Copart (CPRT) 10-K risk factor changes: FY2011 vs FY2010

In assessing the risks described below, you should also [removed: refer to] [added: 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 SEC._

Although no single customer accounted for more than 10% of our revenue during the fiscal year ended July 31, [removed: 2010,] [added: 2011,] historically, a limited number of vehicle sellers have collectively accounted for a substantial portion of our revenues.

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

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

Operationally, the businesses of Universal, Century, AG [removed: Watson and] [added: Watson,] D Hales [added: and Hewitt] 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.

[added: | • | |] the difficulty of managing and staffing foreign offices and the increased travel, infrastructure and legal compliance costs associated with multiple international locations; [added: |]

[added: | • | |] the need to localize our product offerings, particularly with respect to VB2; [added: |]

[added: | • | |] tariffs and trade barriers and other regulatory or contractual limitations on our ability to operate in certain foreign markets; and [added: |]

[added: | • | |] exposure to foreign currency exchange rate risk, which may have an adverse impact on our revenues and revenue growth rates. [added: |]

In addition, we cannot predict whether we will experience the same initial benefits from the implementation of VB2 in [removed: the UK market, or in] future markets we may enter, that we experienced in North [removed: America.][added: America or the UK.]

[added: | • | |] continue to acquire additional facilities on favorable terms; [added: |]

[added: | • | |] expand existing facilities in no-growth regulatory environments; [added: |]

[added: | • | |] increase revenues and profitability at acquired and new facilities; [added: |]

[added: | • | |] maintain the historical revenue and earnings growth rates we have been able to obtain through facility openings and strategic acquisitions; or [added: |]

[added: | • | |] create new vehicle storage facilities that meet our current revenue and profitability requirements. [added: |]

As we continue to expand our operations, our failure to manage growth could harm our business and adversely affect our [added: consolidated] results of operations and financial condition.

[added: | • | |] hire, train and manage additional qualified personnel; [added: |]

[added: | • | |] establish new relationships or expand existing relationships with vehicle sellers; [added: |]

[added: | • | |] identify and acquire or lease suitable premises on competitive terms; [added: |]

[added: | • | |] secure adequate capital; and [added: |]

[added: | • | |] maintain the supply of vehicles from vehicle sellers. [added: |]

Our inability to control or manage these growth factors effectively could have a material adverse effect on our [added: consolidated] financial position, results of operations, or cash flows.

[added: | • | |] fluctuations in the market value of salvage and used vehicles; [added: |]

[added: | • | |] the impact of foreign exchange gain and loss as a result of our [removed: recently acquired] companies in the UK; [added: |]

[added: | • | |] our ability to successfully integrate our newly acquired operations in [removed: the UK and] any additional [removed: international] markets we may enter; [added: |]

[added: | • | |] the availability of salvage vehicles; [added: |]

[added: | • | |] variations in vehicle accident rates; [added: |]

[added: | • | |] member participation in the Internet bidding process; [added: |]

[added: | • | |] delays or changes in state title processing; [added: |]

[added: | • | |] changes in international, state or federal laws or regulations affecting salvage vehicles; [added: |]

[added: | • | |] changes in local laws affecting who may purchase salvage vehicles; [added: |]

[added: | • | |] the timing and size of our new facility openings; [added: |]

[added: | • | |] the announcement of new vehicle supply agreements by us or our competitors; [added: |]

[added: | • | |] the severity of weather and seasonality of weather patterns; [added: |]

[added: | • | |] the amount and timing of operating costs and capital expenditures relating to the maintenance and expansion of our business, operations and infrastructure; [added: |]

[added: | • | |] the availability and cost of general business insurance; [added: |]

[added: | • | |] labor costs and collective bargaining; [added: |]

[added: | • | |] changes in the current levels of out of state and foreign demand for salvage vehicles; [added: |]

[added: | • | |] the introduction of a similar Internet product by a competitor; [removed: and][added: |]

[added: | • | |] the ability to obtain necessary permits to [removed: operate.][added: operate; and |]

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In fiscal 2011, we completed the acquisition of John Hewitt and Sons, Limited (Hewitt).

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If the implementation of our new ERP system is not executed efficiently and effectively, our business, financial condition, and our consolidated operating results could be adversely affected.

We are planning to convert our primary management information system to a new standard ERP system, which will occur in phases through 2013.

In the event this conversion of our primary management information system is not executed efficiently and effectively, the conversion may cause interruptions in our primary management information systems, which may make our website and services unavailable.

This type of interruption may prevent us from processing vehicles for our sellers and may prevent us from selling vehicles through our internet bidding platform, VB2, which could adversely affect our business, financial condition, and our consolidated operating results.

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| • | | the impact of our conversion to a new standard ERP system, if the conversion is not executed efficiently and effectively. |

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cancelled.

For example, in the second quarter of fiscal 2008, we experienced losses associated with credit card fraud in the UK.

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

Our strategic shift from live sales to an entirely Internet-based sales model presents risks, including substantial technology risks.

During 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 presents numerous risks, including our increased reliance on the availability and reliability of our network systems.

In particular, we believe the conversion presents the following risks, among others:

Our operating results in a particular period could be adversely affected in the event our networks are not operable for an extended period of time for any reason, as a result of Internet viruses, or as a result of any other technological circumstance that makes us unable to conduct our virtual sales.

Our business is increasingly reliant on internally developed technology, and we have limited historic experience developing technologies or systems for large-scale implementation and use.

Our general and administrative expenses have tended to increase as a percentage of revenue as our information technology payroll has increased.

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

Our increasing reliance on proprietary technology subjects us to intellectual property risks, including the risk of third party infringement claims or the risk that we cannot establish or protect intellectual property rights in our technologies.

We have filed patent applications for VB2 in the Netherlands, Canada, Australia, China, the European Union, Mexico and Japan, but we cannot provide any assurances that the patents will actually be issued, or if issued that the patents would not later be found to be unenforceable or invalid.

our ability to integrate and manage our acquisitions successfully;

acceptance of buyers and sellers of our Internet-based model deploying VB2, a proprietary Internet auction-style sales technology;

Implementation of VB2 in our operations has increased the relative importance of intellectual property rights to our business.

Further, an

Increased investment in advertising and marketing could adversely impact our operating results.

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

These amounts may be material to our overall general and administrative expenses and we cannot predict what future benefit, if any, will be derived.

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.

to secure financing to purchase salvaged vehicles which may adversely affect demand.

Fluctuations in the rate of exchange between the US dollar

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

Sellers are primarily insurance companies but also include banks and financial institutions, charities, car dealerships, fleet [removed: operators,] [added: operators and] vehicle rental [removed: companies and the general public.][added: companies.]

Under the consignment, or fixed fee, program, we generally [added: charge an additional fee for title processing and special preparation.]

Under the consignment programs, only the fees associated with vehicle processing are recorded in revenue, not the actual [removed: sales price (gross proceeds).]

We have experienced significant growth in facilities as we have acquired [removed: fourteen] [added: seven] facilities and established [removed: twelve] [added: seven] new facilities since the beginning of fiscal [removed: 2008.][added: 2009.]

We believe that these acquisitions and openings strengthen our coverage as we have [removed: 152] [added: 153] facilities located in North America and the UK as of July 31, [removed: 2010] [added: 2011] 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: 2007] [added: 2008] through July 31, [removed: 2010:][added: 2011:]

| [removed: Locations] [added: Locations] | | [removed: Acquisition] [added: | | Acquisition] or [removed: Greenfield] [added: Greenfield] | | [removed: Date] | | [removed: Geographic] [added: Date | | | | Geographic] Service [removed: Area] [added: Area] | [added: | |]

| [removed: Birmingham,] [added: Montgomery,] Alabama | | [added: | |] Greenfield | | [added: | |] February [removed: 2008] [added: 2009] | | [added: | |] Central Alabama | [added: | |]

| Louisville, Kentucky | | [added: | |] Greenfield | | [added: | |] September 2008 | | [added: | |] Northwest Kentucky and Southern Indiana | [added: | |]

| Richmond, Virginia | | [added: | |] Greenfield | | [removed: October] [added: | | *October] 2008 | | [added: | |] Central Virginia | [added: | |]

| Greer, South Carolina | | [added: | |] Greenfield | | [added: | |] February 2009 | | [added: | |] Northwest South Carolina | [added: | |]

| Warren, Massachusetts | | [added: | |] Greenfield | | [added: | |] June 2009 | | [added: | |] Central Massachusetts | [added: | |]

| Bristol, England | | [added: | |] Acquisition | | [added: | |] January 2010 | | [added: | |] United Kingdom | [added: | |]

| Bedford, England | | [added: | |] Acquisition | | [added: | |] January 2010 | | [added: | |] United Kingdom | [added: | |]

| Colchester, England | | [added: | |] Acquisition | | [added: | |] January 2010 | | [added: | |] United Kingdom | [added: | |]

| Gainsborough, England | | [added: | |] Acquisition | | [removed: *January] [added: | | January] 2010 | | [added: | |] United Kingdom | [added: | |]

| Luton, England | | [added: | |] Acquisition | | [added: | |] January 2010 | | [added: | |] United Kingdom | [added: | |]

| Scranton, Pennsylvania | | [added: | |] Greenfield | | [added: | |] February 2010 | | [added: | | Central] Pennsylvania | [added: | |]

[added: | | |] Closed in fiscal [removed: 2008][added: 2010 |]

[added: | * | |] Former MAG facility [added: |]

[removed: Closed in fiscal 2010][added: _Fiscal 2011 Compared to Fiscal 2010_]

[removed: This acquisition was] [added: These acquisitions were] undertaken because of [removed: its] [added: their] strategic fit with our business in the United Kingdom.

