What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-09-28 compared with 2022-09-27 · 110 added, 131 removed, 1086 unchanged (18% of the section changed)

2 unchanged sentences

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

This evaluation, or Controls Evaluation, was performed under the supervision and with the participation of management, including our Co-CEO and our Principal Financial Officer.

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

Disclosure Controls include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our Co-CEO and Principal Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

This evaluation, or Controls Evaluation, was performed under the supervision and with the participation of management, including our Co-CEO and our Chief Financial Officer (“CFO”).

Disclosure Controls are controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure Controls include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our Co-CEO and CFO, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Our Disclosure Controls include some, but not all, components of our internal control over financial reporting.

Based upon the Controls Evaluation, our Co-CEO and Principal Financial Officer 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 Co-CEO and Principal Financial Officer, to allow timely decisions regarding required disclosure, and that such information is recorded, processed, summarized and reported within the time periods specified by the SEC.

Based upon the Controls Evaluation, our Co-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 Co-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 SEC.

Management’s Report on Internal Control Over Financial Reporting

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In our opinion, Copart, Inc.

maintained, in all material respects, effective internal control over financial reporting as of July 31, 2022, based on the COSO criteria.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of July 31, 2023, 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 2023 consolidated financial statements of the Company, and our report dated September 28, 2023, expressed an unqualified opinion thereon.

19 unchanged sentences

Limitations on the Effectiveness of Controls

Our management, including our Co-CEO and Principal Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud.

Our management, including our Co-CEO and CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud.

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

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Other Information

Without limiting the generality of the foregoing, during the three months ended July 31, 2023, no director or officer of the Company adopted or terminated any “Rule 10b5-1 trading arrangement,” or any “non-Rule 10b-5 trading arrangement,” as such terms are defined in Item 408(a) of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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 2023 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.

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Number Description Form Date

3.1 Copart, Inc.

Certificate of Incorporation

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

3.1 Amended and Restated Certificate of Incorporation of Copart, Inc.

Current Report on Form 8-K (File No.

000-23255), Exhibit No.

2 December 22, 2016

3.3 Bylaws of Copart, Inc.

3.1 November 2, 2022

3.2 Amended and Restated Bylaws of Copart, Inc.

Current Report on Form 8-K (File No.

000-23255), Exhibit No.

3.1 September 16, 2021

3.1 March 31, 2022

4.1 Description of Capital Stock

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

Annual Report on Form 10-K (File No.

Current Report on Form 8-K (File No.

000-23255), Exhibit No.

10.17 October 1, 2012

10.1 May 26, 2023

10.8 * Copart, Inc.

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10.1 December 27, 2021

10.11 Executive Officer Employment Agreement, effective December 5, 2022, between the registrant and Leah Stearns

Quarterly Report on Form 10-Q (File No.

000-23255), Exhibit No.

10 February 24, 2023

Incorporated by reference herein

Number Description Form Date

10.12 * Outside Director Compensation Program

— Filed herewith

19.1 Insider Trading Policy

— Filed herewith

21.1 List of subsidiaries of Registrant

9 unchanged sentences

— Filed herewith

32.1 (1) Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.1 (1) Certification of Co-Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

— Filed herewith

32.2 (1) Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 (1) Certification of Co-Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

— Filed herewith

1 unchanged sentence

— Filed herewith

97.1 Compensation Recovery Policy

— Filed herewith

101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

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C OPART, I NC.

/s/ GAVIN RENFREW

Gavin Renfrew

Vice President of Global Accounting

/s/ LEAH STEARNS

Chief Financial Officer

(Principal Financial and Accounting Officer and duly Authorized Officer)

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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 Gavin Renfrew, 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 Jeffrey Liaw and Leah Stearns, 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.

2 unchanged sentences

/s/ JEFFREY LIAW Co-Chief Executive Officer (Principal Executive Officer) September 28, 2023

/s/ GAVIN RENFREW Vice President of Global Accounting (Principal Financial and Accounting Officer) September 27, 2022

Gavin Renfrew

/s/ LEAH STEARNS Chief Financial Officer (Principal Financial and Accounting Officer) September 28, 2023

/s/ WILLIS J.

