What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-09-27 compared with 2020-09-28 · 126 added, 226 removed, 1122 unchanged (24% of the section changed)

108 unchanged sentences

000-23255), Exhibit No.

3 December 22, 2016

3.1 September 16, 2021

4.1 Description of Capital Stock

27 unchanged sentences

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

Quarterly Report on Form 10-Q (File No.

000-23255), Exhibit No.

10.1 December 10, 2008

10.1 March 5, 2021

10.7 * Form of Indemnification Agreement signed by executive officers and directors

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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

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

Current Report on Form 8-K (File No.

000-23255), Exhibit No.

10.2 December 4, 2014

Incorporated by reference herein

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10.1 July 27, 2020

10.15 * Executive Officer Employment Agreement, effective October 5, 2020, between the Registrant and John North

Quarterly Report on Form 10-Q (File No.

000-23255), Exhibit No.

10.1 November 20, 2020

Incorporated by reference herein

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C OPART, I NC.

/s/ J EFFREY L IAW

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

/s/ JOHN NORTH

John North, Chief Financial Officer (Principal Financial and Accounting Officer and duly Authorized Officer)

September 27, 2021

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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.

Jayson Adair and John North, 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.

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JAYSON ADAIR Chief Executive Officer (Principal Executive Officer and Director) September 27, 2021

/s/ JEFFREY LIAW President and Chief Financial Officer (Principal Financial and Accounting Officer) September 28, 2020

/s/ JOHN NORTH Chief Financial Officer (Principal Financial and Accounting Officer) September 27, 2021

/s/ WILLIS J.

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Stephen Fisher

/s/ CHERYLYN HARLEY LEBON Director September 27, 2021

Cherylyn Harley LeBon

MEEKS Director September 27, 2021

MOREFIELD Director September 27, 2021

/s/ CARL SPARKS Director September 27, 2021

/s/ THOMAS N.

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Matter in Our

Audit We tested the Company’s controls that address the risks of material misstatement relating to uncertain tax positions.

Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s controls that address the risks of material misstatement relating to uncertain tax positions.

For example, we tested controls over management’s identification of uncertain tax positions and its application of the recognition and measurement principles, including management’s review of the inputs and calculations of unrecognized tax benefits resulting from uncertain tax positions.

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Our substantive audit procedures included, among others, evaluating changes in tax law that occurred during the year and assessing the Company’s interpretation of those changes under the relevant jurisdiction’s tax law.

In addition, we inspected correspondence, assessments, and settlements from taxing authorities to assess the Company’s determination of the likelihood of its tax positions to be sustained upon examination and the Company’s measurement of the largest amount of benefit, considered on a cumulative probability basis, which is more likely than not to be realized upon settlement.

We also evaluated the Company’s income tax disclosures included in Note 12 in relation to these matters.

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Goodwill 355,717 343,622

Deferred income taxes 213 411

Other assets 41,831 39,934

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Income taxes payable 7,760 3,709

Current portion of operating lease liabilities 24,821 —

Current portion of finance lease obligations 751 1,138

Current portion of operating and finance lease liabilities 22,472 25,572

Total current liabilities 421,031 356,044

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Income taxes payable 52,345 44,965

Operating lease liabilities, net of current portion 95,584 —

Long-term debt and finance lease obligations, net of discount 397,036 400,091

Other liabilities 430 3,342

Operating and finance lease liabilities, net of current portion 97,961 96,150

Long-term debt and other liabilities, net of discount 397,636 396,900

Total liabilities 1,032,942 965,745

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General and administrative 206,665 191,703 181,867

Impairment of long-lived assets — — 1,131

Total operating expenses 1,556,085 1,389,484 1,325,482

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Other expense:

Interest expense ( 20,230 ) ( 19,810 ) ( 20,368 )

Interest income 1,359 2,225 1,293

Other income (expense), net 3,611 6,061 ( 2,759 )

Interest expense, net ( 20,247 ) ( 18,871 ) ( 17,585 )

Other income, net 5,667 3,611 6,061

Total other expense ( 14,580 ) ( 15,260 ) ( 11,524 )

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Net income $ 936,495 $ 699,907 $ 591,693

Net income attributable to noncontrolling interest — — 140

Net income attributable to Copart, Inc.

$ 699,907 $ 591,693 $ 417,867

Basic net income per common share $ 3.96 $ 3.00 $ 2.57

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Comprehensive income $ 956,723 $ 711,348 $ 567,092

Comprehensive income attributable to noncontrolling interest — — 140

Comprehensive income attributable to Copart, Inc.

$ 711,348 $ 567,092 $ 410,615

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

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Shares Amount Retained

Earnings Noncontrolling Interest Stockholders’

Earnings Stockholders’

Balances at July 31, 2018 233,898,841 $ 23 $ 526,858 $ ( 107,928 ) $ 1,162,146 $ 1,581,099

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Currency translation adjustment — — — ( 24,601 ) — ( 24,601 )

Distribution to noncontrolling interest — — — — — ( 235 ) ( 235 )

Sale of majority-owned subsidiary — — — — — ( 439 ) ( 439 )

Cumulative effect of change in accounting standard — — — — ( 22,954 ) ( 22,954 )

Exercise of stock options, net of repurchased shares 3,349,980 — 32,500 — ( 44,987 ) ( 12,487 )

Employee stock-based compensation and related tax benefit — — 23,197 — 24 — 23,221

Employee stock-based compensation — — 23,445 — — 23,445

Shares issued for Employee Stock Purchase Plan 177,043 — 7,183 — — 7,183

Shares repurchased ( 7,635,596 ) — ( 17,427 ) — ( 347,570 ) ( 364,997 )

Balances at July 31, 2019 229,790,268 23 572,559 ( 132,529 ) 1,338,328 1,778,381

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Currency translation adjustment — — — 11,441 — 11,441

Cumulative effect of change in accounting standard — — — — ( 22,954 ) — ( 22,954 )

Exercise of stock options, net of repurchased shares 5,401,963 1 68,570 — ( 100,382 ) ( 31,811 )

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Shares issued for Employee Stock Purchase Plan 123,106 — 8,276 — — 8,276

Shares repurchased ( 7,635,596 ) — ( 17,427 ) — ( 347,570 ) — ( 364,997 )

