Item 15. Exhibits, Financial Statement Schedules

The following documents are filed as part of this Form 10-K:

(a)	Financial statements:

Our consolidated financial statements at July 31, 2015 and 2014 and for each of the three years in the period ended July 31, 2015 and the notes thereto, together with the report of the independent registered public accounting firm on those consolidated financial statements are hereby filed as part of this annual report on Form 10-K.

(b)	Financial statement schedules:

No financial statement schedules are presented since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto.

(c)	Exhibits:

Exhibits are filed as part of this Report and are hereby incorporated by reference. Refer to Exhibit Index included herein.

SIGNATURES

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

	Registrant
	COPART, INC.
	By:		/s/ A. JAYSON ADAIR
			A. Jayson Adair Chief Executive Officer (Principal Executive Officer and Director)

Date: September 25, 2015

	COPART, INC.
	By:		/s/ WILLIAM E. FRANKLIN
			William E. Franklin, Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Date: September 25, 2015

POWER OF ATTORNEY

KNOWN ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints A. Jayson Adair and William E. Franklin, and each of them, as his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

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

Signature		Capacity in Which Signed		Date
/s/ A. JAYSON ADAIR		Chief Executive Officer (Principal Executive Officer and Director)		September 25, 2015
A. Jayson Adair
/s/ WILLIAM E. FRANKLIN		Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)		September 25, 2015
William E. Franklin
/s/ WILLIS J. JOHNSON		Chairman of the Board		September 25, 2015
Willis J. Johnson
/s/ VINCENT W. MITZ		President and Director		September 25, 2015
Vincent W. Mitz
/s/ JAMES E. MEEKS		Director		September 25, 2015
James E. Meeks
/s/ STEVEN D. COHAN		Director		September 25, 2015
Steven D. Cohan
/s/ DANIEL ENGLANDER		Director		September 25, 2015
Daniel Englander
/s/ THOMAS N. TRYFOROS		Director		September 25, 2015
Thomas N. Tryforos
/s/ MATT BLUNT		Director		September 25, 2015
Matt Blunt

Copart, Inc.

Index to Consolidated Financial Statements

and Financial Statement Schedule

Consolidated Financial Statements	Page Number
Report of Independent Registered Public Accounting Firm	55
Consolidated Balance Sheets as of July 31, 2015 and 2014	56
Consolidated Statements of Income for the years ended July 31, 2015, 2014 and 2013	57
Consolidated Statements of Comprehensive Income for the years ended July 31, 2015, 2014 and 2013	58
Consolidated Statement of Stockholder’s Equity for the years ended July 31, 2015, 2014 and 2013	59
Consolidated Statements of Cash Flows for the years ended July 31, 2015, 2014 and 2013	60
Notes to Consolidated Financial Statements	61

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of Copart, Inc.

We have audited the accompanying consolidated balance sheets of Copart, Inc. as of July 31, 2015 and 2014, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended July 31, 2015. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

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, 2015 and 2014, and the consolidated results of its operations and its cash flows for each of the three years in the period ended July 31, 2015, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Copart, Inc.’s internal control over financial reporting as of July 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework) and our report dated September 25, 2015 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Dallas, Texas

September 25, 2015

COPART, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

	July 31,
	2015				2014
ASSETS
Current assets:
Cash and cash equivalents	$	456,012			$	158,668
Accounts receivable, net	215,696				196,985
Vehicle pooling costs	24,949				24,438
Inventories	8,613				7,259
Income taxes receivable	6,092				2,288
Deferred income taxes	3,396				1,803
Prepaid expenses and other assets	19,824				20,850
Total current assets	734,582				412,291
Property and equipment, net	700,402				692,383
Intangibles, net	17,857				25,242
Goodwill	271,850				283,780
Deferred income taxes	28,840				36,721
Other assets	46,421				56,387
Total assets	$	1,799,952			$	1,506,804
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	147,452			$	152,156
Deferred revenue	3,724				4,170
Income taxes payable	8,279				8,284
Current portion of long-term debt and capital lease obligations	53,671				79,674
Total current liabilities	213,126				244,284
Deferred income taxes	5,322				7,372
Income taxes payable	21,157				23,771
Long-term debt and capital lease obligations	592,135				223,227
Other liabilities	3,748				4,651
Total liabilities	835,488				503,305
Commitments and contingencies
Stockholders’ equity:
Preferred stock: $0.0001 par value—5,000,000 shares authorized; none issued	—				—
Common stock: $0.0001 par value—180,000,000 shares authorized; 120,156,340 and 126,143,366 shares issued and outstanding, respectively	12				13
Additional paid-in capital	407,808				404,542
Accumulated other comprehensive loss	(68,793		)		(20,060		)
Retained earnings	625,437				619,004
Total stockholders’ equity	964,464				1,003,499
Total liabilities and stockholders’ equity	$	1,799,952			$	1,506,804

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

COPART, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

	Year Ended July 31,
	2015				2014				2013
Service revenues and vehicle sales:
Service revenues	$	985,363			$	958,413			$	849,667
Vehicle sales	160,716				205,076				196,719
Total service revenues and vehicle sales	1,146,079				1,163,489				1,046,386
Operating expenses:
Yard operations	526,291				520,423				458,228
Cost of vehicle sales	136,412				174,493				167,236
General and administrative	138,975				164,535				137,930
Impairment of long-lived assets	—				29,104				—
Total operating expenses	801,678				888,555				763,394
Operating income	344,401				274,934				282,992
Other (expense) income:
Interest expense	(18,121		)		(8,768		)		(10,267		)
Interest income	817				491				638
Other income, net	4,972				3,378				3,509
Total other expense	(12,332		)		(4,899		)		(6,120		)
Income before income taxes	332,069				270,035				276,872
Income taxes	112,286				91,348				96,847
Net income	$	219,783			$	178,687			$	180,025
Basic net income per common share	$	1.75			$	1.42			$	1.44
Weighted average common shares outstanding	125,914				125,693				124,912
Diluted net income per common share	$	1.67			$	1.36			$	1.39
Diluted weighted average common shares outstanding	131,425				131,230				129,781

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

COPART, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	Year Ended July 31,
	2015				2014				2013
Comprehensive income, net of tax:
Net income	$	219,783			$	178,687			$	180,025
Other comprehensive income:
Unrealized gain on interest rate swaps, net (a)	1,926				2,140				2,993
Reclassification adjustment of interest rate swaps, net (b)	(1,141		)		(1,467		)		(1,624		)
Foreign currency translation adjustments	(49,518		)		26,428				(10,487		)
Total comprehensive income	$	171,050			$	205,788			$	170,907

(a)	Net of tax effect of $(1,026), $(1,125) and $(1,647) for the years ended July 31, 2015, 2014 and 2013, respectively.

(b)	Net of tax effect of $582, $744 and $874 for the years ended July 31, 2015, 2014 and 2013, respectively.

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

COPART, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

	Common Stock
	Outstanding Shares			Amount				Additional Paid in Capital				Accumulated Other Comprehensive Income (Loss)				Retained Earnings				Stockholders’ Equity
Balances at July 31, 2012	124,393,700			$	12			$	326,187			$	(38,043	)		$	272,961			$	561,117
Net income	—			—				—				—				180,025				180,025
Currency translation adjustment	—			—				—				(10,487		)		—				(10,487		)
Interest rate swaps, net of tax effects	—			—				—				1,369				—				1,369
Exercise of stock options, net of repurchased shares	1,516,534			1				21,370				—				(943		)		20,428
Employee stock-based payment compensation and related tax benefit	—			—				21,886				—				—				21,886
Shares issued for Employee Stock Purchase Plan	84,761			—				1,948				—				—				1,948
Shares repurchased	(500,000	)		—				(2,622		)		—				(11,263		)		(13,885		)
Balances at July 31, 2013	125,494,995			13				368,769				(47,161		)		440,780				762,401
Net income	—			—				—				—				178,687				178,687
Currency translation adjustment	—			—				—				26,428				—				26,428
Interest rate swaps, net of tax effects	—			—				—				673				—				673
Exercise of stock options, net of repurchased shares	566,404			—				10,349				—				(463		)		9,886
Employee stock-based payment compensation and related tax benefit	—			—				23,085				—				—				23,085
Shares issued for Employee Stock Purchase Plan	81,967			—				2,339				—				—				2,339
Balances at July 31, 2014	126,143,366			13				404,542				(20,060		)		619,004				1,003,499
Net income	—			—				—				—				219,783				219,783
Currency translation adjustment	—			—				—				(49,518		)		—				(49,518		)
Interest rate swaps, net of tax effects	—			—				—				785				—				785
Exercise of stock options, net of repurchased shares	397,520			—				2,193				—				(1,509		)		684
Employee stock-based payment compensation and related tax benefit	—			—				19,636				—				—				19,636
Shares issued for Employee Stock Purchase Plan	101,015			—				3,079				—				—				3,079
Shares repurchased	(6,485,561	)		(1		)		(21,642		)		—				(211,841		)		(233,484		)
Balances at July 31, 2015	120,156,340			$	12			$	407,808			$	(68,793	)		$	625,437			$	964,464

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

COPART, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended July 31,
	2015				2014				2013
Cash flows from operating activities:
Net income	$	219,783			$	178,687			$	180,025
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	48,893				53,726				56,728
Allowance for doubtful accounts	(578		)		1,087				(356		)
Impairment of long-lived assets	—				29,104				—
Stock-based payment compensation	18,154				22,099				19,557
Excess tax benefit from stock-based payment compensation	(2,971		)		(2,289		)		(6,097		)
Gain on sale of property and equipment	(918		)		(1,461		)		(962		)
Deferred income taxes	4,365				(10,838		)		(3,605		)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	(20,417		)		(12,870		)		(31,171		)
Vehicle pooling costs	(891		)		(3,613		)		(3,626		)
Inventories	(1,731		)		4,012				(1,777		)
Prepaid expenses and other current assets	69				(4,500		)		(5,971		)
Other assets	10,125				(8,900		)		(18,714		)
Accounts payable and accrued liabilities	(3,926		)		5,425				14,749
Deferred revenue	(438		)		(661		)		(871		)
Income taxes receivable	(806		)		9,267				(752		)
Income taxes payable	(1,971		)		2,816				1,609
Other liabilities	(1,666		)		1,503				560
Net cash provided by operating activities	265,076				262,594				199,326
Cash flows from investing activities:
Purchases of property and equipment	(79,153		)		(81,510		)		(130,265		)
Proceeds from sale of property and equipment	1,521				2,849				3,077
Proceeds from sale of assets held for sale	217				858				3,189
Investment in unconsolidated affiliate	(4,500		)		—				—
Purchases of assets and liabilities in connection with acquisition, net of cash acquired	—				(14,300		)		(84,022		)
Net cash used in investing activities	(81,915		)		(92,103		)		(208,021		)
Cash flows from financing activities:
Proceeds from the exercise of stock options	3,634				10,412				21,442
Excess tax benefit from stock-based payment compensation	2,971				2,289				6,097
Proceeds from the issuance of Employee Stock Purchase Plan shares	3,079				2,339				1,948
Repurchases of common stock	(237,306		)		(572		)		(15,009		)
Change in bank overdraft	—				(16,291		)		16,291
Proceeds from the issuance of long-term debt, net of discount	698,939				—				—
Debt offering costs	(955		)		—				—
Principal payments on long-term debt	(350,000		)		(75,000		)		(96,660		)
Net cash provided by (used in) financing activities	120,362				(76,823		)		(65,891		)
Effect of foreign currency translation	(6,179		)		1,369				(1,895		)
Net increase (decrease) in cash and cash equivalents	297,344				95,037				(76,481		)
Cash and cash equivalents at beginning of period	158,668				63,631				140,112
Cash and cash equivalents at end of period	$	456,012			$	158,668			$	63,631
Supplemental disclosure of cash flow information:
Interest paid	$	18,121			$	8,768			$	10,267
Income taxes paid, net of refunds	$	109,925			$	82,813			$	95,182

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

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2015

NOTE 1 — Summary of Significant Accounting Policies

Basis of Presentation and Description of Business

Copart, Inc. was incorporated under the laws of the State of California in 1982. In January 2012, the Company changed the state in which it is incorporated (the “Reincorporation”), and is now incorporated under the laws of the State of Delaware. All references to “we,” “us,” “our,” or “the Company” herein refer to the California corporation prior to the date of the Reincorporation, and to the Delaware corporation on and after the date of the Reincorporation.

