price for the portion of options that were classified as non-qualified stock options.

Additionally, 222,817 shares were withheld at a per share price of $26.93, totaling approximately $6.0 million, based on the closing price of our common stock on the date of exercise, in lieu of the federal and state minimum statutory tax withholding requirements.

In June 2009, our President exercised 361,035 options at an exercise price of $11.12 per share.

In a cashless exercise, 116,741 shares of the 361,035 shares exercised were net settled in satisfaction of the exercise price for the portion of options that were classified as non-qualified stock options.

Additionally, 109,595 shares were withheld at a per share price of $34.39, totaling approximately $3.8 million, based on the closing price of our common stock on the date of exercise, in lieu of the federal and state minimum statutory tax withholding requirements.

The tax withholding amounts paid by us have been accounted for as a repurchase of shares in the shareholders' equity section in the accompanying consolidated balance sheet.

However, these deemed share repurchases are not included as part of our stock repurchase program described in the preceding paragraph.

| _Fiscal 2007_ | | | | | | | | | | | | | |

| Fourth Quarter | | | 2,995,405 | | $ | 29.91 | | | 2,995,405 | | | 1,966,295 | |

We have determined that our peer group is no longer representative of our industry and we intend to discontinue the use of the peer group beginning in our Form 10-K for fiscal 2010.

| | | 7/04 | | | 7/05 | | | 7/06 | | | 7/07 | | | 7/08 | | | 7/09 | | |

| Copart, Inc. | | $ | 100.00 | | $ | 109.93 | | $ | 119.73 | | $ | 126.47 | | $ | 197.12 | | $ | 158.70 | |

| NASDAQ Composite | | $ | 100.00 | | $ | 115.86 | | $ | 113.24 | | $ | 138.79 | | $ | 123.03 | | $ | 105.70 | |

| Peer Group | | $ | 100.00 | | $ | 173.31 | | $ | 346.59 | | $ | 261.79 | | $ | 261.62 | | $ | 198.66 | |

| NASDAQ Q-50 (NXTQ) | | $ | 100.00 | | $ | 134.06 | | $ | 146.68 | | $ | 185.86 | | $ | 140.18 | | $ | 160.37 | |

The following selected consolidated statements of income data for the years ended July 31, [removed: 2009, 2008] [added: 2010, 2009] and [removed: 2007] [added: 2008] and the consolidated balance data at July 31, [removed: 2009] [added: 2010] and [removed: 2008,] [added: 2009,] are derived from the audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

The following selected consolidated statements of income data for the years ended July 31, [removed: 2006] [added: 2007] and [removed: 2005] [added: 2006] and the consolidated balance sheet data at July 31, [removed: 2007, 2006] [added: 2008, 2007] and [removed: 2005,] [added: 2006,] are derived from the audited consolidated financial statements that are not included in this Annual Report on Form 10-K.

| | | | | [added: 2010 | | |] 2009 | | | 2008 | | | 2007 | | | 2006 | | | [removed: 2005 | | |]

| | Revenues | | | $ | [removed: 743,082] [added: 772,879] | | $ | [removed: 784,848] [added: 743,082] | | $ | [removed: 560,680] [added: 784,848] | | $ | [removed: 528,571] [added: 560,680] | | $ | [removed: 447,731] [added: 528,571] | |

| | Operating income | | | | [added: 239,070 | | |] 225,325 | | | 237,917 | | | 203,145 | | | 171,562 | | [removed: | 156,436 | |]

| | Income from continuing operations before income taxes | | | | [added: 239,495 | | |] 227,732 | | | 249,650 | | | 217,421 | | | 174,522 | | [removed: | 164,595 | |]

| | Income tax expense | | | | [removed: (88,186] [added: (87,868] | ) | | [removed: (92,718] [added: (88,186] | ) | | [removed: (81,083] [added: (92,718] | ) | | [removed: (61,862] [added: (81,083] | ) | | [removed: (62,772] [added: (61,862] | ) |

| | Income from continuing operations | | | | [added: 151,627 | | |] 139,546 | | | 156,932 | | | 136,338 | | | 112,660 | | [removed: | 101,823 | |]

