Balance Sheet Information

9 Months Ended

Sep. 28, 2014

Balance Sheet Information [Abstract]

Balance Sheet Information

Balance Sheet Information

Accounts Receivable, net. Accounts receivable, net was as follows (in thousands):

	September 28, 2014			December 29, 2013
Accounts receivable from product revenue	$	1,075,956		$	904,551
Allowance for doubtful accounts	(9,462		)	(8,274		)
Price protection, promotions and other activities	(195,942		)	(213,468		)
Total accounts receivable, net	$	870,552		$	682,809

Inventory. Inventory was as follows (in thousands):

	September 28, 2014		December 29, 2013
Raw material	$	472,863	$	440,570
Work-in-process	121,530		102,543
Finished goods	187,735		213,862
Total inventory	$	782,128	$	756,975

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

	September 28, 2014		December 29, 2013
Income tax receivables	$	18,198	$	7,976
Other tax-related receivables	85,621		62,784
Other non-trade receivables	75,466		37,368
Prepayment to Flash Forward Ltd.	—		5,144
Derivative contract receivables	2,254		777
Prepaid expenses	25,037		12,630
Convertible note issuance costs	5,413		—
Other current assets	18,825		40,206
Total other current assets	$	230,814	$	166,885

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 28, 2014		December 29, 2013
Notes receivable, Flash Partners Ltd.	$	13,732	$	100,057
Notes receivable, Flash Alliance Ltd.	338,735		323,995
Notes receivable, Flash Forward Ltd.	222,009		169,144
Investment in Flash Partners Ltd.	183,606		190,694
Investment in Flash Alliance Ltd.	274,340		283,999
Investment in Flash Forward Ltd.	87,247		66,731
Total notes receivable and investments in Flash Ventures	$	1,119,669	$	1,134,620

Equity-method investments and the Company’s maximum loss exposure related to Flash Ventures are discussed further in Note 12, “Commitments, Contingencies and Guarantees – Flash Ventures” 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 for credit worthiness, 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 capacity. 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 venture 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 28, 2014		December 29, 2013
Prepaid tax onintercompany transactions	$	34,468	$	37,747
Convertible note issuance costs	11,685		20,612
Long-term prepaid income tax	—		66,176
Other non-current assets	49,461		42,895
Total other non-current assets	$	95,614	$	167,430

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

	September 28, 2014		December 29, 2013
Accrued payroll and related expenses	$	192,174	$	227,779
Derivative contract payables	24,031		45,741
Taxes payable	75,649		59,618
Other accrued liabilities	188,334		176,594
Total other current accrued liabilities	$	480,188	$	509,732

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

	September 28, 2014		December 29, 2013
Income tax liabilities	$	119,131	$	205,266
Deferred tax credits on intercompany transactions	5,492		15,065
Deferred tax liabilities	25,140		3,482
Deferred revenue	36,079		35,346
Other non-current liabilities	56,649		47,924
Total non-current liabilities	$	242,491	$	307,083

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 28, 2014			September 29, 2013			September 28, 2014			September 29, 2013
Balance, beginning of period	$	48,742		$	38,355		$	43,624		$	38,787
Warranty liability assumed	3,794			2,363			3,794			2,363
Additions and adjustments to cost of revenue	1,746			9,224			14,104			20,142
Usage	(6,794		)	(10,973		)	(14,034		)	(22,323		)
Balance, end of period	$	47,488		$	38,969		$	47,488		$	38,969

The majority of the Company’s products have a warranty of five years or less, with a small number of products having a warranty ranging up to ten years or more. For warranties ten years or greater, including 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. Additions and adjustments to cost of revenue in the three months endedSeptember 28, 2014 included adjustments to certain warranty assumptions, related to future potential claims, resulting in a $5.7 million reduction to the overall future warranty exposure.

Comprehensive Income (Loss) Note

Accumulated Other Comprehensive Income (Loss). AOCI 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 28, 2014			December 29, 2013
Accumulated net unrealized gain (loss) on:
Available-for-sale investments	$	8,905		$	10,479
Foreign currency translation	(86,269		)	(47,440		)
Hedging activities	(19,841		)	(39,498		)
Total accumulated other comprehensive loss	$	(97,205	)	$	(76,459	)

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

	Three months ended					Nine months ended
	September 28, 2014			September 29, 2013		September 28, 2014			September 29, 2013
Available-for-sale investments	$	(2,439	)	$	2,272	$	(841	)	$	(3,200	)
Foreign currency translation	(12,777		)	1,462		(6,805		)	(26,398		)
Total income tax expense (benefit) allocated	$	(15,216	)	$	3,734	$	(7,646	)	$	(29,598	)

The significant amounts reclassified out of each component of AOCI were as follows (in thousands):

	Three months ended						Nine months ended
AOCI Component	September 28, 2014			September 29, 2013			September 28, 2014			September 29, 2013			Statement of Operations Line Item
Unrealized gain on available-for-sale investments	$	2,928		$	1,079		$	6,911		$	1,630		Interest (expense) and other income (expense), net
Tax impact	(1,053		)	(382		)	(2,447		)	(865		)	Provision for income taxes
Unrealized gain on available-for-sale investments, net of tax	1,875			697			4,464			765
Unrealized holding loss on derivatives:
Foreign exchange contracts	(6,190		)	(14,454		)	(15,240		)	(33,828		)	Cost of revenue
Foreign exchange contracts	(163		)	—			(520		)	—			Research and development
Loss on cash flow hedging activities	(6,353		)	(14,454		)	(15,760		)	(33,828		)
Total reclassifications for the period, net of tax	$	(4,478	)	$	(13,757	)	$	(11,296	)	$	(33,063	)