Balances at July 31, 2020 235,315,337 24 672,727 ( 121,088 ) 1,937,853 2,489,516

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Depreciation and amortization, including debt cost 123,084 104,257 85,334

Allowance for doubtful accounts 1,670 ( 429 ) 1,142

Impairment of long-lived assets — — 1,157

Equity in losses of unconsolidated affiliates 1,401 419 750

Allowance for credit loss ( 1,121 ) 1,670 ( 429 )

Equity in (earnings) losses of unconsolidated affiliates ( 3,240 ) 1,401 419

Stock-based compensation 40,922 23,322 23,445

(Gain) loss on sale of property and equipment ( 1,913 ) ( 3,073 ) 3,240

Gain on sale of property and equipment ( 1,480 ) ( 1,913 ) ( 3,073 )

Deferred income taxes ( 7,951 ) 23,082 23,167

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Proceeds from sale of property and equipment 2,530 2,466 18,361

Proceeds from sale of majority-owned subsidiary — — 1,796

Net cash used in investing activities ( 465,466 ) ( 601,208 ) ( 356,267 )

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Payments for employee stock-based tax withholdings ( 6,145 ) ( 103,451 ) ( 46,888 )

Net repayments on revolving loan facility — — ( 231,000 )

Debt offering costs — ( 2,814 ) —

Payments of finance lease obligations ( 1,118 ) ( 1,065 ) —

Distribution to noncontrolling interest — — ( 235 )

Net cash used in financing activities ( 27,414 ) ( 370,304 ) ( 182,038 )

Net cash provided by (used in) financing activities 40,922 ( 27,414 ) ( 370,304 )

Effect of foreign currency translation 4,195 2,136 ( 8,276 )

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The Company provides vehicle sellers with a full range of services to process and sell vehicles over the internet through the Company’s Virtual Bidding Third Generation (“VB3”) internet auction-style sales technology.

Sellers are primarily insurance companies but also include banks, finance companies, charities, fleet operators, dealers and from individuals.

The Company sells principally to licensed vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers and exporters, and in some jurisdictions, the Company sells directly to the general public.

Vehicle sellers consist primarily of insurance companies, but also include banks, finance companies, charities, fleet operators, dealers, vehicle rental companies, and individuals.

The Company sells principally to licensed vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers, exporters, and directly to the general public.

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

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In Germany and Spain, the Company also derives revenue from listing vehicles on behalf of insurance companies and insurance experts to determine the vehicle’s residual value and/or to facilitate a sale for the insured.

The consolidated financial statements of the Company include the accounts of the parent company and its wholly-owned subsidiaries, including its foreign wholly-owned subsidiaries.

The Company also had a 59.5 % voting interest in a company, which was acquired as part of the Cycle Express, LLC acquisition (“majority-owned subsidiary”), which provided various repossession services for the powersports auction industry.

The noncontrolling interest consisted of a 40.5 % outside voting interest in the majority-owned subsidiary.

Net income or loss of the majority-owned subsidiary was allocated to the members’ interests in accordance with the operating agreement.

During the year ended July 31, 2018, the Company sold the majority-owned subsidiary and disposed of its related goodwill.

The proceeds from the sale of the majority-owned subsidiary were $ 1.8 million resulting in a realized gain of $ 0.9 million recorded in other income.

The consolidated financial statements of the Company include the accounts of the parent company and its wholly-owned subsidiaries.

Significant intercompany transactions and balances have been eliminated in consolidation.

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stock-based compensation;

purchase price allocations;

and contingencies.

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Costs to prepare the vehicles for auction, including inbound transportation costs and titling fees, are deferred and recognized at the time of revenue recognition at auction.

There were no contract liabilities on the consolidated balance sheets at July 31, 2020 or July 31, 2019.

The Company’s disaggregation between service revenues and vehicle sales at the segment level reflects how the nature, timing, amount and uncertainty of its revenues and cash flows are impacted by economic factors.

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This fee is recognized ratably over the term of the arrangement, generally one year, as each day of access to the online auction platform represents the best depiction of the transfer of the service.

No provision for returns has been established, as all sales are final with no right of return or warranty, although the Company provides for bad debt expense in the case of non-performance by its buyers or sellers.

No provision for returns has been established, as all sales are final with no right of return or warranty, although the Company provides for credit loss expense in the case of non-performance by its buyers or sellers.

Year Ended July 31,

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The Company assesses these costs for impairment at least quarterly and as “triggering” events occur that indicate it is more likely than not that an impairment exists.

The contract asset costs where the amortization period for the related asset is one year or less are expensed as incurred and recorded within general and administrative expenses in the accompanying statements of income.

The change in the carrying amount of contract assets was as follows (In thousands):

Balance as of July 31, 2019 $ 10,574

Balance as of Capitalized contract assets during the period 4,130

Balance as of Costs amortized during the period ( 4,875 )

Balance as of Effect of foreign currency exchange rates ( 521 )

Capitalized contract assets during the period 2,875

Costs amortized during the period ( 3,541 )

Effect of foreign currency exchange rates 172

Balance as of July 31, 2020 $ 10,080

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Cumulative loss on foreign currency translation as of July 31, 2019 $ ( 132,529 )

Loss on foreign currency translation ( 24,601 )

Gain on foreign currency translation 11,441

Cumulative loss on foreign currency translation as of July 31, 2020 $ ( 121,088 )

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The Company records its financial assets and liabilities at fair value in accordance with the framework for measuring fair value in U.S.

In accordance with Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures , as amended by Accounting Standards Update (“ASU”) 2011-04, the Company considers fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants under current market conditions.

In accordance with Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures , the Company considers fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants under current market conditions.

This framework establishes a fair value hierarchy that prioritizes the inputs used to measure fair value:

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These inputs may be used with internally developed methodologies that result in management’s best estimate.

The amounts recorded for financial instruments in the Company’s consolidated financial statements, which included cash, restricted cash, accounts receivable, accounts payable, accrued liabilities, and Revolving Loan Facility approximated their fair values as of July 31, 2020 and 2019, due to the short-term nature of those instruments and are classified within Level II of the fair value hierarchy.

