Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Apr. 30, 2014 | Jun. 06, 2014 | |
Document and Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'COPART INC | ' |
Entity Central Index Key | '0000900075 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--07-31 | ' |
Document Type | '10-Q | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Period End Date | 30-Apr-14 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 126,045,670 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Apr. 30, 2014 | Jul. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $132,832 | $63,631 |
Accounts receivable, net | 192,610 | 182,714 |
Vehicle pooling costs | 22,390 | 20,466 |
Inventories | 9,826 | 10,736 |
Income taxes receivable | 3,358 | 9,416 |
Deferred income taxes | 4,950 | 2,216 |
Prepaid expenses and other assets | 18,443 | 15,344 |
Assets held for sale | 1,345 | 1,929 |
Total current assets | 385,754 | 306,452 |
Property and equipment, net | 685,564 | 677,517 |
Intangibles, net | 25,384 | 17,706 |
Goodwill | 288,402 | 267,463 |
Deferred income taxes | 33,765 | 30,117 |
Other assets | 57,803 | 35,226 |
Total assets | 1,476,672 | 1,334,481 |
Current liabilities: | ' | ' |
Accounts payable and accrued liabilities | 164,218 | 136,648 |
Bank overdraft | ' | 16,291 |
Deferred revenue | 5,146 | 4,832 |
Income taxes payable | 11,207 | 4,741 |
Current portion of long-term debt and capital lease obligations | 76,171 | 76,047 |
Total current liabilities | 256,742 | 238,559 |
Deferred income taxes | 7,494 | 8,071 |
Income taxes payable | 25,378 | 23,091 |
Long-term debt and capital lease obligations | 242,106 | 296,410 |
Other liabilities | 5,191 | 5,949 |
Total liabilities | 536,911 | 572,080 |
Commitments and contingencies | ' | ' |
Stockholders' equity: | ' | ' |
Preferred stock: $0.0001 par value - 5,000,000 shares authorized; none issued | ' | ' |
Common stock: $0.0001 par value - 180,000,000 shares authorized; 125,904,003 and 125,494,995 shares issued and outstanding, respectively. | 13 | 13 |
Additional paid-in capital | 393,225 | 368,769 |
Accumulated other comprehensive loss | -21,829 | -47,161 |
Retained earnings | 568,352 | 440,780 |
Total stockholders' equity | 939,761 | 762,401 |
Total liabilities and stockholders' equity | $1,476,672 | $1,334,481 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Apr. 30, 2014 | Jul. 31, 2013 |
Statement Of Financial Position [Abstract] | ' | ' |
Preferred stock par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ' | ' |
Common stock par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 180,000,000 | 180,000,000 |
Common stock, shares issued | 125,904,003 | 125,494,995 |
Common stock, shares outstanding | 125,904,003 | 125,494,995 |
Consolidated_Statements_of_Inc
Consolidated Statements of Income (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 |
Service revenues and vehicle sales: | ' | ' | ' | ' |
Service revenues | $255,045 | $223,977 | $717,140 | $636,076 |
Vehicle sales | 54,677 | 53,661 | 158,899 | 146,613 |
Total service revenues and vehicle sales | 309,722 | 277,638 | 876,039 | 782,689 |
Operating expenses: | ' | ' | ' | ' |
Yard operations | 131,207 | 116,410 | 388,409 | 340,693 |
Cost of vehicle sales | 46,263 | 45,631 | 135,996 | 124,146 |
General and administrative | 40,515 | 32,784 | 123,454 | 97,910 |
Impairment of long-lived assets | 29,104 | ' | 29,104 | ' |
Total operating expenses | 247,089 | 194,825 | 676,963 | 562,749 |
Operating income | 62,633 | 82,813 | 199,076 | 219,940 |
Other (expense) income: | ' | ' | ' | ' |
Interest expense | -2,104 | -2,538 | -6,599 | -7,758 |
Interest income | 81 | 138 | 373 | 485 |
Other income, net | 708 | 1,592 | 3,301 | 2,043 |
Total other expense | -1,315 | -808 | -2,925 | -5,230 |
Income before income taxes | 61,318 | 82,005 | 196,151 | 214,710 |
Income taxes | 20,441 | 28,769 | 68,507 | 75,989 |
Net income | $40,877 | $53,236 | $127,644 | $138,721 |
Basic net income per common share | $0.32 | $0.42 | $1.02 | $1.11 |
Weighted average common shares outstanding | 125,794 | 125,270 | 125,604 | 124,755 |
Diluted net income per common share | $0.31 | $0.41 | $0.97 | $1.07 |
Diluted weighted average common shares outstanding | 131,486 | 130,530 | 131,095 | 129,502 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||||||
In Thousands, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 | ||||
Statement Of Other Comprehensive Income [Abstract] | ' | ' | ' | ' | ||||
Net income | $40,877 | $53,236 | $127,644 | $138,721 | ||||
Other comprehensive income: | ' | ' | ' | ' | ||||
Unrealized gain on interest rate swaps, net | 523 | [1] | 90 | [1] | 1,415 | [1] | 1,744 | [1] |
Reclassification adjustment of interest rate swaps, net | -354 | [2] | -391 | [2] | -1,098 | [2] | -1,225 | [2] |
Foreign currency translation adjustments | 9,720 | -4,507 | 25,015 | 446 | ||||
Total comprehensive income | $50,766 | $48,428 | $152,976 | $139,686 | ||||
[1] | Net of tax effect of $(274) and $(769) for the three and nine months ended April 30, 2014. Net of tax effect of $(41) and $(378) for the three and nine months ended April 30, 2013. | |||||||
[2] | Net of tax effect reclassification adjustment of $178 and $590 for the three and nine months ended April 30, 2014. Net of tax effect reclassification adjustment of $212 and $671 for the three and nine months ended April 30, 2013. |
Consolidated_Statements_of_Com1
Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 |
Statement Of Other Comprehensive Income [Abstract] | ' | ' | ' | ' |
Tax effects on unrealized gain (loss) on interest rate swaps | ($274) | ($41) | ($769) | ($378) |
Tax effects on reclassification adjustment of interest rate swaps to net income | $178 | $212 | $590 | $671 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 |
Cash flows from operating activities: | ' | ' |
Net income | $127,644 | $138,721 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 40,349 | 42,248 |
Allowance for doubtful accounts | 936 | 234 |
Impairment of long-lived assets | 29,104 | ' |
Stock-based compensation | 17,262 | 14,671 |
Excess benefits from stock-based compensation | -1,219 | -6,164 |
Gain on sale of property and equipment | -1,696 | -922 |
Deferred income taxes | -12,609 | -3,372 |
Changes in operating assets and liabilities, net of effects from acquisitions: | ' | ' |
Accounts receivable | -9,161 | -24,414 |
Vehicle pooling costs | -1,609 | -2,197 |
Inventories | 1,439 | -2,107 |
Prepaid expenses and other current assets | -3,539 | -2,877 |
Other assets | -12,133 | -6,145 |
Accounts payable and accrued liabilities | 15,269 | 21,966 |
Deferred revenue | 316 | 15 |
Income taxes receivable | 7,305 | 4,213 |
Income taxes payable | 8,229 | 8,695 |
Other liabilities | 1,747 | 438 |
Net cash provided by operating activities | 207,634 | 183,003 |
Cash flows from investing activities: | ' | ' |
Purchases of property and equipment | -63,317 | -114,265 |
Proceeds from sale of property and equipment | 2,413 | 2,281 |
Proceeds from sale of assets held for sale | 858 | 3,189 |
Purchases of assets and liabilities in connection with acquisition, net of cash acquired | -14,761 | -31,243 |
Net cash used in investing activities | -74,807 | -140,038 |
Cash flows from financing activities: | ' | ' |
Proceeds from the exercise of stock options | 5,680 | 19,579 |
Excess tax benefit from stock-based payment compensation | 1,219 | 6,164 |
Proceeds from the issuance of Employee Stock Purchase Plan shares | 1,115 | 951 |
Repurchases of common stock | -80 | -14,512 |
Change in bank overdraft | -16,291 | ' |
Principal payments on long-term debt | -56,250 | -56,255 |
Net cash used in financing activities | -64,607 | -44,073 |
Effect of foreign currency translation | 981 | 327 |
Net increase (decrease) in cash and cash equivalents | 69,201 | -781 |
Cash and cash equivalents at beginning of period | 63,631 | 140,112 |
Cash and cash equivalents at end of period | 132,832 | 139,331 |
Supplemental disclosure of cash flow information: | ' | ' |
Interest paid | 6,599 | 7,758 |
Income taxes paid | $65,769 | $68,179 |
Description_of_Business_and_Su
Description of Business and Summary of Significant Accounting Policies | 9 Months Ended | ||||
Apr. 30, 2014 | |||||
Description of Business and Summary of Significant Accounting Policies [Abstract] | ' | ||||
Description of Business and Summary of Significant Accounting Policies | ' | ||||
NOTE 1 – Description of Business and Summary of Significant Accounting Policies | |||||
Description of Business | |||||
The Company provides vehicle sellers with a full range of services to process and sell vehicles over the Internet through the Company’s Virtual Bidding Third Generation (VB3) Internet auction-style sales technology. Sellers are primarily insurance companies but also include banks and financial institutions, charities, car dealerships, fleet operators, and vehicle rental companies. The Company sells principally to licensed vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers and exporters; however, at certain locations, the Company sells directly to the general public. The majority of vehicles sold on behalf of insurance companies are either damaged vehicles deemed a total loss or 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. The Company offers vehicle sellers a full range of services that expedite each stage of the vehicle sales process, minimize administrative and processing costs and maximize the ultimate sales price. In the United States and Canada (North America), the United Arab Emirates (U.A.E.), and Brazil, the Company sells vehicles primarily as an agent and derives revenue primarily from fees paid by vehicle sellers and vehicle buyers as well as related fees for services, such as towing and storage. In the United Kingdom (U.K.), the Company operates both on a principal basis, purchasing the salvage vehicle outright from the insurance company and reselling the vehicle for its own account, and as an agent. In Germany and Spain, the Company derives revenue from sales listing fees for listing vehicles on behalf of insurance companies. | |||||
Principles of Consolidation | |||||
The consolidated financial statements include the accounts of the parent company and its wholly-owned subsidiaries, including its foreign wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. | |||||
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments of a normal recurring nature, considered necessary for fair presentation of its financial position as of April 30, 2014, its consolidated statements of income for the three and nine months ended April 30, 2014 and 2013, its consolidated statements of comprehensive income for the three and nine months ended April 30, 2014 and 2013, and its consolidated statements of cash flows for the nine months ended April 30, 2014 and 2013. Interim results for the nine months ended April 30, 2014 are not necessarily indicative of the results that may be expected for any future period, or for the entire year ending July 31, 2014. These consolidated financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. The interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2013. Certain prior year amounts have been reclassified to conform to current year presentation. | |||||
Use of Estimates | |||||
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates include but are not limited to, vehicle pooling costs, self-insured reserves, allowance for doubtful accounts, income taxes, revenue recognition, stock-based compensation, purchase price allocations, long-lived asset and goodwill impairment calculations and contingencies. Actual results could differ from these estimates. | |||||
Impairment | |||||
The Company reviews its operating assets, including software, assets held for development and sale, and construction in progress, for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. GAAP requires that if impairment indicators exist and the undiscounted cash flows expected to be generated by an asset are less than its carrying amount, an impairment charge should be recorded to write-down the carrying amount of such asset to fair value. The impairment analysis does not consider the timing of future cash flows and whether the asset is expected to earn an above or below market rate of return. | |||||
