Advance Auto Parts 2015 Annual Report Download - page 28

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and regulations could increase the cost of doing business and adversely affect our results of operations. If we fail to comply
with existing or future laws or regulations, we may be subject to governmental or judicial fines or sanctions, while incurring
substantial legal fees and costs. In addition, our capital and operating expenses could increase due to remediation measures that
may be required if we are found to be noncompliant with any existing or future laws or regulations.
We work diligently to maintain the privacy and security of our customer, supplier, Team Member and business
information and the functioning of our computer systems, website and other on-line offerings. In the event of a security
breach or other cyber security incident, we could experience adverse operational effects 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 and added costs on an ongoing basis.
The nature of our business requires us to receive, retain and transmit certain personally identifiable information about our
customers, suppliers and Team Members, some of which is entrusted to third-party service providers. While we have taken and
continue to undertake significant steps to protect such personally identifiable information and other confidential information
and to protect 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, suppliers, Team Members
or business being obtained by unauthorized persons or adverse operational effects or interruptions, which could have a material
adverse effect on our business, financial condition, results of operations and cash flows. 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 an immaterial manner in the past and may
be breached in the future due to a cyber-attack, computer malware and/or viruses, team member error, malfeasance, fraudulent
inducement (including so-called "social engineering" attacks and "phishing" scams) or other acts. Unauthorized parties have in
the past obtained, and may in the future obtain, access to our data or the data of our customers, suppliers or Team Members’
data or may otherwise cause damage or interfere with our equipment and/or network. While costs associated with past security
breaches have not been significant, any breach, damage to or interference with our equipment or network, 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 others we interact with will protect
confidential information, there is always the risk that the confidentiality or accessibility of data held or utilized by others 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 to sell 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 due to business interruption (including regulation of exporting
or importing), and if we cannot obtain such merchandise from other sources at similar costs and without an adverse delay, our
sales and profit margins may be negatively affected.
In the event that commercial transportation, including the global shipping industry, 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 insurrection involving any oil producing country could result in an abrupt
increase in the price of crude oil, gasoline and diesel fuel. 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