Commitments and Contingencies

3 Months Ended

Mar. 29, 2014

Commitments and Contingencies

16. Commitments and Contingencies

From time to time, Intevac may have certain contingent liabilities that arise in the ordinary course of its business activities. Intevac accounts for contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

Leases

Intevac leases certain facilities under non-cancelable operating leases that expire at various times up to March 2024 and has options to renew most leases, with rentals to be negotiated. Certain of Intevac’s leases contain provisions for rental adjustments. Included in other long-term assets on the consolidated balance sheets is $371,000 of prepaid rent as of March 29, 2014 related to the effective rent on Intevac’s long-term lease for Intevac’s Santa Clara, California facility. The terms of the Company’s lease of its Santa Clara, California facility include a tenant improvement allowance of up to $1.7 million. Tenant improvement allowances are reimbursements received from the landlord for initial construction costs and are amortized on a straight-line basis over the lease term as a reduction in rent. The tenant improvement allowances are recorded when the Company has completed its obligations and the tenant improvement allowance is receivable. In addition, Intevac is required to maintain a standby letter of credit for $1.0 million for this lease. The facility leases require Intevac to pay for all normal maintenance costs. Gross rental expense for the three months ended March 29, 2014 was $777,000.

As of March 29, 2014, future minimum lease payments are as follows.

(In thousands)
2014	$	1,194
2015		3,168
2016		3,098
2017		2,645
2018		2,630
Thereafter		15,149
	$	27,884