COPART INC

Previous wording

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

Current wording

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

Previous wording

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 dealers, individuals, charities, rental car companies, banks, finance companies, and fleet operators. We obtained 81%, 81%, and 83% of the total number of vehicles processed during fiscal 2025, 2024, and 2023, respectively, from insurance company sellers. 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.

Current wording

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 dealers, individuals, charities, rental car companies, banks, finance companies, and fleet operators. We obtained 79%, 81%, and 81% of the total number of vehicles processed during fiscal 2026, 2025, and 2024, respectively, from insurance company sellers. 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.

Previous wording

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, drivable 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 past 30 years, we believe there has been an increase in overall growth in the salvage market driven by an increase in total loss frequency. This increase in total loss frequency may have been driven by changes in used car values and repair costs over the same long-term horizon, which we believe are generally trending upward. We believe the long-term trend of increases in total loss frequency will continue. In the near term changes in used car prices and repair cost are inversely related, but may impact total loss frequency and thereby 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 has continued to increase, growing from 11.1 years in 2012 to 12.8 years in 2025. 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 with precision.

Current wording

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, drivable 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 past 30 years, we believe there has been an increase in overall growth in the salvage market driven by an increase in total loss frequency. This increase in total loss frequency may have been driven by changes in used car values and repair costs over the same long-term horizon, which we believe are generally trending upward. We believe the long-term trend of increases in total loss frequency will continue. In the near term changes in used car prices and repair cost are inversely related, but may impact total loss frequency and thereby 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 has continued to increase, growing from 11.4 years in 2013 to 13.0 years in 2026. 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 with precision.

Previous wording

Liquidity and Cash Flows: Our primary source of working capital is cash flow from operations. The primary source of our liquidity is our cash and cash equivalents and our revolving credit commitments under our Second Amended and Restated Credit Agreement (the “Revolving Loan Facility.”). The primary factors affecting cash flows from operations 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;

Current wording

Liquidity and Cash Flows: Our primary source of working capital is cash flow from operations. The primary source of our liquidity is our cash and cash equivalents and our revolving credit commitments under our Senior Revolving Credit Agreement (the "2026 Credit Agreement"). The primary factors affecting cash flows from operations 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. These factors are further discussed in the “Results of Operations” and “Risk Factors” sections of this Annual Report on Form 10-K.

Previous wording

Service Revenues. The increase in service revenues for fiscal 2025 of $407.7 million, or 11.4% as compared to fiscal 2024 came from (i) an increase in the U.S. of $325.5 million, and (ii) an increase in International of $82.2 million. The growth in the U.S. was driven primarily by an increase in revenue per car and an increase in volume. The growth in International, after excluding positive fluctuations in currency exchange rates of $2.7 million, was driven primarily by an increase in revenue per car and increase in volume.

Current wording

Service Revenues. The increase in service revenues for fiscal 2026 of $0.9 million, or 0.0 % as compared to fiscal 2025 came from (i) a decrease in the U.S. of $(63.3) million, and (ii) an increase in International of $64.1 million. The decrease in service revenue in the U.S. was primarily related to the one-time revenue associated with hurricanes Helene and Milton recognized in fiscal year 2025 and a decrease in volume offset by an increase in revenue per car. The growth in International, after excluding positive fluctuations in currency exchange rates of $21.9 million, was driven primarily by an increase in revenue per car and increase in volume.

Previous wording

Vehicle Sales. The increase in vehicle sales for fiscal 2025 of $2.5 million, or 0.4% as compared to fiscal 2024 came from (i) an increase in the U.S. of $64.9 million and (ii) a decrease in International of $62.4 million. The increase in the U.S. was primarily driven by an increase in volume and an increase in revenue per car due to higher auction selling prices. The decrease in International, after excluding positive fluctuations in currency exchanges rates of $5.7 million was primarily driven by a decrease in revenue per car due to lower auction selling prices, which we believe was due to change in mix of vehicles sold, and a decrease in volume related to sellers switching to a consignment model.

Current wording

Vehicle Sales. The increase in vehicle sales for fiscal 2026 of $18.4 million, or 2.7% as compared to fiscal 2025 came from (i) an increase in the U.S. of $15.6 million and (ii) an increase in International of $2.8 million. The increase in the U.S. was primarily driven by an increase in revenue per car, which was due to a change in mix of vehicles sold, which was offset by a decrease in volume. The increase in International, after excluding positive fluctuations in currency exchange rates of $12.1 million was primarily driven by an increase in revenue per car, which was due to a change in mix of vehicles sold, which was offset by a decrease in volume related to sellers switching to a consignment model.