The period-to-period comparability of our [added: consolidated] operating results and financial condition is [removed: substantially] affected by business acquisitions, new openings, weather and product introductions during such periods.

| | | [removed: 2010] | | [added: 2010] | [removed: Percentage] [added: | | | Percentage] of [removed: Revenue] [added: Revenue] | | | [removed: 2009] | [added: 2009] | | [removed: Percentage] [added: | | Percentage] of [removed: Revenue] [added: Revenue] | | |

| Service revenues | | [added: | |] $ | 642,134 | | | [added: |] 83 | % | [added: |] $ | 615,352 | | | [added: |] 83 | % |

| Vehicle sales | | | [added: | |] 130,745 | | | [added: |] 17 | % | | [added: |] 127,730 | | | [added: |] 17 | % |

| | | [added: | |] $ | 772,879 | | | [added: |] 100 | % | [added: |] $ | 743,082 | | | [added: |] 100 | % |

Service Revenues. Service revenues were [removed: approximately] $642.1 million during fiscal 2010 compared to $615.4 million for fiscal 2009, an increase of $26.8 million, or 4.4%, above fiscal 2009.

Vehicle sales revenues were [removed: 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 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 [removed: dismantling,] [added: 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 [removed: and used car pricing,] nor can we isolate the impact that VB2 had on the ultimate selling price of vehicles sold in the UK.

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

Cost of Vehicle Sales. The cost of vehicles sold was [removed: approximately] $104.7 million during fiscal 2010 compared to $106.0 million for fiscal 2009, a decline of [removed: approximately] $1.4 million, or 1.3%.

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

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

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 [removed: the current year] [added: fiscal 2010] 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 [removed: the prior year.][added: fiscal 2009.]

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

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

The following [added: table] sets forth information on [removed: customer] revenue by class (in thousands, except percentages):

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sales price (gross proceeds).

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| Homestead, Florida | | | | Greenfield | | | | September 2010 | | | | Southern Florida | | |

| Hartford City, Indiana | | | | Acquisition | | | | March 2011 | | | | Central Indiana | | |

| Wolverhampton, England | | | | Acquisition | | | | March 2011 | | | | United Kingdom | | |

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In fiscal 2011, we acquired John Hewitt and Sons, Limited (Hewitt)

which operated one location in the United Kingdom.

| | | | | 2011 | | | | Percentage of Revenue | | | | 2010 | | | | Percentage of Revenue | | |

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| Service revenues | | | | $ | 723,610 | | | | 83 | % | | $ | 642,134 | | | | 83 | % |

| Vehicle sales | | | | | 148,636 | | | | 17 | % | | | 130,745 | | | | 17 | % |

| | | | | $ | 872,246 | | | | 100 | % | | $ | 772,879 | | | | 100 | % |

Service Revenues. Service revenues were $723.6 million during fiscal 2011 compared to $642.1 million for fiscal 2010, an increase of $81.5 million, or 12.7%, above fiscal 2010.

Growth in the average revenue per car sold generated $1.9 million in additional revenue over last year as higher scrap metal and used car pricing led to a general increase in the average selling price and, consequently, higher revenue per car sold, and was offset by growth in the percentage of volume processed from suppliers with below average revenue per car.

We cannot determine the impact of the movement of these factors, nor can we predict their future movement.

Further, we cannot determine which vehicles are sold to the end user or for

scrap, dismantling, retailing or export.

Accordingly, we cannot quantify the specific impact that commodity pricing, used car pricing, and the introduction of VB2 had on the selling price of vehicles and ultimately on service revenue.

In addition, on August 1, 2010, we adopted Accounting Standards Update (ASU) 2009-13_, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements_ (ASU 2009-13).

Consequently, we recognized in the period earned certain revenues, primarily towing fees, titling fees and other enhancement service fees, which were previously deferred until the period the car associated with those revenues was sold.

As a result of this change, we recognized $14.4 million in additional revenue for the fiscal year ended July 31, 2011, which would have otherwise been recognized in future periods.

Vehicle sales revenues were $148.6 million during fiscal 2011 compared to $130.7 million for fiscal 2010, an increase of $17.9 million, or 13.7%, above fiscal 2010.

The increase in vehicle sales revenue was due to the growth in the average selling price of vehicles which resulted in increased revenue of $16.3 million.

Yard Operation Expenses. Yard operation expenses were $374.1 million during fiscal 2011 compared to $320.2 million for fiscal 2010, an increase of $53.9 million, or 16.8%, above fiscal 2010.

The increase was driven primarily by (i) the growth in volume of units processed, (ii) the adoption of ASU 2009-13, (iii) increase in subhauling costs due to the growth in diesel prices on a year over year basis and, (iv) the general growth in program costs associated with new business segments.

There was a detrimental impact on yard operating expenses due to the change in the GBP to USD exchange rate of $0.8 million.

On August 1, 2010 we adopted ASU 2009-13.

Consequently, we recognized certain revenues and expenses associated primarily with towing fees, titling fees and seller storage fees, which were previously deferred until the period the car associated with those revenues and expenses was sold.

The expenses recognized for the year ended July 31, 2011, which would have otherwise been recognized in future periods, was $13.5 million.

Unit volume decrease led to a decrease of $0.6 million.

The decline in general and administrative costs was due primarily to decreased advertising costs and decreased headcount.

The detrimental

Interest expense increased $3.9 million as a result of increased borrowing under the new credit facility; refer to footnote 10 for additional information regarding the facility.

Interest income declined $0.3 million due primarily to reduced interest yields and a lower cash balance.

Other income, net, increased $1.7 million due primarily to the gain on sale of assets.

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We cannot determine which vehicles are sold directly to

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charge an additional fee for title processing and special preparation.

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| Peterlee, England | | Acquisition | | August 2007 | | Northern England |

| Wisbech, England | | Acquisition | | August 2007 | | Eastern England |

| Rochford, England | | Acquisition | | August 2007 | | Southeast England |

| London, Canada | | Greenfield | | September 2007 | | Southern Ontario |

| Windsor, New Jersey | | Greenfield | | November 2007 | | Central New Jersey |

| Walton, Kentucky | | Greenfield | | January 2008 | | Northern Kentucky |

| Inverkeithing, Scotland | | Acquisition | | March 2008 | | Central Scotland |

| Whitburn, Scotland | | Acquisition | | March 2008 | | Central Scotland |

| Featherstone, England | | Acquisition | | *March 2008 | | Northeast England |

| Doncaster, England | | Acquisition | | *March 2008 | | Northeast England |

| Minneapolis, Minnesota | | Greenfield | | March 2008 | | Central Minnesota and Wisconsin |

| Sikeston, Missouri | | Acquisition | | March 2008 | | Southeast Missouri |

| York, England | | Acquisition | | April 2008 | | Northern England |

| Prairie Grove, Arkansas | | Greenfield | | July 2008 | | Northwest Arkansas |

| Montgomery, Alabama | | Greenfield | | February 2009 | | Central Alabama |

*

In April 2008, we completed the acquisition of Simpson Bros.

(York) Holdings Limited, a UK limited liability company (Simpson), which operated one location in York, England.

Simpson's primary business activity was the dismantling of automobiles and the sales of salvaged auto parts.

In the same month, we also completed the acquisition of Bob Lowe Salvage Pool, Inc., which 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 Watson), which operated two salvage locations in Scotland and two salvage locations in northern England.

In August 2007, we completed the acquisition of Century Salvage Sales Limited (Century), a vehicle salvage disposal company with three facilities located in the UK.

The total consideration paid for these acquisitions consisted of approximately $38.2 million in cash, net of cash acquired.

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

Universal, based in the UK and operating exclusively within the UK, is a service provider to the motor insurance and automotive industries.

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.

We also assumed outstanding indebtedness of Universal totaling approximately £2.3 million ($4.5 million as of June 14, 2007).

The acquisition was our first acquisition outside North America.

The following table sets forth for the periods indicated below, certain information derived from our consolidated statements of income presented in absolute dollars and as a percentage of revenues.

There can be no assurance that any trend in operating results will continue in the future.

