Copart (CPRT) 10-K risk factor changes: FY2012 vs FY2011

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._

The loss of one or more of these major sellers could adversely affect our [added: consolidated] results of operations and financial [removed: condition,] [added: position,] and an inability to increase our sources of vehicle supply could adversely affect our growth rates.

[removed: Although no] [added: No] single customer accounted for more than 10% of our revenue during the fiscal year ended July 31, [removed: 2011, historically, a limited number of vehicle sellers have collectively accounted for a substantial portion of our revenues.][added: 2012.]

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

Our [removed: acquisitions] [added: expansion into markets outside North America, including recent expansions] in [added: Europe and] the [removed: UK] [added: Middle East,] expose us to risks arising from [removed: the acquisitions and risks associated with] operating in [removed: markets outside North America.][added: international markets.]

Any failure to successfully integrate businesses acquired outside of North America into our operations could have an adverse effect on our [removed: financial position,] [added: consolidated] results of [removed: operations] [added: operations, financial position] or cash flows.

[removed: Our acquisitions in the UK and continued expansion of] [added: Acquisitions or other strategies to expand] our operations outside North America pose substantial risks and uncertainties that could have an adverse effect on our future operating results.

We have and may continue to incur substantial expenses establishing new yards or operations in [removed: the UK or Europe.][added: international markets.]

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

Integration of our respective operations, including information technology integration and integration of financial and administrative functions, may not proceed as we [removed: currently] anticipate and could result in [removed: presently] unanticipated costs or expenses (including unanticipated capital expenditures) that could have an adverse effect on our future operating results.

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

| • | | the need to localize our product offerings, particularly [removed: with respect] [added: the need] to [removed: VB2;] [added: implement our online auction platform in foreign countries;] |

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

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

[removed: Certain] [added: In addition, certain] acquisitions in the United Kingdom may be reviewed by the Office of Fair Trade (OFT) and/or Competition Commission [removed: (UK] [added: (U.K.] Regulators).

If an inquiry is made by [removed: the UK] [added: U.K.] Regulators, we may be required to demonstrate [added: that] our acquisitions will not result, or be expected to result, in a substantial lessening of competition in a [removed: UK] [added: U.K.] market.

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

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

In the event of a divestiture order by the [removed: UK] [added: U.K.] Regulators, the assets disposed may be sold for substantially less than their carrying value.

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

If the implementation of our new [removed: ERP] [added: Enterprise Resource Planning (“ERP”)] system is not executed efficiently and effectively, our business, financial [removed: condition,] [added: position,] and our consolidated operating results could be adversely affected.

We are [removed: planning to convert] [added: in the process of converting] our primary management information system to a new standard ERP system, which will occur in phases through [removed: 2013.][added: 2013 and 2014.]

This type of interruption [removed: may] [added: could] prevent us from processing vehicles for our sellers and may prevent us from selling vehicles through our [removed: internet] [added: Internet] bidding platform, VB2, which [removed: could] [added: would] adversely affect our [removed: business, financial condition, and our] consolidated [removed: operating results.][added: results of operations and financial position.]

We believe that the implementation of our proprietary [removed: VB2 sales] [added: auction] technologies across our operations [removed: has] [added: over the last decade] had a favorable impact on our results of operations by increasing the size and geographic scope of our buyer [removed: base and] [added: base,] increasing the average selling price for vehicles sold through our [added: sales, and lowering expenses associated with vehicle] sales.

[removed: VB2 was] [added: We] implemented [added: our online system] across all of our North American and [removed: UK] [added: U.K.] salvage yards beginning in fiscal 2004 and fiscal 2008, [removed: respectively.][added: respectively, and experienced increases in revenues and average selling prices as well as improved operating efficiencies in both markets.]

[removed: As discussed below,] [added: For example,] Hurricanes Katrina and Rita had, in certain quarters, an adverse effect on our operating results, in part because of yard capacity constraints in the Gulf Coast area.

We may not be able to reach agreements to purchase independent storage facilities in markets where we have limited excess capacity, and zoning restrictions or difficulties obtaining use permits may limit our ability to expand our [removed: capacity through acquisitions of new land.]

Failure to have sufficient capacity at one or more of our yards could adversely affect our relationships with insurance companies or other sellers of vehicles, which could have an adverse effect on our [removed: operating results.][added: consolidated results of operations and financial position.]

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

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

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

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

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

Our Internet-based sales model has increased the relative importance of intellectual property assets to our business, and any inability to protect those rights could have a material adverse effect on our business, financial [removed: condition,] [added: position,] or [removed: consolidated] results of operations.

Our intellectual property rights include [removed: a patent for VB2] [added: patents relating to our auction technologies] as well as trademarks, trade secrets, copyrights and other intellectual property rights.

Any significant impairment of our intellectual property rights, or any inability to protect our intellectual property rights, could have a material adverse effect on our consolidated [removed: financial position,] results of operations, [added: financial position] or cash flows.

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

Litigation and any other intellectual property claims, whether with or without merit, can be time-consuming, expensive to litigate and settle, and can divert [removed: management resources and attention from our core business.]

[added: We also utilize, to a lesser extent, independent subhaulers in the U.K.] Our failure to pick up and deliver vehicles in a timely and accurate manner could harm our reputation and brand, which could have a material adverse effect on our business.

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

Historically, a limited number of vehicle sellers have collectively accounted for a substantial portion of our revenues.

We first expanded our operations outside North America in 2007 with a significant acquisition in the United Kingdom, and we continue to evaluate acquisitions and other opportunities outside North America.

In August 2012, we announced our acquisition of a company in the United Arab Emirates.

| • | | adapting to different business cultures and market structures, particularly where we seek to implement our auction model in markets where insurers have historically not played a substantial role in the disposition of salvage vehicles; |

| • | | ensuring compliance with applicable legislation and regulations that affect our international operations, including applicable anticorruption legislation in the United States and United Kingdom and export control and sanctions laws; and |

| • | | repatriation of funds currently held in foreign jurisdictions to the U.S. may result in higher effective tax rates. |

We face risks associated with the implementation of our salvage auction model in markets that may not operate on the same terms as the North American market.

For example, the U.K. market operates on a principal rather than agent basis, which has tended to have an adverse impact on our gross margin percentages and has exposed us to inventory risks that we do not experience in North America.

Some of our target markets outside North America operate in a manner substantially different than our historic market in North America.

For example, the U.K. market operates primarily on the principal model, in which we take title to vehicles, rather than the agency model employed in North America, in which we act as a sales agent for the legal owner of vehicles.

As a result, our operations in the U.K. have had and will continue to have an adverse impact on our consolidated gross margin percentages.

In addition, our business in North America and the United Kingdom has been established and grown based largely on our ability to build relationships with insurance carriers.

In other markets, insurers have traditionally been less

involved in the disposition of salvage vehicles.

As we expand into markets outside North America and the United Kingdom, we cannot predict whether markets will readily adapt to our strategy of online auctions of automobiles sourced principally through vehicle insurers.

In addition, our information and technology systems are vulnerable to damage or interruption from computer viruses, network failures, computer and telecommunications failures, infiltration by unauthorized persons and security breaches, usage errors by our employees, power outages and catastrophic events such as fires, tornadoes, floods, hurricanes and earthquakes.

Although we have not been the victim of cyber attacks or other cyber incidents that have had a material impact on our consolidated operating results or financial position, we have from time to time experienced cybersecurity breaches such as computer viruses and similar information technology violations in the ordinary course of business.

We have implemented various measures to manage our risks related to system and network disruptions.

If these systems are compromised, become inoperable for extended periods of time or cease to function properly, we may have to make a significant investment to fix or replace them and our ability to provide many of our electronic and online solutions to our customers may be impaired.

If that were to occur, it could have a material adverse effect on our consolidated operating results and financial position.

Implementation of our online auction model in new markets may not result in the same synergies and benefits that we achieved when we implemented the model in North America and the U.K.

In considering new markets, we consider the potential synergies from the implementation of our model based in large part on our experience in North America and the U.K. We cannot predict whether these synergies will also be realized in new markets.

capacity through acquisitions of new land.

| • | | our ability to integrate and manage our acquisitions successfully; |

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management resources and attention from our core business.

We have certain provisions in our certificate of incorporation and bylaws, which may have an anti-takeover effect or that may delay, defer or prevent acquisition bids for us that a stockholder might consider favorable and limit attempts by our stockholders to replace or remove our current management.

Our board of directors is authorized to create and issue from time to time, without stockholder approval, up to an aggregate of 5,000,000 shares of undesignated preferred stock, the terms of which may be established and shares of which may be issued without stockholder approval, and which may include rights superior to

the rights of the holders of common stock.

In addition, our bylaws establish advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.

These anti-takeover provisions and other provisions under Delaware law could discourage, delay or prevent a transaction involving a change in control of our company, even if doing so would benefit our stockholders.

These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and cause us to take other corporate actions you desire.

plans.

by previous users of certain of our acquired facilities, or the disposal of our waste at off-site locations.

In issuing the notice of proposed assessment, the

If the interest rate swap entered into in connection with our credit facility proves ineffective, it could result in volatility in our operating results, including potential losses, which could have a material adverse effect on our consolidated results of operations and cash flows.

We entered into two interest rate swaps to exchange our variable interest rate payment commitments for fixed interest rate payments on the Term Loan.

We may acquire additional companies in the UK or other countries or seek to establish new yards or facilities to complement the acquired companies’ operations.

During fiscal 2007, we completed the acquisition of Universal Salvage plc, or Universal, our first acquisition in the UK.

In fiscal 2008, we completed the acquisitions of Century Salvage Sales Limited, (Century), Simpson Bros.

Holdings, Limited and AG Watson Auto Salvage & Motor Spares Limited (AG Watson), all located within the UK.

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

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

We may continue to acquire additional companies or operations in the UK or other countries in Europe or may seek to establish new yards or operations in the UK or Europe now that we have established a presence in these markets.