The amounts recorded for financial instruments in the Company’s consolidated financial statements, which included cash, restricted cash, accounts receivable, accounts payable, accrued liabilities, and amounts outstanding under the Revolving Loan Facility approximated their fair values as of July 31, 2021 and 2020, due to the short-term nature of those instruments and are classified within Level II of the fair value hierarchy.

Cash equivalents are classified within Level II of the fair value hierarchy because they are valued using quoted market prices of the underlying investments.

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Yard Operations

Yard operations consists primarily of operating personnel (which includes yard management, clerical and yard employees) and their related benefits;

Yard operations expenses consist primarily of operating personnel (which includes yard management, clerical and yard employees);

vehicle transportation;

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Other (Expense) Income

Other (expense) income consists primarily of interest expense;

interest income;

gains and losses from the disposal of fixed assets;

earnings from unconsolidated affiliates;

and currency related gains and losses.

Other (expense) income consists primarily of interest expense on long-term debt;

foreign exchange rate gains and losses;

gains and losses from the disposal of assets, which will fluctuate based on the nature of these activities each period;

and earnings from unconsolidated affiliates.

Income Taxes and Deferred Tax Assets

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Excess tax benefits and deficiencies related to exercises of stock options are recognized as expense or benefit in the consolidated statements of income as discrete items in the reporting period in which they occur.

The Company files annual income tax returns in multiple taxing jurisdictions.

A number of years may elapse before an uncertain tax position is audited by the relevant tax authorities and finally resolved.

The Company recognizes and measures uncertain tax positions in accordance with ASC 740, Income Taxes (“ASC 740”), pursuant to which the Company only recognizes the tax benefit from an uncertain tax position if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

The Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return.

ASC 740 further requires that a change in judgment related to the expected ultimate resolution of uncertain tax positions be recognized in earnings in the quarter in which such change occurs.

The Company applies the provisions of the accounting standard for uncertain tax positions to its income taxes.

In determining net income for financial statement purposes, the Company makes certain estimates and judgments in the calculation of tax provisions and the resultant tax liabilities.

In the ordinary course of global business, there may be transactions and calculations where the ultimate tax outcome is uncertain.

The calculation of tax liabilities involves dealing with uncertainties in the interpretation and application of complex tax laws, and significant judgment is necessary to (i) determine whether, based on the technical merits, a tax position is more likely than not to be sustained and (ii) measure the amount of tax benefit that qualifies for recognition.

The Company recognizes potential liabilities for anticipated tax audit issues in the U.S.

and other tax jurisdictions based on an estimate of the ultimate resolution of whether, and the extent to which, additional taxes will be due.

Although the Company believes the estimates are reasonable, no assurance can be given that the final outcome of these matters will not be different from what is reflected in the historical income tax provisions and accruals.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

The Company believes that its reserves for income taxes reflect the most likely outcome.

The Company adjusts these reserves, as well as the related interest, where appropriate in light of changing facts and circumstances.

Net Income Per Share

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The Company considers all highly liquid investments purchased with original maturities of three months or less at the time of purchase to be cash equivalents.

Cash, cash equivalents, and restricted cash include cash held in checking, domestic certificates of deposit, and money market accounts.

Cash, cash equivalents, and restricted cash include cash held in checking, certificates of deposit, U.S.

Treasury Bills, and money market accounts.

The Company periodically invests its excess cash in money market funds and U.S.

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The Company generally does not require collateral on its accounts receivable.

The Company estimates its allowances for doubtful accounts based on historical collection trends, the age of outstanding receivables and existing economic conditions.

The Company estimates its allowances for credit loss based on historical collection trends, the age of outstanding receivables and existing economic conditions.

If events or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly.

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Property and equipment is stated at cost, less accumulated depreciation and amortization.

Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated useful lives of the respective improvements, which is between seven and ten years .

Property and leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or the estimated useful lives of the respective improvements, which is between seven and ten years .

Significant improvements which substantially extend the useful lives of assets are capitalized.

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three to five years for office furniture and equipment;

and 7 to 40 years or the lease term, whichever is shorter , for buildings and improvements.

and seven to forty years or the lease term, whichever is shorter, for buildings and improvements.

Amortization of equipment under finance leases is included in depreciation expense.

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and relevant entity-specific events.

Segments and Other Geographic Reporting

The Company’s U.S.

and International regions are considered two separate operating segments and are disclosed as two reportable segments.

The segments represent geographic areas and reflect how the chief operating decision maker allocates resources and measures results, including total revenues and operating income.

Capitalized Software Costs

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Accumulated amortization expense related to software as of July 31, 2021 and 2020 totaled $ 43.4 million and $ 33.5 million, respectively.

During the year ended July 31, 2018, the Company retired fully amortized capitalized software of $ 15.5 million, which were no longer being utilized.

Stock-Based Compensation

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The value of the portion of the award that is ultimately expected to vest is recognized in expense over the requisite service periods.

The Company has elected to estimate forfeitures at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The fair value of each option, without a market-based condition was estimated on the measurement date using the Black-Scholes Merton (“BSM”) option-pricing model.

For options that included a market-based condition the Monte Carlo simulation model was used.

For options that included a market-based condition either the Monte Carlo simulation model or a lattice model was used.

The Black-Scholes Merton option-pricing model utilized the following assumptions:

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Therefore, the Company uses a zero value for the expected dividend value factor when using the BSM option-pricing model to determine the fair value of options granted.

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

Net cash proceeds from the exercise of stock options were $ 39.0 million, $ 71.6 million and $ 34.4 million for the years ended July 31, 2021, 2020 and 2019, respectively.

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Deferred taxes are not provided on cumulative translation adjustments where the Company expects earnings of a foreign subsidiary to be indefinitely reinvested.

The Company recognizes and measures identifiable assets acquired and liabilities assumed in acquired entities in accordance with ASC 805, Business Combinations .

The allocation of the purchase consideration for acquisitions can require extensive use of accounting estimates and judgments to allocate the purchase consideration to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values.

The excess of the fair value of purchase consideration over the values of the identifiable assets and liabilities is recorded as goodwill.

Critical estimates in valuing certain identifiable assets include but are not limited to expected long-term revenues;

future expected operating expenses;

cost of capital;

appropriate attrition;

and discount rates.

Recently Issued Accounting Pronouncements

In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220):

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income .

