10-Q 1 a2032334z10-q.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) /X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended October 31, 2000 OR / / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ____________ to Commission file number: 0-23255 COPART, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) CALIFORNIA 94-2867490 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Number) 5500 E. SECOND STREET, BENICIA, CA 94510 (Address of principal executive offices with zip code) Registrant's telephone number, including area code: (707) 748-5000 N/A (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO ----- ----- Number of shares of Common Stock outstanding as of November 29, 2000: 54,575,594 COPART, INC. AND SUBSIDIARIES INDEX TO THE QUARTERLY REPORT OCTOBER 31, 2000
DESCRIPTION PAGE PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL INFORMATION Consolidated Balance Sheets 3 Consolidated Statements of Income 4 Consolidated Statements of Cash Flows 5 Notes to the Consolidated Financial Statements 6 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview 7 Acquisitions and New Openings 8 Results of Operations Revenues 8 Operating Costs and Expenses 9 Operating Income, Other Income and Income Taxes 9 Liquidity and Capital Resources 9 Factors Affecting Future Results 10 PART II - OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 13 Signatures 14
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COPART, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) October 31, July 31, 2000 2000 --------------- ------------------ ASSETS Current assets: Cash and cash equivalents $ 15,676,800 $ 12,164,900 Accounts receivable, net 55,621,400 52,509,600 Vehicle pooling costs 16,042,100 15,271,300 Deferred income taxes 1,708,200 1,708,200 Income tax receivable - 3,317,200 Prepaid expenses and other assets 10,125,800 6,443,300 --------------- --------------- Total current assets 99,174,300 91,414,500 Property and equipment, net 88,433,300 80,514,200 Intangibles and other assets, net 89,431,900 90,395,600 --------------- --------------- Total assets $277,039,500 $262,324,300 =============== =============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 7,895,000 $ 7,842,300 Accounts payable and accrued liabilities 24,249,000 19,984,500 Deferred revenue 8,200,200 7,688,100 Income taxes payable 2,686,300 - Other current liabilities 193,600 1,857,300 --------------- --------------- Total current liabilities 43,224,100 37,372,200 Deferred income taxes 2,834,300 2,834,300 Long-term debt, less current portion 638,400 712,200 Other liabilities 1,489,200 1,515,200 --------------- --------------- Total liabilities 48,186,000 42,433,900 --------------- --------------- Shareholders' equity: Common stock, no par value - 120,000,000 shares authorized; 54,562,094 and 54,553,094 shares issued and outstanding at October 31, 2000 and July 31, 2000, respectively 121,558,900 121,515,000 Retained earnings 107,294,600 98,375,400 --------------- --------------- Total shareholders' equity 228,853,500 219,890,400 --------------- --------------- Commitments and contingencies Total liabilities and shareholders' equity $277,039,500 $262,324,300 ================ ================
See accompanying notes to consolidated financial statements. 3 COPART, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three months ended October 31, --------------------------------- 2000 1999 ----------- --------- Revenues $ 57,139,400 $ 40,507,600 ------------- ------------- Operating costs and expenses: Yard and fleet 35,356,200 24,636,700 General and administrative 4,466,100 3,305,500 Depreciation and amortization 3,370,100 2,753,000 ------------- ------------- Total operating expenses 43,192,400 30,695,200 ------------- ------------- Operating income 13,947,000 9,812,400 ------------- ------------- Other income (expense): Interest expense (135,900) (140,100) Interest income 350,800 407,900 Other income 461,100 184,200 ------------- ------------- Total other income 676,000 452,000 ------------- ------------- Income before income taxes 14,623,000 10,264,400 Income taxes 5,703,800 3,951,800 ------------- ------------- Net income $ 8,919,200 $ 6,312,600 ============= ============= Basic net income per share $ .16 $ .12 ============= ============= Weighted average shares outstanding 54,555,000 53,696,000 ============= ============= Diluted net income per share $ .16 $ .11 ============= ============= Weighted average shares and dilutive potential common shares outstanding 56,453,200 55,889,200 ============= =============