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_Fiscal 2009 Compared to Fiscal 2008_

| | | 2009 | | | Percentage of Revenue | | | 2008 | | | Percentage of Revenue | | |

Interest [removed: Rate] [added: Income] Risk

To achieve this objective in the current uncertain global financial markets, as of July 31, [removed: 2010,] [added: 2011,] all of our total cash and cash equivalents were held in bank deposits, US Treasury Bills, and money market funds.

As of July 31, [removed: 2010,] [added: 2011,] 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: 2010,] [added: 2011,] 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 [removed: denominated would result in a decrease/increase to revenue of approximately $17.1 million for the twelve months ended July 31, 2010.]

At July 31, [removed: 2010,] [added: 2011,] the cumulative effect of foreign exchange rate fluctuations on our consolidated financial position was a net translation loss of [removed: approximately $32.7] [added: $23.2] million.

A 10% strengthening or weakening in the value of the US dollar relative to the Canadian dollar or the British pound will not have a material [removed: affect] [added: effect] on our consolidated financial position.

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Interest Expense Risk

Our total borrowings under the Credit Facility were $375.1 million as of July 31, 2011.

Amounts borrowed under the Credit Facility bear interest, subject to certain restrictions, at a fluctuating rate based on (i) the Eurocurrency Rate, (ii) the Federal Funds Rate or (iii) the Prime Rate as described in the Credit Facility.

A default interest rate applies on all obligations during an event of default under the Credit Facility, at a rate per annum equal to 2.0% above the otherwise applicable interest rate.

At July 31, 2011, the interest rate was the Eurocurrency Rate plus 1.50%.

Changes in the overall level of interest rates affect the interest expense that we recognize in our consolidated statements of income.

An interest rate risk sensitivity analysis is used to measure interest rate risk by computing estimated changes in cash flows as a result of assumed changes in market interest rates.

As of July 31, 2011, if the Eurocurrency Rate increased by 100 basis points, the change would have increased our interest expense by $2.1 million for the year ended July 31, 2011.

As of July 31, 2011, we have not entered into any interest rate swaps of forward interest rate contracts to mitigate the risk.

denominated would result in a decrease/increase to revenue of $19.1 million for the twelve months ended July 31, 2011.

_

Sellers are primarily insurance [removed: companies] [added: companies,] but also include banks and financial institutions, charities, car dealerships, fleet [removed: operators,] [added: operators and] vehicle rental [removed: companies and the general public.][added: companies.]

[removed: The majority of the] vehicles [removed: sold on behalf of the insurance companies are either damaged vehicles] deemed a total loss or not economically repairable by the insurance companies or are recovered stolen vehicles for which an insurance settlement with the vehicle owner has already been made.

[removed: During fiscal 2004 and fiscal 2008, we] [added: We] converted all of our North American and UK [removed: sales, respectively,] [added: sales] to [removed: VB2.][added: VB2 during fiscal 2004 and fiscal 2008, respectively.]

For fiscal [removed: 2010,] [added: 2011,] sales of North American vehicles, on a unit basis, to members registered outside the state where the vehicle is located accounted for [removed: 50.2%] [added: 51.4%] of total vehicles sold; [removed: 27.5%] [added: 28.4%] of vehicles were sold to out of state members and [removed: 22.7%] [added: 23.0%] were sold to out of country members, based on registration.

For fiscal [removed: 2010,] [added: 2011,] sales of UK vehicles, on a unit basis, to members registered outside the country where the vehicle is located accounted for [removed: 17.7%] [added: 17.5%] of total vehicles sold.

[added: | • | |] providing coverage that facilitates seller access to buyers around the world, reducing towing and third-party storage expenses, offering a local presence for vehicle inspection stations, and providing prompt response to catastrophes and natural disasters by specially-trained teams; [added: |]

[added: | • | |] providing a comprehensive range of customer services that include merchandising services, efficient title processing, timely pick-up and delivery of vehicles, and Internet sales; [added: |]

[added: | • | |] establishing and efficiently integrating new facilities and acquisitions; [added: |]

[added: | • | |] increasing the number of bidders that can participate at each sale through the ease and convenience of Internet bidding; [added: |]

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

[added: | • | |] providing the venue for insurance customers through our Virtual Insured Exchange (VIX) product to contingently sell a vehicle through the auction process to establish its true value, allowing the insurance customer to avoid dealing with estimated values when negotiating with owners who wish to retain their damaged vehicles. [added: |]

For fiscal year [removed: 2010,] [added: 2011,] which ended July 31, [removed: 2010,] [added: 2011,] our revenues were [removed: approximately $772.9] [added: $872.2] million and our operating income was [removed: approximately $239.1] [added: $265.3] 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 [removed: (Scotland)] Limited (AG Watson) on February 29, 2008; [added: and] Simpson Bros.

[removed: (York)] Holdings Limited (Simpson) on April 4, 2008.

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

In fiscal 2008, we initiated two new programs using VB2, (i) Copart Dealer Services (CDS), by which we sell dealer-trade-ins and (ii) CopartDirect, whereby we [removed: sell] [added: offer to purchase the] cars [removed: on behalf of] [added: directly from] the [removed: general public.][added: public and sell them on our own behalf.]

Our goal through these two programs [removed: is] [added: was] to expand [removed: VB2's] [added: VB2’s] application beyond traditional salvage in order to expand our customer base.

As of July 31, [removed: 2010,] [added: 2011,] we had [added: a total of 153 facilities, comprised of] 134 [removed: facilities] in the US, 2 [removed: facilities] in Canada and [removed: 16 facilities] [added: 17] in the UK.

Industry [removed: Overview][added: Overview]

Although there are other sellers of vehicles, such as banks and financial institutions, charities, car dealerships, fleet [removed: operators,] [added: operators and] vehicle rental [removed: companies and the general public,] [added: companies,] the primary sellers of vehicles are insurance companies.

Vehicle dismantlers, which we believe are the largest group of vehicle buyers, either dismantle a salvage vehicle and sell parts individually or sell the entire vehicle to rebuilders, used vehicle dealers, or the [added: general] public.

[added: | • | |] the anticipated percentage return on salvage (i.e., gross salvage proceeds, minus vehicle handling and selling expenses, divided by the actual cash value); [added: |]

[added: | • | |] the services provided by the company and the degree to which such services reduce administrative costs and expenses; [added: |]

[added: | • | |] the price the company charges for its services; [added: |]

[added: | • | |] national coverage; [added: |]

[added: | • | |] the ability to respond to natural disasters; [added: |]

[added: | • | |] the ability to provide analytical data to the seller; and [added: |]

[added: | • | |] in the UK, the actual amount paid for the vehicle. [added: |]

In the US, total loss vehicles may be sold in most states only after [removed: obtaining a salvage title from the DMV.]

Operating and Growth [removed: Strategy][added: Strategy]

The following table sets forth facilities that we have acquired or opened from August 1, [removed: 2007] [added: 2008] through July 31, [removed: 2010:][added: 2011:]

| [removed: Locations] [added: Locations] | | [removed: Acquisition] [added: | | Acquisition] or [removed: Greenfield] [added: Greenfield] | | [removed: Date] | | [added: Date] | | [removed: Geographic] [added: | | Geographic] Service [removed: Area] [added: Area] | [added: | |]

| [removed: Birmingham,] [added: Montgomery,] Alabama | | [added: | |] Greenfield | | | | February [removed: 2008] [added: 2009] | | [added: | |] Central Alabama | [added: | |]

| Louisville, Kentucky | | [added: | |] Greenfield | | | | September 2008 | | [added: | |] Northwest Kentucky and Southern Indiana | [added: | |]

| Richmond, Virginia | | [added: | |] Greenfield | | | | [removed: October] [added: *October] 2008 | | [added: | |] Central Virginia | [added: | |]

| Greer, South Carolina | | [added: | |] Greenfield | | | | February 2009 | | [added: | |] Northwest South Carolina | [added: | |]

| Warren, Massachusetts | | [added: | |] Greenfield | | | | June 2009 | | [added: | |] Central Massachusetts | [added: | |]

| Bristol, England | | [added: | |] Acquisition | | | | January 2010 | | [added: | |] United Kingdom | [added: | |]

| Bedford, England | | [added: | |] Acquisition | | | | January 2010 | | [added: | |] United Kingdom | [added: | |]

| Colchester, England | | [added: | |] Acquisition | | | | January 2010 | | [added: | |] United Kingdom | [added: | |]

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

Corporate Information

We were incorporated in California in 1982 and became a public company in 1994.

Our principal executive offices are located at 4665 Business Center Drive, Fairfield, California 94534 and our telephone number at that address is (707) 639-5000.

Our website is _www.copart.com_.

The contents of our website are not incorporated by reference into this Form 10-K.

We provide free of charge through a link on our website access to our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as amendments to those reports, as soon as reasonably practical after the reports are electronically filed with, or furnished to, the SEC.

CopartTM, VB2TM, CopartDirectTM, BID4UTM, CoPartfinderTM and CI & DesignTM are trademarks of Copart, Inc. This Form 10-K also includes other trademarks of Copart and of other companies.

