Copart (CPRT) 10-K risk factor changes: FY2020 vs FY2019

[removed: No] [added: Although no] single customer accounted for more than 10% of our consolidated revenues for fiscal [removed: 2019.][added: 2020, a limited number of vehicle sellers historically have collectively accounted for a substantial portion of our revenues.]

Subsequently, in fiscal [added: 2007 and fiscal] 2008 we made [removed: a] significant [removed: acquisition] [added: acquisitions] in the U.K., followed by acquisitions in the U.A.E., Brazil, Germany, and Spain in fiscal 2013, expansions into Bahrain and Oman in fiscal 2015, expansion into the Republic of Ireland and India in fiscal 2016, and an acquisition in Finland in fiscal 2018.

[added: In addition, we continue to evaluate acquisitions and other opportunities outside of the] U.S. Acquisitions or other strategies to expand our operations outside of the U.S. pose substantial risks and uncertainties that could have an adverse effect on our future operating results.

[removed: | • |] [added: -] the difficulty of managing and staffing foreign offices; [removed: |]

[removed: | • |] [added: -] the increased travel, [removed: infrastructure] [added: infrastructure,] and legal compliance costs associated with multiple international locations; [removed: |]

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

[removed: | • |] [added: -] the need to comply with complex foreign and U.S. laws and regulations that apply to our international operations; [removed: |]

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

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

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

[removed: | • |] [added: -] repatriation of funds currently held in foreign jurisdictions to the U.S. may result in higher effective tax [removed: rates. |][added: rates;]

Although we believe we generally enjoy positive community relationships and political support in our range of operations, shifting public opinion sentiments and [removed: socio-political] [added: sociopolitical] dynamics could have an adverse effect on our business and reputation.

Our operations and acquisitions in certain foreign areas expose us to [added: political,] regulatory, economic, and reputational risks.

Although we have implemented policies, [removed: procedures] [added: procedures,] and training designed to ensure compliance with anti-bribery laws, trade controls and economic sanctions, and similar regulations, our employees or agents may take actions in violation of our policies.

In many countries outside of the United States, particularly in those with developing economies, it may be common for persons to engage in business practices prohibited by laws and regulations applicable to us, such as the U.S. Foreign Corrupt Practices Act [removed: (FCPA),] [added: (“FCPA”),] U.K. Bribery Act, Brazil Clean Companies Act, India’s Prevention of Corruption Act, 1988 or similar local anti-bribery laws.

Some of our target markets outside the U.S. operate in a manner substantially different than our historic market in the U.S. For example, new markets may operate either wholly or partially on the principal model, in which the vehicle is purchased [added: and] then resold for our own account, rather than the agency model employed in the U.S., in which we generally act as a sales agent for the legal owner of vehicles.

We have developed a [added: new] proprietary enterprise operating system, and we may experience difficulties operating our business as we continue to design and develop this system.

We have developed a [added: new] proprietary enterprise operating system to address our international expansion needs.

The ongoing design, development, and implementation of our enterprise operating systems [removed: carry] [added: carries] certain risks, including the risk of significant design or deployment errors causing disruptions, delays or deficiencies, which may make our website and services unavailable.

In addition, the transition to our internally developed proprietary system will continue to require us to commit substantial financial, operational and technical resources before the volume of business increases, without assurance [removed: that the volume of business will increase.]

If we are unable to successfully implement the information systems enhancements as planned, our financial position, results of [removed: operations] [added: operations,] and cash flows could be negatively impacted.

Any failure to maintain the integrity of our systems and infrastructure may result in loss of customers [removed: due to] [added: due,] among other things, [added: to] slow delivery times, unreliable service [removed: levels] [added: levels,] or insufficient capacity, [added: any of] which could have a material adverse effect on our business, consolidated financial [removed: position] [added: position,] and results of operations.

Disruptions to our information technology systems, including failure to prevent outages, maintain security, [added: and] prevent unauthorized access to our information technology systems and other confidential information, could disrupt our business and materially and adversely affect our reputation, consolidated results of [removed: operations] [added: operations,] and financial condition.

[added: In addition, human error or accidental technological failure could make us vulnerable to information] technology system disruptions and/or cyber-attacks, including the introduction of malicious computer viruses or code into our system, phishing attacks, or other information technology data security incidents.

Our operations rely on the secure processing, [removed: transmission] [added: transmission,] and storage of confidential, proprietary and other information in our computer systems and networks.

Our customers and other parties in the payments value chain rely on our digital technologies, computer and email systems, [removed: software] [added: software,] and networks to conduct their operations.

In addition, to access our products and services, our customers increasingly use personal smartphones, tablet [removed: PCs] [added: PCs,] and other mobile devices that may be beyond our control.

Information technology system disruptions, [removed: cyber-attacks] [added: cyber-attacks,] or other cyber security incidents could materially and adversely affect our reputation, operating results, or financial condition by, among other things, making our auction platform inoperable for a period of time, damaging our reputation with buyers, sellers, and insurance companies as a result of the unauthorized disclosure of confidential information (including account data information), or resulting in governmental investigations, litigation, liability, fines, or penalties against us.

We are [removed: constantly] [added: regularly] evaluating and implementing new technologies and processes to manage risks relating to cyber-attacks and system and network disruptions, including but not limited to usage errors by our employees, power [removed: outages] [added: outages,] and catastrophic events such as fires, tornadoes, floods, [removed: hurricanes] [added: hurricanes,] and earthquakes.

[added: Any such breach or unauthorized access could] result in significant legal and financial exposure, damage to our reputation, and a loss of confidence in the security of our products and services that could have an adverse effect on our consolidated financial position and results of operations.

We are subject to federal, state and international laws, directives, and regulations relating to the collection, use, retention, disclosure, [removed: security] [added: security,] and transfer of personal data.

For example, the General Data Protection Regulation (“GDPR”), which went into effect in the European Union [removed: (“EU”)] on May 25, 2018, applies to all of our activities conducted from an establishment in the [removed: EU] [added: European Union] and may also apply to related products and services that we offer to [removed: EU] [added: European Union] users.

Similarly, the California Consumer Privacy Act, or AB375 (“CCPA”) and the Brazilian General Data Protection Law (“LGPD”), were also recently enacted and [added: became effective in 2020 and] these laws create new data privacy rights for [removed: individuals, both of which become effective in 2020.][added: individuals.]

For example, Hurricanes Katrina, Rita, Sandy, and Harvey had, in certain quarters, an adverse effect on our operating results, in part because of yard capacity constraints in the impacted areas of the [removed: United States.][added: U.S. We regularly evaluate our capacity in all our markets and where appropriate, and seek to increase capacity through the acquisition of additional land and yards.]

[removed: NPA currently operates facilities] [added: For example,] in [removed: nine locations across the U.S. In] fiscal 2018, we opened three new operational facilities in the U.S., a new operational facility in the U.K., a new operational facility in Germany, and acquired [added: four] locations in [removed: the municipalities of Espoo; Pirkkala; Oulu; and Turku,] Finland.

[added: In fiscal 2019, we opened one new operational] facility in Brazil; seven new operational facilities in Germany; and eleven new operational facilities in the U.S., and acquired an operational facility in Greenville, Kentucky.

[added: In fiscal 2020, we opened two new operational facilities in Germany, one new operational facility in Brazil, and three new operational facilities in the U.S.] Acquisitions are difficult to identify and complete for a number of reasons, including competition among prospective buyers, the availability of affordable financing in the capital markets and the need to satisfy applicable closing conditions and obtain antitrust and other regulatory approvals on acceptable terms.

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

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

[removed: | • |] [added: -] obtain or retain buyers, sellers, and sales volumes in new markets or facilities; [removed: |]

We expect the worldwide COVID-19 pandemic to have an adverse impact on our near-term revenues principally as a result of lower auction inventories.

The geographic extent, length, and economic impact of the pandemic is unknown, but we expect it will adversely affect our business and operating results.

We saw substantial declines in vehicle assignments, which we attribute principally to reduced accident volume as miles driven dramatically declined in response to shelter-in-place orders across the globe.

As we do not recognize the majority of our transactional revenues until the completion of our auctions, a substantial portion of the declines in assignments we experienced in the most recent quarter will be reflected in future quarters.

We cannot predict how the pandemic will continue to develop, whether and to what extent new shelter-in-place orders will be issued, or to what extent the pandemic may have longer term unanticipated impacts on our markets, including, for example, the risk of long-term reductions in miles driven.

To the extent that the pandemic results in temporary or longer-term declines in the number of vehicles we process, our business and operating results could be adversely affected.

Although we have been deemed an “essential business” in the jurisdictions in which we operate and have largely been able to continue our yard operations, we have been required to make adjustments in our business processes that may reduce efficiency or increase operating expenses, particularly if the pandemic continues over a long period of time.

To date, we have not made modifications that materially affect our operating expenses, and while we regularly monitor them, we may not be able to respond with sufficient speed to align revenues and operating expenses when necessary, which could result in a drop in our stock price as a result of our operating or net income for one or more fiscal periods being less than market expectations.

Additional, non-exclusive examples of pandemic-related factors that could adversely affect our future business or operating results include the potential adverse operational impacts from outbreaks of COVID-19 at any of our locations; “second wave” outbreaks of COVID-19 in one or more of our geographic markets; a reduction in miles driven due to one or more factors

relating to the COVID-19 pandemic; any further government actions in response to COVID-19 outbreaks that restrict business activity or travel; disruptions of governmental administrative operations due to COVID-19 outbreaks that adversely impact our core business activities, such as vehicle title processing; and deteriorating economic conditions generally.

- military actions;

- public health issues;

- environmental issues;

- natural and man-made disasters; and

- political issues.

On January 29, 2020, the European Parliament approved the U.K.’s withdrawal from the European Union, commonly referred to as “Brexit.” The U.K. officially left the European Union on January 31, 2020 and entered into a transition period that is scheduled to expire on December 31, 2020 during which the U.K.’s trading relationship with the European Union is expected to remain largely the same while the two parties negotiate a trade agreement as well as other aspects of the U.K.’s relationship with the European Union.

that the volume of business will increase.

indemnification responsibilities.

- military actions;

- natural and man-made disasters;

- public health issues, including COVID-19 and other pandemics; and

- political issues.

These programs could also create additional risks including heightened regulation and litigation risk related to vehicle sales to the general public, and heightened branding, reputational, and intellectual property risk associated with allowing Copart registered members to establish Copart-branded storefronts in foreign jurisdictions.

In the event that we were to again experience extremely adverse weather or other

In the salvage vehicle remarketing industry, large numbers of wrecked vehicles are stored at storage facilities, requiring us to actively monitor and manage potential environmental impacts.

