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Item 9A. Controls and Procedures

2024-09-30 compared with 2023-09-28 · 204 added, 180 removed, 1016 unchanged (27% of the section changed)

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Evaluation of Disclosure Controls and Procedures

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 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 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.

We conducted an evaluation of the effectiveness of our “disclosure controls and procedures” (“Disclosure Controls”), as defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of July 31, 2024, the end of the period covered by this Annual Report on Form 10-K.

The Disclosure Controls evaluation was done under the supervision and with the participation of management, including our CEO and CFO.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures.

Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Based upon this evaluations, our CEO and CFO have concluded that, our Disclosure Controls were effective at the reasonable assurance level as of July 31, 2024.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles.

Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements.

We have investments in unconsolidated affiliates.

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

Management assessed our internal control over financial reporting as of July 31, 2023.

Management based its assessment on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Management’s assessment included evaluation of such elements as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment.

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

The certifications of our principal executive officer and principal financial officer attached as Exhibits 31.1, 31.2 and 31.3 to this Annual Report on Form 10-K include, in paragraph 4 of such certifications, information concerning our disclosure controls and procedures and internal controls over financial reporting.

We reviewed the results of management’s assessment with the Audit Committee of our Board of Directors.

Our independent registered public accounting firm, Ernst & Young LLP, independently assessed the effectiveness of our internal control over financial reporting as of July 31, 2023.

Ernst & Young LLP has issued an attestation report which appears on the following page of this Annual Report on Form 10-K.

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external reporting purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with policies or procedures may deteriorate over time.

Management, including our CEO and CFO, assessed the effectiveness of the Company’s internal control over financial reporting as of July 31, 2024.

In making this assessment, management used criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013).

Based on its assessment and those criteria, management has concluded that the Company maintained effective internal control over financial reporting as of July 31, 2024.

Ernst & Young LLP, the independent registered public accounting firm that audited our Consolidated Financial Statements included in this Annual Report on Form 10-K, has issued an attestation report on our internal control over financial reporting, which is included herein.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended July 31, 2024 that materially affected, or are reasonably like to materially affect, our internal control over financial reporting.

Report of Independent Registered Public Accounting Firm

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September 27, 2024

Limitations on the Effectiveness of Controls

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.

Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Copart have been detected.

These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake.

Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.

The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures.

Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting during the most recent fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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.

During the three months ended July 31, 2024, no director or officer of the Company adopted or terminated any “Rule 10b5-1 trading arrangement,” or any “non-Rule 10b5-1 trading arrangement,” as such terms are defined in Item 408(a) of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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 2024 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.

Directors, Executive Officers and Corporate Governance

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

Delinquent Section 16(a) Reports

There were no delinquent Section 16(a) Reports during fiscal 2023.

During fiscal year 2024 we had a delinquent Section 16(a) Report due to an administrative oversight related to certain gift transfers by Mr.

Adair on January 3, 2024, which were reported on April 1, 2024.

There are no other delinquent Section 16(a) Reports during fiscal 2024.

Code of Ethics

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

Insider Trading Arrangements and Policies

We have adopted insider trading policies and procedures governing the purchase, sale, and/or other dispositions of the Company’s securities by directors, officers and employees, or the Company itself, that are reasonably designed to promote compliance with insider trading laws, rules and regulations, and any listing standards applicable to the Company.

A copy of the Company’s insider trading policy has been filed as Exhibit 19.1 to this Annual Report on Form 10-K.

Executive Compensation

The information required by this item is incorporated herein by reference from the Proxy Statement (to be filed with the Securities and Exchange Commission within 120 days of our July 31, 2023 fiscal year end) under the heading “Executive Compensation,” “Compensation of Directors,” and “Corporate Governance and Board of Directors.”

The information required by this item is incorporated herein by reference from the Proxy Statement under the headings “Executive Compensation Tables,” “Compensation of Directors and Chairman of the Board,” and “Corporate Governance and Board of Directors.”

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item is incorporated herein by reference from the Proxy Statement (to be filed with the Securities and Exchange Commission within 120 days of our July 31, 2023 fiscal year end) under the headings “Security Ownership” and “Executive Compensation,” subheading “Equity Compensation Plan Information.”

The information required by this item is incorporated herein by reference from the Proxy Statement under the headings “Security Ownership” and “Executive Compensation Tables,” subheading “Equity Compensation Plan Information.”

Certain Relationships and Related Transactions, and Director Independence

The information required by this item is incorporated herein by reference from the Proxy Statement (to be filed with the Securities and Exchange Commission within 120 days of our July 31, 2023 fiscal year end) under the heading “Related Person Transactions and Section 16(a) Beneficial Ownership Compliance,” “Corporate Governance and Board of Directors,” and under the proposal captioned “Election of Directors.”

The information required by this item is incorporated herein by reference from the Proxy Statement under the headings “Related Person Transactions,” “Corporate Governance and Board of Directors,” and under the proposal captioned “Election of Directors.”

Principal Accounting Fees and Services

The information required by this item is incorporated herein by reference from the proposal captioned “Ratification of Appointment of Independent Registered Public Accounting Firm” in the Proxy Statement (to be filed with the Securities and Exchange Commission within 120 days of our July 31, 2023 fiscal year end).

