Advance Auto Parts 2012 Annual Report Download - page 20

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We work hard to maintain the privacy and security of our customer and business information and the functioning of
our computer systems, website and other online offerings. In the event of a security breach or other cyber security
incident, we could experience certain operational problems or interruptions, incur substantial additional costs, or
become subject to legal or regulatory proceedings, any of which could lead to damage to our reputation in the
marketplace.
The nature of our business requires us to receive, retain and transmit certain personally identifying information that our
customers provide to purchase products or services, register on our websites, or otherwise communicate and interact with us.
While we have taken and continue to undertake significant steps to protect our customer and confidential information and the
functioning of our computer systems, website and other online offerings, a compromise of our data security systems or those of
businesses we interact with could result in information related to our customers or business being obtained by unauthorized
persons or other operational problems or interruptions. We develop and update processes and maintain systems in an effort to
try to prevent this from occurring, but the development and maintenance of these processes and systems are costly and requires
ongoing monitoring and updating as technologies change, privacy and information security regulations change, and efforts to
overcome security measures become more sophisticated.
Consequently, despite our efforts, our security measures have been breached in the past and may be breached in the future
due to cyber attack, team member error, malfeasance, fraudulent inducement or other acts; and unauthorized parties have in the
past obtained, and may in the future, obtain access to our data or our customers' data. While costs associated with past security
breaches have not been significant, any breach or unauthorized access in the future could result in significant legal and
financial exposure and damage to our reputation that could potentially have an adverse effect on our business. While we also
seek to obtain assurances that third parties we interact with will protect confidential information, there is a risk the
confidentiality of data held or accessed by third parties may be compromised. If a compromise of our data security or function
of our computer systems or website were to occur, it could have a material adverse effect on our operating results and financial
condition and, possibly, subject us to additional legal, regulatory and operating costs and damage our reputation in the
marketplace.
Business interruptions may negatively impact our store hours, operability of our computer systems and the availability
and cost of merchandise which may adversely impact our sales and profitability.
War or acts of terrorism, hurricanes, tornadoes, earthquakes or other natural disasters, or the threat of any of these
calamities or others, may have a negative impact on our ability to obtain merchandise available for sale in our stores, result in
certain of our stores being closed for an extended period of time, negatively affect the lives of our customers or Team Members,
or otherwise negatively impact our operations. Some of our merchandise is imported from other countries. If imported goods
become difficult or impossible to import into the United States, and if we cannot obtain such merchandise from other sources at
similar costs, our sales and profit margins may be negatively affected.
In the event that commercial transportation is curtailed or substantially delayed, our business may be adversely impacted,
as we may have difficulty receiving merchandise from our suppliers and shipping it to our stores.
Terrorist attacks, war in the Middle East, or war within or between any oil producing country would likely result in an
abrupt increase in the price of crude oil, gasoline, diesel fuel and energy costs. Such price increases would increase the cost of
doing business for us and our suppliers, and also would negatively impact our customers' disposable income and have an
adverse impact on our business, sales, profit margins and results of operations.
We rely extensively on our computer systems and the systems of our business partners to manage inventory, process
transactions and report results. Any such systems are subject to damage or interruption from power outages, telecommunication
failures, computer viruses, security breaches and catastrophic events. If our computer systems or those of our business partners
fail we may experience loss of critical data and interruptions or delays in our ability to process transactions and manage
inventory. Any such loss, if widespread or extended, could adversely affect the operation of our business and our results of
operations.
We may be affected by global climate change or by legal, regulatory, or market responses to such change.
The growing political and scientific sentiment is that global weather patterns are being influenced by increased levels of
greenhouse gases in the earth's atmosphere. This growing sentiment and the concern over climate change have led to legislative
and regulatory initiatives aimed at reducing greenhouse gas emissions. For example, proposals that would impose mandatory
requirements on greenhouse gas emissions continue to be considered by policy makers in the United States. Laws enacted that
directly or indirectly affect our suppliers (through an increase in the cost of production or their ability to produce satisfactory