Balance Sheet Information

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



	December 30, 2012			January 1, 2012
Trade accounts receivable	$	766,583		$	692,702
Allowance for doubtful accounts	(6,627		)	(5,717		)
Price protection, promotions and other activities	(171,569		)	(165,222		)
Total accounts receivable from product revenues, net	$	588,387		$	521,763

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



	December 30, 2012			January 1, 2012			January 2, 2011
Balance, beginning of period	$	5,717		$	8,416		$	12,348
Additions (reductions) charged to costs and expenses	1,452			(1,476		)	(2,575		)
Deductions/write-offs	(542		)	(1,223		)	(1,357		)
Balance, end of period	$	6,627		$	5,717		$	8,416

Inventory. Inventory was as follows (in thousands):



	December 30, 2012		January 1, 2012
Raw material	$	404,634	$	398,308
Work-in-process	102,249		89,332
Finished goods	243,192		190,742
Total inventory	$	750,075	$	678,382

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



	December 30, 2012		January 1, 2012
Royalty and other receivables	$	59,299	$	53,443
Other non-trade receivable	—		26,875
Prepaid expenses	13,221		17,274
Tax-related receivables	186,223		67,157
Prepayment to Flash Forward Ltd.	20,577		20,577
Other current assets	19,197		21,093
Total other current assets	$	298,517	$	206,419

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



	December 30, 2012			January 1, 2012
Machinery and equipment	$	1,124,701		$	870,117
Software	148,014			139,388
Buildings and building improvements	227,651			70,036
Capital land lease	31,030			6,588
Furniture and fixtures	10,106			6,333
Leasehold improvements	11,979			24,068
Property and equipment, at cost	1,553,481			1,116,530
Accumulated depreciation and amortization	(887,939		)	(771,633		)
Property and equipment, net	$	665,542		$	344,897

Depreciation expense of property and equipment totaled $161.9 million, $115.0 million and $132.8 million in fiscal years 2012, 2011 and 2010, respectively.

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):



	December 30, 2012		January 1, 2012
Notes receivable, Flash Partners Ltd.	$	180,254	$	291,564
Notes receivable, Flash Alliance Ltd.	476,800		973,176
Notes receivable, Flash Forward Ltd.	162,810		32,396
Investment in Flash Partners Ltd.	232,547		258,184
Investment in Flash Alliance Ltd.	342,048		368,459
Investment in Flash Forward Ltd.	65,653		19,516
Total notes receivable and investments in Flash Ventures	$	1,460,112	$	1,943,295

Equity-method investments and the Company’s maximum loss exposure related to Flash Ventures are discussed further in Note 13, “Commitments, Contingencies and Guarantees – Flash Partners, Flash Alliance and Flash Forward” and Note 14, “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):



	December 30, 2012		January 1, 2012
Prepaid tax on intercompany transactions	$	42,118	$	46,489
Prepayment to Flash Forward Ltd.	5,144		29,396
Convertible note issuance costs	8,708		12,992
Long-term prepaid income tax	63,008		3,956
Other non-current assets	34,832		29,782
Total other non-current assets	$	153,810	$	122,615

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



	December 30, 2012		January 1, 2012
Accrued payroll and related expenses	$	102,269	$	132,182
Derivative contract payables	13,584		40,045
Taxes payable	25,476		61,144
Other accrued liabilities	116,210		104,146
Total other current accrued liabilities	$	257,539	$	337,517

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



	December 30, 2012		January 1, 2012
Deferred tax liabilities	$	28,672	$	44,262
Income tax liabilities	208,629		218,994
Deferred credits on intercompany transactions	58,548		67,926
Other non-current liabilities	112,098		84,342
Total non-current liabilities	$	407,947	$	415,524

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):



	Fiscal years ended
	December 30, 2012			January 1, 2012			January 2, 2011
Balance, beginning of period	$	26,957		$	24,702		$	25,909
Additions and adjustments to cost of product revenues	33,247			29,444			30,732
Usage	(21,417		)	(27,189		)	(31,939		)
Balance, end of period	$	38,787		$	26,957		$	24,702

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):



	December 30, 2012			January 1, 2012
Accumulated net unrealized gain (loss) on:
Available-for-sale investments	$	15,919		$	10,849
Foreign currency translation	155,389			300,788
Hedging activities	(6,187		)	21,064
Total accumulated other comprehensive income	$	165,121		$	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):



	Fiscal years ended
	December 30, 2012			January 1, 2012		January 2, 2011
Available-for-sale investments	$	3,121		$	3,342	$	(6,301	)
Foreign currency translation	(23,791		)	10,315		20,979
Hedging activities	—			2,504		(2,776		)
	$	(20,670	)	$	16,161	$	11,902