Exhibits, Financial Statement Schedules

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Exhibits are filed as part of this Report and are hereby incorporated by reference.

Refer to Exhibit Index included herein.

Exhibits required to be filed by this Item 15 are set forth in the Exhibit Index accompanying this Annual Report on Form 10-K.

Form 10-K Summary

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— Filed herewith

10.13 Corporate Aircraft Personal Use Policy

Current Report on Form 8-K (File No.

000-23255), Exhibit 10.1 March 12, 2024

19.1 Insider Trading Policy

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— Filed herewith

31.2 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

— Filed herewith

31.3 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

— Filed herewith

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

31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

— Filed herewith

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

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

— Filed herewith

32.3 (1) Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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

— Filed herewith

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C OPART, I NC.

Co-Chief Executive Officer

(Principal Executive Officer), Director

September 28, 2023

C OPART, I NC.

/s/ JEFFREY LIAW

Co-Chief Executive Officer

Chief Executive Officer

(Principal Executive Officer)

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POWER OF ATTORNEY

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

Jayson Adair, and Jeffrey Liaw and 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.

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

Signature Capacity in Which Signed Date

JAYSON ADAIR Co-Chief Executive Officer (Principal Executive Officer), Director September 28, 2023

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

/s/ JEFFREY LIAW Chief Executive Officer (Principal Executive Officer) September 27, 2024

/s/ LEAH STEARNS Chief Financial Officer (Principal Financial and Accounting Officer) September 27, 2024

JAYSON ADAIR Executive Chairman September 27, 2024

/s/ WILLIS J.

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Consolidated Statements of Comprehensive Income for the years ended July 31, 2024, 2023 and 2022

Consolidated Statements of Stockholders' Equity for the years ended July 31, 2023, 2022 and 2021

Consolidated Statements of Changes in Redeemable Noncontrolling Interest and Stockholders' Equity for the years ended July 31, 2024, 2023 and 2022

Consolidated Statements of Cash Flows for the years ended July 31, 2024, 2023 and 2022

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We have audited the accompanying consolidated balance sheets of Copart, Inc.

(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”).

(the Company) as of July 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in redeemable noncontrolling interest and stockholders’ equity, and cash flows for each of the three years in the period ended July 31, 2024, 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 financial position of the Company at July 31, 2024 and 2023 and the results of its operations and its cash flows for each of the three years in the period ended July 31, 2024, in conformity with U.S.

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Investment in held to maturity securities

1,908,047 1,406,589

Accounts receivable, net 785,877 702,038

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Total assets $ 8,427,764 $ 6,737,879

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

Current liabilities:

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Commitments and contingencies

Redeemable non-controlling interest 24,544 —

Stockholders’ equity:

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Total stockholders’ equity 7,524,011 5,987,440

Total liabilities and stockholders’ equity $ 6,737,879 $ 5,308,864

Total liabilities, redeemable noncontrolling interests and stockholders’ equity $ 8,427,764 $ 6,737,879

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

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Other income (expense), net ( 3,095 ) 1,831 ( 596 )

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

Total other income 142,578 67,759 ( 34,043 )

Income before income taxes 1,714,601 1,554,328 1,340,954

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Net income 1,362,347 1,237,741 1,090,130

Net income (loss) attributable to redeemable

noncontrolling interest ( 673 ) — —

Net income attributable to Copart, Inc.

$ 1,363,020 $ 1,237,741 $ 1,090,130

Basic net income per common share $ 1.42 $ 1.30 $ 1.15

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Comprehensive income $ 1,360,381 $ 1,266,100 $ 1,021,625

Comprehensive income/(loss) attributable to

redeemable noncontrolling interest $ ( 673 ) $ — $ —

Comprehensive income attributable to Copart, Inc.

$ 1,361,054 $ 1,266,100 $ 1,021,625

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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENT OF CHANGES IN REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

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Shares Amount Retained

Earnings Stockholders’

Earnings Total Stockholders’

Equity Redeemable Noncontrolling Interest

Balances at July 31, 2021 948,057,092 $ 96 $ 761,762 $ ( 100,860 ) $ 2,868,203 $ 3,529,201 $ —

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Currency translation adjustment — — — ( 1,966 ) — ( 1,966 ) —

Acquisition of controlling interest 2,499,993 — 112,075 — — 112,075 25,217

Exercise of stock options, net of repurchased shares 2,560,852 — 24,260 — ( 6,558 ) 17,702 —

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Depreciation and amortization, including debt cost 190,256 159,684 138,605

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

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

Allowance for credit losses 3,914 1,946 1,349

Gain on extinguishment of liabilities ( 4,058 ) — —

Equity in losses of unconsolidated affiliates 2,241 5,347 284

Stock-based compensation 35,234 39,673 38,965

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Loss on extinguishment of debt — — 16,759

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

Deferred income (benefits) taxes ( 847 ) 9,946 17,017

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

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Purchases of property and equipment ( 510,990 ) ( 516,636 ) ( 337,448 )

Assets and liabilities acquired in connection with acquisition 17,662 — ( 106,604 )

Proceeds from sale of property and equipment 4,166 33,919 4,333

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

Investment in held to maturity securities ( 4,087,162 ) ( 1,406,588 ) ( 374,866 )

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Basis of Presentation and Description of Business

was incorporated under the laws of the State of California in 1982.