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(the Company) as of July 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended July 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company at July 31, 2022 and 2021 and the results of its operations and its cash flows for each of the three years in the period ended July 31, 2022, in conformity with U.S.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at July 31, 2023 and 2022 and the results of its operations and its cash flows for each of the three years in the period ended July 31, 2023, in conformity with U.S.

generally accepted accounting principles.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Uncertain Tax Positions

Description of

the Matter As discussed in Note 13 to the consolidated financial statements, the Company has recorded a liability for unrecognized tax benefits resulting from uncertain tax positions, including accrued interest and penalties, of $64.6 million as of July 31, 2022.

The Company’s uncertain tax positions are subject to audit by federal, state and local taxing authorities, and the resolution of such audits may span multiple years.

The Company uses significant judgment to (1) determine whether, based on the technical merits, a tax position is more likely than not to be sustained and (2) measure the amount of tax benefit that qualifies for recognition.

Tax law is complex and often subject to varied interpretations.

Accordingly, the ultimate outcome with respect to taxes the Company may owe may differ from the amounts recognized.

Auditing management’s analysis and accounting for the Company’s uncertain tax positions involved significant auditor judgment and use of tax professionals with specialized skills and knowledge to evaluate the Company’s interpretation of, and compliance with, tax laws across its multiple subsidiaries located in multiple taxing jurisdictions.

Each tax position involves unique facts and circumstances that must be evaluated, and there may be many uncertainties around initial recognition and de-recognition of tax positions, including regulatory changes, litigation and examination activity.

In addition, a higher degree of auditor judgment was required in evaluating 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.

Addressed the

Matter in Our

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.

We involved our tax professionals to assess the technical merits of the Company’s tax positions.

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 13 in relation to these matters.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since fiscal year 2006.

We have served as the Company’s auditor since 2006.

Dallas, Texas

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Cash, cash equivalents, and restricted cash $ 957,395 $ 1,384,236

Investment in held to maturity securities

Accounts receivable, net 702,038 578,573

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Operating income 1,486,569 1,374,997 1,136,426

Other expense:

Interest expense, net ( 16,688 ) ( 20,247 ) ( 18,871 )

Other income (expense):

Interest income (expense), net 65,928 ( 16,688 ) ( 20,247 )

Loss on extinguishment of debt — ( 16,759 ) —

Other (expense) income, net ( 596 ) 5,667 3,611

Total other expense ( 34,043 ) ( 14,580 ) ( 15,260 )

Other income (expense), net 1,831 ( 596 ) 5,667

Total other income (expense) 67,759 ( 34,043 ) ( 14,580 )

Income before income taxes 1,554,328 1,340,954 1,121,846

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Depreciation and amortization, including debt cost 159,684 138,605 123,084

Allowance for credit loss 1,349 ( 1,121 ) 1,670

Equity in (earnings) losses of unconsolidated affiliates 284 ( 3,240 ) 1,401

Allowance for credit losses (gains) 1,946 1,349 ( 1,121 )

Equity in losses (earnings) of unconsolidated affiliates 5,347 284 ( 3,240 )

Stock-based compensation 39,673 38,965 40,922

1 unchanged sentence

Loss on extinguishment of debt — 16,759 —

Deferred income taxes 17,017 ( 7,951 ) 23,082

Deferred income taxes (benefits) 9,946 17,017 ( 7,951 )

Changes in operating assets and liabilities, net of effects from acquisitions:

8 unchanged sentences

Income taxes payable 21,866 49 9,045

Other liabilities — — 498

Net cash provided by operating activities 1,364,210 1,176,683 990,891

1 unchanged sentence

Purchases of property and equipment ( 516,636 ) ( 337,448 ) ( 462,996 )

Purchases of assets and liabilities in connection with acquisitions ( 106,604 ) ( 5,000 ) ( 11,702 )

Proceeds from sale of property and equipment 33,919 4,333 2,530

Investment in unconsolidated affiliate ( 2,591 ) — —

Purchase of held to maturity securities ( 374,866 ) — —

Purchases of assets and liabilities in connection with acquisitions — ( 106,604 ) ( 5,000 )

Investment in held to maturity securities ( 1,406,588 ) ( 374,866 ) —

Proceeds from the sale of held to maturity securities — 374,866 —

Investment in unconsolidated affiliate ( 2,744 ) ( 2,591 ) —

Net cash used in investing activities ( 1,892,049 ) ( 442,310 ) ( 465,466 )