In the UK, a significant portion of our business is conducted on a principal basis, purchasing the salvage vehicle outright from the insurance companies and reselling the vehicle to buyers.

Continued operations on a principal basis will have a negative impact on our future consolidated gross margin percentages and exposes us to additional inventory risks.

The period-to-period comparability of our operating results and financial condition is substantially affected by business acquisitions during such periods.

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

Our results of operations may not continue to benefit from the implementation of VB2 to the extent we have experienced in recent periods.

We do not believe, however, that we will continue to experience improvements in our results of operations at the same relative rates we have experienced in the last few years.

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

We also utilize, to a lesser extent, independent subhaulers in the UK.

While we believe these estimates are reasonable based on the

We have a shareholder rights plan, or poison pill, which could affect the price of our common stock and make it more difficult for a potential acquirer to purchase a large portion of our securities, to initiate a tender offer or a proxy contest, or to acquire us.

In March 2003, our board of directors adopted a shareholder rights plan, commonly known as a poison pill.

The poison pill may discourage, delay, or prevent a third party from acquiring a large portion of our securities, initiating a tender offer or proxy contest, or acquiring us through an acquisition, merger, or similar transaction.

Such an acquirer could be prevented from consummating one of these transactions even if our shareholders might receive a premium for their shares over then-current market prices.

capitalized development costs will be expensed, in part or in full, as an impairment, which may have a material impact on our consolidated results of operations and financial condition.

The adoption of similar laws or regulations in other

Changes in these factors, or

We cannot accurately predict the amount or timing of any impairment of assets.

Should we choose to engage in hedging activities in the future we

[removed: Sellers are] [added: Vehicle sellers consist] primarily [added: of] insurance companies but also include banks and financial institutions, charities, car dealerships, fleet operators and vehicle rental companies.

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

Purchased vehicle revenue includes the gross sales price of the vehicle which we have purchased or are otherwise considered to own and is primarily generated in the [removed: UK.][added: U.K.]

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

We have experienced significant growth in facilities as we have acquired [removed: seven] [added: nine] facilities and established [removed: seven] [added: three] new facilities since the beginning of fiscal [removed: 2009.][added: 2010 through July 31, 2012.]

We believe that these acquisitions and openings strengthen our coverage as we have [removed: 153] [added: 155] facilities located in North America and the [removed: UK] [added: U.K.] as of July 31, [removed: 2011] [added: 2012] 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: 2008] [added: 2009] through July 31, [removed: 2011:][added: 2012:]

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

| [removed: Wolverhampton,] [added: Birmingham,] England | | | | Acquisition | | | | March 2011 | | | | United Kingdom | | |

| [added: *] | | Closed in fiscal 2010 |

In fiscal 2011, we acquired John Hewitt and Sons, Limited (Hewitt) [added: which operated one location in the United Kingdom.]

In particular, we have certain contracts inherited through our [removed: UK] [added: U.K.] acquisitions that require us to act as a principal, purchasing vehicles from the insurance companies and reselling them for our own account.

Service Revenues. Service revenues were [removed: $723.6] [added: $713.1] million during fiscal 2011 compared to [removed: $642.1] [added: $634.6] million for fiscal 2010, an increase of [removed: $81.5] [added: $78.5] million, or [removed: 12.7%,] [added: 12.4%,] above fiscal 2010.

Growth in unit volume generated [removed: $63.9] [added: $33.5] million in additional service revenue relative to last year and was driven primarily by growth in the number of units sold on behalf of franchise and independent car dealerships, new and expanded contracts with insurance companies and the migration from the principal model to the agency model in the [removed: UK.][added: U.K. Growth in the average revenue per car sold generated $11.5 million in additional revenue over last year and was driven by an increase in the average vehicle auction selling price as over 50% of our service revenue is tied in some manner to the ultimate selling price of the vehicle.]

Growth in [added: unit volume generated $62.1 million in additional service revenue relative to fiscal 2010 and was driven primarily by growth in] the [added: number of units sold on behalf of franchise and independent car dealerships, new and expanded contracts with insurance companies and the migration from the principal model to the agency model in the U.K. Growth in the] average revenue per car sold generated [removed: $1.9] [added: $1.0] million in additional revenue over [removed: last year] [added: fiscal 2010] as higher scrap metal and used car pricing led to a general increase in the average selling [removed: price and, consequently, higher revenue per car sold,] [added: price,] and was offset by growth in the percentage of volume processed from suppliers with below average revenue per car.

The average dollar to pound exchange rate was 1.60 dollars to the pound and 1.57 dollars to the pound for fiscal 2011 and fiscal 2010, respectively, and led to an increase in service revenue of [removed: $1.3] [added: $0.9] million.

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

We believe the increase in the average selling price was primarily impacted by: (i) the year over year increase in commodity pricing as we believe that commodity pricing, particularly the per ton price for crushed car bodies, has an impact on the ultimate selling price of vehicles sold for scrap and vehicles sold for dismantling; (ii) the general increase in used car pricing, which we believe has an impact on the average selling price of vehicles which are repaired and retailed or purchased by the end user and (iii) in the [removed: UK,] [added: U.K.,] the continuing beneficial impact of VB2 which we introduced to the [removed: UK] [added: U.K.] in 2008 and which expands our buyer base by opening vehicle sales to buyers worldwide.

Further, we cannot determine which vehicles are sold to the end user or for [added: scrap, dismantling, retailing or export.]

Vehicle Sales. We have assumed certain contracts through our [removed: UK] [added: U.K.] acquisitions that require us to act as a principal, purchasing vehicles from the insurance companies and reselling them for our own account.

Vehicle sales revenues were [removed: $148.6] [added: $159.2] million during fiscal 2011 compared to [removed: $130.7] [added: $138.3] million for fiscal 2010, an increase of [removed: $17.9] [added: $20.9] million, or [removed: 13.7%,] [added: 15.1%,] 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 [removed: $16.3] [added: $20.2] million.

The growth in the average selling price per unit was primarily due to: (i) the increase in commodity pricing, particularly the per ton price for crushed car bodies, which has an impact on the ultimate selling price of vehicles sold for scrap and vehicles sold for dismantling and (ii) in the [removed: UK,] [added: U.K.,] the continuing beneficial impact of VB2 which we introduced to the [removed: UK] [added: U.K.] 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 nor can we isolate the impact that VB2 had on the ultimate selling price of vehicles sold in the [removed: UK.][added: U.K. The]

[removed: The] decline in volume resulted primarily from the migration of certain contracts in the [removed: UK] [added: U.K.] from the principal model to the agency model and resulted in a reduction in vehicle sales revenue of $0.8 million.

The beneficial impact on recorded vehicle sales revenue due to the change in the GBP to USD exchange rate was [removed: $2.4] [added: $2.1] million.

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 [removed: basis and,] [added: basis, and] (iv) the general growth in program costs associated with new business segments.

The increase in the cost per unit sold represented a [removed: $19.0] [added: $15.1] million increase relative to last year.

General and Administrative Expenses. General and administrative [removed: expenses] [added: expenses, excluding depreciation and amortization,] were [removed: $107.6] [added: $98.9] million for fiscal 2011 compared to [removed: $108.9] [added: $100.6] million for fiscal 2010, a decrease of [removed: $1.3] [added: $1.7] million, or [removed: 1.2%.][added: 1.7%.]

[removed: Also included in general and administrative expenses were depreciation] [added: Depreciation] and amortization expenses [removed: which] were $8.7 million and $8.3 million for the fiscal years ended July 31, 2011 and 2010, respectively.

[added: The beneficial] impact on general and administrative expenses due to the change in the GBP to USD exchange rate was $0.1 million.

Interest expense increased $3.9 million as a result of increased borrowing under the new credit [removed: facility; refer to footnote 10 for additional information regarding] [added: facility which is further described in] the [removed: facility.][added: Notes to Consolidated Financial Statements — _Note 9.]

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

Service Revenues. Service revenues were [removed: $642.1] [added: $757.3] million during fiscal [removed: 2010] [added: 2012] compared to [removed: $615.4] [added: $713.1] million for fiscal [removed: 2009,] [added: 2011,] an increase of [removed: $26.8] [added: $44.2] million, or [removed: 4.4%,] [added: 6.2%,] above fiscal [removed: 2009.][added: 2011.]

We believe the increase in the average [added: vehicle auction] selling price was [added: driven] primarily [removed: due to:] [added: by:] (i) [removed: an] [added: the year over year] increase in commodity [added: pricing as we believe that commodity] pricing, particularly the per ton price for crushed car [removed: bodies which] [added: bodies,] has an impact on the ultimate selling price of vehicles sold for scrap and vehicles sold for dismantling; [removed: and] (ii) the general increase in used car pricing, which [added: we believe] has an impact on the average selling price of vehicles [removed: that] [added: which] are [removed: either] repaired and retailed or purchased by the end [removed: user.][added: user; (iii) the mix of cars sold as the insurance company cars, which on average command a lower average selling price than non-insurance cars, represented a lower portion of all cars sold; and (iv) in the U.K., the beneficial impact of VB2 which we introduced in 2008 and which expands our buyer base by opening vehicle sales to buyers worldwide.]

We cannot determine [removed: the movement of these influences nor can we determine] which vehicles are sold directly to the end user or for scrap, dismantling, retailing, or export and, accordingly, cannot quantify the specific impact [removed: that] [added: of] commodity pricing [removed: and used car pricing] [added: nor can we isolate the impact that VB2] had on the [added: ultimate] selling price of [removed: vehicles.][added: vehicles sold in the U.K. The decline in volume resulted primarily from the migration of certain contracts in the U.K. from the principal model to the agency model and resulted in a reduction in vehicle sales revenue of $11.1 million.]