In January 2012, the Company changed the state in which it is incorporated (the “Reincorporation”) and is now incorporated under the laws of the State of Delaware.

All references to “we,” “us,” “our,” or “the Company” herein refer to the California corporation prior to the date of the Reincorporation, and to the Delaware corporation on and after the date of the Reincorporation.

(“the 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.

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

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

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

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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.

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

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

generally accepted accounting principles (“GAAP”) requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.

Estimates include, but are not limited to, vehicle pooling costs;

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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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Service Revenues

The Company’s service revenue consists of auction and auction related sales transaction fees charged for vehicle remarketing services.

The Company’s service revenues consist of auction and auction-related sales transaction fees charged for vehicle remarketing services.

Within this revenue category, the Company’s primary performance obligation is the auctioning of consigned vehicles through an online auction process.

These auction and auction related services may include a combination of vehicle purchasing fees, vehicle listing fees, and vehicle selling fees that can be based on a predetermined percentage of the vehicle sales price, tiered vehicle sales price driven fees, or at a fixed fee based on the sale of each vehicle regardless of the selling price of the vehicle;

transportation fees for the cost of transporting the vehicle to or from the Company’s facility;

title processing and preparation fees;

vehicle storage fees;

bidding fees;

and vehicle loading fees.

These auction and auction-related services may include a combination of (i) vehicle purchasing fees, vehicle listing fees, and vehicle selling fees that can be based on a predetermined percentage of the vehicle sales price, tiered vehicle sales price driven fees, or at a fixed fee based on the sale of each vehicle regardless of the selling price of the vehicle;

(ii) transportation fees for the cost of transporting the vehicle to or from the Company’s facility;

(iii) title processing and preparation fees;

(iv) vehicle storage fees;

(v) bidding fees;

and (vi) vehicle loading fees.

These services are not distinct within the context of the contract.

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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 expected credit losses 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, except for separately identified vehicles subject to an arbitration policy, although the Company provides for expected credit losses in the case of non-performance by its buyers or sellers.

Year Ended July 31,

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The Company defers costs that relate directly to the fulfillment of its contracts associated with vehicles consigned to and received by the Company, but not sold as of the end of the period.

The Company quantifies the deferred costs using a calculation that includes the number of vehicles at its facilities at the beginning and end of the period, the number of vehicles sold during the period, and an allocation of certain yard operation costs of the period.

The primary expenses allocated and deferred are inbound transportation costs, titling fees, certain facility costs, labor, and vehicle processing.

The primary expenses allocated and deferred are inbound transportation costs, titling fees, certain facility costs, labor, and vehicle processing costs.

If the allocation factors change, then yard operation expenses could increase or decrease correspondingly in the future.

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dollar reporting currency.

The British pound, Canadian dollar, Brazilian real, European Union euro, U.A.E.

The Pounds Sterling, Canadian dollar, Brazilian real, European Union euro, U.A.E.

dirham, Omani rial, and Bahraini dinar are the functional currencies of the Company’s foreign subsidiaries as they are the primary currencies within the economic environment in which each subsidiary operates.

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

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 )

Loss on foreign currency translation ( 1,966 )

Cumulative loss on foreign currency translation as of July 31, 2024 $ ( 142,972 )

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, 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.

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, 2024 and 2023, 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.

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.

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General and Administrative Expenses

General and administrative expenses consist primarily of executive management;

data processing;

sales personnel;

professional services;

marketing expenses;

and system maintenance and enhancements.

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

All advertising costs are expensed as incurred and are included in yard operations expenses for costs directly related to the auction process and the remainder in general and administrative expenses on the consolidated statements of income.

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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;

Other income (expense) consists primarily of interest income on U.S.

Treasury Bills on held to maturity securities, 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.

and earnings from unconsolidated entities.

Income Taxes and Deferred Tax Assets

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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.

In the ordinary course of 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 judgment may be 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.

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Basic net income per share amounts were computed by dividing consolidated net income by the weighted average number of common shares outstanding during the period.

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

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, restricted stock, restricted stock units, and performance stock units outstanding during the period using the treasury stock method.

Redeemable Noncontrolling Interest

Redeemable noncontrolling interests represent a 20 % noncontrolling ownership in Purple Wave, a consolidated subsidiary of the Company.

Redeemable noncontrolling interests are presented outside of permanent equity on the consolidated balance sheets as they are redeemable by the holders of the noncontrolling interest and the redemption is outside the control of the Company.

The redeemable noncontrolling interests were initially recorded at their issuance date fair value of $ 25.2 million.

We record the carrying amount of the redeemable noncontrolling interests at the greater of (i) the initial carrying amount, increased or decreased for the noncontrolling interest’s share of net income or loss and its share of other comprehensive income or loss, and dividends or (ii) the redemption value.

For interests that are redeemable in the future, we recognize changes in the redemption value immediately as they occur.

Cash, Cash Equivalents, and Restricted Cash and Investments

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

(In thousands) July 31, 2024

Amortized Cost Gross Unrealized Gains Fair Value

Investment in held to maturity securities $ 1,908,047 $ 18,298 $ 1,926,345

(In thousands) July 31, 2023

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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Past-due account balances are written off when the Company’s internal collection efforts have been unsuccessful in collecting the amounts due.