The current standard, ASC Topic 740 - Income Taxes , requires deferred tax liabilities and assets to be adjusted for the effect of a change in tax laws or rates with the effect included in income from continuing operations in the reporting period that includes the enactment date.

This includes the tax effects of items in accumulated other comprehensive income ("AOCI") that were originally recognized in other comprehensive income, subsequently creating stranded tax effects.

ASU 2018-02 allows a reclassification from AOCI to retained earnings for stranded tax effects specifically resulting from the U.S.

federal government's recently enacted tax bill, the Tax Cuts and Jobs Act.

The adoption of ASU 2018-02, in the first quarter of fiscal 2020, did not result in a reclassification from AOCI to retained earnings and did not have an impact on the Company’s consolidated results of operations, financial position, or cash flows.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , that supersedes all existing guidance on accounting for leases in ASC Topic 840.

ASU 2016-02 is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet.

ASU 2016-02 will continue to classify leases as either finance or operating, with classification affecting the pattern of expense recognition in the statement of income.

ASU 2016-02 is effective for annual and interim periods within those annual reporting periods beginning after December 15, 2018 and adoption is to be applied with a modified retrospective approach to each prior reporting period presented with various optional practical expedients.

Most of the Company’s operating lease commitments are subject to the new guidance and recognized as operating lease liabilities and right-of-use assets upon adoption, resulting in a significant increase in the assets and liabilities on the Company’s consolidated balance sheets.

The Company implemented policy elections and practical expedients as part of adopting ASU 2016-02 including:

(i) excluding from the balance sheet leases with terms that are less than one year;

(ii) for agreements that contain both lease and non-lease components, combining these components together and accounting for them as a single lease;

(iii) the package of practical expedients, which allowed the Company to avoid reassessing contracts that commenced prior to adoption that were properly evaluated under legacy U.S.

and (iv) the policy election that eliminated the need for adjusting prior period comparable financial statements prepared under legacy lease accounting guidance.

The adoption of ASU 2016-02 resulted in the recording of a right-of-use asset and a lease liability in the first quarter of fiscal 2020, as a result of the application of the standard and did not have a material impact to the Company’s consolidated results of operations.

See Note 4 — Leases for additional disclosures as a result of the adoption of the standard.

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350).

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As a result, entities should perform their annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment if the carrying amount exceeds the reporting unit’s fair value.

ASU 2017-04 is effective for annual periods beginning after December 15, 2019.

The Company’s adoption of ASU 2017-04 will not have a material impact on the Company’s consolidated results of operations and financial position.

ASU 2017-04 was effective for fiscal years beginning after December 15, 2019.

The Company’s adoption of ASU 2017-04 did not have a material impact on the Company’s consolidated results of operations and financial position.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326).

ASU 2016-13 requires entities to use a current lifetime expected credit loss methodology to measure impairments of certain financial assets.

Using this methodology will result in earlier recognition of losses than under the current incurred loss approach, which requires waiting to recognize a loss until it is probable of having been incurred.

Using this methodology will result in earlier recognition of losses than the previous incurred loss approach, which required waiting to recognize a loss until it was probable of having been incurred.

There are other provisions within the standard that affect how impairments of other financial assets may be recorded and presented, and that expand disclosures.

This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019, and must be applied on a modified retrospective basis.

The Company’s adoption of ASU 2016-13 will not have a material impact on the Company’s consolidated results of operations and financial position.

This pronouncement was effective for fiscal years beginning after December 15, 2019, and was required to be applied on a modified retrospective basis.

The Company’s adoption of ASU 2016-13 did not have a material impact on the Company’s consolidated results of operations, financial position, and related disclosures.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes .

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This guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

The Company’s adoption of ASU 2019-12 will not have a material impact on the Company’s consolidated results of operations and financial position.

The Company’s adoption of ASU 2019-12 is not expected to have a material impact on the Company’s consolidated results of operations and financial position.

NOTE 2 — Accounts Receivable, Net

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486,264 356,597

Allowance for doubtful accounts ( 6,390 ) ( 4,942 )

Allowance for credit loss ( 5,636 ) ( 6,390 )

Accounts receivable, net $ 480,628 $ 350,207

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Trade accounts receivable includes fees and gross auction proceeds to be collected from insurance companies and buyers.

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

The movements in the allowance for credit loss was as follows:

(In thousands) 2021 2020 2019

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Charged to costs and expenses 3,454 5,591 2,409

Write-offs to bad debt ( 4,143 ) ( 2,911 ) ( 3,122 )

Write-offs ( 4,208 ) ( 4,143 ) ( 2,911 )

Balance at end of year $ 5,636 $ 6,390 $ 4,942

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Amortization expense of software was $ 9.5 million, $ 10.4 million and $ 7.6 million for the years ended July 31, 2021, 2020 and 2019, respectively.

During the year ended July 31, 2018, the Company retired fully amortized capitalized software of $ 15.5 million, which were no longer being utilized.

NOTE 4 — Leases

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Components of lease expense were as follows:

(In thousands) Year Ended July 31, 2020

Year Ended July 31,

(In thousands) 2021 2020

Operating lease expense $ 28,302 $ 31,628

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Total lease expense $ 35,037 $ 42,889

Facilities rental expense for the years ended July 31, 2019 and 2018 was $30.6 million and $45.6 million, respectively under ASC 840, Operating Leases.

Facilities rental expense for the year ended July 31, 2019 was $ 30.6 million under ASC 840, Operating Leases.

The components of right-of-use assets and lease liabilities on the consolidated balance sheet are as follows (In thousands):

Lease Asset and Liabilities Balance Sheet Classification (In thousands) July 31, 2020

Lease Asset and Liabilities Balance Sheet Classification (In thousands) July 31, 2021 July 31, 2020

Operating lease right-of-use assets Operating lease right-of-use assets $ 119,487 $ 118,455

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Total lease assets, net $ 120,050 $ 119,864

Operating lease liabilities - current Current portion of operating lease liabilities $ 24,821

Finance lease liabilities - current Current portion of finance lease obligations 751

Operating lease liabilities - non-current Operating lease liabilities, net of current portion 95,584

Finance lease liabilities - non-current Long-term debt and finance lease obligations, net of discount 566

Operating lease liabilities - current Current portion of operating and finance lease liabilities $ 21,942 $ 24,821

Finance lease liabilities - current Current portion of operating and finance lease liabilities 530 751

Operating lease liabilities - non-current Operating and finance lease liabilities, net of current portion 97,925 95,584

Finance lease liabilities - non-current Operating and finance lease liabilities, net of current portion 36 566

Total lease liabilities $ 120,433 $ 121,722

6 unchanged sentences

Supplemental cash flow information related to leases as of July 31, 2021 were as follows (In thousands):

Year Ended July 31,

(In thousands) 2021 2020

Cash paid for amounts included in the measurement of lease liabilities

24 unchanged sentences

Total future lease payments receivable $ 42,655

The cost of the leased space was $ 64.8 million as of July 31, 2020.

