COPART: Management report and analysis of the financial situation and operating results (form 10-K)

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ATTENTION REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K for the fiscal year ended July 31, 2021, or this
Form 10-K, including the information incorporated by reference herein, contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act"), and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), including
forward-looking statements concerning the potential impact of the COVID-19
pandemic on our business, operations, and operating results. All statements
other than statements of historical facts are statements that could be deemed
forward-looking statements. In some cases, you can identify forward-looking
statements by terms such as "may," "will," "should," "expect," "plan," "intend,"
"forecast," "anticipate," "believe," "estimate," "predict," "potential,"
"continue" or the negative of these terms or other comparable terminology. The
forward-looking statements contained in this Form 10-K involve known and unknown
risks, uncertainties and situations that may cause our or our industry's actual
results, level of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these statements. These forward-looking
statements are made in reliance upon the safe harbor provision of the Private
Securities Litigation Reform Act of 1995. These factors include those listed in
Part I, Item 1A under the caption entitled "Risk Factors" in this Form 10-K and
those discussed elsewhere in this Form 10-K. Unless the context otherwise
requires, references in this Form 10-K to "Copart," the "Company," "we," "us,"
or "our" refer to Copart, Inc. We encourage investors to review these factors
carefully together with the other matters referred to herein, as well as in the
other documents we file with the Securities and Exchange Commission (the "SEC").
We may from time to time make additional written and oral forward-looking
statements, including statements contained in our filings with the SEC. We do
not undertake to update any forward-looking statement that may be made from time
to time by or on behalf of us.

All references to numbered Notes are to specific Notes to our Consolidated
Financial Statements included in this Annual Report on Form 10-K and which
descriptions are incorporated into the applicable response by reference.
Capitalized terms used, but not defined, in this Management's Discussion and
Analysis of Financial Condition and Results of Operation ("MD&A") have the same
meanings as in such Notes.

Overview

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

Our goals are to generate sustainable profits for our stockholders, while also
providing environmental and social benefits for the world around us. With
respect to our environmental stewardship, we believe our business is a critical
enabler for the global re-use and recycling of vehicles, parts, and raw
materials. We are not responsible for the carbon emissions resulting from new
vehicle manufacturing, governmental fuel emissions standards or vehicle use by
consumers. Each vehicle that enters our business operations already exists, with
whatever fuel technology and efficiency it was designed and built to have, and
the substantial carbon emissions associated with the vehicle's manufacture have
already occurred. However, upon our receipt of an existing vehicle, we help
decrease its total environmental impact by extending its useful life and thereby
avoiding the carbon emissions associated with the alternative of new vehicle and
auto parts manufacturing. For example, many of the cars we process and remarket
are subsequently restored to driveable condition, reducing the new vehicle
manufacturing burden the world would otherwise face. Many of our cars are
purchased by dismantlers, who recycle and refurbish parts for vehicle repairs,
again reducing new and aftermarket parts manufacturing. And finally, some of our
vehicles are returned to their raw material inputs through scrapping, reducing
the need for further new resource extraction. In each of these cases, our
business reduces the carbon and other environmental footprint of the global
transportation industry.

Beyond our environmental stewardship, we also support the world's communities in
two important ways. First, we believe that we contribute to economic development
and well-being by enabling more affordable access to mobility around the world.
For example, many of the automobiles sold through our auction platform are
purchased for use in developing countries where affordable transportation is a
critical enabler of education, health care, and well-being more generally.
Secondly, because of the special role we play in responding to catastrophic
weather events, we believe we contribute to disaster recovery and resilience in
the communities we serve. For example, we mobilized our people, entered into
emergency leases, and engaged with a multitude of service providers to timely
retrieve, store, and remarket tens of thousands of flood-damaged vehicles in the
Houston, Texas metropolitan area in the wake of Hurricane Harvey in the summer
of 2017.

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We provide vehicle sellers with a full range of services to process and sell
vehicles primarily over the internet through our Virtual Bidding Third
Generation internet auction-style sales technology, which we refer to as VB3.
Vehicle sellers consist primarily of insurance companies, but also include
banks, finance companies, charities, fleet operators, dealers, vehicle rental
companies, and individuals. We sell the vehicles principally to licensed vehicle
dismantlers, rebuilders, repair licensees, used vehicle dealers, exporters, and
to the general public. The majority of the vehicles sold on behalf of insurance
companies are either damaged vehicles deemed a total loss; not economically
repairable by the insurance companies; or are recovered stolen vehicles for
which an insurance settlement with the vehicle owner has already been made. We
offer vehicle sellers a full range of services that help expedite each stage of
the vehicle sales process, minimize administrative and processing costs, and
maximize the ultimate sales price through the online auction process.

In the U.S., Canada, Brazil, the Republic of Ireland, Finland, the U.A.E., Oman,
and Bahrain, we sell vehicles primarily as an agent and derive revenue primarily
from auction and auction related sales transaction fees charged for vehicle
remarketing services as well as fees for services subsequent to the auction,
such as delivery and storage. In the U.K., Germany, and Spain we operate both as
an agent and on a principal basis, in some cases purchasing salvage vehicles
outright and reselling the vehicles for our own account. In Germany and Spain,
we also derive revenue from listing vehicles on behalf of insurance companies
and insurance experts to determine the vehicle's residual value and/or to
facilitate a sale for the insured.