During the three months ended April 30, 2014, the Company reassessed its strategy of utilizing a third-party enterprise operating system to address its international expansion needs based on the projected cost to complete, deployment risk and certain other factors. The Company decided to cease development of this software and address its international technology needs through an internally-developed proprietary solution. The Company recognized an impairment charge of $29.1 million resulting primarily from the abandonment of work previously capitalized in connection with the development of the software. | |||||
Revenue Recognition | |||||
The Company provides a portfolio of services to its sellers and buyers that facilitate the sale and delivery of a vehicle from seller to buyer. These services include the ability to use the Company’s Internet sales technology and vehicle delivery, loading, title processing, preparation and storage. The Company evaluates multiple-element arrangements relative to its member and seller agreements. | |||||
The services provided to the seller of a vehicle involve disposing of a vehicle on the seller’s behalf and, under most of the Company’s current North American contracts, collecting the proceeds from the member. The Company applies Accounting Standard Update 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements (ASU 2009-13) for revenue recognition. Pre-sale services, including towing, title processing, preparation and storage, as well as sale fees and other enhancement services meet the criteria for separate units of accounting. The revenue associated with each service is recognized upon completion of the respective service, net of applicable rebates or allowances. For certain sellers who are charged a proportionate fee based on high bid of the vehicle, the revenue associated with the pre-sale services is recognized upon completion of the sale when the total arrangement is fixed and determinable. The estimated selling price of each service is determined based on management’s best estimate and allotted based on the relative selling price method. | |||||
Vehicle sales, where vehicles are purchased and remarketed on the Company’s own behalf, are recognized on the sale date, which is typically the point of high bid acceptance. Upon high bid acceptance, a legal binding contract is formed with the member, and the gross sales price is recorded as revenue. | |||||
The Company also provides a number of services to the buyer of the vehicle, charging a separate fee for each service. Each of these services has been assessed to determine whether the requirements have been met to separate them into units of accounting within a multiple-element arrangement. The Company has concluded that the sale and the post-sale services are separate units of accounting. The fees for sale services are recognized upon completion of the sale, and the fees for the post-sale services are recognized upon successful completion of those services using the relative selling price method. | |||||
The Company also charges members an annual registration fee for the right to participate in its vehicle sales program, which is recognized ratably over the term of the arrangement, and relist and late-payment fees, which are recognized upon receipt of payment by the member. No provision for returns has been established, as all sales are final with no right of return, although the Company provides for bad debt expense in the case of non-performance by its members or sellers. | |||||
The Company allocates arrangement consideration based upon management’s best estimate of the selling price of the separate units of accounting contained within an arrangement containing multiple deliverables. Significant inputs in the Company’s estimates of the selling price of separate units of accounting include market and pricing trends, pricing customization and practices, and profit objectives for the services. | |||||
Vehicle Pooling Costs | |||||
The Company defers in vehicle pooling costs certain yard operation expenses associated with vehicles consigned to and received by the Company, but not sold as of the end of the period. The Company quantifies the deferred costs using a calculation that includes the number of vehicles at its facilities at the beginning and end of the period, the number of vehicles sold during the period and an allocation of certain yard operation costs of the period. The primary expenses allocated and deferred are certain facility costs, labor, transportation, and vehicle processing. If the allocation factors change, then yard operation expenses could increase or decrease correspondingly in the future. These costs are expensed as vehicles are sold in subsequent periods on an average cost basis. Given the fixed cost nature of the Company’s business, there is not a direct correlation for an increase in expenses or units processed on vehicle pooling costs. | |||||
The Company applies the provisions of accounting guidance for subsequent measurement of inventory to our vehicle pooling costs. The provision requires that items such as idle facility expense, double freight and re-handling costs be recognized as current period charges regardless of whether they meet the criteria of “abnormal” as provided in the guidance. In addition, the guidance requires that the allocation of fixed production overhead to the costs of conversion be based on the normal capacity of production facilities. | |||||
Foreign Currency Translation | |||||
The Company records foreign currency translation adjustments from the process of translating the functional currency of the financial statements of its foreign subsidiaries into the U.S. dollar reporting currency. The Canadian dollar, the British pound, the U.A.E. dirham, the Brazilian real, and the Euro are the functional currencies of the Company’s foreign subsidiaries as they are the primary currencies within the economic environment in which each subsidiary operates. The original equity investment in the respective subsidiaries is translated at historical rates. Assets and liabilities of the respective subsidiary’s operations are translated into U.S. dollars at period-end exchange rates, and revenues and expenses are translated into U.S. dollars at average exchange rates in effect during each reporting period. Adjustments resulting from the translation of each subsidiary’s financial statements are reported in other comprehensive income. | |||||
The cumulative effects of foreign currency exchange rate fluctuations were as follows (in thousands): | |||||
Cumulative loss on foreign currency translation as of July 31, 2012 | $ | (34,933 | ) | ||
Loss on foreign currency translation | (10,487 | ) | |||
Cumulative loss on foreign currency translation as of July 31, 2013 | $ | (45,420 | ) | ||
Gain on foreign currency translation | 25,015 | ||||
Cumulative loss on foreign currency translation as of April 30, 2014 | $ | (20,405 | ) | ||
Income Taxes and Deferred Tax Assets | |||||
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. | |||||
In accordance with the provisions of ASC 740, Income Taxes, a two-step approach is applied to the recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company recognizes interest and penalties related to uncertain tax positions in the provision for income taxes on its consolidated statements of income. | |||||
Fair Value of Financial Instruments | |||||
The Company records its financial assets and liabilities at fair value in accordance with the framework for measuring fair value in U.S. GAAP. In accordance with ASC 820, Fair Value Measurements and Disclosures, as amended by Accounting Standards Update 2011-04, the Company considers fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants under current market conditions. This framework establishes a fair value hierarchy that prioritizes the inputs used to measure fair value: | |||||
Level I | |||||
Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets. | |||||
Level II | |||||
Inputs other than quoted prices included within Level I that are observable for the asset or liability, either directly or indirectly. Interest rate hedges are valued at exit prices obtained from the counter-party. | |||||
Level III | |||||
Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s best estimate. | |||||
The amounts recorded for financial instruments in the Company's consolidated financial statements, which included cash, accounts receivable, accounts payable and accrued liabilities approximate their fair values as of April 30, 2014 and July 31, 2013, due to the short-term nature of those instruments, and are classified within Level II of the fair value hierarchy. Cash equivalents are classified within Level II of the fair value hierarchy because they are valued using quoted market prices of the underlying investments. See Note 3 - Long-Term Debt for additional fair value disclosures. | |||||
Derivatives and Hedging | |||||
The Company has entered into two interest rate swaps to eliminate interest rate risk on the Company’s variable rate Term Loan, and the swaps are designated as effective cash flow hedges under ASC 815, Derivatives and Hedging. See Note 4 - Derivatives and Hedging. Each quarter, the Company measures hedge effectiveness using the ”hypothetical derivative method” and records in earnings any hedge ineffectiveness with the effective portion of the hedges change in fair value recorded in other comprehensive income or loss. | |||||
Assets Held for Sale | |||||
The Company has removed certain assets from operations and offered them for sale. These assets, which include certain real estate, are reflected at their fair market value, less costs to dispose, in the financial statements and are a Level II fair value measurement based on sale transactions of similar assets. | |||||
Accounting for Acquisitions | |||||
The Company recognizes and measures identifiable assets acquired and liabilities assumed in acquired entities in accordance with ASC 805, Business Combinations. The accounting for acquisitions involves significant judgments and estimates, including the fair value of certain forms of consideration, the fair value of acquired intangible assets, which involve projections of future revenues, cash flows and terminal value, which are then either discounted at an estimated discount rate or measured at an estimated royalty rate, and the fair value of other acquired assets and assumed liabilities, including potential contingencies and the useful lives of the assets. The projections are developed using internal forecasts, available industry and market data and estimates of long-term growth rates of the Company. Historical experience is additionally utilized, in which historical or current costs have approximated fair value for certain assets acquired. | |||||
Segments and Other Geographic Reporting | |||||
The Company’s North American and U.K. regions are considered two separate operating segments, which have been aggregated into one reportable segment because they share similar economic characteristics. |
Cash_and_Cash_Equivalents
Cash and Cash Equivalents | 9 Months Ended |
Apr. 30, 2014 | |
Cash and Cash Equivalents [Abstract] | ' |
Cash and Cash Equivalents | ' |
NOTE 2 – Cash and Cash Equivalents | |
The Company considers all highly liquid investments purchased with original maturities of three months or less at the time of purchase to be cash equivalents. Cash and cash equivalents include cash held in checking and money market accounts. The Company periodically invests its excess cash in money market funds and U.S. Treasury Bills. The Company’s cash and cash equivalents are placed with high credit quality financial institutions. The Company generally classifies its investment portfolio not otherwise qualifying as cash and cash equivalents as available-for-sale securities. Available-for-sale securities are reported at fair value, with unrealized gains and losses reported as a component of stockholders’ equity and comprehensive income. Unrealized losses are charged against income when a decline in the fair market value of an individual security is determined to be other than temporary. Realized gains and losses on investments are included in interest income. |