See accoompanying notes to consolidated financial statements. 4 COPART, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three months ended October 31, ------------------------------- 2000 1999 ------------ ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 8,919,200 $ 6,312,600 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,370,100 2,753,000 Deferred rent (26,000) (43,900) Gain on sale of assets (186,200) (39,200) Changes in operating assets and liabilities: Accounts receivable (3,111,800) (4,320,900) Vehicle pooling costs (770,800) (1,065,000) Prepaid expenses and other current assets (3,682,500) (887,500) Accounts payable and accrued liabilities 2,600,700 1,690,900 Deferred revenue 512,100 584,900 Income taxes 6,003,600 2,341,800 ------------ ------------ Net cash provided by operating activities 13,628,400 7,326,700 ------------ ------------ Cash flows from investing activities: Purchase of property and equipment (10,619,600) (11,311,200) Proceeds from sale of property and equipment 480,300 82,800 Other intangible asset additions - (3,000) ------------ ------------ Net cash used in investing activities (10,139,300) (11,231,400) ------------ ------------ Cash flows from financing activities: Proceeds from the exercise of stock options and warrants 43,900 30,300 Principal payments on notes payable (21,100) (138,300) ------------ ------------ Net cash provided by (used in) financing activities 22,800 (108,000) ------------ ------------ Net increase (decrease) in cash and cash equivalents 3,511,900 (4,012,700) Cash and cash equivalents at beginning of period 12,164,900 37,047,800 ------------ ------------ Cash and cash equivalents at end of period $ 15,676,800 $ 33,035,100 ============ ============ Supplemental disclosure of cash flow information Interest paid $ 135,900 $ 140,100 ============ ============ Income taxes paid $ 299,700 $ 1,628,800 ============ ============
See accompanying notes to consolidated financial statements. 5 COPART, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OCTOBER 31, 2000 (UNAUDITED) NOTE 1 - General: In the opinion of the management of Copart, Inc. (the "Company"), the accompanying unaudited consolidated financial statements contain all adjustments, consisting only of normal, recurring adjustments, necessary to present fairly the financial information included therein. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended July 31, 2000 filed with the Securities and Exchange Commission. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year. NOTE 2 - Net Income Per Share: There were no adjustments to net income in calculating diluted net income per share. The table below reconciles basic weighted shares outstanding to diluted weighted average shares outstanding:
Three Months Ending October 31, ------------------------------- 2000 1999 ---- ---- Basic weighted shares outstanding 54,555,000 53,696,000 Stock options and warrants outstanding 1,898,200 2,193,200 ----------- ----------- Diluted weighted average shares outstanding 56,453,200 55,889,200 =========== ===========
NOTE 3 - Recently Adopted Accounting Pronouncements In fiscal 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133") (as amended by SFAS Nos. 137 and 138) and in fiscal 2000, issued Interpretation No. 44 ("FIN 44"), "Accounting for Certain Transactions Involving Stock Compensation - An Interpretation of Accounting Principles Board Opinion ("APB") No. 25." The Company adopted the above standards on August 1, 2000. The adoption of these standards did not have a material impact on the Company's results of operations, financial position or cash flows. NOTE 4 - Segment Reporting All of the Company's facilities are aggregated into one reportable segment given the similarities of economic characteristics between the operations represented by the facilities and the common nature of the products, customers and methods of revenue generation. 6 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF THE RISK FACTORS SET FORTH BELOW. THE COMPANY HAS ATTEMPTED TO IDENTIFY FORWARD-LOOKING STATEMENTS BY PLACING AN ASTERISK IMMEDIATELY FOLLOWING THE SENTENCE OR PHRASE THAT CONTAINS THE FORWARD-LOOKING STATEMENT. OVERVIEW The Company processes salvage vehicles principally on a consignment method, on either the Percentage Incentive Program (the "PIP") or on a fixed fee consignment basis. Using either consignment method, only the fees associated with vehicle processing are recorded in revenue. The Company also processes a small percentage of its salvage vehicles pursuant to purchase contracts (the "Purchase Program") under which the Company records the gross proceeds of the vehicle sale in purchased vehicle revenues and the cost of the vehicle in yard and fleet expenses. For the three months ended October 31, 2000 and 1999, approximately 60% and 54%, of the vehicles sold by Copart, respectively, were processed under the PIP. The increase in the percentage of vehicles sold under the PIP is due to the Company's successful marketing efforts. The Company attempts to convert acquired operations to the PIP, which typically results in higher net returns to vehicle suppliers and higher fees to the Company than standard fixed fee consignment programs. For the three months ended October 31, 2000 and 1999, approximately 40% and 45%, of the vehicles sold by Copart, respectively, were processed under fixed fee agreements. The decline in the percentage of vehicles processed under fixed contracts is the direct result of the Company's marketing efforts to convert contracts from fixed fee to PIP. For the three months ended October 31, 1999, approximately 1% of the vehicles sold by Copart were processed pursuant to the Purchase Program. Due to a number of factors, including the timing and size of new acquisitions, market conditions, and acceptance of the PIP program by vehicle suppliers, the percentage of vehicles processed under these programs in future periods may vary.