3 unchanged sentences

Payments for employee stock-based tax withholdings ( 4,709 ) ( 1,925 ) ( 6,145 )

Issuance of principal on revolver facility 44,494 — —

Principal payments on revolver facility ( 33,924 ) — —

Debt offering costs — ( 1,212 ) —

1 unchanged sentence

Payments of finance lease obligations ( 23 ) ( 530 ) ( 1,118 )

Net cash (used in) provided by financing activities ( 382,693 ) 40,922 ( 27,414 )

Net cash provided by (used in) financing activities 66,615 ( 382,693 ) 40,922

Effect of foreign currency translation 34,383 ( 15,704 ) 4,195

Net increase in cash, cash equivalents, and restricted cash 335,976 570,542 291,399

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 426,841 ) 335,976 570,542

Cash, cash equivalents, and restricted cash at beginning of period 1,384,236 1,048,260 477,718

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Significant intercompany transactions and balances have been eliminated in consolidation.

Certain prior year amounts have been reclassified to conform to current year presentation.

On October 3, 2022, the Company’s Board of Directors approved a two -for-one common stock split effected in the form of a stock dividend subject to and contingent upon, among other things, obtaining stockholder approval of an amendment to the Company’s certificate of incorporation to increase the number of authorized shares of common stock.

On October 31, 2022, the Company’s stockholders approved such increase at a special meeting of stockholders.

As such, on November 3, 2022, the Company effected the two -for-one stock dividend to stockholders of record as of October 6, 2022.

On August 4, 2023, the Company’s Board of Directors approved a two -for-one common stock split effected in the form of a stock dividend entitling each stockholder of record to receive one additional share of common stock for every one share owned.

On August 21, 2023, the Company effected the two -for-one stock dividend to stockholders of record as of August 14, 2023.

Both stock dividend increased the number of shares of common stock outstanding and all share and per share amounts have been retroactively adjusted for the stock dividend, as of the date earliest presented in these financial statements to conform to current year presentation.

Use of Estimates

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The Company’s primary performance obligation is the auctioning of consigned vehicles through an online auction process.

Service revenue and vehicle sales revenue are recognized at the date the vehicles are sold at auction, excluding annual registration fees.

Service revenue and vehicle sales revenue are recognized at the date the vehicles are sold at auction, excluding annual

registration fees.

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.

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Cumulative loss on foreign currency translation as of July 31, 2021 $ ( 100,860 )

Gain on foreign currency translation 20,228

Cumulative loss on foreign currency translation as of July 31, 2021 $ ( 100,860 )

Loss on foreign currency translation ( 68,505 )

Cumulative loss on foreign currency translation as of July 31, 2022 $ ( 169,365 )

Gain on foreign currency translation 28,359

Cumulative loss on foreign currency translation as of July 31, 2023 $ ( 141,006 )

Fair Value of Financial Instruments

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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, and accrued liabilities approximated their fair values as of July 31, 2022 and 2021, 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.

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 approximated their fair values as of July 31, 2023 and 2022, due to the short-term nature of those instruments and are classified within Level II of the fair value hierarchy.

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

Held to maturity investments are classified within level I of the fair value hierarchy because they are valued at quoted prices for identical assets that are traded in active markets.

See Note 9 — Long-Term Debt and Note 10 – Fair Value Measurements.

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Advertising expenses were $ 17.8 million, $ 15.4 million, and $ 13.7 million for the years ended July 31, 2023, 2022, and 2021, respectively.

Other (Expense) Income

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

Other Income (Expense)

Other income (expense) consists primarily of interest income on Treasury bills on held to maturity securities, interest expense on long-term debt;

foreign exchange rate gains and losses;

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

Cash, Cash Equivalents, and Restricted Cash

Cash, Cash Equivalents, and Restricted Cash and Investments

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.

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The Company’s cash, cash equivalents, and restricted cash are placed with high credit quality financial institutions.

The Company has held to maturity securities comprised of U.S.

Treasury Bills.

These investments are classified as held to maturity as the Company has the intent and ability to hold these investments until they mature.

The held to maturity securities mature within the next 12 months.

The table below shows the amortized cost, associated gross unrealized gains and associated fair value of held to maturity securities (In thousands).

Amortized Cost Gross Unrealized Gains Fair Value

Investment in held to maturity securities $ 1,406,589 $ 8,314 $ 1,414,903

Inventories of purchased vehicles are stated at the lower of cost or estimated realizable value.