The Company does not have off-balance sheet credit exposure related to its customers and to date.

The Company has not experienced significant credit-related losses.

The Company does not have off-balance sheet credit exposure related to its customers, and to date, the Company has not experienced significant credit-related losses.

No single customer accounted for more than 10% of the Company’s consolidated revenues for the years ended July 31, 2024, 2023, and 2022.

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The Company accounts for stock-based awards to employees and non-employees using the fair value method as required by ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees, consultants and directors based on estimated fair value.

ASC 718 requires companies to estimate the fair value of stock-based based awards on the measurement date.

ASC 718 requires companies to estimate the fair value of stock-based awards on the measurement date.

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

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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 March 2023, the Financial Accounting Standards Board (the “FASB”) issued ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323) (“ASU 2023-02”), which allows the option for reporting entities to elect to account for their tax equity investments, using the proportional amortization method if certain conditions are met.

The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption is permitted.

The Company’s adoption of ASU 2023-02 is not expected to have a material impact on the Company’s consolidated results of operations and financial position.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07’), which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

Management is currently evaluating ASU 2023-07 to determine its impact on the Company's disclosures.

On December 2023, the FASB issued ASU 2023-09, Income Taxes (Topics 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”) to expand the disclosure requirements for income taxes, primarily related to the rate reconciliation and income taxes paid.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted.

Management is currently evaluating ASU 2023-09 to determine its impact on the Company's disclosures.

Note 2 — Acquisitions

Fiscal Year 2024 Transactions

On October 6, 2023, the Company acquired an 80 % controlling ownership in Purple Wave, an online offsite heavy equipment auction company.

The Company acquired the controlling ownership by issuing 2.5 million shares of the Company’s common stock which was equal to the $ 108.0 million acquisition price divided by the 10-day volume average weighted price of the Company’s common stock prior to closing.

GAAP, the fair value of the merger consideration paid for Purple Wave was $ 112.1 million and was determined on the basis of the closing price of the Company’s common stock on October 6, 2023.

Substantially all of the merger consideration has preliminarily been allocated to intangible assets, including goodwill.

The fair value of the 20 % redeemable noncontrolling interest in Purple Wave was $ 25.2 million, and was estimated by applying the transaction method.

Refer to Note 1 — Summary of Significant Accounting Policies for more details regarding the redeemable noncontrolling interests.

Acquisition costs reflected in the general administrative line on the income statement were $ 1.2 million.

The Company has finalized the allocation of fair value for acquired assets and liabilities.

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

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 Co.

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Advance charges receivable represents amounts paid to third parties on behalf of insurance companies for which the Company will be reimbursed when the vehicle is sold.

As advance charges are recovered within one year, the Company has not adjusted the amount of consideration received from the customer for a significant financing component.

Advance charges are recovered within one year.

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

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Certain of the Company’s leases have renewal periods up to 40 years, exercisable at the Company’s option, and generally require the Company to pay property taxes, insurance and maintenance costs, in addition to the lease payments.

At lease inception, the Company includes all renewals or option periods that are reasonably certain to exercise when determining the expected lease term, as failure to renew the lease would impose an economic penalty.

At lease inception, the Company includes all renewals or option periods that are reasonably certain to be exercised when determining the expected lease term, as failure to renew the lease would impose an economic penalty.

Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the expected lease term.

To determine the present value of lease payments not yet paid, the Company estimates incremental borrowing rates based on the information available at lease commencement date, as rates are not implicitly stated in the Company’s leases.

To determine the present value of lease payments not yet paid, the Company estimates incremental borrowing rates based on the information available at the lease commencement date, as rates are not implicitly stated in the Company’s leases.

Components of lease expense were as follows:

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Total lease expense $ 31,966 $ 32,402

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

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

Lease Asset and Liabilities Balance Sheet Classification (In thousands) July 31, 2024 July 31, 2023

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Operating leases 8.57 3.95 %

Finance leases 0.62 2.82 %

(1) The Company cannot determine the interest rate implicit in the Company’s leases.

Therefore, the discount rate represents the Company’s incremental borrowing rate and is determined based on the risk-free rate, adjusted for the risk premium attributed to the Company’s corporate credit rating for a secured or collateralized instrument.

Therefore, the discount rate represents the Company’s incremental borrowing rate and is determined based on the risk-free rate, adjusted for the risk premium attributed to the Company’s imputed corporate credit rating for a secured or collateralized instrument.

Supplemental cash flow information related to leases as of July 31, 2024 were as follows (In thousands):

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The annual maturities of the Company’s lease liabilities as of July 31, 2024 were as follows:

Fiscal year (In thousands) Finance leases Operating leases

2024 $ 13 $ 24,034

2025 — 20,746

2026 — 16,795

2027 — 12,488

Fiscal Year (In thousands) Operating Leases

2025 $ 24,745

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The accumulated depreciation associated with the leased assets was $ 4.6 million and $ 3.8 million as of July 31, 2024 and 2023, respectively.

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

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

Rental income from these operating leases was $ 17.6 million and $ 18.8 million for the years ended July 31, 2024 and 2023, respectively, and is included within service revenues on the consolidated statements of income.

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The Company records VAT that the Company has billed to the buyers as VAT payable.

In addition, the Company is required to pay VAT on our purchases.