* Revenues consist of salvage fees charged to vehicle suppliers and vehicle buyers, transportation revenue and purchased vehicle revenues. Salvage fees from vehicle suppliers include fees under PIP agreements and fixed programs where the Company charges for title processing, special preparation, storage and auctioning. Salvage fees also include fees charged vehicle buyers for purchasing vehicles, storage and annual registration. Transportation revenue includes charges to suppliers for towing vehicles under fixed fee contracts. Transportation revenue also includes towing charges assessed to buyers for delivering vehicles. Purchased vehicle revenues are comprised of the price that buyers paid at the Company's auctions for vehicles processed under the Purchase Program. 7 Costs attributable to yard and fleet expenses consist primarily of operating personnel, (which includes yard management, clerical and yard employees), rent, contract vehicle towing, insurance, fuel, fleet maintenance and repair, and acquisition costs of salvage vehicles under the Purchase Program. Costs associated with general and administrative expenses consist primarily of executive, accounting and data processing, sales personnel, professional fees and marketing expenses. The period-to-period comparability of Copart's operating results and financial condition is substantially affected by business acquisitions and new openings made by Copart during such periods. ACQUISITIONS AND NEW OPENINGS Copart has experienced significant growth as it acquired twelve vehicle auction facilities and established six new salvage vehicle auction facilities since the beginning of fiscal 1999. All of the acquisitions have been accounted for using the purchase method. Accordingly, the excess of the purchase price over the fair value of net tangible assets acquired (consisting principally of goodwill) is being amortized over periods not exceeding 40 years. As part of the Company's overall expansion strategy of offering integrated service to vehicle suppliers, the Company anticipates further attempts to open or acquire new salvage facilities in new regions, as well as the regions currently served by Company facilities.* As part of this strategy, during fiscal 2001, Copart opened a new facility in Harrisburg, Pennsylvania. In fiscal 2000, Copart acquired facilities in or near Chesapeake, Virginia; Peoria, Illinois; North Boston, Massachusetts; Boise, Idaho; Pasco, Washington; Abilene, Texas; San Antonio, Texas and Albuquerque, New Mexico and opened new facilities in Graham, Washington; Denver, Colorado and West Palm Beach, Florida. In fiscal 1999, Copart acquired facilities in or near McAllen, Texas; Huntsville, Alabama and Wichita, Kansas and opened new facilities in Nashville, Tennessee and Austin/San Antonio, Texas. The Company believes that these acquisitions and openings help to solidify the Company's nationwide service and expand the Company's coverage of the United States. In the event of future acquisitions, the Company expects to incur future amortization charges in connection with such acquisitions attributable to goodwill, covenants not to compete and other purchase-related adjustments.* RESULTS OF OPERATIONS Three Months Ended October 31, 2000 Compared to Three Months Ended October 31, 1999 REVENUES Revenues were approximately $57.1 million during the three months ended October 31, 2000, an increase of approximately $16.6 million, or 41%, over the three months ended October 31, 1999. The change in revenues is driven primarily by the increase in gross proceeds generated from auctioned salvage vehicles. Gross proceeds were approximately $249.1 million during the three months ended October 31, 2000, an increase of approximately $68.3 million, or 38%, over the three months ended October 31, 1999. New facilities in Chesapeake, Graham, Denver, Peoria, North Boston, Boise, Pasco, West Palm Beach, Abilene, San Antonio and Albuquerque contributed $5.3 million of new revenue for the three months ended October 31, 2000. 