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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.

Recently Issued Accounting Pronouncements

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

ASU 2019-12 eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

It also clarifies and simplifies other aspects of the accounting for income taxes.

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

Note 2 — Acquisitions

Fiscal Year 2022 Transactions.

On July 5, 2022, the Company acquired 100 % of the voting stock of ILT Project Limited which conducts business primarily as Hills Motors (“Hills”), a leading parts recycler in the United Kingdom.

On July 5, 2022, the Company acquired 100 % of the voting stock of ILT Project Limited which conducts business primarily as Hills Motors Co.

the Green Parts Specialists (“Hills”), which is a leading parts recycler in the U.K.

Hills predominantly sells recycled parts to the public.

The purchase price paid for Hills was $ 106.6 million.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed for Hills (in thousands).

Accounts receivable and prepaid expenses 5,348

Inventory 4,913

Property and equipment 22,259

Intangible assets 15,931

Goodwill 56,051

Liabilities assumed ( 6,858 )

Fair value of net assets and liabilities acquired $ 106,604

The Hills acquisition was undertaken for the strategic fit to the Company.

This acquisition has been accounted for using the purchase method in accordance with ASC 805, Business Combinations, which resulted in the recognition of goodwill in the Company’s consolidated financial statements.

Goodwill arose because the purchase price reflected a number of factors, including future earnings and cash flow potential;

the comparable multiples of earnings, cash flow and other factors at which similar businesses have been purchased by other acquirers;

and the complementary strategic fit and resulting synergies brought to existing operations.

Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and is not amortized for financial reporting purposes.

The acquisition of Hills is currently undergoing review by the U.K.

Competition and Markets Authority.

Given the timing of the acquisition the Company has not completed its determination of the fair value of assets acquired and liabilities assumed and the amount shown in the table above are preliminary amounts.

The estimates and assumptions used in the preliminary purchase price allocation are subject to change if additional information, which existed as of the acquisition date, becomes known to the Company.

However, the Company believes any potential changes to the preliminary purchase price allocation will not have a material impact to the Company’s consolidated financial position and results of operations.

The Company obtained a third party independent valuation to assist in the determination of the fair value of the land and buildings acquired.

The valuation utilized the fair value, market value, and market rent to determine the fair value of the land and buildings acquired.

The Company performed a valuation of the customer relationships using the income approach to estimate the fair value.

The valuation of these assets was performed using Level III inputs, as the calculated fair values are based on valuation models that utilize unobservable inputs that are significant to the overall fair value measurement.

The unobservable inputs reflect the Company’s best estimate of what a market participant would use to determine the value of acquired assets based on the best information available in the circumstances.

Intangible assets acquired include customer and supplier relationships, with a useful life of three years .

See Note - 7 — Intangibles, Net.

The Hills acquisition did not result in a significant change in the Company’s consolidated results of operations;

therefore, pro forma financial information has not been presented.

The operating results have been included in the Company’s consolidated financial position and results of operations since the acquisition date.

The purchase price paid for Hills was $ 106.6 million paid with cash on hand.

On July 14, 2023 the U.K.

Competition and Markets Authority approved the merger of Copart and Hills.

With the approval of the merger the Company finalized the allocation of the fair value for acquired assets and liabilities.

The resulting impact to the balance sheet and income statement were immaterial.

NOTE 3 — Accounts Receivable, Net

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Beginning balance $ 401,954 $ 355,717

Acquisitions during the period 56,051 7,882

Adjustments related to business combinations ( 14,249 ) 56,051

Effect of foreign currency exchange rates 6,584 ( 9,814 )

2 unchanged sentences

The Company’s annual goodwill impairment analysis, which was performed qualitatively during the fourth quarter of fiscal 2023 and 2022, did not result in an impairment charge.

This qualitative analysis, which is referred to as step zero under ASC 350, considered all relevant factors specific to the reporting units, including macroeconomic conditions;

This qualitative analysis, considered all relevant factors specific to the reporting units, including macroeconomic conditions;

industry and market considerations;

overall financial performance;

the impact of the COVID-19 pandemic;

and relevant entity-specific events.