In addition, the Company is required to pay VAT on its purchases.

The Company records VAT that is charged by its vendors as VAT receivable.

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.

The Company is required to file VAT returns on at least a quarterly basis with the various international taxing authorities and is 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 and are shown in the taxes payable line in the table above.

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Credit Agreement

On December 21, 2021, the Company entered into a Second Amended and Restated Credit Agreement by and among Copart, certain subsidiaries of Copart party thereto, the lenders party thereto, and Bank of America, N.A., as administrative agent (the “Second Amended and Restated Credit Agreement”).

The Second Amended and Restated Credit Agreement amends and restates certain terms of the First Amended and Restated Credit Agreement, dated as of July 21, 2020, by and among Copart, the lenders party thereto, and Bank of America, N.A., as administrative agent (as successor in interest to Wells Fargo Bank, National Association) (the “Existing Credit Agreement”).

The Second 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 Second Amended and Restated Credit Agreement (the “Revolving Loan Facility”) to $ 1,250.0 million, (b) an increase in the letter of credit sublimit from $ 60.0 million to $ 100.0 million, (c) addition of Copart UK Limited, CPRT GmbH and Copart Autos España, S.L.U., each a wholly-owned direct or indirect foreign subsidiary of Copart, as borrowers, (d) addition of the ability to borrow under the Second and Amended and Restated Credit Agreement in certain foreign currencies including Pounds Sterling, Euro and Canadian Dollars, (e) extension of the maturity date of the revolving credit facility under the Existing Credit Agreement from July 21, 2023 to December 21, 2026, (f) replacing the LIBOR interest rate applicable to U.S.

On December 21, 2021, the Company entered into a Second Amended and Restated Credit Agreement by and among the Company, certain subsidiaries of the Company party thereto, the lenders party thereto, and Bank of America, N.A., as administrative agent (the “Second Amended and Restated Credit Agreement”).

The Second Amended and Restated Credit Agreement amends and restates certain terms of the First Amended and Restated Credit Agreement, dated as of July 21, 2020, by and among the Company, the lenders party thereto, and Bank of America, N.A., as administrative agent (as successor in interest to Wells Fargo Bank, National Association) (the “Existing Credit Agreement”).

The Second 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 Second Amended and Restated Credit Agreement (the “Revolving Loan Facility”) to $ 1,250.0 million, (b) an increase in the letter of credit sublimit from $ 60.0 million to $ 100.0 million, (c) addition of Copart UK Limited, CPRT GmbH and Copart Autos España, S.L.U., each a wholly-owned direct or indirect foreign subsidiary of the Company, as borrowers, (d) addition of the ability to borrow under the Second and Amended and Restated Credit Agreement in certain foreign currencies including Pounds Sterling, Euro and Canadian Dollars, (e) extension of the maturity date of the revolving credit facility under the Existing Credit Agreement from July 21, 2023 to December 21, 2026, (f) replacing the LIBOR interest rate applicable to U.S.

Dollar denominated borrowings with a SOFR-based interest rate, and (g) changing the pricing levels with respect to the revolving loans as further described below.

The Second and Amended and Restated Credit Agreement provides for the Revolving Loan Facility of $ 1,250.0 million maturing on December 21, 2026 (including up to $ 550.0 million equivalent of borrowings in Pounds Sterling, Euro and Canadian Dollars) with a $ 150.0 million equivalent sub-facility available to CPRT GmbH, a $ 150.0 million equivalent sub-facility available to Copart Autos España, S.L.U.

The Second and Amended and Restated Credit Agreement provides for a revolving loan facility (the “Revolving Loan Facility”) of $ 1,250.0 million maturing on December 21, 2026 (including up to $ 550.0 million equivalent of borrowings in Pounds Sterling, European Union euro and Canadian dollars) with a $ 150.0 million equivalent sub-facility available to CPRT GmbH, a $ 150.0 million equivalent sub-facility available to Copart Autos España, S.L.U.

and a $ 250.0 million equivalent sub-facility available to Copart UK Limited.

The proceeds may be used for general corporate purposes, including working capital and capital expenditures, potential share repurchases, acquisitions, or other investments relating to the Company’s expansion strategies in domestic and international markets.

Borrowings under the Second Amended and Restated Credit Agreement bear interest based on, at our option, either (1) the applicable fixed rate plus 1.00 % to 1.75 % or (2) the daily rate plus 0.0 % to 0.75 %, in each case, depending on Copart’s consolidated total net leverage ratio.

Additionally, the unused revolving commitments under the Second Amended and Restated Credit Agreement are subject to the payment of a customary commitment fee at a range of 0.175 % to 0.275 %, depending on Copart’s consolidated total net leverage ratio.

The applicable fixed rates described above with respect to borrowings denominated in (1) U.S.

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 $ 0.0 million and $ 11.0 million outstanding borrowings under the Revolving Loan Facility as of July 31, 2024 and July 31, 2023, respectively.

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Such obligations, including the guaranties, are secured by substantially all of the assets of the Company and the assets of the subsidiary guarantors pursuant to a Security Documents Confirmation Agreement as part of the Second Amended and Restated Credit Agreement.

The Second Amended and Restated Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries’ ability to, among other things, incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into transactions with affiliates, pay dividends, or make distributions on and repurchase stock, in each case subject to certain exceptions.