8 OPERATING COSTS AND EXPENSES Yard and fleet expenses were approximately $35.4 million during the three months ended October 31, 2000, an increase of approximately $10.7 million, or 44%, over the comparable period in fiscal 2000. The increase in yard and fleet expenses is due primarily to the cost of handling increased volume at existing operations and the costs of new facilities. Approximately $4.1 million of the change was the result of the acquisitions and openings of new facilities. Yard and fleet expenses from existing facilities grew by approximately $6.6 million, or 27%, compared to existing-facility revenue growth of 28%. Yard and fleet expenses increased to 62% of revenues during the first quarter of fiscal 2001, as compared to 61% of revenues during the same period of fiscal 2000 due to higher transportation and labor costs. General and administrative expenses were approximately $4.5 million during the three months ended October 31, 2000, an increase of approximately $1.2 million, or 35%, over the comparable period in fiscal 2000. This increase is due primarily to increased payroll and other administrative expenses. General and administrative expenses were 8% of revenues during the first quarter of fiscal 2001 and fiscal 2000. Depreciation and amortization expense was approximately $3.4 million during the three months ended October 31, 2000, an increase of approximately $0.6 million, or 22%, over the comparable period in fiscal 2000. This increase was primarily due to the amortization and depreciation of tangible and intangible assets acquired in fiscal 2000. OPERATING INCOME, OTHER INCOME AND INCOME TAXES The Company's operating income was $13.9 million during the three months ended October 31, 2000, an increase of approximately $4.1 million, or 42%, over the comparable period in fiscal 2000. Existing facilities produced $3.3 million of the increase due to improved PIP percentages, market share gains, favorable weather conditions and other factors. New facilities in Chesapeake, Graham, Denver, Peoria, North Boston, Boise, Pasco, West Palm Beach, Abilene, San Antonio, Albuquerque and Harrisburg produced $0.8 million of the increase. Total other income was approximately $0.7 million during the three months ended October 31, 2000, an increase of approximately $0.2 million over the three months ended October 31, 1999. The effective income tax rate used for the three months ended October 31, 2000 and 1999 was approximately 39%. Due to the foregoing factors, Copart realized net income of approximately $8.9 million for the three months ended October 31, 2000, compared to net income of approximately $6.3 million for the three months ended October 31, 1999. LIQUIDITY AND CAPITAL RESOURCES Copart has financed its growth principally through cash generated from operations, debt financing, public offerings of Common Stock and the equity issued in conjunction with certain acquisitions. At October 31, 2000, Copart had working capital of approximately $56.0 million, including cash and cash equivalents of approximately $15.7 million. The Company is able to process, market, sell and receive payment for processed vehicles quickly. The Company's primary source of cash is from the collection of sellers' fees and reimbursable advances from the proceeds of auctioned salvage vehicles and from buyers' fees. 9 Copart generated cash from operations of approximately $13.6 million and $7.3 million, during the three months ended October 31, 2000 and 1999, respectively. Capital expenditures were approximately $10.6 million and $11.3 million for the three months ended October 31, 2000, and 1999, respectively. Copart's capital expenditures have related primarily to opening and improving facilities and acquiring yard equipment. Cash and cash equivalents increased by approximately $3.5 million and decreased by $4.0 million for the three months ended October 31, 2000 and 1999, respectively. The Company's liquidity and capital resources have not been materially affected by inflation and are not subject to significant seasonal fluctuations. The Company believes that its currently available cash, cash generated from operations and borrowing availability under its bank credit facilities and existing equipment operating lease agreements will be sufficient to satisfy the Company's working capital requirements and fund acquisitions and openings of new facilities for at least 12 months. However, there can be no assurance that the Company will not be required to seek additional debt or equity financing prior to such time, or if new financing is required, that it will be available on reasonable terms if at all. FACTORS AFFECTING FUTURE RESULTS Historically, a limited number of vehicle suppliers have accounted for a substantial portion of the Company's revenues. In the first quarter of fiscal 2001, vehicles supplied by Copart's two largest suppliers accounted for approximately 13% and 10%, of Copart's revenues, respectively. The Company's agreements with these and other vehicle suppliers are either oral or written agreements that typically are subject to cancellation by either party upon 30 days' notice. There can be no assurance that existing agreements will not be canceled or that the terms of any new agreements will be comparable to those of existing agreements. The Company believes that, as the salvage vehicle auction industry becomes more consolidated, the likelihood of large vehicle suppliers entering into agreements with single companies to dispose of all of their salvage vehicles on a statewide, regional or national basis increases.