15.

Income (expense) related to flooding

The Company suspended production at all of its manufacturing facilities in Thailand from October 17, 2011 through November 14, 2011 because of severe flooding in Thailand. The Company never resumed, and has permanently ceased, production at its Chokchai facility. We Company has completed its assessment of the extent of damage to property, inventory and equipment, including consigned assets held by the Company on behalf of its customers, as well as the impact of business interruption to the Company. For the year ended June 29, 2012, the Company recognized expenses related to flooding of $ 97.2 million. Although the Company has completed its assessment and submitted its claims for losses, the Company expects that it will take additional time to reach final settlement with its insurers. Despite the Company’s diligent efforts to file and settle its claims, there are many reasons the claims are still pending more than one year after the flooding, including the extent of the losses and number of claims filed in Thailand, and the complicated nature of the Company’s claim, which includes owned and consigned property. The Company will continue to aggressively pursue its claims to achieve a timely resolution.

As of December 28, 2012, the Company has submitted claims to its insurers for business interruption losses attributable to the effects of flooding through the first quarter of fiscal 2013, as well as claims for owned and consigned inventory losses, owned and consigned equipment losses, and damage to its buildings at Pinehurst, which it owns, and Chokchai, which it leased. In the three months ended December 28, 2012, the Company received an interim payment of $4,825 from its insurers against the Company’s claims for owned equipment losses. In the six months ended December 28, 2012, the Company received an interim payment of $4,825 from its insurers against the Company’s claims for owned equipment losses, an interim payment of $4,741 against its claims for business interruption losses and a payment of $79 as full and final settlement of its claim for damage to its buildings at Pinehurst. The Company will continue to recognize insurance recoveries if and when they become realizable and probable.

A number of exclusions and limitations in the Company’s policies (such as coinsurance, facilities location sub-limits and policy covenants) may reduce the aggregate amount that the Company will ultimately recover for its losses from its insurers. In addition, the Company’s insurers could reject the valuation methodologies the Company has used to estimate its losses, in whole or in part, and apply different valuation methodologies, which could also reduce the Company’s aggregate recovery amount. However, based on the information that the Company has at this time, the Company believes that it will ultimately recover a majority of its losses. The Company further believes that, although the difference between its aggregate claims and its insurance recoveries may ultimately be material, this will not have a material and adverse effect on the Company’s financial condition or results of operation.

The Company continues to have discussions with its customers regarding their assessments of the damage to, and valuation of, the consigned assets that were under the Company’s care, custody and control at its Chokchai facility. In some cases, there may be material differences between the Company’s assessments and its customers’ assessments. There may also be differences of opinions regarding who bears responsibility for certain losses as a result of the flooding. The Company continues to review these differences with its customers and, depending on the outcome of these discussions, the Company may incur additional costs and expenses in connection with its customers’ recovery efforts.

In the three months ended September 28, 2012, the Company entered into a settlement agreement with one of its customers regarding the Company’s liability for the customer’s losses as a result of the flooding. Under the terms of the settlement agreement, the Company made an initial payment to such customer of $4,000 during the three months ended September 28, 2012.

In the three months ended December 28, 2012, the Company entered into a settlement agreement with another customer regarding the Company’s liability for the customer’s losses as a result of the flooding. Under the terms of the settlement agreement, the Company made an initial payment to such customer of $2,797 during the three months ended December 28, 2012.

The Company’s liability under the terms of the settlement agreements is consistent with the Company’s original estimate, and no further provision has been made.