The Second Amended and Restated Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company’s and its subsidiaries’ ability to, among other things, incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into transactions with affiliates, pay dividends, or make distributions on and repurchase stock, in each case subject to certain exceptions.

The Company is also required to maintain compliance, measured at the end of each fiscal quarter, with a consolidated total net leverage ratio and a consolidated interest coverage ratio.

The Second Amended and Restated Credit Agreement contains no restrictions on the payment of dividends and other restricted payments, as defined, as long as (1) the consolidated total net leverage ratio, as defined, both before and after giving effect to any such dividend or restricted payment on a pro forma basis, is less than 3.25 :1, in an unlimited amount, (2) if clause (1) is not available, so long as the consolidated total net leverage ratio both before and after giving effect to any such dividend on a pro forma basis is less than 3.50 :1, in an aggregate amount not to exceed the available amount, as defined, and (3) if clauses (1) and (2) are not available, in an aggregate amount not to exceed $ 50.0 million;

defined, both before and after giving effect to any such dividend or restricted payment on a pro forma basis, is less than 3.25 :1, in an unlimited amount, (2) if clause (1) is not available, so long as the consolidated total net leverage ratio both before and after giving effect to any such dividend on a pro forma basis is less than 3.50 :1, in an aggregate amount not to exceed the available amount, as defined, and (3) if clauses (1) and (2) are not available, in an aggregate amount not to exceed $ 50.0 million;

provided, that, minimum liquidity, as defined, shall be not less than $ 75.0 million both before and after giving effect to any such dividend or restricted payment.

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The Company was in compliance with all covenants related to the Second Amended and Restated Credit Agreement as of July 31, 2024.

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 is included in other assets on the balance sheet as no amounts are outstanding on the Revolving Loan Facility.

In connection with entering into 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 is included in other assets on the consolidated balance sheets 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.

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.

On May 24, 2022, the Company paid $ 420.6 million to retire all of 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.

NOTE 10 – Fair Value Measurements

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Total liabilities $ — $ — $ 11,006 $ 11,006

The Company has investments in U.S.

Treasury Bills some of which mature over a period greater than 90 days and are classified as short-term investments.

Treasury Bills are carried at amortized cost and classified as held to maturity as the Company has the intent and the ability to hold them until they mature.

The carrying value of the U.S.

Treasury Bills are adjusted for accretion of discounts over the remaining life of the investment.

Income related to the U.S.

Treasury Bills is recognized in interest income in the Company’s consolidated statements of income.

Treasury Bills are classified within Level I of the fair value hierarchy.

During the year ended July 31, 2024, no transfers were made between any levels within the fair value hierarchy.

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There were no material adjustments to net income required in calculating diluted net income per share.

Excluded from the dilutive earnings per share calculation were 8,333,268 ;

and 16,361,000 options to purchase the Company’s common stock for the years ended July 31, 2023, 2022 and 2021, respectively, because their inclusion would have been anti-dilutive.

Excluded from the dilutive net income per share calculation were 2,612,116 ;

and 14,891,048 options to purchase the Company’s common stock and restrictive stock for the years ended July 31, 2024, 2023 and 2022, respectively, because their inclusion would have been anti-dilutive.

NOTE 12 — Stockholders’ Equity

The Company has authorized the issuance of 1.6 billion shares of common stock, with a par value of $ 0.0001 , of which 962,967,011 shares were issued and outstanding at July 31, 2024.

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.

As of July 31, 2024 and 2023, the Company had reserved 49,707,714 and 52,648,002 shares of common stock, respectively, for the issuance of options, restricted stock (“RSA”), restricted stock units (“RSU”), or performance stock units (“PSU”) granted under the Company’s equity incentive plans and 3,638,112 and 3,953,154 shares of common stock, respectively, for the issuance of shares under the Copart, Inc.

Employee Stock Purchase Plan (“ESPP”).

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For fiscal 2024, 2023 and 2022, the Company did not repurchase any shares of its common stock under the program.

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 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.

The Company remitted $ 0.0 million , $ 0.0 million and $ 3.8 million during the years ended July 31, 2023, 2022 and 2021, 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:

Period Options Exercised Weighted Average Exercise Price Shares Net Settled for Exercise Shares Withheld for Taxes (1)

Net Shares to Employees Weighted Average Share Price for Withholding Employee Stock-Based Tax Withholding (in 000s)

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

As of July 31, 2024, 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 our program.

In fiscal 2024, certain employees held stock option awards that could be exercised through a cashless exercise.

For the years ended July 31, 2024, 2023 and 2022, no employee exercised stock options through a cashless exercise.

If exercised a portion of the options exercised will be net settled in satisfaction of the exercise price and employees’ statutory withholding requirements.

Any shares withheld for taxes are treated as a repurchase of shares for accounting purposes but do not count against our stock repurchase program.

Employee Stock Purchase Plan

The ESPP provides for the purchase of up to an aggregate of 40 million shares of common stock of the Company by employees pursuant to the terms of the ESPP.

The Company’s ESPP was adopted by the Board of Directors and approved by the stockholders in 1994.

The Company’s ESPP was adopted by the Board of Directors and approved by the Company’s stockholders in 1994.

The ESPP was amended and restated in 2003 and again approved by the stockholders.