NOTE 7 — Intangibles, Net

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

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

Amount Accumulated

9 unchanged sentences

Licenses and databases 682 633 ( 682 ) ( 560 ) — 73 0 1

Indefinite-lived intangibles:

7,443 — — — 7,443 — 0 0

Total Intangibles $ 112,043 $ 91,404 $ ( 49,341 ) $ ( 36,724 ) $ 62,702 $ 54,680

2 unchanged sentences

2024 $ ( 12,461 )

2025 ( 10,707 )

2026 ( 10,707 )

2027 ( 10,550 )

2028 ( 9,554 )

Thereafter ( 1,280 )

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The Company is required to file VAT returns on at least a quarterly basis with the various international taxing authorities and are entitled to claim the VAT charged by the Company's vendors as VAT credit and these credits can be applied to the Company's VAT payables billed to the buyers.

Accordingly, these VAT payables and receivables are presented as net amounts for financial statement purposes.

Accordingly, these VAT payables and receivables are presented as net amounts for financial statement purposes and are shown in the taxes payable line in the table above.

The Company is partially self-insured for certain losses related to general liability, workers’ compensation and auto liability.

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Dollars is SOFR plus certain “spread adjustments” described in the Second Amended and Restated Credit Agreement, (2) Pounds Sterling is SONIA plus certain “spread adjustments” described in the Second Amended and Restated Credit Agreement, (3) Euro is EURIBOR, and (4) Canadian Dollars is CDOR.

The Company had no outstanding borrowings under the Revolving Loan Facility as of as of July 31, 2022 or 2021.

The Company had $ 11.0 million and $ 0.0 million outstanding borrowings under the Revolving Loan Facility as of July 31, 2023 and July 31, 2022, respectively.

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

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Related to the execution of the second Amended and Restated Credit Agreement, the Company incurred $ 2.7 million in costs, which was capitalized as debt issuance fees.

The debt discount is amortized to interest expense over the term of the respective debt instruments and are classified as reductions of the outstanding liability.

The debt discount is amortized to interest expense over the term of the respective debt instruments and is included in other assets on the balance sheet as no amounts are outstanding on the Revolving Loan Facility.

Note Purchase Agreement

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The Company used proceeds from the Note Purchase Agreement for general corporate purposes.

Subsequently on May 24, 2022, the Company retired 100 % of the Senior Notes .

On May 24, 2022, the Company retired 100 % of the Senior Notes .

The Company paid $ 420.6 million to retire the Senior Notes which included an additional $ 16.8 million make-whole payment to the holders of the Senior Notes, and $ 3.8 million in accrued interest.

4 unchanged sentences

Cash equivalents $ 674,980 $ 677,515 $ 1,236,990 $ 1,237,337

Investment in held to maturity securities 1,406,589 1,414,903 $ — $ —

Total Assets 2,081,569 2,092,418 1,236,990 1,237,337

Long-term fixed rate debt, including current portion $ — $ — $ 399,733 $ 432,027

Long-term debt, including current portion $ 11,006 $ 11,006 $ — $ —

Total Liabilities 11,006 11,006 — $ —

During the year ended July 31, 2023, no transfers were made between any levels within the fair value hierarchy.

The fair value of the Senior Notes is based on the discounted value of each interest and principal payment calculated utilizing market interest rates of similar types of borrowing arrangements and was classified within Level II of the fair value hierarchy.

See Note 1 — Summary of Significant Accounting Policies and Note 9 — Long-Term Debt .

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NOTE 12 — Stockholders’ Equity

The Company has authorized the issuance of 400 million shares of common stock, with a par value of $ 0.0001 , of which 238,040,974 shares were issued and outstanding at July 31, 2022.

The Company has authorized the issuance of 1.6 billion shares of common stock, with a par value of $ 0.0001 , of which 957,344,162 shares were issued and outstanding at July 31, 2023.

As of July 31, 2023 and 2022, the Company had reserved 52,648,002 and 57,512,480 shares of common stock, respectively, for the issuance of options, restricted stock or restricted stock units granted under the Company’s stock option plans and 3,953,154 and 4,401,832 shares of common stock, respectively, for the issuance of shares under the Copart, Inc.

2 unchanged sentences

Stock Repurchases

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

On September 22, 2011, the Company’s Board of Directors approved a 320 million share increase in the stock repurchase program, bringing the total current authorization to 784 million shares.

The repurchases may be effected through solicited or unsolicited transactions in the open market or in privately negotiated transactions.