Overview

The majority of the vehicles sold on behalf of the insurance companies are either damaged

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In fiscal 2011, we acquired John Hewitt and Sons, Limited (Hewitt) on March 11, 2011.

In fiscal 2011, in North America, we acquired one new facility located in Hartford City, Indiana, and we opened a new facility in Homestead, Florida.

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obtaining a salvage title from the DMV.

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| Homestead, Florida | | | | Greenfield | | | | September 2010 | | | | Southern Florida | | |

| Hartford City, Indiana | | | | Acquisition | | | | March 2011 | | | | Central Indiana | | |

| Wolverhampton, England | | | | Acquisition | | | | March 2011 | | | | United Kingdom | | |

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_

General

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

| | | | | | | | | |

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| Peterlee, England | | Acquisition | | | | August 2007 | | Northern England |

| Wisbech, England | | Acquisition | | | | August 2007 | | Eastern England |

| Rochford, England | | Acquisition | | | | August 2007 | | Southeast England |

| London, Canada | | Greenfield | | | | September 2007 | | Southern Ontario |

| Windsor, New Jersey | | Greenfield | | | | November 2007 | | Central New Jersey |

| Walton, Kentucky | | Greenfield | | | | January 2008 | | Northern Kentucky |

| Inverkeithing, Scotland | | Acquisition | | | | March 2008 | | Central Scotland |

| Whitburn, Scotland | | Acquisition | | | | March 2008 | | Central Scotland |

| Featherstone, England | | Acquisition | | * | | March 2008 | | Northeast England |

| Doncaster, England | | Acquisition | | * | | March 2008 | | Northeast England |

| Minneapolis, Minnesota | | Greenfield | | | | March 2008 | | Central Minnesota and Wisconsin |

| Sikeston, Missouri | | Acquisition | | | | March 2008 | | Southeast Missouri |

| York, England | | Acquisition | | | | April 2008 | | Northern England |

| Prairie Grove, Arkansas | | Greenfield | | | | July 2008 | | Northwest Arkansas |

| Montgomery, Alabama | | Greenfield | | | | February 2009 | | Central Alabama |

*

Closed in fiscal 2010

We plan to continue to refine

facilities in North America and the UK.

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

Anyone can call 1-888-Sell-it-1 and arrange to drop off their vehicle and transferable title at any of our North American facilities.

We sell the vehicle by listing it on VB2, monitoring the sale, handling the title processing, collecting payment from the buyer, and remitting the balance less our fees to the seller.

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

As of July 31, 2008, our UK operations were completely migrated to our proprietary business operating software and servers described above.

sampling.

Legal Proceedings

We are involved in litigation and damage claims arising in the ordinary course of business, such as actions related to injuries, property damage, and handling or disposal of vehicles.

This litigation includes the following matter:

On November 20, 2007, Car Auction & Reinsurance Solutions, Inc. (CARS) filed suit against Copart in the Superior Court in the County of New Castle, Delaware.

CARS is seeking in excess of $2 million in damages, punitive damages, and prejudgment interest related to allegations involving breach of contract and misrepresentation.

We believe the claim is without merit and are defending the lawsuit vigorously.

On December 16, 2008, Liberty Mutual Fire Insurance Company filed suit against Copart in the US District Court, Northern District of California.

Liberty Mutual's complaint 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 sought to reform the contract and charge us for a $2 million self-insured retention which it claimed was the original intent.

On November 20, 2007, Car Auction & Reinsurance Solutions, Inc. (CARS) filed suit against [removed: Copart] [added: us] in the Superior Court in the County of New Castle, Delaware.

CARS [removed: is] [added: was] seeking in excess of [removed: $2] [added: $2.0] million in damages, punitive damages, and prejudgment interest related to allegations involving breach of contract and misrepresentation.

We believe the claim is without merit and [removed: are defending] [added: intend to continue to vigorously defend] the [removed: lawsuit vigorously.][added: lawsuit.]

We believe that any ultimate liability will not have a material effect on our [added: consolidated] financial position, results of operations or cash flows.

[removed: However, the amount of the liabilities associated with] these claims, if any, cannot be determined with certainty.

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

_Legal Proceedings_

These legal proceedings include the following matters:

On September 15, 2011 the parties reached a settlement amount that was not material to our consolidated financial condition or results of operations.

On August 21, 2008, a former employee filed a Charge of Discrimination with the Equal Employment Opportunity Commission, or EEOC, claiming, in part, that he was denied employment based on his race and subjected to unlawful retaliation.

We responded to the Charge of Discrimination explaining that we have a policy prohibiting the employment of individuals with certain criminal offenses and that the former employee was terminated after it was belatedly discovered that he had been convicted of a felony and other crimes prior to being hired by us.

The Charge of Discrimination lay dormant at the EEOC for over two years.

In January,

2011, however, the EEOC began actively investigating the allegations and challenging our policy of conducting criminal background checks and denying employment based on certain criminal convictions.

It is the EEOC’s position that such a practice is unlawful because it has a disparate impact on minorities.

It is our position that our policy is required by one of our largest auto insurance company customers.

Because our customer is in the insurance and financial services industry, its operations are heavily regulated.

The Federal Deposit Insurance Act (12 U.S.C. §1829) prohibits savings and loan holding companies, such as our customer, from employing “any person who has been convicted of any criminal offense involving dishonesty or a breach of trust or money laundering, or has agreed to enter into a pretrial diversion or similar program in connection with a prosecution for such offense.” In turn, it is our understanding that our customer is obligated to make sure its vendors, such as us, comply with similar hiring restrictions.

The EEOC is still investigating the Charge of Discrimination.

We anticipate that if the Charge of Discrimination is not dismissed or settled, the EEOC will file a lawsuit in Federal Court on behalf of all former employees and applicants of ours who were denied employment because of our policy.

We believe that our practices are not unlawful and intend to continue to vigorously defend this action.

On April 23, 2010, Deborah Hill filed suit against us in the Twentieth Judicial Circuit of Collier County, Florida, alleging negligent destruction of evidence in connection with a stored vehicle that suffered damage due to a fire at our facility in Florida where the vehicle was being stored.

Relief sought is for compensatory damages, costs and interest allowed by law.

On September 21, 2010, Robert Ortiz and Carlos Torres filed suit against us in Superior Court of San Bernardino County, San Bernardino District, which purported to be a class action on behalf of persons employed by us in the positions of facilities managers and assistant general managers in California at any time since the date four years prior to September 21, 2010.

The complaint alleges failure to pay wages and overtime wages, failure to provide meal breaks and rest breaks, in violation of various California Labor and Business and Professional Code sections, due to alleged misclassification of facilities managers and assistant general managers as exempt employees.

Relief sought includes class certification, injunctive relief, damages according to proof, restitution for unpaid wages, disgorgement of ill-gotten gains, civil penalties, attorney’s fees and costs, interest, and punitive damages.

We believe the claim is without merit and intend to continue to vigorously defend the lawsuit.

On February 12, 2011, Jose E.

Brizuela filed suit against us in Superior Court, San Bernardino County, San Bernardino District, which purports to be class action on behalf of persons employed by us paid on a hourly basis in California at any time since the date four years prior to February 14, 2011.

The complaint alleges failure to pay all earned wages due to an alleged practice of rounding of hours worked to the detriment of the employees.

Relief sought includes class certification, injunctive relief, unpaid wages, waiting time penalty-wages, interest, and attorney’s fees and costs of suit.

We believe the claim is without merit and intend to continue to vigorously defend the lawsuit.

On August 10, 2011, Glenn A.

Mangis and Lynn Brown-Mangis, husband and wife, filed suit against us in the Superior Court of Washington for Pierce County, alleging exposure to asbestos during the course of his employment as a carpenter, electrician and laborer; and as a direct result of said exposure, Plaintiff developed mesothelioma.

Plaintiff’s wife is alleging loss of spousal relationship as a result.

Relief sought is for general and special damages, medical and related expenses, costs and disbursements in case, prejudgment interest and all other relief the Court deems just.

No specific amount was given.

We believe the claim is without merit and intend to continue to vigorously defend the lawsuit.

However, the amount of the liabilities associated with

_Governmental Proceedings_

The Georgia Department of Revenue, or DOR, recently conducted a sales and use tax audit of our operations in Georgia for the period from January 1, 2007 through June 30, 2011.

As a result of the audit, the DOR issued a notice of proposed assessment for uncollected sales taxes in which it asserted that we failed to remit sales taxes totaling $73.8 million, including penalties and interest.

In issuing the notice of proposed assessment, the DOR stated its policy position that sales for resale to non-U.S. registered resellers are subject to Georgia sales and use tax.

We have engaged a Georgia law firm and outside tax advisors to review the conduct of our business operations in Georgia, the notice of assessment, and the DOR’s policy position.

In particular, our outside legal counsel has provided us with an opinion that our sales for resale to non-U.S. registered resellers should not be subject to Georgia sales and use tax.

This litigation includes the following matter:

On December 16, 2008, Liberty Mutual Fire Insurance Company filed suit against Copart in the US District Court, Northern District of California.