The accumulated depreciation associated with the leased assets was $ 0.9 million as of July 31, 2020.

The cost of the leased space was $ 55.5 million and $ 64.8 million as of July 31, 2021 and 2020, respectively.

The accumulated depreciation associated with the leased assets was $ 1.9 million and $ 0.9 million as of July 31, 2021 and 2020, respectively.

Both the leased assets and accumulated depreciation are included in Property and equipment, net on the consolidated balance sheet.

Rental income from these operating leases for the year ended July 31, 2020, was $ 6.2 million, and is included within Service revenues on the consolidated statements of income.

Rental income from these operating leases was $ 14.8 million and $ 6.2 million for the years ended July 31, 2021 and 2020, respectively, and is included within Service revenues on the consolidated statements of income.

NOTE 5 — Goodwill

6 unchanged sentences

In accordance with the guidance in ASC 350, goodwill is tested for impairment on an annual basis or upon the occurrence of circumstances that indicate that goodwill may be impaired.

The Company’s annual impairment tests were performed during the fourth quarter of fiscal 2020 and 2019 and goodwill was not impaired.

The Company’s annual impairment tests were performed during the fourth quarter of each period presented and goodwill was not impaired.

NOTE 6 — Intangibles, Net

13 unchanged sentences

Aggregate amortization expense on intangible assets was $ 6.9 million, $ 8.9 million and $ 10.5 million for the years ended July 31, 2021, 2020 and 2019, respectively.

During the year ended July 31, 2018, the Company recognized a $ 1.1 million charge primarily related to fully impairing a supply contract in the International segment.

Intangible amortization expense for the next five fiscal years based upon July 31, 2021 intangible assets is expected to be as follows (In thousands):

24 unchanged sentences

On December 3, 2014, the Company entered into a Credit Agreement (as amended from time to time, the “Credit Amendment”) with Wells Fargo Bank, National Association, as administrative agent, and Bank of America, N.A., as syndication agent.

The Credit Agreement provided for (a) a secured revolving loan facility in an aggregate principal amount of up to $ 300.0 million (the “Revolving Loan Facility”), and (b) a secured term loan facility in an aggregate principal amount of $ 300.0 million (the “Term Loan”), which was fully drawn at closing.

The Term Loan amortized $ 18.8 million per quarter.

On March 15, 2016, the Company entered into a First Amendment to Credit Agreement (the “Amendment to Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent and Bank of America, N.A.

1 unchanged sentence

The Amendment to Credit Agreement provided for (a) an increase in the secured revolving credit commitments by $ 50.0 million, bringing the aggregate principal amount of the revolving credit commitments under the Credit Agreement to $ 350.0 million, (b) a new secured term loan (the “Incremental Term Loan”) in the aggregate principal amount of $ 93.8 million having a maturity date of March 15, 2021 , and (c) an extension of the termination date of the Revolving Loan Facility and the maturity date of the Term Loan from December 3, 2019 to March 15, 2021 .

The Amendment to Credit Agreement extended the amortization period for the Term Loan and decreased the quarterly amortization payments for that loan to $ 7.5 million per quarter.

The Amendment to Credit Agreement additionally reduced the pricing levels under the Credit Agreement to a range of 0.15 % to 0.30 % in the case of the commitment fee, 1.125 % to 2.0 % in the case of the applicable margin for LIBOR loans, and 0.125 % to 1.0 % in the case of the applicable margin for base rate loans, based on the Company’s consolidated total net leverage ratio during the preceding fiscal quarter.

The Company borrowed the entire $ 93.8 million principal amount of the Incremental Term Loan concurrent with the closing of the Amendment to Credit Agreement.

On July 21, 2016, the Company entered into a Second Amendment to Credit Agreement (the “Second Amendment to Credit Agreement”) with Wells Fargo Bank, National Association, SunTrust Bank, and Bank of America, N.A., as administrative agent (as successor in interest to Wells Fargo Bank).

The Second Amendment to Credit Agreement amends certain terms of the Credit Agreement, dated as of December 3, 2014 as amended by the Amendment to Credit Agreement, dated as of March 15, 2016.

The Second Amendment to Credit Agreement provides for, among other things, (a) an increase in the secured revolving credit commitments by $ 500.0 million, bringing the aggregate principal amount of the revolving credit commitments under the Credit Agreement to $ 850.0 million, (b) the repayment of existing term loans outstanding under the Credit Agreement, (c) an extension of the termination date of the revolving credit facility under the Credit Agreement from March 15, 2021 to July 21, 2021, and (d) increased covenant flexibility.

Concurrent with the closing of the Second Amendment to Credit Agreement, the Company prepaid in full the outstanding $ 242.5 million principal amount of the Term Loan and Incremental Term Loan under the Credit Agreement without premium or penalty.

The Second Amendment to Credit Agreement reduced the pricing levels under the Credit Agreement to a range of 0.125 % to 0.20 % in the case of the commitment fee, 1.00 % to 1.75 % in the case of the applicable margin for LIBOR loans, and 0.0 % to 0.75 % in the case of the applicable margin for base rate loans, in each case depending on the Company’s consolidated total net leverage ratio during the preceding fiscal quarter.

The Second Amendment to Credit Agreement amended certain terms of the Credit Agreement, dated as of December 3, 2014 as amended by the Amendment to Credit Agreement, dated as of March 15, 2016.

