SecProbe.io

CORRESP
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VIA
EDGAR

February 23,
2009

Mr. H.
Christopher Owings

Securities and Exchange Commission

100
F Street NE

Washington, D.C. 20549

  Re:

  Correspondence from you dated February 5, 2009
  concerning Copart, Inc.

  Form 10-K for the Fiscal Year Ended July 31, 2008

  Filed September 29, 2008

  File No. 001-16565

  Proxy Statement on Schedule 14A

  Filed November 4, 2008

  File No. 0000-23255

Ladies
and Gentlemen:

On behalf of Copart, Inc. (“Copart” or the “Company”), this letter
is being transmitted in response to comments received from the staff (the “Staff”)
of the Securities and Exchange Commission (the “Commission”) by letter dated February 5,
2009 with respect to the Company’s Annual Report on Form 10-K for the
fiscal year ended July 31, 2008, filed on September 29, 2008, and
proxy statement on Schedule 14A filed November 4, 2008.  The numbering of the paragraphs below
corresponds to the numbering of the comments which, for the Staff’s
convenience, we have incorporated into this response letter.

Form 10-K
for the Fiscal Year Ended July 31, 2008

Item 5.
Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer
Purchases of Equity Securities, page 31

Performance
Graph, page 33

1.              We reviewed your response to
comment 1 from our letter dated December 17, 2008. Please provide us the
companies that comprised your peer group for purposes of creating the
performance graph found in your Form 10-K for the fiscal year ended July 31,
2008.

The
companies that comprise the Company’s peer group for purposes of creating the
performance graph found in the Company’s Form 10-K for the fiscal year
ended July 31, 2008 (the “2008 Form 10-K”) are as follows:  Sterling Construction Company, Inc.
(STRL) and Coast Distribution System, Inc. (CRV).

The
Company supplementally advises the Staff that Copart’s peer group as
constituted for the purpose of creating the performance graph for the 2004
fiscal year (ended July 31, 2004) consisted of the following six companies
in addition to Sterling Construction and Coast Distribution:  Central Parking Corp. (CPC); Insurance Auto
Auctions Inc. (IAAI); Keystone Automotive Industries Inc. (KEYS); TBC
Corporation (TBCC); Universal Automotive Industries, Inc. (UVSL); and JPE, Inc.
(JPEI).  Between fiscal years 2004 and
2008, those additional members of our peer group have either been acquired or
have discontinued trading.  As a result,
the Company plans to transition the composition of the performance graph to be
disclosed in its Form 10-K for the fiscal year ended July 31, 2009
(the “2009 Form 10-K”) from its current composition (i.e., Nasdaq
Composite and peer group) to a comparison of the percentage change in the
Company’s cumulative total shareholder return on its common stock with (i) the
Nasdaq Composite, (ii) an industry or line-of business index to be
identified prior to the filing of the 2009 Form 10-K, and (iii) the
peer group used for the 2008 Form 10-K, with a

footnote
describing the Company’s intention to discontinue the use of that peer group
beginning in the Company’s Form 10-K for the fiscal year ended July 31,
2010.

Item7.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations, page 35

2.              We reviewed your response to
comment 2 from our letter dated December 17, 2008. Please provide a
discussion and analysis of the key variables and other factors necessary for an
understanding of revenues and operating results.

In
response to the Staff’s comment and its prior comment 2 from its letter dated December 17,
2008, the Company will disclose in MD&A in its future Form 10-K and Form 10-Q
filings the following information relating to any increases or decreases in
total revenue:  (i) the amount of
the increase or decrease that was attributable to increases or decreases in the
volume of cars processed and (ii) the amount of the increase or decrease
that was attributable to changes in the fees charged for vehicle processing or
other services.

In
addition to the quantitative disclosure described above, the Company will
provide, as appropriate and as described below, additional qualitative
disclosure concerning variable and other factors affecting its revenues.

Discussion of Key Variables and Other Factors
Affecting Revenues

The
Company supplementally advises the Staff that a number of largely qualitative
factors will influence the volume of cars the Company processes in a given
period.  The Company has outlined these
factors below, most of which are discussed in the Risk Factors section of the
Company’s periodic filings.  To the
extent management has concluded that one or more of these factors has
influenced the Company’s volume in a particular period, the Company will
provide a discussion of the factor(s) in the MD&A.

