22.

Expenses 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 ceased production permanently at its Chokchai facilities. Company personnel, insurance adjusters, professional asset valuation advisors, equipment restoration contractors and forensic accounting experts have assessed, and continue to assess, the 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. The following is a summary of all known costs incurred as a result of this event recognized in the Company’s consolidated statements of operations for the year ended June 29, 2012:


	Year Ended
	June 29, 2012
	(in thousands)
Loss from written-off owned inventories	$	16,612
Loss from written-off leased building improvement		1,431
Loss from written-off owned machinery and equipment		1,098
Loss from written-off investments in lease and prepayment		3,532
Loss from consigned inventories		11,748
Loss from consigned machinery and equipment		48,450
Estimated restoration cost of leased building		1,000
Payroll and other expenses		7,712
Flood protection, salvage and increased expenses		5,703

Total	$	97,286

The Company has submitted claims to its insurers for business interruption losses attributable to the effects of flooding during the second and third quarters of fiscal 2012, 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 first quarter of fiscal 2013, the Company plans to submit a claim for business interruption losses for the three months ended June 29, 2012. The Company expects to experience additional business interruption losses during the first quarter of fiscal 2013, and therefore expects to submit an additional claim for such losses in the second quarter of fiscal 2013.

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 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 inventory and 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. The Company will recognize insurance recoveries if and when they become realizable and probable.