The Second Amendment to Credit Agreement provided for, among other things, (a) an increase in the secured revolving credit commitments by $ 500.0 million, bringing the aggregate principal amount of the revolving credit commitments under the Credit Agreement to $ 850.0 million, (b) the repayment of existing term loans outstanding under the Credit Agreement, (c) an extension of the termination date of the revolving credit facility under the Credit Agreement from March 15, 2021 to July 21, 2021, and (d) increased covenant flexibility.

On July 21, 2020, the Company entered into a First Amended and Restated Credit Agreement with Wells Fargo Bank, National Association, Truist Bank (as successor by merger to Suntrust Bank), BMO Harris Bank N.A., Santander Bank, N.A., and Bank of America, N.A., as administrative agent.

The First Amended and Restated Credit Agreement amends certain terms of the Credit Agreement, dated as of December 3, 2014 as amended by the Amendment to Credit Agreement, dated as of March 15, 2016, as amended by the Second Amendment to Credit Agreement, dated as July 21, 2016.

The First Amended and Restated Credit Agreement amended certain terms of the Credit Agreement, dated as of December 3, 2014 as amended by the Amendment to Credit Agreement, dated as of March 15, 2016, as amended by the Second Amendment to Credit Agreement, dated as July 21, 2016.

The First Amended and Restated Credit Agreement provides for, among other things, (a) an increase in the secured revolving credit commitments by $ 200.0 million, bringing the aggregate principal amount of the revolving credit commitments under the Credit Agreement to $ 1,050.0 million, and (b) an extension of the termination date of the revolving credit facility under the Credit Agreement from July 21, 2021 to July 21, 2023 .

The First Amended and Restated Credit Agreement additionally increased the pricing levels under the Credit Agreement to a range of 0.25 % to 0.35 % in the case of the commitment fee, 1.50 % to 2.25 % in the case of the applicable margin for Eurodollar Rate Loans, and 0.50 % to 1.25 % in the case of the applicable margin for base rate loans, in

each case depending on the Company’s consolidated total net leverage ratio during the preceding fiscal quarter.

The principal purposes of these financing transactions were to increase the size and availability under the Company’s Revolving Loan Facility and to provide additional long-term financing.

4 unchanged sentences

or (b) the Eurodollar Rate plus an applicable margin ranging from 1.50 % to 2.25 % depending on the Company’s consolidated total net leverage ratio during the preceding fiscal quarter.

Interest is due and payable in arrears, 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 Eurodollar Rate Loans.

Interest is due and payable in arrears, 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 Eurodollar Rate Loans.

The interest rate as of July 31, 2021 on the Company’s Revolving Loan Facility was the Eurodollar Rate of 0.75 % plus an applicable margin of 1.50 %.

4 unchanged sentences

The commitment fee rate ranges from 0.25 % to 0.35 %, depending on the Company’s consolidated total net leverage ratio during the preceding fiscal quarter, on the average daily unused portion of the revolving credit commitment under the Credit Agreement.

The Company had no outstanding borrowings under the Revolving Loan Facility as of July 31, 2020 and 2019.

The Company had no outstanding borrowings under the Revolving Loan Facility as of July 31, 2021 or 2020.

The Company’s obligations under the Credit Agreement are guaranteed by certain of the Company’s domestic subsidiaries meeting materiality thresholds set forth in the Credit Agreement.

33 unchanged sentences

The Company was in compliance with all covenants related to the Note Purchase Agreement as of July 31, 2021.

As of July 31, 2020, future payments on the Revolving Loan Facility and Note Purchase Agreement were as follows:

As of July 31, 2021, future payments on the Revolving Loan Facility and Note Purchase Agreement were as follows for the fiscal years ending:

(In thousands) July 31, (1)

18 unchanged sentences

Weighted average common shares outstanding 236,252 233,202 230,489

Effect of dilutive securities — stock options 5,454 9,964 10,084

Effect of dilutive securities 4,038 5,454 9,964

Weighted average common and dilutive potential common shares outstanding 240,290 238,656 240,453

17 unchanged sentences

In fiscal 2020, the Company’s former President exercised all of his vested stock options through a cashless exercise.

In fiscal 2020, the Company's Chief Executive Officer exercised all of his vested stock options through a cashless exercise.

In fiscal 2021, certain employees exercised stock options through a cashless exercise.

A portion of the options exercised were net settled in satisfaction of the exercise price.

The Company remitted $ 101.3 million, $ 45.6 million, and no amounts for the years ended July 31, 2020, 2019 and 2018, respectively, to the proper taxing authorities in satisfaction of the employees’ statutory withholding requirements.

The Company remitted $ 3.8 million, $ 101.3 million, and $ 45.6 million during the years ended July 31, 2021, 2020 and 2019, respectively, to the proper taxing authorities in satisfaction of the employees’ statutory withholding requirements.

The exercised stock options, utilizing a cashless exercise, are summarized in the following table:

30 unchanged sentences

Each option became exercisable over five years , subject to continued service by Mr.

Adair and the Company’s former President, with 20 % vesting on April 15, 2015 and December 16, 2014, respectively, and the balance vesting monthly over the subsequent four years .

Adair and the Company’s former President, with 20 % vesting on April 15, 2015 and December 16, 2014, respectively, and the balance vested monthly over the subsequent four years .

On December 16, 2018, the option held by the Company’s former President became fully vested and on April 15, 2019, the option held by Mr.

2 unchanged sentences

The total compensation expense recognized by the Company over the five year service period for these options was $ 38.8 million.

The Company recognized no expense, $ 4.3 million, and $ 7.2 million in compensation expenses for these grants in the years ended July 31, 2020, 2019 and 2018, respectively.

The Company recognized no compensation expenses for these grants in the years ended July 31, 2021 and 2020, respectively, and $ 4.3 million in compensation expenses for these grants in the year ended July 31, 2019.

In June 2020, the Compensation Committee of the Company’s Board of Directors approved the grant to A.

Jayson Adair, the Company’s Chief Executive Officer, of nonqualified stock options to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $ 85.04 per share, which equaled the closing price of the Company’s common stock on June 12, 2020, the effective date of grant.

The grant was made in lieu of any cash salary or bonus compensation in excess of $1.00 per year or the grant of any additional equity incentives for five years .

The option will become exercisable over five years , subject to continued service by Mr.