The consolidated financial statements of the Company include the accounts of the parent company and its wholly-owned subsidiaries, including its foreign wholly-owned subsidiaries. Significant intercompany transactions and balances have been eliminated in consolidation.

The Company provides vehicle sellers with a full range of services to process and sell vehicles over the Internet through the Company’s Virtual Bidding Third Generation (VB3) Internet auction-style sales technology. Sellers are primarily insurance companies but also include banks and financial institutions, charities, car dealerships, fleet operators, and vehicle rental companies. The Company sells principally to licensed vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers and exporters; however, at certain locations, the Company sells directly to the general public. The majority of vehicles sold on behalf of insurance companies are either damaged vehicles deemed a total loss or not economically repairable by the insurance companies or are recovered stolen vehicles for which an insurance settlement with the vehicle owner has already been made. The Company offers vehicle sellers a full range of services that expedite each stage of the vehicle sales process, minimize administrative and processing costs and maximize the ultimate sales price. In the United States and Canada (North America), the United Arab Emirates (U.A.E.), Oman, Bahrain, and Brazil, the Company sells vehicles primarily as an agent and derives 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 United Kingdom (U.K.), the Company operates both on a principal basis, purchasing the salvage vehicle outright from the insurance company and reselling the vehicle for its own account, and as an agent. In Germany and Spain, the Company derives revenue from sales listing fees for listing vehicles on behalf of insurance companies.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates include but are not limited to, vehicle pooling costs; self-insured reserves; allowance for doubtful accounts; income taxes; revenue recognition; stock-based payment compensation; purchase price allocations; long-lived asset and goodwill impairment calculations and contingencies. Actual results could differ from these estimates.

Revenue Recognition

The Company provides a portfolio of services to its sellers and buyers that facilitate the sale and delivery of a vehicle from seller to buyer. These services include the ability to use the Company’s Internet sales technology and vehicle delivery, loading, title processing, preparation and storage. The Company evaluates multiple-element arrangements relative to its member and seller agreements.

The services provided to the seller of a vehicle involve disposing of a vehicle on the seller’s behalf and, under most of the Company’s current North American contracts, collecting the proceeds from the member. The Company applies Accounting Standard Update 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements (ASU 2009-13) for revenue recognition. Pre-sale services, including towing, title processing, preparation and storage, as well as sale fees and other enhancement services meet the criteria for separate units of accounting. Revenue associated with each service is recognized upon completion of the respective service, net of applicable rebates or allowances. For certain sellers who are charged a proportionate fee based on high bid of the vehicle, the revenue associated with the pre-sale services is recognized upon completion of the sale when the total arrangement is fixed and determinable. The estimated selling price of each service is determined based on management’s best estimate and allotted based on the relative selling price method.

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

Vehicle sales, where vehicles are purchased and remarketed on the Company’s own behalf, are recognized on the sale date, which is typically the point of high bid acceptance. Upon high bid acceptance, a legal binding contract is formed with the member, and the gross sales price is recorded as revenue.

The Company also provides a number of services to the buyer of the vehicle, charging a separate fee for each service. Each of these services has been assessed to determine whether the requirements have been met to separate them into units of accounting within a multiple-element arrangement. The Company has concluded that the sale and the post-sale services are separate units of accounting. The fees for sale services are recognized upon completion of the sale, and the fees for the post-sale services are recognized upon successful completion of those services using the relative selling price method.

The Company also charges members an annual registration fee for the right to participate in its vehicle sales program, which is recognized ratably over the term of the arrangement, and relist and late-payment fees, which are recognized upon receipt of payment by the member. No provision for returns has been established, as all sales are final with no right of return, although the Company provides for bad debt expense in the case of non-performance by its members or sellers.

The Company allocates arrangement consideration based upon management’s best estimate of the selling price of the separate units of accounting contained within arrangements including multiple deliverables. Significant inputs in the Company’s estimates of the selling price of separate units of accounting include market and pricing trends, pricing customization and practices, and profit objectives for the services.

Vehicle Pooling Costs

The Company defers in vehicle pooling costs certain yard operation expenses associated with vehicles consigned to and received by the Company, but not sold as of the end of the period. The Company quantifies the deferred costs using a calculation that includes the number of vehicles at its facilities at the beginning and end of the period, the number of vehicles sold during the period and an allocation of certain yard operation costs of the period. The primary expenses allocated and deferred are certain facility costs, labor, transportation, and vehicle processing. If the allocation factors change, then yard operation expenses could increase or decrease correspondingly in the future. These costs are expensed as vehicles are sold in subsequent periods on an average cost basis. Given the fixed cost nature of the Company’s business, there are no direct correlations for increases in expenses or units processed on vehicle pooling costs.

The Company applies the provisions of accounting guidance for subsequent measurement of inventory to our vehicle pooling costs. The provision requires that items such as idle facility expenses, double freight and rehandling costs be recognized as current period charges regardless of whether they meet the criteria of “abnormal” as provided in the guidance. In addition, the guidance requires that the allocation of fixed production overhead to the costs of conversion be based on the normal capacity of production facilities.

In early November 2012, Hurricane Sandy hit the northeastern coast of the United States. As a result of the extensive flooding that it caused, the Company expended additional costs for (i) temporary storage facilities; (ii) premiums for subhaulers as they were reassigned from other regions; and (iii) labor costs incurred for overtime, travel and lodging due to the reassignment of employees to the affected region. These costs, which are characterized as “abnormal” under ASC 330, Inventory, were expensed as incurred and not included in inventory. At July 31, 2013, the incremental salvage vehicles received as a result of Hurricane Sandy were sold.

Foreign Currency Translation

The Company records foreign currency translation adjustments from the process of translating the functional currency of the financial statements of its foreign subsidiaries into the U.S. dollar reporting currency. The Canadian dollar, British pound, U.A.E. dirham, Bahraini dinar, Omani rial, Brazilian real, and Euro are the functional currencies of the Company’s foreign subsidiaries as they are the primary currencies within the economic environment in which each subsidiary operates. The original equity investment in the respective subsidiaries is translated at historical rates. Assets and liabilities of the respective subsidiary’s operations are translated into U.S. dollars at period-end exchange rates, and revenues and expenses are translated into U.S. dollars at average exchange rates in effect during each reporting period. Adjustments resulting from the translation of each subsidiary’s financial statements are reported in other comprehensive income.

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

The cumulative effects of foreign currency exchange rate fluctuations were as follows (in thousands):

Cumulative loss on foreign currency translation as of July 31, 2013	$	(45,420	)
Gain on foreign currency translation	26,428
Cumulative loss on foreign currency translation as of July 31, 2014	$	(18,992	)
Loss on foreign currency translation	(49,518		)
Cumulative loss on foreign currency translation as of July 31, 2015	$	(68,510	)

Fair Value of Financial Instruments

The Company records its financial assets and liabilities at fair value in accordance with the framework for measuring fair value in U.S. GAAP. In accordance with ASC 820, Fair Value Measurements and Disclosures, as amended by Accounting Standards Update 2011-04, the Company considers fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants under current market conditions. This framework establishes a fair value hierarchy that prioritizes the inputs used to measure fair value:

Level I	Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.

Level II	Inputs other than quoted prices included within Level I that are observable for the asset or liability, either directly or indirectly. Interest rate hedges are valued at exit prices obtained from the counter-party.

Level III	Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s best estimate.

The amounts recorded for financial instruments in the Company’s consolidated financial statements, which included cash, accounts receivable, accounts payable and accrued liabilities approximated their fair values as of July 31, 2015 and 2014, due to the short-term nature of those instruments, and are classified within Level II of the fair value hierarchy. Cash equivalents are classified within Level II of the fair value hierarchy because they are valued using quoted market prices of the underlying investments. See Note 8 — Long-Term Debt for additional fair value disclosures.

Derivatives and Hedging

The Company has entered into two interest rate swaps to eliminate interest rate risk on the Company’s variable interest rate debt, and the swaps are designated as effective cash flow hedges under ASC 815, Derivatives and Hedging. See Note 9 — Derivatives and Hedging. Each quarter, the Company measures hedge effectiveness using the “hypothetical derivative method” and records in earnings any hedge ineffectiveness with the effective portion of the change in fair value recorded in other comprehensive income or loss.

Cost of Vehicle Sales

Cost of vehicle sales includes the purchase price of vehicles sold for the Company’s own account.

Yard Operations

Yard operations consists primarily of operating personnel (which includes yard management, clerical and yard employees), rent, contract vehicle towing, insurance, fuel and equipment maintenance and repair. The Company recognizes the costs of pre-sale services, including towing, title processing, and preparation and storage within yard operation expenses at the time the related services are provided.

General and Administrative Expenses

General and administrative expenses consist primarily of executive, accounting and data processing, sales personnel, professional services, system maintenance and enhancements and marketing expenses.

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

Advertising

All advertising costs are expensed as incurred and are included in general and administrative expenses on the consolidated statements of income. Advertising expenses were $4.9 million for the year ended July 31, 2015, and $5.0 million for the years ended July 31, 2014 and 2013, respectively.

Other (Expense) Income

Other (expense) income consists primarily of interest expense, interest income, gains and losses from the disposal of fixed assets, rental income, and earnings from unconsolidated affiliates.

Net Income Per Share

Basic net income per share amounts were computed by dividing consolidated net income by the weighted average number of common shares outstanding during the period. Diluted net income per share amounts were computed by dividing consolidated net income by the weighted average number of common shares outstanding plus dilutive potential common shares calculated for stock options outstanding during the period using the treasury stock method.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents include cash held in checking, domestic certificates of deposit, and money market accounts. The Company periodically invests its excess cash in money market funds and U.S. Treasury Bills. The Company’s cash and cash equivalents are placed with high credit quality financial institutions.

