Napa Auto Parts 2015 Annual Report Download - page 19

loss, disclosure or misappropriation of or access to our customers’ information. As threats related to cyber secu-
rity breaches develop and grow, we may also find it necessary to make further investments to protect our data
and infrastructure.
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 effect 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 taxes, 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 capi-
tal 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 recognize the growing demand for business-to-business and business-to-customer e-commerce options,
and we could lose business if we fail to provide the e-commerce options our customers wish to use.
Our success in e-commerce depends on our ability to accurately identify the products to make available
through e-commerce platforms across our business segments, and to establish and maintain such platforms to
provide the highest level of data security to our customers on and through the platforms our customers wish to
use (including mobile) with rapidly changing technology in a highly competitive environment.
We are dependent on key personnel and the loss of one or more of those key personnel could harm our
business.
Our future success significantly depends on the continued services and performance of our key management
personnel. We believe our management team’s depth and breadth of experience in our industry is integral to
executing our business plan. We also will need to continue to attract, motivate and retain other key personnel.
The loss of services of members of our senior management team or other key employees, the inability to attract
additional qualified personnel as needed or failure to plan for the succession of senior management and key per-
sonnel could have a material adverse effect on our business.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
ITEM 2. PROPERTIES.
The Company’s headquarters and Automotive Parts Group headquarters are located in two office buildings
owned by the Company in Atlanta, Georgia.
The Company’s Automotive Parts Group currently operates 59 NAPA Distribution Centers in the United
States distributed among ten geographic divisions. Approximately 90% of the distribution center properties are
owned by the Company. At December 31, 2015, the Company operated approximately 1,100 NAPA AUTO
PARTS stores located in 45 states, and the Company owned either a noncontrolling or controlling interest in 114
additional auto parts stores in nine states. Other than NAPA AUTO PARTS stores located within Company
owned distribution centers, the majority of the automotive parts stores in which the Company has an ownership
interest are operated in leased facilities. In addition, NAPA Canada/UAP operates 12 distribution centers, one
fabrication/remanufacturing facility and approximately 193 automotive parts and Traction stores in Canada. In
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