Liberty Mutual's complaint 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 sought to reform the contract and charge us for a $2 million self-insured retention which it claimed was the original intent.

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

[removed: [PART IV](#ea40501_part_iv)][added: | PART I | | | | | | | | | 1 | |]

[removed: Washington,] [added: Washington,] D.C. 20549

OF THE SECURITIES EXCHANGE ACT OF [removed: 1934][added: 1934]

[removed: |] (Mark [removed: One) | | |][added: One)]

| [removed: þ] [added: \[X\]] | | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [removed: For] [added: For] the fiscal year ended: July 31, [removed: 2010] [added: 2011] |

| [removed: o] [added: \[ \]] | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934 For] [added: 1934 For] the transition period from [removed: to] [added: to Commission file number 0-23255] |

[removed: (Exact] [added: (Exact] name of registrant as specified in its [removed: charter)][added: charter)]

| [removed: California] _(State or other jurisdiction of incorporation or organization)_ | | [removed: 94-2867490] [added: | |] _(I.R.S. Employer Identification Number)_ | [added: | | |]

| 4665 Business Center Drive Fairfield, California _(Address of principal executive offices)_ | | [removed: 94534 _(Zip] [added: | | 94534 _(Zip] code)_ | [added: | | |]

[removed: Registrant's] [added: | Registrant’s] telephone number, including area code: [added: (707) 639-5000 Securities registered pursuant to Section 12(b) of the Act: | | | | | | | |]

| Title of Each Class | | [added: | |] Name of each exchange on which registered | [added: | |]

| Common Stock, no par value (Including associated Preferred Stock Rights) | | [added: | |] The NASDAQ Stock Market LLC (NASDAQ Global Select Market) | [added: | |]

Yes [removed: þ] [added: \[X\]] No [removed: o][added: \[ \]]

Yes [removed: o] [added: \[ \]] No [removed: þ][added: \[X\]]

Yes [removed: o] [added: \[X\]] No [removed: o][added: \[ \]]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of [removed: registrant's] [added: registrant’s] knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [removed: o]

| Large Accelerated Filer [removed: þ] [added: \[X\]] | | [added: | |] Accelerated Filer [removed: o] [added: \[ \]] | | [added: | |] Non-Accelerated Filer [removed: o (Do not check if a smaller reporting company)] [added: \[ \]] | | [added: | |] Smaller Reporting Company [removed: o] [added: \[ \]] | [added: | | |]

The aggregate market value of the voting and non-voting Common Stock held by non-affiliates of the registrant as of January 31, [removed: 2010] [added: 2011] (the last business day of the [removed: registrant's] [added: registrant’s] most recently completed second fiscal quarter) was [removed: $2,837,917,860] [added: $2,111,301,225] based upon the closing sales price reported for such date on the NASDAQ Global Select Market (formerly the NASDAQ National Market).

At September [removed: 22, 2010,] [added: 27, 2011,] registrant had [removed: 84,367,430] [added: 66,030,517] outstanding shares of Common Stock.

[removed: Items 10, 11, 12, 13, and 14] [added: Portions] of [removed: Part III incorporate certain information by reference from the registrant's] [added: our] definitive [removed: proxy statement] [added: Proxy Statement] for [removed: its 2010] [added: the 2011] Annual Meeting of [removed: Shareholders (Proxy Statement)] [added: Shareholders, also referred] to [added: in this Annual Report on Form 10-K as our Proxy Statement, which will] be filed [added: with the Securities and Exchange Commission, or SEC,] pursuant to Regulation 14A within 120 days after the [removed: registrant's] [added: registrant’s] fiscal year end of July 31, [removed: 2010.][added: 2011, have been incorporated by reference in Part III hereof.]

for the Fiscal Year Ended July 31, [removed: 2010][added: 2011]

TABLE OF [removed: CONTENTS][added: CONTENTS]

| | | | | [removed: Page] | [added: | | | Page | | |]

| | | [removed: [](#dg40501_industry_overview) [Industry Overview](#dg40501_industry_overview)] | | [removed: [5](#dg40501_industry_overview)] [added: Industry Overview] | [added: | | | | 3 | |]

| | | [removed: [](#dg40501_operating_and_growth_strategy) [Operating] [added: | | Operating] and Growth [removed: Strategy](#dg40501_operating_and_growth_strategy)] [added: Strategy] | | [removed: [6](#dg40501_operating_and_growth_strategy)] | [added: | | 5 | |]

| | | [removed: [](#dg40501_our_competitive_advantages) [Our] [added: | | Our] Competitive [removed: Advantages](#dg40501_our_competitive_advantages)] [added: Advantages] | | [removed: [8](#dg40501_our_competitive_advantages)] | [added: | | 6 | |]

| | | [removed: [](#dg40501_our_service_offerings) [Our] [added: | | Our] Service [removed: Offerings](#dg40501_our_service_offerings)] [added: Offerings] | | [removed: [9](#dg40501_our_service_offerings)] | [added: | | 7 | |]

| | | [removed: [](#di40501_sales) [Sales](#di40501_sales)] | | [removed: [12](#di40501_sales)] [added: Sales] | [added: | | | | 10 | |]

| | | [removed: [](#di40501_members) [Members](#di40501_members)] | | [removed: [12](#di40501_members)] [added: Members] | [added: | | | | 11 | |]

| | | [removed: [](#di40501_competition) [Competition](#di40501_competition)] | | [removed: [13](#di40501_competition)] [added: Competition] | [added: | | | | 11 | |]

| | | [removed: [](#di40501_management_information_systems) [Management] [added: | | Management] Information [removed: Systems](#di40501_management_information_systems)] [added: Systems] | | [removed: [13](#di40501_management_information_systems)] | [added: | | 11 | |]

| | | [removed: [](#di40501_employees) [Employees](#di40501_employees)] | | [removed: [13](#di40501_employees)] [added: Employees] | [added: | | | | 11 | |]

| | | [removed: [](#di40501_environmental_matters) [Environmental Matters](#di40501_environmental_matters)] | | [removed: [14](#di40501_environmental_matters)] [added: Environmental Matters] | [added: | | | | 12 | |]

| | | [removed: [](#di40501_governmental_regulations) [Governmental Regulations](#di40501_governmental_regulations)] | | [removed: [15](#di40501_governmental_regulations)] [added: Governmental Regulations] | [added: | | | | 13 | |]

[removed: | | | [](#di40501_legal_proceedings) [Legal Proceedings](#di40501_legal_proceedings) | | [15](#di40501_legal_proceedings) |][added: Legal Proceedings 24]

| | | [removed: [](#di40501_intellectual_property_and_proprietary_rights) [Intellectual] [added: | | Intellectual] Property and Proprietary [removed: Rights](#di40501_intellectual_property_and_proprietary_rights)] [added: Rights] | | [removed: [16](#di40501_intellectual_property_and_proprietary_rights)] | [added: | | 13 | |]

| | | [removed: [](#di40501_seasonality) [Seasonality](#di40501_seasonality)] | | [removed: [16](#di40501_seasonality)] [added: Seasonality] | [added: | | | | 13 | |]

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

[removed: | [](#item_1B) [Item 1B.](#item_1B) | | [](#item_1B) [Unresolved] [added: Unresolved] Staff [removed: Comments](#item_1B) | | [27](#item_1B) |][added: Comments 24]

[removed: | [](#item_2) [Item 2.](#item_2) | | [](#item_2) [Properties](#item_2) | | [27](#item_2) |][added: Item 1.]

10-K 1 d27786.htm 10-K

OR

| California | | | | 94-2867490 | | | |

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

Yes \[X\] No \[ \]

\[ \]

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

| | | | | | | | | (Do not check if a smaller reporting company) | | | | | | | |

Yes \[ \] No \[ü\]

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

Business 1

Risk Factors 13

Item 1B.

Properties 24

Item 3.