Any subsequent repeal of the Tax Act could adversely affect our financial condition or results of operations.

On January 29, 2020, the European Parliament approved the U.K.’s withdrawal from the European Union, commonly referred to as “Brexit.” The U.K. officially left the European Union on January 31, 2020 and entered into a transition period that is scheduled to expire on December 31, 2020 during which the U.K.’s trading relationship with the European Union is expected to remain largely the same while the two parties negotiate a trade agreement as well as other aspects of the U.K.’s relationship with the European Union.

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

In addition, we continue to evaluate acquisitions and other opportunities outside of the

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On June 23, 2016, the U.K. held a referendum in which voters approved an exit from the European Union, commonly referred to as “Brexit.” In February 2017, the British Parliament voted in favor of allowing the British government to begin negotiating the terms of the U.K.’s withdrawal from the European Union and discussions with the European Union began in March 2017.

For example, during fiscal 2017, we recognized a $19.4 million charge primarily related to fully impairing costs previously capitalized in connection with the development of business operating software.

In addition, human error or accidental technological failure could make us vulnerable to information

Any such breach or unauthorized access could

Recent regulatory changes in Europe have created compliance uncertainty regarding certain transfers of personal data from Europe to the United States.

We regularly evaluate our capacity in all our markets and where appropriate, seek to increase capacity through the acquisition of additional land and yards.

For example, in fiscal 2017, we opened a new operational facility in Germany, a new operational facility in Brazil, nine new operational facilities in the U.S. and acquired Cycle Express, LLC, which conducts business primarily as National Powersport Auctions (NPA), a leading non-salvage auction platform for motorcycles, snowmobiles, watercraft and other powersports vehicles.

In fiscal 2019, we opened one new operational

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

Among other laws and regulations, we are subject at the state level to land use ordinances, business licensure requirements and procedures, vehicle registration rules and procedures, and regulations relating to zoning and land use.

We believe that we are in compliance in all material respects with applicable regulatory requirements.

In the salvage vehicle remarketing industry, large numbers of wrecked vehicles are stored at storage facilities and during that time, spills of fuel, motor oil and other fluids may occur, resulting in soil, surface water or groundwater contamination.

In addition, certain of our facilities generate and/or store petroleum products and other hazardous materials, including waste solvents and used oil.

In addition to

The repeal of the $1.0 million deduction limit for performance-based compensation, the new U.S. taxes on accumulated and future foreign earnings and other adverse changes resulting from the Tax Act, or a change in the mix of domestic and foreign earnings, might offset the benefit from the reduced tax rate, and our future effective tax rates and/or cash taxes may increase, even significantly, or not decrease much, compared to recent or historical trends.

*This Annual Report on Form 10-K for the fiscal year [removed: ended* *July] [added: ended July] 31, [removed: 2019,] [added: 2020,] or this Form 10-K, including the information incorporated by reference herein, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange [removed: Act).][added: Act), including forward-looking statements concerning the potential impact of the COVID-19 pandemic on our business, operations, and operating results.]

Unless the context otherwise requires, references in this Form 10-K to “Copart,” the “Company,” “we,” “us,” or “our” refer to Copart, Inc. We encourage investors to review these factors carefully together with the other matters referred to herein, as well as in the other documents we file with the Securities and Exchange Commission [removed: (the SEC).][added: (“the SEC”).]

We are a leading provider of online auctions and vehicle remarketing services with operations in the United States [removed: (U.S.),] [added: (“U.S.”),] Canada, the United Kingdom [removed: (U.K.),] [added: (“U.K.”),] Brazil, the Republic of Ireland, Germany, Finland, the United Arab Emirates [removed: (U.A.E.),] [added: (“U.A.E.”),] Oman, Bahrain, and Spain.

[removed: Many] [added: For example, many] of the cars we process and remarket are subsequently restored to drivable condition, reducing the new vehicle manufacturing burden the world would otherwise face.

And finally, some of our vehicles are returned to their raw material inputs through scrapping, reducing the need for further [removed: de novo] [added: new] resource extraction.

In each [removed: case,] [added: of these cases,] our business [removed: has reduced] [added: reduces] the carbon and other environmental footprint of the global transportation industry.

[removed: In addition,] [added: Secondly,] because of the special role we play in responding to catastrophic weather events, we believe we contribute to disaster recovery and resilience in the communities we serve.

Vehicle sellers consist primarily of insurance companies, but also include banks, finance companies, charities, fleet operators, dealers and [removed: vehicles sourced directly] from [removed: individual owners.][added: individuals.]

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

In the U.S., Canada, Brazil, the Republic of Ireland, Finland, the U.A.E., Oman, [removed: Bahrain,] and [removed: Spain,] [added: Bahrain,] we sell vehicles primarily as an agent and derive revenue primarily from auction and auction related sales transaction fees charged for vehicle remarketing services as well as fees for services subsequent to the auction, such as delivery and storage.

In the [removed: U.K. and] [added: U.K.,] Germany, [added: and Spain] we operate both as an agent and on a principal basis, in some cases purchasing salvage vehicles outright and reselling the vehicles for our own account.

Vehicle auction selling prices are driven primarily by: (i) [removed: changes in commodity prices, particularly the per ton price for crushed car bodies, as we believe this has an impact on the ultimate selling price of vehicles sold for scrap and vehicles sold] [added: market demand] for [removed: dismantling;] [added: rebuildable, drivable vehicles;] (ii) used car pricing, which we also believe has an impact on total loss frequency; (iii) [added: end market demand for recycled and refurbished parts as reflected in demand from dismantlers; (iv)] the mix of cars sold; [removed: and (iv)] [added: (v)] changes in the U.S. dollar exchange rate to foreign currencies, which we believe has an impact on auction participation by international [removed: buyers.][added: buyers, and; (vi) changes in commodity prices, particularly the per ton price for crushed car bodies, as we believe this has an impact on the ultimate selling price of vehicles sold for scrap and vehicles sold for dismantling.]

We cannot specifically quantify the financial impact that commodity pricing, used car pricing, and product sales mix has on the selling price of vehicles, our service [removed: revenues] [added: revenues,] or financial results.

The increase in total loss frequency may have been driven by the [removed: decline] [added: change] in used car values [removed: relative to] [added: and] repair costs, which we believe are generally trending upward.

[removed: Conversely, increases] [added: Changes] in used car [removed: prices, such as occurred during the most recent recession,] [added: prices and repair costs,] may [removed: decrease] [added: impact] total loss frequency and [removed: adversely] affect our growth rate.

The average age of cars on the road continued to increase, growing from 9.6 years in 2002 to [removed: 11.8] [added: 11.9] years in [removed: 2019.][added: 2020.]

*Operating Costs and Expenses:* Yard operations expenses consist primarily of operating personnel (which includes yard management, [removed: clerical] [added: clerical,] and yard [removed: employees), rent, contract] [added: employees); rent;] vehicle [removed: transportation, insurance, fuel,] [added: transportation; insurance; property related taxes; fuel;] equipment maintenance and [removed: repair,] [added: repair; marketing costs directly related to the auction process;] and costs of vehicles sold under the purchase contracts.

General and administrative expenses consist primarily of executive [removed: management, accounting,] [added: management; accounting;] data [removed: processing,] [added: processing;] sales [removed: personnel, human resources,] [added: personnel;] professional [removed: fees, information technology, and] [added: services;] marketing [removed: expenses.][added: expenses; and system maintenance and enhancements.]

*Other Income and Expense:* Other income primarily includes [removed: income from the rental of certain real property,] foreign exchange rate gains and losses, and gains and losses from the disposal of assets, which will fluctuate based on the nature of these activities each period.

See Notes to Consolidated Financial Statements, [removed: *Note* *7] [added: *Note 8] — Long-Term [removed: Debt.*][added: Debt.*]

The primary factors affecting cash operating results are: (i) seasonality; (ii) market wins and losses; (iii) supplier mix; (iv) accident frequency; (v) total loss frequency; (vi) [removed: increased] volume from our existing suppliers; (vii) commodity pricing; (viii) used car pricing; (ix) foreign currency exchange rates; (x) product mix; (xi) contract mix to the extent applicable; [removed: and] (xii) our capital [removed: expenditures.][added: expenditures; and other macroeconomic factors such as COVID-19.]

Potential internal sources of additional working capital [added: and liquidity] are the sale of assets or the issuance of shares through option exercises and shares issued under our Employee Stock Purchase Plan.

A potential external source of additional working capital [added: and liquidity] is the issuance of additional debt with new lenders and equity.

We believe that these acquisitions and openings will strengthen our coverage, as we have facilities located in the U.S., Canada, the U.K., Brazil, the Republic of Ireland, Germany, Finland, the U.A.E., Oman, Bahrain, and Spain with the intention of providing [removed: national] [added: global] coverage for our sellers.

The following tables set forth operational facilities that we have opened and began operations from August 1, [removed: 2016] [added: 2017] through July 31, [removed: 2019:][added: 2020:]

| United States Locations | | [added: | | | |] Date | [added: | |]

| [removed: Ogden, Utah (Salt] [added: Salt] Lake [removed: City)] [added: City, Utah] | | [removed: March 2017] | [added: | | | May 2020 | | |]

| Andrews, Texas (Midland) | | [added: | | | |] August 2017 | [added: | |]

| Exeter, Rhode Island | | [added: | | | |] October 2017 | [added: | |]

| Lumberton, North Carolina | | [added: | | | |] June 2018 | [added: | |]

| Spartanburg, South Carolina | | [added: | | | |] August 2018 | [added: | |]

| Madison, Wisconsin | | [added: | | | |] September 2018 | [added: | |]

| Harleyville, South Carolina | | [added: | | | |] January 2019 | [added: | |]

| Macon, Georgia | | [added: | | | |] January 2019 | [added: | |]

| Mocksville, North Carolina | | [added: | | | |] January 2019 | [added: | |]

| Antelope, California | | [added: | | | |] January 2019 | [added: | |]

| Sacramento, California | | [added: | | | |] March 2019 | [added: | |]

| Fredericksburg, Virginia | | [added: | | | |] April 2019 | [added: | |]

| West Mifflin, Pennsylvania | | [added: | | | |] May 2019 | [added: | |]

| Hartford, Connecticut | | [added: | | | |] July 2019 | [added: | |]

We are not responsible for the carbon emissions resulting from new vehicle manufacturing, governmental fuel emissions standards or vehicle use by consumers.

Each vehicle that enters our business operations is an existing fact, with whatever fuel technology and efficiency it was designed and built to have, and the substantial carbon emissions associated with the vehicle’s manufacture are already sunk costs.

