Acquisition-Related Contingent Consideration

3 Months Ended

Mar. 30, 2019

Acquisition-Related Contingent Consideration

7. Acquisition-Related Contingent Consideration

In connection with the acquisition of Solar Implant Technologies, Inc. (“SIT”), Intevac also 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 March 30, 2019 based on forecasted revenues reflecting Intevac’s own assumptions concerning future revenue from such products. The earnout period terminates on June 30, 2019.

The fair value measurement of contingent consideration is based on significant inputs not observable in the market and thus represents a Level 3 measurement. Significant increases or decreases in these inputs would result in a significantly lower (higher) fair value measurement. Any change in fair value of the contingent consideration subsequent to the acquisition date is recognized in operating income within the consolidated statement of income. The following table represents a reconciliation of the change in the fair value measurement of the contingent consideration liability for the three-month periods ended March 30, 2019 and March 31, 2018.

	Three Months Ended
	March 30, 2019			March 31, 2018
	(In thousands)
Opening balance	$	223		$	362
Changes in fair value		7			(1	)
Cash payments made		(98	)		—
Closing balance	$	132		$	361

The contingent consideration liability of $132,000 at March 30, 2019 and $223,000 at December 29, 2018 is included in other accrued liabilities on the condensed consolidated balance sheets.