900075--10/1/2007--COPART

related topics

{customer, product, revenue}

{stock, price, operating}

{cost, operation, labor}

{competitive, industry, competition}

{property, intellectual, protect}

{acquisition, growth, future}

{cost, regulation, environmental}

{operation, natural, condition}

{personnel, key, retain}

{condition, economic, financial}

{provision, law, control}

{regulation, change, law}

{gas, price, oil}

{loss, insurance, financial}

We depend on a limited number of major suppliers of salvage vehicles. The loss of one or more of these major suppliers could adversely affect our results of operations and financial condition, and an inability to increase our sources of vehicle supply could adversely affect our growth rates. In the UK we operate primarily on a principal basis, purchasing the salvage vehicle outright from the insurance companies and reselling the vehicle to buyers. This exposes us to inventory risks including: Our strategic shift from live salvage sales to an entirely Internet-based sales model presents new risks, including substantial technology risks. Our results of operations may not continue to benefit from the implementation of VB Failure to have sufficient capacity to accept additional cars at one or more of our salvage yards could adversely affect our relationships with insurance companies or other suppliers of salvage vehicles. Factors such as mild weather conditions can have an adverse effect on our revenues and operating results as well as our revenue and earnings growth rates by reducing the available supply of salvage vehicles. Conversely, extreme weather conditions can result in an oversupply of salvage vehicles that requires us to incur abnormal expenses to respond to market demands. High fuel prices may have an adverse effect on our revenues and operating results as well as our earnings growth rates. The salvage vehicle sales industry is highly competitive and we may not be able to compete successfully. Because the growth of our business has been due in large part to acquisitions and development of new salvage vehicle facilities, the rate of growth of our business and revenues may decline if we are not able to successfully complete acquisitions and develop new facilities. As we continue to expand our operations, our failure to manage growth could harm our business and adversely affect our results of operations and financial condition. Our annual and quarterly performance may fluctuate, causing the price of our stock to decline. Our strategic shift to an Internet-based sales model has increased the relative importance of intellectual property assets to our business, and any inability to protect those rights could have a material adverse effect on our business, financial condition, or results of operations. We have in the past been and may in the future be subject to intellectual property rights claims, which are costly to defend, could require us to pay damages, and could limit our ability to use certain technologies in the future. New accounting pronouncements or new interpretations of existing standards could require us to make changes or adjustments in our accounting policies and procedures that could adversely affect our financial statements. Government regulation of the salvage vehicle sales industry may impair our operations, increase our costs of doing business and create potential liability. The operation of our storage facilities poses certain environmental risks, which could adversely affect our financial position, results of operations or cash flows. If we experience problems with our providers of fleet operations, our business could be harmed. If we experience problems with our UK trucking fleet operations, our business could be harmed. We are partially self-insured for certain losses. Our executive officers, directors and their affiliates hold a large percentage of our stock and their interests may differ from other shareholders. We have a shareholder rights plan, or poison pill, which could affect the price of our common stock and make it more difficult for a potential acquirer to purchase a large portion of our securities, to initiate a tender offer or a proxy contest, or to acquire us. If we lose key management or are unable to attract and retain the talent required for our business, we may not be able to successfully manage our business or achieve our objectives. Executive Officers of the Registran t , our founder, has served as our Chairman of the Board since 2004, Chief Executive Officer since 1986 and as a director since 1982. Mr. Johnson served as our President from 1986 until May 1995. Mr. Johnson was an officer and director of U-Pull-It, Inc., or UPI, a self-service auto dismantler which he co-founded in 1982, from 1982 through September 1994. Mr. Johnson sold his entire interest in UPI in September 1994. Mr. Johnson has over 30 years of experience in owning and operating auto dismantling companies.

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900075--10/1/2007--COPART_INC