We monitor and analyze a number of key financial performance indicators in order
to manage our business and evaluate our financial and operating performance.
Such indicators include:

Service and Vehicle Sales Revenue: Our service revenue consists of auction and
auction related sales transaction fees charged for vehicle remarketing services.
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 our facility; title processing and
preparation fees; vehicle storage fees; bidding fees; and vehicle loading fees.
These fees are recognized as net revenue (not gross vehicle selling price) at
the time of auction in the amount of such fees charged. Purchased vehicle
revenue includes the gross sales price of the vehicles which we have purchased
or are otherwise considered to own. We have certain contracts with insurance
companies, primarily in the U.K., in which we act as a principal, purchasing
vehicles and reselling them for our own account. We also purchase vehicles in
the open market, primarily from individuals, and resell them for our own
account.

Our revenue is impacted by several factors, including total loss frequency and
the average vehicle auction selling price, as a significant amount of our
service revenue is associated in some manner with the ultimate selling price of
the vehicle. Vehicle auction selling prices are driven primarily by: (i) market
demand for rebuildable, driveable vehicles; (ii) used car pricing, which we also
believe has an impact on total loss frequency; (iii) end market demand for
recycled and refurbished parts as reflected in demand from dismantlers; (iv) the
mix of cars sold; (v) changes in the U.S. dollar exchange rate to foreign
currencies, which we believe has an impact on auction participation by
international buyers; and; (vi) changes in commodity prices, particularly the
per ton price for crushed car bodies, as we believe this has an impact on the
ultimate selling price of vehicles sold for scrap and vehicles sold for
dismantling. We cannot specifically quantify the financial impact that commodity
pricing, used car pricing, and product sales mix has on the selling price of
vehicles, our service revenues, or financial results. Total loss frequency is
the percentage of cars involved in accidents that insurance companies salvage
rather than repair and is driven by the relationship between repair costs, used
car values, and auction returns. Over the last several years, we believe there
has been an increase in overall growth in the salvage market driven by an
increase in total loss frequency. The increase in total loss frequency may have
been driven by the change in used car values and repair costs, which we believe
are generally trending upward. Changes in used car prices and repair costs, may
impact total loss frequency and affect our growth rate. Used car values are
determined by many factors, including used car supply, which is tied directly to
new car sales, and the average age of cars on the road. The average age of cars
on the road continued to increase, growing from 9.6 years in 2002 to 12.1 years
in 2021. Repair costs are generally based on damage severity, vehicle
complexity, repair parts availability, repair parts costs, labor costs, and
repair shop lead times. The factors that can influence repair costs, used car
pricing, and auction returns are many and varied and we cannot predict their
movements. Accordingly, we cannot predict future trends in total loss frequency.

Beginning in March 2020, our business and operations began to experience the
impact of the worldwide COVID-19 pandemic. In materially all of our
jurisdictions, we have been deemed by local authorities an essential business
because our operations ensure the removal of vehicles from repair shops, impound
yards, and streets and highways, enabling the critical function of road
infrastructure. As a result, we have continued to operate our facilities as well
as our online-only auctions, while following appropriate health and safety
protocols to ensure safe working conditions for our employees as well as for our
sellers, buyers, and other business partners with whom we come in contact.

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From a financial perspective, our operating results were adversely affected by
lower processed vehicle volume, but these adverse effects were more than offset
by corresponding increases in vehicle average sales prices. Although we
initially saw substantial declines in vehicle assignments following the onset of
the COVID-19 pandemic, which we attribute principally to reduced accident volume
as miles driven dramatically declined in response to shelter-in-place orders
across the globe, we have generally seen vehicle assignment volumes steadily
recovering; however additional subsequent shelter-in-place orders have
occasionally stalled or regressed the assignment volume commensurate with the
severity and duration of such orders. We cannot predict how the pandemic will
continue to develop, whether and to what extent new shelter-in-place orders will
be issued, or to what extent the pandemic may have longer term unanticipated
impacts on our markets, including, for example, the risk of long-term reductions
in miles driven.

Although we have been deemed an "essential business" in the jurisdictions in
which we operate and have largely been able to continue our yard operations, we
have been required to make adjustments in our business processes that may reduce
efficiency or increase operating expenses, particularly if the pandemic
continues over a long period of time. We adjusted, but did not make material
modifications to, our operating expenses to be able to continue providing
employment for our employees, service to our sellers, and process incoming
vehicles for sale in future quarters. The pandemic may have an adverse effect on
our future revenues, with the magnitude and timing of these effects dependent
upon the extent and duration of suspended economic activity across our markets.
We believe that the longer-term impact on our business will depend on potential
adverse operational impacts from outbreaks of COVID-19 at any of our locations;
additional outbreaks of COVID-19 in one or more of our geographic markets; a
reduction in miles driven due to one or more factors relating to the COVID-19
pandemic; the relationship of supply and demand for newly manufactured vehicles,
on the one hand, and used and salvage vehicles, on the other hand, due to
reduced manufacturing capacity and broader supply chain disruptions during the
COVID-19 pandemic and the effects of these supply and demand relationships on
the average sale prices obtained at auction for the vehicles assigned to us for
remarketing; further government actions in response to COVID-19 outbreaks that
restrict business activity or travel; disruptions of governmental administrative
operations due to COVID-19 outbreaks that adversely impact our core business
activities, such as vehicle title processing; and deteriorating economic
conditions generally, and the potential availability, among other things, of
vaccines or treatments, none of which we can predict. For a further discussion
of risks to our business and operating results arising from the pandemic, please
see the section of this Annual Report on Form 10-K captioned "Risk Factors."

Operating Costs and Expenses: Yard operations expenses consist primarily of
operating personnel (which includes yard management, clerical, and yard
employees); rent; vehicle transportation; insurance; property related taxes;
fuel; equipment maintenance and repair; marketing costs directly related to the
auction process; and costs of vehicles sold under the purchase contracts.
General and administrative expenses consist primarily of executive management;
accounting; data processing; sales personnel; professional services; marketing
expenses; and system maintenance and enhancements.