However, upon our receipt of an existing vehicle, we help decrease its total environmental impact by extending its useful life and thereby avoiding the carbon emissions associated with the alternative of new vehicle and auto parts manufacturing.

Repair costs are generally based on damage severity, vehicle complexity, repair parts availability, repair parts costs, labor costs, and repair shop lead times.

Beginning in March 2020, our business and operations began to experience the impact of the worldwide COVID-19 pandemic, first within our European operations and as the month progressed throughout the balance of our global operations.

In materially all of our jurisdictions, we have been deemed by local authorities an essential business because our operations ensure the removal of vehicles from repair shops, impound yards, and streets and highways, enabling the critical function of road infrastructure.

As a result, we have continued to operate our facilities as well as our online-only auctions, while following appropriate health and safety protocols to ensure safe working conditions for our employees as well as for our sellers, buyers, and other business partners with whom we come in contact.

From a financial perspective, our operating results were adversely affected by lower processed vehicle volume during the last five months of the year ended July 31, 2020.

We saw substantial declines in vehicle assignments, which we attribute principally to reduced accident volume as miles driven dramatically declined in response to shelter-in-place orders across the globe.

As we do not recognize the majority of our transactional revenues until the completion of our auctions, a substantial portion of the declines in assignments we experienced in the most recent quarter will be reflected in future quarters.

We cannot predict how the pandemic will continue to develop, whether and to what extent new shelter-in-place orders will be issued, or to what extent the pandemic may have longer term unanticipated impacts on our markets, including, for example, the risk of long-term reductions in miles driven.

To the extent that the pandemic results in temporary or longer-term declines in the number of vehicles we process, our business and operating results could be adversely affected.

Although we have been deemed an “essential business” in the jurisdictions in which we operate and have largely been able to continue our yard operations, we have been required to make adjustments in our business processes that may reduce efficiency or increase operating expenses, particularly if the pandemic continues over a long period of time.

We adjusted, but did not make material modifications to, our operating expenses to be able to continue providing employment for our employees, service to our sellers, and process incoming vehicles for sale in future quarters.

We expect the pandemic to have an adverse effect on our quarterly revenues in future quarters, with the magnitude and timing of these effects dependent upon the extent and duration of suspended economic activity across our markets.

The longer-term impact on our business will depend on potential adverse operational impacts from outbreaks of COVID-19 at any of our locations; “second wave” outbreaks of COVID-19 in one or more of our geographic markets; a reduction in miles driven due to one or more factors relating to the COVID-19 pandemic; any further government actions in response to COVID-19 outbreaks that restrict business activity or travel; disruptions of governmental administrative operations due to COVID-19 outbreaks that adversely impact our core business activities, such as vehicle title processing; and deteriorating economic conditions generally, and the potential availability, among other things, of vaccines or treatments, none of which we can predict.

For a further discussion of risks to our business and operating results arising from the pandemic, please see the section of this Annual Report on Form 10-K captioned “Risk Factors.”

On March 20, 2020, we filed a Current Report on Form 8-K to announce our draw down of funds under our available credit facilities in order to ensure financial flexibility given current uncertainties; we subsequently repaid all outstanding borrowings under these facilities.

As of July 31, 2020, we had cash, cash equivalents, and restricted cash of $477.7 million, an increase of $384.2 million over January 31, 2020, and had $1.5 billion of liquidity.

These incremental available cash equivalents may be used for investments in land, technology, acquisitions, working capital, share repurchases, or general corporate purposes as permitted by the applicable credit agreements.

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| Fort Wayne, Indiana | | | | | | February 2020 | | |

| Concord, North Carolina | | | | | | March 2020 | | |

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| Niederlehme, Brandenburg (Berlin) | | | | | | Germany | | | | | | November 2019 | | |

| Pilsting, Bavaria (Munich) | | | | | | Germany | | | | | | December 2019 | | |

| São Paulo, São Paulo | | | | | | Brazil | | | | | | May 2020 | | |

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| | | | | | | | | | Year Ended July 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 vs. 2019 | | | | | | | | | | | | | | | | | | 2019 vs. 2018 | | | | | | | | | | | | | | |

| | | |

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

| Brighton, Colorado (Denver) | | August 2016 |

| Sun Valley, California (Los Angeles) | | November 2016 |

| Casper, Wyoming | | January 2017 |

| Littleton, Colorado (Denver) | | January 2017 |

| Apopka, Florida (Orlando) | | January 2017 |

| Alorton, Illinois (St. Louis) | | February 2017 |

| Okeechobee, Florida | | March 2017 |

| Wilmington, California (Long Beach) | | March 2017 |

| | | | | |

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

| Bad Fallingbostel, Germany (Hanover) | | Germany | | September 2016 |

| Newbury, United Kingdom | | United Kingdom | | September 2016 |

| Betim, Minas Gerais | | Brazil | | April 2017 |

| Cycle Express, LLC (1) | | United States | | June 2017 |

| | |

| --- | --- |

| (1) | Cycle Express, LLC conducts business primarily as National Powersport Auctions (NPA), a leading non-salvage auction platform for motorcycles, snowmobiles, watercraft and other powersports vehicles. NPA has facilities in San Diego, California; Philadelphia, Pennsylvania; Dallas, Texas; Cincinnati, Ohio; Atlanta, Georgia; Littleton, Colorado; Madison, Wisconsin; Portland, Oregon; and Sacramento, California. |

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The increase in the cost to process each car in fiscal 2018 in the U.S. relates to the negative impact of abnormal costs of $68.6 million for temporary storage facilities; abnormally high costs for subhaulers; increased labor costs due to overtime; travel and lodging due to the reassignment of employees; and equipment lease expenses to handle the increased volume associated with Hurricane Harvey, as the storm produced extraordinary volumes of flood damaged vehicles.

These costs did not include normal expenses associated with the increased unit volume created by the hurricane, which are deferred until the sale of the units and are recognized as vehicle pooling costs on the balance sheet.

Included in yard operations expenses were depreciation and amortization expenses.

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

Impairment. During fiscal 2018, we recognized a $1.1 million charge primarily related to fully impairing a supply contract in the International segment.

During fiscal 2017, we recognized a $19.4 million charge primarily related to fully impairing costs previously capitalized in connection with the development of business operating software.

The prior year’s effective tax rate was computed based on the reduced blended U.S. federal statutory tax rate of 26.9% for the fiscal year ending July 31, 2018 and included the effects of the Tax Cuts and Jobs Act (the “Act”).

See *Note* *10 — Income Taxes* for a detailed discussion of the Act.

The change in operating assets and liabilities was primarily the result of an increase in income taxes payable of $13.8 million offset by a decrease in funds used to pay accounts payable of $42.2 million, decrease in funds received on accounts receivable of $20.5 million and an increase in vehicle pooling costs deferred of $13.1 million, primarily from the adoption of ASC 606, as we began deferring the inbound transportation costs and titling fees directly associated with the vehicles during fiscal 2019.

Included in capital expenditures were capitalized software development costs for new software for internal use and major software enhancements to existing software.

Additionally, during fiscal 2017, we recognized a $19.4 million charge primarily related to fully impairing costs previously capitalized in connection with the development of business operating software.

For further detail, see Notes to Consolidated Financial Statements, *Note* *9 — Stockholders’ Equity.*

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| FY 2017—Q1 | | 18,000,000 | | | $ | 7.70 | | | 5,408,972 | | | 5,255,322 | | | 7,335,706 | | | $ | 25.62 | | | $ | 134,615 | |

| Operating leases (2) | | 30,158 | | | | 45,388 | | | | 31,310 | | | | 35,291 | | | | — | | | | 142,147 | | |

To achieve this objective in the current uncertain global financial markets, all cash and cash equivalents were held in bank deposits and money market funds as of July 31, [removed: 2019.][added: 2020.]

As of July 31, [removed: 2019,] [added: 2020,] we held no direct investments in auction rate securities, collateralized debt obligations, structured investment vehicles or mortgaged-backed securities.

Based on the average cash balance held for fiscal [removed: 2019,] [added: 2020,] a hypothetical 10% adverse change in our interest yield would not have materially affected our operating results.

Our total borrowings under the Revolving Loan Facility under the Credit Agreement were zero as of July 31, [removed: 2019.][added: 2020.]

The Revolving Loan Facility under the Credit Agreement bears interest, at our election, 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) the [removed: LIBOR rate] [added: Eurodollar Rate] plus 1.0%, [added: subject to an interest rate floor of 0.75%,] in each case plus an applicable margin ranging from [removed: 0.0%] [added: 0.50%] to [removed: 0.75%] [added: 1.25%] based on our consolidated total net leverage ratio during the preceding fiscal quarter; or (b) the [removed: LIBOR rate] [added: Eurodollar Rate] plus an applicable margin ranging from [removed: 1.00%] [added: 1.50%] to [removed: 1.75%] [added: 2.25%] depending on our consolidated total net leverage ratio during the preceding fiscal quarter.

Interest is due and [removed: payable quarterly,] [added: payable,] in arrears, [added: at the end of each calendar quarter] 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 [removed: loans bearing interest at the adjusted LIBOR rate.][added: Eurodollar Rate Loans.]

These operations also incur a majority of their expenses in the local currency, the [removed: Canadian dollar,] British pound, [added: Canadian dollar,] Brazilian real, European Union euro, U.A.E. dirham, Omani rial, and Bahraini dinar.

A hypothetical 10% adverse change in the value of the U.S. dollar relative to the [removed: Canadian dollar,] British pound, [added: Canadian dollar,] Brazilian real, European Union euro, U.A.E. dirham, Omani rial, and Bahraini dinar would have resulted in a decrease in operating income of [removed: $7.9] [added: $7.0] million for fiscal [removed: 2019.][added: 2020.]

At July 31, [removed: 2019,] [added: 2020,] the cumulative effect of foreign exchange rate fluctuations on our consolidated financial position was a net translation loss of [removed: $132.5] [added: $121.1] million.

A hypothetical 10% adverse change in the value of the U.S. dollar relative to the [removed: Canadian dollar,] British pound, [added: Canadian dollar,] Brazilian real, European Union euro, U.A.E. dirham, Omani rial, [removed: Bahraini dinar,] and [removed: Indian rupee] [added: Bahraini dinar] would not have materially affected our consolidated financial position.

On January 29, 2020, the European Parliament approved the U.K.’s withdrawal from the European Union, commonly referred to as “Brexit.” The U.K. officially left the European Union on January 31, 2020 and entered into a transition period that is scheduled to expire on December 31, 2020 during which the U.K.’s trading relationship with the European Union is expected to remain largely the same while the two parties negotiate a trade agreement as well as other aspects of the U.K.’s relationship with the European Union.

