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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
August 28, 2000 (August 28, 2000)
Date of Report (Date of earliest event reported)
COPART, INC.
(Exact name of registrant as specified in its charter)
California 0-23255 94-2867490
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) identification No.)
5500 E. Second Street 94510
Benicia, CA
(Address of Principal Executive Offices) (Zip Code)
(707) 748-5000
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
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This report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Actual results could differ materially from
those indicated in the forward-looking statements due to a number of factors
including, but not limited to, as a result of the risk factors set forth below
in this report as well as those set forth in the Company's Annual Report on Form
10-K and the other reports and documents that the Company files from time to
time with the Securities and Exchange Commission.
Item 5. Other Events.
On August 28, 2000, Copart, Inc. ("Copart" or the "Company") announced that it
has entered into an agreement to acquire up to 23 locations of the Sadisco chain
of salvage auctions from Charles H. Powers. Mr. Powers owns or controls 23 out
of a total 43 Sadisco franchise facilities located throughout the Southeastern
United States. During calendar 1999, these 23 facilities generated gross auction
proceeds that are estimated to exceed $180 million. The 23 locations occupy
approximately 800 acres of real estate in seven states.
Under the terms of the agreement Copart expects to acquire the businesses and
intangibles for approximately $46 million plus certain real estate. The exact
purchase price is subject to adjustment based on the final number of facilities
actually acquired which should be between 19 and 23. Copart expects to pay for
the business with cash and new debt. The transaction is subject to federal
regulatory and other approvals and is expected to close by the end of 2000.
Mr. Powers (70) has operated the businesses as a sole proprietorship since
1964. Financial statements are currently unaudited and prepared on an income
tax/cash basis. For the calendar year ending December 31, 1998, the most
recent period available, the businesses reported total assets of $10.4
million, including real estate and improvements with a book value of $7.3
million. The 1998 net revenues were $12.7 million. Earnings before interest,
taxes, depreciation and amortization (EBITDA) were $5.0 million and taxable
income was $3.9 million. Under the income tax basis used for sole
proprietorships, the businesses do not report accounts receivable, which are
estimated to exceed $8.0 million.
Copart has engaged independent auditors to conduct an audit of Mr. Powers
facilities for the 12 months ending July 31, 2000. The audited financial
statements and pro-forma results will be filed at the closing of the
transaction.
Copart will account for the transaction as a purchase. Goodwill from the
transaction will be determined based on the audited results and the fair value
of the facilities actually acquired. The goodwill is currently estimated to be
approximately $31 million and will be amortized over 40 years. Real estate to be
acquired includes up to 22 of the facilities. The purchase price for the real
estate is approximately $34 million dollars. Copart does not expect the
acquisition to be accretive to earnings in the fiscal year ending July 31, 2001.
Copart currently has in place a $50 million reducing revolving credit facility
with a banking syndicate that has never been used and which matures in February
2002. The Company expects to obtain a new larger credit facility from the
banking syndicate on similar terms that will replace the existing $50 million
facility and be used to partially finance the Sadisco acquisition.
The pending acquisition involves a number of risks including Copart's ability to
finance the acquisition and the associated costs through future cash flows, the
diversion of management's attention to the integration of the companies, assets,
operations and personnel; the introduction of new products and services into
Copart's business; and the risk of loss of key employees. Our profitability may
suffer if we are unable to successfully integrate and manage this acquisition,
or if we do not generate sufficient revenue to offset the increased expenses
associated with this acquisition.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
COPART, INC.
By: /s/ WAYNE R. HILTY
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Wayne R. Hilty
(Senior Vice President and Chief Financial Officer)
Dated: August 28, 2000