Other (Expense) Income: Other (expense) income consists primarily of interest
expense on long-term debt, see Notes to Consolidated Financial Statements, Note
8 - 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.

Liquidity and Cash Flows: Our primary source of working capital is cash
operating results and debt financing. The primary source of our liquidity is our
cash and cash equivalents and Revolving Loan Facility. The primary factors
affecting cash operating results are: (i) seasonality; (ii) market wins and
losses; (iii) supplier mix; (iv) accident frequency; (v) total loss frequency;
(vi) volume from our existing suppliers; (vii) commodity pricing; (viii) used
car pricing; (ix) foreign currency exchange rates; (x) product mix; (xi)
contract mix to the extent applicable; (xii) our capital expenditures; and
(xiii) other macroeconomic factors such as COVID-19. These factors are further
discussed in the Results of Operations and Risk Factors sections of this Annual
Report on Form 10-K.

Potential internal sources of additional working capital and liquidity are the
sale of assets or the issuance of shares through option exercises and shares
issued under our Employee Stock Purchase Plan. A potential external source of
additional working capital and liquidity is the issuance of additional debt or
equity. However, we cannot predict if these sources will be available in the
future or on commercially acceptable terms.

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Acquisitions and New Operations

As part of our overall expansion strategy of offering integrated services to
vehicle sellers, we anticipate acquiring and developing facilities in new
regions, as well as the regions currently served by our facilities. We believe
that these acquisitions and openings will strengthen our coverage, as we have
facilities located in the U.S., Canada, the U.K., Brazil, the Republic of
Ireland, Germany, Finland, the U.A.E., Oman, Bahrain, and Spain with the
intention of providing global coverage for our sellers. All of these
acquisitions have been accounted for using the purchase method of accounting.

The following tables show the operational facilities that we have opened and are now operational as of Aug 1, 2018 through July 31, 2021:

   United States Locations             Date
Spartanburg, South Carolina      August 2018
Madison, Wisconsin               September 2018
Harleyville, South Carolina      January 2019
Macon, Georgia                   January 2019
Mocksville, North Carolina       January 2019
Antelope, California             January 2019
Sacramento, California           March 2019
Fredericksburg, Virginia         April 2019
West Mifflin, Pennsylvania       May 2019
Hartford, Connecticut            July 2019
Buffalo, New York                July 2019
Fort Wayne, Indiana              February 2020
Concord, North Carolina          March 2020
Salt Lake City, Utah             May 2020
Redding, California              August 2020
Dothan, Alabama                  August 2020
Jacksonville, Florida            August 2020
Milwaukee, Wisconsin             September 2020
Houston, Texas                   December 2020
Knightdale, North Carolina       March 2021
Gastonia, North Carolina         May 2021
Bismarck, North Dakota           June 2021
Fairburn, Georgia                July 2021
Dyer, Indiana                    July 2021



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Contents

                    International Locations                               Geographic Service Area                  Date
Curitiba, Paraná                                                       Brazil                               September 2018
Mannheim, Rhineland-Palatinate                                         Germany                              October 2018
Stuttgart, Baden-Württemberg                                           Germany                              November 2018
Frankfurt, Hessen                                                      Germany                              November 2018
Itzehoe, Schleswig-Holstein (Hamburg)                                  Germany                              November 2018
Furth, Bavaria (Nuremberg)                                             Germany                              November 2018
Massen, Brandenburg (Berlin)                                           Germany                              November 2018
Friesack, Brandenburg (Berlin)                                         Germany                              December 2018
Niederlehme, Brandenburg (Berlin)                                      Germany                              November 2019
Pilsting, Bavaria (Munich)                                             Germany                              December 2019
São Paulo, São Paulo                                                   Brazil                               May 2020
Bruchmühlbach-Miesau, Rhineland-Palatinate (Mannheim)                  Germany                              February 2021
Mallorca, Balearic Islands                                             Spain                                April 2021


The following table shows the operating facilities obtained through the acquisitions of companies from Aug 1, 2018 through July 31, 2021:

                   Locations            Geographic Service Area          Date
            Greenville, Kentucky       United States                 March 2019
            Des Moines, Iowa           United States                 July 2021



The period-to-period comparability of our consolidated operating results and
financial position is affected by business acquisitions, new openings, weather,
and product introductions during such periods.

In addition to growth through business acquisitions, we seek to increase
revenues and profitability by, among other things, (i) acquiring and developing
additional vehicle storage facilities in key markets, including foreign markets;
(ii) pursuing global, national, and regional vehicle seller agreements; (iii)
increasing our service offerings; and (iv) expanding the application of VB3 into
new markets. In addition, we implement our pricing structure and auction
procedures, and attempt to introduce cost efficiencies at each of our acquired
facilities by implementing our operational procedures, integrating our
management information systems, and redeploying personnel, when necessary.

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Results of Operations

The following table shows certain data from our consolidated statements of
income expressed as a percentage of total service revenues and vehicle sales for
fiscal 2021, 2020 and 2019:
                                                         Year Ended July 31,
(In percentages)                                     2021             2020       2019
Service revenues and vehicle sales:
Service revenues                                            85  %      88  %      86  %
Vehicle sales                                               15  %      12  %      14  %
Total service revenues and vehicle sales                   100  %     100  %     100  %
Operating expenses:
Yard operations                                             37  %      44  %      43  %
Cost of vehicle sales                                       13  %      10  %      13  %
General and administrative                                   8  %       9  %       9  %

Total operating expenses                                    58  %      63  %      65  %
Operating income                                            42  %      37  %      35  %
Total other expense                                         (1) %      (1) %      (1) %
Income before income taxes                                  41  %      36  %      34  %
Income tax expense                                           6  %       4  %       5  %
Net income                                                  35  %      32  %      29  %