LongTerm_Debt
Long-Term Debt | 9 Months Ended |
Apr. 30, 2014 | |
Long-Term Debt [Abstract] | ' |
Long-Term Debt | ' |
NOTE 3 – Long-Term Debt | |
On December 14, 2010, the Company entered into an Amended and Restated Credit Facility Agreement (Credit Facility), which superseded the Company’s previously disclosed credit agreement with Bank of America, N.A. (Bank of America). The Credit Facility is an unsecured credit agreement providing for (i) a $100.0 million revolving credit facility, including a $100.0 million alternative currency borrowing sublimit and a $50.0 million letter of credit sublimit (Revolving Credit) and (ii) a term loan facility of $400.0 million (Term Loan). On January 14, 2011, the full $400.0 million provided under the Term Loan was borrowed. On September, 29, 2011, the Company amended the Credit Facility increasing the amount of the Term Loan from $400.0 million to $500.0 million. On March 1, 2013, the Company amended the Credit Facility to increase the net leverage ratio at which restrictive spending covenants are introduced from 1:1 to 1.5:1. | |
The Term Loan, which at April 30, 2014 had $312.5 million outstanding, amortizes $18.8 million each quarter beginning December 31, 2011, with all outstanding borrowings due on December 14, 2015. All amounts borrowed under the Term Loan may be prepaid without premium or penalty. | |
Amounts borrowed under the Credit Facility bear interest, subject to certain restrictions, at a fluctuating rate based on (i) the Eurocurrency Rate; (ii) the Federal Funds Rate; or (iii) the Prime Rate as described in the Credit Facility. The Company has entered into two interest rate swaps to exchange its variable interest rate payments commitment for fixed interest rate payments on the Term Loan balance. See Note 4- Derivatives and Hedging. A default interest rate applies on all obligations during an event of default under the credit facility at a rate per annum equal to 2.0% above the otherwise applicable interest rate. The Company’s interest rate at April 30, 2014 was the 0.15% Eurocurrency Rate plus the 1.5% Applicable Rate. The Applicable Rate can fluctuate between 1.5% and 2.0% depending on the Company’s consolidated net leverage ratio, as defined in the Credit Facility. The Credit Facility is guaranteed by the Company’s material domestic subsidiaries. The carrying amount of the Credit Facility is comprised of borrowings under which interest accrues under a fluctuating interest rate structure. Accordingly, the carrying value approximates fair value at April 30, 2014, and was classified within Level II of the fair value hierarchy. | |
Amounts borrowed under the Revolving Credit may be repaid and reborrowed until the maturity date of December 14, 2015. The Credit Facility requires the Company to pay a commitment fee on the unused portion of the Revolving Credit. The commitment fee ranges from 0.075% to 0.125% per annum depending on the Company's leverage ratio. The Company had no outstanding borrowings under the Revolving Credit at April 30, 2014. | |
The Credit Facility contains customary representations and warranties and may place certain business operating restrictions on the Company relating to, among other things, indebtedness, liens and other encumbrances, investments, mergers and acquisitions, asset sales, dividends and distributions and redemptions of capital stock. In addition, the Credit Facility provides for the following financial covenants: (i) earnings before interest, income tax, depreciation and amortization (EBITDA); (ii) leverage ratio; (iii) interest coverage ratio; and (iv) limitations on capital expenditures. The Credit Facility contains events of default that include, among others, non-payment of principal, interest or fees, violation of covenants, inaccuracy of representations and warranties, cross-defaults to certain other indebtedness, bankruptcy and insolvency defaults, material judgments, invalidity of the loan documents and events constituting a change of control. The Company was in compliance with all covenants as of April 30, 2014. |
Derivatives_and_Hedging
Derivatives and Hedging | 9 Months Ended |
Apr. 30, 2014 | |
Derivatives and Hedging [Abstract] | ' |
Derivatives and Hedging | ' |
NOTE 4 – Derivatives and Hedging | |
The Company has entered into two interest rate swaps to exchange its variable interest rate payments commitment for fixed interest rate payments on the Term Loan balance, which at April 30, 2014 totaled $312.5 million. The first swap fixed the Company’s interest rate at 85 basis points plus the one month LIBOR rate on the first $250.0 million of the Term Loan. The second swap fixed the Company’s interest rate at 69 basis points plus the one month LIBOR rate on the next $62.5 million of the Term Loan. | |
The swaps are a designated effective cash flow hedge under ASC 815, Derivatives and Hedging. Each quarter, the Company measures hedge effectiveness using the “hypothetical derivative method” and records in earnings any hedge ineffectiveness with the effective portion of the change in fair value recorded in other comprehensive income or loss. The Company has reclassified $0.5 million and $0.6 million for the three months ended April 30, 2014 and 2013, respectively, out of other comprehensive income into interest expense and $1.7 million and $1.9 million for the nine months ended April 30, 2014 and 2013, respectively, out of other comprehensive income into interest expense. | |
The notional amount of the swap amortizes until all outstanding borrowings are due on the Term Loan on December 14, 2015. See Note 3 - Long-Term Debt. At April 30, 2014, the notional amount of the interest rate swaps was equal to the Term Loan balance of $312.5 million. The notional amount of the two derivative transactions amortizes $18.8 million per quarter through September 30, 2015 and $200.0 million on December 14, 2015. | |
The hedge provided by the swaps could prove to be ineffective for a number of reasons, including early retirement of the Term Loan, as allowed under the Credit Facility, or in the event the counterparty to the interest rate swaps is determined in the future to not be creditworthy. The Company has no plans for early retirement of the Term Loan. | |
The interest rate swaps are classified within Level II of the fair value hierarchy as the derivatives are valued using observable inputs. The Company determines fair value of the derivative utilizing observable market data of swap rates and basis rates. These inputs are placed into a pricing model using a discounted cash flow methodology in order to calculate the mark-to-market value of the interest rate swaps. As of April 30, 2014 and July 31, 2013, the Company’s fair value of the interest rate swaps were $2.2 million and $2.7 million, respectively, and were classified as other liabilities in the consolidated balance sheets. |
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets | 9 Months Ended | ||||||||
Apr. 30, 2014 | |||||||||
Goodwill and Intangible Assets [Abstract] | ' | ||||||||
Goodwill and Intangible Assets | ' | ||||||||
NOTE 5 – Goodwill and Intangible Assets | |||||||||
The following table sets forth amortizable intangible assets by major asset class: | |||||||||
(In thousands) | 30-Apr-14 | 31-Jul-13 | |||||||
Amortized intangibles: | |||||||||
Covenants not to compete | $ | 17,655 | $ | 12,515 | |||||
Supply contracts | 28,953 | 26,322 | |||||||
Customer relationships | 15,834 | 7,389 | |||||||
Trade name | 2,540 | 2,998 | |||||||
Licenses and databases | 2,113 | 3,306 | |||||||
Accumulated amortization | (41,711 | ) | (34,824 | ) | |||||
Net intangibles | $ | 25,384 | $ | 17,706 | |||||
Aggregate amortization expense on amortizable intangible assets was $1.5 million and $1.0 million for the three months ended April 30, 2014 and 2013, respectively, and $3.8 million and $3.2 million for the nine months ended April 30, 2014 and 2013, respectively. | |||||||||
The change in the carrying amount of goodwill was as follows (in thousands): | |||||||||
Balance as of July 31, 2013 | $ | 267,463 | |||||||
Goodwill recorded during the period (Note 13 - Acquisitions) | 12,987 | ||||||||
Effect of foreign currency exchange rates | 7,952 | ||||||||
Balance as of April 30, 2014 | $ | 288,402 | |||||||
Net_Income_Per_Share
Net Income Per Share | 9 Months Ended | ||||||||||||||||
Apr. 30, 2014 | |||||||||||||||||
Net Income Per Share [Abstract] | ' | ||||||||||||||||
Net Income Per Share | ' | ||||||||||||||||
NOTE 6 – Net Income Per Share | |||||||||||||||||
The table below reconciles basic weighted shares outstanding to diluted weighted average shares outstanding: | |||||||||||||||||
Three Months Ended April 30, | Nine Months Ended April 30, | ||||||||||||||||
(In thousands) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Weighted average common shares oustanding | 125,794 | 125,270 | 125,604 | 124,755 | |||||||||||||
Effect of dilutive securities - stock options | 5,692 | 5,260 | 5,491 | 4,747 | |||||||||||||
Weighted average common and dilutive potential common shares outstanding | 131,486 | 130,530 | 131,095 | 129,502 | |||||||||||||
There were no material adjustments to net income required in calculating diluted net income per share. Excluded from the dilutive earnings per share calculation were 4,973,398 and 209,914 shares, and 3,240,098 and 308,641 shares for the three and nine months ended April 30, 2014 and 2013, respectively, because their inclusion would have been anti-dilutive. |
Stockbased_Compensation
Stock-based Compensation | 9 Months Ended | ||||||||||||||||
Apr. 30, 2014 | |||||||||||||||||
Stock-based Compensation [Abstract] | ' | ||||||||||||||||
Stock-based Compensation | ' | ||||||||||||||||
NOTE 7 – Stock-based Compensation | |||||||||||||||||
The Company recognizes compensation expense for stock option awards on a straight-line basis over the requisite service period of the award. The following is a summary of option activity for the Company’s stock options for the nine months ended April 30, 2014: | |||||||||||||||||
(In thousands, except per share and term data) | Shares | Weighted Average | Weighted Average | Aggregate | |||||||||||||
Exercise Price | Remaining Contractual | Intrinsic Value | |||||||||||||||
Term (Years) | |||||||||||||||||
Outstanding as of July 31, 2013 | 14,922 | $ | 16.75 | 5.91 | $ | 235,086 | |||||||||||
Grants of options | 4,966 | 35.75 | |||||||||||||||
Exercises | (335 | ) | 17.59 | ||||||||||||||
Forfeitures or expirations | (87 | ) | 17.69 | ||||||||||||||
Outstanding as of April 30, 2014 | 19,466 | 21.59 | 6.34 | 285,896 | |||||||||||||
Exercisable as of April 30, 2014 | 13,144 | $ | 16.24 | 5.01 | $ | 263,249 | |||||||||||
As required by ASC 718, Compensation – Stock Compensation, the Company made an estimate of expected forfeitures and is recognizing compensation cost only for those equity awards expected to vest. | |||||||||||||||||
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of our common stock. The balance for options that were in-the-money is 18,273,258 at April 30, 2014. | |||||||||||||||||
The table below sets forth the stock-based compensation recognized by the Company: | |||||||||||||||||
(In thousands) | Three Months Ended April 30, | Nine Months Ended April 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
General and administrative | $ | 5,948 | $ | 4,069 | $ | 15,406 | $ | 12,884 | |||||||||
Yard Operations | 675 | 608 | 1,856 | 1,713 | |||||||||||||
Total stock-based compensation | $ | 6,623 | $ | 4,677 | $ | 17,262 | $ | 14,597 | |||||||||