Adair, with 20% vesting on June 12, 2021, and the balance vesting monthly over the subsequent four years.

with 20 % vested on June 12, 2021, and the balance vesting monthly over the subsequent four years.

Separate and apart from the time-based vesting schedule, the options are also subject to market based vesting, such that no options will be exercisable unless and until the average closing price in trading of Copart, Inc., common stock on the NASDAQ Global Select Market is greater than or equal to $ 106.30 per share (which is an amount equivalent to 125 % of the exercise price of the options) for a period of 20 consecutive trading days.

The market based vesting condition was satisfied in the first quarter of fiscal 2021.

The option held by Mr.

2 unchanged sentences

The fair value of each option at the date of grant using the Monte Carlo simulation model was $ 25.47 , with an expected life of 7.64 years, a risk-free interest rate of 0.71 %, estimated volatility of 25.2 %, and no expected dividends.

The total estimated compensation expense to be recognized by the Company over the five year estimated service period for these options is $ 25.5 million.

The following table details stock-based compensation recognized by the Company for stock options and restricted stock awards:

The total estimated compensation expense to be recognized by the Company over the five year estimated service period for these options is $ 25.5 million and is recognized using the accelerated attribution method over each vesting tranche of the award.

The Company recognized $ 13.5 million in compensation expense for this grant in year ended July 31, 2021.

The table below sets forth the stock-based compensation recognized by the Company for stock options, restricted stock, and restricted unit awards:

Year Ended July 31,

5 unchanged sentences

The Company recognizes compensation expense for stock option awards on a straight-line basis over the requisite service period of the award.

In accordance with ASC 718, Compensation - Stock Compensation , the Company made an estimate of expected forfeitures and recognized compensation cost only for those equity awards expected to vest.

A summary of the status of the Company’s non-vested shares from stock option awards and its activity during the year ended July 31, 2021 was as follows:

18 unchanged sentences

The aggregate intrinsic value of options exercised was $ 143.3 million, $ 476.3 million and $ 215.4 million in the years ended July 31, 2021, 2020 and 2019, respectively, and represents the difference between the exercise price of the option and the estimated fair value of the Company’s common stock on the dates exercised.

As of July 31, 2020, the total compensation cost related to non-vested stock-based awards granted to employees under the Company’s stock option plans but not yet recognized was $ 49.5 million, net of estimated forfeitures.

This cost will be amortized on a straight-line basis over a weighted average remaining term of 3.49 years and will be adjusted for subsequent changes in estimated forfeitures.

As of July 31, 2021, the total compensation cost related to non-vested stock-based awards granted to employees under the Company’s stock option plans but not yet recognized

was $ 60.6 million.

This cost will be amortized on a straight-line basis over a weighted average remaining term of 3.28 years.

The fair value of options vested for the years ended July 31, 2021, 2020 and 2019 was $ 19.0 million, $ 19.2 million and $ 21.3 million, respectively.

9 unchanged sentences

Outstanding as of July 31, 2021 7,557 6.53 $ 56.19 4,295 $ 38.16

The Company recognizes compensation expense for restricted stock awards on a straight-line basis over the requisite service period of the award.

The following is a summary of activity for the Company’s restricted stock for the for the year ended July 31, 2020:

The Company’s restricted stock awards (“RSA”) and restricted stock unit awards (“RSU”) have generally been issued with vesting periods ranging from two years to five years and vest solely on service conditions.

Accordingly, the Company recognizes compensation expense for RSA and RSU awards on a straight-line basis over the requisite service period of the award.

The following is a summary of activity for the Company’s RSA’s and RSU’s for the for the year ended July 31, 2021:

(In thousands, except per share data) Restricted Shares Weighted Average Grant Date Fair Value

Outstanding as of July 31, 2020 105 $ 69.86

Grants of restricted stock 68 82.33

Vested restricted stock ( 74 ) 60.74

Forfeited restricted stock ( 23 ) 59.03

Grants 61 116.86

Vested ( 58 ) 83.26

Forfeitures or expirations ( 6 ) 67.55

Outstanding as of July 31, 2021 102 $ 90.46

29 unchanged sentences

( 1.9 ) % ( 11.2 ) % ( 6.4 ) %

GILTI, FDII, and transition tax ( 0.3 ) % ( 0.7 ) % 2.2 %

Deferred tax remeasurement — % — % ( 0.8 ) %

FDII, GILTI, and transition tax ( 3.1 ) % ( 0.3 ) % ( 0.7 ) %

Federal return to provision adjustment ( 1.8 ) % — % — %

Other differences 1.3 % 1.4 % 0.5 %

6 unchanged sentences

Deferred tax assets:

Allowance for doubtful accounts $ 1,141 $ 919

Allowance for credit loss $ 942 $ 1,141

Accrued compensation and benefits 15,541 13,217

State taxes — 460

Operating lease liabilities 25,176 —

Accrued other 4,551 4,763

8 unchanged sentences

Property and equipment ( 55,047 ) ( 62,123 )

Prepaid insurance ( 1,411 ) ( 987 )

Operating lease right-of-use assets ( 25,253 ) —

Other prepaids ( 461 ) ( 1,411 )

Intangibles and goodwill ( 24,602 ) ( 23,714 )

1 unchanged sentence

Net deferred tax liabilities $ ( 63,516 ) $ ( 71,473 )

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

(In thousands) 2020 2019

non-current liabilities $ ( 66,082 ) $ ( 44,499 )

International non-current liabilities ( 5,391 ) ( 3,773 )

Net deferred tax liabilities $ ( 71,473 ) $ ( 48,272 )

On December 22, 2017 legislation, commonly referred to as the Tax Cuts and Jobs Act (the “Act”), was enacted.

The Act included a one-time tax on accumulated unremitted earnings of the Company’s foreign subsidiaries (“Transition Tax”).

In fiscal 2018, the Company recorded a $ 12.4 million Transition Tax charge.

The Act reduced the federal statutory tax rate from 35.0 % to 21.0 %, effective January 1, 2018, which results in federal statutory tax rates for the Company of 21.0 %, 21.0 %, and 26.9 % for fiscal years 2020, 2019 and 2018, respectively.

In fiscal year 2018 the Company recorded a $ 4.3 million benefit to remeasure deferred taxes as of the enactment date of the Act to reflect the federal statutory rate reduction.