Comparison of closed years July 31, 2021, 2020 and 2019

The following table presents a comparison of service revenues for fiscal 2021,
2020 and 2019:
                                                                   Year Ended July 31,                                      2021 vs. 2020                                2020 vs. 2019
(In thousands)                                        2021                 2020                 2019                 Change               % Change                Change               % Change
Service revenues
             United States                       $ 2,017,504          $ 1,714,724          $ 1,537,431          $     302,780                  17.7  %       $     177,293                  11.5  %
             International                           274,363              232,416              218,263                 41,947                  18.0  %              14,153                   6.5  %
Total service revenues                           $ 2,291,867          $ 1,947,140          $ 1,755,694          $     344,727                  17.7  %       $     191,446                  10.9  %



Service Revenues. The increase in service revenues for fiscal 2021 of $344.7
million, or 17.7% as compared to fiscal 2020 came from (i) an increase in the
U.S. of $302.8 million, and (ii) an increase in International of $41.9 million.
The growth in the U.S. was driven primarily by an increase in revenue per car,
partially offset by a decrease in volume. The decrease in volume in the U.S. was
driven by the COVID-19 pandemic, which reduced accident volume as miles driven
declined. Excluding the beneficial impact of $12.0 million due to changes in
foreign currency exchange rates, primarily from the change in the British pound
and Brazilian real to U.S. dollar exchange rates, the growth in International of
$29.9 million was driven primarily by increased revenue per car, partially
offset by decreased volume driven by the COVID-19 pandemic, which reduced
accident volume as miles driven decreased.

The following table presents a comparison of vehicle sales for fiscal 2021, 2020
and 2019:
                                                             Year Ended July 31,                                   2021 vs. 2020                                2020 vs. 2019
(In thousands)                                    2021               2020               2019                Change               % Change                Change               % Change

Vehicle sales

            United States                     $ 254,568          $ 145,962          $ 119,138          $     108,606                  74.4  %       $      26,824                  22.5  %
            International                       146,076            112,481            167,125                 33,595                  29.9  %             (54,644)                (32.7) %
Total vehicle sales                           $ 400,644          $ 258,443          $ 286,263          $     142,201                  55.0  %       $     (27,820)                 (9.7) %



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Vehicle Sales. The increase in vehicle sales for fiscal 2021 of $142.2 million,
or 55.0% as compared to fiscal 2020 came from (i) an increase in the U.S. of
$108.6 million and (ii) an increase in International of $33.6 million. The
growth in the U.S. was primarily the result of (i) increased volume and (ii)
higher average auction selling prices, which we believe was due to a change in
the mix of vehicles sold; increased demand; and reduced supply. Excluding a
beneficial impact of $10.2 million due to changes in foreign currency exchange
rates, primarily from the change in the British pound and European Union euro to
U.S. dollar exchange rates, the increase in International of $23.4 million was
primarily the result of higher average auction selling prices partially offset
by decreased volume driven by contractual shifts from purchase contracts to fee
based service contracts and COVID-19's impact on volume, which reduced accident
volume as miles driven declined.

The following table presents a comparison of yard operations expense for fiscal
2021, 2020 and 2019:
                                                            Year Ended July 31,                                    2021 vs. 2020                               2020 vs. 2019
(In thousands)                                   2021                2020               2019                Change               % Change               Change               % Change

Court operating costs

         United States                      $   849,037          $ 828,066          $ 751,653          $      20,971                  2.5  %       $      76,413                 10.2  %
         International                          154,255            144,421            136,458                  9,834                  6.8  %               7,963                  5.8  %
Total yard operations expenses              $ 1,003,292          $ 972,487          $ 888,111          $      30,805                  3.2  %       $      84,376                  9.5  %

Yard operations expenses, excluding
depreciation and amortization
         United States                      $   761,021          $ 760,043          $ 697,115          $         978                  0.1  %       $      62,928                  9.0  %
         International                          141,354            135,445            127,829                  5,909                  4.4  %               7,616                  6.0  %

Depreciation and amortization of yard

         United States                      $    88,016          $  68,023          $  54,538          $      19,993                 29.4  %       $      13,485                 24.7  %
         International                           12,901              8,976              8,629                  3,925                 43.7  %                 347                  4.0  %



Yard Operations Expenses. The increase in yard operations expenses for fiscal
2021 of $30.8 million, or 3.2% as compared to fiscal 2020 resulted from (i) an
increase in the U.S. of $21.0 million, primarily from a $20.0 million increase
in depreciation and an increase in the cost to process each car partially offset
by a decline in volume driven by the COVID-19 pandemic, which reduced accident
volume as miles driven declined; and (ii) an increase in International of $9.8
million related primarily from the detrimental impact of $7.6 million due to
changes in foreign currency exchange rates, driven by changes in the British
pound, Brazilian real, and European Union euro to U.S. dollar exchange rate; and
an increase in the cost to process each car, partially offset by a decrease in
volume driven by the COVID-19 pandemic. The increase in yard operations
depreciation and amortization expenses resulted primarily from depreciating new
and expanded facilities placed into service in the U.S. and International
locations.