On June 23, 2016, the U.K. held a referendum in which voters approved an exit from the European Union, commonly referred to as “Brexit.” In February 2017, the British Parliament voted in favor of allowing the British government to begin negotiating the terms of the U.K.’s withdrawal from the European Union and discussions with the European Union began in March 2017.

We are a leading provider of online auctions and vehicle remarketing services with operations in the United States [removed: (U.S.),] [added: (“U.S.”),] Canada, the United Kingdom [removed: (U.K.),] [added: (“U.K.”),] Brazil, the Republic of Ireland, Germany, Finland, the United Arab Emirates [removed: (U.A.E.),] [added: (“U.A.E.”),] Oman, Bahrain, and Spain.

[removed: Many] [added: For example, many] of the cars we process and remarket are subsequently restored to drivable condition, reducing the new vehicle manufacturing burden the world would otherwise face.

Many of our cars are purchased by dismantlers, who recycle and refurbish parts for vehicle repairs, again [removed: reducing new and aftermarket parts manufacturing.]

And finally, some of our vehicles are returned to their raw material inputs through scrapping, reducing the need for further [removed: de novo] [added: new] resource extraction.

In each [removed: case,] [added: of these cases,] our business [removed: has reduced] [added: reduces] the carbon and other environmental footprint of the global transportation industry.

[removed: In addition,] [added: Secondly,] because of the special role we play in responding to catastrophic weather events, we believe we contribute to disaster recovery and resilience in the communities we serve.

Vehicle sellers consist primarily of insurance companies, but also include banks, finance companies, charities, fleet operators, dealers and [removed: vehicles sourced directly] from [removed: individual owners.][added: individuals.]

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

In the U.S., Canada, Brazil, the Republic of Ireland, Finland, the U.A.E., Oman, [removed: Bahrain,] and [removed: Spain,] [added: Bahrain,] we sell vehicles primarily as an agent and derive revenue primarily from auction and auction related sales transaction fees charged for vehicle remarketing services as well as fees for services subsequent to the auction, such as delivery and storage.

In the [removed: U.K. and] [added: U.K.,] Germany, [added: and Spain,] we operate both as an agent and on a principal basis, in some cases purchasing salvage vehicles outright and reselling the vehicles for our own account.

Through our Virtual Bidding Third Generation (VB3) auction [removed: platform] [added: platform,] our sales process is open to registered buyers (whom we refer to as “members”) anywhere in the world with access to the internet.

For fiscal [removed: 2019,] [added: 2020,] sales of U.S. vehicles, on a unit basis, to members registered outside the state where the vehicle was located accounted for [removed: 55.2%] [added: 60.5%] of total vehicles sold; of which [removed: 32.0%] [added: 24.8%] of vehicles were sold to out of state members within the U.S. and [removed: 23.2%] [added: 35.7%] were sold to International members, based on the [added: IP] address [removed: submitted] [added: utilized] during [removed: registration.][added: the auction process.]

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

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

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

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

[removed: | • |] [added: -] applying technology to enhance operating efficiency through internet bidding, web-based order processing, salvage value quotes, electronic communication with members and sellers, and vehicle imaging; and [removed: |]

[removed: | • |] [added: -] providing a venue for insurance customers through our Virtual Insured Exchange [removed: (VIX)] [added: (“VIX”)] product to contingently sell a vehicle through our auction process to assess true market value, equipping our insurance customers with market data in its negotiations with owners who wish to retain their damaged vehicles. [removed: |]

For fiscal [removed: 2019,] [added: 2020,] our revenues were [removed: $2.0] [added: $2.2] billion and our operating income was [removed: $716.5] [added: $816.1] million.

In fiscal 2018, we opened three new operational facilities in the U.S., a new operational facility in the U.K., a new operational facility in Germany, and acquired [added: four] locations in [removed: the municipalities of Espoo; Pirkkala; Oulu; and Turku,] Finland.

Operating costs consist primarily of operating personnel (which includes yard management, [removed: clerical] [added: clerical,] and yard [removed: employees), rent, contract] [added: employees); rent;] vehicle [removed: transportation, insurance, fuel,] [added: transportation; insurance; property related taxes; fuel;] equipment maintenance and [removed: repair,] [added: repair; marketing costs directly related to the auction process;] and costs of vehicles sold under the purchase contracts.

General and administrative expenses consist primarily of executive [removed: management, accounting,] [added: management; accounting;] data [removed: processing,] [added: processing;] sales [removed: personnel, human resources,] [added: personnel;] professional [removed: fees, information technology, and] [added: services;] marketing [removed: expenses.][added: expenses; and system maintenance and enhancements.]

The vehicles are usually purchased at a price based on the vehicles’ estimated pre-accident [removed: cash] value [added: (“PAV”)] and the extent of damage.

Vehicle remarketers typically operate from multiple facilities where vehicles are processed, viewed, stored and [removed: delivered] [added: released] to the buyer.

While [removed: most] companies in this industry remarket vehicles through a physical auction or a hybrid internet and physical auction, we sell virtually all our vehicles on our internet selling platform VB3, thus eliminating the requirement for buyers to travel to an auction location to participate in the sales process.

Although there are other sellers of vehicles, such as banks, finance companies, charities, fleet operators, dealers and [removed: vehicles sourced directly] from [removed: individual owners,] [added: individuals,] our primary sellers of vehicles are insurance companies.

The primary buyers of vehicles at our auctions are vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers, exporters, and in some [removed: states,] [added: jurisdictions,] the general public.

Vehicle rebuilders and vehicle repair licensees generally purchase [added: salvage vehicles to repair and resell.]

The vehicle is inspected by the insurance company’s adjuster, who estimates the costs of repairing the vehicle and gathers information regarding the damaged vehicle’s mileage, options and condition in order to estimate its [removed: pre-accident value (PAV),] [added: PAV,] otherwise known as actual cash value [removed: (ACV).][added: (“ACV”).]

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

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

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

[removed: | • |] [added: -] geographic coverage; [removed: |]

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

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

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

Our growth strategy is to increase [removed: our] revenues and profitability by, among other things, (i) acquiring and developing [removed: new] [added: additional vehicle storage] facilities in key [removed: markets] [added: markets,] including foreign markets; (ii) pursuing [added: global,] national and regional vehicle [removed: supply] [added: seller] agreements; [removed: and] (iii) [removed: expanding] [added: increasing] our [removed: online auctions and vehicle remarketing] service [removed: offerings to sellers] [added: offerings;] and [removed: members.][added: (iv) expanding the application of VB3 into new markets.]

In addition, [removed: to maximize gross sales proceeds] [added: we implement our pricing structure] and [added: auction procedures, and attempt to introduce] cost efficiencies at each of our acquired [removed: facilities, we introduce] [added: facilities by implementing] our [removed: (i) pricing structure; (ii) selling processes; (iii)] operational [removed: procedures; (iv)] [added: procedures, integrating our] management information [removed: systems;] [added: systems,] and [removed: (v)] [added: redeploying personnel,] when [removed: appropriate, redeploy existing personnel.][added: necessary.]

We actively seek to establish [removed: national] [added: global, national,] and regional supply agreements with insurance companies by promoting our ability to achieve high net returns and broader access to buyers through our national coverage and electronic commerce capabilities.

This includes, for our sellers, real-time access to sales data over the internet, [removed: national coverage,] the ability to respond on a national scale and, for our members, the implementation of VB3 real-time bidding at substantially all of our facilities, permitting members at any location worldwide to participate in the sales at our yards.

We are not responsible for the carbon emissions resulting from new vehicle manufacturing, governmental fuel emissions standards or vehicle use by consumers.

Each vehicle that enters our business operations is an existing fact, with whatever fuel technology and efficiency it was designed and built to have, and the substantial carbon emissions associated with the vehicle’s manufacture are already sunk costs.

However, upon our receipt of an existing vehicle, we help decrease its total environmental impact by extending its useful life and thereby avoiding the carbon emissions associated with the alternative of new vehicle and auto parts manufacturing.

reducing new and aftermarket parts manufacturing.

In fiscal 2020, we opened two new operational facilities in Germany, one new operational facility in Brazil, and three new operational facilities in the U.S.

vehicles, and identifying drivable vehicles.

Copart 360

We pioneered posting vehicle images online for buyers in 2001, and, we have been improving the technology to provide top quality photos since then.

In July 2020, we enhanced online images and videos by launching Copart 360 (“C360”), our proprietary technology that captures clear 360-degree views of interiors and exteriors of cars, trucks, and vans across U.S. Copart locations.

Interested buyers can view everything from the backseat to the dashboard to the tires.

Buyers can also zoom in and out or expand to full screen on computers or mobile devices.

Buyers can access this feature by clicking the 360° icon under vehicle images on select lot details pages on Copart.com.

Membership Tiers

We now offer three tiers of membership in the U.S. - Guest, Basic and Premier - for those registering to buy vehicles through Copart.com.

*Guest Member Benefits*

Guest members can sign up for free to add their favorite vehicles to their Watchlist, set up Vehicle Alerts to get notified when we add specific vehicles they’re looking for and view our inventory from their desktop or mobile device via our Mobile App.

*Basic Member Benefits*

Basic member benefits include:

- view multiple online auctions in real-time (live);

- bid on one vehicle at a time without a deposit, or up to five with a deposit;

- save favorite searches; and

- get access to member appreciation events.

*Premier Member Benefits*

Premier member benefits include all basic member benefits, as well as, the following:

- bid on multiple vehicles at the same time;

- get priority placement in phone and chat support;

- access the Virtual Queue which provides expedited service at our locations; and

- get a complimentary safety vest (one per membership year) and water bottle at our locations.

Virtual Queue

We always strive to maintain the highest safety guidelines to protect the health and well-being of our members and employees.

As soon as COVID-19 began impacting businesses globally, we rolled out the Virtual Queue at all locations to reinforce safety measures.

The Virtual Queue, available in multiple languages, is a safe way to secure a place in line while visiting one of our locations.

Whether a visitor is at a location to make a payment or preview a vehicle, the Virtual Queue lets them conveniently maintain social distancing practices.

Rather than wait in line inside a location, our visitors can save their place and receive an estimated wait time, using our mobile app, in the comfort of their own vehicle.

We notify them via text message when it is their turn to speak to a customer service agent.

| | | | | | | | | |

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

| International | | | | | | 2,205 | | |

In the salvage vehicle remarketing industry, large numbers of wrecked vehicles are stored at storage facilities, requiring us to actively monitor and manage potential environmental impacts.

| | |

| --- | --- |

In fiscal 2017, we opened a new operational facility in Germany, a new operational facility in Brazil, nine new operational facilities in the U.S. and acquired Cycle Express, LLC, which conducts business primarily as National Powersport Auctions (NPA), a leading non-salvage auction platform for motorcycles, snowmobiles, watercraft and other powersports vehicles.

