5. Allowance for Doubtful Accounts

The following table represents a reconciliation of the allowance for doubtful accounts for the three and nine months ended September 29, 2012:


	Three Months Ended			Nine Months Ended
	September 29, 2012
	(In thousands)
Opening balance	$	—		$	41
Bad debt expense		3,017			3,017
Write-offs		(3,017	)		(3,058	)

Closing balance	$	—		$	—

Intevac held a promissory note from a customer which was secured by the equipment sold to this customer in a prior year under a product and sales agreement. The note was to be repaid in monthly installment payments ending in March 2015. The revenue associated with this sale had been accounted for under the installment method of accounting whereby revenue was recognized only to the extent cash had been received. During the quarter ended September 29, 2012, the customer became delinquent in its monthly installment payments and the note was put on non-accrual status. On September 27, 2012, the customer liquidated its operating assets in an auction. The equipment which collateralized the promissory note was sold in the liquidation auction and Intevac received the proceeds. On September 28, 2012, the customer announced that it was discontinuing its operations effective October 9, 2012 and Intevac concluded that none of the carrying value of the promissory note receivable was collectible and recorded a bad debt charge.

Intevac evaluates the collectibility of trade accounts receivables and notes receivable on an ongoing basis and provides reserves against potential losses when appropriate. Management analyzes historical bad debts, customer concentrations, customer creditworthiness, changes in customer payment tendencies and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. Customer accounts are written off against the allowance when the amount is deemed uncollectible.

The following table summarizes the components of the bad debt expense for the three- and nine month periods ended September 29, 2012 (in thousands):


Promissory note	$	4,085
Deferred profit on installment sale		(1,028	)
Cash recovery from liquidation sale		(40	)

Bad debt expense	$	3,017

The Company did not record any bad debt expense during the nine months ended September 28, 2013.