Advance Auto Parts 2013 Annual Report Download - page 83

ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 28, 2013, December 29, 2012 and December 31, 2011
(in thousands, except per share data)
F-31
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. The products in the lawsuits naming us or our subsidiaries as defendants 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 effect 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.
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 $10,850, $10,255 and $10,148 in Fiscal 2013, 2012 and 2011, 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. As of December 28,
2013 and December 29, 2012, these liabilities were $14,835 and $12,927, respectively.
Postretirement Plan
The Company provides certain health and life insurance benefits for eligible retired Team Members through a
postretirement plan. Plan participants include only those Team Members who were either already retired or eligible for
retirement as of January 1, 2005. In Fiscal 2013, the Company amended the plan to allow participants to opt out of the plan due
to health care reform. Plan 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. The accrued postretirement benefit obligation, included in Accrued