The average dollar to pound exchange rate was [removed: 1.57] [added: 1.58] dollars to the pound and [removed: 1.59] [added: 1.60] dollars to the pound for fiscal [removed: 2010] [added: 2012] and fiscal [removed: 2009,] [added: 2011,] respectively, and led to a [removed: reduction] [added: decrease] in service revenue of [removed: $0.2] [added: $0.8] million.

Vehicle sales revenues were [removed: $130.7] [added: $166.9] million during fiscal [removed: 2010] [added: 2012] compared to [removed: $127.7] [added: $159.2] million for fiscal [removed: 2009,] [added: 2011,] an increase of [removed: $3.0] [added: $7.7] million, or [removed: 2.4%,] [added: 4.8%,] above fiscal [removed: 2009.][added: 2011.]

The increase in vehicle sales revenue was due to the [removed: rise] [added: growth] in the average selling price of vehicles which resulted in increased revenue of [removed: $30.0] [added: $19.1] million.

The [removed: rise] [added: growth] 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; (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;] [added: dismantling] and [removed: (iii)] [added: (ii)] in the [removed: UK,] [added: U.K.,] the continuing beneficial impact of VB2 which we introduced to the [removed: UK] [added: U.K.] in 2008 and which expands our buyer base by opening vehicle sales to buyers worldwide.

| Atlanta, Georgia | | | | Greenfield | | | | August 2011 | | | | Northern Georgia | | |

| Edmonton, Canada | | | | Acquisition | | | | May 2012 | | | | Canada | | |

| Calgary, Canada | | | | Acquisition | | | | May 2012 | | | | Canada | | |

In August 2012, we acquired Ride Safely Middle East Auction, LLC located in Dubai, UAE.

_Fiscal 2012 Compared to Fiscal 2011_

| | | | | 2012 | | | | Percentage of Revenue | | | | 2011 | | | | Percentage of Revenue | | |

| Service revenues | | | | $ | 757,272 | | | | 82 | % | | $ | 713,093 | | | | 82 | % |

| Vehicle sales | | | | | 166,919 | | | | 18 | % | | | 159,153 | | | | 18 | % |

| | | | | $ | 924,191 | | | | 100 | % | | $ | 872,246 | | | | 100 | % |

We cannot determine the impact of the movement of these influences as we cannot determine which vehicles are sold to the end user or for scrap, dismantling, retailing or export.

Nor can we predict their future movement.

Yard Operation Expenses. Yard operation expenses were $377.6 million during fiscal 2012 compared to $374.1 million for fiscal 2011, an increase of $3.5 million, or 0.9%, above fiscal 2011.

The increase was driven by volume, which led to an increase of $13.5 million as we processed more vehicles in fiscal 2012 than in fiscal 2011.

This increase was offset by a reduction in operating costs of $5.5 million driven by the decline in the cost to process each car.

There was a detrimental impact on yard operating expenses due to the change in the GBP to USD exchange rate of $0.5 million.

Unit volume decrease led to a decrease of $2.3 million.

General and Administrative Expenses. General and administrative expenses, excluding depreciation and amortization, were $99.4 million for fiscal 2012 compared to $98.9 million for fiscal 2011, an increase of less than $0.5 million, or 0.5%.

Impairment.

During the year ended July 31, 2012, we recorded an impairment of $8.8 million associated with the write down to fair market value of certain assets, primarily real estate, computer hardware and our fleet of private aircraft which have been removed from operations and, if not disposed of during the year, are reflected in assets held for sale on the balance sheet.

Other (Expense) Income. Total other expense was $8.3 million during fiscal 2012 compared to $1.4 million during fiscal 2011, an increase of $6.9 million, or 492.9%.

Interest expense increased $7.3 million as a result of increased borrowing under the new credit facility, which is further described in the Notes to Consolidated Financial Statements — _Note 9.

Long-Term Debt_, which is incorporated herein by reference.

Other income, net, increased $0.5 million due primarily to the gain on sale of assets.

The change in tax rates was primarily driven by the geographical allocation of income and the application of new elective tax law starting in fiscal 2012.

| Service revenues | | | | $ | 713,093 | | | | 82 | % | | $ | 634,606 | | | | 82 | % |

| Vehicle sales | | | | | 159,153 | | | | 18 | % | | | 138,273 | | | | 18 | % |

Vehicle Sales. We have assumed certain contracts through our U.K. acquisitions that require us to act as a principal, purchasing vehicles from the insurance companies and reselling them for our own account.

The detrimental impact on general and administrative expenses due to the change in the GBP to USD exchange rate was $0.1 million.

Long-Term Debt_, which is incorporated herein by reference.

advances from the proceeds of auctioned salvage vehicles.

The increase in cash was due primarily to the $125.0 million of proceeds from additional debt, proceeds from the sale of assets held for sale and from stock option exercises and cash from operations which were offset by share repurchase activity, payments on outstanding debt and capital expenditures during fiscal 2012.

As of July 31, 2012, $58.8 million of the $140.1 million of cash and cash equivalents was held by our foreign subsidiaries.

If these funds are needed for our operations in the U.S., we would be required to accrue and pay U.S. taxes to repatriate these funds.

However, our intent is to permanently reinvest these funds outside of the U.S. and our current plans do not demonstrate a need to repatriate them to fund our U.S. operations.

The decrease was driven in part by increased deferred income taxes of $15.5 million, a $12.1 million increase in vehicle pooling costs as a result of the adoption of ASU 2009-13 in fiscal 2011 offset by an increase in net income of $15.7 million.

During fiscal 2013, we terminated this lease.

In fiscal 2012, our Board of Directors approved a 40 million share increase in the stock repurchase program, bringing the total current authorization to 98 million shares.

For the fiscal year ended July 31, 2012, we repurchased 8,880,708 shares of our common stock at a weighted average price of $22.51.

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, 2012 is $0.04.

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

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

| Louisville, Kentucky | | | | Greenfield | | | | September 2008 | | | | Northwest Kentucky and Southern Indiana | | |

| Richmond, Virginia | | | | Greenfield | | | | *October 2008 | | | | Central Virginia | | |

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

| Greer, South Carolina | | | | Greenfield | | | | February 2009 | | | | Northwest South Carolina | | |

| Warren, Massachusetts | | | | Greenfield | | | | June 2009 | | | | Central Massachusetts | | |

| * | | Former MAG facility |

which operated one location in the United Kingdom.

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

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

scrap, dismantling, retailing or export.

The detrimental

Net Income. Due to the foregoing factors, we realized net income of $166.4 million for fiscal 2011, compared to net income of $151.6 million for fiscal 2010.

_Fiscal 2010 Compared to Fiscal 2009_

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

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

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

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

The increase in service revenue was due primarily to an increase in the average revenue per car sold.

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

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

We cannot determine which vehicles are sold directly to

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

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

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

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

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

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

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

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

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

Other income, net, declined $0.6 million primarily due a decline in rental income of $1.7 million and the loss of $0.8 million on the sale of an airplane in 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 fiscal 2009.

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

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

Our primary

The decrease in cash was due primarily to the share repurchase activity during fiscal 2011.

We repurchased $739.6 million of common stock of which $400 million was financed with term debt borrowings in connection with the tender offer discussed below in financing activities.

Net cash provided by operating activities increased by $9.3 million to $203.3 million during fiscal 2009 when compared to fiscal 2008.

The increase was driven primarily by a reduction in income taxes receivable of $18.0 million which was offset by a decrease in net income of $15.8 million.

In fiscal 2009, we used $17.5 million through changes in our book overdraft.

To achieve this objective in the current uncertain global financial markets, as of July 31, [removed: 2011,] [added: 2012,] all of our total cash and cash equivalents were held in bank [removed: deposits, US Treasury Bills,] [added: deposits] and money market funds.

As of July 31, [removed: 2011,] [added: 2012,] 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: 2011,] [added: 2012,] a 10% change in our interest yield would not materially affect our operating results.

Our total borrowings under the Credit Facility were [removed: $375.1] [added: $443.8] million as of July 31, [removed: 2011.][added: 2012.]

International net revenues result from transactions by our Canadian and [removed: UK] [added: U.K.] operations and are typically denominated in the local currency of each country.

A hypothetical uniform 10% strengthening or weakening in the value of the [removed: US] [added: U.S.] dollar relative to the Canadian dollar and British pound in which our revenues and profits are [added: denominated would result in a decrease/increase to revenue of $19.9 million for the twelve months ended July 31, 2012.]

At July 31, [removed: 2011,] [added: 2012,] the cumulative effect of foreign exchange rate fluctuations on our consolidated financial position was a net translation loss of [removed: $23.2] [added: $34.9] million.

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

We have entered into two interest rate swaps to exchange our variable interest rate payments commitment for fixed interest rate payments on the Term Loan balance.

We do not hedge interest rate fluctuation risks.

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.

There are inherent limitations in the sensitivity analysis presented, due primarily to the assumption that foreign exchange rate movements are linear and instantaneous.

As a result, the analysis is unable to reflect the potential effects of more complex market changes that could arise, which may positively or negatively affect income.

We were incorporated in California in [removed: 1982 and] [added: 1982,] became a public company in [removed: 1994.][added: 1994 and we reincorporated into Delaware in January 2012.]

Our principal executive offices are located at [removed: 4665 Business Center Drive, Fairfield, California 94534] [added: 14185 Dallas Parkway, Suite 300, Dallas, Texas 75254] and our telephone number at that address is [removed: (707) 639-5000.][added: (972) 391-5000.]

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

[removed: Copart, Inc. is] [added: We are] a leading provider of online auctions and vehicle remarketing services in the United States [removed: (US),] [added: (U.S.),] Canada and the United Kingdom [removed: (UK).][added: (U.K.).]

[removed: Sellers are] [added: Vehicle sellers consist] primarily [added: of] insurance companies, but also include banks and financial institutions, charities, car dealerships, fleet operators and vehicle rental companies.