| | Income (loss) from discontinued operations, net of income tax effects | | | | [added: — | | |] 1,557 | | | — | | | — | | | (15,713 | ) | [removed: | 293 | |]

| | Net income | | | | [added: 151,627 | | |] 141,103 | | | 156,932 | | | 136,338 | | | 96,947 | | [removed: | 102,116 | |]

| | | Income from continuing operations | | $ | [removed: 1.67] [added: 1.80] | | $ | [removed: 1.80] [added: 1.67] | | $ | [removed: 1.50] [added: 1.80] | | $ | [removed: 1.24] [added: 1.50] | | $ | [removed: 1.13] [added: 1.24] | |

| | | Discontinued operations | | | [added: — | | |] 0.02 | | | — | | | — | | | (0.17 | ) | [removed: | — | |]

| | | Net income per share | | $ | [removed: 1.69] [added: 1.80] | | $ | [removed: 1.80] [added: 1.69] | | $ | [removed: 1.50] [added: 1.80] | | $ | [removed: 1.07] [added: 1.50] | | $ | [removed: 1.13] [added: 1.07] | |

| | | Weighted average shares | | | [added: 84,165 | | |] 83,537 | | | 87,412 | | | 90,651 | | | 90,372 | | [removed: | 90,162 | |]

| | | Income from continuing operations | | $ | [removed: 1.64] [added: 1.78] | | $ | [removed: 1.75] [added: 1.64] | | $ | [removed: 1.46] [added: 1.75] | | $ | [removed: 1.21] [added: 1.46] | | $ | [removed: 1.10] [added: 1.21] | |

| | | Discontinued operations | | | [added: — | | |] 0.02 | | | — | | | — | | | (0.17 | ) | [removed: | — | |]

| | | Net income per share | | $ | [removed: 1.66] [added: 1.78] | | $ | [removed: 1.75] [added: 1.66] | | $ | [removed: 1.46] [added: 1.75] | | $ | [removed: 1.04] [added: 1.46] | | $ | [removed: 1.10] [added: 1.04] | |

| | | Weighted average shares | | | [added: 85,027 | | |] 84,930 | | | 89,858 | | | 93,455 | | | 92,925 | | [removed: | 92,984 | |]

| | Cash, cash equivalents and short-term investments | | | $ | [removed: 162,691] [added: 268,188] | | $ | [removed: 38,954] [added: 162,691] | | $ | [removed: 210,246] [added: 38,954] | | $ | [removed: 279,850] [added: 210,246] | | $ | [removed: 253,643] [added: 279,850] | |

| | Working capital | | | [removed: $] | [added: 330,191 | | |] 212,349 | | [removed: $] | 84,501 | | [removed: $] | 247,850 | | [removed: $] | 328,017 | | [removed: $ | 293,696 | |]

| | Total assets | | | [removed: $] | [added: 1,228,812 | | |] 1,058,032 | | [removed: $] | 956,247 | | [removed: $] | 1,014,600 | | [removed: $] | 899,240 | | [removed: $ | 793,884 | |]

| | Total debt | | | [removed: $] | [removed: 1,457] [added: 975] | | [removed: $] | [removed: 2,240] [added: 1,457] | | [removed: $] | [removed: 2,793] [added: 2,240] | | [removed: $] | [removed: —] [added: 2,793] | | [removed: $] | — | |

| | Shareholders' equity | | | [removed: $] | [added: 1,087,234 | | |] 921,459 | | [removed: $] | 798,996 | | [removed: $] | 880,866 | | [removed: $] | 809,970 | | [removed: $ | 709,379 | |]

| | Number of storage facilities | | | | [added: 152 | | |] 147 | | | 143 | | | 131 | | | 122 | | [removed: | 117 | |]

This evaluation, or "Controls Evaluation," was performed under the supervision and with the participation of management, including our [removed: Chairman of the Board,] Chief Executive Officer and Director (our CEO) and our Senior Vice President and Chief Financial Officer (our CFO).

Disclosure Controls include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act is [added: accumulated and]

[removed: accumulated and] communicated to our management, including our CEO and CFO, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Management assessed our internal control over financial reporting as of July 31, [removed: 2009,] [added: 2010,] the end of our fiscal year.