* There can be no assurance that the Company will be able to enter into such agreements or that it will be able to retain its existing supply of salvage vehicles in the event vehicle suppliers begin disposing of their salvage vehicles pursuant to state, regional or national agreements with other operators of salvage vehicle auction facilities. A loss or reduction in the number of vehicles from a significant vehicle supplier or material changes in the terms of an arrangement with a substantial vehicle supplier could have a material adverse effect on the Company's financial condition and results of operations. The Company's operating results have fluctuated in the past and may fluctuate significantly in the future depending on a number of factors. These factors include changes in the market value of salvage vehicles, buyer attendance at salvage auctions, fluctuations in vehicle transportation costs, delays or changes in state title processing and/or changes in state or federal laws or regulations affecting salvage vehicles, fluctuations in Actual Cash Values ("ACV's") of salvage vehicles, the availability of vehicles and weather conditions. As a result, the Company believes that period-to-period comparisons of its results of operations are not necessarily meaningful and should not be relied upon as any indication of future performance. There can be no assurance, therefore, that the Company's operating results in some future quarter will not be below the expectations of public market analysts and/or investors. The market price of the Company's Common Stock could be subject to significant fluctuations in response to various factors and events, including variations in the Company's operating results, the inability to continue to increase service fees, the timing and size of acquisitions and facility openings, the loss of vehicle suppliers or buyers, the announcement of new vehicle supply agreements by the Company or its competitors, changes in 10 regulations governing the Company's operations or its vehicle suppliers, environmental problems or litigation. In addition, the stock market in recent years has experienced broad price and volume fluctuations that often have been unrelated to the operating performance of companies. The Company seeks to increase sales and profitability primarily through the increase of salvage vehicle volume and revenue at existing facilities, the opening of new facilities and the acquisition of other salvage vehicle auction facilities. There can be no assurance that the Company will be able to continue to acquire additional facilities on terms economical to the Company or that the Company will be able to increase revenues at newly acquired facilities above levels realized at such facilities prior to their acquisition by the Company. Additionally, as the Company continues to grow, its openings and acquisitions will have to be more numerous or of a larger size in order to have a material impact on the Company's operations. The ability of the Company to achieve its expansion objectives and to manage its growth is also dependent on other factors, including the integration of new facilities into existing operations, the establishment of new relationships or expansion of existing relationships with vehicle suppliers, the identification and lease of suitable premises on competitive terms and the availability of capital. The size and timing of such acquisitions and openings may vary. Management believes that facilities opened by the Company require more time to reach revenue and profitability levels comparable to its existing facilities and may have greater working capital requirements than those facilities acquired by the Company. Therefore, to the extent that the Company opens a greater number of facilities in the future than it has historically, the Company's growth rate in revenues and profitability may be adversely affected. Currently, Willis J. Johnson, Chief Executive Officer of the Company, together with two other existing shareholders, beneficially owns approximately 36% of the issued and outstanding shares of Common Stock. This interest in the Company may also have the effect of making certain transactions, such as mergers or tender offers involving the Company, more difficult or impossible, absent the support of Mr. Johnson, and such other existing shareholders. The Company's operations are subject to federal, state and local laws and regulations regarding the protection of the environment. In