The following table presents a comparison of the cost of sales of vehicles for fiscal years 2021, 2020 and 2019:

                                                                   Year Ended July 31,                                   2021 vs. 2020                                2020 vs. 2019
(In thousands)                                          2021               2020               2019                Change               % Change                Change               % Change

Cost of vehicle sales

                  United States                     $ 227,365          $ 135,095          $ 112,268          $      92,270                  68.3  %       $      22,827                  20.3  %
                  International                       118,763             90,199            143,236                 28,564                  31.7  %             (53,037)                (37.0) %
Total cost of vehicle sales                         $ 346,128          $ 225,294          $ 255,504          $     120,834                  53.6  %       $     (30,210)                (11.8) %



Cost of Vehicle Sales. The increase in cost of vehicle sales for fiscal 2021 of
$120.8 million, or 53.6% as compared to fiscal 2020 was the result of (i) an
increase in the U.S. of $92.3 million and (ii) an increase in International of
$28.6 million. The increase in the U.S. was primarily the result of (i)
increased volume and (ii) higher average purchase prices, which we believe was
due to a change in the mix of vehicles sold; increased demand; and reduced
supply. Excluding the detrimental impact of $8.3 million due to changes in
foreign currency exchange rates, driven by changes in the British pound and
European euro to U.S. dollar exchange rate, the increase in International of
$20.3 million was primarily the result of higher average purchase prices
partially offset by decreased volume driven by contractual shifts from purchase
contracts to fee based service contracts and COVID-19's impact on volume, which
reduced accident volume as miles driven declined.

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The following table presents a comparison of general and administrative expenses
for fiscal 2021, 2020 and 2019:
                                                                    Year Ended July 31,                                   2021 vs. 2020                               2020 vs. 2019
(In thousands)                                           2021               2020               2019                Change               % Change               Change               % Change

General and administrative expenses

            United States                            $ 172,115          $ 154,346          $ 155,180          $      17,769                 11.5  %       $        (834)                (0.5) %
            International                               34,550             37,357             26,687                 (2,807)                (7.5) %              10,670                 40.0  %
Total general and administrative expenses            $ 206,665          $ 191,703          $ 181,867          $      14,962                  7.8  %       $       9,836                  5.4  %

General and administrative expenses, excluding
depreciation and amortization
            United States                            $ 152,366          $ 131,551          $ 134,452          $      20,815                 15.8  %       $      (2,901)                (2.2) %
            International                               33,245             35,761             25,687                 (2,516)                (7.0) %              10,074                 39.2  %

General and administrative depreciation and
amortization
            United States                            $  19,749          $  22,795          $  20,727          $      (3,046)               (13.4) %       $       2,068                 10.0  %
            International                                1,305              1,596              1,001                   (291)               (18.2) %                 595                 59.4  %



General and Administrative Expenses. The increase in general and administrative
expenses for fiscal 2021 of $15.0 million, or 7.8% as compared to fiscal 2020
came primarily from (i) an increase in the U.S. of $17.8 million, partially
offset by (ii) a decrease in International of $2.8 million. Excluding
depreciation and amortization, the decrease in International of $2.5 million
resulted primarily from the detrimental impact of $1.4 million due to changes in
foreign currency exchange rates, primarily from the change in the British pound,
Brazilian real, and European Union euro to U.S. dollar exchange rate and lower
current period costs including decreased travel costs and the nonrecurrence of
certain legal costs incurred in fiscal 2020. Excluding depreciation and
amortization, the increase in the U.S. of $20.8 million resulted primarily from
increases in stock compensation and increased legal costs, partially offset by
decreased payroll taxes from the exercise of employee stock options and travel
costs. The decrease in depreciation and amortization expenses resulted primarily
from fully depreciating certain intangible and technology assets in the U.S. and
International locations.

The following table summarizes the total of other income taxes and charges for fiscal years 2021, 2020 and 2019:

                                                            Year Ended July 31,                                         2021 vs. 2020                                    2020 vs. 2019
(In thousands)                                2021                    2020                 2019                  Change                 % Change                  Change                 % Change

Total other expenses                         (14,580)               (15,260)             (11,524)                       680                   4.5  %                  (3,736)                (32.4) %
Income taxes                                 185,351                100,932              113,258                     84,419                  83.6  %                 (12,326)                (10.9) %


Other Expenses. The decrease in total other expenses for fiscal 2021 of $0.7
million, or 4.5% as compared to fiscal 2020 was primarily due to a decrease in
currency losses, primarily due to the change in the British pound and Brazilian
real to U.S. dollar exchange rate, lower gains on the disposal of certain
non-operating assets in the current year, and lower interest income earned in
the current year, partially offset by higher earnings of unconsolidated
affiliates.

Income Taxes. Our effective income tax rates were 16.5% and 12.6%, for fiscal
2021 and 2020, respectively. The current and prior year's effective tax rate was
computed based on the U.S. federal statutory tax rate of 21.0%. The effective
tax rate for fiscal year ending July 31, 2021 was favorably impacted by $19.8
million of discrete tax adjustments made in connection with finalizing our
fiscal year 2020 tax return. The effective tax rate for fiscal year ending July
31, 2020 was negatively impacted by $1.7 million of discrete tax items related
to amending previously filed income tax returns. The effective tax rates in the
current and prior year were also impacted by the recognition of excess tax
benefits from the exercise of employee stock options of $29.8 million and $92.5
million for fiscal years 2021 and 2020, respectively.

Discussion of the closed financial year July 31, 2020 compared to the closed financial year
July 31, 2019

For a discussion of fiscal 2020 as compared to fiscal 2019, please refer to Part
II, Item 7, Management's Discussion and Analysis of Financial Condition and
Results of Operations in our   Form 10-K   for the fiscal year ended July 31,
2020, filed with the SEC on   September 28, 2020  .