In 2014, a new ESPP was approved by the Board of Directors and approved by the stockholders.

In 2014, a new ESPP was approved by the Board of Directors and approved by the Company’s stockholders.

Under the ESPP, employees of the Company who elect to participate have the right to purchase common stock at a 15 % discount from the lower of the market value of the common stock at the beginning or the end of each six month offering period.

The ESPP permits an enrolled employee to make contributions to purchase shares of common stock by having withheld from their salary an amount up to 10% of their compensation (which amount may be increased from time to time by the Company but may not exceed 15 % of compensation).

The ESPP permits an enrolled employee to have contributions withheld from their salary an amount up to 10% of their compensation (which amount may be increased from time to time by the Company but may not exceed 15 % of compensation).

No employee may purchase more than $ 25,000 worth of common stock (calculated at the time the purchase right is granted) in any calendar year.

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As of July 31, 2024, 21,137,327 shares were available for grant under the Plan and the number of options that were in-the-money was 22,290,519 at July 31, 2024.

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

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

Year Ended July 31,

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Total stock-based compensation $ 35,234 $ 39,673 $ 38,965

Additionally, Purple Wave maintains an equity-based compensation plan for certain executives.

Compensation cost attributable to Purple Wave equity-based compensation plan was $ 1.9 million and $ 0 included in stock based compensation for the fiscal years ended July 31, 2024 and 2023, respectively.

There were no material compensation costs capitalized as part of the cost of an asset as of July 31, 2024 and 2023.

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

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.

The fair value of each stock 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 either the Monte Carlo simulation model or a lattice model was used.

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

The BSM option-pricing model utilized the following assumptions:

2024 2023 2022

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Weighted average fair value at measurement date $ 9.93 $ 12.10 $ 10.59

Expected life—The Company’s expected life represents the period that the Company’s stock-based awards are expected to be outstanding and was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as influenced by changes to the terms of its stock-based awards.

Expected life— Expected life represents the period that the Company’s stock-based awards are expected to be outstanding and was determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as influenced by changes to the terms of its stock-based awards.

Risk-free interest rate—The Company bases the risk-free interest rate used in the BSM option-pricing model on the implied yield currently available on U.S.

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Net cash proceeds from the exercise of stock options were $ 24.3 million, $ 49.7 million and $ 28.1 million for the years ended July 31, 2024, 2023 and 2022, respectively.

A summary of the status of the Company’s unvested stock options awards and its activity during the year ended July 31, 2023 was as follows:

A summary of the status of the Company’s unvested stock options awards and activity during the year ended July 31, 2024 was as follows:

(In thousands, except per share amounts) Shares Weighted

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The fair value of the awards is determined at the grant date using either the Lattice or Monte Carlo model, risk-free interest rates ranging from 0.71 % to 3.57 %, estimated volatility ranging from 25.2 % to 29.3 %, and no expected dividends.

The total estimated compensation expense to be recognized by the Company over the five-year service period for these options is $ 48.4 million and will be recognized using the accelerated attribution method over each vesting tranche of the award.

The Company recognized $ 12.2 million, $ 9.8 million and $ 13.1 million in compensation expense related to these awards for the year ended July 31, 2023, 2022 and 2021, respectively.

The total estimated compensation expense to be recognized by the Company over the five-year service period for these options was $ 50.1 million as of July 31, 2024 and will be recognized using the accelerated attribution method over each vesting tranche of the award.

The Company recognized $ 7.4 million, $ 12.2 million and $ 9.8 million in compensation expense related to these awards for the years ended July 31, 2024, 2023 and 2022, respectively.

The following is a summary of activity for the Company’s stock option awards subject to market conditions for the year ended July 31, 2024:

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5,988 $ 24.70 6.47 $ 165,464

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.

The aggregate intrinsic value in the tables above represents the total pre-tax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of the year ended July 31, 2024 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, 2024.

The aggregate intrinsic value of options exercised was $ 105.5 million, $ 131.1 million and $ 30.5 million in the years ended July 31, 2024, 2023 and 2022, 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, 2023, 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 $ 33.3 million.

As of July 31, 2024, the total compensation cost related to non-vested stock options granted to employees under the Company’s stock equity incentive plans but not yet recognized was $ 26.3 million.

This cost will be amortized on a straight-line basis over a weighted average remaining term of 2.57 years.

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Outstanding as of July 31, 2024 22,305 4.91 $ 20.24 18,128 $ 17.20

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.

The Company’s restricted stock awards (“RSA”), RSUs, and PSUs have generally been issued with vesting periods ranging from two years to five years .

RSAs and RSUs vest solely on service conditions while PSUs will vest over five years , when and if certain financial performance targets are met.

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, 2023:

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

Compensation expense for PSU awards is recognized on an accelerated attribution method when the achievement of certain financial performance targets appear probable and is recognized over the remaining requisite service period.

The following is a summary of activity for the Company’s RSAs, RSUs, ans PSUs for the for the year ended July 31, 2024:

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

Outstanding as of July 31, 2023 800 $ 31.77

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Compensation and fringe benefits ( 0.7 ) % ( 1.0 ) % ( 0.6 ) %

( 1.0 ) % ( 0.6 ) % ( 1.9 ) %

FDII and/or GILTI ( 2.8 ) % ( 2.8 ) % ( 2.8 ) %

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Effective tax rate 20.5 % 20.4 % 18.7 %

(1) Included in the compensation and fringe benefits rate reconciliation is the impact of the Company’s adoption of ASU No.