Previous wording

Facility Operations Expenses. The increase in facility operations expenses for fiscal 2025 of $234.2 million, or 13.7% as compared to fiscal 2024 resulted from (i) an increase in the U.S. of $205.5 million, and (ii) an increase in International of $28.8 million. The increase in the U.S. compared to the same period last year related to an increase in volume and in non-CAT related subhaul, labor, and facility costs combined with one time CAT costs of $56 million associated with Hurricanes Helene and Milton. These costs are related to subhaul, labor costs incurred from overtime, increased security costs, and increased travel and lodging. The increase in International, after excluding negative fluctuations in currency exchange rates of $1.8 million, is the result of an increase in volume and an increase in costs to process a car. Included in facility operations expenses were depreciation and amortization expenses. The increase in facility operations depreciation and amortization expenses as compared to the same period last year resulted primarily from depreciating new and expanded facilities placed into service in the U.S. and International.

Current wording

Facility Operations Expenses. The increase in facility operations expenses for fiscal 2026 of $21.6 million, or 1.1% as compared to fiscal 2025 resulted from (i) a decrease in the U.S. of $(11.8) million, and (ii) an increase in International of $33.3 million. The decrease in the U.S. compared to the same period last year was related to one-time costs associated with hurricanes Helene and Milton recognized in fiscal year 2025 offset by increases in subhaul, freight and postage. The increase in International, after excluding negative fluctuations in currency exchange rates of $(12.5) million, was the result of an increase in the cost to process a car. Included in facility operations expenses were depreciation and amortization expenses. The increase in facility operations depreciation and amortization expenses as compared to the same period last year resulted primarily from depreciating new and expanded facilities placed into service in the U.S. and International.

Previous wording

Cost of Vehicle Sales. The decrease in cost of vehicle sales for fiscal 2025 of $16.5 million, or 2.7% as compared to fiscal 2024, was the result of (i) an increase in the U.S. of $64.7 million and (ii) a decrease in International of $81.1 million. The increase in the U.S. was primarily the result of an an increase average purchase price due to a change in the mix of vehicles sold and an increase in volume. The decrease in International, after excluding the negative fluctuations of currency exchange rates of $4.1 million, was primarily due to a lower average purchase price due to a change in the mix of vehicles sold, combined with a decrease in volume related to sellers switching to a consignment model.

Current wording

Cost of Vehicle Sales. The increase in cost of vehicle sales for fiscal 2026 of $13.5 million, or 2.2% as compared to fiscal 2025, was the result of (i) an increase in the U.S. of $12.9 million and (ii) an increase in International of $0.5 million. The increase in the U.S. was primarily the result of a change in the mix of vehicles sold, offset by a decrease in volume. The increase in International, after excluding the negative fluctuations of currency exchange rates of $(10.6) million, was primarily due to an increase in average purchase price due to change in the mix of vehicles sold offset by a decrease in volume related to sellers switching to a consignment model.

Previous wording

General and Administrative Expenses. The increase in general and administrative expenses for fiscal 2025 of $67.7 million, or 20.2% as compared to fiscal 2024 came primarily from (i) an increase in the U.S. of $67.4 million, and (ii) an increase in International of $0.3 million. Excluding depreciation and amortization, the increase in the U.S. of $62.4 million resulted primarily from increases in third party outside services (including legal, compliance, and system implementations), labor costs (as a result of investment in the business and the expansion of our sales force), facility costs and travel. The increase in International, primarily from increases in labor costs, and computer software offset by a decrease in legal costs. The increase in depreciation and amortization expenses was the result of new intangibles and technology being placed in service in the U.S. and International.

Current wording

General and Administrative Expenses. The increase in general and administrative expenses for fiscal 2026 of $28.3 million, or 7.0% as compared to fiscal 2025 came primarily from (i) an increase in the U.S. of $13.0 million, and (ii) an increase in International of $15.3 million. Excluding depreciation and amortization, the increase in the U.S. of $9.5 million resulted primarily from an increase in labor (as a result of investment in the business and the expansion of our sales force), travel, insurance, and third party outside services offset by decreases in legal, compliance, and stock-based compensation. The increase in International of $15.2 million, after excluding the negative fluctuations in currency exchange rates of $(2.9) million, resulted primarily from an increase in labor, stock-based compensation, and third party outside services (including consulting and legal). The increase in depreciation and amortization expenses was the result of the addition of technology assets being placed in service in the U.S. and International.

Previous wording

Other Income (Expenses). The increase in total other income for fiscal 2025 of $56.3 million, or 39.5% as compared to fiscal 2024 was primarily due to higher interest income earned from U.S. Treasury Bills, gain on sale of fixed assets, and realized and unrealized foreign currency gains.

Current wording

Other Income (Expenses). The decrease in total other income for fiscal 2026 of $(16.5) million, or (8.3)% as compared to fiscal 2025 was primarily due to a decrease in gain on sale of fixed assets, and realized and unrealized foreign currency gains offset by increase in interest income earned from U.S. Treasury Bills.

Previous wording

Income Taxes. Our effective income tax rates were 18.3% and 20.5%, for fiscal 2025 and 2024, 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 the fiscal year ended July 31, 2025 was favorably impacted by a $55.0 million tax benefit related to the Foreign Derived Intangible Income “FDII” deduction and $36.7 million in excess tax benefits from the exercise of employee stock options and negatively impacted by $38.6 million related to state income taxes. The effective tax rate for the fiscal year ending July 31, 2024 was favorably impacted by a $47.7 million tax benefit related to the FDII deduction and $14.8 million in excess tax benefits from the exercise of employee stock options and negatively impacted by $40.6 million related to state income taxes.