In October 2013, the Compensation Committee of the Company’s Board of Directors, following stockholder approval of proposed grants at a meeting of stockholders, approved the grant to each of A. Jayson Adair, the Company’s Chief Executive Officer, and Vincent W. Mitz, the Company’s President, of nonqualified stock options to purchase 2,000,000 and 1,500,000 shares of the Company’s common stock, respectively, at an exercise price of $35.62 per share which equaled the closing price of the Company’s common stock on December 16, 2013, the effective date of grant. Such grants were made in lieu of any cash salary or bonus compensation in excess of $1.00 per year or the grant of any additional equity incentives for a five-year period. Each option will become exercisable over five years, subject to continued service by Mr. Adair and Mr. Mitz, with twenty percent (20%) vesting on April 15, 2015 and December 16, 2014, respectively, and the balance vesting monthly over the subsequent four years. Each option will become fully vested, assuming continued service, on April 15, 2019 and December 16, 2018, respectively. If, prior to a change in control, either executive’s employment is terminated without cause, then one hundred percent (100%) of the shares subject to that executive’s stock option will immediately vest. If, upon or following a change in control, either the Company or a successor entity terminates the executive’s service without cause, or the executive resigns for good reason (as defined in the option agreement), then one hundred percent (100%) of the shares subject to his stock option will immediately vest. The fair value of each option at the date of grant was $11.43. The total estimated compensation expense to be recognized by the Company over the five year estimated service period for these options is $40.0 million. |
Common_Stock_Repurchases
Common Stock Repurchases | 9 Months Ended | ||||||||||||||||||||||||||||
Apr. 30, 2014 | |||||||||||||||||||||||||||||
Common Stock Repurchases [Abstract] | ' | ||||||||||||||||||||||||||||
Common Stock Repurchases | ' | ||||||||||||||||||||||||||||
NOTE 8 – Common Stock Repurchases | |||||||||||||||||||||||||||||
On September 22, 2011, the Company's board of directors approved a 40 million share increase in the Company's stock repurchase program, bringing the total current authorization to 98 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 the Company deems appropriate and may be discontinued at any time. The Company did not repurchase its common stock during the nine months ended April 30, 2014. The Company repurchased 500,000 shares of its common stock during the nine months ended April 30, 2013, at a weighted average price of $27.77 per share totaling $13.9 million. The total number of shares repurchased under the program as of April 30, 2014 was 50,286,782, and 47,713,218 shares were available for repurchase under the program. The impact on dilutive earnings per share of all repurchased shares on the weighted average number of common shares outstanding for the nine months ended April 30, 2014 is less than $0.01. | |||||||||||||||||||||||||||||
In the second quarter of fiscal 2013, certain executive officers exercised stock options through cashless exercises and in the first quarter of fiscal 2014, certain employees exercised stock options through cashless exercises. A portion of the options exercised were net settled in satisfaction of the exercise price and federal and state minimum statutory tax withholding requirements. The Company remitted $0.1 million and $0.6 million for the nine months ended April 30, 2014 and 2013, respectively, to the proper taxing authorities in satisfaction of the employees' minimum statutory withholding requirements. | |||||||||||||||||||||||||||||
The exercised stock options are summarized in the following table: | |||||||||||||||||||||||||||||
Period | Options | Exercise | Shares Net | Shares | Net Shares | Share Price | Tax | ||||||||||||||||||||||
Exercised | Price | Settled for | Withheld | to Employee | for | Withholding | |||||||||||||||||||||||
Exercise | for Taxes (1) | Withholding | (in 000s) | ||||||||||||||||||||||||||
FY 2013 - Q2 | 73,228 | $ | 8.89 | 18,127 | 17,461 | 37,640 | $ | 35.91 | $ | 627 | |||||||||||||||||||
FY 2014 - Q1 | 14,000 | $ | 16.43 | 7,241 | 2,519 | 4,240 | $ | 31.77 | $ | 80 | |||||||||||||||||||
-1 | Shares withheld for taxes are treated as a repurchase of shares for accounting purposes but do not count against the Company’s stock repurchase program. | ||||||||||||||||||||||||||||
Income_Taxes
Income Taxes | 9 Months Ended |
Apr. 30, 2014 | |
Income Taxes [Abstract] | ' |
Income Taxes | ' |
NOTE 9 – Income Taxes | |
The Company applies the provisions of the accounting standard for uncertain tax positions to its income taxes. For benefits to be realized, a tax position must be more likely than not to be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. | |
As of April 30, 2014, the total gross unrecognized tax benefit was $25.4 million, including interest and penalties. | |
As of April 30, 2014, the gross amounts of the Company’s liabilities for unrecognized tax benefits were classified as long-term income taxes payable in the accompanying consolidated balance sheet. Over the next twelve months, the Company’s existing positions will continue to generate an increase in liabilities for unrecognized tax benefits, as well as a likely decrease in liabilities as a result of the lapse of the applicable statute of limitations and the conclusion of income tax audits. The expected decrease in liabilities relating to unrecognized tax benefits will have a positive effect on the Company’s consolidated results of operations and financial position when realized. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The amount of interest and penalties recognized during the nine months ended April 30, 2014 was $1.3 million. | |
The Company files income tax returns in the U.S. federal jurisdiction, various states, and foreign jurisdictions. The Company is currently under audit in certain jurisdictions for fiscal years 2008 through 2012. The Company is no longer subject to U.S. federal and state income tax examination for fiscal years prior to 2011, excepting the jurisdictions currently under audit. At this time, the Company does not believe that the outcome of any examination will have a material impact on the Company’s consolidated results of operations and financial position. | |
The Company has not provided for U.S. federal income and foreign withholding taxes from undistributed earnings of its foreign operations because the Company intends to reinvest such earnings indefinitely in the operations and potential acquisitions related to its foreign operations. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to U.S. income taxes subject to an adjustment for foreign tax credits. It is not practical to determine the income tax liability that might be incurred if these earnings were to be distributed. If these earnings were distributed, foreign tax credits may become available under current law to reduce or eliminate the resultant U.S. income tax liability. |
Recent_Accounting_Pronouncemen
Recent Accounting Pronouncements | 9 Months Ended |
Apr. 30, 2014 | |
Recent Accounting Pronouncements [Abstract] | ' |
Recent Accounting Pronouncements | ' |
NOTE 10 – Recent Accounting Pronouncements | |
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU 2014-09 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 also requires additional disclosure about the nature,amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2016, using one of two retrospective application methods. The Company has not determined the potential effects of implementing ASU 2014-09 on the consolidated financial statements. |
Legal_Proceedings
Legal Proceedings | 9 Months Ended |
Apr. 30, 2014 | |
Legal Proceedings [Abstract] | ' |
Legal Proceedings | ' |
NOTE 11 – Legal Proceedings | |
The Company is subject to threats of litigation and is involved in actual litigation and damage claims arising in the ordinary course of business, such as actions related to injuries, property damage, and handling or disposal of vehicles. The material pending legal proceedings to which the Company is a party to, or of which any of the Company’s property is subject to include the following matters: | |
On April 23, 2010, Deborah Hill filed suit against the Company in the Twentieth Judicial Circuit of Collier County, Florida, alleging negligent destruction of evidence in connection with a stored vehicle that suffered damage due to a fire at its facility in Florida where the vehicle was being stored. Relief sought is for compensatory damages, costs and interest allowed by law. On January 30, 2013, the Court granted the Company’s motion for summary judgment, finding that the Company did not owe any duty to Ms. Hill to preserve her car as evidence. The summary judgment resolves Ms. Hill’s claim against the Company in its entirety in favor of the Company. On February 22, 2013, Ms. Hill’s attorneys filed an appeal of the summary judgment. On April 25, 2014, the appeals court denied Ms. Hill’s appeal, which orders the end to her appeal rights. | |
In connection with its response to Hurricane Sandy, the Company entered into various short-term lease/license agreements with certain land owners in New York and New Jersey to marshal and store storm damaged vehicles until they were sold. In November and December 2012, various actions were commenced against the Company and land owners. In New York, actions were brought by the Town of Southampton, the County of Suffolk, the Town of Brookhaven, and the New York State Department of Environmental Conservation (the DEC), seeking declaratory and injunctive relief as well as civil penalties, in connection with alleged violations of local zoning, land use and environmental regulations. The claims by the various plaintiffs have been mitigated with the removal of vehicles from the various short-term storage locations in New York. The claims brought by the DEC have all been resolved through entering into consent orders, which included administrative payments in amounts that are not material to the Company, and restoration of premises, which the Company is undertaking. The Company is defending the remaining New York claim and believes it has bona fide legal defenses. | |
The Company provides for costs relating to these matters when a loss is probable and the amount can be reasonably estimated. The effect of the outcome of these matters on the Company’s future consolidated results of operations and cash flows cannot be predicted because any such effect depends on future results of operations and the amount and timing of the resolution of such matters. The Company believes that any ultimate liability will not have a material effect on our consolidated results of operations, financial position or cash flows. However, the amount of the liabilities associated with these claims, if any, cannot be determined with certainty. The Company maintains insurance which may or may not provide coverage for claims made against the Company. There is no assurance that there will be insurance coverage available when and if needed. Additionally, the insurance that the Company carries requires that the Company pay for costs and/or claims exposure up to the amount of the insurance deductibles negotiated when the insurance is purchased. | |
Governmental Proceedings | |
The Georgia Department of Revenue, or DOR, conducted a sales and use tax audit of the Company’s operations in Georgia for the period from January 1, 2007 through June 30, 2011. As a result of the audit, the DOR issued a notice of proposed assessment for uncollected sales taxes in which it asserted that the Company failed to remit sales taxes totaling $73.8 million, including penalties and interest. In issuing the notice of proposed assessment, the DOR stated its policy position that sales for resale to non-U.S. registered resellers are subject to Georgia sales and use tax. | |