We [added: then] sell [added: the vehicles] principally to licensed vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers and exporters and, at certain locations, [removed: we sell directly] to the general public.

The majority of the vehicles sold on behalf of [removed: the] insurance companies [removed: are either damaged]

[added: 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.

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

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

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

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

The preliminary bidding step is an open bid format similar to [removed: eBay.][added: eBay®.]

[removed: Preliminary bidding] ends one hour prior to the start of a second bidding step, an Internet-only virtual auction.

We believe the implementation of VB2 has increased the pool of available buyers for each [removed: sale and the] [added: sale, which has resulted in] added competition [removed: has increased] [added: and an increase in] the amount buyers are willing to pay for vehicles.

For fiscal [removed: 2011,] [added: 2012,] sales of North American vehicles, on a unit basis, to members registered outside the state where the vehicle is located accounted for [removed: 51.4%] [added: 51.1%] of total vehicles sold; [removed: 28.4%] [added: 28.7%] of vehicles were sold to out of state members and [removed: 23.0%] [added: 22.4%] were sold to out of country members, based on registration.

For fiscal [removed: 2011,] [added: 2012,] sales of [removed: UK] [added: U.K.] vehicles, on a unit basis, to members registered outside the country where the vehicle is located accounted for [removed: 17.5%] [added: 18.1%] of total vehicles sold.

For fiscal [removed: year 2011,] [added: 2012,] which ended July 31, [removed: 2011,] [added: 2012,] our revenues were [removed: $872.2] [added: $924.2] million and our operating income was [removed: $265.3] [added: $286.4] million.

On June 14, 2007, we entered the [removed: UK] [added: U.K.] salvage market through the acquisition of Universal Salvage Plc (Universal).

As of July 31, [removed: 2011,] [added: 2012,] we had a total of [removed: 153] [added: 155] facilities, comprised of [removed: 134] [added: 136] in the [removed: US, 2] [added: U.S., 4] in Canada and [removed: 17] [added: 15] in the [removed: UK.][added: U.K.]

On occasion in North America and on a primary basis in the [removed: UK,] [added: U.K.,] companies in our industry will purchase vehicles from the largest segment of sellers, insurance companies, and resell the vehicles for their own account.

While most companies in this industry remarket vehicles through a physical auction, [removed: Copart sells] [added: we sell] all of [removed: its] [added: our] vehicles on [removed: its] [added: our] Internet selling platform, VB2, thus eliminating the requirement for buyers to travel to an auction location to participate in the sales process.

Automobile manufacturers are incorporating new standard features, including unibody [removed: construction,] [added: construction utilizing exotic metals,] passenger safety cages with surrounding crumple zones to absorb impacts, plastic [added: and ceramic] components, airbags, xenon lights, computer systems, heated seats, and navigation systems.

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

In the [removed: UK,] [added: U.K.,] insurance companies generally tender periodic contracts for the purchase of salvaged vehicles.

Generally, upon receipt of the [removed: pick up] [added: pickup] order (the assignment), we arrange for the transport of a vehicle to a facility.

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

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

The following table sets forth facilities that we have acquired or opened from August 1, [removed: 2008] [added: 2009] through July 31, [removed: 2011:][added: 2012:]

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

| [removed: Wolverhampton,] [added: Birmingham,] England | | | | Acquisition | | | | March 2011 | | | | United Kingdom | | |

| [added: *] | | Closed in fiscal 2010 |

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

Since our inception in 1982, we have expanded from a single facility in Vallejo, California to an integrated network of [removed: 153] [added: 155] facilities located in the United States, Canada and the [removed: UK] [added: U.K.] as of July 31, [removed: 2011.][added: 2012.]

| • | | online payment capabilities via our ePay [removed: product and] [added: product,] credit [removed: cards;] [added: cards and dealer financing programs;] |

| • | | 2nd chance bidding, which [removed: allow] [added: allows] the second highest bidder the opportunity to purchase the vehicle for the seller’s current minimum [removed: bid;] [added: bid after the high bidder declines;] and |

| • | | Night Cap Sales, which [removed: include] [added: provides an additional opportunity for bidding on] vehicles that did not achieve their minimum bid during the virtual sale, counter bidding, or 2nd chance bidding. |

Since becoming a public company in 1994, we have completed the acquisition of [removed: 80] [added: 83] facilities in North [removed: America] [added: America, U.K.] and the [removed: UK.][added: U.A.E. As part of our acquisition and integration strategy, we seek to:]

We offer vehicle sellers in the [removed: UK] [added: U.K.] estimating services for vehicles taken to our facilities.

In the [removed: UK,] [added: U.K.,] we are an authorized treatment facility, or ATF, for the disposal of End-of-Life vehicles, or ELVs.

In fiscal 2012, we made no acquisitions in the U.K.

In fiscal 2012, in North America, we acquired two new facilities located in Calgary and Edmonton, Canada.

In August 2012, we acquired Ride Safely Middle East Auction, LLC located in Dubai, United Arab Emirates (UAE), our first acquisition outside of North America and the U.K.

| Atlanta, Georgia | | | | Greenfield | | | | August 2011 | | | | Northern Georgia | | |

| Edmonton, Canada | | | | Acquisition | | | | May 2012 | | | | Canada | | |

| Calgary, Canada | | | | Acquisition | | | | May 2012 | | | | Canada | | |

Our service offerings include the following:

Currently, the purchase program is offered primarily in the U.K.

_Buy It Now_

We offer an option to our members to purchase specific pre-qualified vehicles immediately at a set price before the live auction process.

This enables us to provide a fast, easy, transparent and comprehensive buying option on these pre-qualified vehicles.

Preliminary bidding

We market our services to the general public under

During the last three years, a majority of our revenue was generated within North America and a majority of our long-lived assets are located within the United States.

Please see _Note 14.

taken and that a closure letter be issued by the TCEQ.

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

obtaining a salvage title from the DMV.

| Louisville, Kentucky | | | | Greenfield | | | | September 2008 | | | | Northwest Kentucky and Southern Indiana | | |

| Richmond, Virginia | | | | Greenfield | | | | *October 2008 | | | | Central Virginia | | |

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

| Greer, South Carolina | | | | Greenfield | | | | February 2009 | | | | Northwest South Carolina | | |

| Warren, Massachusetts | | | | Greenfield | | | | June 2009 | | | | Central Massachusetts | | |

| * | | Former Motors Auction Group (MAG) facility |

As part of our acquisition and integration strategy, we seek to:

We have no purchase programs in North America.

The largest national dismantler is LKQ Corporation (LKQ).

We are not

below Texas surface water quality standards.

Information with respect to this item may be found in the Notes to Consolidated Financial Statements — _Note 15.

Commitments and Contingencies_, which is incorporated herein by reference.

_Mine Safety Disclosure_

Not applicable.

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.

These legal proceedings include the following matters:

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

CARS was seeking in excess of $2.0 million in damages, punitive damages, and prejudgment interest related to allegations involving breach of contract and misrepresentation.

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.

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

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.

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.

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 provide for costs relating to these matters when a loss is probable and the amount can be reasonably estimated.

The effect of the outcome of these matters on our future results of operations cannot be predicted because any such effect depends on future results of operations and the amount and timing of the resolution of such matters.

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

However, the amount of the liabilities associated with

these claims, if any, cannot be determined with certainty.

We maintain insurance which may or may not provide coverage for claims made against us.

There is no assurance that there will be insurance coverage available when and if needed.

Additionally, the insurance that we carry requires that we pay for costs and/or claims exposure up to the amount of the insurance deductibles negotiated when insurance is purchased.

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

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

[added: | o | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)] OF THE SECURITIES EXCHANGE ACT OF 1934 [added: For the transition period from to |]

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

| \[X\] | | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: July 31, [removed: 2011] [added: 2012] |

Copart, [removed: Inc.][added: Inc.]

| Registrant’s telephone number, including area code: [removed: (707) 639-5000] [added: (972) 391-5000] Securities registered pursuant to Section 12(b) of the Act: | | | | | | | |

| Common Stock, [removed: no] [added: $0.0001] par value [removed: (Including associated Preferred Stock Rights)] | | | | The NASDAQ [removed: Stock Market LLC (NASDAQ] Global Select [removed: Market)] [added: Market] | | |

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

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

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 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. [added: o]

| Large Accelerated Filer \[X\] | | | | Accelerated Filer [removed: \[ \]] [added: o] | | | | Non-Accelerated Filer [removed: \[ \]] [added: o] | | | | Smaller Reporting Company [removed: \[ \] |] [added: o] | | |

| | | | | | | | | (Do not check if a smaller reporting company) | | | | | | | [removed: |]

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

The aggregate market value of the voting and non-voting Common Stock held by non-affiliates of the registrant as of January 31, [removed: 2011] [added: 2012] (the last business day of the registrant’s most recently completed second fiscal quarter) was [removed: $2,111,301,225] [added: $2,504,602,111] based upon the closing sales price reported for such date on the NASDAQ Global Select Market (formerly the NASDAQ National Market).

At September [removed: 27, 2011,] [added: 28, 2012,] registrant had [removed: 66,030,517] [added: 124,093,869] outstanding shares of Common Stock.

