Advance Auto Parts 2010 Annual Report Download - page 86

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ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
January 1, 2011, January 2, 2010 and January 3, 2009
(in thousands, except per share data)
.
F-32
distributed and/or sold by the various defendants. These products have primarily included brake parts. Many of the
cases pending against the Company or its subsidiaries are in the early stages of litigation. The damages claimed
against the defendants in some of these proceedings are substantial. Additionally, some of the automotive parts
manufacturers named as defendants in these lawsuits have declared bankruptcy, which will limit plaintiffs’ ability to
recover monetary damages from those defendants. Although the Company diligently defends against these claims,
the Company may enter into discussions regarding settlement of these and other lawsuits, and may enter into
settlement agreements, if it believes settlement is in the best interests of the Company’s shareholders. The Company
believes that many of these claims are at least partially covered by insurance. Based on discovery to date, the
Company does not believe the cases currently pending will have a material adverse effect on the Company’s
operating results, financial position or liquidity. However, if the Company was to incur an adverse verdict in one or
more of these claims and was ordered to pay damages that were not covered by insurance, these claims could have a
material adverse affect on its operating results, financial position and liquidity. If the number of claims filed against
the Company or any of its subsidiaries alleging injury as a result of exposure to asbestos-containing products
increases substantially, the costs associated with concluding these claims, including damages resulting from any
adverse verdicts, could have a material adverse effect on its operating results, financial position or liquidity in future
periods.
The Company is involved in various types of legal proceedings arising from claims of employment
discrimination or other types of employment matters as a result of claims by current and former employees. The
damages claimed against the Company in some of these proceedings are substantial. Because of the uncertainty of
the outcome of such legal matters and because the Company’s liability, if any, could vary widely, including the size
of any damages awarded if plaintiffs are successful in litigation or any negotiated settlement, the Company cannot
reasonably estimate the possible loss or range of loss which may arise. The Company is also involved in various
other claims and legal proceedings arising in the normal course of business. Although the final outcome of these
legal matters cannot be determined, based on the facts presently known, it is management’s opinion that the final
outcome of such claims and lawsuits will not have a material adverse effect on the Company’s financial position,
results of operations or liquidity.
18. Benefit Plans:
401(k) Plan
The Company maintains a defined contribution benefit plan, which covers substantially all Team Members after
one year of service and who have attained the age of 21. The plan allows for Team Member salary deferrals, which
are matched at the Company’s discretion. Company contributions were $10,104, $9,277 and $9,117 in Fiscal 2010,
2009 and 2008, respectively.
Deferred Compensation
The Company maintains a non-qualified deferred compensation plan for certain Team Members. This plan
provides for a minimum and maximum deferral percentage of the Team Member’s base salary and bonus, as
determined by the Retirement Plan Committee. The Company establishes and maintains a deferred compensation
liability for this plan. At January 1, 2011 and January 2, 2010 these liabilities were $10,311 and $6,966,
respectively.
Postretirement Plan
The Company provides certain health and life insurance benefits for eligible retired Team Members through a
postretirement plan, or Plan. These benefits are subject to deductibles, co-payment provisions and other limitations.
The Plan has no assets and is funded on a cash basis as benefits are paid.