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

Use these links to rapidly review the document

| | | |

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

| | | OR |

Commission file number 0-23255

(707) 639-5000

Securities registered pursuant to Section 12(b) of the Act:

| | | | | | | |

| | | | | |

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

| [](#special_note) [Information concerning forward-looking statements used in this Form 10-K](#special_note) | | | | [2](#special_note) |

| [](#da40501_corporate_information) [Corporate Information](#da40501_corporate_information) | | | | [2](#da40501_corporate_information) |

| | | PART I | | |

| [](#de40501_item_1._business) [Item 1.](#de40501_item_1._business) | | [](#de40501_item_1._business) [Business](#de40501_item_1._business) | | [3](#de40501_item_1._business) |

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

| [](#item_3) [Item 3.](#item_3) | | [](#item_3) [Legal Proceedings](#item_3) | | [27](#item_3) |

| | | PART II | | |

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

| [](#dq40501_item_6._selected_financial_data) [Item 6.](#dq40501_item_6._selected_financial_data) | | [](#dq40501_item_6._selected_financial_data) [Selected Financial Data](#dq40501_item_6._selected_financial_data) | | [31](#dq40501_item_6._selected_financial_data) |

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

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

| [](#du40501_item_8._financial_statements_and_supplementary_data) [Item 8.](#du40501_item_8._financial_statements_and_supplementary_data) | | [](#du40501_item_8._financial_statements_and_supplementary_data) [Financial Statements and Supplementary Data](#du40501_item_8._financial_statements_and_supplementary_data) | | [47](#du40501_item_8._financial_statements_and_supplementary_data) |

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

| [](#du40501_item_9a._controls_and_procedures) [Item 9A.](#du40501_item_9a._controls_and_procedures) | | [](#du40501_item_9a._controls_and_procedures) [Controls and Procedures](#du40501_item_9a._controls_and_procedures) | | [47](#du40501_item_9a._controls_and_procedures) |

| [](#dy40501_item_9b._other_information) [Item 9B.](#dy40501_item_9b._other_information) | | [](#dy40501_item_9b._other_information) [Other Information](#dy40501_item_9b._other_information) | | [51](#dy40501_item_9b._other_information) |

| | | PART III | | |

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

| [](#dy40501_item_11._executive_compensation) [Item 11.](#dy40501_item_11._executive_compensation) | | [](#dy40501_item_11._executive_compensation) [Executive Compensation](#dy40501_item_11._executive_compensation) | | [52](#dy40501_item_11._executive_compensation) |

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

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

| [](#dy40501_item_14._principal_accountant_fees_and_services) [Item 14.](#dy40501_item_14._principal_accountant_fees_and_services) | | [](#dy40501_item_14._principal_accountant_fees_and_services) [Principal Accountant Fees and Services](#dy40501_item_14._principal_accountant_fees_and_services) | | [52](#dy40501_item_14._principal_accountant_fees_and_services) |

| | | PART IV | | |

| [](#ea40501_item_15._exhibits_and_financial_statement_schedules) [Item 15.](#ea40501_item_15._exhibits_and_financial_statement_schedules) | | [](#ea40501_item_15._exhibits_and_financial_statement_schedules) [Exhibits and Financial Statement Schedules](#ea40501_item_15._exhibits_and_financial_statement_schedules) | | [53](#ea40501_item_15._exhibits_and_financial_statement_schedules) |

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

_This Annual Report on Form 10-K for the fiscal year ended July 31, 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).

In some cases, you can identify forward- looking statements by terms such as "may," "will," "should," "expect," "plan," "intend," "forecast," "anticipate," "believe," "estimate," "predict," "potential," "continue" or the negative of these terms or other comparable terminology.

The forward-looking statements contained in this Form 10-K involve known and unknown risks, uncertainties and situations that may cause our or our industry's actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements.

These forward-looking statements are made in reliance upon the safe harbor provision of the Private Securities Litigation Reform Act of 1995.

[removed: PART] [added: | PART] II [added: | | | | | | | | | 27 | |]

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

Item 5.

Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities 27

Item 6.

Selected Financial Data 30

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations 31

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk 45

Item 8.

Financial Statements and Supplementary Data 46

Item 9.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 46

Item 9A.

Controls and Procedures 46

Item 9B.

Other Information 49

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

| PART III | | | | | | | | | 50 | |

Item 10.

Directors, Executive Officers of the Registrant and Corporate Governance 50

Item 11.

Executive Compensation 50

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters 50

Item 13.

Certain Relationships and Related Transactions, and Director Independence 51

Item 14.

Principal Accountant Fees and Services 51

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

| PART IV | | | | | | | | | 52 | |

Item 15.

Exhibits and Financial Statement Schedules 52

iv

| | | PART I |

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

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

_This Annual Report on Form 10-K for the fiscal year ended July 31, 2011, 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).

In some cases, you can identify forward- looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “forecast,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” or the negative of these terms or other comparable terminology.

The forward-looking statements contained in this Form 10-K involve known and unknown risks, uncertainties and situations that may cause our or our industry’s actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements.

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

None.

Not applicable.

This facility consists of approximately 100,000 square feet of [added: leased] office [removed: space owned by Copart.][added: space.]

We also own or lease an additional [removed: 152] [added: 153] operating facilities.

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

We entered into a lease on January 3, 2011, for our corporate headquarters located in Fairfield, California.

The lease term is twenty four months with one option to extend for an additional six months.

In addition, we recently purchased approximately 10,000 square feet of office space near the current corporate headquarters in Fairfield, California in order to relocate certain corporate departments that are not moving to the Dallas, Texas headquarters.

We lease approximately 4,700 square feet of office space in Dallas, Texas.

This facility serves as a temporary location while we locate a new facility in the Dallas, Texas area to relocate our corporate headquarters from Fairfield, California.

The move is scheduled to take place in phases over the next two years.

In the UK, we own or lease 17 operating facilities.

In the UK, as of July 31, 2010, we owned or leased 16 operating facilities.

[removed: Market Information][added: _Market Information_]

As of July 31, [removed: 2010,] [added: 2011,] there were [removed: 84,363,063] [added: 66,005,517] shares outstanding.

As of July 31, [removed: 2010,] [added: 2011,] we had approximately [removed: 1,755] [added: 1,643] shareholders of record.

On July 31, [removed: 2010,] [added: 2011,] the last reported sale price of our common stock on the Nasdaq Global Select Market was [removed: $36.44] [added: $43.45] per share.

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

| Fourth Quarter | | | [added: | |] 37.83 | | | [added: |] 33.96 | |

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

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

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

| [removed: Fiscal] [added: Fiscal] Year [removed: 2009] [added: 2011] | | [removed: High] | | [added: High] | [removed: Low] | | | [added: Low | | |]

For the [added: fiscal] year ended July 31, 2010, we repurchased 121,251 shares of our common stock at a [added: weighted average] price of $36.76.

For the [added: fiscal] year ended July 31, 2009, we did not repurchase any shares under our stock repurchase program.

For the [added: fiscal] year ended July 31, [removed: 2008,] [added: 2011,] we repurchased [removed: 6,615,764] [added: 6,682,317] shares of our common stock at a weighted average price of [removed: $40.70.][added: $40.83.]

As of July 31, [removed: 2010,] [added: 2011,] the total number of shares repurchased under the program was [removed: 13,770,720] [added: 20,453,037] and [removed: 15,229,280] [added: 8,546,963] 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 [added: exercises.]

We remitted [removed: approximately $17.2] [added: $4.2 million, $7.4] million [added: and $9.8 million, in fiscal 2011, 2010 and 2009, respectively,] to the proper taxing authorities in satisfaction of the [removed: employees'] [added: employees’] minimum statutory withholding requirements.

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

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

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

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

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

[added: | (1) | |] Shares withheld for taxes are treated as a repurchase of shares for accounting purposes but do not count against our repurchase program. [added: |]

| [removed: Period] [added: Period] | | [removed: Total] [added: | | Total] Number of Shares [removed: Purchased] [added: Purchased] | | | [removed: Average] [added: | Average] Price Paid Per [removed: Share] [added: Share] | | | [removed: Total] [added: | Total] Number of Shares Purchased as Part of Publicly Announced [removed: Program] [added: Program] | | | [removed: Maximum] [added: | Maximum] Number of Shares That May Yet Be Purchased Under the [removed: Program] [added: Program] | | |

| Fourth Quarter | | | [removed: 2,853,600] | | [removed: $] [added: —] | [removed: 42.24] | | | [removed: 2,853,600] [added: —] | | | [added: | — | | | |] 15,350,531 | |

| _Fiscal [removed: 2009_] [added: 2009 _] | | | | | | | | | | | | | | [added: | | | | |]

| First Quarter | | | [added: | |] — | | | [added: |] — | | | [added: |] — | | | [added: |] 15,350,531 | |

| Second Quarter | | | [added: | |] — | | | [added: |] — | | | [added: |] — | | | [added: |] 15,350,531 | |

| Third Quarter | | | [added: | |] — | | | [added: |] — | | | [added: |] — | | | [added: |] 15,350,531 | |

| [removed: Fourth] [added: First] Quarter | | | [added: | |] — | | | [added: |] — | | | [added: |] — | | | [added: |] 15,350,531 | |

| _Fiscal [removed: 2010_] [added: 2010 _] | | | | | | | | | | | | | | [added: | | | | |]

| Fourth Quarter | | | [added: | |] 121,251 | | [added: |] $ | 36.76 | | | [added: |] 121,251 | | | [added: |] 15,229,280 | |

[removed: Includes 20] [added: Our Board of Directors has authorized a 29] million share [removed: increase in our] stock repurchase [removed: program authorized by the Board of Directors in October 2007.][added: program.]

There were no issuances of unregistered securities in the quarter ended July 31, [removed: 2010.][added: 2011.]

The following is a line graph comparing the cumulative total return to shareholders of our common stock at July 31, [removed: 2010] [added: 2011] since July 31, [removed: 2005,] [added: 2006,] to the cumulative total return over such period of (i) the NASDAQ Composite Index, (ii) the NASDAQ Industrial Index, and (iii) the NASDAQ Q-50 (NXTQ).