Portions of our definitive Proxy Statement for the [removed: 2011] [added: 2012] Annual Meeting of [removed: Shareholders,] [added: Stockholders,] also referred to in this Annual Report on Form 10-K as our Proxy Statement, which will be filed with the Securities and Exchange Commission, or SEC, pursuant to Regulation 14A within 120 days after the registrant’s fiscal year end of July 31, [removed: 2011,] [added: 2012,] have been incorporated by reference in Part III hereof.

for the Fiscal Year Ended July 31, [removed: 2011][added: 2012]

| | | | | Employees | | | | | [removed: 11] [added: 12] | |

Risk Factors [removed: 13][added: 14]

Unresolved Staff Comments [removed: 24][added: 25]

Properties [removed: 24][added: 25]

Legal Proceedings [removed: 24][added: 25]

10-K 1 d29549.htm 10-K

Commission file number 0-23255

| Delaware | | | | 94-2867490 | | | |

| 14185 Dallas Parkway, Suite 300, Dallas, Texas _(Address of principal executive offices)_ | | | | 75254 _(Zip code)_ | | | |

Yes \[X\] No o

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

Yes o No R

10-K 1 d27786.htm 10-K

ANNUAL REPORTS PURSUANT TO SECTION 13 OR 15(d)

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

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

| 4665 Business Center Drive Fairfield, California _(Address of principal executive offices)_ | | | | 94534 _(Zip code)_ | | | |

\[ \]

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

| PART II | | | | | | | | | [removed: 27] [added: 26] | |

Market for Registrant’s Common Equity, Related [removed: Shareholder] [added: Stockholder] Matters and Issuer Purchases of Equity Securities [removed: 27][added: 26]

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure [removed: 46][added: 47]

Controls and Procedures [removed: 46][added: 47]

Other Information [removed: 49][added: 50]

| PART III | | | | | | | | | [removed: 50] [added: 51] | |

Directors, Executive Officers of the Registrant and Corporate Governance [removed: 50][added: 51]

Executive Compensation [removed: 50][added: 51]

Security Ownership of Certain Beneficial Owners and Management and Related [removed: Shareholder] [added: Stockholder] Matters [removed: 50][added: 52]

Certain Relationships and Related Transactions, and Director Independence [removed: 51][added: 52]

Principal Accountant Fees and Services [removed: 51][added: 52]

| PART IV | | | | | | | | | [removed: 52] [added: 53] | |

Exhibits and Financial Statement Schedules [removed: 52][added: 53]

[removed: | | |] PART I [removed: |]

_This Annual Report on Form 10-K for the fiscal year ended July 31, [removed: 2011,] [added: 2012,] 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 [removed: forward- looking] [added: 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.

_Although we believe that, based on information currently available to [removed: Copart] [added: us] and [removed: its] [added: our] management, the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

iv

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

Our corporate headquarters are located in [removed: Fairfield, California.][added: Dallas, Texas.]

This facility consists of approximately [removed: 100,000] [added: 53,000] square feet of leased office [removed: space.][added: space under a lease which expires in fiscal 2024.]

In addition, we [removed: recently purchased] [added: own] approximately 10,000 square feet of office space near the [removed: current] [added: previous] corporate headquarters in Fairfield, California [removed: in order to relocate] [added: which houses] certain corporate departments that are not [added: currently] moving to the Dallas, Texas headquarters.

We also own or lease an additional [removed: 153] [added: 155] operating facilities.

In the [removed: US,] [added: U.S.,] we have facilities in every state except Delaware, New Hampshire, North Dakota, Rhode Island, South Dakota, Vermont and Wyoming.

In the [removed: UK,] [added: U.K.,] we own or lease [removed: 17] [added: 15] operating facilities.

In Canada, we have facilities in the provinces of Ontario and Alberta.

In August 2012, we acquired a facility in Dubai, UAE.

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.

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 Canada, we have facilities only in the province of Ontario.

As of July 31, [removed: 2011,] [added: 2012,] there were [removed: 66,005,517] [added: 124,393,700] shares outstanding.

On July 31, [removed: 2011,] [added: 2012,] the last reported sale price of our common stock on the [removed: Nasdaq] [added: NASDAQ] Global Select Market was [removed: $43.45] [added: $23.76] per share.

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

| [removed: Fiscal] [added: Fiscal] Year [removed: 2010] [added: 2012] | | | | High | | | | Low | | |

In addition to our stock repurchase program, we are considering a variety of alternative potential uses for our remaining cash balances and our cash [removed: flow] [added: flows] from operations.

These alternative potential uses include additional stock repurchases, [added: repayments of long-term debt,] the payment of dividends and acquisitions.

No time limit has been placed on the duration of the [removed: share] [added: stock] repurchase program.

For the fiscal year ended July 31, 2011, we repurchased [removed: 6,682,317] [added: 13,364,634] shares of our common stock at a weighted average price of [removed: $40.83.][added: $20.42.]

For the fiscal year ended July 31, 2010, we repurchased [removed: 121,251] [added: 242,502] shares of our common stock at a weighted average price of [removed: $36.76.][added: $18.38.]

As of July 31, [removed: 2011,] [added: 2012,] the total number of shares repurchased under the program was [removed: 20,453,037] [added: 49,786,782] and [removed: 8,546,963] [added: 48,213,218] shares were available for repurchase under our program.

Additionally, on January 14, 2011, we completed a tender offer to purchase up to [removed: 10,526,315] [added: 21,052,630] shares of our common stock at a price of [removed: $38.00] [added: $19.00] per share.

[removed: Directors] [added: Our directors] and executive officers [removed: 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 [removed: 12,172,088] [added: 24,344,176] shares of our common stock.

The shares accepted for purchase are comprised of the [removed: 10,526,315] [added: 21,052,630] shares we offered to purchase and an additional [removed: 1,645,773] [added: 3,291,546] shares purchased pursuant to our right to purchase additional shares up to 2% of our outstanding shares.

[added: The] purchase of the shares of common stock was funded by the proceeds relating to the issuance of [removed: $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, [removed: 2011] [added: 2012] is [removed: approximately $0.23.][added: $0.04.]

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

We remitted [removed: $4.2] [added: $2.6] million, [removed: $7.4] [added: $4.2] million and [removed: $9.8] [added: $7.4] million, in fiscal [removed: 2011, 2010] [added: 2012, 2011] and [removed: 2009,] [added: 2010,] respectively, to the proper taxing authorities in satisfaction of the employees’ minimum statutory withholding requirements.

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

There were no issuances of unregistered securities in the quarter ended July 31, [removed: 2011.][added: 2012.]

The following is a line graph comparing the cumulative total return to [removed: shareholders] [added: stockholders] of our common stock at July 31, [removed: 2011] [added: 2012] since July 31, [removed: 2006,] [added: 2007,] 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: ]

| * | | Assumes that $100.00 was invested on July 31, [removed: 2006] [added: 2007] 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. No dividends have been declared on our common stock. [removed: Shareholder] [added: Stockholder] returns over the indicated period should not be considered indicative of future [removed: shareholder] [added: stockholder] returns. |

As of July 31, 2012, we had 1,617 stockholders of record.

Throughout this report, share and per share amounts have been adjusted as appropriate to reflect the two-for-one stock split effected in the form of a stock dividend distributed after close of trading on March 28, 2012.

| Fourth Quarter | | | | | 27.88 | | | | 22.59 | |

| Third Quarter | | | | | 26.84 | | | | 22.58 | |

| Second Quarter | | | | | 24.55 | | | | 20.82 | |

| First Quarter | | | | | 22.55 | | | | 17.88 | |

| Fourth Quarter | | | | | 23.99 | | | | 21.52 | |

| Third Quarter | | | | | 22.82 | | | | 19.74 | |

| Second Quarter | | | | | 20.44 | | | | 16.50 | |

| First Quarter | | | | | 18.37 | | | | 15.64 | |

In fiscal 2012, our Board of Directors approved a 40 million share increase in the stock repurchase program, bringing the total current authorization to 98 million shares.

For the fiscal year ended July 31, 2012, we repurchased 8,880,708 shares of our common stock at a weighted average price of $22.51.

| First Quarter | | | | | — | | | | — | | | | — | | | | 30,701,062 | |

| Second Quarter | | | | | — | | | | — | | | | — | | | | 30,701,062 | |

| Third Quarter | | | | | — | | | | — | | | | — | | | | 30,701,062 | |

| Fourth Quarter | | | | | 242,502 | | | $ | 18.38 | | | | 242,502 | | | | 30,458,560 | |

| First Quarter | | | | | 4,499,652 | | | $ | 16.83 | | | | 4,499,652 | | | | 25,958,908 | |

| Second Quarter | | | | | 24,344,176 | | | $ | 19.00 | | | | — | | | | 25,958,908 | |

| Third Quarter | | | | | 2,883,084 | | | $ | 21.52 | | | | 2,883,084 | | | | 23,075,824 | |

| Fourth Quarter | | | | | 5,981,898 | | | $ | 22.59 | | | | 5,981,898 | | | | 17,093,926 | |

| _Fiscal 2012 _ | | | | | | | | | | | | | | | | | | |

| First Quarter | | | | | 2,139,796 | | | $ | 20.26 | | | | 2,139,796 | | | | 54,954,130 | |

| Second Quarter | | | | | 3,940,912 | | | $ | 23.37 | | | | 3,940,912 | | | | 51,013,218 | |

| Third Quarter | | | | | — | | | | — | | | | — | | | | 51,013,218 | |

| May 1, 2012 through May 31, 2012 | | | | | — | | | | — | | | | — | | | | 51,013,218 | |

| June 1, 2012 through June 30, 2012 | | | | | 2,800,000 | | | $ | 23.22 | | | | 2,800,000 | | | | 48,213,218 | |

| July 1, 2012 through July 31, 2012 | | | | | — | | | | — | | | | — | | | | 48,213,218 | |

In the first, second and third quarters of fiscal year 2012 certain executive officers exercised stock options through cashless exercises.

| FY 2010—Q1 | | | | | 647,262 | | | $ | 6.52 | | | | 228,708 | | | | 191,492 | | | | 227,062 | | | $ | 18.45 | | | $ | 3,533 | |

| FY 2010—Q4 | | | | | 700,000 | | | $ | 6.46 | | | | 245,844 | | | | 211,654 | | | | 242,502 | | | $ | 18.38 | | | $ | 3,890 | |

| FY 2011—Q2 | | | | | 177,500 | | | $ | 8.47 | | | | 76,050 | | | | 37,834 | | | | 63,616 | | | $ | 19.76 | | | $ | 748 | |

| FY 2011—Q3 | | | | | 548,334 | | | $ | 11.02 | | | | 295,496 | | | | 118,032 | | | | 134,806 | | | $ | 20.40 | | | $ | 2,408 | |

| FY 2011—Q4 | | | | | 180,000 | | | $ | 9.48 | | | | 76,396 | | | | 48,366 | | | | 55,238 | | | $ | 22.33 | | | $ | 1,080 | |

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

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

| FY 2012—Q1 | | | | | 40,000 | | | $ | 9.00 | | | | 16,082 | | | | 8,974 | | | | 14,944 | | | $ | 22.39 | | | $ | 201 | |

| FY 2012—Q2 | | | | | 20,000 | | | $ | 9.00 | | | | 7,506 | | | | 4,584 | | | | 7,910 | | | $ | 23.98 | | | $ | 110 | |

| FY 2012—Q3 | | | | | 322,520 | | | $ | 10.74 | | | | 131,298 | | | | 85,684 | | | | 105,538 | | | $ | 26.38 | | | $ | 2,260 | |

| | | | | 7/07 | | | | 7/08 | | | | 7/09 | | | | 7/10 | | | | 7/11 | | | | 7/12 | | |

| Copart, Inc. | | | | $ | 100.00 | | | $ | 155.86 | | | $ | 125.48 | | | $ | 129.50 | | | $ | 154.41 | | | $ | 168.87 | |

As of July 31, 2011, we had approximately 1,643 shareholders of record.