The Company has engaged a Georgia law firm and outside tax advisors to review the conduct of its business operations in Georgia, the notice of assessment, and the DOR’s policy position. In particular, the Company’s outside legal counsel has provided the Company an opinion that its sales for resale to non-U.S. registered resellers should not be subject to Georgia sales and use tax. In rendering its opinion, the Company’s counsel noted that non-U.S. registered resellers are unable to comply strictly with technical requirements for a Georgia certificate of exemption but concluded that its sales for resale to non-U.S. registered resellers should not be subject to Georgia sales and use tax notwithstanding this technical inability to comply. | |
Based on the opinion from the Company’s outside law firm and advice from outside tax advisors, the Company has adequately provided for the payment of a possible assessment in its consolidated financial statements. The Company believes it has strong defenses to the DOR’s notice of proposed assessment and intends to defend this matter. The Company has filed a request for protest or administrative appeal with the State of Georgia. There can be no assurance, however, that this matter will be resolved in the Company’s favor or that the Company will not ultimately be required to make a substantial payment to the Georgia DOR. The Company understands that Georgia law and DOR regulations are ambiguous on many of the points at issue in the audit, and litigating and defending the matter in Georgia could be expensive and time-consuming and result in substantial management distraction. If the matter were to be resolved in a manner adverse to the Company, it could have a material adverse effect on the Company’s consolidated results of operations, financial position, and cash flows. |
Restructuring
Restructuring | 9 Months Ended | ||||||||||||||||
Apr. 30, 2014 | |||||||||||||||||
Restructuring [Abstract] | ' | ||||||||||||||||
Restructuring | ' | ||||||||||||||||
NOTE 12 – Restructuring | |||||||||||||||||
The Company relocated its corporate headquarters to Dallas, Texas in 2012. The restructuring costs were as follows: | |||||||||||||||||
Three Months Ended April 30, | Nine Months Ended April 30, | ||||||||||||||||
(In thousands) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
General and Administrative | |||||||||||||||||
Severance | $ | (676 | ) | $ | 286 | $ | 4,096 | $ | 859 | ||||||||
Relocation | 268 | 13 | 350 | 520 | |||||||||||||
Total general and administrative | $ | (408 | ) | $ | 299 | $ | 4,446 | $ | 1,379 | ||||||||
Severance for the three months ended April 30, 2014 included a benefit for the reversal of previously accrued costs as a result of adjusting the severance accrual based upon the Company’s reassessment of its strategy of utilizing a third-party enterprise operating system. See Impairmentin Note 1 – Description of Business and Summary of Significant Accounting Policies. | |||||||||||||||||
The movements in the severance accrual were as follows: | |||||||||||||||||
(In thousands) | Balance as of | Expense | Payments | Balance as of | |||||||||||||
31-Jul-13 | 30-Apr-14 | ||||||||||||||||
Severance | $ | 2,224 | $ | 4,096 | $ | 4,043 | $ | 2,277 | |||||||||
The Company started transitioning its data center to a third-party managed data center during the year ended July 31, 2013. The Company reviewed the useful life of certain assets related to its data centers and determined they should be revised from an average of 60 months to an average of 45 months to reflect the shorter useful lives of these assets. Additionally, facility depreciation related to the Company’s information technology operations, previously located in the Company’s offices in Fairfield, California, was accelerated as the department relocated to the Dallas, Texas corporate headquarters. These changes in estimates are accounted for on a prospective basis, resulting in increased depreciation expense over the revised useful lives. These changes resulted in additional depreciation expense of $2.8 million and $4.7 million during the nine months ended April 30, 2014 and 2013, respectively. |
Acquisitions
Acquisitions | 9 Months Ended | ||||||||||||
Apr. 30, 2014 | |||||||||||||
Acquisitions [Abstract] | ' | ||||||||||||
Acquisitions | ' | ||||||||||||
NOTE 13 – Acquisitions | |||||||||||||
During the nine months ended April 30, 2013, the Company acquired salvage vehicle auction businesses in Brazil and the U.A.E. and an auction platform in Germany for a total purchase price of $34.9 million. | |||||||||||||
During the nine months ended April 30, 2014, the Company acquired salvage vehicle auction businesses in Brazil which did not include any facilities, and in Canada, as well as the assets of an online marketing company, which included the rights to hundreds of web domains including www.cashforcars.com and www.cash4cars.com. The aggregate purchase price totaled $14.8 million. | |||||||||||||
The total acquisition price was as follows: | |||||||||||||
Three Months Ended April 30, | Nine Months Ended April 30, | ||||||||||||
(In thousands) | 2014 | 2013 | 2014 | 2013 | |||||||||
Total cash paid, net of cash acquired | $ | 533 | $ | — | $ 14,761 | $ 31,243 | |||||||
Contingent consideration | (533 | ) | — | - | 3,690 | ||||||||
Total acquisition price | $ | — | $ | — | $ 14,761 | $ 34,933 | |||||||
These acquisitions were undertaken because of their strategic fit and have been accounted for using the purchase method in accordance with ASC 805, Business Combinations, which has resulted in the recognition of goodwill in the Company's consolidated financial statements. This goodwill arose because the purchase price of each acquisition reflected a number of factors, including their future earnings and cash flow potential; the multiple to earnings, cash flow and other factors at which similar businesses have been purchased by other acquirers; the competitive nature of the process by which the Company acquired the businesses; and because of the complementary strategic fit and resulting synergies brought to existing operations. The goodwill that arose from these acquisitions was within Level III of the fair value hierarchy as it was valued using unobservable inputs. Unobservable inputs reflect the Company’s best estimate of what hypothetical market participants would use to determine the value of acquired assets at the reporting date based on the best information available in the circumstances. When a determination is made to classify items within Level III of the fair value hierarchy, the evaluation is based upon the significance of the unobservable inputs to the overall fair value measurement. Due to the limitation of goodwill asset market value or pricing information, the determination of fair value of the goodwill asset is inherently more difficult. Goodwill is not amortized for financial reporting purposes, and most of the balance is not amortized for tax purposes. The intangible assets that arose from these acquisitions were also within Level III of the fair value hierarchy as it was valued using unobservable inputs, primarily utilizing the Multi-Period Excess Earnings Method (MPEEM) model, which is an income-based approach that allocates to goodwill any acquisition costs not specifically assigned to intangibles, fixed assets or working capital. Intangible assets acquired include covenants not to compete, supply contracts, customer relationships, trade names, licenses and databases and software with a useful life ranging from three to eight years. | |||||||||||||
The purchase price allocation for the acquired auction platform in Spain, the salvage vehicle auction businesses in Canada and Brazil, and the acquired online marketing company, are not final for property and equipment, income taxes, liabilities and intangible assets acquired pending the final valuation by the Company. The Company believes any potential changes to its preliminary purchase price allocations will not have a material impact on the Company’s consolidated financial position and results of operations. | |||||||||||||
During the three months ended April 30, 2014, the purchase price allocation for Salvage Parent, Inc. was finalized. As a result, from the preliminary purchase price allocation as of July 31, 2013, goodwill increased $5.3 million, primarily related to a $11.5 million increase in accrued liabilities, a $7.3 million increase in intangible assets, and changes to deferred taxes on acquired intangible assets and working capital adjustments. Accrued liabilities were adjusted after obtaining new information on a pre-acquisition contingency related to a lack of documentation on the historical sales of Salvage Parent, Inc. The Company noted that the potential exposure from this contingency ranged from $7.0 million to $28.0 million. The Company recorded the fair value of this contingency of $14.0 million. In accordance with ASC 805, any adjustments to the fair value of acquired assets and liabilities that occur subsequent to the measurement period will be reflected in the Company’s results of operations. | |||||||||||||
The acquisitions do not result in a significant change in the Company’s consolidated results of operations individually or in the aggregate; therefore, pro forma financial information has not been presented. The operating results have been included in the Company’s consolidated financial position and results of operations since the acquisition dates. |
Description_of_Business_and_Su1
Description of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended | ||||
Apr. 30, 2014 | |||||
Description of Business and Summary of Significant Accounting Policies [Abstract] | ' | ||||
Principles of Consolidation | ' | ||||
Principles of Consolidation | |||||
The consolidated financial statements include the accounts of the parent company and its wholly-owned subsidiaries, including its foreign wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. | |||||
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments of a normal recurring nature, considered necessary for fair presentation of its financial position as of April 30, 2014, its consolidated statements of income for the three and nine months ended April 30, 2014 and 2013, its consolidated statements of comprehensive income for the three and nine months ended April 30, 2014 and 2013, and its consolidated statements of cash flows for the nine months ended April 30, 2014 and 2013. Interim results for the nine months ended April 30, 2014 are not necessarily indicative of the results that may be expected for any future period, or for the entire year ending July 31, 2014. These consolidated financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to such rules and regulations. The interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2013. Certain prior year amounts have been reclassified to conform to current year presentation. | |||||
Use of Estimates | ' | ||||
Use of Estimates | |||||
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates include but are not limited to, vehicle pooling costs, self-insured reserves, allowance for doubtful accounts, income taxes, revenue recognition, stock-based compensation, purchase price allocations, long-lived asset and goodwill impairment calculations and contingencies. Actual results could differ from these estimates. | |||||
Impairment | ' | ||||
Impairment | |||||
The Company reviews its operating assets, including software, assets held for development and sale, and construction in progress, for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. GAAP requires that if impairment indicators exist and the undiscounted cash flows expected to be generated by an asset are less than its carrying amount, an impairment charge should be recorded to write-down the carrying amount of such asset to fair value. The impairment analysis does not consider the timing of future cash flows and whether the asset is expected to earn an above or below market rate of return. | |||||