[removed: ][added: ]

[added: | * | |] Assumes that $100.00 was invested on July 31, [removed: 2005] [added: 2006] in our common stock, in the NASDAQ Composite Index, the NASDAQ Industrial Index and the NASDAQ Q-50 (NXTQ), and that all dividends were reinvested. [added: No dividends have been declared on our common stock. Shareholder returns over the indicated period should not be considered indicative of future shareholder returns. |]

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

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

| Fourth Quarter | | | | | 47.97 | | | | 43.03 | |

| Third Quarter | | | | | 45.63 | | | | 39.47 | |

| Second Quarter | | | | | 40.87 | | | | 32.99 | |

| First Quarter | | | | | 36.73 | | | | 31.28 | |

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

Additionally, on January 14, 2011, we completed a tender offer to purchase up to 10,526,315 shares of our common stock at a price of $38.00 per share.

Directors and executive officers of Copart were expressly prohibited from participating in the tender offer by our board of directors under our Securities Trading Policy.

In connection with the tender offer, we accepted for purchase 12,172,088 shares of our common stock.

The shares accepted for purchase are comprised of the 10,526,315 shares we offered to purchase and an additional 1,645,773 shares purchased pursuant to our right to purchase additional shares up to 2% of our outstanding shares.

The shares purchased as a result of the tender offer are not part of our repurchase program.

The

purchase of the shares of common stock was funded by the proceeds relating to the issuance of $400.0 million of long term debt.

The dilutive earnings per share impact of all repurchased shares on the weighted average number of common shares outstanding for the year ended July 31, 2011 is approximately $0.23.

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

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

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

| _Fiscal 2011 _ | | | | | | | | | | | | | | | | | | |

| First Quarter | | | | | 2,249,826 | | | $ | 33.65 | | | | 2,249,826 | | | | 12,979,454 | |

| Second Quarter | | | | | 12,172,088 | | | $ | 38.00 | | | | — | | | | 12,979,454 | |

| Third Quarter | | | | | 1,441,542 | | | $ | 43.03 | | | | 1,441,542 | | | | 11,537,912 | |

| May 1, 2011 through May 31, 2011 | | | | | — | | | | — | | | | — | | | | 11,537,912 | |

| June 1, 2011 through June 30, 2011 | | | | | 2,990,949 | | | $ | 45.17 | | | | 2,990,949 | | | | 8,546,963 | |

| July 1, 2011 through July 31, 2011 | | | | | — | | | | — | | | | — | | | | 8,546,963 | |

In the second, third and fourth quarters of fiscal year 2011 certain executive officers exercised stock options through cashless exercises.

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

| FY 2011—Q2 | | | | | 88,750 | | | $ | 16.93 | | | | 38,025 | | | | 18,917 | | | | 31,808 | | | $ | 39.51 | | | $ | 748 | |

| FY 2011—Q3 | | | | | 274,167 | | | $ | 22.03 | | | | 147,748 | | | | 59,016 | | | | 67,403 | | | $ | 40.80 | | | $ | 2,408 | |

| FY 2011—Q4 | | | | | 90,000 | | | $ | 18.95 | | | | 38,198 | | | | 24,183 | | | | 27,619 | | | $ | 44.65 | | | $ | 1,080 | |

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

| | | | | 7/06 | | | | 7/07 | | | | 7/08 | | | | 7/09 | | | | 7/10 | | | | 7/11 | | |

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

| Copart, Inc. | | | | $ | 100.00 | | | $ | 105.63 | | | $ | 164.64 | | | $ | 132.55 | | | $ | 136.79 | | | $ | 163.10 | |

| NASDAQ Composite | | | | $ | 100.00 | | | $ | 124.58 | | | $ | 114.25 | | | $ | 98.15 | | | $ | 112.22 | | | $ | 137.49 | |

| NASDAQ Industrial | | | | $ | 100.00 | | | $ | 122.51 | | | $ | 107.98 | | | $ | 85.31 | | | $ | 103.03 | | | $ | 138.71 | |

| NASDAQ Q-50 (NXTQ) | | | | $ | 100.00 | | | $ | 133.54 | | | $ | 118.52 | | | $ | 105.89 | | | $ | 145.89 | | | $ | 201.13 | |

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

_

| | | | | | | | |

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

| Fourth Quarter | | | 36.00 | | | 29.02 | |

| Third Quarter | | | 32.78 | | | 23.48 | |

| Second Quarter | | | 36.57 | | | 22.54 | |

| First Quarter | | | 46.96 | | | 30.21 | |

In October 2007, our Board of Directors approved a 20 million share increase in our stock repurchase program bringing the total current number of shares authorized for repurchase to 29 million shares.

exercises.

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

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

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

(1)

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

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

| _Fiscal 2008_ | | | | | | | | | | | | | |

| First Quarter | | | — | | | — | | | — | | | 21,966,295 | * |

| Second Quarter | | | 982,655 | | $ | 41.67 | | | 982,655 | | | 20,983,640 | |

| Third Quarter | | | 2,779,509 | | $ | 38.77 | | | 2,779,509 | | | 18,204,131 | |

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

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

| | | 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 | |

No dividends have been declared on our common stock.

Shareholder returns over the indicated period should not be considered indicative of future shareholder returns.

The following selected consolidated statements of income data for the years ended July 31, [removed: 2010, 2009] [added: 2011, 2010] and [removed: 2008] [added: 2009] and the consolidated balance data at July 31, [removed: 2010] [added: 2011] and [removed: 2009,] [added: 2010,] 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: 2007] [added: 2008] and [removed: 2006] [added: 2007] and the consolidated balance sheet data at July 31, [removed: 2008, 2007] [added: 2009, 2008] and [removed: 2006,] [added: 2007,] are derived from the audited consolidated financial statements that are not included in this Annual Report on Form 10-K.

| | | | | [removed: Fiscal Year] [added: Fiscal Years] Ending July [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | [added: | | | | |]

| | | | | [removed: 2010] [added: 2011] | | | [removed: 2009] | [added: 2010] | | [removed: 2008] | | [added: 2009] | [removed: 2007] | | | [removed: 2006] [added: 2008] | | | [added: | 2007 | | | |]

| | | | | [removed: (in] [added: (in] thousands, except per share and other [removed: data)] [added: data)] | | | | | | | | | | | | | | | [added: | | | | |]

| Operating [removed: Data] [added: Data] | | | | | | | | | | | | | | | | | | | [added: | | | | |]

| [removed: |] Revenues | | | [added: |] $ | [added: 872,246 | | | $ |] 772,879 | | [added: |] $ | 743,082 | | [added: |] $ | 784,848 | | [added: |] $ | 560,680 | | [removed: $] | [removed: 528,571 | |]

| [removed: |] Operating income | | | | [added: | 265,290 | | | |] 239,070 | | | [added: |] 225,325 | | | [removed: 237,917] | [added: 237,917] | | [removed: 203,145] | | [added: 203,145] | [removed: 171,562] | |

| [removed: |] Income from continuing operations before income taxes | | | | [added: | 263,877 | | | |] 239,495 | | | [added: |] 227,732 | | | [removed: 249,650] | [added: 249,650] | | [removed: 217,421] | | [added: 217,421] | [removed: 174,522] | |

| [removed: |] Income tax expense | | | | [added: | (97,502 | ) | | |] (87,868 | ) | | [added: |] (88,186 | ) | | [added: |] (92,718 | ) | | [added: |] (81,083 | ) | | [removed: (61,862 | ) |]

| [removed: |] Income from continuing operations | | | | [added: | 166,375 | | | |] 151,627 | | | [added: |] 139,546 | | | [removed: 156,932] | [added: 156,932] | | [removed: 136,338] | | [added: 136,338] | [removed: 112,660] | |

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

| [removed: |] Net income | | | | [added: | 166,375 | | | |] 151,627 | | | [added: |] 141,103 | | | [removed: 156,932] | [added: 156,932] | | [removed: 136,338] | | [added: 136,338] | [removed: 96,947] | |

| [removed: |] Basic per share amounts: | | | | | | | | | | | | | | | | | | [added: | | | | | |]

| [removed: | |] Income from continuing operations | | [added: | |] $ | [added: 2.20 | | | $ |] 1.80 | | [added: |] $ | 1.67 | | [added: |] $ | 1.80 | | [added: |] $ | 1.50 | | [removed: $] | [removed: 1.24 | |]