In fiscal year 2019, the Company completed its accounting for the tax effects of the enactment of the Tax Act and recorded a discrete decrease in tax expense of $ 1.1 million, whose effect on the Company’s effective tax rate was immaterial.

The Act contains Global Intangible Low-Taxed Income (“GILTI”) provisions, which first impacted the Company in fiscal year 2019.

4 unchanged sentences

The Act also includes a favorable tax treatment for certain Foreign Derived Intangible Income (“FDII”), effective for the Company starting August 1, 2018.

The Company’s estimate for both GILTI and FDII did not materially impact the effective income tax rate or income tax expense for the fiscal year ended July 31, 2020 or 2019.

The Company’s estimate for FDII did have a material impact to the effective income tax rate and income tax expense for the fiscal year ended July 31, 2021.

As of July 31, 2021 and 2020, the Company had foreign operating losses and a U.S.

10 unchanged sentences

Beginning balance $ 36,123 $ 27,537 $ 21,322

Increases related to current year tax position 8,196 6,588 5,169

Increases related to current year tax positions 13,122 8,196 6,588

Prior year tax positions:

Prior year increase 6,390 800 554

Prior year decrease ( 1,603 ) ( 305 ) ( 2,079 )

Cash settlement ( 1,182 ) ( 534 ) ( 519 )

Increases recognized during the period 8,782 6,390 800

Decreases recognized during the period ( 5,749 ) ( 1,603 ) ( 305 )

Cash settlements during the period ( 3,261 ) ( 1,182 ) ( 534 )

Lapse of statute of limitations ( 1,956 ) ( 3,215 ) ( 334 )

15 unchanged sentences

The Company’s U.S.

federal statutory tax rate for fiscal year 2020 was 21.0 % and was negatively impacted by $ 1.7 million of discrete tax items related to amending previously filed income tax returns.

The effective tax rate for the fiscal year ending July 31, 2019, was computed based on a reduced blended U.S.

federal statutory tax rate of 21.0 % and was favorably impacted by $ 10.2 million of discrete tax items related to amending previously filed income tax returns.

The effective tax rate for the fiscal year ending July 31, 2018, was computed based on a reduced blended U.S.

federal statutory tax rate of 26.9 % and included the effects of the Act.

The tax rates were also impacted from the result of recognizing excess tax benefits from the exercise of employee stock options of $ 92.5 million, $ 46.1 million and $ 21.3 million, for the years ended July 31, 2020, 2019 and 2018, respectively.

federal statutory tax rate for fiscal years 2021, 2020 and 2019 was 21.0 %.

The effective tax rate for fiscal year ending July 31, 2021 was favorably impacted by $ 19.8 million of discrete tax adjustments made in connection with finalizing the Company’s fiscal year 2020 tax return.

The effective tax rate for fiscal year ending July 31, 2020 was negatively impacted by $ 1.7 million of discrete tax items related to amending previously filed income tax returns.

The effective tax rate for the fiscal year ending July 31, 2019, was favorably impacted by $ 10.2 million of discrete tax items related to amending previously filed income tax returns.

The effective tax rates were also impacted by the recognition of excess tax benefits from the exercise of employee stock-based compensation of $ 29.8 million, $ 92.5 million, and $ 46.1 million, for fiscal years ended July 31, 2021, 2020 and 2019, respectively.

NOTE 13 — Segments and Other Geographic Reporting

37 unchanged sentences

General and administrative 155,180 26,687 181,867

Impairment of long-lived assets — 1,131 1,131

Operating income $ 637,468 $ 79,007 $ 716,475

12 unchanged sentences

The effect of the outcome of any such matters on the Company’s future consolidated results of operations and cash flows cannot be predicted because any such effect depends on future results of operations and the amount and timing of the resolution of any such matters.

The Company believes that any ultimate liability would not have a material effect on its consolidated results of operations, financial position, or cash flows.

The Company believes that any ultimate liability regarding existing litigation and claims would not have a material effect on its consolidated results of operations, financial position, or cash flows.

However, the amount of the liabilities associated with claims, if any, cannot be determined with certainty.

11 unchanged sentences

The Company matches 20 % of employee contributions up to 15 % of employee salary deferral.

The Company recognized expenses of $ 1.9 million, $ 1.7 million, and $ 0.9 million, for the years ended July 31, 2020, 2019 and 2018, respectively, related to this plan.

The Company recognized expenses of $ 1.9 million, for the years ended July 31, 2021, and 2020 and $ 1.7 million, for the year ended July 31, 2019, related to this plan.

The Company also sponsors an additional defined contribution plan for its U.K.

3 unchanged sentences

The Company recognized expenses of $ 1.4 million, $ 1.2 million, and $ 0.9 million for the years ended July 31, 2021, 2020 and 2019, respectively, related to this plan.

NOTE 18 — Quarterly Financial Information (Unaudited) (1)

Fiscal Quarter

Fiscal Year 2020 (In thousands, except per share data) First Second Third Fourth

Total revenue $ 554,424 $ 575,140 $ 550,360 $ 525,659

Gross profit 254,869 259,889 242,613 250,431

Operating income 205,391 209,892 195,101 205,715

Income before income taxes 202,082 205,074 191,800 201,883

Net income attributable to Copart, Inc.

218,180 168,707 147,487 165,533

Basic net income per common share $ 0.94 $ 0.73 $ 0.63 $ 0.70

Diluted net income per common share $ 0.91 $ 0.71 $ 0.62 $ 0.69

Fiscal Quarter

Fiscal Year 2019 (In thousands, except per share data) First Second Third Fourth

Total revenue $ 461,368 $ 484,898 $ 553,116 $ 542,575

Gross profit 195,918 208,226 251,579 242,619

Operating income 151,440 164,739 207,494 192,802

Income before income taxes 148,786 164,966 204,129 187,070

Net income attributable to Copart, Inc.

114,083 131,373 192,741 153,496

Basic net income per common share $ 0.49 $ 0.57 $ 0.85 $ 0.67

Diluted net income per common share $ 0.47 $ 0.55 $ 0.81 $ 0.64

(1) Earnings per share were computed independently for each of the periods presented;

therefore, the sum of the earnings per share amounts for the quarters may not equal the total for the year.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures