Balance Sheet Information

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



	September 30, 2012			January 1, 2012
Trade accounts receivable	$	604,112		$	692,702
Allowance for doubtful accounts	(5,544		)	(5,717		)
Price protection, promotions and other activities	(132,950		)	(165,222		)
Total accounts receivable from product revenues, net	$	465,618		$	521,763

Inventory. Inventory was as follows (in thousands):



	September 30, 2012		January 1, 2012
Raw material	$	535,427	$	398,308
Work-in-process	106,564		89,332
Finished goods	210,734		190,742
Total inventory	$	852,725	$	678,382

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



	September 30, 2012		January 1, 2012
Royalty and other receivables	$	41,773	$	53,443
Other non-trade receivable	—		26,875
Prepaid expenses	13,621		17,274
Tax-related receivables	220,979		67,157
Prepayment to Flash Forward Ltd.	20,577		20,577
Other current assets	6,938		21,093
Total other current assets	$	303,888	$	206,419

Notes Receivable and Investments in Flash Ventures. Notes receivable and investments in Flash Partners Ltd., Flash Alliance Ltd. and Flash Forward Ltd. (collectively referred to as “Flash Ventures”) were as follows (in thousands):



	September 30, 2012		January 1, 2012
Notes receivable, Flash Partners Ltd.	$	199,331	$	291,564
Notes receivable, Flash Alliance Ltd.	688,014		973,176
Notes receivable, Flash Forward Ltd.	180,041		32,396
Investment in Flash Partners Ltd.	254,986		258,184
Investment in Flash Alliance Ltd.	375,518		368,459
Investment in Flash Forward Ltd.	72,465		19,516
Total notes receivable and investments in Flash Ventures	$	1,770,355	$	1,943,295

Equity-method investments and the Company’s maximum loss exposure related to Flash Ventures are discussed further in Note 11, “Commitments, Contingencies and Guarantees – Flash Partners, Flash Alliance and Flash Forward” and Note 12, “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 Flash Ventures notes receivable into one class of financing receivables due to the similar ownership interest and common structure in each Flash Ventures entity. 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):



	September 30, 2012		January 1, 2012
Prepaid tax on intercompany transactions	$	43,211	$	46,489
Prepayment to Flash Forward Ltd.	10,289		29,396
Convertible note issuance costs	9,179		12,992
Long-term prepaid income tax	63,008		3,956
Other non-current assets	29,479		29,782
Total other non-current assets	$	155,166	$	122,615

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



	September 30, 2012		January 1, 2012
Accrued payroll and related expenses	$	79,473	$	132,182
Derivative contract payables	4,272		40,045
Taxes payable	8,181		61,144
Other accrued liabilities	107,257		104,146
Total other current accrued liabilities	$	199,183	$	337,517

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



	September 30, 2012		January 1, 2012
Deferred tax liabilities	$	43,174	$	44,262
Income tax liabilities	210,114		218,994
Deferred credits on intercompany transactions	62,749		67,926
Other non-current liabilities	120,085		84,342
Total non-current liabilities	$	436,122	$	415,524

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



	Three months ended						Nine months ended
	September 30, 2012			October 2, 2011			September 30, 2012			October 2, 2011
Balance, beginning of period	$	31,640		$	23,156		$	26,957		$	24,702
Additions and adjustments to cost of product revenues	4,565			5,689			18,044			13,893
Usage	(4,339		)	(5,310		)	(13,135		)	(15,060		)
Balance, end of period	$	31,866		$	23,535		$	31,866		$	23,535

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 Condensed 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):



	September 30, 2012			January 1, 2012
Accumulated net unrealized gain (loss) on:
Available-for-sale investments	$	21,060		$	10,849
Foreign currency translation	294,679			300,788
Hedging activities	(219		)	21,064
Total accumulated other comprehensive income	$	315,520		$	332,701

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



	Three months ended					Nine months ended
	September 30, 2012		October 2, 2011			September 30, 2012			October 2, 2011
Available-for-sale investments	$	1,860	$	(3,479	)	$	5,694		$	5,777
Foreign currency translation	4,997		10,906			(1,845		)	11,754
Hedging activities	—		1,915			—			3,267
	$	6,857	$	9,342		$	3,849		$	20,798