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

| [removed: | |] Net income per share | | [added: | |] $ | [added: 2.20 | | | $ |] 1.80 | | [added: |] $ | 1.69 | | [added: |] $ | 1.80 | | [added: |] $ | 1.50 | | [removed: $] | [removed: 1.07 | |]

| [removed: | |] Weighted average shares | | | [added: | | 75,649 | | | |] 84,165 | | | [added: |] 83,537 | | | [removed: 87,412] | [added: 87,412] | | [removed: 90,651] | | [added: 90,651] | [removed: 90,372] | |

| [removed: |] Diluted per share amounts: | | | | | | | | | | | | | | | | | | [added: | | | | | |]

| [removed: | |] Income from continuing operations | | [added: | |] $ | [added: 2.17 | | | $ |] 1.78 | | [added: |] $ | 1.64 | | [added: |] $ | 1.75 | | [added: |] $ | 1.46 | | [removed: $] | [removed: 1.21 | |]

| [removed: | |] Net income per share | | [added: | |] $ | [added: 2.17 | | | $ |] 1.78 | | [added: |] $ | 1.66 | | [added: |] $ | 1.75 | | [added: |] $ | 1.46 | | [removed: $] | [removed: 1.04 | |]

| [removed: | |] Weighted average shares | | | [added: | | 76,676 | | | |] 85,027 | | | [added: |] 84,930 | | | [removed: 89,858] | [added: 89,858] | | [removed: 93,455] | | [added: 93,455] | [removed: 92,925] | |

| Balance Sheet [removed: Data] [added: Data] | | | | | | | | | | | | | | | | | | | [added: | | | | |]

| [removed: |] Cash, cash equivalents and short-term investments | | | [added: |] $ | [added: 74,009 | | | $ |] 268,188 | | [added: |] $ | 162,691 | | [added: |] $ | 38,954 | | [added: |] $ | 210,246 | | [removed: $] | [removed: 279,850 | |]

| [removed: |] Working capital | | | | [added: | 75,242 | | | |] 330,191 | | | [added: |] 212,349 | | | [removed: 84,501] | [added: 84,501] | | [removed: 247,850] | | [added: 247,850] | [removed: 328,017] | |

| [removed: |] Total assets | | | | [added: | 1,084,436 | | | |] 1,228,812 | | | [added: |] 1,058,032 | | | [removed: 956,247] | [added: 956,247] | | [removed: 1,014,600] | | [added: 1,014,600] | [removed: 899,240] | |

| [removed: |] Total debt | | | | [added: | 375,756 | | | |] 975 | | | [added: |] 1,457 | | | [removed: 2,240] | [added: 2,240] | | [removed: 2,793] | | [added: 2,793] | [removed: —] | |

| [removed: | Shareholders'] [added: Shareholders’] equity | | | | [added: | 555,172 | | | |] 1,087,234 | | | [added: |] 921,459 | | | [removed: 798,996] | [added: 798,996] | | [removed: 880,866] | | [added: 880,866] | [removed: 809,970] | |

| Other [removed: Data] [added: Data] | | | | | | | | | | | | | | | | | | | [added: | | | | |]

| [removed: |] Number of storage facilities | | | | [added: | 153 | | | |] 152 | | | [added: |] 147 | | | [removed: 143] | [added: 143] | | [removed: 131] | | [added: 131] | [removed: 122] | |

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As a result of the adoption of Accounting Standards Update 2009–13, _Revenue Arrangements with Multiple Deliverables_, for the year ended July 31, 2011, we accelerated recognition of $14.4 million in service revenue and $13.5 million in related yard operation expenses.

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| Discontinued operations | | | | | — | | | | — | | | | 0.02 | | | | — | | | | — | | |

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See Part IV, Item 15(a) for an index to the [added: consolidated] financial statements and supplementary financial information.

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

Our management is responsible for establishing and maintaining internal control over financial reporting (as such item is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of [added: consolidated] financial statements for external purposes in accordance with generally accepted accounting principles.

Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of [added: consolidated] financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the [added: consolidated] financial statements.

Management assessed our internal control over financial reporting as of July 31, [removed: 2010,] [added: 2011,] the end of our fiscal year.

Based on our assessment, management has concluded that our internal control over financial reporting was effective as of the end of the fiscal year to provide reasonable assurance regarding the reliability of financial reporting and the preparation of [added: consolidated] financial statements for external reporting purposes in accordance with generally accepted accounting principles.

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: 2010.][added: 2011.]

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

We have audited Copart, [removed: Inc.'s] [added: Inc.’s] internal control over financial reporting as of July 31, [removed: 2010,] [added: 2011,] 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: 2010,] [added: 2011,] 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: 2010] [added: 2011] and [removed: 2009,] [added: 2010,] and the related consolidated statements of income, [removed: shareholders'] [added: shareholders’] equity and comprehensive income, and cash flows for each of the three years in the period ended July 31, [removed: 2010] [added: 2011] of Copart, Inc. and our report dated September [removed: 23, 2010] [added: 27, 2011] expressed an unqualified opinion thereon.

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San Francisco, California

September 27, 2011

_

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

Sacramento, California

September 23, 2010

PART [removed: III][added: III]

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: 2010] [added: 2011] 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.

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Information required by this item concerning our Board of Directors, the members of our Audit Committee, 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 [removed: "Election] [added: “Proposal Number One Election] of [removed: Directors] [added: Directors,” “Corporate Governance] and [removed: Director Biographies," "Board] [added: Board] of [removed: Directors Information"] [added: Directors”] and [removed: "General—Compliance with] [added: “Related Person Transactions and] Section 16(a) Beneficial Ownership [removed: Reporting Requirements"] [added: Compliance”] in our Proxy Statement.

Information required by this item with respect to material changes to the procedures by which our shareholders may recommend nominees to our Board of Directors is incorporated herein by reference from the information provided under the heading [removed: "The Nominating and] [added: “Corporate] Governance [removed: Committee"] [added: and Board] of [added: Directors,” subheading “Director Nomination Process,” of] our Proxy Statement.

[added: | 1. | |] From our main web page, click on [removed: "Company Info."][added: “Company Info.” |]

[added: | 2. | |] Next, click on [removed: "Investor Relations."][added: “Investor Relations.” |]

[added: | 3. | |] Finally, click on [removed: "Code] [added: “Code] of Ethics for Principal Executive and Senior Financial [removed: Officers."][added: Officers.” |]

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1.

2.

3.

The information required by this item is incorporated herein by reference from the Proxy Statement under the heading [removed: "Executive Compensation."][added: “Executive Compensation,” “Compensation of Non-Employee Directors,” and “Corporate Governance and Board of Directors.”]

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The information required by this item is incorporated herein by reference from the Proxy Statement under the headings [removed: "Security Ownership"] [added: “Security Ownership”] and [removed: "Equity] [added: “Execution Compensation,” subheading “Equity] Compensation Plan [removed: Information."][added: Information.”]

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The information required by this item is incorporated herein by reference from the Proxy Statement under the heading [removed: "Related Party Transactions."][added: “Related Person Transactions and Section 16(a) Beneficial Ownership Compliance,” “Corporate Governance and Board of Directors,” and “Proposal Number One Election of Directors.”]

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The information required by this item is incorporated herein by reference from the section captioned [removed: "Proposal Two—Ratification] [added: “Proposal Five — Ratification] of Independent Registered Public Accounting [removed: Firm"] [added: Firm”] in the Proxy Statement.

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| | | | | | | [added: | |] Page | | |

| [removed: (a)] [added: (a)1.] | | [removed: 1.] | | _Financial [removed: Statements:_ Index] [added: Statements:_Index] to Consolidated Financial [removed: Statements] [added: Statements] | | | | | [added: | |]

| | | | | [removed: [](#Report) [Report] [added: Report] of Independent Registered Public Accounting [removed: Firm](#Report)] [added: Firm] | | | [removed: [59](#Report)] | | [added: 58 | |]

| | | | | [removed: [](#balance_sheets) [Consolidated] [added: Consolidated] Balance Sheets at July 31, [removed: 2010] [added: 2011] and [removed: 2009](#balance_sheets)] [added: 2010] | | | [removed: [60](#balance_sheets)] | | [added: 59 | |]

| | | | | [removed: [](#stmnts_of_income) [Consolidated] [added: Consolidated] Statements of Income for the years ended July 31, [removed: 2010, 2009] [added: 2011, 2010] and [removed: 2008](#stmnts_of_income)] [added: 2009] | | | [removed: [61](#stmnts_of_income)] | | [added: 60 | |]

| | | | | [removed: [](#stmnts_of_shareholder) [Consolidated] [added: Consolidated] Statements of [removed: Shareholders'] [added: Shareholders’] Equity and Comprehensive Income for the years ended July 31, [removed: 2010, 2009] [added: 2011, 2010] and [removed: 2008](#stmnts_of_shareholder)] [added: 2009] | | | [removed: [62](#stmnts_of_shareholder)] | | [added: 61 | |]

| | | | | [removed: [](#stmnts_of_cash) [Consolidated] [added: Consolidated] Statements of Cash Flows for the years ended July 31, [removed: 2010, 2009] [added: 2011, 2010] and [removed: 2008](#stmnts_of_cash)] [added: 2009] | | | [removed: [63](#stmnts_of_cash)] | | [added: 62 | |]

| | | | | [removed: [](#notes_to_fins) [Notes] [added: Notes] to Consolidated Financial [removed: Statements](#notes_to_fins)] [added: Statements] | | | [removed: [64](#notes_to_fins)] | | [added: 63 | |]