During the three months ended April 30, 2014, the Company reassessed its strategy of utilizing a third-party enterprise operating system to address its international expansion needs based on the projected cost to complete, deployment risk and certain other factors. The Company decided to cease development of this software and address its international technology needs through an internally-developed proprietary solution. The Company recognized an impairment charge of $29.1 million resulting primarily from the abandonment of work previously capitalized in connection with the development of the software. | |||||
Revenue Recognition | ' | ||||
Revenue Recognition | |||||
The Company provides a portfolio of services to its sellers and buyers that facilitate the sale and delivery of a vehicle from seller to buyer. These services include the ability to use the Company’s Internet sales technology and vehicle delivery, loading, title processing, preparation and storage. The Company evaluates multiple-element arrangements relative to its member and seller agreements. | |||||
The services provided to the seller of a vehicle involve disposing of a vehicle on the seller’s behalf and, under most of the Company’s current North American contracts, collecting the proceeds from the member. The Company applies Accounting Standard Update 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements (ASU 2009-13) for revenue recognition. Pre-sale services, including towing, title processing, preparation and storage, as well as sale fees and other enhancement services meet the criteria for separate units of accounting. The revenue associated with each service is recognized upon completion of the respective service, net of applicable rebates or allowances. For certain sellers who are charged a proportionate fee based on high bid of the vehicle, the revenue associated with the pre-sale services is recognized upon completion of the sale when the total arrangement is fixed and determinable. The estimated selling price of each service is determined based on management’s best estimate and allotted based on the relative selling price method. | |||||
Vehicle sales, where vehicles are purchased and remarketed on the Company’s own behalf, are recognized on the sale date, which is typically the point of high bid acceptance. Upon high bid acceptance, a legal binding contract is formed with the member, and the gross sales price is recorded as revenue. | |||||
The Company also provides a number of services to the buyer of the vehicle, charging a separate fee for each service. Each of these services has been assessed to determine whether the requirements have been met to separate them into units of accounting within a multiple-element arrangement. The Company has concluded that the sale and the post-sale services are separate units of accounting. The fees for sale services are recognized upon completion of the sale, and the fees for the post-sale services are recognized upon successful completion of those services using the relative selling price method. | |||||
The Company also charges members an annual registration fee for the right to participate in its vehicle sales program, which is recognized ratably over the term of the arrangement, and relist and late-payment fees, which are recognized upon receipt of payment by the member. No provision for returns has been established, as all sales are final with no right of return, although the Company provides for bad debt expense in the case of non-performance by its members or sellers. | |||||
The Company allocates arrangement consideration based upon management’s best estimate of the selling price of the separate units of accounting contained within an arrangement containing multiple deliverables. Significant inputs in the Company’s estimates of the selling price of separate units of accounting include market and pricing trends, pricing customization and practices, and profit objectives for the services. | |||||
Vehicle pooling costs | ' | ||||
Vehicle Pooling Costs | |||||
The Company defers in vehicle pooling costs certain yard operation expenses associated with vehicles consigned to and received by the Company, but not sold as of the end of the period. The Company quantifies the deferred costs using a calculation that includes the number of vehicles at its facilities at the beginning and end of the period, the number of vehicles sold during the period and an allocation of certain yard operation costs of the period. The primary expenses allocated and deferred are certain facility costs, labor, transportation, and vehicle processing. If the allocation factors change, then yard operation expenses could increase or decrease correspondingly in the future. These costs are expensed as vehicles are sold in subsequent periods on an average cost basis. Given the fixed cost nature of the Company’s business, there is not a direct correlation for an increase in expenses or units processed on vehicle pooling costs. | |||||
The Company applies the provisions of accounting guidance for subsequent measurement of inventory to our vehicle pooling costs. The provision requires that items such as idle facility expense, double freight and re-handling costs be recognized as current period charges regardless of whether they meet the criteria of “abnormal” as provided in the guidance. In addition, the guidance requires that the allocation of fixed production overhead to the costs of conversion be based on the normal capacity of production facilities. | |||||
Foreign Currency Translation | ' | ||||
Foreign Currency Translation | |||||
The Company records foreign currency translation adjustments from the process of translating the functional currency of the financial statements of its foreign subsidiaries into the U.S. dollar reporting currency. The Canadian dollar, the British pound, the U.A.E. dirham, the Brazilian real, and the Euro are the functional currencies of the Company’s foreign subsidiaries as they are the primary currencies within the economic environment in which each subsidiary operates. The original equity investment in the respective subsidiaries is translated at historical rates. Assets and liabilities of the respective subsidiary’s operations are translated into U.S. dollars at period-end exchange rates, and revenues and expenses are translated into U.S. dollars at average exchange rates in effect during each reporting period. Adjustments resulting from the translation of each subsidiary’s financial statements are reported in other comprehensive income. | |||||
The cumulative effects of foreign currency exchange rate fluctuations were as follows (in thousands): | |||||
Cumulative loss on foreign currency translation as of July 31, 2012 | $ | (34,933 | ) | ||
Loss on foreign currency translation | (10,487 | ) | |||
Cumulative loss on foreign currency translation as of July 31, 2013 | $ | (45,420 | ) | ||
Gain on foreign currency translation | 25,015 | ||||
Cumulative loss on foreign currency translation as of April 30, 2014 | $ | (20,405 | ) | ||
Income Taxes and Deferred Tax Assets | ' | ||||
Income Taxes and Deferred Tax Assets | |||||
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. | |||||
In accordance with the provisions of ASC 740, Income Taxes, a two-step approach is applied to the recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company recognizes interest and penalties related to uncertain tax positions in the provision for income taxes on its consolidated statements of income. | |||||
Fair Value of Financial Instruments | ' | ||||
Fair Value of Financial Instruments | |||||
The Company records its financial assets and liabilities at fair value in accordance with the framework for measuring fair value in U.S. GAAP. In accordance with ASC 820, Fair Value Measurements and Disclosures, as amended by Accounting Standards Update 2011-04, the Company considers fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants under current market conditions. This framework establishes a fair value hierarchy that prioritizes the inputs used to measure fair value: | |||||
Level I | |||||
Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets. | |||||
Level II | |||||
Inputs other than quoted prices included within Level I that are observable for the asset or liability, either directly or indirectly. Interest rate hedges are valued at exit prices obtained from the counter-party. | |||||
Level III | |||||
Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s best estimate. | |||||
The amounts recorded for financial instruments in the Company's consolidated financial statements, which included cash, accounts receivable, accounts payable and accrued liabilities approximate their fair values as of April 30, 2014 and July 31, 2013, due to the short-term nature of those instruments, and are classified within Level II of the fair value hierarchy. Cash equivalents are classified within Level II of the fair value hierarchy because they are valued using quoted market prices of the underlying investments. See Note 3 - Long-Term Debt for additional fair value disclosures. | |||||
Derivatives and Hedging | ' | ||||
Derivatives and Hedging | |||||
The Company has entered into two interest rate swaps to eliminate interest rate risk on the Company’s variable rate Term Loan, and the swaps are designated as effective cash flow hedges under ASC 815, Derivatives and Hedging. See Note 4 - Derivatives and Hedging. Each quarter, the Company measures hedge effectiveness using the ”hypothetical derivative method” and records in earnings any hedge ineffectiveness with the effective portion of the hedges change in fair value recorded in other comprehensive income or loss. | |||||
Assets Held for Sale | ' | ||||
Assets Held for Sale | |||||
The Company has removed certain assets from operations and offered them for sale. These assets, which include certain real estate, are reflected at their fair market value, less costs to dispose, in the financial statements and are a Level II fair value measurement based on sale transactions of similar assets. | |||||
Accounting for Acquisitions | ' | ||||
Accounting for Acquisitions | |||||
The Company recognizes and measures identifiable assets acquired and liabilities assumed in acquired entities in accordance with ASC 805, Business Combinations. The accounting for acquisitions involves significant judgments and estimates, including the fair value of certain forms of consideration, the fair value of acquired intangible assets, which involve projections of future revenues, cash flows and terminal value, which are then either discounted at an estimated discount rate or measured at an estimated royalty rate, and the fair value of other acquired assets and assumed liabilities, including potential contingencies and the useful lives of the assets. The projections are developed using internal forecasts, available industry and market data and estimates of long-term growth rates of the Company. Historical experience is additionally utilized, in which historical or current costs have approximated fair value for certain assets acquired. | |||||
Segments and Other Geographic Reporting | ' | ||||
Segments and Other Geographic Reporting | |||||
The Company’s North American and U.K. regions are considered two separate operating segments, which have been aggregated into one reportable segment because they share similar economic characteristics. |
Description_of_Business_and_Su2
Description of Business and Summary of Significant Accounting Policies (Tables) | 9 Months Ended | ||||
Apr. 30, 2014 | |||||
Description of Business and Summary of Significant Accounting Policies [Abstract] | ' | ||||
Schedule of foreign currency translation | ' | ||||
Cumulative loss on foreign currency translation as of July 31, 2012 | $ | (34,933 | ) | ||
Loss on foreign currency translation | (10,487 | ) | |||
Cumulative loss on foreign currency translation as of July 31, 2013 | $ | (45,420 | ) | ||
