Napa Auto Parts 2010 Annual Report Download - page 12

Table of Contents
We may not be able to successfully implement our business initiatives in each of our four business segments to grow our
sales and earnings, which could adversely affect our business, financial condition, results of operations and cash flows.
We have implemented numerous initiatives in each of our four business segments to grow sales and earnings, including the
introduction of new and expanded product lines, geographic expansion (including acquisitions), sales to new markets, enhanced customer
marketing programs and a variety of gross margin and cost savings initiatives. If we are unable to implement these initiatives efficiently
and effectively, or if these initiatives are unsuccessful, our business, financial condition, results of operations and cash flows could be
adversely affected.
Successful implementation of these initiatives also depends on factors specific to the automotive parts industry and the other
industries in which we operate and numerous other factors that may be beyond our control. In addition to the other risk factors contained
in this “Item 1A. Risk Factors,” adverse changes in the following factors could undermine our business initiatives and have a material
adverse affect on our business, financial condition, results of operations and cash flows:
• the competitive environment in our end markets may force us to reduce prices below our desired pricing level or increase
promotional spending;
• our ability to anticipate changes in consumer preferences and to meet customers’ needs for our products in a timely manner;
• our ability to successfully enter new markets;
• our ability to effectively manage our costs;
• our ability to continue to grow through acquisitions and successfully integrate acquired businesses in our existing operations; and
• the economy in general.
Because we are involved in litigation from time to time and are subject to numerous laws and governmental regulations, we
could incur substantial judgments, fines, legal fees and other costs.
We are sometimes the subject of complaints or litigation from customers, employees or other third parties for various actions. The
damages sought against us in some of these litigation proceedings are substantial. Although we maintain liability insurance for some
litigation claims, if one or more of the claims were to greatly exceed our insurance coverage limits or if our insurance policies do not cover
a claim, this could have a material adverse affect on our business, financial condition, results of operations and cash flows.
Additionally, we are subject to numerous federal, state and local laws and governmental regulations relating to environmental
protection, product quality standards, building and zoning requirements, as well as employment law matters. 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 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.
 UNRESOLVED STAFF COMMENTS.
Not applicable.
 PROPERTIES.
The Company’s headquarters and Automotive Parts Group headquarters are located in two adjacent office buildings owned by the
Company in Atlanta, Georgia.
The Company’s Automotive Parts Group currently operates 58 NAPA Distribution Centers in the United States distributed among
eight geographic divisions. Approximately 90% of the distribution center properties are owned by the Company. At December 31, 2010,
the Company operated approximately 1,000 NAPA AUTO PARTS stores
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