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Liquidity and Capital Resources

The following table presents a comparison of key components of our liquidity and
capital resources for fiscal 2021, 2020 and 2019, excluding additional funds
available to us through our Revolving Loan Facility:
                                                        July 31,                                         2021 vs. 2020                                2020 vs. 2019
(In thousands)                         2021                2020               2019                Change               % Change                Change               % Change
Cash, cash equivalents, and
restricted cash                   $ 1,048,260          $ 477,718          $ 186,319          $     570,542                 119.4  %       $     291,399                 156.4  %
Working capital                     1,281,580            607,715            405,163                673,865                 110.9  %             202,552                  50.0  %



                                                    Year Ended July 31,                                    2021 vs. 2020                                 2020 vs. 2019
(In thousands)                         2021                2020                2019                 Change               % Change                Change
               % Change
Operating cash flows               $  990,891          $  917,885          $  646,646          $      73,006                   8.0  %       $     271,239                    41.9  %
Investing cash flows                 (465,466)           (601,208)           (356,267)               135,742                  22.6  %            (244,941)                  (68.8) %
Financing cash flows                   40,922             (27,414)           (370,304)                68,336                 249.3  %             342,890                    92.6  %

Capital expenditures,
excluding acquisitions             $ (462,996)         $ (591,972)         $ (373,883)         $     128,976                  21.8  %       $    (218,089)                  (58.3) %
Acquisitions, net of cash
acquired                               (5,000)            (11,702)               (745)                 6,702                  57.3  %             (10,957)               (1,470.7) %



Cash, cash equivalents, and restricted cash and working capital increased $570.5
million and $673.9 million at July 31, 2021, respectively, as compared to
July 31, 2020. Cash, cash equivalents, and restricted cash increased primarily
due to cash generated from operations and proceeds from stock option exercises,
partially offset by capital expenditures and payments for employee stock-based
tax withholdings. Working capital increased primarily from cash generated from
operations and timing of cash receipts and payments, partially offset by capital
expenditures and certain income tax benefits related to stock option exercises.
Cash equivalents consisted of bank deposits, certificates of deposit, U.S.
Treasury Bills, and funds invested in money market accounts, which bear interest
at variable rates.

Historically, we have financed our growth through cash generated from
operations, public offerings of common stock, equity issued in conjunction with
certain acquisitions, and debt financing. Our primary source of cash generated
by operations is from the collection of service fees and reimbursable advances
from the proceeds of vehicle sales. We expect to continue to use cash flows from
operations to finance our working capital needs and to develop and grow our
business. In addition to our stock repurchase program, we are considering a
variety of alternative potential uses for our remaining cash balances and our
cash flows from operations. These alternative potential uses include additional
stock repurchases, repayments of long-term debt, the payment of dividends, and
acquisitions. For further detail, see Notes to Consolidated Financial
Statements, Note 8 - Long-Term Debt and Note 11 - Stockholders' Equity and under
the subheadings "Credit Agreement" and "Note Purchase Agreement" below.

Our business is seasonal as inclement weather during the winter months increases
the frequency of accidents and consequently, the number of cars involved in
accidents which the insurance companies salvage rather than repair. During the
winter months, most of our facilities process 5% to 20% more vehicles than at
other times of the year. Severe weather events, including but not limited to
tornadoes, floods, hurricanes, and hailstorms, can also impact our volumes.
These increased volumes require the increased use of our cash to pay out
advances and handling costs of the additional business.

The COVID-19 pandemic may also have an impact on our liquidity, the extent and timing of these effects depending on the extent and duration of the suspension of economic activity in our markets. The COVID-19 pandemic may impact our volume of vehicles processed and the average selling prices of corresponding vehicles.

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We believe that our currently available cash and cash equivalents and cash
generated from operations will be sufficient to satisfy our operating and
working capital requirements for the next 12 months and for the foreseeable
future. We expect to acquire or develop additional locations and expand some of
our current facilities in the foreseeable future. We may be required to raise
additional cash through drawdowns on our Revolving Loan Facility or issuance of
additional equity to fund this expansion. Although the timing and magnitude of
growth through expansion and acquisitions are not predictable, the opening of
new greenfield yards is contingent upon our ability to locate property that (i)
is in an area in which we have a need for more capacity; (ii) has adequate size
given the capacity needs; (iii) has the appropriate shape and topography for our
operations; (iv) is reasonably close to a major road or highway; and (v) most
importantly, has the appropriate zoning for our business. Costs to develop a new
yard can range from $3.0 to $50.0 million, depending on size, location and
developmental infrastructure requirements.

As of July 31, 2021, $159.5 million of the $1.0 billion of cash, cash
equivalents, and restricted cash was held by our foreign subsidiaries. If these
funds are needed for our operations in the U.S., the repatriation of these funds
could still be subject to the foreign withholding tax following the U.S. Tax
Reform. However, our intent is to permanently reinvest these funds outside of
the U.S. and our current plans do not require repatriation to fund our U.S.
operations.

Net cash provided by operating activities increased for fiscal 2021 as compared
to fiscal 2020 due to improved cash operating results primarily from an increase
in service and vehicle sales revenues, partially offset by an increase in yard
operations and general and administrative expenses, and changes in operating
assets and liabilities. The change in operating assets and liabilities was
primarily the result of a decrease in funds received in accounts receivable of
$143.5 million and a decrease in cash generated from the sale of inventory of
$49.0 million, partially offset by net income taxes receivable of $12.9 million
primarily related to excess tax benefits from stock option exercises, decreases
in funds primarily used to pay land acquisition deposits of of $6.9 million, and
decreases in funds used to pay accounts payable of $2.9 million.