(i) Seasonality
– Over 80% of the cars we process are assigned to us by insurance companies
primarily as a result of an accident in which the insurance company determines
the repair of the car is not economically feasible.  In this situation the insurance company will
pay the policyholder the pre-accident value of the car, take ownership of the
car, and contract with us to sell it on their behalf.  Because accidents are more frequent during
inclement weather we process more volume during the winter months.  Also, severity of weather varies not only
from season to season but from year to year as seasons with higher instances of
hurricanes and ice storms will lead to more accidents.  While we know weather has a direct impact on
the volume of cars processed it is not possible to reasonably quantify its
impact.

(ii) Business
days – Our volume is directly tied to the number of business days in a
reporting period as we conduct sales every business day.  During the last six fiscal years the number
of business days in each quarter of a fiscal year has varied from as few as 61
to as many as 65.  Further, the same
quarters in successive fiscal years have varied by as many as two business
days.

(iii) Contract
wins and losses – During the course of each fiscal year we may win new
contracts or lose contracts with our insurance suppliers that may have an
impact on the volume of units processed when comparing quarterly volumes.

(iv) Change
in the market share of our insurance suppliers – During the course of each
fiscal year our insurance customers may grow or decline in the total volume of
salvage units that each processes depending on their respective market
share.  To the extent that an existing
insurance customer grows in market share there will be a corresponding increase
in volume of salvage units processed from that customer and to the extent an
existing insurance supplier declines in market share we will see a reduction in
salvage units from that customer.

(v) Accident
frequency – The frequency of accidents will have a direct impact on the number
of salvage cars we process.  However, information
on accident frequency is not available on a contemporaneous basis and,
accordingly, conclusion on the impact accident frequency has on quarterly
volume cannot be derived.

(vi) Salvage
frequency – The percentage of cars salvaged rather than repaired will have a
direct impact on the number of salvage cars we process.  Salvage frequency is affected by the
relationship between repair costs, the pre-accident value of an automobile (or
used car pricing) and the net proceeds generated at auction.  Information on salvage frequency is not
available on a contemporaneous basis and, accordingly, conclusion on the impact
salvage frequency has on quarterly volume cannot be derived.

(vii) Growth
in volume from non-insurance suppliers including (i) banks and finance
companies which primarily liquidate repossessed vehicles, (ii) charities, (iii) franchise
and independent car dealerships, (iv) individual consigners, (v) fleets,
(vi) rental car companies and in some states (vii) the general public
can have an impact on both volume and revenue per transaction as revenue yields
for each class of supplier vary significantly.

The
Company supplementally advises the Staff that management has identified the
following factors as influences to the fee and service revenues we realize in
connection with vehicle processing. The Company has outlined these factors
below, most of which are discussed in the Risk Factors section of the Company’s
periodic filings. To the extent management has concluded that one or more of
these factors has had an identifiable effect on fee and service revenue in a
particular period, the Company will provide a discussion of the factor(s) in
the MD&A.

(i) Commodity
pricing - Commodity pricing, particularly the per ton price for crushed car
bodies, has an impact on the ultimate selling price of vehicles sold for scrap
and vehicles to be dismantled.
Subsequent to harvesting the valuable car parts by a dismantler, the
carcass of the car will often be sold for scrap. Because a portion of our
revenue is based to some extent on the selling price of the vehicle,
fluctuations in the average selling price may lead to variations in revenue.

(ii) Used
car pricing - Used car pricing has an impact on the ultimate selling price of
those vehicles that are purchased for retail sale.  Decreases in the overall used car pricing
will tend to reduce the resale value of vehicles that Copart processes and
reduce the amount that buyers will pay at auction.

(iii) Foreign
currency exchange rates - Fluctuations in foreign currency exchange rates may
have an impact on those cars being purchased for export as, for example, a
stronger dollar increases the purchase price paid in our international buyer’s
local currency and may lead to a reduction in the ultimate selling price of a
vehicle.

The
Company cannot know which cars are purchased for scrap, dismantling, resale or
for export. Accordingly, the Company cannot quantify the specific impact that
fluctuations in commodity pricing, used car pricing and foreign currency
exchange rates have on the selling price of vehicles and on the Company’s
revenue.

(iv) Product
mix – Cars remarketed on behalf of individual consigners and franchise and
independent dealerships are generally drivable and of better quality and,
accordingly, tend to sell for higher average sales prices than cars remarketed
on behalf of the insurance companies and thus have a favorable impact on the
Company’s revenues.