Current wording

Income Taxes. Our effective income tax rates were 19.3% and 18.3%, for fiscal 2026 and 2025, 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 the fiscal year ended July 31, 2026 was favorably impacted by a $46.7 million tax benefit related to the Foreign Derived Intangible Income “FDII” deduction and $6.6 million in excess tax benefits from the exercise of employee stock options and negatively impacted by $21.5 million related to state income taxes. The effective tax rate for the fiscal year ending July 31, 2025 was favorably impacted by a $55.0 million tax benefit related to the FDII deduction and $36.7 million in excess tax benefits from the exercise of employee stock options and negatively impacted by $38.6 million related to state income taxes.

Previous wording

The following table presents a comparison of key components of our liquidity and capital resources for fiscal 2025, 2024 and 2023, excluding additional funds available to us through our Revolving Loan Facility:

Current wording

The following table presents a comparison of key components of our liquidity and capital resources for fiscal 2026, 2025, and 2024, excluding additional funds available to us under our 2026 Credit Agreement:

Previous wording

Cash, cash equivalents, and restricted cash increased $1,266.4 million and working capital increased $1,281.7 million at July 31, 2025, as compared to July 31, 2024. Cash, cash equivalents, and restricted cash increased primarily due to cash generated from operations, proceeds from held to maturity securities, and proceeds from stock option exercises. Working capital increased primarily from cash generated from operations and timing of cash receipts and payments, partially offset by capital expenditures, investment in held to maturity securities and certain income tax benefits related to stock option exercises and timing of cash payments. 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.

Current wording

Cash, cash equivalents, and restricted cash decreased $872.6 million and working capital decreased $206.9 million at July 31, 2026, as compared to July 31, 2025. Cash, cash equivalents, and restricted cash decreased primarily as result of the repurchase of common stock as part of our stock repurchase program and investment in held to maturity securities offset by decrease in capital expenditures. 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.

Previous wording

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. For further detail, see Notes to Consolidated Financial Statements, Note 9 – Long-Term Debtand Note 12 — Stockholders’ Equityand under the subheading “Credit Agreement” below.

Current wording

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, including through the payment of the expected $1.9 billion aggregate cash purchase price for ACV under the Merger Agreement. 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. For further detail, see Notes to Consolidated Financial Statements, NOTE 9 – Long-Term Debtand NOTE 12 — Stockholders’ Equityand under the subheading “Credit Agreement” below.

Previous wording

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 in the foreseeable future. We expect to acquire or develop additional locations and expand some of our current facilities in the foreseeable future. We may 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 facilities 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.

Current wording

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 in the foreseeable future. We expect to acquire or develop additional locations and expand some of our current facilities in the foreseeable future. We may raise additional cash through drawdowns on our 2026 Credit Agreement 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 facilities 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.

Previous wording

As of July 31, 2025, $314.9 million of the $2.8 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.

Current wording

As of July 31, 2026, $598.3 million of the $1.9 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.

Previous wording

Net cash provided by operating activities increased for fiscal 2025 as compared to fiscal 2024 due to improved cash operating results primarily from an increase in service and vehicle sales revenues, partially offset by an increase in facility 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 accounts receivable of $111.4 million, vehicle pooling costs of $26.4 million, prepaid expenses and other current and non-current assets of $78.8 million, partially offset by an increase in income tax receivable of $7.1 million and decrease in income tax payable of $90.8 million.

Current wording

Net cash provided by operating activities decreased for fiscal 2026 as compared to fiscal 2025 due to reduction in net income primarily from an increase in facility 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 an increase in accounts receivable of $46.8 million, income tax receivable of $48.7 million, vehicle pooling costs of $23.1 million, and inventory of $16.1 million, partially offset by an decrease in accounts payable of $37.1 million.

Previous wording

Net cash used in investing activities decreased for fiscal 2025 as compared to fiscal 2024 due primarily to an increase in proceeds from the sale of held to maturity securities, a reduction in the purchase of held to maturity securities and an increase in capital expenditures. 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 facility 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, 2025, we had no material non-cancelable commitments for future capital expenditures.

Current wording

Net cash used in investing activities increased for fiscal 2026 as compared to fiscal 2025 due primarily to an increase in investments in held to maturity securities, offset by a decrease in capital expenditures. 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 facility 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, 2026, we had no material non-cancelable commitments for future capital expenditures.

Previous wording

For further detail on the Second Amended and Restated Credit Agreement, see Notes to Consolidated Financial Statements, Note 9 – Long-Term Debt.

Current wording

For further detail on the 2026 Credit Agreement, see Notes to Consolidated Financial Statements, NOTE 9 – Long-Term Debt.

Previous wording

Our service revenues consist 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 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.

Current wording

Our service revenues consist 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 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 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.

Previous wording

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.

Current wording

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 agreement. 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.