Net cash used in investing activities decreased for fiscal 2021 as compared to
fiscal 2020 due primarily to decreases in capital expenditures and acquisitions
and proceeds from the sale of assets. Our capital expenditures are primarily
related to acquiring land, opening and improving facilities, capitalized
software development costs for new software for internal use and major software
enhancements, acquiring yard equipment, and lease buyouts of certain facilities.
We continue to develop, expand, and invest in new and existing facilities and
standardize the appearance of existing locations. As of July 31, 2021, we have
no material non-cancelable commitments for future capital expenditures.
Capitalized software development costs were $13.6 million, $13.2 million, and
$8.4 million for fiscal 2021, 2020 and 2019, respectively. If, at any time it is
determined that capitalized software provides a reduced economic benefit, the
unamortized portion of the capitalized development costs will be impaired. See
Notes to Consolidated Financial Statements, Capitalized Software Costs in Note 1
- Summary of Significant Accounting Policies.

Net cash provided by (used in) financing activities changed from a use of cash
to providing cash in fiscal 2021 as compared to fiscal 2020 due primarily to
lower payments for employee stock-based tax withholdings as discussed in further
detail under the subheading "Stock Repurchases"and the Notes to Consolidated
Financial Statements, Note 11 - Stockholders' Equity and lower debt issuance
costs for the restructuring of our revolving loan facility as discussed in
further detail in Notes to Consolidated Financial Statements, Note 8 - Long-Term
Debt, partially offset by a decrease in proceeds from the exercise of stock
options.

For a discussion of fiscal 2020 as compared to fiscal 2019, please refer to Part
II, Item 7, Management's Discussion and Analysis of Financial Condition and
Results of Operations in our   Form 10-K   for the fiscal year ended July 31,
2020, filed with the SEC on   September 28, 2020  .

Stock Repurchases

On September 22, 2011, our Board of Directors approved an 80 million share
increase in the stock repurchase program, bringing the total current
authorization to 196 million shares. The repurchases may be effected through
solicited or unsolicited transactions in the open market or in privately
negotiated transactions. No time limit has been placed on the duration of the
stock repurchase program. Subject to applicable securities laws, such
repurchases will be made at such times and in such amounts as we deem
appropriate and may be discontinued at any time. For fiscal 2021 and 2020, we
did not repurchase any shares of our common stock under the program. For fiscal
2019, we repurchased 7,635,596 shares of our common stock under the program at a
weighted average price of $47.81 per share totaling $365.0 million. As of
July 31, 2021, the total number of shares repurchased under the program was
114,549,198 and 81,450,802 shares were available for repurchase under our
program.

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In fiscal 2019, our former President exercised all of his vested stock options
through a cashless exercise. In fiscal 2020, our Chief Executive Officer
exercised all of his vested stock options through a cashless exercise. In fiscal
2021, certain employees exercised stock options through a cashless exercise. A
portion of the options exercised were net settled in satisfaction of the
exercise price. We remitted $3.8 million, $101.3 million, and $45.6 million
during the years ended July 31, 2021, 2020 and 2019, respectively, to the proper
taxing authorities in satisfaction of the employees' statutory withholding
requirements.

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

                                                        Weighted                                                                                                         Weighted Average         Employee Stock-Based
                                                         Average            Shares Net Settled        Shares Withheld for Taxes                                          Share Price for          Tax Withholding (in
      Period               Options Exercised         Exercise Price            for Exercise                      (1)                   Net Shares to Employees             Withholding                   000s)
FY 2019-Q3                   3,000,000               $      17.81                  945,162                         806,039                   1,248,799                 $           56.53          $          45,565
FY 2020-Q1                   4,000,000                      17.81                  865,719                       1,231,595                   1,902,686                             82.29                    101,348
FY 2021-Q4                      90,000                      17.73                   12,366                          29,349                      48,285                            129.01                      3,786

(1) Shares withheld for tax are treated as a share buyback for accounting purposes but are not included in our share buyback program.

Credit agreement

On July 21, 2020, we entered into a First Amended and Restated Credit Agreement
with Wells Fargo Bank, National Association, Truist Bank (as successor by merger
to Suntrust Bank), BMO Harris Bank N.A., Santander Bank, N.A., and Bank of
America, N.A., as administrative agent (as amended from time to time, the
"Credit Amendment"), bringing the aggregate principal amount of the revolving
credit commitments under the Credit Agreement ( the "Revolving Loan Facility")
to $1,050.0 million.

The carrying amount of the Credit Agreement is comprised of borrowings under
which interest accrues under a fluctuating interest rate structure. Accordingly,
the carrying value approximated fair value at July 31, 2021, and was classified
within Level II of the fair value hierarchy.

The interest rate as of July 31, 2021 on our Revolving Loan Facility was the
Eurodollar Rate of 0.75% plus an applicable margin of 1.50%. Amounts borrowed
under the Revolving Loan Facility may be repaid and reborrowed until the
maturity date of July 21, 2023. We had no outstanding borrowings under the
Revolving Loan Facility as of July 31, 2021 or 2020. The Credit Agreement
contains customary affirmative and negative covenants and we were in compliance
with all covenants related to the Credit Agreement as of July 31, 2021.

Note Purchase contract

On December 3, 2014, we entered into a Note Purchase Agreement and sold to
certain purchasers (collectively, the "Purchasers") $400.0 million in aggregate
principal amount of senior secured notes (the "Senior Notes") consisting of (i)
$100.0 million aggregate principal amount of 4.07% Senior Notes, Series A, due
December 3, 2024; (ii) $100.0 million aggregate principal amount of 4.19% Senior
Notes, Series B, due December 3, 2026; (iii) $100.0 million aggregate principal
amount of 4.25% Senior Notes, Series C, due December 3, 2027; and (iv) $100.0
million aggregate principal amount of 4.35% Senior Notes, Series D, due
December 3, 2029. Interest is due and payable quarterly, in arrears, on each of
the Senior Notes. We may prepay the Senior Notes, in whole or in part, at any
time, subject to certain conditions, including minimum amounts and payment of a
make-whole amount equal to the discounted value of the remaining scheduled
interest payments under the Senior Notes. The Note Purchase Agreement contains
customary affirmative and negative covenants and we were in compliance with all
covenants related to the Note Purchase Agreement as of July 31, 2021.