NPA currently operates facilities in nine locations across the U.S.

salvage vehicles to repair and resell.

| • | second chance bidding, which allows the second highest bidder the opportunity to purchase the vehicle for the seller’s current minimum bid after the high bidder fails to consummate the purchase; and |

We also assign a special

We obtained 78% and 84% of the total number of vehicles processed during fiscal 2018 and 2017, respectively, from insurance company sellers.

| | | |

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

| International | | 1,935 |

In the salvage vehicle remarketing industry, large numbers of wrecked vehicles are stored at storage facilities and during that time, spills of fuel, motor oil and other fluids may occur, resulting in soil, surface water or groundwater contamination.

In addition, certain of our facilities generate and/or store petroleum products and other hazardous materials, including waste solvents and used oil.

We [removed: will provide] [added: have provided] for costs relating to matters when a loss is probable and the amount can be reasonably estimated.

The effect of the outcome of any such matters on our 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 [added: any] such matters.

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

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

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

There is no assurance

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

| ☒ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the fiscal year [removed: ended July] [added: ended July] 31, [removed: 2019][added: 2020]

| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

| Delaware | | [added: | | | |] 000-23255 | | [added: | | | | | | |] 94-2867490 | | [added: | | | | | | | | | | | | |]

| (State or other jurisdiction of incorporation or organization) | | [added: | | | |] (Commission File Number) | | [added: | | | | | | |] (I.R.S. Employer Identification No.) | | [added: | | | | | | | | | | | | |]

| 14185 Dallas Parkway | [added: | |] Suite 300 | [added: | |] Dallas | [added: | |] Texas | [added: | |] 75254 | | [added: | | | | | | | | | | | | | | | |]

| (Address of principal executive offices, including zip code) | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | |]

[removed: (972) 391-5000][added: (972) 391-5000]

| Securities registered pursuant to Section 12(b) of the Act: | | | [added: | | | | | | | | | | | |]

| Title of each class | [added: | |] Trading Symbol(s) | [added: | |] Name of each exchange on which registered | [added: | | | | | | | |]

| Common Stock, par value $0.0001 | [added: | |] CPRT | [added: | |] The NASDAQ Global Select Market | [added: | | | | | | | |]

Securities registered pursuant to Section 12(g) of the [removed: Act: None][added: Act: None]

| Large accelerated filer | [added: | |] ☒ | | [added: | | | |] Accelerated filer | [added: | |] ☐ | [added: | |]

| Non-accelerated filer | [added: | |] ☐ | | [added: | | | |] Smaller reporting company | [added: | |] ☐ | [added: | |]

| | | | [added: | | | | | |] Emerging growth company | [added: | |] ☐ | [added: | |]

The aggregate market value of the voting and non-voting Common Stock held by non-affiliates of the registrant as of January 31, [removed: 2019] [added: 2020] (the last business day of the registrant’s most recently completed second fiscal quarter) was [removed: $9,985,566,607] [added: $20,623,302,411] based upon the closing sales price reported for such date on the NASDAQ Global Select Market.

As of September [removed: 27, 2019, 232,250,144] [added: 25, 2020, 235,971,920] shares of the registrant’s common stock were outstanding.

Portions of our definitive Proxy Statement for the [removed: 2019] [added: 2020] Annual Meeting of Stockholders, also referred to in this Annual Report on Form 10-K as our Proxy Statement, which will be filed with the Securities and Exchange Commission, or SEC, pursuant to Regulation 14A within 120 days after the registrant’s fiscal year end of July 31, [removed: 2019,] [added: 2020,] have been incorporated by reference in Part III hereof.

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

| Item 1 | | [removed: [Business](#sD06FA5EFCB9B52108453A26072D91CC7)] | [removed: [1](#sD06FA5EFCB9B52108453A26072D91CC7)] | [added: | | [Business](#i4c7614062f2f49079d0a1fb7892fb9b4_19) | | | [1](#i4c7614062f2f49079d0a1fb7892fb9b4_19) | | | | | | | | |]

| | | [added: | | | |] [Industry [removed: Overview](#s1AA5132E3B285FDFAD084986D92AF4F1)] [added: Overview](#i4c7614062f2f49079d0a1fb7892fb9b4_22)] | [removed: [3](#s1AA5132E3B285FDFAD084986D92AF4F1)] | [added: | [3](#i4c7614062f2f49079d0a1fb7892fb9b4_22) | | | | | | | | |]

| | | [added: | | | |] [Operating and Growth [removed: Strategy](#s382786425F325CCFAD854CB774E02E95)] [added: Strategy](#i4c7614062f2f49079d0a1fb7892fb9b4_25)] | [removed: [5](#s382786425F325CCFAD854CB774E02E95)] | [added: | [5](#i4c7614062f2f49079d0a1fb7892fb9b4_25) | | | | | | | | |]

| | | [added: | | | |] [Our Competitive [removed: Advantages](#s7DF00A1DE9C859A287737442110C98B0)] [added: Advantages](#i4c7614062f2f49079d0a1fb7892fb9b4_28)] | [removed: [5](#s7DF00A1DE9C859A287737442110C98B0)] | [added: | [5](#i4c7614062f2f49079d0a1fb7892fb9b4_28) | | | | | | | | |]

| | | [added: | | | |] [Our Business [removed: Segments](#sFC0A43D651E0565881FCD74D3A5F1651)] [added: Segments](#i4c7614062f2f49079d0a1fb7892fb9b4_31)] | [removed: [7](#sFC0A43D651E0565881FCD74D3A5F1651)] | [added: | [7](#i4c7614062f2f49079d0a1fb7892fb9b4_31) | | | | | | | | |]

| | | [added: | | | |] [Our Service [removed: Offerings](#sFA51291AA83657D6A317E287752D8F1D)] [added: Offerings](#i4c7614062f2f49079d0a1fb7892fb9b4_34)] | [removed: [7](#sFA51291AA83657D6A317E287752D8F1D)] | [added: | [7](#i4c7614062f2f49079d0a1fb7892fb9b4_34) | | | | | | | | |]

| | | [added: | | | |] [Management Information [removed: Systems](#s95FF033EA3AD530F8FA00391D1E13F6A)] [added: Systems](#i4c7614062f2f49079d0a1fb7892fb9b4_46)] | [removed: [11](#s95FF033EA3AD530F8FA00391D1E13F6A)] | [added: | [12](#i4c7614062f2f49079d0a1fb7892fb9b4_46) | | | | | | | | |]

| | | [added: | | | |] [Environmental [removed: Matters](#s16B34A856A8650ECA4EDD4068AFDF95D)] [added: Matters](#i4c7614062f2f49079d0a1fb7892fb9b4_52)] | [removed: [11](#s16B34A856A8650ECA4EDD4068AFDF95D)] | [added: | [12](#i4c7614062f2f49079d0a1fb7892fb9b4_52) | | | | | | | | |]

| | | [added: | | | |] [Governmental [removed: Regulations](#sFB2C0F4397865932B93EBD30B6D08C9A)] [added: Regulations](#i4c7614062f2f49079d0a1fb7892fb9b4_55)] | [removed: [12](#sFB2C0F4397865932B93EBD30B6D08C9A)] | [added: | [13](#i4c7614062f2f49079d0a1fb7892fb9b4_55) | | | | | | | | |]

| | | [added: | | | |] [Intellectual Property and Proprietary [removed: Rights](#s4053F6EE557D58AB83DD68DE9106B1D5)] [added: Rights](#i4c7614062f2f49079d0a1fb7892fb9b4_58)] | [removed: [12](#s4053F6EE557D58AB83DD68DE9106B1D5)] | [added: | [13](#i4c7614062f2f49079d0a1fb7892fb9b4_58) | | | | | | | | |]

| Item 1A. | | [added: | | | |] [Risk [removed: Factors](#s3EC885DBDCDB553CAF088C294DB37E78)] [added: Factors](#i4c7614062f2f49079d0a1fb7892fb9b4_64)] | [removed: [12](#s3EC885DBDCDB553CAF088C294DB37E78)] | [added: | [13](#i4c7614062f2f49079d0a1fb7892fb9b4_64) | | | | | | | | |]

| Item 1B. | | [added: | | | |] [Unresolved Staff [removed: Comments](#sF57075CE211A50C0A188E56829F23FFD)] [added: Comments](#i4c7614062f2f49079d0a1fb7892fb9b4_67)] | [removed: [25](#sF57075CE211A50C0A188E56829F23FFD)] | [added: | [27](#i4c7614062f2f49079d0a1fb7892fb9b4_67) | | | | | | | | |]

| Item 2. | | [removed: [Properties](#s33A8B9C4CBD059B49B273F890336C17A)] | [removed: [26](#s33A8B9C4CBD059B49B273F890336C17A)] | [added: | | [Properties](#i4c7614062f2f49079d0a1fb7892fb9b4_70) | | | [27](#i4c7614062f2f49079d0a1fb7892fb9b4_70) | | | | | | | | |]

| Item 3. | | [added: | | | |] [Legal [removed: Proceedings](#sFBA7834F0663510187578799328547CC)] [added: Proceedings](#i4c7614062f2f49079d0a1fb7892fb9b4_73)] | [removed: [26](#sFBA7834F0663510187578799328547CC)] | [added: | [27](#i4c7614062f2f49079d0a1fb7892fb9b4_73) | | | | | | | | |]

| Item 4. | | [added: | | | |] [Mine Safety [removed: Disclosure](#s7AC61C917A185662BF30334D351564AA)] [added: Disclosure](#i4c7614062f2f49079d0a1fb7892fb9b4_76)] | [removed: [26](#s7AC61C917A185662BF30334D351564AA)] | [added: | [28](#i4c7614062f2f49079d0a1fb7892fb9b4_76) | | | | | | | | |]

| Item 5. | | [added: | | | |] [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sAC9EBE7196CA59CAB39F2DB13E4048B3)] [added: Securities](#i4c7614062f2f49079d0a1fb7892fb9b4_82)] | [removed: [27](#sAC9EBE7196CA59CAB39F2DB13E4048B3)] | [added: | [29](#i4c7614062f2f49079d0a1fb7892fb9b4_82) | | | | | | | | |]

| Item 6. | | [added: | | | |] [Selected Financial [removed: Data](#sDB9DFC26953C5243AF316A45F0D839FF)] [added: Data](#i4c7614062f2f49079d0a1fb7892fb9b4_85)] | [removed: [30](#sDB9DFC26953C5243AF316A45F0D839FF)] | [added: | [32](#i4c7614062f2f49079d0a1fb7892fb9b4_85) | | | | | | | | |]

| Item 7. | | [added: | | | |] [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s83DB63CA4B635317B9180CBFCBC727AE)] [added: Operations](#i4c7614062f2f49079d0a1fb7892fb9b4_88)] | [removed: [31](#s83DB63CA4B635317B9180CBFCBC727AE)] | [added: | [33](#i4c7614062f2f49079d0a1fb7892fb9b4_88) | | | | | | | | |]

| Item 7A. | | [added: | | | |] [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s67B6E683DCC35A1EAE4907D61C2AB63E)] [added: Risk](#i4c7614062f2f49079d0a1fb7892fb9b4_106)] | [removed: [48](#s67B6E683DCC35A1EAE4907D61C2AB63E)] | [added: | [50](#i4c7614062f2f49079d0a1fb7892fb9b4_106) | | | | | | | | |]

| Item 8. | | [added: | | | |] [Financial Statements and Supplementary [removed: Data](#s30C2BCBD5E755407B7229C5E1FE26EBD)] [added: Data](#i4c7614062f2f49079d0a1fb7892fb9b4_109)] | [removed: [49](#s30C2BCBD5E755407B7229C5E1FE26EBD)] | [added: | [51](#i4c7614062f2f49079d0a1fb7892fb9b4_109) | | | | | | | | |]