Bank Overdraft

As a result of maintaining a consolidated cash management system, the Company utilizes controlled disbursement bank accounts. These accounts are funded as checks are presented for payment, not when checks are issued. The resulting bank overdraft position was included in current liabilities as of July 31, 2013.

Inventory

Inventories of purchased vehicles are stated at the lower of cost or estimated realizable value. Cost includes the Company’s cost of acquiring ownership of the vehicle. The cost of vehicles sold is charged to cost of vehicle sales as sold on a specific identification basis.

Accounts Receivable

Accounts receivable, which consist primarily of advance charges due from insurance companies and the gross sales price of the vehicle due from members, are recorded when billed, advanced or accrued and represent claims against third parties that will be settled in cash.

Allowance for Doubtful Accounts

The Company maintains an allowance for doubtful accounts in order to provide for estimated losses resulting from disputed amounts billed to sellers or members and the inability of sellers or members to make required payments. If billing disputes exceed expectations and/or if the financial condition of sellers or members were to deteriorate, additional allowances may be required. The allowance is calculated by considering both seller and member accounts receivables written off during the previous twelve-month period as a percentage of the total accounts receivable balance.

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

Concentration of Credit Risk

Financial instruments, which subject the Company to potential credit risk, consist of its cash and cash equivalents, short-term investments and accounts receivable. The Company adheres to its investment policy when placing investments. The investment policy has established guidelines to limit the Company’s exposure to credit risk by placing investments with high credit quality financial institutions, diversifying its investment portfolio, limiting investments in any one issuer or pooled fund and placing investments with maturities that maintain safety and liquidity. The Company places its cash and cash equivalents with high credit quality financial institutions. Deposits with these financial institutions may exceed the amount of insurance provided; however, these deposits typically are redeemable upon demand and, therefore, the Company believes that the financial risks associated with these financial instruments are minimal.

The Company performs ongoing credit evaluations of its customers, and generally does not require collateral on its accounts receivable. The Company estimates its allowances for doubtful accounts based on historical collection trends, the age of outstanding receivables and existing economic conditions. If events or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly. Past-due account balances are written off when the Company’s internal collection efforts have been unsuccessful in collecting the amounts due. The Company does not have off-balance sheet credit exposure related to its customers and to date, the Company has not experienced significant credit-related losses.

No single customer accounted for more than 10% of total revenues for the years ended July 31, 2015, 2014 and 2013. As of July 31, 2015 and 2014, one customer accounted for more than 10% of the Company’s accounts receivable.

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation and amortization. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated useful lives of the respective improvements, which is between five and ten years. Significant improvements which substantially extend the useful lives of assets are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Depreciation and amortization are computed on a straight-line basis over the estimated useful lives: three to five years for internally developed or purchased software; three to seven years for transportation and other equipment; three to ten years for office furniture and equipment; and 5 to 40 years or the lease term, whichever is shorter, for buildings and improvements. Amortization of equipment under capital leases is included in depreciation expense.

Long-Lived Asset Valuation

The Company evaluates long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In accordance with ASC 360, Property, Plant, and Equipment, a long-lived asset is initially measured at the lower of its carrying amount or fair value. An impairment loss is recognized when the estimated undiscounted future cash flows expected to be generated from the use of the asset are less than the carrying amount of the asset. The impairment loss is then calculated by comparing the carrying amount with its fair value, which is usually estimated using discounted cash flows expected to be generated from the use of the asset.

Goodwill and Other Identifiable Intangible Assets

In accordance with ASC 350-30-35, Intangibles—Goodwill and Other, goodwill is not amortized but is tested for potential impairment, at a minimum on an annual basis, or when indications of potential impairment exist. The Company performed its annual impairment test for goodwill during the fourth quarter of the year ended July 31, 2015, utilizing a market value and discounted cash flow approach. The impairment test for identifiable intangible assets not subject to amortization is also performed annually or when impairment indicators exist. The impairment test consists of a comparison of the fair value of the intangible asset with its carrying amount. Identifiable intangible assets that are subject to amortization are evaluated for impairment using a process similar to that used to evaluate other long-lived assets.

Capitalized Software Costs

The Company capitalizes system development costs and website development costs related to the enterprise computing services during the application development stage. Costs related to preliminary project activities and post implementation

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

activities are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life, generally three years. The Company evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that impact the recoverability of these assets. Total gross capitalized software as of July 31, 2015 and 2014 was $65.1 million and $61.7 million, respectively. Accumulated amortization expense related to software as of July 31, 2015 and 2014 totaled $42.6 million and $38.6 million, respectively.

The Company reassessed its strategy of utilizing a third-party enterprise operating system to address its international expansion needs based on the projected cost to complete, deployment risk and certain other factors. The Company decided to cease development of this software and address its international technology needs through an internally developed proprietary solution. For the year ended July 31, 2014, the Company recognized a charge of $29.1 million resulting primarily from the impairment of costs previously capitalized in connection with the development of the software.

Retained Insurance Liabilities

The Company is partially self-insured for certain losses related to medical, general liability, workers’ compensation and auto liability. The Company’s insurance policies are subject to a $250,000 deductible per claim, with the exception of its medical policy which has a $225,000 stop loss per claim and a stop loss limiting total exposure to 120% of expected claims. In addition, each of the Company’s policies contains an aggregate stop loss which limits its ultimate exposure. The Company’s liability represents an estimate of the ultimate cost of claims incurred as of the balance sheet date. The estimated liability is not discounted and is established based upon analysis of historical data and actuarial estimates. The primary estimates used in the actuarial analysis include total payroll and revenue. The Company’s estimates have not materially fluctuated from actual results. While the Company believes these estimates are reasonable based on the information currently available, if actual trends, including the severity of claims and medical cost inflation, differ from the Company’s estimates, the Company’s consolidated results of operations, financial position or cash flows could be impacted. The process of determining the Company’s insurance reserves requires estimates with various assumptions, each of which can positively or negatively impact those balances. As of July 31, 2015 and 2014, the total amount reserved for related self-insured claims is $5.8 million and $5.7 million, respectively.

Stock-Based Payment Compensation

The Company accounts for stock-based awards to employees and non-employees using the fair value method as required by ASC 718, Compensation—Stock Compensation (ASC 718), which requires the measurement and recognition of compensation expense for all stock-based payment awards made to employees, consultants and directors based on estimated fair value. ASC 718 requires companies to estimate the fair value of stock-based payment awards on the measurement date using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized in expense over the requisite service periods. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company’s employee stock options have characteristics significantly different from those of traded options and because changes in the input assumptions can materially affect their fair value estimate, it is the Company’s opinion that the existing models do not necessarily provide a reliable single measure of the fair value of the employee stock options.

The fair value of each option was estimated on the measurement date using the Black-Scholes Merton (BSM) option-pricing model utilizing the following assumptions:

	July 31,
	2015				2014				2013
Expected life (in years)	5.3 – 7.2				5.1 – 7.1				5.2 – 6.9
Risk-free interest rate	1.58 – 2.26				1.55 – 2.3				0.61 – 1.5
Estimated volatility	22 – 28				20 – 25				24 – 26
Expected dividends	—		%		—		%		—		%
Weighted average fair value at measurement date	$	10.18			$	11.10			$	7.87

Expected life—The Company’s expected life represents the period that the Company’s stock-based payment awards are expected to be outstanding and was determined based on historical experience of similar awards, giving consideration to the

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

contractual terms of the stock-based payment awards, vesting schedules and expectations of future employee behavior as influenced by changes to the terms of its stock-based payment awards.

Estimated volatility—The Company uses the trading history of its common stock in determining an estimated volatility factor when using the BSM option-pricing model to determine the fair value of options granted.

Expected dividend—The Company has not declared dividends. Therefore, the Company uses a zero value for the expected dividend value factor when using the BSM option-pricing model to determine the fair value of options granted.

Risk-free interest rate—The Company bases the risk-free interest rate used in the BSM option-pricing model on the implied yield currently available on U.S. Treasury zero-coupon issues with the same or substantially equivalent expected life.

Estimated forfeitures—When estimating forfeitures, the Company considers voluntary and involuntary termination behavior as well as analysis of actual option forfeitures.

Net cash proceeds from the exercise of stock options were $3.6 million, $10.4 million and $21.4 million for the years ended July 31, 2015, 2014 and 2013, respectively. The Company realized an income tax benefit of $3.0 million, $2.3 million and $6.1 million from stock option exercises during the years ended July 31, 2015, 2014 and 2013, respectively. In accordance with ASC 718, the Company presents excess tax benefits from disqualifying dispositions of the exercise of incentive stock options, vested prior to August 1, 2005, if any, as financing cash flows rather than operating cash flows.

Comprehensive Income

Comprehensive income includes all changes in stockholders’ equity during a period from non-stockholder sources. For the years ended July 31, 2015, 2014 and 2013, accumulated other comprehensive income (loss) was the effect of foreign currency translation adjustments and the effective portion of the interest rate swaps’ change in fair value. Deferred taxes are not provided on cumulative translation adjustments where the Company expects earnings of a foreign subsidiary to be indefinitely reinvested.

Reclassifications

Certain reclassifications have been made to prior years' consolidated financial statements to conform to the classifications used in fiscal 2015.

Recently Issued Accounting Standards

In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments are effective for financial statements issued for annual and interim periods beginning after December 15, 2015. The amendments are to be applied on a retrospective basis, wherein the balance sheet of each individual period presented is adjusted to reflect the period-specific effects of applying the new guidance. The Company’s adoption of ASU 2015-03 will not have a material impact on the Company’s consolidated results of operations and financial position.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810), which is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). The ASU focuses on the consolidation evaluation for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. In addition to reducing the number of consolidation models from four to two, the new standard simplifies the FASB Accounting Standards Codification and improves current U.S. GAAP by placing more emphasis on risk of loss when determining a controlling financial interest, reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (“VIE”), and changing consolidation conclusions for companies in several industries that typically make use of limited partnerships or VIEs. The ASU will be effective for annual and interim periods beginning after December 15, 2015. The Company’s adoption of ASU 2015-02 will not have a material impact on the Company’s consolidated results of operations and financial position.

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2016, . On July 9, 2015, the FASB issued a proposed ASU to defer the effective date for one year for annual and interim periods beginning after December 15, 2017. ASU 2014-09 allows adoption with either retrospective application to each period presented, or retrospective application with the cumulative effect recognized as of the date of initial application. The Company has not determined the potential effects of implementing ASU 2014-09 on the consolidated financial statements.

Acquisitions

The Company recognizes and measures identifiable assets acquired and liabilities assumed in acquired entities in accordance with ASC 805, Business Combinations. The accounting for acquisitions involves significant judgments and estimates, including the fair value of certain forms of consideration, the fair value of acquired intangible assets, which involve projections of future revenues, cash flows and terminal value, which are then either discounted at an estimated discount rate or measured at an estimated royalty rate, and the fair value of other acquired assets and assumed liabilities, including potential contingencies and the useful lives of the assets. The projections are developed using internal forecasts, available industry and market data and estimates of long-term growth rates of the Company. Historical experience is additionally utilized, in which historical or current costs have approximated fair value for certain assets acquired.