For further details on the Credit Agreement and the Note Purchase Agreement, see the Notes to Consolidated Financial Statements, Note 8 – Long Term Debt.

Off-balance sheet provisions

As of July 31, 2021, we had no off-balance sheet arrangements pursuant to Item
303(a)(4) of Regulation S-K promulgated under the Securities Exchange Act of
1934, as amended.

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Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements, which have been prepared
in accordance with accounting principles generally accepted in the U.S. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues,
expenses, and related disclosure of contingent assets and liabilities as of the
date of the financial statements. Actual results may differ from these estimates
under different assumptions or conditions.

We consider the following policies to be the most critical to understanding the
judgments that are involved and the uncertainties that could impact our results
of operations, financial condition, and cash flows. For additional information,
see Note 1 - Summary of Significant Accounting Policies in the Notes to
Consolidated Financial Statements.

The following discussion and analysis should be read in conjunction with our consolidated financial statements and the accompanying notes in Part I., Section I., “Financial Statements”.

Revenue recognition

Our 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. 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.

Our disaggregation between service revenues and vehicle sales at the segment
level reflects how the nature, timing, amount, and uncertainty of our revenues
and cash flows are impacted by economic factors. We report sales taxes on
relevant transactions on a net basis in our consolidated results of operations,
and therefore do not include sales taxes in revenues or costs.

Service revenues

Our service revenue consists of auction and auction related sales transaction
fees charged for vehicle remarketing services. Within this revenue category, our
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
our facility; title processing and preparation fees; vehicle storage fees;
bidding fees; and vehicle loading fees. These services are not distinct within
the context of the contract. Accordingly, revenue for these services is
recognized when the single performance obligation is satisfied at the completion
of the auction process. We do not take ownership of these consigned vehicles,
which are stored at our facilities located throughout the U.S. and at its
international locations. These fees are recognized as net revenue (not gross
vehicle selling price) at the time of auction in the amount of such fees
charged.

We have a separate performance obligation related to providing access to our
online auction platform. We charge members an annual registration fee for the
right to participate in our online auctions and access our bidding platform.
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 we provide for credit loss expense in the
case of non-performance by our buyers or sellers.
                                                          Year Ended July 31,
           (In thousands)                       2021             2020             2019
           Service revenues
                        United States       $ 2,017,504      $ 1,714,724      $ 1,537,431
                        International           274,363          232,416          218,263
           Total service revenues           $ 2,291,867      $ 1,947,140      $ 1,755,694


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Vehicle sales

Some vehicles are purchased and re-marketed on our behalf. We have only one performance obligation related to the sale of these vehicles, which is the completion of the online auction process. Turnover from vehicle sales is recorded on the date of the auction. As we act as principal in vehicle sales transactions, the gross sale price at auction is recorded as revenue.

                                           Year Ended July 31,
(In thousands)                     2021           2020           2019
Vehicle sales
            United States       $ 254,568      $ 145,962      $ 119,138
            International         146,076        112,481        167,125
Total vehicle sales             $ 400,644      $ 258,443      $ 286,263



Contract assets

We capitalize certain contract assets related to obtaining a contract, where the
amortization period for the related asset is greater than one year. These assets
are amortized over the expected life of the customer relationship. Contract
assets are classified as current or long-term other assets, based on the timing
of when we expect to recognize the related revenues and are amortized as an
offset to the associated revenues on a straight-line basis. We assess these
costs for impairment at least quarterly and as "triggering" events occur that
indicate it is more likely than not that an impairment exists. The contract
asset costs where the amortization period for the related asset is one year or
less are expensed as incurred and recorded within general and administrative
expenses in the accompanying consolidated statements of income.

Uncertain tax positions

In determining net income for financial statement purposes, we must make 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. In
addition, our actual and forecasted earnings are subject to change due to
economic, political and other conditions, such as new COVID-19 variants.

Our effective tax rates could be affected by numerous factors such as changes in
our business operations; acquisitions; investments; entry into new businesses
and geographies; intercompany transactions; the relative amount of our foreign
earnings, including earnings being lower than anticipated in jurisdictions where
we have lower statutory rates and higher than anticipated in jurisdictions where
we have higher statutory rates; losses incurred in jurisdictions for which we
are not able to realize related tax benefits; the applicability of special tax
regimes; changes in foreign currency exchange rates; changes in our stock price;
changes to our forecasts of income and loss and the mix of jurisdictions to
which they relate; changes in our deferred tax assets and liabilities and their
valuation; changes in the laws, regulations, administrative practices,
principles, and interpretations related to tax, including changes to the global
tax framework; competition; and other laws and accounting rules in various
jurisdictions. In addition, a number of countries have enacted or are actively
pursuing changes to their tax laws applicable to corporate multinationals.

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. Development in an audit,
investigation, or other tax controversy could have a material effect on our
operating results or cash flows in the period or periods for which that
development occurs, as well as for prior and subsequent periods. We recognize
potential liabilities for anticipated tax audit issues in the U.S. and other tax
jurisdictions based on an estimate of the ultimate resolution of whether, and
the extent to which, additional taxes will be due. Although we believe the
estimates are reasonable, no assurance can be given that the final outcome of
these matters will not be different from what is reflected in the historical
income tax provisions and accruals. We recognize interest and penalties, if any,
related to unrecognized tax benefits in income tax expense.

Recently published accounting standards

For a description of the new accounting standards that affect us, see the notes to the consolidated financial statements, note 1 – Summary of significant accounting policies.

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