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

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

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

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

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

| Third Quarter | | | | | 37.01 | | | | 32.77 | |

| Second Quarter | | | | | 37.10 | | | | 31.63 | |

| First Quarter | | | | | 38.47 | | | | 31.93 | |

Our Board of Directors has authorized a 29 million share stock repurchase program.

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

The

| _Fiscal 2009 _ | | | | | | | | | | | | | | | | | | |

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

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

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

| Fourth Quarter | | | | | — | | | | — | | | | — | | | | 15,350,531 | |

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

| 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 | |

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

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

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

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

| 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 | |

The following selected consolidated statements of income data for the years ended July 31, [removed: 2011, 2010] [added: 2012, 2011] and [removed: 2009] [added: 2010] and the consolidated balance data at July 31, [removed: 2011] [added: 2012] and [removed: 2010,] [added: 2011,] 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: 2008] [added: 2009] and [removed: 2007] [added: 2008] and the consolidated balance sheet data at July 31, [removed: 2009, 2008] [added: 2010, 2009] and [removed: 2007,] [added: 2008,] are derived from the audited consolidated financial statements that are not included in this Annual Report on Form 10-K.

As a result of the adoption of Accounting Standards Update [removed: 2009–13,] [added: 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.

| | | | | [removed: 2011] [added: 2012] | | | | [removed: 2010] [added: 2011] | | | | [removed: 2009] [added: 2010] | | | | [removed: 2008] [added: 2009] | | | | [removed: 2007] [added: 2008] | | | |

| Revenues | | | | $ | [removed: 872,246] [added: 924,191] | | | $ | [removed: 772,879] [added: 872,246] | | | $ | [removed: 743,082] [added: 772,879] | | | $ | [removed: 784,848] [added: 743,082] | | | $ | [removed: 560,680] [added: 784,848] | | |

| Operating income | | | | | [removed: 265,290] [added: 286,353] | | | | [removed: 239,070] [added: 265,290] | | | | [removed: 225,325] [added: 239,070] | | | | [removed: 237,917] [added: 225,325] | | | | [removed: 203,145] [added: 237,917] | | |

| Income from continuing operations before income taxes | | | | | [removed: 263,877] [added: 278,056] | | | | [removed: 239,495] [added: 263,877] | | | | [removed: 227,732] [added: 239,495] | | | | [removed: 249,650] [added: 227,732] | | | | [removed: 217,421] [added: 249,650] | | |

| Income tax expense | | | | | [removed: (97,502] [added: (95,937] | ) | | | [removed: (87,868] [added: (97,502] | ) | | | [removed: (88,186] [added: (87,868] | ) | | | [removed: (92,718] [added: (88,186] | ) | | | [removed: (81,083] [added: (92,718] | ) | |

| Income from continuing operations | | | | | [removed: 166,375] [added: 182,119] | | | | [removed: 151,627] [added: 166,375] | | | | [removed: 139,546] [added: 151,627] | | | | [removed: 156,932] [added: 139,546] | | | | [removed: 136,338] [added: 156,932] | | |

| Income from discontinued operations, net of income tax effects | | | | | — | | | | — | | | | [removed: 1,557] [added: —] | | | | [removed: —] [added: 1,557] | | | | — | | |

| Net income | | | | | [removed: 166,375] [added: 182,119] | | | | [removed: 151,627] [added: 166,375] | | | | [removed: 141,103] [added: 151,627] | | | | [removed: 156,932] [added: 141,103] | | | | [removed: 136,338] [added: 156,932] | | |

| Discontinued operations | | | | | — | | | | — | | | | [removed: 0.02] [added: —] | | | | [removed: —] [added: 0.01] | | | | — | | |

| Cash, cash equivalents and short-term investments | | | | $ | [removed: 74,009] [added: 140,112] | | | $ | [removed: 268,188] [added: 74,009] | | | $ | [removed: 162,691] [added: 268,188] | | | $ | [removed: 38,954] [added: 162,691] | | | $ | [removed: 210,246] [added: 38,954] | | |

| Working capital | | | | | [removed: 75,242] [added: 134,908] | | | | [removed: 330,191] [added: 75,242] | | | | [removed: 212,349] [added: 330,191] | | | | [removed: 84,501] [added: 212,349] | | | | [removed: 247,850] [added: 84,501] | | |

| Total assets | | | | | [removed: 1,084,436] [added: 1,155,066] | | | | [removed: 1,228,812] [added: 1,084,436] | | | | [removed: 1,058,032] [added: 1,228,812] | | | | [removed: 956,247] [added: 1,058,032] | | | | [removed: 1,014,600] [added: 956,247] | | |

| Total debt | | | | | [removed: 375,756] [added: 444,120] | | | | [removed: 975] [added: 375,756] | | | | [removed: 1,457] [added: 975] | | | | [removed: 2,240] [added: 1,457] | | | | [removed: 2,793] [added: 2,240] | | |

| [removed: Shareholders’] [added: Stockholders’] equity | | | | | [removed: 555,172] [added: 561,117] | | | | [removed: 1,087,234] [added: 555,172] | | | | [removed: 921,459] [added: 1,087,234] | | | | [removed: 798,996] [added: 921,459] | | | | [removed: 880,866] [added: 798,996] | | |

| Number of storage facilities | | | | | [removed: 153] [added: 155] | | | | [removed: 152] [added: 153] | | | | [removed: 147] [added: 152] | | | | [removed: 143] [added: 147] | | | | [removed: 131] [added: 143] | | |

| Income from continuing operations | | | | $ | 1.42 | | | $ | 1.10 | | | $ | 0.90 | | | $ | 0.84 | | | $ | 0.90 | | |

| Net income per share | | | | $ | 1.42 | | | $ | 1.10 | | | $ | 0.90 | | | $ | 0.85 | | | $ | 0.90 | | |

| Weighted average shares | | | | | 128,120 | | | | 151,298 | | | | 168,330 | | | | 167,074 | | | | 174,824 | | |

| Income from continuing operations | | | | $ | 1.39 | | | $ | 1.08 | | | $ | 0.89 | | | $ | 0.82 | | | $ | 0.87 | | |

| Discontinued operations | | | | | — | | | | — | | | | — | | | | 0.01 | | | | — | | |

| Net income per share | | | | $ | 1.39 | | | $ | 1.08 | | | $ | 0.89 | | | $ | 0.83 | | | $ | 0.87 | | |

| Weighted average shares | | | | | 131,428 | | | | 153,352 | | | | 170,054 | | | | 169,860 | | | | 179,716 | | |

| Income from continuing operations | | | | $ | 2.20 | | | $ | 1.80 | | | $ | 1.67 | | | $ | 1.80 | | | $ | 1.50 | | |

| Net income per share | | | | $ | 2.20 | | | $ | 1.80 | | | $ | 1.69 | | | $ | 1.80 | | | $ | 1.50 | | |

| Weighted average shares | | | | | 75,649 | | | | 84,165 | | | | 83,537 | | | | 87,412 | | | | 90,651 | | |

| Income from continuing operations | | | | $ | 2.17 | | | $ | 1.78 | | | $ | 1.64 | | | $ | 1.75 | | | $ | 1.46 | | |

| Net income per share | | | | $ | 2.17 | | | $ | 1.78 | | | $ | 1.66 | | | $ | 1.75 | | | $ | 1.46 | | |

| Weighted average shares | | | | | 76,676 | | | | 85,027 | | | | 84,930 | | | | 89,858 | | | | 93,455 | | |

We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and [removed: procedures,] [added: procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act),] or [removed: “Disclosure Controls,”] [added: Disclosure Controls,] as of the end of the period covered by this Annual Report on Form 10-K.

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

Disclosure Controls are controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report, is recorded, processed, summarized and reported within the time periods specified in the [removed: US Securities and Exchange Commission’s] [added: SEC’s] rules and forms.

Our management is responsible for establishing and maintaining internal control over financial reporting (as [removed: such item is] defined in [removed: 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 consolidated financial statements for external purposes in accordance with generally accepted accounting principles.

Management assessed our internal control over financial reporting as of July 31, [removed: 2011,] [added: 2012,] the end of our fiscal year.

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: 2011.][added: 2012.]

The Board of Directors and [removed: Shareholders] [added: Stockholders] of Copart, Inc.

