It means that in this line:
$my_classes = $variables['items'][$delta]['entity']['field_collection_item'][$delta+1]['field_layout']['#items'][0]['value'];
key 'entity' does not exist in this $delta
You could add a check:
if (isset($variables['items'][$delta]['entity'])) { }
but it might make better sense to try and figure out why a particular delta doesn't have the entity key, if you believe it should be there.