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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

For the Fiscal Year Ended July 31, 2020

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

| [PART I](#i4c7614062f2f49079d0a1fb7892fb9b4_13) | | | | | | | | | | | | | | | [1](#i4c7614062f2f49079d0a1fb7892fb9b4_13) | | |

| | | | | | | [Sales](#i4c7614062f2f49079d0a1fb7892fb9b4_37) | | | [11](#i4c7614062f2f49079d0a1fb7892fb9b4_37) | | | | | | | | |

| | | | | | | [Members](#i4c7614062f2f49079d0a1fb7892fb9b4_40) | | | [11](#i4c7614062f2f49079d0a1fb7892fb9b4_40) | | | | | | | | |

| | | | | | | [Competition](#i4c7614062f2f49079d0a1fb7892fb9b4_43) | | | [11](#i4c7614062f2f49079d0a1fb7892fb9b4_43) | | | | | | | | |

| | | | | | | [Employees](#i4c7614062f2f49079d0a1fb7892fb9b4_49) | | | [12](#i4c7614062f2f49079d0a1fb7892fb9b4_49) | | | | | | | | |

| | | | | | | [Seasonality](#i4c7614062f2f49079d0a1fb7892fb9b4_61) | | | [13](#i4c7614062f2f49079d0a1fb7892fb9b4_61) | | | | | | | | |

| [PART II](#i4c7614062f2f49079d0a1fb7892fb9b4_79) | | | | | | | | | | | | | | | [29](#i4c7614062f2f49079d0a1fb7892fb9b4_79) | | |

| [PART IV](#i4c7614062f2f49079d0a1fb7892fb9b4_139) | | | | | | | | | | | | | | | [56](#i4c7614062f2f49079d0a1fb7892fb9b4_139) | | |

| Item 16. | | | | | | [Form 10-K Summary](#i4c7614062f2f49079d0a1fb7892fb9b4_2526) | | | [56](#i4c7614062f2f49079d0a1fb7892fb9b4_2526) | | | | | | | | |

| [Signatures](#i4c7614062f2f49079d0a1fb7892fb9b4_145) | | | | | | | | | | | | | | | [60](#i4c7614062f2f49079d0a1fb7892fb9b4_145) | | |

ii

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

| [PART I](#s8D6D8E69E37E586A9D269A05B50D0039) | | | [1](#s8D6D8E69E37E586A9D269A05B50D0039) |

| | | [Sales](#s26E497DA221258229C184ED71746C951) | [10](#s26E497DA221258229C184ED71746C951) |

| | | [Members](#sBF56C33EDF5655E7B825AA0BBDEADBA9) | [10](#sBF56C33EDF5655E7B825AA0BBDEADBA9) |

| | | [Competition](#s10A59D72629859C6B73F64ECD6881A9F) | [10](#s10A59D72629859C6B73F64ECD6881A9F) |

| | | [Employees](#s880020D41F525294994C24F55ABA5C3B) | [11](#s880020D41F525294994C24F55ABA5C3B) |

| | | [Seasonality](#s7E6999CB7B7F5C8BBCBBF435942188D9) | [12](#s7E6999CB7B7F5C8BBCBBF435942188D9) |

| [PART II](#s1A0B31EC26425CDABCFD49D01B7D4416) | | | [27](#s1A0B31EC26425CDABCFD49D01B7D4416) |

| [PART IV](#sF197EC0500DA59A6A827086975CB4239) | | | [54](#sF197EC0500DA59A6A827086975CB4239) |

| [Signatures](#s4F57338FE3635ABFABE2855592A0C694) | | | [55](#s4F57338FE3635ABFABE2855592A0C694) |

In the U.S., we own or lease facilities in every state except [removed: North Dakota and] Vermont.

In the U.K., we own or lease [removed: 18] [added: eighteen] operating facilities.

In Brazil, we own or lease [removed: eleven] [added: thirteen] operating facilities.

In Germany we operate an online platform and own or lease [removed: thirteen] [added: twelve] operating facilities.

This facility consists of approximately 123,000 square feet of office space under a lease which expires in fiscal 2029.

| | |

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| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |

Market Information

As of July 31, 2019, there were 229,790,268 shares outstanding.

Our common stock has been quoted on the NASDAQ Global Select Market under the symbol “CPRT” since March 17, 1994.

As of September 27, 2019, we had 877 stockholders of record.

On July 31, 2019, the last reported sale price of our common stock on the NASDAQ Global Select Market was $77.53 per share.

Dividend Policies

We have not paid a cash dividend since becoming a public company in 1994.

We currently intend to retain any earnings for use in our business.

The Credit Agreement to which we are a party contains customary affirmative and negative covenants, including covenants that limit or restrict us and our subsidiaries’ ability to, among other things, pay dividends, subject to certain exceptions.

For further detail see Notes to Consolidated Financial Statements, *Note* *7 — Long-Term Debt* and *Note* *9 — Stockholders’ Equity* and under the subheadings “*Credit Agreement*” and “*Note Purchase Agreement*” in the Liquidity and Capital Resources sections of this Annual Report on Form 10-K*.*

Repurchases of Our Common Stock

On September 22, 2011, our board of directors approved an 80 million share increase in the stock repurchase program, bringing the total current authorization to 196 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 we deem appropriate and may be discontinued at any time.

For fiscal 2019, we repurchased 7,635,596 shares of our common stock under the program at a weighted average price of $47.81 per share totaling $365.0 million.

For fiscal 2018 and 2017, we did not repurchase any shares of our common stock under the program.

As of July 31, 2019, the total number of shares repurchased under the program was 114,549,198, and 81,450,802 shares were available for repurchase under our program.

The number and average price of shares purchased in each fiscal year are set forth in the table below:

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

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

| Period | | Total Number of Shares Purchased | | | Average Price Paid Per Share | | | | Total Number of Shares Purchased as Part of Publicly Announced Program | | | Maximum Number of Shares That May Yet be Purchased Under the Program(1) | |

| *Fiscal 2017* | | | | | | | | | | | | | |

| First Quarter | | — | | | $ | — | | | — | | | 89,086,398 | |

| Second Quarter | | — | | | $ | — | | | — | | | 89,086,398 | |

| Third Quarter | | — | | | $ | — | | | — | | | 89,086,398 | |

| Fourth Quarter | | — | | | $ | — | | | — | | | 89,086,398 | |

| *Fiscal 2018* | | | | | | | | | | | | | |

| *Fiscal 2019* | | | | | | | | | | | | | |

| Second Quarter | | 7,635,596 | | | $ | 47.81 | | | 7,635,596 | | | 81,450,802 | |

| Third Quarter | | — | | | $ | — | | | — | | | 81,450,802 | |

| May 1, 2019 through May 31, 2019 | | — | | | $ | — | | | — | | | 81,450,802 | |

| June 1, 2019 through June 30, 2019 | | — | | | $ | — | | | — | | | 81,450,802 | |

| July 1, 2019 through July 31, 2019 | | — | | | $ | — | | | — | | | 81,450,802 | |

| (1) | Our stock repurchase program was announced on February 20, 2003. On September 22, 2011, our board of directors approved an 80 million share increase in our stock repurchase program, bringing the total current authorization to 196 million shares. The repurchase 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 we deem appropriate and may be discontinued at any time. |

During fiscal 2018 and 2017, certain executive officers and members of our board of directors exercised stock options through cashless exercises.

During fiscal 2019, our former President exercised all of his vested stock options through a cashless exercise.

Market Information

As of July 31, 2020, there were 235,315,337 shares outstanding.

Our common stock has been quoted on the NASDAQ Global Select Market under the symbol “CPRT” since March 17, 1994.

As of September 25, 2020, we had 828 stockholders of record.

On July 31, 2020, the last reported sale price of our common stock on the NASDAQ Global Select Market was $93.25 per share.

Repurchases of Our Common Stock

On September 22, 2011, our Board of Directors approved an 80 million share increase in the stock repurchase program, bringing the total current authorization to 196 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 we deem appropriate and may be discontinued at any time.

For fiscal 2020 and 2018, we did not repurchase any shares of our common stock under the program.

For fiscal 2019, we repurchased 7,635,596 shares of our common stock under the program at a weighted average price of $47.81 per share totaling $365.0 million.

As of July 31, 2020, the total number of shares repurchased under the program was 114,549,198, and 81,450,802 shares were available for repurchase under our program.