Segments and Other Geographic Reporting

The Company’s North American and U.K. regions are considered two separate operating segments, which have been aggregated into one reportable segment because they share similar economic characteristics.

NOTE 2 — Acquisitions

Fiscal 2015 Transactions

The Company made no significant acquisitions during the year ended July 31, 2015.

Fiscal 2014 Transactions

During the year ended July 31, 2014, the Company acquired one facility in Montreal, Canada; a salvage vehicle auction business in Brazil, which did not include any facilities; as well as the assets of an online marketing company, which included the rights to hundreds of web domains including www.cashforcars.com and www.cash4cars.com. The aggregate purchase price totaled $14.5 million.

During the year ended July 31, 2015, the purchase price allocations for the assets of the online marketing company and the salvage vehicle auction businesses in Montreal, Canada and Brazil were finalized. As a result, from the preliminary purchase price allocation as of July 31, 2014, goodwill decreased $0.8 million, primarily related to a $0.9 million increase in intangible assets, and changes to deferred taxes on acquired intangible assets. In accordance with ASC 805, any adjustments to the fair value of acquired assets and liabilities that occur subsequent to the measurement period will be reflected in the Company’s results of operations.

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

The following table summarizes the purchase price allocation based on the estimated fair values of the assets acquired and liabilities assumed for these acquisitions (in thousands):

Allocation of the acquisition:
Accounts receivable and prepaid expenses	$	734
Property and equipment	71
Inventory	81
Intangible assets	6,071
Goodwill	7,682
Liabilities assumed	(171		)
Fair value of net assets and liabilities acquired	$	14,468

These acquisitions were undertaken because of their strategic fit and have been accounted for using the purchase method in accordance with ASC 805, Business Combinations, which resulted in the recognition of goodwill in the Company’s consolidated financial statements. Goodwill arose because the purchase price of each acquisition reflected a number of factors, including their future earnings and cash flow potential; the multiple to earnings, cash flow and other factors at which similar businesses have been purchased by other acquirers; the competitive nature of the process by which the Company acquired these businesses; and the complementary strategic fit and resulting synergies brought to existing operations. Goodwill that arose from these acquisitions was within Level III of the fair value hierarchy as it was valued using unobservable inputs. Unobservable inputs reflect the Company’s best estimate of what hypothetical market participants would use to determine the value of acquired assets at the reporting date based on the best information available in the circumstances. When a determination is made to classify items within Level III of the fair value hierarchy, the evaluation is based upon the significance of the unobservable inputs to the overall fair value measurement. Due to the limitation of goodwill asset market value or pricing information, the determination of fair value of the goodwill asset is inherently more difficult. Goodwill is not amortized for financial reporting purposes but could be amortizable for tax purposes. The intangible assets that arose from these acquisitions were also within Level III of the fair value hierarchy as it was valued using unobservable inputs, primarily from utilizing the Multi-Period Excess Earnings Method (MPEEM) model, which is an income-based approach that allocates to goodwill any acquisition costs not specifically assigned to intangibles, fixed assets or working capital. Intangible assets acquired include covenants not to compete, supply contracts, customer relationships, trade names, licenses and databases and software with a useful life ranging from three to eight years.

These acquisitions did not result in a significant change in the Company’s consolidated results of operations individually or in the aggregate; therefore, pro forma financial information has not been presented. The operating results have been included in the Company’s consolidated results of operations and financial position since the acquisition dates. The acquisition-related expenses incurred during the year ended July 31, 2014, were not significant and were included in general and administrative expenses in the Company’s consolidated financial position and results of operations.

Fiscal 2013 Transactions

During the year ended July 31, 2013, the Company acquired 100% of the voting stock of Salvage Parent, Inc., which conducted business primarily as Quad City Salvage Auction, CrashedToys, and Desert View Auto Auctions. The Company also acquired salvage vehicle auction businesses in Brazil and the U.A.E.; two auction platforms in Germany and Spain; as well as the assets of Gainesville Salvage Disposal and Auto Salvage Auction, Inc., salvage vehicle auction companies with locations in Gainesville, GA, and Davison and Ionia, MI, for a total purchase price of $87.0 million.

During the year ended July 31, 2014, the purchase price allocation for Salvage Parent, Inc. and the acquired auction platform in Spain was finalized. As a result, from the preliminary purchase price allocation as of July 31, 2013, goodwill decreased $0.8 million, primarily related to increases of $11.5 million in accrued liabilities, $9.3 million in intangible assets, and changes to deferred taxes on acquired intangible assets and working capital adjustments. Accrued liabilities were adjusted after obtaining new information on a pre-acquisition contingency related to a lack of documentation on the historical sales of Salvage Parent, Inc. The Company noted that the potential exposure from this contingency ranged from $7.0 million to $28.0 million. The Company recorded the fair value of this contingency of $14.0 million. In accordance with ASC 805, any adjustments to the fair value of acquired assets and liabilities that occur subsequent to the measurement period will be reflected in the Company’s results of operations.

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

The following table summarizes the purchase price allocation based on the estimated fair values of the assets acquired and liabilities assumed for these acquisitions (in thousands):

Total cash paid, net of cash acquired	$	83,866
Contingent consideration	3,092
Total acquisition price	$	86,958
Allocation of the acquisition:
Accounts receivable and prepaid expenses	$	21,082
Deferred income taxes	2,845
Vehicle pooling costs	1,187
Property and equipment	21,158
Inventory	634
Intangible assets	24,186
Goodwill	72,666
Liabilities assumed	(56,800		)
Fair value of net assets and liabilities acquired	$	86,958

The acquisitions do not result in a significant change in the Company’s consolidated results of operations individually nor in the aggregate; therefore pro forma financial information has not been presented. The operating results have been included in the Company’s consolidated financial position and results of operations since the acquisition dates. The acquisition-related expenses incurred during the year ended July 31, 2013, were not significant and were included in general and administrative expenses in the Company’s consolidated financial position and results of operations.

NOTE 3 — Accounts Receivable, Net

Accounts receivable, net consisted of:

	July 31,
(In thousands)	2015				2014
Advance charges receivable	$	143,724			$	126,307
Trade accounts receivable	73,773				72,170
Other receivables	1,187				2,092
	218,684				200,569
Less: allowance for doubtful accounts	(2,988		)		(3,584		)
Accounts receivable, net	$	215,696			$	196,985

Advance charges receivable represents unbilled amounts paid to third parties on behalf of insurance companies for which the Company will be reimbursed when the vehicle is sold. Trade accounts receivable includes fees and gross auction proceeds to be collected from insurance companies and members.

The movements in the allowance for doubtful accounts were as follows:

	July 31,
(In thousands)	2015				2014				2013
Balance at beginning of year	$	3,584			$	2,683			$	2,920
Charged to costs and expenses	2,221				3,376				1,424
Deductions to bad debt	(2,817		)		(2,475		)		(1,661		)
Balance at end of year	$	2,988			$	3,584			$	2,683

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

NOTE 4 — Property and Equipment, Net

Property and equipment, net consisted of the following:

	July 31,
(In thousands)	2015				2014
Transportation and other equipment	$	70,133			$	68,956
Office furniture and equipment	44,837				41,504
Software	65,072				61,698
Land	481,748				475,564
Buildings and leasehold improvements	453,965				429,895
	1,115,755				1,077,617
Less: accumulated depreciation and amortization	(415,353		)		(385,234		)
Property and equipment, net	$	700,402			$	692,383

Depreciation expense on property and equipment was $34.9 million, $37.0 million and $42.0 million for the years ended July 31, 2015, 2014 and 2013, respectively. Amortization expense of software was $5.0 million, $9.8 million and $9.5 million for the years ended July 31, 2015, 2014 and 2013, respectively.

NOTE 5 — Goodwill

The change in the carrying amount of goodwill was as follows:

	July 31,
(In thousands)	2015				2014
Beginning balance	$	283,780			$	267,463
Goodwill recorded during the period	(790		)		7,724
Effect of foreign currency exchange rates	(11,140		)		8,593
Ending balance	$	271,850			$	283,780

In accordance with the guidance in ASC 350, goodwill is tested for impairment on an annual basis or upon the occurrence of circumstances that indicate that goodwill may be impaired. The Company’s annual impairment tests were performed in the fourth quarter of fiscal 2015 and 2014 and goodwill was not impaired. As of July 31, 2015 and 2014, the cumulative amount of goodwill impairment losses recognized totaled $21.8 million.

NOTE 6 — Intangibles, Net

The following table sets forth amortizable intangible assets by major asset class:

	Gross Carrying Amount								Accumulated Amortization								Net Book Value								Weighted Average Remaining Useful Life (in years)
	July 31,								July 31,								July 31,								July 31,
(In thousands, except remaining useful life)	2015				2014				2015				2014				2015				2014				2015		2014
Amortized intangibles:
Covenants not to compete	$	1,691			$	1,797			$	(900	)		$	(615	)		$	791			$	1,182			3		4
Supply contracts & customer relationships	27,506				29,128				(13,551		)		(9,747		)		13,955				19,381				4		5
Trade name	5,129				5,791				(2,467		)		(1,479		)		2,662				4,312				3		4
Licenses and databases	2,498				1,810				(2,049		)		(1,443		)		449				367				2		3
Intangibles, net	$	36,824			$	38,526			$	(18,967	)		$	(13,284	)		$	17,857			$	25,242

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

Aggregate amortization expense on intangible assets was $6.8 million, $6.9 million and $4.8 million for the years ended July 31, 2015, 2014 and 2013, respectively. Intangible amortization expense for the next five fiscal years based upon July 31, 2015 intangible assets is expected to be as follows:

(In thousands)
2016	$	5,811
2017	5,497
2018	4,414
2019	817
2020	574
Thereafter	744
Total future intangible amortization expense	$	17,857

NOTE 7 — Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of the following:

	July 31,
(In thousands)	2015				2014
Trade accounts payable	$	15,287			$	22,108
Accounts payable to sellers	42,230				40,105
Buyer deposits and prepayments	33,871				28,117
Accrued compensation and benefits	25,647				25,721
Accrued insurance	5,796				5,703
Other accrued liabilities	24,621				30,402
Total accounts payable and accrued expenses	$	147,452			$	152,156

The Company is partially self-insured for certain losses related to general liability, workers’ compensation and auto liability. Accrued insurance liability represents an estimate of the ultimate cost of claims incurred as of the balance sheet date. The estimated liability is not discounted and is established based upon analysis of historical data, including the severity of the Company’s frequency of claims, actuarial estimates and is reviewed periodically by management to ensure that the liability is appropriate.

NOTE 8 — Long-Term Debt

Credit Facility

On December 14, 2010, the Company entered into an Amended and Restated Credit Facility Agreement (Credit Facility), with Bank of America, N.A. The Credit Facility was an unsecured credit agreement providing for (i) a $100.0 million revolving credit facility, including a $100.0 million alternative currency borrowing sublimit and a $50.0 million letter of credit sublimit and (ii) a term loan facility of $400.0 million. On September, 29, 2011, the Company amended the Credit Facility increasing the amount of the term loan facility from $400.0 million to $500.0 million.

Credit Agreement

On December 3, 2014, the Company entered into a Credit Agreement with Wells Fargo Bank, National Association, as administrative agent, and Bank of America, N.A., as syndication agent, which superseded the Credit Facility. The Credit Agreement provides for (a) a secured revolving loan facility in an aggregate principal amount of up to $300.0 million, none of which was drawn at closing, or at July 31, 2015 (Revolving Loan Facility), and (b) a secured term loan facility in an aggregate principal amount of $300.0 million (Term Loan), which was fully drawn at closing. Proceeds from the Credit Facility Agreement were used to repay all outstanding amounts under the Credit Facility totaling $275.0 million at December 3, 2014.

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

The remaining proceeds will be used for general corporate purposes. The Revolving Loan Facility and the Term Loan facility mature on December 3, 2019.

The Term Loan, which as of July 31, 2015, had $243.8 million outstanding, amortizes $18.8 million each quarter beginning December 31, 2014 through December 31, 2015, then amortizes $7.5 million each quarter, with all outstanding borrowings due on December 3, 2019. All amounts borrowed under the Term Loan may be prepaid without premium or penalty.

The revolving and term loans under the Credit Agreement bear interest, at the election of the Company, at either (a) the Base Rate, which is defined as a fluctuating rate per annum equal to the greatest of (i) the Prime Rate in effect on such day; (ii) the Federal Funds Rate in effect on such date plus 0.50%; or (iii) an adjusted LIBOR rate determined on the basis of a one-month interest period plus 1.0%, in each case plus an applicable margin ranging from 0.25% to 1.0% based on the Company's consolidated total net leverage ratio during the preceding fiscal quarter; or (b) an adjusted LIBOR rate plus an applicable margin ranging from 1.25% to 2.0% depending on the Company’s consolidated total net leverage ratio during the preceding fiscal quarter. Interest is due and payable quarterly, in arrears, for loans bearing interest at the Base Rate, and at the end of an interest period (or at each three month interval in the case of loans with interest periods greater than three months) in the case of loans bearing interest at the adjusted LIBOR rate. The interest rate as of July 31, 2015 on the Company's variable interest rate debt was the one month LIBOR rate of 0.19% plus an applicable margin of 1.25%. The carrying amount of the Credit Agreement is comprised of borrowings under which interest accrues under a fluctuating interest rate structure. Accordingly, the carrying value approximates fair value at July 31, 2015, and was classified within Level II of the fair value hierarchy.

Amounts borrowed under the Revolving Loan Facility may be repaid and reborrowed until the maturity date of December 3, 2019. The Company is obligated to pay a commitment fee on the unused portion of the Revolving Loan Facility. The commitment fee rate ranges from 0.20% to 0.35%, depending on the Company’s consolidated total net leverage ratio during the preceding fiscal quarter, on the average daily unused portion of the revolving credit commitment under the Credit Agreement. The Company had no outstanding borrowings under the Revolving Loan Facility as of July 31, 2015.

The Company’s obligations under the Credit Agreement are guaranteed by certain of the Company’s domestic subsidiaries meeting materiality thresholds set forth in the Credit Agreement. Such obligations, including the guaranties, are secured by substantially all of the assets of the Company and the assets of the subsidiary guarantors pursuant to a Security Agreement, dated December 3, 2014, among the Company, the subsidiary guarantors from time to time party thereto, and Wells Fargo Bank, National Association, as collateral agent.

The Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries’ ability to, among other things, incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into transactions with affiliates, pay dividends, or make distributions on and repurchase stock, in each case subject to certain exceptions. The Company is also required to maintain compliance, measured at the end of each fiscal quarter, with a consolidated total net leverage ratio and a consolidated interest coverage ratio. The Company was in compliance with all covenants related to the Credit Agreement as of July 31, 2015.

The Company’s Term Loan requires quarterly payments of $18.8 million each quarter beginning December 31, 2014 through December 31, 2015, then amortizes $7.5 million each quarter, with all outstanding borrowings due on December 3, 2019.

Note Purchase Agreement

On December 3, 2014, the Company entered into a Note Purchase Agreement and sold to certain purchasers (collectively, the “Purchasers”) $400.0 million in aggregate principal amount of senior secured notes (Senior Notes) consisting of (i) $100.0 million aggregate principal amount of 4.07% Senior Notes, Series A, due December 3, 2024; (ii) $100.0 million aggregate principal amount of 4.19% Senior Notes, Series B, due December 3, 2026; (iii) $100.0 million aggregate principal amount of 4.25% Senior Notes, Series C, due December 3, 2027; and (iv) $100.0 million aggregate principal amount of 4.35% Senior Notes, Series D, due December 3, 2029. Interest is due and payable quarterly, in arrears, on each of the Senior Notes. Proceeds from the Note Purchase Agreement will be used for general corporate purposes.

The Company may prepay the Senior Notes, in whole or in part, at any time, subject to certain conditions, including minimum amounts and payment of a make-whole amount equal to the discounted value of the remaining scheduled interest payments under the Senior Notes.

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

The Company’s obligations under the Note Purchase Agreement are guaranteed by certain of the Company’s domestic subsidiaries meeting materiality thresholds set forth in the Note Purchase Agreement. Such obligations, including the guaranties, are secured by substantially all of the assets of the Company and the subsidiary guarantors. The obligations of the Company and its subsidiary guarantors under the Note Purchase Agreement will be treated on a pari passu basis with the obligations of those entities under the Credit Agreement as well as any additional debt the Company may obtain.

The Note Purchase Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries’ ability to, among other things, incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into transactions with affiliates, pay dividends, or make distributions and repurchase stock, in each case subject to certain exceptions. The Company is also required to maintain compliance, measured at the end of each fiscal quarter, with a consolidated total net leverage ratio and a consolidated interest coverage ratio. The Company was in compliance with all covenants related to the Note Purchase Agreement as of July 31, 2015.

Related to the execution of the Credit Agreement and the Note Purchase Agreement, the Company incurred $2.1 million in costs, of which $1.0 million was capitalized as debt issuance fees and $1.1 million was recorded as a reduction of the long-term debt proceeds as a debt discount. Both the debt issuance fees and debt discount are amortized to interest expense over the term of the respective debt instruments.

As of July 31, 2015, future payments on the Term Loan and Note Purchase Agreement were as follows:

(In thousands)	July 31,
2016	$	52,500
2017	30,000
2018	30,000
2019	30,000
2020	101,250
Thereafter	400,000
Total future payments	$	643,750

NOTE 9 — Derivatives and Hedging

The Company has entered into two interest rate swaps to exchange its variable interest rate payments commitment for fixed interest rate payments through December 2015. The swaps are a designated effective cash flow hedge under ASC 815, Derivatives and Hedging. Each quarter, the Company measures hedge effectiveness using the “hypothetical derivative method” and records in earnings any hedge ineffectiveness with the effective portion of the change in fair value recorded in other comprehensive income or loss. The Company has reclassified $1.7 million, $2.2 million, and $2.5 million for the years ended July 31, 2015, 2014 and 2013 respectively, out of other comprehensive income into interest expense.

The hedge provided by the swaps could prove to be ineffective for a number of reasons, including early retirement of the variable interest rate debt, as is allowed under the variable interest rate debt, or in the event the counterparty to the interest rate swaps is determined in the future to not be creditworthy. The Company has no plans for early retirement of the Term Loan.

The interest rate swaps are classified within Level II of the fair value hierarchy as the derivatives are valued using observable inputs. The Company determines fair value of the derivative utilizing observable market data of swap rates and basis rates. These inputs are placed into a pricing model using a discounted cash flow methodology in order to calculate the mark-to-market value of the interest rate swaps. As of July 31, 2015 and 2014, the Company’s fair value of the interest rate swaps were $0.4 million and $1.7 million, respectively, and were classified as other liabilities in the consolidated balance sheets.

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

NOTE 10 — Stockholders’ Equity

General

The Company has authorized the issuance of 180 million shares of common stock, with a par value of $0.0001, of which 120,156,340 shares were issued and outstanding at July 31, 2015. As of July 31, 2015 and 2014, the Company had reserved 22,682,820 and 23,472,855 shares of common stock, respectively, for the issuance of options granted under the Company’s stock option plans and 1,097,943 and 1,158,921 shares of common stock, respectively, for the issuance of shares under the Copart, Inc. Employee Stock Purchase Plan (ESPP). The Company has authorized the issuance of five million shares of preferred stock, with a par value of $0.0001, none of which were issued or outstanding at July 31, 2015 or 2014, which have the rights and preferences as the Company’s Board of Directors shall determine, from time to time.

Stock Repurchases

On September 22, 2011, the Company’s board of directors approved a 40 million share increase in the Company’s stock repurchase program, bringing the total current authorization to 98 million shares. The repurchases may be effected through solicited or unsolicited transactions in the open market or in privately negotiated transactions. No time limit has been placed on the duration of the stock repurchase program. Subject to applicable securities laws, such repurchases will be made at such times and in such amounts as the Company deems appropriate and may be discontinued at any time. During the twelve months ended July 31, 2015, the Company repurchased 231,500 shares of our common stock at a weighted average price of $36.02 per share totaling $8.3 million. During the twelve months ended July 31, 2014, the Company did not repurchase any common stock. During the twelve months ended July 31, 2013, the Company repurchased 500,000 shares of its common stock at a weighted average price of $27.77 per share totaling $13.9 million. As of July 31, 2015, the total number of shares repurchased under the program was 50,518,282 and 47,481,718 shares were available for repurchase under the program.

Additionally, on July 9, 2015, the Company completed a modified "Dutch Auction" tender offer, or tender offer, to purchase up to 13,888,888 shares of its common stock at a price not greater than $36.00 nor less than $34.75 per share. In connection with the tender offer, the Company accepted for payment an aggregate of 6,254,061 shares of its common stock at a purchase price of $36.00 per share for a total value of $225.1 million. The Company's directors and executive officers were expressly prohibited from participating in the tender offer by the board of directors under the Company's Insider Trading Policy. The shares purchased as a result of the tender offer were not part of the repurchase program. The purchases of the shares of common stock were funded by the proceeds from the issuance of long term debt.

During fiscal 2015, 2014 and 2013, certain executive officers and employees exercised stock options through cashless exercises. A portion of the options exercised were net settled in satisfaction of the exercise price and federal and state minimum statutory tax withholding requirements. The Company remitted $3.8 million, $0.1 million and $0.6 million for the years ended July 31, 2015, 2014 and 2013, respectively, to the proper taxing authorities in satisfaction of the employees’ minimum statutory withholding requirements.

The exercised stock options are summarized in the following table:

Period	Options Exercised			Exercise Price				Shares Net Settled for Exercise			Shares Withheld for Taxes(1)			Net Shares to Employee			Share Price for Withholding				Tax Withholding (in 000s)
FY 2013—Q2	73,228			$	8.89			18,127			17,461			37,640			$	35.91			$	627
FY 2014—Q1	14,000			16.43				7,241			2,519			4,240			31.77				80
FY 2015—Q1	201,333			19.59				124,621			35,416			41,296			31.65				1,121
FY 2015—Q3	139,690			20.27				76,021			20,656			43,013			37.27				770
FY 2015—Q4	200,000			12.02				66,602			52,158			81,240			36.08				1,882

(1)	Shares withheld for taxes are treated as a repurchase of shares for accounting purposes but do not count against the Company’s stock repurchase program.

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

Employee Stock Purchase Plan

The ESPP provides for the purchase of up to an aggregate of 5 million shares of common stock of the Company by employees pursuant to the terms of the ESPP. The Company’s ESPP was adopted by the Board of Directors and approved by the stockholders in 1994. The ESPP was amended and restated in 2003 and again approved by the stockholders. In 2014, a new ESPP was approved by the Board of Directors and approved by the stockholders. Under the ESPP, employees of the Company who elect to participate have the right to purchase common stock at a 15% discount from the lower of the market value of the common stock at the beginning or the end of each six month offering period. The ESPP permits an enrolled employee to make contributions to purchase shares of common stock by having withheld from their salary an amount up to 10% of their compensation (which amount may be increased from time to time by the Company but may not exceed 15% of compensation). No employee may purchase more than $25,000 worth of common stock (calculated at the time the purchase right is granted) in any calendar year. The Compensation Committee of the Board of Directors administers the ESPP. The number of shares of common stock issued pursuant to the ESPP during the years ended July 31, 2015, 2014 and 2013 was 101,015; 81,967; and 84,761, respectively. As of July 31, 2015, there were 3,942,094 shares of common stock issued pursuant to the ESPP and 1,097,943 shares remain available for purchase under the ESPP.

Stock Options

In December 2007, the Company adopted the Copart, Inc. 2007 Equity Incentive Plan (Plan), presently covering an aggregate of 8.0 million shares of the Company’s common stock. The Plan provides for the grant of incentive stock options, restricted stock, restricted stock units and other equity-based awards to employees and non-qualified stock options, restricted stock, restricted stock units and other equity-based awards to employees, officers, directors and consultants at prices not less than 100% of the fair market value for incentive and non-qualified stock options, as determined by the Board of Directors at the grant date. Incentive and non-qualified stock options may have terms of up to ten years and vest over periods determined by the Board of Directors. Options generally vest ratably over a five-year period. The Plan replaced the Company’s 2001 Stock Option Plan. As of July 31, 2015, 1,671,530 shares were available for grant under the Plan.

In April 2009, the Compensation Committee of the Company’s Board of Directors, subject to stockholder approval (which was subsequently obtained at the April 14, 2009 special meeting of stockholders), approved the grant to each of Willis J. Johnson, the Company’s Chairman (and then Chief Executive Officer), and A. Jayson Adair, the Company’s Chief Executive Officer (and then President), of nonqualified stock options to purchase 4,000,000 shares of the Company’s common stock at an exercise price of $15.11 per share, which equaled the closing price of the Company’s common stock on April 14, 2009, the effective date of grant. Such grants were made in lieu of any cash salary or bonus compensation in excess of $1.00 per year or the grant of any additional equity incentives for a five-year period. Each option became exercisable over five years, due to continued service by the executive, with 20% vesting on April 14, 2010, and the balance vesting ratably over the subsequent four years. Each option became fully vested due to continued service on April 14, 2014, the fifth anniversary of the date of grant. The total compensation expense recognized by the Company over the five year service period was $26.1 million per grant. The Company recognized no compensation expense in the year ended July 31, 2015, and $7.2 million and $10.2 million for the years ended July 31, 2014 and 2013, respectively, relating to these grants.

In October 2013, the Compensation Committee of the Company’s Board of Directors, subject to stockholder approval (which was subsequently obtained at the December 16, 2013 annual meeting of stockholders), approved the grant to each of A. Jayson Adair, the Company’s Chief Executive Officer, and Vincent W. Mitz, the Company’s President, of nonqualified stock options to purchase 2,000,000 and 1,500,000 shares of the Company’s common stock, respectively, at an exercise price of $35.62 per share, which equaled the closing price of the Company’s common stock on December 16, 2013, the effective date of grant. Such grants were made in lieu of any cash salary or bonus compensation in excess of $1.00 per year or the grant of any additional equity incentives for a five-year period. Each option will become exercisable over five years, subject to continued service by Mr. Adair and Mr. Mitz, with 20% vesting on April 15, 2015 and December 16, 2014, respectively, and the balance vesting monthly over the subsequent four years. Each option will become fully vested, assuming continued service, on April 15, 2019 and December 16, 2018, respectively. If, prior to a change in control, either executive’s employment is terminated without cause, then 100% of the shares subject to that executive’s stock option will immediately vest. If, upon or following a change in control, either the Company or a successor entity terminates the executive’s service without cause, or the executive resigns for good reason (as defined in the option agreement), then 100% of the shares subject to his stock option will immediately vest. On June 2, 2015, the Compensation Committee of the Company’s Board of Directors approved the amendment of each of the stand-alone stock option agreements, by and between the Company and A. Jayson Adair and Vincent W. Mitz, respectively, to remove the provision providing at times prior to a “change in control” for the immediate vesting in full of the underlying option

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

upon an involuntary termination of Mr. Adair or Mr. Mitz, as applicable, without “cause.” The fair value of each option at the date of grant was $11.43. The total estimated compensation expense to be recognized by the Company over the five year estimated service period for these options is $40.0 million. The Company recognized $7.5 million and $4.7 million in compensation expenses for these grants in the years ended July 31, 2015 and 2014, respectively.

The following table details stock-based payment compensation expense included in the company’s consolidated statements of income:

	Year Ended July 31,
(In thousands)	2015				2014				2013
General and administrative	$	15,938			$	19,489			$	17,238
Yard operations	2,216				2,610				2,319
Total stock-based payment compensation	$	18,154			$	22,099			$	19,557

There were no material compensation costs capitalized as part of the cost of an asset as of July 31, 2015 and 2014.

A summary of the status of the Company’s non-vested shares and its activity during the year ended July 31, 2015 was as follows:

(In thousands, except per share amounts)	Number of Shares			Weighted Average Grant- date Fair Value
Non-vested shares at July 31, 2014	5,921			$	10.39
Grants of non-vested shares	2,891			10.18
Vested	(1,984	)		9.83
Forfeitures or expirations	(213	)		10.37
Non-vested shares at July 31, 2015	6,615			$	10.48

Stock option activity for the year ended July 31, 2015 was as follows:

(In thousands, except per share and term data)	Shares			Weighted Average Exercise Price				Weighted Average Remaining Contractual Term (In years)		Aggregate Intrinsic Value
Outstanding as of July 31, 2014	19,082			$	21.64			6.01		$	235,734
Grants of options	2,891			35.95
Exercises	(749	)		17.11
Forfeitures or expirations	(213	)		33.40
Outstanding as of July 31, 2015	21,011			$	23.65			5.78		$	261,339
Exercisable as of July 31, 2015	14,396			$	18.38			4.37		$	254,158
Vested and expected to vest as of July 31, 2015	20,542			$	23.39			5.72		$	260,845

As required by ASC 718, Compensation — Stock Compensation, the Company made an estimate of expected forfeitures and recognized compensation cost only for those equity awards expected to vest.

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of the year ended July 31, 2015 and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their options on July 31, 2015. The aggregate intrinsic value of options exercised was $13.4 million, $10.5 million and $25.4 million in the years ended July 31, 2015, 2014 and 2013, respectively, and represents the difference between the exercise price of the option and the estimated fair value of the Company’s common stock on the dates exercised. As of July 31, 2015, the total compensation cost related to non-vested stock-based payment awards granted to employees under the Company’s stock option plans but not yet recognized was $60.9 million, net of estimated forfeitures. This cost will be amortized on a straight-line basis over a weighted

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

average remaining term of 3.78 years and will be adjusted for subsequent changes in estimated forfeitures. The fair value of options vested for the years ended July 31, 2015, 2014 and 2013 was $19.5 million, $15.0 million and $22.9 million, respectively.

The following table summarizes stock options outstanding and exercisable as of July 31, 2015:

(In thousands, except per share amount)	Options Outstanding									Options Exercisable
Range of Exercise Prices	Number			Weighted Average Remaining Contractual Life		Weighted Average Exercise Price				Number			Weighted Average Exercise Price
$12.02–$17.20	10,484			3.61		$	15.42			10,464			$	15.42
$17.32–$21.05	2,122			4.90		19.83				1,942			19.76
$22.47–$35.45	2,503			8.95		32.29				594			25.21
$35.62–$37.22	5,902			8.61		35.99				1,396			35.71
	21,011			5.78		23.65				14,396			18.38

NOTE 11 — Income Taxes

Income before taxes consisted of the following:

	Year ended July 31,
(In thousands)	2015				2014				2013
U.S.	$	286,169			$	218,450			$	236,118
Non-U.S.	45,900				51,585				40,754
Total income before taxes	$	332,069			$	270,035			$	276,872

Income tax expense (benefit) from continuing operations consisted of the following:

	Year ended July 31,
(In thousands)	2015				2014				2013
Federal:
Current	$	95,468			$	90,207			$	87,484
Deferred	5,841				(9,589		)		(1,073		)
	101,309				80,618				86,411
State:
Current	1,160				1,912				3,871
Deferred	(86		)		(279		)		66
	1,074				1,633				3,937
Foreign:
Current	11,062				10,077				9,090
Deferred	(1,159		)		(980		)		(2,591		)
	9,903				9,097				6,499
Income tax expense	$	112,286			$	91,348			$	96,847

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

A reconciliation of the expected U.S. statutory tax rate to the actual effective income tax rate is as follows:

	Year ended July 31,
(In thousands)	2015			2014			2013
Federal statutory rate	35.0	%		35.0	%		35.0	%
State income taxes, net of federal income tax benefit	1.1			1.1			1.1
Foreign rate differential	(1.9	)		(2.1	)		(1.8	)
Compensation and fringe benefits	0.1			0.1			0.1
Other differences	(0.5	)		(0.3	)		0.6
Effective tax rate	33.8	%		33.8	%		35.0	%

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabilities) are presented below:

	July 31,
(In thousands)	2015				2014
Deferred tax assets:
Allowance for doubtful accounts	$	992			$	1,209
Accrued compensation and benefits	40,391				36,780
State taxes	577				416
Accrued other	3,967				2,962
Deferred revenue	798				1,301
Property and equipment	16,957				18,627
Losses carried forward	4,362				4,312
Federal tax benefit	7,832				10,457
Total gross deferred tax assets	75,876				76,064
Less valuation allowance	(2,650		)		(2,210		)
Net deferred tax assets	73,226				73,854
Deferred tax liabilities:
Vehicle pooling costs	(7,749		)		(7,420		)
Prepaid insurance	(890		)		(1,950		)
Intangibles and goodwill	(37,673		)		(33,332		)
Total gross deferred tax liabilities	(46,312		)		(42,702		)
Net deferred tax assets	$	26,914			$	31,152

The above net deferred tax assets and liabilities have been reflected in the accompanying consolidated balance sheets as follows:

	July 31,
(In thousands)	2015				2014
North America current assets	$	3,396			$	1,803
North America non-current assets	28,856				36,639
Foreign non-current liabilities	(5,338		)		(7,290		)
Net deferred tax assets	$	26,914			$	31,152

The Company’s ability to realize deferred tax assets is dependent on its ability to generate future taxable income. Accordingly, the Company has established a valuation allowance in taxable jurisdictions where the utilization of the tax assets is uncertain. Additional timing differences or future tax losses may occur which could warrant a need for establishing additional

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

valuation allowances against certain deferred tax assets. The valuation allowance for the years ended July 31, 2015 and 2014 was $2.7 million and $2.2 million, respectively.

As of July 31, 2015 and 2014, if recognized, the portion of liabilities for unrecognized tax benefits that would favorably affect the Company’s effective tax rate was $17.4 million and $18.4 million, respectively. It is possible that the amount of unrecognized tax benefits will change in the next twelve months, due to tax legislation updates or future audit outcomes; however an estimate of the range of the possible change cannot be made at this time.

The following table summarizes the activities related to the Company’s unrecognized tax benefits:

	July 31,
(In thousands)	2015				2014				2013
Beginning balance	$	18,419			$	17,178			$	16,946
Increases related to current year tax position	3,441				1,805				1,844
Prior year tax positions:
Prior year increase	599				2,997				1,474
Prior year decrease	—				(523		)		—
Cash settlement	(225		)		—				—
Lapse of statute of limitations	(4,806		)		(3,038		)		(3,086		)
Ending balance	$	17,428			$	18,419			$	17,178

It is the Company’s continuing practice to recognize interest and penalties related to income tax matters in income tax expense. As of July 31, 2015, 2014 and 2013, the Company had accrued interest and penalties related to unrecognized tax benefits of $3.8 million, $5.4 million and $5.9 million, respectively.

The Company is currently under audit by certain taxing authorities in the U.S. for fiscal years 2011 to 2014. The Company is no longer subject to U.S. federal and state income tax examination for fiscal years prior to 2012, except the jurisdictions currently under audit. At this time, the Company does not believe that the outcome of any examination will have a material impact on the Company’s consolidated results of operations and financial position.

In the years ended July 31, 2015, 2014 and 2013, the Company recognized a tax benefit of $3.0 million, $2.3 million and $6.1 million, respectively, upon the exercise of certain stock options, which was reflected in stockholders’ equity.

The Company has not provided for U.S. federal income and foreign withholding taxes on its $134.0 million foreign subsidiaries’ undistributed earnings as of July 31, 2015, because the Company intends to reinvest such earnings indefinitely in its foreign operations. Specifically, the earnings will be dedicated to the following areas outside the U.S. (i) funding operating and capital spending needs in existing foreign markets; (ii) funding merger and acquisition deals both in existing and new foreign markets; and (iii) other investments to help expand the Company's footprint in foreign emerging markets. The Company does not anticipate the need for any foreign cash in the U.S. operations. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to U.S. income taxes (subject to an adjustment for foreign tax credits). It is not practical to determine the income tax liability that might be incurred if these earnings were to be distributed.

NOTE 12 — Net Income Per Share

The table below reconciles basic weighted shares outstanding to diluted weighted average shares outstanding:

	July 31,
(In thousands)	2015			2014			2013
Weighted average common shares outstanding	125,914			125,693			124,912
Effect of dilutive securities — stock options	5,511			5,537			4,869
Weighted average common and dilutive potential common shares outstanding	131,425			131,230			129,781

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

There were no material adjustments to net income required in calculating diluted net income per share. Excluded from the dilutive earnings per share calculation were 5,905,374; 3,684,735; and 298,408 options to purchase the Company’s common stock for the years ended July 31, 2015, 2014, and 2013, respectively, because their inclusion would have been anti-dilutive.

NOTE 13 — Segments and Other Geographic Reporting

The Company’s North American and U.K. regions are considered two separate operating segments, which have been aggregated into one reportable segment because they share similar economic characteristics.

Total revenues by geographic location of the selling facility are summarized in the following table:

	Year ended July 31,
(In thousands)	2015				2014				2013
North America	$	914,443			$	904,000			$	826,030
United Kingdom	209,823				235,245				209,186
Other	21,813				24,244				11,170
Total revenue	$	1,146,079			$	1,163,489			$	1,046,386
International total	$	243,199			$	269,915			$	228,945

Long-lived assets by geographic location are summarized in the following table:

	Year ended July 31,
(In thousands)	2015				2014				2013
North America	$	580,691			$	551,182			$	565,590
United Kingdom	118,958				139,845				102,934
Other	47,174				57,743				44,219
Total long-lived assets	$	746,823			$	748,770			$	712,743
International total	$	171,396			$	204,076			$	151,179

NOTE 14 — Commitments and Contingencies

Leases

The Company leases certain facilities and certain equipment under non-cancelable capital and operating leases. In addition to the minimum future lease commitments presented below, the leases generally require the Company to pay property taxes, insurance, maintenance and repair cost which are not included in the table because the Company has determined these items are not material. Certain leases provide the Company with either a right of first refusal to acquire or an option to purchase a facility at fair value. Certain leases also contain escalation clauses and renewal option clauses calling for increased rents. Where a lease contains an escalation clause or a concession, such as a rent holiday or tenant improvement allowance, rent expense is recognized on a straight-line basis over the lease term in accordance with ASC 840, Operating Leases.

The future minimum lease commitments for the next five fiscal years, under non-cancelable capital and operating leases with initial or remaining lease terms in excess of one year were as follows:

	Year ended July 31,
(In thousands)	2016				2017				2018				2019				2020				Thereafter				Subtotal				Less Amount Representing Interest				Total
Operating leases	$	22,311			$	19,734			$	17,431			$	14,113			$	10,895			$	71,885			$	156,369			$	—			$	156,369
Capital leases	1,312				37				3				—				—				—				1,352				(28		)		1,324

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

Facilities rental expense for the years ended July 31, 2015, 2014 and 2013 were $21.7 million, $26.4 million and $20.6 million, respectively. Yard operations equipment rental expense for the years ended July 31, 2015, 2014 and 2013 were $3.6 million, $3.0 million and $2.8 million, respectively.

Commitments

Letters of Credit

The Company had outstanding letters of credit of $17.5 million at July 31, 2015, which are primarily used to secure certain insurance obligations.

Contingencies

Legal Proceedings

The Company is subject to threats of litigation and is involved in actual 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. The material pending legal proceedings to which the Company is a party to, or of which any of the Company’s property is subject to include the following matters.

On November 1, 2013, the Company filed suit against Sparta Consulting, Inc. (now known as “KPIT”) in the 44th Judicial District Court of Dallas County, Texas, alleging fraud, fraudulent inducement, and/or promissory fraud, negligent misrepresentation, unfair business practices pursuant to California Business and Professions Code § 17200, breach of contract, declaratory judgment, and attorney’s fees. The Company seeks compensatory and exemplary damages, disgorgement of amounts paid, attorney’s fees, pre- and post-judgment interest, costs of suit, and a judicial declaration of the parties’ rights, duties, and obligations under the Implementation Services Agreement dated October 6, 2011. The suit arises out of the Company’s September 17, 2013 decision to terminate the Implementation Services Agreement, under which KPIT was to design, implement, and deliver a customized replacement enterprise resource planning system for the Company. On January 2, 2014, KPIT removed this suit to the United States District Court for the Northern District of Texas. On August 11, 2014, the Northern District of Texas transferred the suit to the United States District Court for the Eastern District of California for convenience. On January 8, 2014, KPIT filed suit against the Company in the United States District Court for the Eastern District of California, alleging breach of contract, promissory estoppel, breach of the implied covenant of good faith and fair dealing, account stated, quantum meruit, unjust enrichment, and declaratory relief. KPIT seeks compensatory and exemplary damages, prejudgment interest, costs of suit, and a judicial declaration of the parties’ rights, duties, and obligations under the Implementation Services Agreement. The Company is pursuing its claim for damages, and defending KPIT’s claim for damages.

The Company provides 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 the Company’s future consolidated results of operations and cash flows cannot be predicted because any such effect depends on future results of operations and the amount and timing of the resolution of such matters. The Company believes that any ultimate liability will not have a material effect on its consolidated results of operations, financial position or cash flows. However, the amount of the liabilities associated with these claims, if any, cannot be determined with certainty. The Company maintains insurance which may or may not provide coverage for claims made against the Company. There is no assurance that there will be insurance coverage available when and if needed. Additionally, the insurance that the Company carries requires that the Company pay for costs and/or claims exposure up to the amount of the insurance deductibles negotiated when the insurance is purchased.

Governmental Proceedings

The Georgia Department of Revenue, or DOR, has conducted a sales and use tax audit of the Company’s operations in Georgia for the period from January 1, 2007 through June 30, 2011. As a result of their initial audit, the DOR issued a notice of proposed assessment for uncollected sales taxes in which it asserted that the Company failed to collect and remit sales taxes totaling $73.8 million, including penalties and interest. According to the DOR, the proposed assessment was based on its initial determination that the Company's sales did not constitute nontaxable sales for resale.

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

The Company subsequently engaged a Georgia law firm and outside tax advisors to review the conduct of its business operations in Georgia, the notice of proposed assessment, and the DOR’s policy position. In particular, the Company’s outside legal counsel provided the Company an opinion that the sales for resale to non-U.S. registered resellers should not be subject to Georgia sales and use tax. In rendering its opinion, the Company’s counsel noted that non-U.S. registered resellers are unable to comply strictly with technical requirements for a Georgia certificate of exemption but concluded that its sales for resale to non-U.S. registered resellers should not be subject to Georgia sales and use tax notwithstanding this technical inability to comply.

Since the Company's receipt of the notice of proposed assessment, the Company and its counsel have engaged in active discussions with the DOR to resolve the matter. On June 5, 2015, following the Company's most recent discussions and after additional review of documentation, the DOR provided the Company with revised audit work papers computing a sales tax liability of $2.7 million before interest and any penalties.

On June 22, 2015, representatives of the DOR and the Office of the Attorney General for the State of Georgia informed the Company's counsel that the DOR intended to issue a formal notice of assessment for an estimated $100.0 million, based on the DOR’s original proposed assessment of $73.8 million plus additional accumulated interest and penalties. On August 4, 2015, the DOR issued an official Assessment and Demand for Payment for $96.1 million for sales taxes, penalties, and interest that the DOR alleges the Company owes the State of Georgia. The Company filed an appeal of this notice of assessment from the DOR with the Georgia Tax Tribunal on September 3, 2015.

Based on the opinion from the Company’s outside law firm, advice from its outside tax advisors, and the Company's best estimate of a probable outcome, the Company has adequately provided for the payment of any assessment in its consolidated financial statements. The Company believes it has strong defenses to the DOR’s notice of assessment and intends to defend this matter. There can be no assurance that this matter will be resolved in the Company’s favor or that the Company will not ultimately be required to make a substantial payment to the Georgia DOR. The Company understands that litigating and defending the matter in Georgia could be expensive and time-consuming and result in substantial management distraction. If the matter were to be resolved in a manner adverse to the Company, it could have a material adverse effect on the Company’s consolidated results of operations and financial position.

NOTE 15 — Guarantees — Indemnifications to Officers and Directors

The Company typically enters into indemnification agreements with its directors and certain of its officers to indemnify them to the extent permitted by law against any and all liabilities, costs, expenses, amounts paid in settlement and damages incurred by the directors as a result of any lawsuit, or any judicial, administrative or investigative proceeding in which the directors are sued as a result of their service as members of its Board of Directors.

NOTE 16 — Related Party Transactions

The Company leases certain of its facilities from officers and directors of the Company under various lease agreements. Rental payments under these leases totaled $0.8 million, $1.4 million, and $0.4 million for the years ended July 31, 2015, 2014 and 2013, respectively.

During the year ended July 31, 2015 the company purchased three properties previously leased from an executive which totaled $11.9 million. During the year ended July 31, 2014, the Company purchased a property previously leased from an executive for $1.8 million. During the year ended July 31, 2013, the Company purchased one commercial property from an executive who relocated to the corporate headquarters in Dallas, Texas for $1.1 million.

There were no amounts due to or from related parties as of July 31, 2015 and 2014 that are not separately or previously disclosed.

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

NOTE 17 — Employee Benefit Plan

The Company sponsors a 401(k) defined contribution plan covering its eligible employees. The plan is available to all U.S. employees who meet minimum age and service requirements and provides employees with tax deferred salary deductions and alternative investment options. The Company matches 20% of employee contributions up to 15% of employee salary deferral. The Company recognized expenses of $0.8 million for the years ended July 31, 2015 and 2014, and $0.5 million for the year ended July 31, 2013, related to this plan.

The Company also sponsors an additional defined contribution plan for its U.K. employees, which is available to all U.K. employees who meet minimum service requirements. The Company matches up to 5% of employee contributions. The Company recognized expenses of $0.7 million, $0.6 million, and $0.2 million for the years ended July 31, 2015, 2014 and 2013, respectively, related to this plan.

NOTE 18 — Restructuring

The Company relocated its corporate headquarters to Dallas, Texas in 2012. Restructuring costs were as follows:

	Year ended July 31,
(In thousands)	2015				2014				2013
General and Administrative
Severance	$	310			$	4,598			$	978
Relocation	255				491				759
Total general and administrative	$	565			$	5,089			$	1,737
Yard Operations
Relocation	$	25			$	(28	)		$	189
Impairment	—				—				—
Total yard operations	$	25			$	(28	)		$	189

Severance for the year ended July 31, 2014 included a benefit for the reversal of previously accrued costs as a result of adjusting the severance accrual based upon the Company’s reassessment of its strategy of utilizing a third-party enterprise operating system. See Capitalized Software Costs in Note 1 — Summary of Significant Accounting Policies.

The movements in the severance accrual were as follows:

	Year ended July 31,
(In thousands)	2015				2014
Beginning balance	$	1,898			$	2,224
Expense	590				4,598
Payments	(1,538		)		(4,924		)
Ending balance	$	950			$	1,898

The Company started transitioning its data center to a third-party managed data center during the year ended July 31, 2013. The Company reviewed the useful life of certain assets related to its data centers and determined they should be revised from an average of 60 months to an average of 45 months to reflect the shorter useful lives of these assets. Additionally, facility depreciation related to the Company’s information technology operations, previously located in the Company’s offices in Fairfield, California, was accelerated as the department relocated to the Dallas, Texas corporate headquarters. These changes in estimates were accounted for on a prospective basis, resulting in increased depreciation expense over the revised useful lives. These changes resulted in additional depreciation expense of $2.8 million and $7.0 million for the years ended July 31, 2014 and 2013, respectively.

COPART, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

JULY 31, 2015

NOTE 19 — Quarterly Financial Information (in thousands, except per share data) (Unaudited)(1)

	Fiscal quarter
Fiscal year 2015	First				Second				Third				Fourth
Total revenue	$	290,386			$	276,258			$	297,142			$	282,293
Gross margin	122,308				114,867				127,417				118,784
Operating income	82,401				80,468				94,767				86,765
Income before income taxes	82,223				80,104				88,296				81,446
Net income	52,615				52,193				57,563				57,412
Basic net income per common share	$	0.42			$	0.41			$	0.46			$	0.46
Diluted net income per common share	$	0.40			$	0.40			$	0.44			$	0.44

	Fiscal quarter
Fiscal year 2014	First				Second				Third				Fourth
Total revenue	$	279,883			$	286,434			$	309,722			$	287,450
Gross margin	107,836				111,546				132,252				116,939
Operating income	64,959				71,484				62,633				75,858
Income before income taxes	64,245				70,588				61,318				73,884
Net income	41,422				45,345				40,877				51,043
Basic net income per common share	$	0.33			$	0.36			$	0.32			$	0.41
Diluted net income per common share	$	0.32			$	0.35			$	0.31			$	0.39

(1)	Earnings per share were computed independently for each of the periods presented; therefore, the sum of the earnings per share amounts for the quarters may not equal the total for the year.

EXHIBIT INDEX

The following Exhibits are filed as part of, or incorporated by reference into this report.

						Incorporated by reference herein
Exhibit Number				Description		Form		Date
3.1				Copart, Inc. Certificate of Incorporation		Current Report on Form 8-K, (File No. 000-23255), Exhibit No. 3.1		January 10, 2012
3.2				Bylaws of Copart, Inc.		Current Report on Form 8-K, (File No. 000-23255), Exhibit No. 3.2		January 10, 2012
4.1				Preferred Stock Rights Agreement, dated as of March 6, 2003,between Copart and Equiserve Trust Company N.A., including the Certificate of Determination, the form of Rights Certificate and the Summary of Rights attached thereto as Exhibits A, B and C, respectively		8/A-12/G (File No. 000-23255), Exhibit No. 4.1		March 11, 2003
4.2				Amendment to Preferred Stock Rights Agreement, as of March 14, 2006, between the Registrant and Computershare Trust Company, N.A. (formerly Equiserve Trust Company, N.A.)		8/A-12G/A (File No. 000-23255), Exhibit 4.2		March 15, 2006
4.3				Amendment to Preferred Stock Rights Agreement, as of January 10, 2013, 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
10.1		*		Copart Inc. 2001 Stock Option Plan		Registration Statement on Form S-8 (File No. 333-90612), Exhibit No. 4.1		June 17, 2002
10.2		*		Copart Inc. 2007 Equity Incentive Plan, as Amended and Restated (2007 EIP)		Registration Statement on Form S-8 (File No. 333-193244), Exhibit No. 4.1		January 9, 2014
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. 10.1		December 12, 2007
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
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
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
10.7		*		Credit Agreement dated as of December 14, 2010 by and between 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
10.8		*		Amendment to Credit Agreement 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

						Incorporated by reference herein
Exhibit Number				Description		Form		Date
10.9		*		Copart, Inc. Executive Bonus Plan		Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.13		August 3, 2006
10.10		*		Amended and Restated Executive Officer Employment Agreement between the 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
10.11		*		Form of Copart, Inc. Stand-Alone Stock Option Award Agreement for grant of options to purchase 2,000,000 shares of the 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
10.12		*		Amendment dated June 9, 2010 to Option Agreements dated June 6, 2001, October 21, 2002 and August 19, 2003 between the Registrant and Willis J. Johnson		Annual Report on Form 10-K (File No. 000-23255), Exhibit No. 10-17		September 23, 2010
10.13		*		Executive Officer Employment Agreement between the 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
10.14		*		Executive Officer Employment Agreement between the Registrant and Vincent Philips, dated April 12, 2010		Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.4		December 15, 2010
10.15				Standard Industrial/Commercial single tenant lease-net dated January 3, 2011 between Partnership Health Plan of California and the Registrant		Annual Report on Form 10-K (File No. 000-23255), Exhibit No. 10.21		September 23, 2011
10.16		*		Form of Indemnification Agreement signed by executive officers and directors		Annual Report on Form 10-K (File No. 000-23255), Exhibit No. 10.17		October 1, 2012
10.17				Standard Industrial/Commercial single tenant lease-net dated February 3, 2013 between Garden Centura, L.P. and the Registrant		Annual Report on Form 10-K (File No. 000-23255), Exhibit No. 10.18		October 1, 2012
10.18		*		Executive Officer Employment Agreement between the Registrant and John Lindle, dated June 1, 2013		Annual Report on Form 10-K (File No. 000-23255), Exhibit No. 10.18		September 30, 2013
10.19				Credit Agreement among the Registrant, the lenders from time to time party thereto, and Wells Fargo Bank, N.A., as administrative agent, dated as of December 3, 2014		Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.1		December 4, 2014
10.20				Security Agreement among the Registrant, the lenders from time to time party thereto, and Wells Fargo Bank, N.A., as collateral agent, dated as of December 3, 2014		Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.2		December 4, 2014
10.21				Note Purchase Agreement among the Registrant and each of the purchasers listed on Schedule B dated as of December 3, 2014		Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.3		December 4, 2014
10.22		*		Copart, Inc. 2014 Employee Stock Purchase Plan		Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.1		December 5, 2014

						Incorporated by reference herein
Exhibit Number				Description		Form		Date
10.23		*		Form of Copart, Inc. Stand-Alone Stock Option Award Agreement for grant of options to purchase 2,000,000 and 1,500,000 shares of the Registrant’s common stock to A. Jayson Adair and Vincent W. Mitz, respectively.		Registration Statement on Form S-8 (File No. 333-193244), Exhibit No. 4.2		January 9, 2014
10.24		*		Amended and Restated Stand-Alone Stock Option Award Agreement dated June 2, 2015, between the Registrant and A. Jayson Adair.		Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.1		June 4, 2015
10.25		*		Amended and Restated Stand-Alone Stock Option Award Agreement dated June 2, 2015, between the Registrant and Vincent W. Mitz.		Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.2		June 4, 2015
14.01				Code of Ethics for Principal Executive and Senior Financial Officers		Annual Report on Form 10-K (File No. 000-23254), Exhibit No. 14-01		October 17, 2003
21.1				List of subsidiaries of Registrant		—		Filed herewith
23.1				Consent of Independent Registered Public Accounting Firm		—		Filed herewith
24.1				Power of Attorney (included on signature page)		—		Filed herewith
31.1				Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002		—		Filed herewith
31.2				Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002		—		Filed herewith
32.1		(1)		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		—		Filed herewith
32.2		(1)		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		—		Filed herewith
101.INS				XBRL Instance Document
101.SCH				XBRL Taxonomy Extension Schema Document
101.CAL				XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF				XBRL Extension Definition
101.LAB				XBRL Taxonomy Extension Label Linkbase Document
101.PRE				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-K 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.

*	Management contract, plan or arrangement