7. Acquisition-Related Contingent Consideration

In connection with the acquisition of Solar Implant Technologies, Inc. (“SIT”), Intevac agreed to pay to the selling shareholders in cash a revenue earnout on Intevac’s net revenue from commercial sales of certain products over a specified period up to an aggregate of $9.0 million. Intevac estimated the fair value of this contingent consideration on September 29, 2018 based on forecasted revenues reflecting Intevac’s own assumptions concerning future revenue from such products.

The fair value measurement of contingent consideration is based on significant inputs not observed in the market and thus represents a Level 3 measurement. Any change in fair value of the contingent consideration subsequent to the acquisition date is recognized in income (loss) from operations within the condensed consolidated statement of operations. The following table represents a reconciliation of the change in the fair value measurement of the contingent consideration liability for the three and nine month periods ended September 29, 2018 and September 30, 2017:


	Three Months Ended					Nine Months Ended
	September 29, 2018		September 30, 2017			September 29, 2018		September 30, 2017
	(In thousands)
Opening balance	$	370	$	859		$	362	$	759
Changes in fair value		—		(283	)		8		(181	)
Cash payments made		—		(172	)		—		(174	)

Closing balance	$	370	$	404		$	370	$	404

The following table displays the balance sheet classification of the contingent consideration liability account at September 29, 2018 and at December 30, 2017:


	September 29,		December 30,
	2018		2017
	(In thousands)
Other accrued liabilities	$	370	$	103
Other long-term liabilities		—		259

Total acquisition-related contingent consideration	$	370	$	362

The following table represents the quantitative range of the significant unobservable inputs used in the calculation of fair value of the contingent consideration liability as of September 29, 2018. Significant increases or decreases in any of these inputs in isolation would result in a significantly lower or higher fair value measurement.

Quantitative Information about Level 3 Fair Value Measurements at September 29, 2018

Fair Value

Valuation Technique

Unobservable Input

Weighted Average

(In thousands, except for percentages)

Revenue Earnout

370

Discounted cash flow

Weighted average cost of capital

12.1