(v) Contract
mix – Seller fees vary by contract.
Further, certain seller contracts call for the Company to purchase the
vehicles and resell it for our own account.
For these contracts the gross proceeds generated through the remarketing
process are included in revenue.
Accordingly, a shift in the percentage of cars sold pursuant to
contracts with either higher or lower fee schedules and/or a shift in the
percentage of cars processed pursuant to a contract requiring the Company to
purchase the vehicle will impact the Company’s fee and service revenues.

Critical
Accounting Policies and Estimates, page 44

3.              We reviewed your response to
comment 5 in our letter dated December 17, 2008. Please describe
significant assumptions underlying your critical accounting estimates, disclose
how accurate your estimates/assumptions have been in the past and how much your
estimates/assumptions have changed in the past and provide an analysis of their
sensitivity to change based on other outcomes that are reasonably likely to
occur and would have a material effect. Refer to the Commission’s Guidance  Regarding
Management’s Discussion and Analysis of Financial Condition and Results of
Operations.

In
response to Staff’s comment, the Company notes the most significant assumptions
underlying our critical accounting estimates relate to income taxes, retained
insurance levels and allowance for doubtful accounts.  The Company has provided supplemental
information for those items below:

Income Taxes and Deferred Tax Assets

We account for income taxes in accordance with SFAS No.109, Accounting for Income Taxes. We are subject to income taxes
in the US, Canada and UK. In arriving at a provision of income taxes, we first
calculate taxes payable in accordance with the prevailing tax laws in the
jurisdictions in which we operate; we then analyze the timing differences
between the financial reporting and tax basis of our assets and liabilities,
such as various accruals, depreciation and amortization. The tax effects of the
timing difference are presented as deferred tax assets and liabilities in the
consolidated balance sheet. We assess the probability that the deferred tax
assets will be realized based on our ability to generate future taxable income.
In the event that it is more likely than not the full benefit would not be
realized from the deferred tax assets we carry on our consolidated balance
sheet, we record a valuation allowance to reduce the carrying value of the
deferred tax assets to the amount expected to be realized. As of July 31,
2008, we had approximately $0.6 million of valuation allowance arising from the
net operating losses in states where we had withdrawn our operations in prior
years. To the extent we establish a valuation allowance or change the amount of
valuation allowance in a period, we reflect the change with a corresponding
increase or decrease in our income tax provision in the consolidated income
statement.

Historically, our income taxes have been sufficiently provided to cover
our actual income tax liabilities among the jurisdictions in which we operate.
Nonetheless, our future effective tax rate could still be adversely affected by
the following factors, including the (i) geographical allocation of our
future earnings, (ii) the change in tax laws or our interpretation of tax
laws, (iii) the changes in governing regulations and accounting
principles, (iv) the changes in the valuation of our deferred tax assets
and liabilities and (v) the outcome of the income tax examinations. As a
result, we routinely assess the possibilities of material changes resulting
from the aforementioned factors to determine the adequacy of our income tax
provision.

Based on our results for the year ended July 31, 2008, a one
percentage-point change in our provision for income taxes as a percentage of
income before taxes would have resulted in an increase or decrease in the
provision of approximately $2.5 million. The following analysis demonstrates,
for illustrative purposes only, the potential effect that a one
percentage-point deviation would have on our consolidated financial statements
and is not intended to provide a range of exposure or expected deviation (in
thousands, except per share data):

  -100

  Basis

  Points

  7/31/2008

  +100

  Basis

  Points

  Provision for income taxes

  90,221

  92,718

  95,215

  Net income

  156,932

  159,429

  154,435

  Diluted earnings per share

  1.77

  1.75

  1.72

Effective August 1, 2008, we adopted Financial Interpretation No. 48,
Accounting for Uncertainty in Income
Taxes-an interpretation of FASB Statement No. 109
(FIN 48). FIN 48 contains a two-step approach to recognizing and
measuring uncertain tax positions accounted for in accordance with SFAS No. 109,
Accounting for Income Taxes. The
first step is to evaluate the tax position for recognition by determining if
the weight of available evidence indicates that it is more likely than not that
the position will be sustained on audit, including resolution of related
appeals or litigation processes, if any. The second step is to measure the tax
benefit as the largest amount that is more than 50% likely of being realized
upon settlement.

Although we believe we have adequately reserved for our uncertain tax
positions, no assurance can be given that the final tax outcome of these
matters will not be different. We adjust these reserves in light of changing
facts and circumstances, such as the closing of a tax audit or the refinement
of an es