2 unchanged sentences

For fiscal 2023, 2022 and 2021, the Company did not repurchase any shares of its common stock under the program.

As of July 31, 2022, the total number of shares repurchased under the program was 114,549,198 , and 81,450,802 shares were available for repurchase under the program.

In fiscal 2020, the Company’s Chief Executive Officer (now Co-CEO) exercised all of his vested stock options through a cashless exercise.

As of July 31, 2023, the total number of shares repurchased under the program was 458,196,792 , and subject to applicable limitations under Delaware law, 325,803,208 shares were available for repurchase under the program.

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

In fiscal 2022, no employee exercised stock options through a cashless exercise.

In fiscal 2022 and 2023, no employee exercised stock options through a cashless exercise.

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

4 unchanged sentences

FY 2021—Q4 360,000 4.43 49,464 117,396 193,140 32.25 3,786

FY 2021—Q4 90,000 17.73 12,366 29,349 48,285 129.01 3,786

FY 2022 — — — — — — —

FY 2023 — — — — — — —

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

73 unchanged sentences

Outstanding as of July 31, 2022

5,620 $ 23.91 8.33 $ 45,590

Grants of options 300 32.85

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Outstanding as of July 31, 2023

5,920 $ 24.37 7.43 $ 117,389

Exercisable as of July 31, 2023

2,941 $ 22.65 7.11 $ 63,356

Vested and expected to vest as of July 31, 2023

5,901 $ 24.36 7.43 $ 117,059

The aggregate intrinsic value in the tables above represents the total pretax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of the year ended July 31, 2023 and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their options on July 31, 2023.

66 unchanged sentences

Accrued compensation and benefits 17,008 16,965

State taxes — —

Operating lease liabilities 22,891 24,379

26 unchanged sentences

federal statutory tax rate for fiscal years 2023, 2022, and 2021 was 21.0 %.

The effective tax rate for the fiscal year ending July 31, 2022 was unfavorably impacted by $ 8.2 million of discrete tax adjustments made in connection with finalizing the Company’s fiscal year 2021 tax return, favorably impacted by $ 17.0 million of discrete tax items related to amending previously filed income tax returns, and favorably impacted by a $ 37.2 million FDII deduction in the current year.

The effective tax rate for the fiscal year ending July 31, 2023 was favorably impacted by $ 1.5 million of discrete tax adjustments made in connection with finalizing the Company’s fiscal year 2022 tax return, and favorably impacted by a $ 42.6 million FDII deduction in the current year.

The effective tax rate for the 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 the 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 rates were also impacted by the recognition of excess tax benefits from the exercise of employee stock-based compensation of $ 21.0 million, $ 14.4 million, and $ 29.8 million, for fiscal years ended July 31, 2023, 2022, and 2021, respectively.

The Company invested in renewable energy which is expected to generate investment tax credits of approximately $ 10 million the Company can utilize to reduce its tax liability on its fiscal year 2022 tax return.

The Company’s ability to realize deferred tax assets is dependent on its ability to generate future taxable income.

2 unchanged sentences

During fiscal year 2023, the Company recorded a $ 11.1 million increase in valuation allowances primarily due to additional operating losses generated in foreign jurisdictions unlikely to be realized.

As of July 31, 2022 and 2021, the Company had foreign operating losses of $ 29.9 million and $ 24.4 million, respectively.

As of July 31, 2023 and 2022, the Company had foreign operating losses of $ 41.6 million and $ 29.9 million (tax effected), respectively.

The foreign operating losses, subject to certain limitations, usually can be carried forward indefinitely.

91 unchanged sentences

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

The Company recognized expenses of $ 1.9 million, for the years ended July 31, 2022, and $ 1.9 million, for the year ended July 31, 2021and 2020, related to this plan.

The Company recognized expenses of $ 2.2 million, for the year ended July 31, 2023, and $ 1.9 million for each of the years ended July 31, 2022 and 2021, related to this plan.

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

2 unchanged sentences

The Company matches up to 5 % of employee contributions.

The Company recognized expenses of $ 1.4 million, $ 1.4 million, and $ 1.2 million for the years ended July 31, 2022, 2021 and 2020, respectively, related to this plan.

The Company recognized expenses of $ 1.6 million, for the year ended July 31, 2023, and $ 1.4 million for each of the years ended July 31, 2022 and 2021, related to this plan.

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