Management based its assessment on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway [removed: Commission (COSO).][added: Commission.]

Our independent registered public accounting firm, Ernst & Young LLP, independently assessed the effectiveness of our internal control over financial reporting as of July 31, [removed: 2009.][added: 2010.]

We have audited Copart, Inc.'s internal control over financial reporting as of July 31, [removed: 2009,] [added: 2010,] based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria).

In our opinion, Copart, Inc. maintained, in all material respects, effective internal control over financial reporting as of July 31, [removed: 2009] [added: 2010,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Copart, Inc. as of July 31, [removed: 2009] [added: 2010] and [removed: 2008,] [added: 2009,] and the related consolidated statements of income, shareholders' equity and comprehensive income, and cash flows for each of the three years in the period ended July 31, [removed: 2009] [added: 2010] of Copart, Inc. and our report dated September [removed: 29, 2009] [added: 23, 2010] expressed an unqualified opinion thereon.

These inherent limitations include the realities that judgments in [removed: decision-making] [added: decision making] can be faulty, and that breakdowns can occur because of simple error or mistake.

September 23, 2010

September 29, 2009

Certain information required by Part III is omitted from this Annual Report on Form 10-K because we intend to file a definitive proxy statement for our [removed: 2009] [added: 2010] Annual Meeting of Shareholders (the Proxy Statement) not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, and certain information to be included therein is incorporated herein by reference.

Information required by this item concerning [removed: the] [added: our] Board of [removed: Directors of the Company,] [added: Directors,] the members of [removed: the Company's] [added: our] Audit Committee, [removed: the Company's] [added: our] Audit Committee Financial Expert, and compliance with Section 16(a) of the Securities Exchange Act of 1934 is incorporated by reference to the sections entitled "Election of Directors and Director Biographies," "Board of Directors Information" and "General—Compliance with Section 16(a) Beneficial Ownership Reporting Requirements" in [removed: the Company's] [added: our] Proxy Statement.

Information required by this item concerning our Executive Officers is incorporated by reference to the section entitled "Executive Officers" in [removed: the Company's] [added: our] Proxy Statement.

| | | | | [removed: [](#Report_financials)] [added: [](#Report)] [Report of Independent Registered Public Accounting [removed: Firm](#Report_financials)] [added: Firm](#Report)] | | | [removed: [61](#Report_financials)] [added: [59](#Report)] | |

| | | | | [removed: [](#Consolidated_balance)] [added: [](#balance_sheets)] [Consolidated Balance Sheets at July 31, [removed: 2009] [added: 2010] and [removed: 2008](#Consolidated_balance)] [added: 2009](#balance_sheets)] | | | [removed: [62](#Consolidated_balance)] [added: [60](#balance_sheets)] | |

| | | | | [removed: [](#Consolidated_Statements_of_Income)] [added: [](#stmnts_of_income)] [Consolidated Statements of Income for the years ended July 31, [removed: 2009, 2008] [added: 2010, 2009] and [removed: 2007](#Consolidated_Statements_of_Income)] [added: 2008](#stmnts_of_income)] | | | [removed: [63](#Consolidated_Statements_of_Income)] [added: [61](#stmnts_of_income)] | |

| | | | | [removed: [](#Consolidated_Statements_of_Share)] [added: [](#stmnts_of_shareholder)] [Consolidated Statements of Shareholders' Equity and Comprehensive Income for the years ended July 31, [removed: 2009, 2008] [added: 2010, 2009] and [removed: 2007](#Consolidated_Statements_of_Share)] [added: 2008](#stmnts_of_shareholder)] | | | [removed: [64](#Consolidated_Statements_of_Share)] [added: [62](#stmnts_of_shareholder)] | |

| | | | | [removed: [](#Consolidated_Statements_of_Cash)] [added: [](#stmnts_of_cash)] [Consolidated Statements of Cash Flows for the years ended July 31, [removed: 2009, 2008] [added: 2010, 2009] and [removed: 2007](#Consolidated_Statements_of_Cash)] [added: 2008](#stmnts_of_cash)] | | | [removed: [65](#Consolidated_Statements_of_Cash)] [added: [63](#stmnts_of_cash)] | |

[removed: | | | | | [](#Notes_to_Consolidated) [Notes to Consolidated Financial Statements](#Notes_to_Consolidated) | | | [66](#Notes_to_Consolidated) | |][added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS]

| | | 3. | | _Exhibits:_ The following Exhibits are filed as part of, or incorporated by reference into this [removed: report.] [added: report.] | | | | |

| 4.1 | | Preferred Stock Rights Agreement, [removed: dates] [added: dated] as of March 6, 2003, between [removed: the company] [added: Copart] and Equiserve Trust Company N.A., including the Certificate of Determination, the form of Rights Certificate and the Summary of Rights attached thereto as Exhibits A, B and C, respectively | | 8/A-12/G (File No. 000-23255), Exhibit No. 4.1 | | March 11, 2003 |

| [removed: 10.10*] [added: 10.8*] | | Copart Inc. 2007 Equity Incentive Plan (2007 EIP) | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.1 | | December 12, 2007 |

| [removed: 10.11*] [added: 10.9*] | | Form of Performance Share Award Agreement for use with 2007 EIP | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.2 | | December 12, 2007 |

| [removed: 10.12*] [added: 10.10*] | | Form of Restricted Stock Unit Award Agreement for use with 2007 EIP | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.3 | | December 12, 2007 |

| [removed: 10.13*] [added: 10.11*] | | Form of Stock Option Award Agreement for use with 2007 EIP | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.5 | | December 12, 2007 |

| [removed: 10.14*] [added: 10.12*] | | Form of Restricted Stock Award Agreement for use with 2007 EIP | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.4 | | December 12, 2007 |

| [removed: 10.15] [added: 10.13] | | Credit Agreement dated as of March 6, 2008 by and between Copart Inc. and Bank of America, N.A. | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.1 | | March 7, 2008 |

| [removed: 10.16*] [added: 10.14*] | | Copart, Inc. Executive Bonus Plan | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.13 | | August 3, 2006 |

| [removed: 10.17*] [added: 10.15*] | | Amended and Restated Executive Officer Employment Agreement between the Company and William E. Franklin, dated September 25, 2008 | | Quarterly Report on Form 10-Q (File No. 000-23255), Exhibit No. 10.1 | | December 10, 2008 |

| [removed: 10.18*] [added: 10.16*] | | Form of Copart, Inc. Stand-Alone Stock Option Award Agreement for grant of options to purchase 2,000,000 shares of the Company's common stock to each of Willis J. Johnson and A. Jayson Adair | | Registration Statement on Form S-8 (File No. 333-159946), Exhibit No. 4.1 | | [removed: April 16,] [added: June 12,] 2009 |

| 31.1 | | Certification of [removed: Chief] [added: Principal] Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | — | | Filed herewith |

| | | By: | | /s/ [removed: WILLIS J. JOHNSON Willis J. Johnson] [added: A. JAYSON ADAIR A. Jayson Adair] _Chief Executive Officer_ |

KNOWN ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints [removed: Willis J.][added: A.]

[removed: Johnson] [added: Jayson Adair] and William E.

| /s/ [removed: WILLIS J. JOHNSON Willis J. Johnson] [added: A. JAYSON ADAIR A. Jayson Adair] | | Chief Executive Officer (Principal Executive Officer and Director) | | September [removed: 29, 2009] [added: 23, 2010] |

| /s/ WILLIAM E. FRANKLIN William E. Franklin | | Senior Vice President of Finance and Chief Financial Officer (Principal Financial and Accounting Officer) | | September [removed: 29, 2009] [added: 23, 2010] |

| /s/ JAMES E. MEEKS James E. Meeks | | Director | | September [removed: 29, 2009] [added: 23, 2010] |

| /s/ STEVEN D. COHAN Steven D. Cohan | | Director | | September [removed: 29, 2009] [added: 23, 2010] |

| /s/ DANIEL ENGLANDER Daniel Englander | | Director | | September [removed: 29, 2009] [added: 23, 2010] |

| [removed: /s/ THOMAS W. SMITH] Thomas W. Smith | | Director | | September [removed: 29, 2009] [added: 23, 2010] |

| /s/ MATT BLUNT Matt Blunt | | Director | | September [removed: 29, 2009] [added: 23, 2010] |

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING [removed: FIRM][added: FIRM]

We have audited the accompanying consolidated balance sheets of Copart, Inc. as of July 31, [removed: 2009] [added: 2010] and [removed: 2008,] [added: 2009,] and the related consolidated statements of income, shareholders' equity and comprehensive income, and cash flows for each of the three years in the period ended July 31, [removed: 2009.][added: 2010.]

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Copart, Inc. at July 31, [removed: 2009] [added: 2010] and [removed: 2008,] [added: 2009,] and the consolidated results of its operations and its cash flows for each of the three years in the period ended July 31, [removed: 2009,] [added: 2010,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Copart, Inc.'s internal control over financial reporting as of July 31, [removed: 2009,] [added: 2010,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated September [removed: 29, 2009] [added: 23, 2010] expressed an unqualified opinion thereon.

COPART, [removed: INC.][added: INC.]

[removed: CONSOLIDATED] [added: CONSOLIDATED] BALANCE [removed: SHEETS][added: SHEETS]

[removed: (in] [added: (in] thousands, except share [removed: amounts)][added: amounts)]

| | | [added: July 31, 2010] | | [added: |] July 31, 2009 | | | July 31, 2008 | | |

| | Cash and cash equivalents | | | $ | [removed: 162,691] [added: 268,188] | | $ | [removed: 38,954] [added: 162,691] | |

| | Accounts receivable, net | | | | [removed: 109,248] [added: 109,061] | | | [removed: 111,705] [added: 109,248] | |

| | Vehicle pooling costs | | | | [removed: 28,685] [added: 29,890] | | | [removed: 30,787] [added: 28,685] | |

| | Inventories | | | | [removed: 4,667] [added: 4,976] | | | [removed: 5,334] [added: 4,667] | |

| | | | | [](#notes_to_fins) [Notes to Consolidated Financial Statements](#notes_to_fins) | | | [64](#notes_to_fins) | |

| 4.2 | | Amendment to Preferred Stock Rights Agreement, as of March 14, 2006, between Copart and Computershare Trust Company, N.A. (formerly Equiserve Trust Company, N.A.) | | 8/A-12G/A (File No. 000-23255), Exhibit 4.2 | | March 15, 2006 |

| 10.17* | | Amendment dated June 9, 2010 to Option Agreements dated June 6, 2001, October 21, 2002 and August 19, 2003 between the Company and Willis J. Johnson | | — | | Filed herewith |

| 14.01 | | Code of Ethics for Principal Executive and Senior Financial Officers | | Annual Report on Form 10-K (File No. 000-23254), Exhibit No. 14-01 | | October 17, 2003 |

| September 23, 2010 | | | | |

| September 23, 2010 | | | | |

| /s/ WILLIS J. JOHNSON Willis J. Johnson | | Chairman of the Board | | September 23, 2010 |

September 23, 2010

| | | | | July 31, 2010 | | | July 31, 2009 | | |

| Other assets | | | | | 18,784 | | | 21,915 | |

| | Net income | | | — | | | — | | | — | | | 151,627 | | | 151,627 | |

| | Comprehensive income | | | | | | | | | | | | | | | 145,968 | |

| | Shares repurchased | | | (121,251 | ) | | (512 | ) | | — | | | (3,945 | ) | | (4,457 | ) |

| Balances at July 31, 2010 | | | | 84,363,063 | | $ | 365,507 | | $ | (32,741 | ) | $ | 754,468 | | $ | 1,087,234 | |

COPART, INC.

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

into US dollars at average exchange rates in effect during each reporting period.

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

late-payment fees, which are recognized upon receipt of payment by the member.

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

_Allowance for Doubtful Accounts_

The Company maintains an allowance for doubtful accounts in order to provide for estimated losses resulting from disputed amounts billed to sellers or members and the inability of sellers or members to make required payments.

If billing disputes exceed expectations and/or if the financial condition of sellers or members were to deteriorate, additional allowances may be required.

The allowance is calculated by considering both seller and member accounts receivables written off during the previous 12 month period as a percentage of the total accounts receivable balance.

The Company estimates its allowances for doubtful

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

At July 31, 2010 no single customer accounted for more than 10% of the Company's accounts receivables.

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2010, 2009 AND 2008

_Stock Compensation_

| | | | | |

| --- | --- | --- | --- | --- |

| September 29, 2009 | | | | |

| September 29, 2009 | | | | |

| /s/ A. JAYSON ADAIR A. Jayson Adair | | President and Director | | September 29, 2009 |

| Barry Rosenstein | | Director | | September 29, 2009 |

As discussed in Note 1 to the consolidated financial statements, effective August 1, 2007, the Company adopted Financial Accounting Standards Board Interpretation No. 48, _Accounting for Uncertainty in Income Taxes._

September 29, 2009

| Land purchase options and other assets | | | | | 21,915 | | | 27,151 | |

| | Equity in losses of unconsolidated entity | | | | — | | | — | | | (2,216 | ) |

| Balances at July 31, 2006 | | | | 90,445,208 | | $ | 276,052 | | $ | (37 | ) | $ | 533,955 | | $ | 809,970 | |

| | Net income | | | — | | | — | | | — | | | 136,338 | | | 136,338 | |

| | Comprehensive income | | | | | | | | | | | | | | | 140,822 | |

| | Shares repurchased | | | (2,995,405 | ) | | (89,579 | ) | | — | | | — | | | (89,579 | ) |

| | | Equity in loss of unconsolidated entity | | | | | — | | | — | | | 2,216 | |

| | Change in book overdraft | | | | | | (17,502 | ) | | 8,246 | | | 4,721 | |

| | Principal payments on notes payable | | | | | | — | | | — | | | (2,033 | ) |

(1) Summary of Significant Accounting Policies (Continued)

_Book Overdraft_

As a result of maintaining a consolidated cash management system, the Company utilizes controlled disbursement bank accounts.

These accounts are funded as checks are presented for payment, not when checks are issued.

The resulting book overdraft position is included in current liabilities.

future.

In fiscal 2007, State Farm Insurance accounted for 10% of the Company's revenues.

not be recoverable.

_Share-Based Compensation_

the date of grant using an option-pricing model.

_Subsequent Events_

The Company has evaluated the impact of subsequent events through September 29, 2009, which is the date these financial statements were issued, refer to Note 19.

_Reclassifications_

The Company has determined that in the first quarter of fiscal 2008, it included $3.0 million in general and administrative costs and $0.4 million in general and administrative depreciation from the Copart UK operations that, in order to be consistent with US classification, should have been reflected in yard operations.

The reclassifications of these costs, which have no affect on fiscal 2009, are reflected in the fiscal 2008 results.

The Company made certain reclassifications to conform to the current year presentation.

1) The Company reclassified $165.1 million and $24.9 million of vehicle sales revenue for fiscal years ended July 31, 2008 and 2007, respectively, from total revenue; 2) the Company, reclassified $133.7 million and $22.4 million of cost of vehicle sales for fiscal years ended July 31, 2008 and 2007, respectively, from total yard operations; and 3) the Company reclassified $4.6 million from other long-term assets to deferred incomes taxes as of July 31, 2008.

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 157, _Fair Value Measurements_ (SFAS 157).

SFAS 157 defines fair value, establishes a framework for measuring fair value under GAAP and expands disclosure about fair value measurements.

In February 2008, the FASB issued FASB Staff Position (FSP) SFAS No. 157-2 _Effective Date of FASB Statement No. 157_ (FSP 157-2) which delays the effective date of SFAS 157 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statement on a recurring basis (at least annually).

FSP 157-2 partially defers the effective date of SFAS 157 to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years for items within the scope of FSP 157-2.

The Company adopted SFAS 157, except as it applies to those non-financial assets and non-financial liabilities as noted in FSP 157-2.

In February 2007, the FASB issued SFAS No. 159, _The Fair Value Option for Financial Assets and Financial Liabilities_ (SFAS 159).