the salvage vehicle auction industry, large numbers of wrecked vehicles are stored at auction facilities for short periods of time. Minor spills of gasoline, motor oils and other fluids may occur from time to time at the Company's facilities which may result in localized soil, surface water or groundwater contamination. Petroleum products and other hazardous materials are contained in aboveground or underground storage tanks located at certain of the Company's facilities. Waste materials such as waste solvents or used oils are generated at some of the Company's facilities that are disposed of as nonhazardous or hazardous wastes. The Company has put into place procedures to reduce the amounts of soil contamination that may occur at its facilities, and has initiated safety programs and training of personnel on safe storage and handling of hazardous materials. The Company believes that it is in compliance in all material respects with applicable environmental regulations and does not anticipate any material capital expenditures for environmental compliance or remediation that are not currently reserved for.* Environmental laws and regulations, however, could become more stringent over time and there can be no assurance that the Company or its operations will not be subject to significant compliance costs in the future. To date, the Company has not incurred expenditures for preventive or remedial action with respect to soil contamination or the use of hazardous materials which have had a material adverse effect on the Company's financial condition or results of operations. The soil contamination which may occur at the Company's facilities and the potential contamination by previous users of certain acquired facilities create the risk, however, that the Company could incur substantial expenditures for preventive or remedial action, as well as potential liability arising as a consequence of hazardous material contamination, which could have a material adverse effect on the Company. The salvage vehicle auction industry is highly fragmented. As a result, the Company faces intense competition for the supply of salvage vehicles from vehicle suppliers, as well as competition for buyers of vehicles from other salvage vehicle auction companies. The Company believes its principal competitor is Insurance Auto 11 Auctions, Inc. ("IAA"). IAA is a significant competitor in certain regions in which the Company operates or may expand in the future. In other regions of the United States, the Company faces substantial competition from salvage vehicle auction facilities with established relationships with vehicle suppliers and buyers and financial resources which may be greater than the Company's. Due to the limited number of vehicle suppliers and the absence of long-term contractual commitments between the Company and such salvage vehicle suppliers, competition for salvage vehicles from such suppliers is intense. The Company may also encounter significant competition for state, regional and national supply agreements with vehicle suppliers.* Vehicle suppliers may enter into state, regional or national supply agreements with competitors of the Company. The Company has a number of regional and national contracts with various suppliers. There can be no assurance that the existence of other state, regional or national contracts entered into by the Company's competitors will not have a material adverse effect on the Company or the Company's expansion plans. Furthermore, the Company is likely to face competition from major competitors in the acquisition of salvage vehicle auction facilities, which could significantly increase the cost of such acquisitions and thereby materially impede the Company's expansion objectives or have a material adverse effect on the Company's results of operations.* These potential new competitors may include consolidators of automobile dismantling businesses, organized salvage buying groups, automobile manufacturers, automobile auctioneers and software companies. While most vehicle suppliers have abandoned or reduced efforts to sell salvage vehicles without the use of service providers such as the Company, there can be no assurance that they may not in the future decide to dispose of their salvage vehicles directly to buyers. Existing or new competitors may be significantly larger and have greater financial and marketing resources than the Company. There can be no assurance that the Company will be able to compete successfully in the future. 12 PART II - OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS. 27.1 Financial Data Schedule (b) REPORTS ON FORM 8-K. None 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. COPART, INC. /s/ Wayne R. Hilty --------------------------- Wayne R. Hilty Senior Vice President and Chief Financial Officer (duly authorized officer and principal financial and accounting officer) Date: November 29, 2000 14