2016-09, Improvements to Employee Share-Based Payment Accounting.

Under this standard, all excess tax benefits and tax deficiencies related to exercises of stock options are recognized as income tax expense or benefit in the income statement as discrete items in the reporting period in which they occur.

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

6 unchanged sentences

Deferred revenue 5,544 5,349

Losses carried forward 41,589 29,936

Losses carried forward/interest disallowance 48,599 41,589

Federal tax benefit 12,821 14,798

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federal statutory tax rate for fiscal years 2024, 2023, and 2022 was 21.0 %.

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, 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.

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 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 effective tax rate for the fiscal year ended July 31, 2024 was favorably impacted by $ 0.8 million of tax adjustments made in connection with finalizing the Company’s fiscal year 2023 tax return, and favorably impacted by a $ 47.7 million FDII deduction in the current year.

The effective tax rate for the fiscal year ended July 31, 2023 was favorably impacted by $ 1.5 million of 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.

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

The effective tax rates were also impacted by the recognition of excess tax benefits from the exercise of employee stock-based compensation of $ 14.8 million, $ 21.0 million, and $ 14.4 million, for the fiscal years ended July 31, 2024, 2023, and 2022, respectively.

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

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Additional timing differences or future tax losses may occur which could warrant a need for establishing additional valuation allowances against certain deferred tax assets.

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

During fiscal year 2024, the Company recorded a $ 7.0 million increase in valuation allowances primarily due to additional operating losses and interest disallowance carryforward generated in foreign jurisdictions unlikely to be realized.

As of July 31, 2024 and 2023, the Company had foreign operating losses and interest disallowance carryforward of $ 48.6 million and $ 41.6 million (tax effected), respectively.

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

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At this time, the Company does not believe that the outcome of any examination will have a material impact on the Company’s consolidated results of operations and financial position.

The Act significantly lowered the additional federal income tax upon the repatriation of undistributed earnings generated by our foreign subsidiaries.

As of July 31, 2024, the Company has undistributed earnings of approximately $ 500.8 million generated by its foreign subsidiaries.

As the Company determined these undistributed foreign earnings along with any additional outside basis differences were indefinitely reinvested as of July 31, 2024, no deferred tax was therefore provided.

The undistributed earnings, as of July 31, 2023, were estimated to be approximately $ 377.7 million.

The Company believes it is not practicable to estimate the amount of deferred tax liability related to the entire outside basis differences due to the complexity of the calculation and the uncertainty regarding assumptions necessary to compute the tax.

42 unchanged sentences

Capital expenditures, including acquisitions 297,632 146,420 444,052

Total assets 4,615,788 693,076 5,308,864

Goodwill 270,269 131,685 401,954

NOTE 15 — Commitments and Contingencies

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The Company is subject to threats of litigation and is involved in actual litigation and damage claims arising in the ordinary course of business, such as actions related to injuries, property damage, contract disputes, and handling or disposal of vehicles.

There are no material pending legal proceedings to which the Company is a party, or with respect to which any of the Company’s property is subject.

The Company provides for costs relating to matters when a loss is probable and the amount can be reasonably estimated.

In addition, from time to time, the Company receives communications from government or regulatory agencies concerning investigations or allegations of noncompliance with laws or regulations in jurisdictions in which the Company operates.

Except as otherwise noted in this Note 15, there are no material pending legal proceedings to which the Company is a party, or with respect to which any of the Company’s property is subject.

The Company provides accruals for matters when a loss is probable and the amount can be reasonably estimated.

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 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.

However, legal and regulatory proceedings are inherently unpredictable, and the amount of the liabilities associated with claims, if any, cannot be determined with certainty.

If one or more matters were resolved against us for amounts in excess of the Company’s expectations, the impact on the Company’s consolidated results of operations, financial position, or cash flow could be material.

The Company maintains insurance which may or may not provide coverage for claims made against the Company.

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Additionally, the insurance that the Company carries requires that the Company pay for costs and/or claims exposure up to the amount of the insurance deductibles.

Department of Justice, Consumer Protection Branch (DOJ) is conducting an ongoing investigation into potential violations by the Company of certain money laundering laws related to its practices and procedures for preventing and detecting money-laundering activity by its auction platform members.

In connection with this investigation, the Company received a letter from the DOJ in October 2023 in which the DOJ indicated the Company may have exposure as a result of potential violations of such money laundering statutes and regulations.

The Company is cooperating with the DOJ’s investigation.

At this time, we are unable to predict the duration, scope, or result of any potential governmental, criminal, or civil proceeding that may result, the imposition of fines and penalties, and/or other remedies, and as a result, are unable to predict the range of possible loss.

NOTE 16 — Guarantees — Indemnifications to Officers and Directors

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

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 recognized expenses of $ 2.3 million, $ 2.2 million, and $ 1.9 million for the year ended July 31, 2024, 2023,and 2022, respectively, 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 $ 1.6 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.

The Company recognized expenses of $ 2.1 million, $ 1.6 million, and $ 1.4 million for the year ended July 31, 2024, 2023,and 2022, respectively, 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