The number and average price of shares purchased in each fiscal year are set forth in the table below:

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

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

| Period | | | | | | Total Number of Shares Purchased | | | | | | Average Price Paid Per Share | | | | | | Total Number of Shares Purchased as Part of Publicly Announced Program | | | | | | Maximum Number of Shares That May Yet be Purchased Under the Program(1) | | |

| *Fiscal 2018* | | | | | | | | | | | | | | | | | | | | | | | | | | |

| First Quarter | | | | | | — | | | | | | $ | — | | | | | — | | | | | | 89,086,398 | | |

| Second Quarter | | | | | | — | | | | | | $ | — | | | | | — | | | | | | 89,086,398 | | |

| Third Quarter | | | | | | — | | | | | | $ | — | | | | | — | | | | | | 89,086,398 | | |

| Fourth Quarter | | | | | | — | | | | | | $ | — | | | | | — | | | | | | 89,086,398 | | |

| *Fiscal 2019* | | | | | | | | | | | | | | | | | | | | | | | | | | |

| First Quarter | | | | | | — | | | | | | $ | — | | | | | — | | | | | | 89,086,398 | | |

| Second Quarter | | | | | | 7,635,596 | | | | | | $ | 47.81 | | | | | 7,635,596 | | | | | | 81,450,802 | | |

| Third Quarter | | | | | | — | | | | | | $ | — | | | | | — | | | | | | 81,450,802 | | |

| Fourth Quarter | | | | | | — | | | | | | $ | — | | | | | — | | | | | | 81,450,802 | | |

| *Fiscal 2020* | | | | | | | | | | | | | | | | | | | | | | | | | | |

| First Quarter | | | | | | — | | | | | | $ | — | | | | | — | | | | | | 81,450,802 | | |

| Second Quarter | | | | | | — | | | | | | $ | — | | | | | — | | | | | | 81,450,802 | | |

| Third Quarter | | | | | | — | | | | | | $ | — | | | | | — | | | | | | 81,450,802 | | |

| May 1, 2020 through May 31, 2020 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | 81,450,802 | | |

| June 1, 2020 through June 30, 2020 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | 81,450,802 | | |

| July 1, 2020 through July 31, 2020 | | | | | | — | | | | | | $ | — | | | | | — | | | | | | 81,450,802 | | |

(1)Our stock repurchase program was announced on February 20, 2003.

On September 22, 2011, our Board of Directors approved an 80 million share increase in our stock repurchase program, bringing the total current authorization to 196 million shares.

The repurchase 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 we deem appropriate and may be discontinued at any time.

In fiscal 2018, certain members of our Board of Directors exercised stock options through cashless exercises.

| | | [added: | | | |] Fiscal Year Ended July 31, | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| (In thousands, except per share) | | [added: | | | | 2020 | | | | | |] 2019 | | | | [added: | |] 2018 | | | | [added: | |] 2017 | | | | [added: | |] 2016 | | | | [removed: 2015] | | | [added: | | | | | | | | | | | | | | | | | | | |]

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

| Revenues | | [added: | | | |] $ | [added: 2,205,583 | | | | | $ |] 2,041,957 | | | [added: | |] $ | 1,805,695 | | | [added: | |] $ | 1,447,981 | | | [added: | |] $ | 1,268,449 | | | [removed: $] | [removed: 1,146,079] | | [added: | | | | | | | | | | | | | | | | | | | |]

| Operating income | | [added: | | | | 816,099 | | | | | |] 716,475 | | | | [added: | |] 584,345 | | | | [added: | |] 461,299 | | | | [added: | |] 406,470 | | | | [removed: 344,401] | | | [added: | | | | | | | | | | | | | | | | | | | |]

| Income before income taxes | | [added: | | | | 800,839 | | | | | |] 704,951 | | | | [added: | |] 562,511 | | | | [added: | |] 440,100 | | | | [added: | |] 395,865 | | | | [removed: 332,069] | | | [added: | | | | | | | | | | | | | | | | | | | |]

| Income taxes | | [added: | | | | 100,932 | | | | | |] 113,258 | | | | [added: | |] 144,504 | | | | [added: | |] 45,839 | | | | [added: | |] 125,505 | | | | [removed: 112,286] | | | [added: | | | | | | | | | | | | | | | | | | | |]

| Net income | | [added: | | | |] $ | [added: 699,907 | | | | | $ |] 591,693 | | | [added: | |] $ | 418,007 | | | [added: | |] $ | 394,261 | | | [added: | |] $ | 270,360 | | | [removed: $] | [removed: 219,783] | | [added: | | | | | | | | | | | | | | | | | | | |]

| Basic net income per common share | | [added: | | | |] $ | [added: 3.00 | | | | | $ |] 2.57 | | | [added: | |] $ | 1.80 | | | [added: | |] $ | 1.72 | | | [added: | |] $ | 1.18 | | | [removed: $] | [removed: 0.87] | | [added: | | | | | | | | | | | | | | | | | | | |]

| Weighted average common shares outstanding | | [added: | | | | 233,202 | | | | | |] 230,489 | | | | [added: | |] 231,793 | | | | [added: | |] 228,686 | | | | [added: | |] 228,846 | | | | [removed: 251,829] | | | [added: | | | | | | | | | | | | | | | | | | | |]

| Diluted net income per common share | | [added: | | | |] $ | [added: 2.93 | | | | | $ |] 2.46 | | | [added: | |] $ | 1.73 | | | [added: | |] $ | 1.66 | | | [added: | |] $ | 1.11 | | | [removed: $] | [removed: 0.84] | | [added: | | | | | | | | | | | | | | | | | | | |]

| Diluted weighted average common shares outstanding | | [added: | | | | 238,656 | | | | | |] 240,453 | | | | [added: | |] 241,877 | | | | [added: | |] 237,019 | | | | [added: | |] 244,295 | | | | [removed: 262,851] | | | [added: | | | | | | | | | | | | | | | | | | | |]

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

| [removed: Cash] [added: Cash, cash equivalents,] and [added: restricted] cash [removed: equivalents] | | [added: | | | |] $ | [added: 477,718 | | | | | $ |] 186,319 | | | [added: | |] $ | 274,520 | | | [added: | |] $ | 210,100 | | | [added: | |] $ | 155,849 | | | [removed: $] | [removed: 456,012] | | [added: | | | | | | | | | | | | | | | | | | | |]

| Working capital | | [added: | | | | 607,715 | | | | | |] 405,163 | | | | [added: | |] 431,860 | | | | [added: | |] 285,108 | | | | [added: | |] 220,523 | | | | [removed: 521,456] | | | [added: | | | | | | | | | | | | | | | | | | | |]

| Total assets | | [added: | | | | 3,455,261 | | | | | |] 2,547,617 | | | | [added: | |] 2,307,698 | | | | [added: | |] 1,982,501 | | | | [added: | |] 1,649,820 | | | | [removed: 1,798,660] | | | [added: | | | | | | | | | | | | | | | | | | | |]

| Total debt | | [added: | | | | 397,787 | | | | | |] 401,229 | | | | [added: | |] 399,898 | | | | [added: | |] 633,038 | | | | [added: | |] 640,492 | | | | [removed: 644,514] | | | [added: | | | | | | | | | | | | | | | | | | | |]

| Stockholders’ equity | | [added: | | | | 2,489,516 | | | | | |] 1,778,381 | | | | [added: | |] 1,581,099 | | | | [added: | |] 1,098,600 | | | | [added: | |] 774,456 | | | | [removed: 964,464] | | | [added: | | | | | | | | | | | | | | | | | | | |]

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

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

Based upon the Controls Evaluation, our CEO and CFO have concluded that, as of the end of the period covered by this Annual Report on Form 10-K, our Disclosure Controls were effective to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is accumulated and communicated to management, including the CEO and CFO, to allow timely decisions regarding required disclosure, and that such information is recorded, processed, summarized and reported within the time periods specified by the [removed: Securities and Exchange Commission.][added: SEC.]

Management assessed our internal control over financial reporting for the fiscal year ended July 31, [removed: 2019.][added: 2020.]

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

Our independent registered public accounting firm, Ernst & Young LLP, independently assessed the effectiveness of our internal control over financial reporting as of July 31, [removed: 2019.][added: 2020.]

We have audited the internal control over financial reporting of Copart, Inc. (the Company) as of July 31, [removed: 2019,] [added: 2020,] based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Copart, Inc. maintained, in all material respects, effective internal control over financial reporting as of July 31, [removed: 2019,] [added: 2020,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the [removed: 2019] [added: 2020] consolidated financial statements of the Company, and our report dated September [removed: 30, 2019] [added: 28, 2020] expressed an unqualified opinion thereon.

[removed: Except for the remediated material weakness discussed above, there] [added: There] have not been any changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

We have investments in unconsolidated affiliates.

Since we do not control or manage those affiliates, our controls and procedures with respect to those affiliates are substantially more limited than those we maintain with respect to our consolidated subsidiaries.

September 28, 2020

This assessment is supported by testing and monitoring performed by our Finance department.

During our most recent fiscal quarter, management identified and remediated a material weakness related to ineffective information technology general controls (ITGCs) in the area of change-management over certain information technology (IT) systems that support our financial reporting processes.

The material weakness did not result in any identified misstatements to the financial statements, and there were no changes to previously released financial results.

September 30, 2019

Certain information required by Part III is omitted from this Annual Report on Form 10-K because we intend to file a definitive proxy statement for our [removed: 2019] [added: 2020] Annual Meeting of Stockholders (the Proxy Statement) not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, and certain information to be included therein is incorporated herein by reference.

Information required by this item is incorporated by reference to the [removed: sections entitled “Proposal Number One — Election] [added: proposal captioned “Election] of Directors,” [added: and the sections titled] “Corporate Governance and Board of Directors” and “Related Person Transactions and Section 16(a) Beneficial Ownership Compliance” in our Proxy Statement.

We have adopted the Copart, Inc. Code of Ethics for Principal Executive and Senior Financial Officers [removed: (Code] [added: (“Code] of [removed: Ethics).][added: Ethics”).]

Delinquent Section 16(a) Reports

There were no delinquent Section 16(a) Reports during fiscal 2020.

The information required by this item is incorporated herein by reference from the Proxy Statement (to be filed with the Securities and Exchange Commission within 120 days of our July 31, [removed: 2019] [added: 2020] fiscal year end) under the heading “Executive Compensation,” “Compensation of Directors,” and “Corporate Governance and Board of Directors.”

The information required by this item is incorporated herein by reference from the Proxy Statement (to be filed with the Securities and Exchange Commission within 120 days of our July 31, [removed: 2019] [added: 2020] fiscal year end) under the headings “Security Ownership” and “Executive Compensation,” subheading “Equity Compensation Plan Information.”

The information required by this item is incorporated herein by reference from the Proxy Statement (to be filed with the Securities and Exchange Commission within 120 days of our July 31, [removed: 2019] [added: 2020] fiscal year end) under the heading “Related Person Transactions and Section 16(a) Beneficial Ownership Compliance,” “Corporate Governance and Board of Directors,” and [removed: “Proposal Number One — Election] [added: under the proposal captioned “Election] of Directors.”

The information required by this item is incorporated herein by reference from the [removed: section] [added: proposal] captioned [removed: “Proposal Number Three — Ratification] [added: “Ratification] of Appointment of Independent Registered Public Accounting Firm” in the Proxy Statement (to be filed with the Securities and Exchange Commission within 120 days of our July 31, [removed: 2019] [added: 2020] fiscal year end).

[removed: | *(a)* | *Financial] [added: *(a)Financial] statements:* [removed: |]

Our consolidated financial statements at July 31, [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] and for each of the three years in the period ended July 31, [removed: 2019] [added: 2020] 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.

[removed: | *(b)* | *Financial] [added: *(b)Financial] statement schedules:* [removed: |]

[removed: | *(c)* | *Exhibits:* |][added: *(c)Exhibits:*]

Refer to [Exhibit [removed: Index](#s5959F362BCC459FBADDB7BF6674F8FB1)] [added: Index](#i4c7614062f2f49079d0a1fb7892fb9b4_244)] included herein.

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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 30, 2019

| | By: | | /s/ JEFFREY LIAW |

| | | | Jeffrey Liaw, President and Chief Financial Officer (Principle Financial and Accounting Officer and duly Authorized Officer) |

POWER OF ATTORNEY

KNOWN ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints A.

Jayson Adair and Jeffrey Liaw, and each of them, as his or her true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him or her and in his or her 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 30, 2019 |

| A. Jayson Adair | | | | |

| /s/ JEFFREY LIAW | | President and Chief Financial Officer (Principal Financial and Accounting Officer) | | September 30, 2019 |

| Jeffrey Liaw | | | | |

| /s/ WILLIS J. JOHNSON | | Chairman of the Board | | September 30, 2019 |

| Willis J. Johnson | | | | |

| /s/ MATT BLUNT | | Director | | September 30, 2019 |

| Matt Blunt | | | | |

| /s/ STEVEN D. COHAN | | Director | | September 30, 2019 |

| Steven D. Cohan | | | | |

| /s/ DANIEL ENGLANDER | | Director | | September 30, 2019 |

| Daniel Englander | | | | |

| /s/ STEPHEN FISHER | | Director | | September 30, 2019 |

| Stephen Fisher | | | | |

| /s/ JAMES E. MEEKS | | Director | | September 30, 2019 |

| James E. Meeks | | | | |

| /s/ DIANE M. MOREFIELD | | Director | | September 30, 2019 |

| Diane M. Morefield | | | | |

| /s/ THOMAS N. TRYFOROS | | Director | | September 30, 2019 |

| Thomas N. Tryforos | | | | |

None.

EXHIBIT INDEX

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

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| | | | | | | | | | | | | Incorporated by reference herein | | | | | | | | | | | | | | |

| Exhibit Number | | | | | | Description | | | | | | Form | | | | | | Date | | | | | | | | |

| 3.1 | | | | | | [Copart, Inc. Certificate of Incorporation](http://www.sec.gov/Archives/edgar/data/900075/000090007516000018/cprt01312016-ex31.htm) | | | | | | Quarterly Report on Form 10-Q, (File No. 000-23255), Exhibit No. 3.1 | | | | | | February 25, 2016 | | | | | | | | |

| 3.2 | | | | | | [Certificate of Amendment to the Copart, Inc. Certificate of Incorporation](http://www.sec.gov/Archives/edgar/data/900075/000090007516000136/cprt12162016certificateofa.htm) | | | | | | Current Report on Form 8-K, (File No. 000-23255), Exhibit No. 2 | | | | | | December 22, 2016 | | | | | | | | |

| 3.3 | | | | | | [Bylaws of Copart, Inc.](http://www.sec.gov/Archives/edgar/data/900075/000090007516000136/cprt12162016arbylawsmajori.htm) | | | | | | Current Report on Form 8-K, (File No. 000-23255), Exhibit No. 3 | | | | | | December 22, 2016 | | | | | | | | |

| 4.1 | | | | | | [Description of Capital Stock](http://www.sec.gov/Archives/edgar/data/900075/000090007519000022/cprt07312019-ex41.htm) | | | | | | Annual Report on Form 10-K (File No. 000-23255), Exhibit No. 4.1 | | | | | | September 30, 2019 | | | | | | | | |

| 10.1 | | | * | | | [Copart Inc. 2007 Equity Incentive Plan, as Amended and Restated (2007 EIP)](http://www.sec.gov/Archives/edgar/data/900075/000090007516000136/cprtamendedandrestated2007.htm) | | | | | | Current Report on Form 8-K, (File No. 000-23255), Exhibit No. 1 | | | | | | December 22, 2016 | | | | | | | | |

| 10.2 | | | * | | | [Form of Performance Share Award Agreement for use with 2007 EIP](http://www.sec.gov/Archives/edgar/data/900075/000110465907088501/a07-31307_1ex10d1.htm) | | | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.1 | | | | | | December 12, 2007 | | | | | | | | |

| 10.3 | | | * | | | [Form of Restricted Stock Unit Award Agreement for use with 2007 EIP](http://www.sec.gov/Archives/edgar/data/900075/000110465907088501/a07-31307_1ex10d3.htm) | | | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.3 | | | | | | December 12, 2007 | | | | | | | | |

| 10.4 | | | * | | | [Form of Stock Option Award Agreement for use with 2007 EIP](http://www.sec.gov/Archives/edgar/data/900075/000110465907088501/a07-31307_1ex10d5.htm) | | | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.5 | | | | | | December 12, 2007 | | | | | | | | |

| 10.5 | | | * | | | [Form of Restricted Stock Award Agreement for use with 2007 EIP](http://www.sec.gov/Archives/edgar/data/900075/000110465907088501/a07-31307_1ex10d4.htm) | | | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.4 | | | | | | December 12, 2007 | | | | | | | | |

| 10.6 | | | * | | | [Copart, Inc. Executive Bonus Plan](http://www.sec.gov/Archives/edgar/data/900075/000110465906051216/a06-17234_1ex10d13.htm) | | | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.13b | | | | | | August 3, 2006 | | | | | | | | |

| 10.7 | | | * | | | [Amended and Restated Executive Officer Employment Agreement between the Registrant and William E. Franklin, dated September 25, 2008](http://www.sec.gov/Archives/edgar/data/900075/000110465908075796/a08-30073_1ex10d1.htm) | | | | | | Quarterly Report on Form 10-Q (File No. 000-23255), Exhibit No. 10.1 | | | | | | December 10, 2008 | | | | | | | | |

| 10.8 | | | * | | | [Form of Indemnification Agreement signed by executive officers and directors](http://www.sec.gov/Archives/edgar/data/900075/000114544312001120/d29549_ex10-17.htm) | | | | | | Annual Report on Form 10-K (File No. 000-23255), Exhibit No. 10.17 | | | | | | October 1, 2012 | | | | | | | | |

| 10.9 | | | | | | [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](http://www.sec.gov/Archives/edgar/data/900075/000114544314001444/d31887_ex10-1.htm) | | | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.1 | | | | | | December 4, 2014 | | | | | | | | |

| 10.10 | | | | | | [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](http://www.sec.gov/Archives/edgar/data/900075/000114544314001444/d31887_ex10-2.htm) | | | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.2 | | | | | | December 4, 2014 | | | | | | | | |

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| | | | | | | | | | | | | Incorporated by reference herein | | | | | | | | | | | | | | |

| Exhibit Number | | | | | | Description | | | | | | Form | | | | | | Date | | | | | | | | |

| 10.11 | | | | | | [Note Purchase Agreement among the Registrant and each of the purchasers listed on Schedule B dated as of December 3, 2014](http://www.sec.gov/Archives/edgar/data/900075/000114544314001444/d31887_ex10-3.htm) | | | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.3 | | | | | | December 4, 2014 | | | | | | | | |

| 10.12 | | | * | | | [Copart, Inc. 2014 Employee Stock Purchase Plan](http://www.sec.gov/Archives/edgar/data/900075/000114544314001453/d31889_ex10-1.htm) | | | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.1 | | | | | | December 5, 2014 | | | | | | | | |

| 10.13 | | | * | | | [Executive Officer Employment Agreement, effective January 4, 2016, between the Registrant and Jeffrey Liaw.](http://www.sec.gov/Archives/edgar/data/900075/000162828015008945/cprt10312015-ex1026executi.htm) | | | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.26 | | | | | | November 23, 2015 | | | | | | | | |

| 10.14 | | | | | | [First Amendment to Credit Agreement, dated as of March 15, 2016, by and among Copart, Inc., the subsidiaries of Copart, Inc. party thereto, the lenders party thereto, and Wells Fargo Bank, National Association, as administrative agent.](http://www.sec.gov/Archives/edgar/data/900075/000090007516000021/cprt031516-ex101.htm) | | | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.1 | | | | | | March 17, 2016 | | | | | | | | |

| 10.15 | | | | | | [Second Amendment to Credit Agreement, dated as of July 21, 2016, by and among Copart, Inc., the subsidiaries of Copart, Inc. party thereto, the lenders party thereto, and Bank of America, N.A., as administrative agent.](http://www.sec.gov/Archives/edgar/data/900075/000090007516000054/cprt072716ex101.htm) | | | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.1 | | | | | | July 27, 2016 | | | | | | | | |

| 10.16 | | | | | | [First Amendment to Note Purchase Agreement, dated as of July 21, 2016, by and among Copart, Inc., the subsidiaries of Copart, Inc. party thereto and the purchasers party thereto.](http://www.sec.gov/Archives/edgar/data/900075/000090007516000054/cprt072716ex102.htm) | | | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.2 | | | | | | July 27, 2016 | | | | | | | | |

| 10.17 | | | | | | [First Amended and Restated Credit Agreement, dated as of July 21, 2020, by and among Copart, certain subsidiaries of Copart. the lenders party thereto, and Bank of America,N.A., as administrative agent.](http://www.sec.gov/Archives/edgar/data/900075/000162828020010649/firstamendedandrestate.htm) | | | | | | Current Report on Form 8-K (File No. 000-23255), Exhibit No. 10.1 | | | | | | July 27, 2020 | | | | | | | | |

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| | | | | | | | | | | | | Incorporated by reference herein | | | | | | | | | | | | | | |

| Exhibit Number | | | | | | Description | | | | | | Form | | | | | | Date | | | | | | | | |

| 21.1 | | | | | | [List of subsidiaries of Registrant](https://www.sec.gov/Archives/edgar/data/900075/000090007520000021/cprt07312020-ex211.htm) | | | | | | — | | | | | | Filed herewith | | | | | | | | |

| 23.1 | | | | | | [Consent of Independent Registered Public Accounting Firm](https://www.sec.gov/Archives/edgar/data/900075/000090007520000021/cprt07312020-ex231.htm) | | | | | | — | | | | | | 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](https://www.sec.gov/Archives/edgar/data/900075/000090007520000021/cprt07312020-ex311.htm) | | | | | | — | | | | | | Filed herewith | | | | | | | | |