Balance Sheet Information

Accounts Receivable from Product Revenues, net. Accounts receivable from product revenues, net, were as follows (in thousands):



	January 1, 2012			January 2, 2011
Trade accounts receivable	$	692,702		$	621,822
Allowance for doubtful accounts	(5,717		)	(8,416		)
Price protection, promotions and other activities	(165,222		)	(245,622		)
Total accounts receivable from product revenues, net	$	521,763		$	367,784

Allowance for Doubtful Accounts. The activity in the allowance for doubtful accounts was as follows (in thousands):



	January 1, 2012			January 2, 2011			January 3, 2010
Balance, beginning of period	$	8,416		$	12,348		$	13,881
Additions (reductions) charged to costs and expenses	(1,476		)	(2,575		)	(719		)
Deductions/write-offs	(1,223		)	(1,357		)	(814		)
Balance, end of period	$	5,717		$	8,416		$	12,348

Inventory. Inventory was as follows (in thousands):



	January 1, 2012		January 2, 2011
Raw material	$	398,308	$	314,027
Work-in-process	89,332		48,889
Finished goods	190,742		146,669
Total inventory	$	678,382	$	509,585

Other Current Assets. Other current assets were as follows (in thousands):



	January 1, 2012		January 2, 2011
Royalty and other receivables	$	53,443	$	45,075
Other non-trade receivable	26,875		—
Prepaid expenses	17,274		11,025
Tax-related receivables	67,157		128,346
Prepayment to Flash Forward	20,577		—
Other current assets	21,093		18,581
Total other current assets	$	206,419	$	203,027

Property and Equipment. Property and equipment were as follows (in thousands):



	January 1, 2012			January 2, 2011
Machinery and equipment	$	870,117		$	708,358
Software	139,388			128,095
Buildings and building improvements	70,036			58,661
Capital land lease	6,588			6,634
Furniture and fixtures	6,333			6,247
Leasehold improvements	24,068			23,070
Property and equipment, at cost	1,116,530			931,065
Accumulated depreciation and amortization	(771,633		)	(664,344		)
Property and equipment, net	$	344,897		$	266,721

Depreciation expense of property and equipment totaled $115.0 million, $132.8 million and $152.6 million in fiscal years 2011, 2010 and 2009, respectively.

Notes Receivable and Investments in Flash Ventures. Notes receivable and investments in Flash Ventures were as follows (in thousands):



	January 1, 2012		January 2, 2011
Notes receivable, Flash Partners Ltd.	$	291,564	$	578,604
Notes receivable, Flash Alliance Ltd.	973,176		653,699
Notes receivable, Flash Forward Ltd.	32,396		—
Investment in Flash Partners Ltd.	258,184		238,601
Investment in Flash Alliance Ltd.	368,459		262,587
Investment in Flash Forward Ltd.	19,516		—
Total notes receivable and investments in Flash Ventures	$	1,943,295	$	1,733,491

Equity-method investments and the Company’s maximum loss exposure related to Flash Partners Ltd., Flash Alliance Ltd. and Flash Forward Ltd. (collectively referred to as “Flash Ventures”) are discussed further in Note 12, “Commitments, Contingencies and Guarantees – Flash Partners, Flash Alliance and Flash Forward” and Note 13, “Related Parties and Strategic Investments.”

The Company assesses financing receivable credit quality through financial and operational reviews of the borrower and creditworthiness, including credit rating agency ratings, of significant investors of the borrower, where material or known. Impairments, when required, are recorded in other income (expense). The Company makes or will make long-term loans to Flash Ventures to fund new process technologies and additional wafer capacities. The Company aggregates its Notes Receivables to Flash Ventures into one class of financing receivables due to the similar ownership interest in Flash Ventures and common structure. For all reporting periods presented, no loans were past due and no loan impairments were recorded.

Other Non-Current Assets. Other non-current assets were as follows (in thousands):



	January 1, 2012		January 2, 2011
Prepaid tax on intercompany transactions	$	46,489	$	—
Prepayment to Flash Forward	29,396		—
Convertible note issuance costs	12,992		18,091
Deposits	6,375		6,648
Other non-current assets	27,363		37,205
Total other non-current assets	$	122,615	$	61,944

Other Current Accrued Liabilities. Other current accrued liabilities were as follows (in thousands):



	January 1, 2012		January 2, 2011
Accrued payroll and related expenses	$	132,182	$	143,260
Derivative contract payables	40,045		33,606
Income taxes payable	61,144		9,751
Other accrued liabilities	104,146		98,092
Total other current accrued liabilities	$	337,517	$	284,709

Non-current liabilities. Non-current liabilities were as follows (in thousands):



	January 1, 2012		January 2, 2011
Deferred tax liability	$	44,262	$	37,210
Income tax liabilities	218,994		200,579
Deferred credits on intercompany transactions	67,926		—
Other non-current liabilities	84,342		88,387
Total non-current liabilities	$	415,524	$	326,176

Warranties. The liability for warranty expense is included in Other current accrued liabilities and Non-current liabilities in the accompanying Consolidated Balance Sheets and the activity was as follows (in thousands):



	January 1, 2012			January 2, 2011			January 3, 2010
Balance, beginning of period	$	24,702		$	25,909		$	36,469
Additions and adjustments to cost of product revenues	29,444			30,732			23,129
Usage	(27,189		)	(31,939		)	(33,689		)
Balance, end of period	$	26,957		$	24,702		$	25,909

The majority of the Company’s products have a warranty of less than three years, with a small number of products having a warranty ranging up to ten years or more. For 100-year or lifetime warranties, the Company uses the estimated useful life of the product to calculate the warranty exposure. A provision for the estimated future cost related to warranty expense is recorded at the time of customer invoice. The Company’s warranty liability is affected by customer and consumer returns, product failures, number of units sold and repair or replacement costs incurred. Should actual product failure rates, or repair or replacement costs, differ from the Company’s estimates, increases or decreases to its warranty liability would be required.

Accumulated Other Comprehensive Income. Accumulated other comprehensive income presented in the accompanying Consolidated Balance Sheets consists of unrealized gains and losses on available-for-sale investments, foreign currency translation and hedging activities, net of tax, for all periods presented (in thousands):



	January 1, 2012		January 2, 2011
Accumulated net unrealized gain on:
Available-for-sale investments	$	10,849	$	17,505
Foreign currency translation	300,788		231,255
Hedging activities	21,064		11,468
Total accumulated other comprehensive income	$	332,701	$	260,228

The amount of income tax (benefit) expense allocated to unrealized gain on available-for-sale investments, hedging activities and foreign currency translation was as follows (in thousands):



	Fiscal years ended
	January 1, 2012		January 2, 2011			January 3, 2010
Available-for-sale investments	$	3,342	$	(6,301	)	$	13,745
Foreign currency translation	10,315		20,979			(5,643		)
Hedging activities	2,504		(2,776		)	(11,588		)
	$	16,161	$	11,902		$	(3,486	)