Note

17.

Fire at the Fannie

May

Warehouse and Distribution Facility

November 27, 2014,

a fire occurred at the Company's Maple Heights, Ohio warehouse and distribution facility. While the fire did

not

cause any injuries, the building was severely damaged, rendering it inoperable for the key calendar

2014

holiday season, and all Fannie

May

and Harry London confections in the facility were destroyed. As a result, the Company had limited supplies of its Fannie

May

Fine Chocolates and Harry London Chocolates products available in its retail stores as well as for its ecommerce and wholesale channels during the

2014

holiday season. While the Company implemented contingency plans to increase production for Fannie

May

Fine Chocolates and Harry London Chocolates products at its production facility in Canton, Ohio and to shift warehousing and distribution operations to alternate Company facilities, product availability was severely limited, impacting revenue and earnings during the fiscal

second

and

third

quarters of fiscal

2015.

The following table reflects the costs related to the fire and the insurance recovery and associated gain as of

July 3, 2016:

	Fire-related Insurance Recovery
	(in thousands)
Loss on inventory	$	29,587
Other fire related costs		5,802
Total fire related costs		35,389
Less: fire related insurance recoveries		(55,000	)
Fire related gain	$	(19,611	)

During the

three

months ended

September 27, 2015,

the Company and its insurance carrier reached final agreement, and during the

three

months ended

December 27, 2015,

the Company received all remaining proceeds from its Fannie

May

fire claim. The agreement, in the amount of

$55.0

million, provided for: (i) recovery of raw materials and work-in-process at replacement cost, and finished goods at selling price, less costs to complete the sale and normal discounts and other charges, as well as (ii) other incremental fire-related costs. The cost of inventory lost in the fire was approximately

$29.6

million, while other fire-related costs amounted to approximately

$5.8

million, including incremental contracted lease and cold storage fees which were incurred by the Company until the move back into its leased facility once the landlord completed repairs, during the Company

’s

third

quarter of fiscal

2016.

The resulting gain of

$19.6

million is included in “Other (income) expense, net” in the consolidated statements of income for the year ended

July 3, 2016.