We have audited Copart, Inc.’s internal control over financial reporting as of July 31, [removed: 2011,] [added: 2012,] 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: 2011,] [added: 2012,] 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: 2011] [added: 2012] and [removed: 2010,] [added: 2011,] and the related consolidated statements of income, [removed: shareholders’ equity and] comprehensive income, [added: stockholders’ equity,] and cash flows for each of the three years in the period ended July 31, [removed: 2011] [added: 2012] of Copart, Inc. and our report dated [removed: September 27, 2011] [added: October 1, 2012] expressed an unqualified opinion thereon.

There have not been any changes in our internal control over financial reporting [removed: (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act),] during the most recent fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

The certifications of our principal executive officer

and principal financial officer attached as Exhibits 31.1 and 31.2 to this report include, in paragraph 4 of such certifications, information concerning our disclosure controls and procedures and internal controls over financial reporting.

Dallas, Texas

October 1, 2012

San Francisco, California

September 27, 2011

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: 2011] [added: 2012] Annual Meeting of [removed: Shareholders] [added: Stockholders] (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.

An updated form of indemnification agreement applicable to our directors and certain of our officers was approved in January 2012.

The form was intended to update the current form for our reincorporation into Delaware and general developments in corporate law since the adoption of our original form of indemnification agreement and was done as part of our ordinary course of corporate governance matters.

A copy of the form of agreement is attached as Exhibit 10.17 to this Report on Form 10-K.

None.

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 “Proposal Number One Election of Directors,” “Corporate Governance and Board of Directors” and “Related Person Transactions and Section 16(a) Beneficial Ownership Compliance” in our Proxy [removed: Statement.][added: Statement (to be filed with the Securities and Exchange Commission within 120 days of our July 31, 2012 fiscal year end).]

Information required by this item concerning our Executive Officers is incorporated by reference to the section entitled “Executive Officers” in our Proxy [removed: Statement.][added: Statement (to be filed with the Securities and Exchange Commission within 120 days of our July 31, 2012 fiscal year end).]

Information required by this item with respect to material changes to the procedures by which our [removed: shareholders] [added: stockholders] may recommend nominees to our Board of Directors is incorporated herein by reference from the information provided under the heading “Corporate Governance and Board of Directors,” subheading “Director Nomination Process,” of our Proxy [removed: Statement.][added: Statement (to be filed with the Securities and Exchange Commission within 120 days of our July 31, 2012 fiscal year end).]

We intend to satisfy disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the Code of Ethics by posting such information on our website, at the address and location specified above, or as otherwise required by the [removed: Nasdaq] [added: NASDAQ] Global [added: Select] Market.

The information required by this item is incorporated herein by reference from the Proxy Statement [added: (to be filed with the Securities and Exchange Commission within 120 days of our July 31, 2012 fiscal year end)] under the heading “Executive Compensation,” “Compensation of Non-Employee Directors,” and “Corporate Governance and Board of Directors.”

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

The information required by this item is incorporated herein by reference from the Proxy Statement [added: (to be filed with the Securities and Exchange Commission within 120 days of our July 31, 2012 fiscal year end)] under the headings “Security Ownership” and “Execution Compensation,” subheading “Equity Compensation Plan Information.”

The information required by this item is incorporated herein by reference from the Proxy Statement [added: (to be filed with the Securities and Exchange Commission within 120 days of our July 31, 2012 fiscal year end)] under the heading “Related Person Transactions and Section 16(a) Beneficial Ownership Compliance,” “Corporate Governance and Board of Directors,” and “Proposal Number One Election of Directors.”

The information required by this item is incorporated herein by reference from the section captioned “Proposal [removed: Five] [added: Three] — Ratification of [added: Appointment of] Independent Registered Public Accounting Firm” in the Proxy [removed: Statement.][added: Statement (to be filed with the Securities and Exchange Commission within 120 days of our July 31, 2012 fiscal year end).]

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

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

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

| | | | | Consolidated Balance Sheets at July 31, [removed: 2011] [added: 2012] and [removed: 2010] [added: 2011] | | | | | [removed: 59] [added: 60] | |

| | | | | Consolidated Statements of Income for the years ended July 31, [removed: 2011, 2010] [added: 2012, 2011] and [removed: 2009] [added: 2010] | | | | | [removed: 60] [added: 61] | |

| | | | | Consolidated Statements of [removed: Shareholders’ Equity and] Comprehensive Income for the years ended July 31, [removed: 2011, 2010] [added: 2012, 2011] and [removed: 2009] [added: 2010] | | | | | [removed: 61] [added: 62] | |

| | | | | Consolidated Statements of Cash Flows for the years ended July 31, [removed: 2011, 2010] [added: 2012, 2011] and [removed: 2009] [added: 2010] | | | | | [removed: 62] [added: 64] | |

| | | | | Notes to Consolidated Financial Statements | | | | | [removed: 63] [added: 65] | |

| 2. | | | | _Financial Statement Schedules:_All schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes [removed: thereto.] [added: thereto] | | | | | | |

| [removed: 3.2d] [added: 3.2] | | | | [removed: Amendment to Section 3.2 to the] Bylaws of Copart, Inc. [removed: effective as of January 13, 2009] | | | | Current Report on Form [removed: 8-K] [added: 8-K,] (File No. 000-23255), Exhibit No. [removed: 3.1] [added: 3.2] | | | | [removed: December 5, 2008] [added: January 10, 2012] | | | |

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

| 10.1* | | | | Copart Inc. [removed: 1992] [added: 2001] Stock Option [removed: Plan, as amended, and form of stock option agreement] [added: Plan] | | | | Registration Statement on Form S-8 (File No. [removed: 333-93887),] [added: 333-90612),] Exhibit No. [removed: 10.1] [added: 4.1] | | | | [removed: December 30, 1999] [added: June 17, 2002] | | | |

| [removed: 10.8*] [added: 10.2*] | | | | Copart Inc. 2007 Equity Incentive Plan (2007 EIP) | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.1 | | | | December 12, 2007 | | | |

| [removed: 10.9*] [added: 10.3*] | | | | Form of Performance Share Award Agreement for use with 2007 EIP | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.2 | | | | December 12, 2007 | | | |

| [removed: 10.10*] [added: 10.4*] | | | | Form of Restricted Stock Unit Award Agreement for use with 2007 EIP | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.3 | | | | December 12, 2007 | | | |

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

| [removed: 10.12*] [added: 10.6*] | | | | Form of Restricted Stock Award Agreement for use with 2007 EIP | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.4 | | | | December 12, 2007 | | | |

| [removed: 10.13] [added: 10.7] | | | | Credit Agreement dated as of December 14, 2010 by and between [removed: Copart Inc.] [added: the Registrant] and Bank of America, N.A. | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.1 | | | | December 15, 2010 | | | |

| [removed: 10.14*] [added: 10.9*] | | | | Copart, Inc. Executive Bonus Plan | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.13 | | | | August 3, 2006 | | | |

| [removed: 10.15*] [added: 10.10*] | | | | Amended and Restated Executive Officer Employment Agreement between the [removed: Company] [added: Registrant] and William E. Franklin, dated September 25, 2008 | | | | Quarterly Report on Form 10-Q (File No. 000-23255), Exhibit No. 10.1 | | | | December 10, 2008 | | | |

| [removed: 10.16*] [added: 10.11*] | | | | Form of Copart, Inc. Stand-Alone Stock Option Award Agreement for grant of options to purchase 2,000,000 shares of the [removed: Company’s] [added: Registrant’s] common stock to each of Willis J. Johnson and A. Jayson Adair | | | | Registration Statement on Form S-8 (File No. 333-159946), Exhibit No. 4.1 | | | | June 12, 2009 | | | |

| [removed: 10.17*] [added: 10.12*] | | | | Amendment dated June 9, 2010 to Option Agreements dated June 6, 2001, October 21, 2002 and August 19, 2003 between the [removed: Company] [added: Registrant] and Willis J. Johnson | | | | Annual Report on Form 10-K (File No. 000-23255), Exhibit No. 10-17 | | | | September 23, 2010 | | | |

| [removed: 10.18] [added: 10.13] | | | | Executive Officer Employment Agreement between the [removed: Company] [added: Registrant] and Thomas Wylie, dated September 25, 2008 | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.2 | | | | December 15, 2010 | | | |

| [removed: 10.19] [added: 10.14] | | | | Executive Officer Employment Agreement between the [removed: Company] [added: Registrant] and Greg A. Tucker, dated October 29, 2008 | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.3 | | | | December 15, 2010 | | | |

| [removed: 10.20] [added: 10.15] | | | | Executive Officer Employment Agreement between the [removed: Company] [added: Registrant] and Vincent Phillips, dated April 12, 2010 | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.4 | | | | December 15, 2010 | | | |

| [removed: 10.21] [added: 10.16] | | | | Standard Industrial/Commercial single tenant lease-net dated January 3, 2011 between Partnership HealthPlan of California and the Registrant | | | | [removed: —] [added: Annual Report on Form 10-K (File No. 000-23254), Exhibit No. 10.21] | | | | [removed: Filed herewith] [added: September 28, 2011] | | | |

| [removed: 32.1] [added: 32.1(1)] | | | | Certification of [removed: the] Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | | | — | | | | Filed herewith | | | |

| [removed: 32.2] [added: 32.2(1)] | | | | Certification of [removed: the] Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | | | — | | | | Filed herewith | | | |

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, [removed: as amended] the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

[added: | | | | |] Registrant [added: | | | | | | |]

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

Pursuant to the requirements of the Securities Exchange Act of 1934, [removed: as amended,] this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

| /s/ A. JAYSON ADAIRA. Jayson Adair | | | | Chief Executive Officer (Principal Executive Officer and Director) | | | | [removed: September 27, 2011] [added: October 1, 2012] | | |

| /s/ WILLIAM E. FRANKLINWilliam E. Franklin | | | | Senior Vice President of Finance and Chief Financial Officer (Principal Financial and Accounting Officer) | | | | [removed: September 27, 2011] [added: October 1, 2012] | | |

| /s/ WILLIS J. JOHNSONWillis J. Johnson | | | | Chairman of the Board | | | | [removed: September 27, 2011] [added: October 1, 2012] | | |

| /s/ JAMES E. MEEKSJames E. Meeks | | | | Director | | | | [removed: September 27, 2011] [added: October 1, 2012] | | |

| /s/ STEVEN D. COHANSteven D. Cohan | | | | Director | | | | [removed: September 27, 2011] [added: October 1, 2012] | | |

| /s/ MATT BLUNTMatt Blunt | | | | Director | | | | [removed: September 27, 2011] [added: October 1, 2012] | | |

The Board of Directors and [removed: Shareholders] [added: Stockholders] of Copart, Inc.

