Advance Auto Parts 2012 Annual Report Download - page 75

F-30
16. Contingencies:
In the case of all known contingencies, the Company accrues for an obligation, including estimated legal costs, when it is
probable and the amount is reasonably estimable. As facts concerning contingencies become known to the Company, the
Company reassesses its position with respect to accrued liabilities and other potential exposures. Estimates that are particularly
sensitive to future change include legal matters, which are subject to change as events evolve and as additional information
becomes available during the administrative and litigation process.
The Company's Western Auto subsidiary, together with other defendants including automobile manufacturers, automotive
parts manufacturers and other retailers, has been named as a defendant in lawsuits alleging injury as a result of exposure to
asbestos-containing products. The Company and some of its other subsidiaries also have been named as defendants in many of
these lawsuits. The plaintiffs have alleged that these products were manufactured, 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 were 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. Historically, our asbestos claims have been inconsistent in type
and number and have been immaterial. As a result, we are unable to estimate a possible range of loss with respect to unasserted
asbestos claims that may be filed against the Company in the future. 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 Team Members. 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.
17. 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 $10,255, $10,148 and $10,104 in Fiscal 2012, 2011 and 2010, 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 December 29, 2012
and December 31, 2011, these liabilities were $12,927 and $11,359, respectively.
ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 29, 2012, December 31, 2011 and January 1, 2011
(in thousands, except per share data)