Gain on foreign currency translation | 25,015 | ||||
Cumulative loss on foreign currency translation as of April 30, 2014 | $ | (20,405 | ) |
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets (Tables) | 9 Months Ended | ||||||||
Apr. 30, 2014 | |||||||||
Goodwill and Intangible Assets [Abstract] | ' | ||||||||
Schedule of aggregate amortization expense on intangible assets | ' | ||||||||
(In thousands) | 30-Apr-14 | 31-Jul-13 | |||||||
Amortized intangibles: | |||||||||
Covenants not to compete | $ | 17,655 | $ | 12,515 | |||||
Supply contracts | 28,953 | 26,322 | |||||||
Customer relationships | 15,834 | 7,389 | |||||||
Trade name | 2,540 | 2,998 | |||||||
Licenses and databases | 2,113 | 3,306 | |||||||
Accumulated amortization | (41,711 | ) | (34,824 | ) | |||||
Net intangibles | $ | 25,384 | $ | 17,706 | |||||
Schedule of change in carrying amount of goodwill | ' | ||||||||
Balance as of July 31, 2013 | $ | 267,463 | |||||||
Goodwill recorded during the period (Note 13 - Acquisitions) | 12,987 | ||||||||
Effect of foreign currency exchange rates | 7,952 | ||||||||
Balance as of April 30, 2014 | $ | 288,402 | |||||||
Net_Income_Per_Share_Tables
Net Income Per Share (Tables) | 9 Months Ended | ||||||||||||||||
Apr. 30, 2014 | |||||||||||||||||
Net Income Per Share [Abstract] | ' | ||||||||||||||||
Schedule of reconciliation of basic weighted shares outstanding to diluted weighted average shares outstanding | ' | ||||||||||||||||
Three Months Ended April 30, | Nine Months Ended April 30, | ||||||||||||||||
(In thousands) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
Weighted average common shares outstanding | 125,794 | 125,270 | 125,604 | 124,755 | |||||||||||||
Effect of dilutive securities - stock options | 5,692 | 5,260 | 5,491 | 4,747 | |||||||||||||
Weighted average common and dilutive | |||||||||||||||||
potential common shares outstanding | 131,486 | 130,530 | 131,095 | 129,502 |
Stockbased_Compensation_Tables
Stock-based Compensation (Tables) | 9 Months Ended | ||||||||||||||||
Apr. 30, 2014 | |||||||||||||||||
Stock-based Compensation [Abstract] | ' | ||||||||||||||||
Summary of option activity for stock options | ' | ||||||||||||||||
(In thousands, except per share and term data) | Shares | Weighted Average | Weighted Average | Aggregate | |||||||||||||
Exercise Price | Remaining Contractual | Intrinsic Value | |||||||||||||||
Term (Years) | |||||||||||||||||
Outstanding as of July 31, 2013 | 14,922 | $ | 16.75 | 5.91 | $ | 235,086 | |||||||||||
Grants of options | 4,966 | 35.75 | |||||||||||||||
Exercises | (335 | ) | 17.59 | ||||||||||||||
Forfeitures or expirations | (87 | ) | 17.69 | ||||||||||||||
Outstanding as of April 30, 2014 | 19,466 | 21.59 | 6.34 | 285,896 | |||||||||||||
Exercisable as of April 30, 2014 | 13,144 | $ | 16.24 | 5.01 | $ | 263,249 | |||||||||||
Recognized stock-based compensation expense | ' | ||||||||||||||||
(In thousands) | Three Months Ended April 30, | Nine Months Ended April 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
General and administrative | $ | 5,948 | $ | 4,069 | $ | 15,406 | $ | 12,884 | |||||||||
Yard Operations | 675 | 608 | 1,856 | 1,713 | |||||||||||||
Total stock-based compensation | $ | 6,623 | $ | 4,677 | $ | 17,262 | $ | 14,597 |
Common_Stock_Repurchases_Table
Common Stock Repurchases (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||
Apr. 30, 2014 | |||||||||||||||||||||||||||||
Common Stock Repurchases [Abstract] | ' | ||||||||||||||||||||||||||||
Schedule disclosing summary of stock options exercised | ' | ||||||||||||||||||||||||||||
Period | Options | Exercise | Shares Net | Shares | Net Shares | Share Price | Tax | ||||||||||||||||||||||
Exercised | Price | Settled for | Withheld | to Employee | for | Withholding | |||||||||||||||||||||||
Exercise | for Taxes (1) | Withholding | (in 000s) | ||||||||||||||||||||||||||
FY 2013 - Q2 | 73,228 | $ | 8.89 | 18,127 | 17,461 | 37,640 | $ | 35.91 | $ | 627 | |||||||||||||||||||
FY 2014 - Q1 | 14,000 | $ | 16.43 | 7,241 | 2,519 | 4,240 | 31.77 | 80 | |||||||||||||||||||||
-1 | Shares withheld for taxes are treated as a repurchase of shares for accounting purposes but do not count against the Company’s stock repurchase program. | ||||||||||||||||||||||||||||
Restructuring_Tables
Restructuring (Tables) | 9 Months Ended | ||||||||||||||||
Apr. 30, 2014 | |||||||||||||||||
Restructuring [Abstract] | ' | ||||||||||||||||
Schedule of restructuring-related costs | ' | ||||||||||||||||
Three Months Ended April 30, | Nine Months Ended April 30, | ||||||||||||||||
(In thousands) | 2014 | 2013 | 2014 | 2013 | |||||||||||||
General and Administrative | |||||||||||||||||
Severance | $ | (676 | ) | $ | 286 | $ | 4,096 | $ | 859 | ||||||||
Relocation | 268 | 13 | 350 | 520 | |||||||||||||
Total general and administrative | $ | (408 | ) | $ | 299 | $ | 4,446 | $ | 1,379 | ||||||||
Schedule of movements in severance accrual | ' | ||||||||||||||||
(In thousands) | Balance as of | Expense | Payments | Balance as of | |||||||||||||
31-Jul-13 | 30-Apr-14 | ||||||||||||||||
Severance | $ | 2,224 | $ | 4,096 | $ | 4,043 | $ | 2,277 |
Acquisitions_Tables
Acquisitions (Tables) | 9 Months Ended | ||||||||||||
Apr. 30, 2014 | |||||||||||||
Acquisitions [Abstract] | ' | ||||||||||||
Summary of acquisitions | ' | ||||||||||||
Three Months Ended April 30, | Nine Months Ended April 30, | ||||||||||||
(In thousands) | 2014 | 2013 | 2014 | 2013 | |||||||||
Total cash paid, net of cash acquired | $ | 533 | $ | — | $ 14,761 | $ 31,243 | |||||||
Contingent consideration | (533 | ) | — | - | 3,690 | ||||||||
Total acquisition price | $ | — | $ | — | $ 14,761 | $ 34,933 | |||||||
Description_of_Business_and_Su3
Description of Business and Summary of Significant Accounting Policies (Details) (USD $) | 9 Months Ended | 12 Months Ended |
In Thousands, unless otherwise specified | Apr. 30, 2014 | Jul. 31, 2013 |
Cumulative Translation Adjustment Summary [Roll Forward] | ' | ' |
Cumulative loss on foreign currency translation, Begining balance | ($45,420) | ($34,933) |
Gain (Loss) on foreign currency translation | 25,015 | -10,487 |
Cumulative loss on foreign currency translation, Ending balance | ($20,405) | ($45,420) |
Description_of_Business_and_Su4
Description of Business and Summary of Significant Accounting Policies (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended |
In Thousands, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2014 |
Segment | ||
Description Of Business and Summary Of Significant Accounting Policies [Line Items] | ' | ' |
Impairment of long-lived assets | $29,104 | $29,104 |
Tax benefits realized upon ultimate settlement, Description | ' | 'The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. |
Number of operating segments | ' | 2 |
Number of reportable segment | ' | 1 |
Interest Rate Swap | ' | ' |
Description Of Business and Summary Of Significant Accounting Policies [Line Items] | ' | ' |
Number of interest rate derivatives held | 2 | 2 |
LongTerm_Debt_Details_Textual
Long-Term Debt (Details Textual) (USD $) | 9 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | 9 Months Ended | |||||||
In Millions, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2014 | Mar. 01, 2013 | Apr. 30, 2014 | Sep. 29, 2011 | Mar. 01, 2013 | Apr. 30, 2014 | Apr. 30, 2014 | Apr. 30, 2014 | Apr. 30, 2014 | Apr. 30, 2014 | Jan. 14, 2011 | Sep. 29, 2011 |
Revolving Credit Facility | Revolving Credit Facility | Revolving Credit Facility | Revolving Credit Facility | Revolving Credit Facility | Revolving Credit Facility | Alternative currency borrowing credit facility | Letter of Credit | Term Loan Facility | Term Loan Facility | Term Loan Facility | Term Loan Facility | ||
Minimum | Minimum | Minimum | Maximum | Maximum | Original Limit | Original Limit | Maximum | ||||||
Original Limit | |||||||||||||
Line of Credit Facility [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity | ' | $100 | ' | ' | $400 | ' | ' | $100 | $50 | ' | $400 | $400 | $500 |
Net leverage ratio | ' | ' | '1:1 | ' | ' | '1.5:1 | ' | ' | ' | ' | ' | ' | ' |
Outstanding borrowings | ' | ' | ' | ' | ' | ' | ' | ' | ' | 312.5 | ' | ' | ' |
Quarterly payments for term loan | ' | ' | ' | ' | ' | ' | ' | ' | ' | $18.80 | ' | ' | ' |
Maturity date | ' | ' | ' | ' | ' | ' | ' | ' | ' | 14-Dec-15 | ' | ' | ' |
Reference rate basis | '(i) the Eurocurrency Rate; (ii) the Federal Funds Rate; or (iii) the Prime Rate as described in the Credit Facility | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reference rate | 0.15% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Applicable interest rate added to reference rate in order to compute variable interest rate | 1.50% | ' | ' | 1.50% | ' | ' | 2.00% | ' | ' | ' | ' | ' | ' |
Commitment fee percentage | ' | ' | ' | 0.08% | ' | ' | 0.13% | ' | ' | ' | ' | ' | ' |
Line of credit facility interest rate during period | 2.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Derivatives_and_Hedging_Detail
Derivatives and Hedging (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | |||||
In Millions, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 | Jul. 31, 2013 | Apr. 30, 2014 | Apr. 30, 2014 |
Interest Rate Swap | Interest Rate Swap | Interest Rate Swap | Interest Rate Swap | Interest Rate Swap | First interest rate swap | Second interest rate swap | |
Derivative | Derivative | Other liabilities | |||||
Derivative [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Derivative, type of instrument | ' | ' | 'Interest rate swap | ' | ' | ' | ' |
Number of interest rate derivatives held | 2 | ' | 2 | ' | ' | ' | ' |
Notional amount of interest rate swap | $312.50 | ' | $312.50 | ' | ' | ' | ' |
Derivative, fixed interest rate | ' | ' | ' | ' | ' | 0.85% | 0.69% |
Portion of notional amount at fixed interest rate | ' | ' | ' | ' | ' | 250 | 62.5 |
Derivative designated as cash flow hedge, Fair value | ' | ' | ' | ' | 2.7 | ' | ' |
Reclassification adjustment out of other comprehensive income into interest expense | 0.5 | 0.6 | 1.7 | 1.9 | ' | ' | ' |
Description of interest rate cash flow hedge accounting method | ' | ' | 'Hypothetical derivative method | ' | ' | ' | ' |
Amortization on notional amount per quarter through September 30, 2015 | 18.8 | ' | 18.8 | ' | ' | ' | ' |
Amortization on notional amount on December 14, 2015 | $200 | ' | $200 | ' | ' | ' | ' |
Derivative, description of variable rate basis | ' | ' | 'One month LIBOR rate | ' | ' | ' | ' |
Goodwill_and_Intangible_Assets2
Goodwill and Intangible Assets (Details) (USD $) | Apr. 30, 2014 | Jul. 31, 2013 |
In Thousands, unless otherwise specified | ||
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Accumulated Amortization | ($41,711) | ($34,824) |
Net intangibles | 25,384 | 17,706 |
Covenants not to compete | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross Carrying Amount | 17,655 | 12,515 |
Supply contracts | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross Carrying Amount | 28,953 | 26,322 |
Customer relationships | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross Carrying Amount | 15,834 | 7,389 |
Trade name | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross Carrying Amount | 2,540 | 2,998 |
Licenses and databases | ' | ' |
Finite-Lived Intangible Assets [Line Items] | ' | ' |
Gross Carrying Amount | $2,113 | $3,306 |
Goodwill_and_Intangible_Assets3
Goodwill and Intangible Assets (Details 1) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Apr. 30, 2014 |
Goodwill [Roll Forward] | ' |
Balance as of July 31, 2013 | $267,463 |
Goodwill recorded during the period | 12,987 |
Effect of foreign currency exchange rates | 7,952 |
Balance as of April 30, 2014 | $288,402 |
Goodwill_and_Intangible_Assets4
Goodwill and Intangible Assets (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 |
Goodwill [Abstract] | ' | ' | ' | ' |
Aggregate amortization expense | $1.50 | $1 | $3.80 | $3.20 |
Net_Income_Per_Share_Details
Net Income Per Share (Details) | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 | |
Net Income Per Share [Abstract] | ' | ' | ' | ' |
Weighted average common shares outstanding | 125,794 | 125,270 | 125,604 | 124,755 |
Effect of dilutive securities - stock options | 5,692 | 5,260 | 5,491 | 4,747 |
Weighted average common and dilutive potential common shares outstanding | 131,486 | 130,530 | 131,095 | 129,502 |
Net_Income_Per_Share_Details_T
Net Income Per Share (Details Textual) | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 | |
Net Income Per Share [Abstract] | ' | ' | ' | ' |
Stock options excluded from the calculation of dilutive earnings per share | 4,973,398 | 209,914 | 3,240,098 | 308,641 |
Stockbased_Compensation_Detail
Stock-based Compensation (Details) (USD $) | 3 Months Ended | 9 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Oct. 31, 2013 | Jan. 31, 2013 | Apr. 30, 2014 |
Number of Options [Roll Forward] | ' | ' | ' |
Outstanding as of July 31, 2013 | 14,922 | ' | 14,922 |
Grants of options | ' | ' | 4,966 |
Exercises | 14,000 | 73,228 | -335 |
Forfeitures or expirations | ' | ' | -87 |
Outstanding as of April 30, 2014 | ' | ' | 19,466 |
Exercisable as of April 30, 2014 | ' | ' | 13,144 |
Weighted - Average Exercise Price [Roll Forward] | ' | ' | ' |
Outstanding as of July 31, 2013 | $16.75 | ' | $16.75 |
Grants of options | ' | ' | $35.75 |
Exercise Price | $16.43 | $8.89 | $17.59 |
Forfeitures or expirations | ' | ' | $17.69 |
Outstanding as of April 30, 2014 | ' | ' | $21.59 |
Exercisable as of April 30, 2014 | ' | ' | $16.24 |
Weighted - Average Remaining Contractual Term [Roll Forward] | ' | ' | ' |
Outstanding as of July 31, 2013 | ' | ' | '5 years 10 months 28 days |
Outstanding as of April 30, 2014 | ' | ' | '6 years 4 months 2 days |
Exercisable as of April 30, 2014 | ' | ' | '5 years 4 days |
Aggregate Intrinsic Value [Roll Forward] | ' | ' | ' |
Outstanding as of July 31, 2013 | $235,086 | ' | $235,086 |
Outstanding as of April 30, 2014 | ' | ' | 285,896 |
Exercisable as of April 30, 2014 | ' | ' | $263,249 |
Stockbased_Compensation_Detail1
Stock-based Compensation (Details 1) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Total stock-based compensation | $6,623 | $4,677 | $17,262 | $14,597 |
General and administrative [Member] | ' | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Total stock-based compensation | 5,948 | 4,069 | 15,406 | 12,884 |
Yard Operations [Member] | ' | ' | ' | ' |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ' | ' | ' | ' |
Total stock-based compensation | $675 | $608 | $1,856 | $1,713 |
Stockbased_Compensation_Detail2
Stock-based Compensation (Details Textual) (USD $) | 6 Months Ended | |
In Millions, except Share data, unless otherwise specified | Oct. 31, 2013 | Apr. 30, 2014 |
Stock Based Compensation (Textual) | ' | ' |
Shares available for calculating intrinsic value (in shares) | ' | 18,273,258 |
Nonqualified stock options to purchase of shares, exercise price | $35.62 | ' |
Deferred compensation arrangement with individual - requisite service period | 'Five years | ' |
Deferred compensation arrangement with individual - maximum contractual term | 'Each option will become fully vested, assuming continued service, on April 15, 2019 and December 16, 2018. | ' |
Term for not granting cash salary or bonus compensation in excess of $ 1.00 per year | '5 years | ' |
Percentage of stock options which would get immediately vested on termination of executive | 100.00% | ' |
Percentage of stock options which would get immediately vested on change of control | 100.00% | ' |
Value of option at the date of grant | $11.43 | ' |
Total compensation expense to be recognized per grant | $40 | ' |
A. Jayson Adair, the Chief Executive Officer | ' | ' |
Stock Based Compensation (Textual) | ' | ' |
Nonqualified stock options to purchase of shares | 2,000,000 | ' |
Percentage of total aggregate options vested | 20.00% | ' |
Vincent W. Mitz, the President | ' | ' |
Stock Based Compensation (Textual) | ' | ' |
Nonqualified stock options to purchase of shares | 1,500,000 | ' |
Percentage of total aggregate options vested | 20.00% | ' |
Common_Stock_Repurchases_Detai
Common Stock Repurchases (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, except Share data, unless otherwise specified | Oct. 31, 2013 | Jan. 31, 2013 | Apr. 30, 2014 | ||
Share-Based Compensation Arrangement By Share-Based Payment Award, Options Exercisable [Abstract] | ' | ' | ' | ||
Options Exercised | 14,000 | 73,228 | -335 | ||
Exercise Price | $16.43 | $8.89 | $17.59 | ||
Shares Net Settled for Exercise | 7,241 | 18,127 | ' | ||
Shares Withheld for Taxes | 2,519 | [1] | 17,461 | [1] | ' |
Net Shares to Employee | 4,240 | 37,640 | ' | ||
Share Price for Withholding | $31.77 | $35.91 | ' | ||
Tax Withholding | $80 | $627 | ' | ||
[1] | Shares withheld for taxes are treated as a repurchase of shares for accounting purposes but do not count against the Company's stock repurchase program. |
Common_Stock_Repurchases_Detai1
Common Stock Repurchases (Details Textual) (USD $) | 9 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 | Sep. 22, 2011 |
Stock Repurchase [Abstract] | ' | ' | ' |
Additional common stock authorized for repurchase (in shares) | ' | ' | 40,000,000 |
Common stock authorized for repurchase (in shares) | ' | ' | 98,000,000 |
Repurchased common stock (in shares) | ' | 500,000 | ' |
Stock repurchase price per share (in dollars per share) | ' | $27.77 | ' |
Value of repurchased common stock | ' | $13.90 | ' |
Number of shares repurchased under the program | 50,286,782 | ' | ' |
Number of shares available for repurchase under Stock Repurchase Program | 47,713,218 | ' | ' |
Dilutive earnings per share, Impact of repurchase shares on the weighted average common shares outstanding (in dollars per share) | $0.01 | ' | ' |
Remittance to taxing authorities under statutory withholding | $0.10 | $0.60 | ' |
Income_Taxes_Details_Textual
Income Taxes (Details Textual) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Apr. 30, 2014 |
Income Taxes [Abstract] | ' |
Gross unrecognized tax benefit | $25.40 |
Interest and penalties related to income tax | $1.30 |
Tax benefits recognized provided percentage of likelihood of realization is more than | 50.00% |
Legal_Proceedings_Details_Text
Legal Proceedings (Details Textual) (USD $) | Apr. 30, 2014 |
In Millions, unless otherwise specified | |
Legal Proceedings [Abstract] | ' |
Sales tax including penalties and interest expense | $73.80 |
Restructuring_Details
Restructuring (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 |
Severance [Member] | ' | ' | ' | ' |
Restructuring Cost and Reserve [Line Items] | ' | ' | ' | ' |
Restructuring Charges | ' | ' | $4,096 | ' |
General and administrative [Member] | ' | ' | ' | ' |
Restructuring Cost and Reserve [Line Items] | ' | ' | ' | ' |
Restructuring Charges | -408 | 299 | 4,446 | 1,379 |
General and administrative [Member] | Severance [Member] | ' | ' | ' | ' |
Restructuring Cost and Reserve [Line Items] | ' | ' | ' | ' |
Restructuring Charges | -676 | 286 | 4,096 | 859 |
General and administrative [Member] | Relocation [Member] | ' | ' | ' | ' |
Restructuring Cost and Reserve [Line Items] | ' | ' | ' | ' |
Restructuring Charges | $268 | $13 | $350 | $520 |
Restructuring_Details_1
Restructuring (Details 1) (Severance [Member], USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Apr. 30, 2014 |
Severance [Member] | ' |
Restructuring Reserve [Roll Forward] | ' |
Balance as of July 31, 2013 | $2,224 |
Expense | 4,096 |
Payments | 4,043 |
Balance as of April 30, 2014 | $2,277 |
Restructuring_Details_Textual
Restructuring (Details Textual) (USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 |
Restructuring and Related Activities (Details Textual) | ' | ' |
Additional depreciation expenses recognized during current period | $2.80 | $4.70 |
Data Centers [Member] | ' | ' |
Restructuring and Related Activities (Details Textual) | ' | ' |
Average useful lives of data center | '60 months | ' |
Revised average useful lives of data center | '45 months | ' |
Acquisitions_Details
Acquisitions (Details) (Acquired salvage vehicle and assets of an online marketing company [Member], USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 |
Acquired salvage vehicle and assets of an online marketing company [Member] | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Total cash paid, net of cash acquired | $533 | ' | $14,761 | $31,243 |
Contingent consideration | -533 | ' | ' | 3,690 |
Total acquisition price | ' | ' | $14,761 | $34,933 |
Acquisitions_Details_Textual
Acquisitions (Details Textual) (USD $) | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 | |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Business acquisition preacquisition contingency potential exposure fair value | $14,000,000 | ' | $14,000,000 | ' |
Increase in goodwill | 5,300,000 | ' | ' | ' |
Increase in accrued liabilities | 11,500,000 | ' | ' | ' |
Increase in intangible assets | 7,300,000 | ' | ' | ' |
Minimum | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Business acquisition preacquisition contingency, Range | ' | ' | 7,000,000 | ' |
Maximum | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Business acquisition preacquisition contingency, Range | ' | ' | 28,000,000 | ' |
Acquired salvage vehicle and assets of an online marketing company [Member] | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Acquisition price | ' | ' | $14,761,000 | $34,933,000 |
Acquired salvage vehicle and assets of an online marketing company [Member] | Covenants not to compete | Minimum | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Useful life of intangible assets | ' | ' | '3 years | ' |
Acquired salvage vehicle and assets of an online marketing company [Member] | Covenants not to compete | Maximum | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Useful life of intangible assets | ' | ' | '8 years | ' |
Acquired salvage vehicle and assets of an online marketing company [Member] | Supply contracts | Minimum | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Useful life of intangible assets | ' | ' | '3 years | ' |
Acquired salvage vehicle and assets of an online marketing company [Member] | Supply contracts | Maximum | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Useful life of intangible assets | ' | ' | '8 years | ' |
Acquired salvage vehicle and assets of an online marketing company [Member] | Customer relationships | Minimum | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Useful life of intangible assets | ' | ' | '3 years | ' |
Acquired salvage vehicle and assets of an online marketing company [Member] | Customer relationships | Maximum | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Useful life of intangible assets | ' | ' | '8 years | ' |
Acquired salvage vehicle and assets of an online marketing company [Member] | Trade names | Minimum | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Useful life of intangible assets | ' | ' | '3 years | ' |
Acquired salvage vehicle and assets of an online marketing company [Member] | Trade names | Maximum | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Useful life of intangible assets | ' | ' | '8 years | ' |
Acquired salvage vehicle and assets of an online marketing company [Member] | Licenses and databases | Minimum | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Useful life of intangible assets | ' | ' | '3 years | ' |
Acquired salvage vehicle and assets of an online marketing company [Member] | Licenses and databases | Maximum | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Useful life of intangible assets | ' | ' | '8 years | ' |
Acquired salvage vehicle and assets of an online marketing company [Member] | Software | Minimum | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Useful life of intangible assets | ' | ' | '3 years | ' |
Acquired salvage vehicle and assets of an online marketing company [Member] | Software | Maximum | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Useful life of intangible assets | ' | ' | '8 years | ' |