We have audited the accompanying consolidated balance sheets of Copart, Inc. as of July 31, [removed: 2011] [added: 2012] and [removed: 2010,] [added: 2011,] and the related consolidated statements of income, [removed: shareholders’ equity and] comprehensive income, [added: stockholders’ equity,] and cash flows for each of the three years in the period ended July 31, [removed: 2011.][added: 2012.]

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Copart, Inc. at July 31, [removed: 2011] [added: 2012] and [removed: 2010,] [added: 2011,] and the consolidated results of its operations and its cash flows for each of the three years in the period ended July 31, [removed: 2011,] [added: 2012,] in conformity with U.S. generally accepted accounting principles.

| | | | | Consolidated Statements of Stockholders’ Equity for the years ended July 31, 2012, 2011 and 2010 | | | | | 63 | |

| 3.1 | | | | Copart, Inc. Certificate of Incorporation | | | | Current Report on Form 8-K, (File No. 000-23255), Exhibit No. 3.1 | | | | January 10, 2012 | | | |

| 4.3 | | | | Amendment to Preferred Stock Rights Agreement, as of January 10, 2012, between the Registrant and Computershare Trust Company, N.A. (formerly Equiserve Trust Company, N.A.) | | | | 8/A-12G/A (File No. 000-23255), Exhibit 4.3 | | | | January 10, 2012 | | | |

| 10.8 | | | | Amendment to Credit Agreement between and between the Registrant and Bank of America, N.A., dated as of September 29, 2011 | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.13b | | | | October 4, 2011 | | | |

| 10.17* | | | | Form of Indemnification Agreement signed by executive officers and directors | | | | — | | | | Filed herewith | | | |

| 10.18 | | | | Standard Industrial/Commercial single tenant lease-net dated February 3, 2012 between Garden Centura, L.P. and the Registrant | | | | — | | | | Filed herewith | | | |

| 101.INS(2) | | | | XBRL Instance Document | | | | | | | | | | | |

| 101.SCH(2) | | | | XBRL Taxonomy Extension Schema Document | | | | | | | | | | | |

| 101.CAL(2) | | | | XBRL Taxonomy Extension Calculation Linkbase Document | | | | | | | | | | | |

| 101.DEF(2) | | | | XBRL Extension Definition | | | | | | | | | | | |

| 101.LAB(2) | | | | XBRL Taxonomy Extension Label Linkbase Document | | | | | | | | | | | |

| 101.PRE(2) | | | | XBRL Taxonomy Extension Presentation Linkbase Document | | | | | | | | | | | |

| (1) | | | | In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. | | | | | | | | | | |

| (2) | | | | XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Exchange Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. | | | | | | | | | | |

October 1, 2012

| | | | | COPART, INC. | | | | | | |

October 1, 2012

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

| /s/ DANIEL ENGLANDERDaniel Englander | | | | Director | | | | October 1, 2012 | | |

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

| /s/ THOMAS N. TRYFOROSThomas N. Tryforos | | | | Director | | | | October 1, 2012 | | |

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

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

| /s/ VINCENT W. MITZVincent W. Mitz | | | | President and Director | | | | October 1, 2012 | | |

Dallas, Texas

October 1, 2012

| Cash and cash equivalents | | | | $ | 140,112 | | | $ | 74,009 | | | | | | |

| Assets held for sale | | | | | 3,926 | | | | — | | | | | | |

| Stockholders’ equity: | | | | | | | | | | | | | | | |

| Common stock, $0.0001 par value — 180,000,000 shares authorized; 124,393,700 and 132,011,034 shares issued and outstanding at July 31, 2012 and 2011, respectively | | | | | 12 | | | | 13 | | | | | | |

| Additional paid-in capital | | | | | 326,187 | | | | 313,927 | | | | | | |

| Service revenues | | | | $ | 757,272 | | | $ | 713,093 | | | $ | 634,606 | | |

| Vehicle sales | | | | | 166,919 | | | | 159,153 | | | | 138,273 | | |

| Weighted average common shares outstanding | | | | | 128,120 | | | | 151,298 | | | | 168,330 | | |

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

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

| Net income, as reported | | | | $ | 182,119 | | | $ | 166,375 | | | $ | 151,627 | | |

| Interest rate swap, net of tax effects of $1,762, $0, and $0 | | | | | (3,110 | ) | | | — | | | | — | | |

| Foreign currency translation adjustments | | | | | (11,708 | ) | | | 9,516 | | | | (5,659 | ) | |

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

| 3.1 | | | | Amended and restated Articles of Incorporation | | | | Annual Report on Form 10-K, (File No. 000-23254), Exhibit No. 3.1 | | | | October 26, 2000 | | | |

| 3.1b | | | | Certificate of Amendment of Articles of Incorporation | | | | Annual Report on Form 10-K (File No. 000-23254), Exhibit No. 3.1b | | | | October 26, 2000 | | | |

| 3.1c | | | | Certificate of Amendment of Articles of Incorporation from 2002 | | | | — | | | | Filed herewith | | | |

| 3.2 | | | | Amended and Restated Bylaws of Registrant | | | | Annual Report on Form 10-K, Exhibit No. 3.2 | | | | October 21, 1995 | | | |

| 3.2b | | | | Certificate of Amendment of Bylaws | | | | Quarterly Report on Form 10-Q (File No. 000-23255), Exhibit No. 3.4 | | | | December 15, 2003 | | | |

| 3.2c | | | | Certificate of Amendment of Bylaws | | | | Annual Report on Form 10-K (File No. 000-23255), Exhibit No. 3.2b | | | | October 14, 2004 | | | |

| 3.3 | | | | Certificate of Determination of Rights, Preferences and Privileges of Series A Participating Preferred Stock of Copart, Inc. | | | | 8/A-12/G (File No. 000-23255), Exhibit No. 3.3 | | | | March 11, 2003 | | | |

| 10.2* | | | | 1994 Employee Stock Purchase Plan (as amended December 8, 2003) with form of subscription agreement | | | | Registration Statement on Form S-8 (File No. 333-112597), Exhibit No. 4.1 | | | | February 6, 2004 | | | |

| 10.3* | | | | 1994 Director Option Plan with form of subscription agreement | | | | Registration Statement on Form S-1 (File No. 333-74250) | | | | January 19, 1994 | | | |

| 10.4* | | | | Copart Inc. 2001 Stock Option Plan | | | | Registration Statement on Form S-8 (File No. 333-90612), Exhibit No. 4.1 | | | | June 17, 2002 | | | |

| 10.5* | | | | Form of Indemnification Agreement signed by executive officers and directors | | | | Annual Report on Form 10-K (File No. 000-23254), Exhibit No. 10.5 | | | | October 29, 2002 | | | |

September 27, 2011

| Daniel Englander | | | | Director | | | | September 27, 2011 | | |

| /s/ THOMAS W. SMITHThomas W. Smith | | | | Director | | | | September 27, 2011 | | |

San Francisco, California

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

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

| Shareholders’ equity: | | | | | | | | | | | |

| Service revenues | | | | $ | 723,610 | | | $ | 642,134 | | | $ | 615,352 | | |

| Vehicle sales | | | | | 148,636 | | | | 130,745 | | | | 127,730 | | |

| Income from continuing operations | | | | | 166,375 | | | | 151,627 | | | | 139,546 | | |

| Discontinued operations: | | | | | | | | | | | | | | | |

| Income from discontinued operations, net of income tax effects | | | | | — | | | | — | | | | 1,557 | | |

| Income from continuing operations | | | | $ | 2.20 | | | $ | 1.80 | | | $ | 1.67 | | |

| Income from discontinued operations | | | | | — | | | | — | | | | 0.02 | | |

| Weighted average common shares outstanding | | | | | 75,649 | | | | 84,165 | | | | 83,537 | | |

| Income from continuing operations | | | | $ | 2.17 | | | $ | 1.78 | | | $ | 1.64 | | |

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

| Balances at July 31, 2008 | | | | | 83,274,995 | | | $ | 316,673 | | | $ | 833 | | | $ | 481,490 | | | $ | 798,996 | |

| Net income | | | | | — | | | | — | | | | — | | | | 141,103 | | | | 141,103 | |

| Comprehensive income | | | | | | | | | | | | | | | | | | | | | 113,188 | |

| Exercise of stock options, net of repurchased shares | | | | | 580,985 | | | | 1,842 | | | | — | | | | (8,492 | ) | | | (6,650 | ) |

| Comprehensive income | | | | | | | | | | | | | | | | | | | | | 175,891 | |

| Income from discontinued operations | | | | | — | | | | — | | | | (2,440 | ) | |

| Change in book overdraft | | | | | — | | | | — | | | | (17,502 | ) | |

| Cash and cash equivalents at end of period | | | | $ | 74,009 | | | $ | 268,188 | | | $ | 162,691 | | |

Significant intercompany transactions and balances have been eliminated in consolidation.

For certain sellers who are charged a proportionate fee based on the selling price of the vehicle, the revenue associated with these pre-sale services is recognized upon completion of the sale when the total arrangement fee is considered fixed and determinable.

In October 2009, the Financial Accounting Standards Board (FASB) amended the accounting standards for multiple deliverable revenue arrangements to: