10-K

Use these links to rapidly review the document
TABLE OF CONTENTS
Item 8. Financial statements and supplementary data

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-K

ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED March 31, 2013
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to

Commission file number: 001-34818

RealD Inc.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization) 77-0620426
(I.R.S. Employer
Identification No.)

100 N. Crescent Drive, Suite 200
Beverly Hills, California 90210
(Address of Principal Executive Offices, Zip code)

(310) 385-4000
(Registrant's telephone number, including area code)

         Securities registered pursuant to Section 12(b) of the Act:

Common stock, par value $0.0001 per share	New York Stock Exchange
(Title of each class)	(Name of each exchange on which registered)

         Securities registered pursuant to Section 12(g) of the Act: None

         Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý    No o

         Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

         Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

         Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o

         Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

         Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer ý Non-accelerated filer o
(Do not check if a
smaller reporting company) Smaller reporting company o

         Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes o    No ý

         The aggregate market value of the common stock held by non-affiliates of the registrant was $429,774,957 based on the last reported sale price of the registrant's common stock on September 21, 2012 (the last business day of the registrant's most recently completed second fiscal quarter) as reported by the New York Stock Exchange ($9.17 per share). As of May 30, 2013, there were 49,427,042 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

         Part III incorporates certain information by reference from the registrant's Proxy Statement for its 2013 Annual Meeting of Stockholders, which will be filed on or before June 26, 2013. With the exception of the sections of the registrant's 2013 Proxy Statement specifically incorporated herein by reference, the registrant's Proxy Statement for its 2013 Annual Meeting of Stockholders is not deemed to be filed as part of this Form 10-K.

RealD Inc.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED
March 31, 2013
TABLE OF CONTENTS

	SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INDUSTRY DATA	3
PART I
Item 1.	Business	4
Item 1A.	Risk Factors	18
Item 1B.	Unresolved staff comments	35
Item 2.	Properties	36
Item 3.	Legal proceedings	36
Item 4.	Mining Safety Disclosures	36
PART II
Item 5.	Market for registrant's common equity, related stockholder matters and issuer purchases of equity securities	37
Item 6.	Selected financial data	40
Item 7.	Management's discussion and analysis of financial condition and results of operations	43
Item 7A.	Quantitative and qualitative disclosures about market risk	71
Item 8.	Financial statements and supplementary data	74
Item 9.	Changes in and disagreements with accountants on accounting and financial disclosure	111
Item 9A.	Controls and procedures	111
Item 9B.	Other information	114
PART III
Item 10.	Directors, executive officers and corporate governance	114
Item 11	Executive compensation	114
Item 12.	Security ownership of certain beneficial owners and management and related stockholder matters	114
Item 13.	Certain relationships and related transactions, and director independence	114
Item 14.	Principal accounting fees and services	115
PART IV
Item 15.	Exhibit and financial statement schedules	116
SIGNATURES		117

2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND
OTHER INDUSTRY DATA

        This Annual Report on Form 10-K and the documents incorporated herein by reference contain forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, about our future expectations, plans or prospects and our business. All statements contained in this Annual Report on Form 10-K, other than statements of historical fact, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "intends," "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue" or the negative of these terms or other comparable terminology, but the absence of these words does not necessarily mean that a statement is not forward-looking. Forward-looking statements include, among other things, statements concerning anticipated future financial and operating performance; our expectations regarding demand and acceptance for our technologies; RealD's ability to continue to derive substantial revenue from the licensing of RealD's 3D technologies for use in the motion picture industry, as well asour ability to generate revenue from the licensing of RealD's 3D technologies for use in 3D-enabled display devices; 3D motion picture releases and conversions scheduled for fiscal 2014 ending March 2014 and beyond, their commercial success and domestic consumer preferences that, in recent periods, have trended in favor of 2D over 3D; our ability to increase our revenues, the number of RealD-enabled screens in domestic and international markets and our market share; our ability to supply our solutions to our customers on a timely basis; our relationships with exhibitor and studio partners and the business model for 3D eyewear in North America; the progress, timing and amount of expenses associated with RealD's research and development activities, which may increase in future periods; market and industry trends, including growth in 3D content; our plans, strategies and expected opportunities; the deployment of and demand for our products and products incorporating our technologies; and competitive pressures in domestic and international cinema markets impacting licensing and product revenues; and RealD's projected operating results.

        Actual results may differ materially from those discussed in these forward-looking statements due to a number of factors, including the risks set forth in the section entitled "Risk factors" in Part I, Item 1A of this Annual Report on Form 10-K and elsewhere in this filing. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements. We are under no duty to update any of the forward-looking statements after the date of this Annual Report on Form 10-K to conform our prior statements to actual results.

        This Annual Report on Form 10-K also contains estimates and other information concerning our industry, including business segment and growth rates, that we obtained from industry publications, surveys and forecasts. Unless we otherwise specify, industry and market data is given on a calendar year basis and is current as of December 31, 2012. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates. Although we believe the information in these industry publications, surveys and forecasts is reliable, we have not independently verified the accuracy or completeness of the information. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled "Risk factors" in Part I, Item 1A of this Annual Report on Form 10-K.

        RealD and the RealD logo are trademarks of RealD Inc. All other trademarks and service marks appearing in this Annual Report on Form 10-K are the property of their respective holders and all rights are reserved. The absence of a trademark or service mark or logo from this Annual Report on Form 10-K does not constitute a waiver of trademark or other intellectual property rights of RealD Inc., its affiliates and/or licensors.

3

PART I

Item 1.    Business

Overview

        We are a leading global licensor of 3D technologies. Our extensive intellectual property portfolio is used in applications that enable a premium 3D viewing experience in the theater, the home and elsewhere. We license our RealD Cinema Systems to motion picture exhibitors that show 3D motion pictures and alternative 3D content. We also provide our RealD Display, active and passive eyewear and RealD Format technologies to consumer electronics manufacturers, content providers and distributors to enable the delivery and viewing of 3D content on a variety of visual displays and devices.

Competitive strengths

        Our competitive strengths include the following:

Innovative technology

        Our technical expertise has allowed us to develop new and innovative technologies for viewing 3D content in the motion picture industry, the home and elsewhere. Working with Disney to release Chicken Little in 3D in 2005, we became the first company to commercially enable 3D theater screens using digital projection. Our patented RealD Cinema Systems deliver superior light output, providing for a high quality, brighter image and enabling display on larger theater screens than most competing technologies. Many of our licensees, including American Multi-Cinema, Inc., or AMC, Cinemark USA, Inc., or Cinemark, Regal Cinemas, Inc., or Regal, Carmike Cinemas, Inc., or Carmike, and Cineplex Theatres, or Cineplex, deploy our RealD Cinema Systems on their own premium-branded large-screen auditoriums. Our RealD Display, active and passive eyewear and RealD Format technologies provide our consumer electronics licensees the ability to display high quality 3D content that can be delivered through the current cable, satellite and broadcast infrastructure. We continually develop next generation 3D display technology for televisions, personal computers, laptops, tablets, smart phones and other mobile devices. Our extensive intellectual property portfolio, which is based on years of research and development, contains approximately 191 individual issued patents and approximately 369 pending patent applications in approximately 18 jurisdictions worldwide. Content producers use our technologies to enhance and accelerate their production of 3D content. Our research, development and engineering teams have expertise in many disciplines, including:

•

polarization control (the manipulation of light);

•

photonics (the application of electromagnetic energy, incorporating laser technology, electrical engineering, materials science and information storage and processing);

•

optics (the branch of physics that deals with light and vision);

•

liquid crystal physics (the application of elements at the border between the solid and liquid phase to the creation of nanoscale devices); and

•

digital image processing (the use of computer algorithms to perform image processing on digital images).

Global leader in 3D-enabled theater screens

        As of March 31, 2013, our RealD Cinema Systems were deployed on approximately 22,700 theater screens in 68 countries, which we believe are substantially more 3D screens than all of our competitors. 14 of the world's top 17 motion picture exhibition groups utilize RealD Cinema Systems in their theaters, including Regal, AMC, Cinemark, Carmike, Cinepolis, Cineplex, Wanda, ODEON, Cineworld

4

and EuroPalaces. Our licensees include approximately 1,000 motion picture exhibitors and we are actively engaged with other motion picture exhibitors regarding potential new license agreements. During our fiscal year ended March 31, 2013, domestic box office on RealD-enabled screens represented approximately 80% of total domestic 3D box office and we estimate that worldwide box office on RealD-enabled screens represented approximately 50% of the total worldwide 3D box office.

Pioneer in emerging 3D visual display technologies

        We believe that the success of major 3D motion pictures is leading to the creation and distribution of 3D content and products for 3D consumer electronics. Although 3D consumer electronics technologies are new and developing, we have already entered into agreements to provide our RealD Display, active and passive eyewear and RealD Format technologies to leading consumer electronics manufacturers. Our licensees also include content distributors, including cable television services and satellite television services.

Premium brand

        We believe our brand is well-recognized among licensees and consumers as a result of motion picture studios and exhibitors co-branding with us and moviegoers having worn our branded RealD eyewear more than one billion times. We believe the prominence of our brand in the motion picture industry will enhance our marketing efforts of 3D consumer electronics technologies.

Scalable licensing model

        We license our 3D technologies under a highly scalable business model with recurring revenue from those licensees. As an example, our multi-year (typically five years or longer), generally exclusive agreements with motion picture exhibitors generate revenue on a per-admission, periodic fixed-fee or per-motion picture basis at limited incremental direct cost to us. We believe motion picture exhibitors prefer our licensing model, which includes technological upgrades and maintenance, because it reduces their capital expenditures and the risk they may purchase equipment that will become obsolete. We believe our motion picture exhibitor licensees also prefer our low-cost RealD eyewear because it requires fewer personnel (no active collecting or washing by motion picture exhibitors) and reduces motion picture exhibitors' loss from theft and breakage. Although we have not yet generated material revenue licensing our other 3D visual display technologies, we anticipate that our relationships with consumer electronics manufacturers and others will generate future license fees on 3D consumer electronics technologies on a per unit basis.

Extensive industry relationships and strong technical expertise

        Our experienced management team, including Michael V. Lewis, our Chairman and Chief Executive Officer, Joseph Peixoto, President of Worldwide Cinema, and Leo Bannon, Executive Vice President of Global Operations, have extensive, long-term relationships with content producers and distributors, major motion picture studios and exhibitors, and consumer electronics manufacturers that help us drive the proliferation of 3D content, delivery and viewing in theaters, the home and elsewhere. Our research and development team, primarily based in our Boulder, Colorado facility, is comprised of leaders in the invention, development and commercialization of innovative 3D technologies.

5

Strategy

        Key elements of our strategy include:

Continue to innovate and develop new technologies

        We continue to develop proprietary technologies to perfect the visual image and create additional revenue opportunities. We endeavor to improve our RealD Cinema Systems and other cinema technologies to deliver an even better and more immersive 3D viewing experience to consumers in theaters. For example, during 2013, we introduced Precision White Screen technology for cinema projection that features improved screen efficiency, resulting in 40% more total light coming off the screen and providing more uniform brightness than a standard silver screen. We are also working to enhance our other 3D visual display technologies to enable consumers to enjoy 3D at home and elsewhere. We have patented technologies that we believe will in the future enable consumers to enjoy 3D content without eyewear. We believe our licensing of 3D technologies for professional and other non-theatrical applications will continue to provide a strong foundation for our development of new 3D technologies for viewing 3D content at motion picture theaters, non-theatrical locations like theme parks or museums, and on other visual display devices. We also selectively pursue technology acquisitions to expand and enhance our intellectual property portfolio in areas that complement our existing and new market opportunities and to supplement our internal research and development efforts.

Increase our leading global share in 3D-enabled theater screens, particularly in international markets

        We continue to work with our existing motion picture exhibitor licensees to deploy additional RealD Cinema Systems. We also plan to enter into agreements with new motion picture exhibitor licensees to increase the number of deployed RealD Cinema Systems worldwide. We believe there is a significant opportunity for us to continue to expand our business internationally and to license our 3D technologies to international motion picture exhibitors based on a licensing model that is similar to our domestic model. In particular, China, Russia and Latin America are fast-growing cinema markets where moviegoing consumers have strongly embraced 3D films. For example, rapid growth in Chinese cinema screens has helped to drive an increase in total Chinese box office receipts of more than 30 percent annually for the past several years. In fact, China's total box office is widely expected to surpass North America to become the largest cinema market worldwide by 2020.

Encourage filmmakers and studios to create additional 3D films

        We continue to work with film studios and filmmakers to encourage their production of additional 3D films. Our efforts include further educating the filmmaking community about 3D trends and ensuring that the entire ecosystem fully appreciates the powerful economic benefits of 3D filmmaking, particularly in growing cinema markets overseas where moviegoers' interest in 3D cinema has increased in recent years. A positive driver of the compelling economics for studios is that the incremental cost of 3D filmmaking has declined considerably in recent years, while the quality of 3D filmmaking has continued to improve. Our efforts also include encouraging studios and film directors to consider 3D as a creative tool for films beyond the typical 3D genres of live action and animated films. The theatrical success of the recent dramatic 3D films Life of Pi and The Great Gatsby demonstrates early progress towards our initiative to promote an expansion of 3D filmmaking genres.

Expand our emerging 3D visual display technology business

        We continue to work with consumer electronics manufacturers, content producers and distributors and other licensees to enable a premium 3D viewing experience in the home and elsewhere using our technologies. We endeavor to incorporate our 3D technologies in visual displays for laptop computers,

6

personal computers, tablets, mobile phones and other devices, and to enable the delivery of 3D content across a variety of distribution platforms.

Build upon the strength of our RealD brand

        It is our goal to make RealD the best known 3D technology brand in the world, associated with delivering the highest quality 3D viewing experience in the global marketplace. We will further leverage the strength of our brand to generate stronger licensee and consumer preference for a RealD experience in 3D consumer electronics and other applications. We continue to actively encourage motion picture studios and exhibitors to prominently feature our brand in their motion picture advertising and marketing, at theater locations, online and on consumer electronics products and packaging. We will also continue our advertising efforts to strengthen our brand in the theatrical and consumer electronics industries. We plan to use our brand to drive the continued adoption of our 3D technologies in existing and new applications.

Industry

History of 3D

        First used commercially in a public theater in 1922, 3D technology has been used by content producers in an effort to enhance the viewing experience. 3D imagery is created using stereoscopic photography, which is a process that creates the illusion of 3D by using a pair of 2D images. Each image represents a different perspective of the same object, emulating the different perspectives that binocular vision captures. When the two images are viewed by each eye, the brain fuses the two images to form a single picture, creating the illusion of 3D. 3D technology has a wide range of applications including entertainment, research and development, scientific exploration and manufacturing.

        Innovation in 3D technology has centered on optimizing the projection of stereoscopic images as well as the filtering of the image intended for each eye. Early 3D exhibition required the use of two projectors, one to project the reel for each eye to create the stereoscopic image, which required synchronization that was difficult to achieve due to the manual operation of projectors. To view a stereoscopic image, audiences utilized 3D eyewear that employed different filters that did not maintain the quality of a standard motion picture image and caused discomfort including eye strain and headaches.

        Benefiting from the continuing adoption of digital projection, the newest wave of 3D projection uses digital technologies that address many of the limitations of previous methods of 3D projection. The use of high definition digital projectors, advances in the construction of silver screens and the use of polarization filters and polarized lenses have broadened the color spectrum, and reduced eyestrain and synchronization issues that caused headaches, thus greatly improving the 3D viewing experience.

        The launch of modern 3D digital projection for motion pictures was marked by the presentation of Chicken Little by Disney in November 2005, which debuted on approximately 100 RealD-enabled screens. Since the debut of Chicken Little in 2005 through March 31, 2013, more than 125 major 3D motion pictures have been released on RealD-enabled screens including six of the top 10 grossing films of all time. In addition, six of the 10 highest grossing motion pictures released in 2012 were exhibited in RealD 3D.

        Cutting-edge 3D technology has also been deployed in other applications including scientific research. For example, NASA has utilized 3D technology to analyze damage to the Space Shuttle and to navigate the Mars Rover. Industrial applications for 3D technology include the use of 3D visualization by biotech firms for the development of pharmaceuticals, by aircraft and motor vehicle manufacturers like McDonnell Douglas Corp., Caterpillar Inc. and Harley Davidson, Inc. for the design of new prototypes and by major energy companies such as Chevron that utilize 3D technology to

7

reduce the cost and environmental impact of exploration by analyzing oil and gas fields in virtual 3D environments.

Market opportunity

        Our 3D technologies can be used in many different applications and businesses, including entertainment, consumer electronics, education, aerospace, defense and healthcare. Our 3D technologies are primarily used in motion pictures, consumer electronics and professional applications.

        The shift in the motion picture industry from analog to digital over the past decade has created an opportunity for new and transformative 3D technologies. As of December 31, 2012, approximately 89,000 digital theater screens were deployed worldwide, representing approximately 68% of the worldwide installed base. Certain major film studios have stated that they will stop making available analog versions of their motion pictures within the next few years, which should contribute to further migration of cinema screens to digital projection, thereby expanding our growth opportunity. RealD's Cinema Systems function as an enhancement to digital projectors and, therefore, require cinemas to be equipped with a digital projector prior to installation.

        The following chart illustrates, as of December 31, 2012, the approximate total number of theater screens worldwide, the approximate number of theater screens that have been converted to digital and the approximate number of digital theater screens that are 3D-enabled.

(1)

Of the estimated 46,000 worldwide digital theater 3D-enabled screens as of December 31, 2012 (per Screen Digest), 22,200 were RealD-enabled screens, representing a nearly 50% share. As of March 31, 2013, RealD had deployed approximately 22,700 screens worldwide.

8

        The growth in 3D screens worldwide combined with growth in the number of 3D motion pictures has led to an increase in the worldwide box office generated by 3D screens in recent years. In 2012, 3D-enabled screens generated an estimated $7.3 billion in worldwide 3D box office (according to provisional figures from IHS), representing 21% of the $34.7 billion in total worldwide box office in 2012. Six of the top 10 grossing films worldwide in 2012 were exhibited in RealD 3D. We anticipate that continued growth in the number of 3D films and the number of 3D-enabled screens will lead to further growth in the worldwide 3D box office. We anticipate that approximately 36 3D motion pictures produced by domestic studios will be released worldwide in our fiscal year 2014, including sequels to successful major motion picture franchises, such as Iron Man, Thor, The Hobbit, Star Trek, 300, Monsters, Despicable Me, The Smurfs, and Cloudy with a Chance of Meatballs

        In addition to major 3D releases produced by domestic film studios, an increasing number of 3D motion pictures are being produced overseas for release in various international markets. For example, Journey to the West 3D generated nearly $200 million in total box office during 2013 and Painted Skin 2 3D generated $115 million in total box office during 2012. Both films were produced in China, the second-largest cinema market in the world. Similarly, Stalingrad 3D is currently scheduled for release in Russia during August 2013.

9

        The following table shows the major 3D motion pictures released or scheduled for release on domestic 3D-enabled screens for the fiscal year 2014 ending on March 31, 2014. Information provided includes the motion picture studios and the release dates for those motion pictures (announced as of June 6, 2013):

Film	Motion Picture Studio	Domestic Release Date
Jurassic Park (re-release)	Universal	4/5/2013
Iron Man 3	Disney/Marvel	5/3/2013
The Great Gatsby	Warner Bros.	5/10/2013
Star Trek Into Darkness	Paramount	5/16/2013
Epic	Fox	5/24/2013
Man of Steel	Warner Bros./Legendary	6/14/2013
World War Z	Paramount	6/21/2013
Monsters University	Disney/Pixar	6/21/2013
Despicable Me 2	Universal	7/3/2013
Pacific Rim	Warner Bros. / Legendary	7/12/2013
Turbo	Dreamworks Animation/Fox	7/17/2013
R.I.P.D.	Universal	7/19/2013
The Wolverine	Fox	7/26/2013
The Smurfs 2	Sony Pictures Animation/Columbia Pictures	7/31/2013
Percy Jackson: Sea of Monsters	Fox	8/7/2013
Planes	Disney Animation	8/9/2013
One Direction: This Is Us	Sony Pictures	8/30/2013
Battle of the Year: The Dream Team	Sony/Screen Gems	9/13/2013
Cloudy With a Chance of Meatballs 2	Sony Animation	9/27/2013
Sin City: A Dame to Die For	Dimenstion Films/The Weinstein Company	10/4/2013
Gravity	Warner Bros.	10/4/2013
Metallica: Through the Never	Picturehouse Entertainment	10/4/2013
The Seventh Son	Warner Bros.	10/18/2013
Free Birds	Relativity/Reel	11/1/2013
Thor 2: The Dark World	Disney/Marvel	11/8/2013
Frozen	Disney	11/27/2013
Postman Pat: The Movie—You Know You're the One	Classic Media	11/27/2013
The Hobbit 2: The Desolation of Smaug	Warner Bros.	12/13/2013
Walking With Dinosaurs	Fox	12/20/2013
47 Ronin	Universal	12/25/2013
The Nut Job	Open Road	1/17/2014
I, Frankenstein	Lionsgate	1/24/2014
The Lego Movie	Warner Bros.	2/7/2014
Pompeii	Sony Tristar	2/28/2014
Mr. Peabody and Sherman	Dreamworks Animation/Fox	3/7/2014
300: Rise of an Empire	Warner Bros. / Legendary	3/7/2014

        We believe that more 3D-enabled theater screens will be needed in the future, particularly in fast-growing international markets such as China, Russia and Latin America, to accommodate the expected growth in the number of 3D motion pictures being released and to provide the necessary capacity to fully capitalize on commercially successful 3D motion pictures.

10

        We believe that the success of major 3D motion pictures and the recent establishment of an industry consortium called Digital Cinema Distribution Coalition (DCDC), which will enable the digital distribution of content via a satellite distribution network, will further stimulate the production and distribution of new and alternative 3D content for digital cinema. In particular, we anticipate that there will be more live broadcast events in 3D, including sporting events, concerts, cultural and other live events. Live 3D events broadcast in RealD cinemas to date have included Wimbledon tennis, FIFA World Cup soccer, Ultimate Fighting Championship (UFC) matches, and music concerts.

        We believe that the recent success of 3D motion pictures is also leading to the production and distribution of new 3D content for consumer electronics applications. There are currently a growing number of 3D channels available worldwide including linear broadcast channels and VOD systems on major broadcast services including DirecTV, Virgin Media, Sky, Foxtel and Comcast. 3D channels are currently being programmed from major content brands including ESPN (ESPN3D), British Sky Broadcasting (Sky 3D), and Discovery Communications (3net). Examples of major sporting events broadcast live in 3D include The Masters golf tournament, Premier League soccer, NCAA football, NCAA men's basketball, NBA basketball and boxing.

        The proliferation of high definition televisions, laptops, tablets, smartphones and other displays represents a new market opportunity for revenue arising from the release of 3D-enabled consumer electronics products. For example, market researcher DisplaySearch estimates that the number of 3D-enabled televisions shipped worldwide will increase significantly from an estimated 41 million units in 2012 to approximately 70 million units in 2013. We believe growth in the installed base of 3D-enabled TVs and other consumer displays gives film studios even more incentive to create a 3D version of their major film releases in order to take advantage of the downstream revenue opportunity to display the film's 3D version in the home.

Key applications

        We believe that we possess innovative technology, a significant market presence, a premium brand and a scalable licensing model in our key applications.

        We design, manufacture, license and market our RealD Cinema Systems that enable digital cinema projectors to show 3D motion pictures and alternative 3D content to consumers wearing our RealD eyewear.

        Technology.    We believe our patented 3D digital projection technology delivers double the amount of light output compared to any other 3D digital projection technology on the market, which is the most significant factor in producing a high quality 3D image. As a result, we believe we are able to reach larger screens with our RealD digital projection technology than the majority of other 3D digital projection technology providers for use in motion picture theaters. For example, using a single digital DLP (digital light processing, based on Texas Instruments chip technology) projector and the same lamp and lamp power as a 2D presentation, our RealD XL Cinema System, using our polarizing technology, can deliver crisp, clear 3D content to screens. Our RealD Cinema Systems:

•

are relatively inexpensive to deploy and include maintenance and free upgrades at no additional charge to the exhibitor;

•

produce full color, unlike stereoscopic/spectral 3D that relies on eyewear with red and green color filters that cause a substantial loss of available colors;

•

reduce most "ghost images" caused by the left eye seeing a small portion of the right-eye frames and vice versa;

•

can be viewed with our circular polarized passive RealD eyewear, which allow consumers to move around with reduced image distortion.

11

•

can further enhance the visual image for 2D and 3D presentation by projecting on RealD's Precision White Screen technology, which is available only to RealD customers. The Precision White Screen technology's greater efficiency results in more total light coming off the cinema screen, providing more uniform brightness than a standard silver screen

        Market presence.    Our RealD Cinema Systems are the world's most widely deployed digital 3D cinema technology based on the number of theater screens installed worldwide. As of March 31, 2013, our RealD Cinema Systems were deployed on approximately 22,700 theater screens in 68 countries worldwide. As of December 31, 2012, our RealD Cinema Systems accounted for more than 80% of the estimated domestic 3D-enabled theater screens and nearly 50% of the 3D-enabled theater screens deployed worldwide. During our fiscal year ended March 31, 2013, domestic box office on RealD-enabled screens represented approximately 80% of total domestic 3D box office and we estimate that worldwide box office on RealD-enabled screens represented approximately 50% of the total worldwide 3D box office. We expect to continue to grow our cinema business based on an increasing number of theater screens becoming RealD-enabled and an increasing number of RealD-compatible 3D motion pictures being released.

        The following chart illustrates the number of theater locations with RealD-enabled screens and the total number of RealD-enabled screens:

	Year ended
(approximate numbers)	March 31, 2013		March 23, 2012		March 25, 2011
Number of RealD enabled screens (at period end)
Total domestic RealD enabled screens		12,800		11,700		8,700
Total international RealD enabled screens		9,900		8,500		6,300
Total RealD enabled screens		22,700		20,200		15,000
Number of locations with RealD enabled screens (at period end)
Total domestic locations with RealD enabled screens		2,800		2,600		2,300
Total international locations with RealD enabled screens		2,700		2,500		2,200
Total locations with RealD enabled screens		5,500		5,100		4,500
Number of 3D motion pictures (released domestically during period)		35		36		26

        At most RealD theater locations, there are multiple RealD-enabled screens. We believe that having more RealD-enabled screens per location will allow us to accommodate simultaneous 3D motion picture releases and provide the necessary capacity to fully capitalize on commercially successful 3D motion pictures. We believe the commercial success of 3D motion pictures will facilitate and further encourage the conversion of theater screens to digital and 3D. After motion picture exhibitors convert their projectors to digital cinema, they must install a silver screen and our RealD Cinema Systems in order to display motion pictures in RealD 3D.

        Content.    While the number of 3D films exhibited on our RealD domestic cinema systems decreased from 36 in fiscal year 2012 to 35 in fiscal year 2013, it grew significantly from 26 major motion pictures in our fiscal year 2011. As of June 6, 2013, we expect approximately 36 3D motion pictures to be released on our domestic screens during our fiscal year 2014, which ends on March 31, 2014, all of which we expect will be exhibited using our RealD Cinema Systems. In addition, we expect a growing number of foreign 3D films produced overseas to be released on our international RealD-enabled screens during our fiscal year 2014.

        We believe that the recent success of major 3D motion pictures, and the recent establishment of an industry consortium called Digital Cinema Distribution Coalition (DCDC), which will enable the digital distribution of content via a satellite distribution network, will drive the creation and theatrical

12

distribution of more alternative content and live broadcast events in 3D. To facilitate the display of alternative content, we introduced RealD LIVE, which enables live event 3D broadcast capabilities in theaters. RealD-enabled screens and the RealD Format have been used to exhibit other new and alternative 3D content, including sports, concerts, cultural events and other live events.

        Brand.    Motion picture studios often co-brand RealD in motion picture marketing and advertising. Motion picture exhibitors display our brand at theaters, on-screen and online. Moviegoers have worn our branded RealD eyewear more than one billion times. Our in-theater branding includes signage at the box office where tickets are purchased, signage in the lobby and in poster cases in and around the theater, branded recycling bins located at each auditorium entrance and exit, an on-screen animated 3D preview informing consumers when to put on their eyewear and reminding them to recycle their eyewear after the motion picture and a promotional trailer that plays immediately before the motion picture. Our brand also appears on major online ticketing websites aligned with show times at theaters equipped with our RealD technology. We believe our branded 3D experience will lead to increased admissions as consumers recognize our brand as the leading choice for 3D viewing, prompting motion picture exhibitors to select us as their 3D technology licensor.

        Licensing model.    We license our RealD Cinema Systems to motion picture exhibitors under multi-year (typically five years or longer) agreements that are generally exclusive and from which we generally receive license fees on a per-admission basis. Our agreements with motion picture exhibitors provide us with recurring revenue as 3D motion pictures are exhibited using our 3D technologies. Based on the number of deployed RealD-enabled screens, the number of additional RealD Cinema Systems that we will work with our existing motion picture exhibitor licensees to deploy, our market presence and the number of 3D motion pictures slated for future release, we believe our cinema business will continue to grow.

        We license and market systems to motion picture exhibitors based on the type of digital projector installed and theater configuration: our RealD Cinema System, RealD XL Cinema System, RealD XLS Cinema System, and the RealD XLW Cinema System, which is designed specifically for premium large screen auditoriums with stadium seating configurations. Our RealD XL Cinema System can be displayed on screens up to 82 feet wide, and our RealD Cinema Systems will be scalable to larger formats as projector technology evolves. The RealD XLW Cinema System, introduced in January 2011, can accommodate a throw ratio as wide as 1.0 (projection distance divided by screen width), and is designed for use in premium large screen motion picture auditoriums, theme parks and specialty theaters with stadium seating. We also recently introduced a RealD Cinema System for dual projector installations that is capable of delivering twice the light of other dual-projector 3D systems. Based on our actual experience, we believe we can upgrade almost any theater that has an existing digital cinema projector with our RealD Cinema Systems within a few hours. Under our agreements with motion picture exhibitors, we provide technological upgrades and maintenance on our RealD Cinema Systems at no additional charge to the exhibitor.

        We believe our RealD Cinema Systems are a compelling and scalable technology for the motion picture industry. Motion picture producers can tell their stories in more creative and compelling ways through the use of 3D technology. As evidenced by the record-setting performance of The Avengers in May 2012, releasing content on RealD-enabled screens can result in increased ticket sales at premium prices, enhanced monetization of a motion picture's initial release as well as enhanced monetization of a film's downstream revenue sources (such as pay television rights), which are often negotiated based on a film's theatrical success at the box office. As a result, 3D filmmaking can provide a more attractive return on investment to motion picture producers and distributors with only limited incremental costs compared to producing a film in 2D. Motion picture exhibitors share in the benefit of increased motion picture ticket sales at premium prices despite requiring very limited up-front costs to deploy RealD's Cinema Systems. We also believe consumers benefit from a superior 3D entertainment experience.

13

Other visual display technologies and applications

        We actively seek to have our 3D technologies incorporated into new 3D-enabled visual display devices by making them available to licensees, including consumer electronics manufacturers, content producers and content distributors.

        Technology.    We continue our development efforts of next-generation 3D display technologies, including glasses-free technologies that will allow the viewing of 3D content on a variety of visual display devices witout the need for 3D glasses. Our patented high brightness, passive eyewear-based 3D display could be used with high definition displays without significantly degrading image resolution as experienced with competing passive eyewear 3D display technologies.

        Many of the 3D-enabled visual display devices sold today utilize active shuttering 3D eyewear. To address this opportunity, we have developed technology to create active 3D eyewear, which are compatible with 3D-enabled visual display devices from various major consumer electronics brands.

        Our RealD Format is based on multiplexing technology (which packs two images in a single space) to deliver and display high definition 3D content via today's existing infrastructure for cable, satellite, broadcast, packaged media and the Internet. Our technology can grow with the content distribution infrastructure to deliver the highest quality, premium 3D viewing experience across a variety of distribution systems and consumer electronics products. Our 3D technologies can also be used for 3D-enabled interactive gaming by game developers and publishers. Our technologies for interactive gaming include those that adjust viewing angles in a game, assure 3D across depth of field and enable in-frame 3D effects.

        Competitive presence.    Our 3D technologies can be deployed across the entire range of consumer electronics. We have made available our RealD Display, active and passive eyewear and RealD Format technologies to consumer electronics manufacturers, content producers and distributors to enable high definition televisions, laptops, tablets, smart phones and other displays to be viewed in 3D in the home and elsewhere. Although we have not yet generated material revenue licensing our consumer electronics technologies, we have agreements in place with a wide range of leading consumer electronics manufacturers and content providers.

        Content.    Building on the recent success of major 3D motion pictures released in theaters, we believe consumers' desire for 3D consumer electronics will be stimulated with the creation and distribution of new motion pictures and other forms of 3D content. We anticipate that the demand for live broadcast events in 3D, including sporting events, concerts, cultural and other live events, for 3D interactive games, as well as other new and alternative 3D content for the home and elsewhere, will further stimulate the demand for RealD-enabled consumer electronics products.

        Brand.    We believe the strength of our brand in the motion picture industry will assist us in the 3D consumer electronics space. We are working with our licensees to incorporate RealD branding in their consumer electronics product advertising, marketing and packaging.

        Licensing model.    We have entered into multi-year licensing agreements with participants in the consumer electronics industry to further integrate our RealD Format and other technologies into their products. Although we have not yet generated material revenue from our current agreements in the consumer electronics industry, and may never generate material revenue from those agreements, we believe there will be future revenue opportunities for licensing our 3D technologies to consumer electronics manufacturers, component and accessories manufacturers, eyewear manufacturers, mobile device companies and others as the 3D consumer electronics opportunity continues to develop.

        Professional and Non-Theatrical Applications.    Our 3D visual display technologies are utilized by Fortune 500 companies, government, academic institutions, and research and development

14

organizations for a variety of applications. Our 3D technologies have also been used for theme park installations, including LEGOLAND®.

Our history

        RealD was founded in 2003 with the goal of bringing a premium 3D viewing experience to audiences everywhere. In 2005, we acquired Stereographics Corporation, or Stereographics, a company founded in 1980 and one of the largest providers of 3D technologies at the time of the acquisition. In 2007, we acquired ColorLink Inc., or ColorLink, a polarization control, photonics and optics company with an extensive patent portfolio. ColorLink, which was founded in 1995, had played an instrumental role collaborating with RealD to develop our first cinema system. In March 2005, we demonstrated our initial RealD Cinema System to motion picture exhibitors and studios. In November 2005, Disney released Chicken Little in 3D on approximately 100 RealD-enabled screens. In 2008, we established a RealD sales and operating presence in Europe and also entered 3D consumer electronics with a number of 3D technologies for the home and elsewhere. In December 2009, Fox released Avatar worldwide, including on approximately 4,200 RealD-enabled screens. In 2010, we established a RealD sales and operating presence in China and Hong Kong. In 2012, we established a RealD sales and operating presence in Russia. In 2013, RealD surpassed 20,000 3D-equipped cinema screens worldwide and we also established a RealD sales and operating presence in Latin America.

Licensees

        In our cinema business, our primary licensees are motion picture exhibitors that use our RealD Cinema Systems, including 14 of the top 17 motion picture exhibition groups in the world. As of March 31, 2013, we had multi-year (typically five years or longer) agreements that are generally exclusive with our motion picture exhibitor licensees in both the domestic and international markets. However, our license agreements typically do not obligate motion picture exhibitors to deploy a specific number of our RealD Cinema Systems according to a specific timeline. License revenue from AMC, Cinemark and Regal together comprised approximately 22% of our gross license revenue in the year ended March 31, 2013, 24% in the year ended March 23, 2012 and 23% in the year ended March 25, 2011. No licensee accounted for more than 10% of our gross license revenue in fiscal 2013, 2012 or 2011.

Sales and marketing

        We market and license our technologies throughout the 3D motion picture, 3D consumer electronics and professional industries through an internal sales team. We maintain sales offices in the United States, the United Kingdom, Russia, Japan, Hong Kong, China and Brazil.

        We focus our marketing efforts on motion picture studios and exhibitors, consumer electronics manufacturers, interactive game companies, content producers and content distributors. We reach these customers primarily through industry trade shows, public relations and our website and studio events.

Research and development

        We believe we must continue to develop or acquire innovative technologies on a regular basis to maintain our competitive edge. We monitor trends in the 3D motion picture, 3D consumer electronics and professional industries to stay abreast of new developments. We further monitor relevant intellectual property and other public domain information. Our research and development is focused on building and testing licensed products that could potentially incorporate our 3D technologies. Once the proof of concepts are built and tested, our 3D technologies are licensed to motion picture exhibitors and consumer electronics manufacturers.

15

        Our research and development expenses were $19.5 million for the year ended March 31, 2013, $16.5 million for the year ended March 23, 2012 and $15.6 million for the year ended March 25, 2011. In addition, we have made significant investments in intellectual property through acquisitions, including our acquisitions of Stereographics and ColorLink.

Manufacturing and supply

        RealD Cinema Systems.    We purchase optical and mechanical components for our RealD Cinema Systems from multiple suppliers. We have also entered into a large number of license and deployment agreements with digital cinema projector and server companies that grant them a limited, royalty-free license related to the use of RealD technology into digital cinema projection systems.

        RealD eyewear.    Our RealD eyewear is an integral part of our RealD Cinema Systems. Our circular polarized passive RealD eyewear allows consumers to move around with reduced image distortion and is comfortable and sanitary, which we believe provides convenience to consumers. We have entered into non-exclusive agreements with several manufacturers to produce RealD eyewear. We manage worldwide manufacturing and distribution of RealD eyewear. Domestically, we operate a recycling program for our RealD eyewear. Domestically, we provide our RealD eyewear free of charge to motion picture exhibitors and then receive a fee from the motion picture studios for the usage of that RealD eyewear by the motion picture exhibitors' consumers. Most international motion picture exhibitors purchase RealD eyewear directly from us and sell them to consumers as part of their admission or as a concession item. As a result, we are one of the world's largest distributors of passive 3D eyewear. Our recyclable eyewear is designed to fit comfortably on most viewers and easily over prescription eyewear. We also make available kids size RealD 3D eyewear. With the growth of 3D motion picture productions and releases, we anticipate that a market for personal and customized RealD eyewear will emerge.

        RealD installation, repair and maintenance services.    We hire independent contractors to perform installation, repair and maintenance services related to our RealD Cinema Systems.

Competition

        The market for 3D visual display technologies is highly competitive.

        Our primary competitors for our RealD Cinema Systems include Dolby Laboratories, Inc., or Dolby, X6D Limited, or xpanD, MasterImage 3D, LLC, or MasterImage, Sony Electronics, or Sony, and IMAX Corporation, or IMAX. As of December 31, 2012, these and other competitors had enabled approximately 23,800 worldwide theater screens, collectively, as compared to our approximately 22,200 RealD-enabled worldwide theater screens (which subsequently increased to approximately 22,700 screens as of March 31, 2013). Consumers may be more familiar with some of our competitors' brands in the motion picture industry. However, we believe we differentiate ourselves from our competitors in the motion picture industry for reasons that include the following:

•

we provide premium 3D technologies that are highly regarded by licensees and others in the motion picture industry;

•

our RealD Cinema Systems deliver superior light output providing for a high quality image and enabling display on larger theater screens with one projector than most competing technologies;

•

we offer motion picture exhibitors a licensing model that includes technological upgrades and maintenance at no additional charge and reduces their capital expenditures and the risk that they may purchase equipment that will become obsolete;

16

•

compared to most of our competitors' eyewear in the motion picture industry, our circular polarized passive RealD eyewear allows consumers to move around with reduced image distortion; and

•

our RealD eyewear model requires fewer personnel (no active collecting or washing by motion picture exhibitors) and reduces motion picture exhibitors' loss from theft and breakage.

        Our primary competitors in 3D visual display technologies include consumer electronics companies who are developing 3D visual display devices, including LG and active 3D eyewear manufacturers including Xpand. While the 3D consumer electronics industry is new and rapidly developing, we must compete with companies that enjoy competitive advantages in the consumer electronics industry.

        We believe that the principal competitive factors include some or all of the following:

•

quality and reliability of technologies;

•

technology performance, flexibility and range of application;

•

timeliness and relevance of new product introductions;

•

relationships with key participants in the motion picture and consumer electronics industries;

•

inclusion in explicit or de facto industry standards;

•

brand recognition and reputation;

•

availability of 3D compatible, high quality content; and

•

price.

        We believe we compete favorably with respect to many of these factors.

Intellectual property

        We have a substantial base of intellectual property assets, including patents, trademarks, copyrights, trade secrets and know-how.

        We have multiple patents covering unique aspects and improvements for many of our technologies. As of March 31, 2013, we had over 241 patent families comprising approximately 191 individual issued patents and approximately 369 pending patent applications in approximately 18 jurisdictions worldwide. Our issued patents are scheduled to expire at various times between May 2013 and January 2038. Of these, two patents are scheduled to expire in 2013, five patents are scheduled to expire in 2014, and nine patents are scheduled to expire in 2015. We believe the expiration of these patents will not adversely affect our business. Our patents are used in the areas of algorithms, autostereo, eyewear, projection, format, direct view, retarder stack filters, polarization switches, eyewear protection, color switching and other areas. We currently derive our license revenue principally from our RealD Cinema Systems. Patents relating to our RealD Cinema Systems generally expire between 2013 and 2038. We pursue a general practice of filing patent applications for our technology in the United States and outside of the United States where our licensees manufacture, distribute or sell licensed products and where our competitors manufacture, distribute or sell competing products. We actively pursue new applications to expand our patent portfolio to address new technology innovations. We also from time to time acquire intellectual property through acquisition, such as our purchase of a portfolio of 2D-3D conversion patents from DDMH, and our acquisitions of Stereographics and ColorLink.

        We have approximately 67 trademark and service mark registrations and pending applications worldwide for a variety of word marks, logos and slogans. Our registered and common law trademarks are an integral part of our licensing program and licensees typically elect to place our trademarks on

17

their products to inform consumers that their products incorporate our technology and meet our quality specifications.

Employees

        As of March 31, 2013, we had 163 employees located in the United States, Canada, the United Kingdom, Japan, Hong Kong, Taiwan, China and Russia. Approximately 36 are engaged in research and development, approximately 38 are in operations, and approximately 89 are in sales and general and administrative functions. None of our employees are represented by a labor union, and we consider our employee relations to be good.

Item 1A.    Risk Factors

The following risk factors and other information included in this Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission should be carefully considered. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we presently deem less significant may also impair our business, results of operations, financial condition and/or liquidity. If any of these events or the following risks actually occur, our business, operating results and financial condition could be materially adversely affected, and you could lose all or part of your investment.

Risks relating to our business

         If motion pictures that can be viewed with RealD Cinema Systems are not made or are not commercially successful, our revenue will decline.

        Almost all of our revenue is currently dependent upon both the number of 3D motion pictures released and the commercial success of those 3D motion pictures. Although we have produced alternative content in 3D, such as the production of Carmen in 3D with London's Royal Opera House, we are not actively developing 3D motion pictures or our own 3D content and therefore, we rely on motion picture studios producing and releasing 3D motion pictures compatible with our RealD Cinema Systems. There is no guarantee an increasing number of 3D motion pictures will be released or that motion picture studios will continue to produce 3D motion pictures at all. Motion picture studios may refrain from producing and releasing 3D motion pictures for any number of reasons, including their lack of commercial success, consumer preferences, the lower-cost to produce 2D motion pictures or the availability of other entertainment options. The commercial success of a 3D motion picture depends on a number of factors that are outside of our control, including whether it achieves critical acclaim, timing of the release, cost, marketing efforts and promotional support for the release. In the past, consumer interest in 3D motion pictures was episodic and motion picture studios tended to use 3D motion pictures as a gimmick rather than as an artistic tool to enhance the viewing experience. If consumers' recent renewed interest in the 3D viewing experience fails to grow or, as in recent periods, domestic consumer preferences trend towards viewing motion pictures in 2D rather than 3D, box office performance may suffer and motion picture studios may reduce the number of 3D motion pictures they produce. Poor box office performance of 3D motion pictures, disruption or reduction in 3D motion picture production or conversion of two-dimensional motion pictures into 3D motion pictures, changes in release schedules, cancellations of motion picture releases in 3D versions, a reduction in marketing efforts for 3D motion pictures by motion picture studios or a lack of consumer demand for 3D motion pictures could result in lower 3D motion picture attendance, which would substantially reduce our revenue, which declined in fiscal 2013 compared to fiscal year 2012. Moreover, films can be subject to delays in production or changes in release schedule, and the slippage of a film's release date from one accounting period to another could adversely affect our financial condition, results of operations and business.

18

         If motion picture exhibitors do not continue to use our RealD Cinema Systems or experience financial difficulties, our growth and results of operations could be adversely affected.

        Our primary licensees in the motion picture industry are motion picture exhibitors. Our license agreements with motion picture exhibitors do not obligate these licensees to deploy a specific number of our RealD Cinema Systems. We cannot predict whether any of our existing motion picture exhibitor licensees will continue to perform under their license agreements with us, whether they will renew their license agreements with us at the end of their term or whether we or any of our existing motion picture exhibitor licensees may now or in the future be in breach of those agreements. If motion picture exhibitors reduce or eliminate the number of 3D motion pictures that are exhibited in theaters, then motion picture studios may not produce and release 3D motion pictures and our revenue could be materially and adversely affected.

        In addition, license revenue from AMC, Cinemark and Regal together comprised approximately 22% of our gross license revenue in the year ended March 31, 2013, 24% in the year ended March 23, 2012 and 23% in the year ended March 25, 2011. Any inability or failure by motion picture exhibitors to pay us amounts due in a timely fashion or at all could substantially reduce our cash flow and could materially and adversely impact our financial condition and results of operations.

         A deterioration in our relationships with the major motion picture studios could adversely affect our business and results of operations.

        The six major motion picture studios accounted for approximately 76% of domestic box office revenue and all 10 of the top 10 grossing 3D motion pictures in calendar year 2012. Such 3D motion pictures are also released internationally. In addition, for our domestic operations, these major motion picture studios pay us a per use fee for our RealD eyewear. To the extent that our relationship with any of these major motion picture studios deteriorates or any of these studios stop making motion pictures that can be viewed at RealD-enabled theater screens, refuse to co-brand with us, stop using or paying for the use of or reduce the amounts paid for our RealD eyewear in domestic markets, our costs could increase and our revenue could decline, which would adversely affect our business and results of operations. We understand that at least one motion picture studio is seeking a change to the 3D eyewear business model in North America to resemble the international model. While we support multiple business models for our RealD eyewear around the world, the uncertainty and any potential dispute with a motion picture studio over the domestic eyewear business model could adversely affect our results of operations, financial condition, business and prospects.

         If motion picture exhibitors do not continue converting analog theaters to digital or the pace of conversions slows, our future prospects could be limited and our business could be adversely affected.

        Our RealD Cinema Systems only work in theaters equipped with digital cinema projection systems, which enable 3D motion pictures to be delivered, stored and projected electronically, and our systems are not compatible with analog motion picture projectors. Motion picture exhibitors have been converting projectors from analog to digital cinema over the last several years, giving us the opportunity to deploy our RealD Cinema Systems. After motion picture exhibitors convert their projectors to digital cinema, they must install a silver screen and our RealD Cinema System in order to display motion pictures in RealD 3D. The conversion by motion picture exhibitors of their projectors and screens from analog to digital cinema requires significant expense. As of December 31, 2012, approximately 85% of domestic theater screens had converted to digital and approximately 60% of the international theater screens had been converted. If the market for digital cinema develops more slowly than expected, or if the motion picture exhibitors we have agreements with delay or abandon the conversion of their theaters from analog theaters to digital, our ability to grow our revenue and our business could be adversely affected. While DCIP and Cinedigm financing provided funding for the digital conversion of domestic theater screens operated by many of our licensees, there has not been a similar effort to

19

organize digital conversion in certain geographies outside North America. If the pace of digital conversion outside of the United States does not follow that which occurred inside the United States, our revenue may not grow or may decline, and our business could be adversely affected.

         If the deployment of our RealD Cinema Systems is delayed or not realized, our future prospects could be limited and our business could be adversely affected.

        We have license agreements with motion picture exhibitors that give us the right, subject to certain exceptions, to deploy our RealD Cinema Systems if a location under contract is already equipped with our systems. Under the terms of these agreements, the motion picture exhibitor licensees may choose to install additional 3D digital projector systems. However, our license agreements do not obligate our licensees to deploy a specific number of our RealD Cinema Systems. Numerous factors beyond our control could influence when and whether our RealD Cinema Systems will be deployed, including motion picture exhibitors' ability to fund capital expenditures, or their decision to delay or abandon the conversion of their theaters to digital projection or reduce the number of 3D motion pictures exhibited in their theaters, and our ability to secure adequate supplies of components comprising our RealD Cinema System in any given period. If motion picture exhibitors delay, postpone or decide not to deploy RealD Cinema Systems at the number of screens they have announced, or we are unable to deploy our RealD Cinema Systems in a timely manner, our future prospects could be limited and our business could be adversely affected.

         We have a history of net losses and may suffer losses in the future.

        While we were profitable in the fiscal year ended March 23, 2012, we incurred net losses in our fiscal years ended 2013, 2011, 2010 and 2009. Our revenues declined in our fiscal year 2013 as compared to the prior year. If we cannot return to sustainable revenue growth and profitability, our financial condition will deteriorate, and we may be unable to achieve our business objectives.

         Any inability to protect our intellectual property rights could reduce the value of our 3D technologies and brand, which could adversely affect our financial condition, results of operations and business.

        Our business is dependent upon our patents, trademarks, trade secrets, copyrights and other intellectual property rights. Effective intellectual property rights protection, however, may not be available under the laws of every country in which we and our licensees operate, such as China. For example, we believe competitors may be introducing large-screen 3D cinema screen formats that potentially infringe on our intellectual property rights in China to unfairly compete against us. The efforts we have taken to protect our proprietary rights may not be sufficient or effective. Any significant impairment of our intellectual property rights could harm our business or our ability to compete. In addition, protecting our intellectual property rights is costly and time consuming. It may not be practicable or cost effective for us to fully protect our intellectual property rights in some countries or jurisdictions. If we are unable to successfully identify and stop unauthorized use of our intellectual property, we could lose potential revenue and experience increased operational and enforcement costs, which could adversely affect our financial condition, results of operations and business.

        It is possible that some of our 3D technologies may not be protectable by patents. In addition, given the costs of obtaining patent protection, we may choose not to protect particular innovations that later turn out to be important. Even where we do have patent protection, the scope of such protection may be insufficient to prevent third parties from designing around our particular patent claims or otherwise avoiding infringement. Furthermore, there is always the possibility that an issued patent may later be found to be invalid or unenforceable, or a competitor may attempt to engineer around our issued patent. Additionally, patents only offer a limited term of protection. Moreover, the intellectual property we maintain as trade secrets could be compromised by third parties, or intentionally or

20

accidentally by our employees, which would cause us to lose the competitive advantage resulting from them.

         Any failure to maintain the security of information relating to our customers, employees, licensees and suppliers, whether as a result of cybersecurity attacks or otherwise, could expose us to litigation, government enforcement actions and costly response measures, and could disrupt our operations and harm our reputation.

        In connection with the sales and marketing of our products and our entering into licensing arrangements with motion picture exhibitors, we may from time to time transmit confidential information. We also have access to, collect or maintain private or confidential information regarding our customers, employees, licensees and suppliers, as well as our business. We have procedures in place to safeguard such data and information and as a result of those procedures, to our knowledge, computer hackers have been unable to gain access to the information stored in our information systems. However, cyber-attacks are rapidly evolving and becoming increasingly sophisticated. It is possible that computer hackers and others might compromise our security measures or those that we do business with in the future and obtain the personal information of our customers, employees, licensees and suppliers or our business information. A security breach of any kind could expose us to risks of data loss, litigation, government enforcement actions and costly response measures, and could seriously disrupt our operations. Any resulting negative publicity could significantly harm our reputation which could cause us to lose market share and have an adverse effect on our financial results.

         We may in the future be subject to intellectual property rights disputes that are costly to defend, could require us to pay damages and could limit our ability to use particular 3D technologies in the future.

        We may be exposed to, or threatened with, future litigation or any other disputes by other parties alleging that our 3D technologies infringe their intellectual property rights. Any intellectual property disputes, regardless of their merit, could be time consuming, expensive to litigate or settle and could divert management resources and attention. An adverse determination in any intellectual property dispute could require us to pay damages and/or stop using our 3D technologies, trademarks, copyrighted works and other material found to be in violation of another party's rights and could prevent us from licensing our 3D technologies to others. In order to avoid these restrictions and resolve the dispute, we may have to pay for a license. This license may not be available on reasonable terms, could require us to pay significant license fees and may significantly increase our operating expenses. A license also may not be available to us at all. As a result, we may be required to use and/or develop non-infringing alternatives, which could require significant effort and expense, or which may not be possible. If we cannot obtain a license or develop alternatives for any infringing aspects of our business, we may be forced to limit our 3D technologies and may be unable to compete effectively. In certain instances, we have contractually agreed to provide indemnification to licensees relating to our intellectual property. This may require us to defend or hold harmless motion picture exhibitors, consumer electronics manufacturers or other licensees. We have from time to time corresponded with one or more third parties regarding patent enforcement issues and in-bound and out-bound patent licensing opportunities. In addition, from time to time we may be engaged in disputes regarding the licensing of our intellectual property rights, including matters related to our license fee rates and other terms of our licensing arrangements. These types of disputes can be asserted by our licensees or prospective licensees or by other third parties as part of negotiations with us or in private actions seeking monetary damages or injunctive relief or in regulatory actions. Requests for monetary and injunctive remedies asserted in claims like these could be material and could have a significant impact on our business. Any disputes with our licensees, potential licensees or other third parties could materially and adversely affect our business, results of operations and prospects.

21

         Our RealD Cinema Systems and other technologies are generally designed for use with third-party technologies and hardware, and if we are unable to maintain the ability of our RealD Cinema Systems and other technologies to work with these third-party technologies and hardware, our business and operating results could be adversely affected.

        Our RealD Cinema Systems and other technologies are generally designed for use with third-party technologies and hardware, such as Christie projectors, Doremi servers, Harkness Hall screens and Sony Electronics 4K SXRD® digital cinema projectors. Third-party technologies and hardware may be modified, re-engineered or removed altogether from the marketplace. In addition, third-party technologies used to interact with our RealD Cinema Systems, RealD Format and other 3D technologies can change without prior notice to us, which could result in increased costs or our inability to provide our 3D technologies to our licensees. If we are unable to maintain the ability of our RealD Cinema Systems, RealD Format and other 3D technologies to work with these third-party technologies and hardware, our business and operating results could be adversely affected.

         If we are unable to maintain our brand and reputation for providing high quality 3D technologies, our business, results of operations and prospects could be materially harmed.

        Our business, results of operations and prospects depend, in part, on maintaining and strengthening our brand and reputation for providing high quality 3D technologies. If problems with our 3D technologies cause motion picture exhibitors, consumer electronics manufacturers or other licensees to experience operational disruption or failure or delays in the delivery of their products and services to their customers, our brand and reputation could be diminished. Maintaining and strengthening our brand and reputation may be particularly challenging as we enter new businesses in which we have limited experience, such as 3D consumer electronics. If we fail to promote and maintain our brand and reputation successfully, our business, results of operations and prospects could be materially harmed.

         Competition from other providers of 3D technologies to the motion picture industry could adversely affect our business.

        The motion picture industry is highly competitive, particularly among providers of 3D technologies. Our primary competitors include Dolby, Sony, IMAX, MasterImage and XpanD, with IMAX increasing market share in recent periods. In addition, other companies, including motion picture exhibitors and studios and smaller competitors in international markets, may develop their own 3D technologies in the future. Consumers may also perceive the quality of 3D technologies delivered by some of our competitors to be equivalent or superior to our 3D technologies. In addition, some of our current or future competitors may enjoy competitive advantages, such as greater financial, technical, marketing and other resources than we do, greater market share and name recognition than we have or may have more experience or advantages in the businesses in which we compete that will allow them to offer lower prices or higher quality technologies, products or services. If we do not successfully compete with these providers of 3D technologies, we could lose market share and our business could be adversely affected. In addition, competition could force us to decrease prices and cause our margins to decline, which could adversely affect our business. Pricing pressures in both domestic and international motion picture exhibitor markets continue, and no assurance can be given that our margins in future periods will increase.

22

         We face potential competition from companies with greater brand recognition and resources in the consumer electronics industry.

        3D consumer electronics technologies are new and rapidly developing, and we must compete with companies that enjoy competitive advantages, including:

•

more developed distribution channels and deeper relationships with consumer electronics manufacturers;

•

a more extensive customer base;

•

technologies that may be better suited for 3D consumer electronics products;

•

broader technology, product and service offerings; and

•

greater resources for competitive activities, such as research and development, strategic acquisitions, alliances, joint ventures, sales and marketing, and lobbying for changes in industry and government standards.

        As a result, these current and potential competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, products, technologies or standards in 3D consumer electronics.

        We also face competition where existing licensees relying on our RealD Cinema Systems in the motion picture industry may become current or potential competitors in 3D consumer electronics, or vice versa. For example, Sony Pictures Entertainment, Inc., or Sony Pictures, is a major motion picture studio, but certain of its affiliates also design, manufacture and market consumer electronics products and components and are marketing 3D consumer electronics. To the extent that our other licensees choose to utilize competing 3D technologies that they have developed or in which they have an interest, rather than use our 3D technologies, our growth prospects could be adversely affected.

         The introduction of new 3D technologies and changes in the way that our competitors operate could harm our business. If we fail to keep up with rapidly changing 3D technologies or the growth of new and existing opportunities, our 3D technologies could become less competitive or obsolete.

        Due to technological advances and changing consumer tastes, numerous companies have developed, and are expected to continue to develop, new 3D technologies that may compete directly with or render our 3D technologies less competitive or obsolete. We believe that original equipment manufacturers may be working to develop laser-based projection technologies, which may compete with, be incompatible with or render our RealD Cinema Systems obsolete. Competitors may develop alternative 3D technologies that are more attractive to consumers, content producers and distributors, motion picture exhibitors, consumer electronics manufacturers and others, or more cost effective than our technologies, and compete with or render our 3D technologies less competitive or obsolete. As a result of this competition, we could lose market share, which could harm our business and operating results. We expect to continue to expend considerable resources on research and development in response to changes in the motion picture and consumer electronics industries, even in years like 2013 where our revenues declined, and our profitability may suffer adversely impacting our financial condition. However, we may not be able to develop and effectively market new 3D technologies that adequately or competitively address the needs of these changing industries, which could have a material and adverse effect on our business, results of operations and prospects.

         If our 3D technologies fail to be widely adopted by or are not compatible with the needs of our licensees, our business prospects could be limited and our operating results could be adversely affected.

        Our motion picture and consumer electronics licensees depend upon our 3D technologies being compatible with a wide variety of motion picture and consumer electronics systems, products and

23

infrastructure. We make significant efforts to design our 3D technologies to address capability, quality and cost considerations so that they either meet or, where possible, exceed the needs of our licensees in the motion picture and consumer electronics industries. To have our 3D technologies widely adopted in the motion picture and consumer electronics industries, we must convince a broad spectrum of professional organizations worldwide, as well as motion picture studios and exhibitors and consumer electronics manufacturers who are members of such organizations, to adopt them and to ensure that our 3D technologies are compatible with their systems, products and infrastructure.

        If our 3D technologies are not widely adopted or retained or if we fail to conform our 3D technologies to the expectations of, or standards set by, industry participants, they may not be compatible with other products and our business, operating results and prospects could be adversely affected. We expect that meeting and maintaining the needs of our licensees for compatibility with them will be significant to our business in the future. In addition, the market for broadcast technologies has traditionally been heavily regulated by governments or other regulatory bodies, and we expect this to continue to be the case in the future. If our 3D technologies are not compatible with the broadcasting infrastructure or governmental or regulatory requirements in particular geographic areas, our ability to compete in these markets could be adversely affected.

         Other forms of entertainment may be more attractive to consumers than those using our 3D technologies, which could harm our growth and operating results.

        We face competition for consumer attention from other forms of entertainment that may drive down motion picture box office, license revenue from motion picture exhibitors, and license revenue from 3D-enabled consumer electronic devices. We compete with a number of alternative motion picture distribution channels, such as cable, satellite, broadcast, packaged media and the Internet. There are also other forms of entertainment competing for consumers' leisure time and disposable income such as concerts, amusement parks and sporting events. A significant increase in the popularity of these alternative motion picture channels and competing forms of entertainment could reduce the demand for theatrical exhibition of 3D motion pictures, including those viewed with our RealD Cinema Systems, or the use of 3D-enabled consumer electronics devices, any of which would have an adverse effect on our business and operating results.

         Our limited operating history in 3D consumer electronics and the uncertainty of consumer interest in 3D consumer electronics products presents risk to our ability to achieve success in this area.

        Our 3D visual display technologies have only recently been made available to certain consumer electronics manufacturers and electronics component suppliers to enable 3D viewing on high definition televisions, laptops and other displays. These agreements are not exclusive and to date, we have not generated revenue of any material significance from these arrangements. 3D consumer electronics technologies are rapidly developing, as manufacturers are working to set standards and content producers and distributors are working on increasing the availability of new 3D content. However, the demand and income potential for our 3D visual display technologies is unproven. In addition, because 3D consumer electronics technologies continue to quickly evolve, we have limited insight into trends that may emerge and affect our business, including whether consumers will widely adopt 3D-enabled visual display devices at all. In addition, our competitorsmay offer consumers superior technology or lower prices which may reduce the demand for visual display devices using our 3D technologies. As a result, our future prospects could be adversely affected if we make errors in predicting and reacting to relevant business trends and consumer demand, or if consumer electronics manufacturers choose not to use our 3D technologies in their visual display devices.

24

         If consumer electronics manufacturers limit, delay or cease their use of our 3D technologies in high definition televisions, laptops and other displays or such products are not accepted by consumers, our potential growth will be significantly reduced.

        We are dependent on consumer electronics manufacturers to use our RealD Display, active and passive eyewear and RealD Format technologies with their high definition televisions, laptops, tablets, smart phones and other displays, and for content distributors to deliver 3D content via cable, satellite, broadcast, packaged media and the Internet. While we have entered into agreements with some consumer electronics manufacturers regarding the use of our 3D technologies in various consumer electronics products, these agreements are not exclusive, and we can give no assurances that these consumer electronics manufacturers will utilize our 3D technologies or that there will be sufficient consumer demand for 3D electronics products. In addition, since 3D consumer electronics technologies are still emerging, it is unclear if consumers will widely adopt viewing 3D content in the home and elsewhere as an attractive alternative to the 2D viewing experience. After having jointly announced with Samsung a license agreement in May 2011 which we had expected to lead to the incorporation of our RDZ™ 3D display technology into LCD panels manufactured by Samsung, Samsung's initiative to manufacture panels under the license agreement with us is no longer being pursued. The cost or lack of consumer interest in 3D technologies may cause consumer electronics manufacturers to limit, delay or cease their use of our 3D technologies. In addition, our competitors in 3D consumer electronics technologies may offer consumers superior technology or lower prices which may reduce the demand for our RealD 3D-enabled consumer electronic devices. As a result, our future prospects could be adversely affected if consumer electronics manufacturers choose not to use our 3D technologies in their devices.

         Acquisition activities could result in operating difficulties, dilution to our stockholders and other harmful consequences.

        We have built our business, in part, through acquisitions of intellectual property and other assets, including Stereographics Corporation, a California ("Stereographics") in 2005 and ColorLink Inc., a Delaware corporation ("ColorLink") in 2007. We intend to selectively pursue strategic acquisitions in the future. Future acquisitions could divert management's time and focus from operating our business. In addition, integrating an acquired company, business or technology is risky and may result in unforeseen operating difficulties and expenditures. Foreign acquisitions also involve unique risks related to integration of operations across different cultures and languages, currency risks and the particular economic, political and regulatory risks associated with specific countries.

        We may not accurately assess the value or prospects of acquisition candidates, and the anticipated benefits from our future acquisitions may not materialize. In addition, future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, including our common stock, the incurrence of additional debt, contingent liabilities or amortization expenses, or write-offs of goodwill, any of which could materially harm our financial condition.

         Our growth may place a strain on our resources, and we may continue to borrow money as our business grows.

        We have experienced significant growth since we acquired ColorLink in 2007. The growth that we have experienced in the past, as well as any further growth that we experience, may place a significant strain on our resources and increase demands on our management, our information and reporting systems and our internal controls over financial reporting. Upon becoming a public company in July 2010, we began incurring additional general and administrative expenses to comply with the U.S. Securities and Exchange Commission, or SEC, reporting requirements, the listing standards of the New York Stock Exchange, or NYSE, and provisions of the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and will continue to incur additional

25

research and development expenses. If we are unable to manage our growth effectively while maintaining appropriate internal controls, we may experience operating inefficiencies that could increase our costs or otherwise materially and adversely affect our financial position. In addition, as our business grows, we may borrow money to fund various growth initiatives, including accelerated research and product development, acquisitions, capital expenditures or stock repurchases which will result in debt service payment obligations and will require us to comply with certain financial and operating covenants. For example, in April 2012, we entered into a secured credit facility agreement with City National Bank, or City National, to increase our borrowing capacity to an aggregate of $125 million. We may draw on our secured credit facility to fund growth initiatives and repurchase our common stock. In the event we breach any of the covenants under our credit agreements or are unable to pay our obligations to City National or other lenders as they become due, we may become in default under our credit agreements which will have a material and adverse effect on our business, results of operations and financial condition.

         Our level of indebtedness reduces our financial flexibility and could impede our ability to operate.

        In April 2012, we entered into a secured credit facility agreement with City National which provides the Company with:

•

a revolving credit facility (including a letter of credit sub-facility) in a maximum amount not to exceed $75 million (the "Revolving Facility"); and

•

a delayed-draw term loan facility in a maximum amount not to exceed $50 million (the "Term Loan Facility").

        The Revolving Facility and the Term Loan Facility replaced pre-existing revolving and term loan facilities provided under our pre-existing credit and security agreement with City National, which had been most recently amended on December 6, 2011.

        Our obligations under our secured credit facility are secured by a first priority security interest in substantially all of our tangible and intangible assets and are fully and unconditionally guaranteed by our subsidiaries, ColorLink and Stereographics.

        We intend to borrow additional amounts under our secured credit facility to fund various growth initiatives, including accelerated research and product development, acquisitions, capital expenditures and stock repurchases. We expect that we will maintain a significant amount of indebtedness on an ongoing basis. Our Revolving Facility matures on April 17, 2015, and the Term Loan Facility matures the last day of the twelfth (12^th) full fiscal quarter after the earlier of October 18, 2013 or the date that aggregate term loan commitments have been drawn in full, which maturity dates may, in each case, be accelerated in certain circumstances.

        There is no assurance that we will be able to refinance our outstanding indebtedness, or if refinancing is available, that it can be obtained on terms we can afford. The capital markets have recently experienced a high degree of volatility. To the extent that volatility in the capital markets continues, our access to capital may become limited and its borrowing costs may materially increase.

        Our credit facilities require us to pay a variable rate of interest, which will increase or decrease based on variations in certain financial indexes, and fluctuations in interest rates can significantly decrease our profits. We do not have any hedge or similar contracts that would protect us against changes in interest rates.

26

        The amount of our indebtedness could have important consequences, including the following:

•

requiring us to dedicate a substantial portion of our cash flow from operations to make payments on our debt, thereby reducing funds available for operations, future business opportunities and other purposes;

•

limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

•

making it more difficult for us to satisfy our debt obligations, and any failure to comply with such obligations, including financial and other restrictive covenants, could result in an event of default under the agreements governing such indebtedness, which could lead to, among other things, an acceleration of our indebtedness or foreclosure on the assets securing our indebtedness, which could have a material adverse effect on our business or financial condition;

•

limiting our ability to borrow additional funds, or to sell assets to raise funds, if needed, for working capital, capital expenditures, acquisitions or other purposes; and

•

increasing our vulnerability to general adverse economic and industry conditions, including changes in interest rates.

        Our indebtedness was $47.5 million as of March 31, 2013. We may not generate sufficient cash flow from operations to service and repay our debt and related obligations and have sufficient funds left over to achieve or sustain profitability in our operations, meet our working capital and capital expenditure needs or compete successfully in our industry, particularly if we access our increased Revolving Facility and Term Loan Facility.

         Our credit facilities impose, and the terms of any future indebtedness may impose, significant operating, financial and other restrictions on us and our subsidiaries.

        Restrictions imposed by our credit facilities will limit or prohibit, among other things, our ability to:

•

incur additional debt

•

make certain investments or acquisitions

•

enter into certain merger and consolidation transactions, and

•

sell our assets other than in the ordinary course of business.

        We are also required to maintain compliance with certain financial covenants, including a minimum fixed charge coverage ratio and a maximum leverage ratio. If we fail to comply with any of the covenants or if any other event of default, as defined in our credit facilities, should occur, the lenders could elect to prevent us from borrowing and declare the indebtedness to be immediately due and payable.

        These restrictions could adversely affect our ability to finance our future operations or capital needs and pursue available business opportunities. A breach of any of these restrictions, including breach of financial covenants, could result in a default in respect of the related indebtedness. If a default occurs, the relevant lenders could elect to declare the indebtedness, together with accrued interest and fees, to be immediately due and payable and proceed against any collateral securing that indebtedness, which will constitute substantially all of our assets.

         We may incur future asset impairment charges.

        An asset impairment charge may result from the occurrence of unexpected adverse events or management decisions that impact our estimates of expected cash flows generated from our long-lived

27

assets. We review our long-lived assets for impairment, when events or changes in circumstances indicate the carrying value of an asset may not be recoverable. We may be required to recognize asset impairment charges in the future as a result of reductions in demand for specific technologies, a weak economic environment, challenging market conditions, events related to particular customers or asset type, or as a result of asset or portfolio sale decisions by management.

         We face risks from doing business internationally that could harm our business, financial condition and results of operations.

        We are dependent on international business for a significant portion of our total revenue. International gross revenue accounted for approximately 50% in fiscal 2013, 49% in fiscal 2012 and 55% in fiscal 2011. We expect that our international business will continue to represent a significant portion of our total revenue for the foreseeable future. This future revenue will depend to a large extent on the continued use and expansion of our 3D technologies in the motion picture and consumer electronics industries worldwide. As a result, our business is subject to certain risks inherent in international business operations, many of which are beyond our control. These risks include:

•

competitive and pricing pressures that vary from market-to-market and place-to-place;

•

fluctuating foreign exchange rates and systems;

•

laws and policies affecting trade, investment and taxes, including laws and policies relating to customs, duties, the repatriation of funds and withholding taxes and changes in these laws and our compliance with the foregoing;

•

changes in local regulatory requirements, including restrictions on content;

•

differing cultural tastes and attitudes;

•

differing degrees of protection for intellectual property;

•

the need to adapt our business model to local requirements;

•

the instability of foreign economies and governments; and

•

political instability, natural disaster, war or acts of terrorism.

        Events or developments related to these and other risks associated with our international business operations could adversely affect our revenue from such operations, which could have a material and adverse effect on our business, financial condition and results of operations.

         Our operating results may fluctuate substantially from quarter to quarter, which may be different from analysts' expectations and adversely affect our stock price.

        Our operating results may fluctuate from quarter to quarter. Factors that have affected our operating results in the past, and are likely to affect our operating results in the future, include, among other things:

•

the timing of when a 3D motion picture is released which tends to be based on specific consumer entertainment dynamics, which results in seasonal patterns, with the largest number of motion pictures being released in summer and early winter;

•

the rate of installations of new RealD Cinema Systems, which we expect to decrease with the passage of time;

•

the timing of capital expenditures and expenses, including depreciation expense of our RealD Cinema Systems deployed at a motion picture exhibitor's premises (we expect capital expenditures to decrease, and depreciation expense to increase, as our RealD Cinema Systems

28

business matures), digital projector depreciation expenses, RealD eyewear costs (including shipping, handling and recycling costs), field service and support costs, and occupancy costs, which may increase significantly, even in quarters when we do not experience a similar growth in revenue;

•

the timing and accuracy of license fee reports which often include positive or negative corrective or retroactive license fees that cover extended periods of time; and

•

competitive and pricing pressures that vary from market-to-market and place-to-place.

        In addition, variances in our operating results from analysts' expectations could adversely affect our stock price. See also "Part II, Item 7: Management's discussion and analysis of financial condition and results of operations—Seasonality and Quarterly Performance."

         Our RealD eyewear may, in the future, be regulated by the Food and Drug Administration, or FDA, or by other state or foreign governmental or regulatory agencies, which could increase our costs and materially and adversely impact our profitability.

        Currently, polarized 3D eyewear, including our RealD eyewear, is not regulated by the FDA, or by state or foreign governmental and regulatory agencies. However, certain eyewear, such as non-prescription reading glasses and sunglasses, are considered to be medical devices by the FDA and are subject to regulations imposed by the FDA and various state and foreign governmental and regulatory agencies. With the rising popularity of polarized 3D eyewear, there has been an increasing level of public scrutiny examining its potential health risks. Polarized 3D eyewear, including our RealD eyewear, may at some point be subject to federal, state or foreign regulations that could potentially restrict how our RealD eyewear is produced, used or marketed, and the cost of complying with those regulations may adversely affect our profitability.

         If 3D viewing with active or passive eyewear is found to cause health risks or consumers believe that it does, demand for the 3D viewing experience may decrease or we may become subject to liability, any of which could adversely affect our results of operations, financial condition, business and prospects.

        Research conducted by institutions unrelated to us has suggested that 3D viewing with active or passive eyewear may cause vision fatigue, eye strain, discomfort, headaches, motion sickness, dizziness, nausea, epileptic seizures, strokes, disorientation, perceptual after-effects, decreased postural stability or other health risks in some consumers. If these potential health risks are substantiated or consumers believe in their validity, demand for the 3D viewing experience in the theater, the home and elsewhere may decline. As a result, major motion picture studios and other content producers and distributors may refrain from developing 3D content, motion picture exhibitors may reduce the number of 3D-enabled screens (including RealD-enabled screens) they currently deploy or plan to deploy, or they may reduce the number of 3D motion pictures exhibited in their theaters, which would adversely affect our results of operations, financial condition and prospects. A decline in consumer demand may also lead consumer electronics manufacturers and content distributors to reduce or abandon the production of 3D products, which could adversely affect our prospects and financial condition.

        In addition, if health risks associated with our RealD eyewear materialize, we may become subject to governmental regulation or product liability claims, including claims for personal injury. Successful assertion against us of one or a series of large claims could materially harm our business. Also, if our RealD eyewear is found to be defective, we may be required to recall it, which may result in substantial expense and adverse publicity that could adversely impact our sales, operating results and reputation. Potential product liability claims may exceed the amount of our insurance coverage or may be excluded under the terms of the policy, which could adversely affect our financial condition. In addition, we may also be required to pay higher premiums and accept higher deductibles in order to secure adequate insurance coverage in the future, which could materially and adversely affect our results of operations,

29

financial condition and business. Even meritless product liability claims could be expensive to resolve and may divert our management's attention.

         Our agreements with motion picture studios domestically and motion picture exhibitors internationally require us to manage the supply chain of our RealD eyewear, and any interruption to the supply chain for our RealD eyewear components could adversely affect our results of operations, financial condition, business and prospects.

        Our RealD eyewear is an integral part of our RealD Cinema Systems. We have entered into non-exclusive agreements with several manufacturers to produce RealD eyewear. We manage manufacturing, distribution and recycling of RealD eyewear for motion picture studios and exhibitors worldwide. Domestically, we generally provide our RealD eyewear free of charge to motion picture exhibitors and then receive a fee from the motion picture studios for the usage of that RealD eyewear by the motion picture exhibitors' customers. Most international motion picture exhibitors and some domestic motion picture exhibitors purchase RealD eyewear directly from us and sell them to consumers as part of their admission or as a concession item. Any interruption in the supply of RealD eyewear from manufacturers, increase in shipping cost, logistics or recycling interruption, other disruption to our global supply chain or competitive pricing pressures could adversely affect our results of operations, financial condition, business and prospects. For example, in connection with recent major 3D motion picture releases and increased consumer demand, we have in the past exhausted our inventory of RealD eyewear and incurred increased shipping costs to accelerate delivery.

         Our RealD 3D eyewear business model in North America relies on fees from motion picture studios for the usage of RealD eyewear by motion picture exhibitors' customers, the uncertainty and any potential dispute between motion picture studios and exhibitors could adversely affect our results of operations, financial condition, business and prospects.

        Our RealD eyewear is an integral part of our RealD Cinema Systems. Domestically, we provide our RealD eyewear free of charge to motion picture exhibitors and then receive a fee from the motion picture studios for the usage of that RealD eyewear by the motion picture exhibitors' customers. Most international motion picture exhibitors purchase RealD eyewear directly from us and sell them to customers as part of their admission or as a concession. We understand that at least one major motion picture studio is seeking a change to the 3D eyewear business model in North America to resemble the international model. While we support multiple business models for our RealD eyewear around the world, the uncertainty and any potential dispute between motion picture studios and exhibitors over the domestic eyewear business model could adversely affect our results of operations, financial condition, business and prospects. In addition, we expect that profitability in our RealD eyewear business may not be sustainable, as motion picture studios with whom we do business seek to recover our cost savings and efficiencies in the form of reduced prices for eyewear.

         Economic conditions beyond our control could reduce consumer demand for our 3D technologies and, as a result, could materially and adversely affect our business, revenue and growth prospects.

        The global economic environment since late 2008 has been volatile and continues to pose risks. The economy could remain significantly challenged for an indeterminate period of time. Present economic conditions could lead to a decrease in discretionary consumer spending or consumer preference for lower-cost 2D motion pictures, resulting in lower motion picture box office revenue. In the event of declining box office revenue, motion picture studios may be less willing to release 3D motion pictures and motion picture exhibitors may be less willing to license our RealD Cinema Systems. Further, a decrease in discretionary consumer spending may adversely affect future demand for 3D consumer electronics products that may use our 3D technologies and consumer electronics

30

manufacturers may decide to limit, delay or cease their use of our 3D technologies, any of which could cause our business, revenue and growth prospects to suffer.

         The loss of members of our management or research and development teams could substantially disrupt our business operations.

        Our success depends to a significant degree upon the continued individual and collective contributions of our management and research and development teams. A limited number of individuals have primary responsibility for managing our business, including our relationships with motion picture studios and exhibitors and consumer electronics manufacturers and the research and development of our 3D technologies. The loss of any of these individuals, including Michael V. Lewis, our Chairman and Chief Executive Officer or our failure to attract and retain other qualified and experienced personnel on acceptable terms, could impair our ability to sustain and grow our business, and could substantially disrupt our business operations. In addition, because we operate in a highly competitive industry, our hiring of qualified executives, scientists, engineers or other personnel may cause us or those persons to be subject to lawsuits alleging misappropriation of trade secrets, improper solicitation of employees, breach of contract or other claims.

         Our ability to use our net operating loss carryforwards could be subject to additional limitation if our ownership has changed or will change by more than 50%, which could potentially result in increased future tax liability.

        While currently subject to a full valuation allowance for purposes of preparing our consolidated financial statements (see the discussion under the heading "Management's discussion and analysis of financial condition and results of operations—Critical accounting policies and estimates—Deferred tax asset valuation and tax exposures" in Part II, Item 7 of this Annual Report on Form 10-K), we intend to use our U.S. net operating loss carryforwards to reduce any future U.S. corporate income tax liability associated with our operations. Section 382 of the U.S. Internal Revenue Code of 1986, as amended, generally imposes an annual limitation on the amount of net operating loss carryforwards that may be used to offset taxable income when a corporation has undergone significant changes in stock ownership. The Company is performing a study to determine the extent of the limitation, if any. It is possible that our initial public offering, or IPO, either on a standalone basis or when combined with past or future transactions (including, but not limited to, significant increases during the applicable testing period in the percentage of our stock owned directly or constructively by (i) any stockholder who owns 5% or more of our stock or (ii) some or all of the group of stockholders who individually own less than 5% of our stock), will cause us to undergo one or more ownership changes. In that event, our ability to use our net operating loss carryforwards could be adversely affected. To the extent our use of net operating loss carryforwards is significantly limited under the rules of Section 382 (as a result of our IPO or otherwise), our income could be subject to U.S. corporate income tax earlier than it would if we were able to use net operating loss carryforwards, which could result in lower profits.

         Changes in accounting may affect the Company's reported earnings and operating income.

        U.S. GAAP and accompanying accounting pronouncements, implementation guidelines and interpretations for many aspects of the Company's business, such as revenue recognition, film accounting, accounting for pensions and other postretirement benefits, accounting for income taxes, and treatment of goodwill or long lived assets, are highly complex and involve many subjective judgments. Changes in these rules, their interpretation, management's estimates, or changes in the Company's products or business could significantly change its reported future earnings and operating income and could add significant volatility to those measures, without a comparable underlying change in cash flow from operations.

31

        Beginning in the first quarter of fiscal 2014 that ends on June 30, 2013, RealD intends to modify its definition of Adjusted EBITDA for financial reporting purposes to align with the Adjusted EBITDA definition under RealD's expanded credit facility. As a result, for future reporting periods, RealD will no longer add back sales and use tax and property tax to calculate Adjusted EBITDA for financial reporting purposes.

         We face risks in conducting business in China, Russia and other emerging economies.

        We believe that various trends will increase our exposure to the risks of conducting business in emerging economies. For example, Greater China and Russia are among the Company's largest and fastest growing market opportunities. As of March 31, 2013, our RealD Cinema Systems were deployed and operated in approximately 1,200 cinema screens in Greater China and Russia on a combined basis, with an additional approximately 1,400 screens under contract within these markets. We believe that our sales of products and services in China, Russia and other emerging economies will expand in the future to the extent that the use of digital technologies increases in these countries, including in movies and theaters, and as consumers there become more affluent. We face many risks associated with operating in these emerging economies, in large part due to limited recognition and enforcement of contractual and intellectual property rights. As a result, we may experience difficulties in enforcing our intellectual property rights in these emerging economies, where intellectual property rights are not as respected as they are in the U.S., Hong Kong, Japan and Europe. We believe that it is critical that we strengthen existing relationships and develop new relationships with entertainment industry participants worldwide to increase our ability to enforce our intellectual property and contractual rights without relying solely on the legal systems in the countries in which we operate. If we are unable to develop, maintain, and strengthen these relationships, our revenue from these countries could be adversely affected.

         We face risks associated with international trade and currency exchange.

        We maintain sales, marketing, and business operations in foreign countries. Consequently, we are exposed to fluctuations in exchange rates associated with the local currencies of our foreign business operations. While we may derive nearly all of our revenue from our foreign business operations in transactions denominated in U.S. dollars, a substantial portion of our costs from our foreign operations are denominated in the currency of that foreign location. Consequently, exchange rate fluctuations between the U.S. dollar and other currencies could have a material impact on our profitability.

Risks related to owning our common stock

         The price of our common stock may fluctuate significantly, and you could lose all or part of your investment.

        Shares of our common stock were sold in our IPO in July 2010 at a price of $16.00 per share, and, as of June 4, 2013, our common stock has subsequently traded as high as $35.60 and as low as $7.85. An active, liquid and orderly market for our common stock may not be sustained, which could depress the trading price of our common stock.

        Volatility in the market price of our common stock may prevent you from being able to sell your shares at or above the price you paid for your shares or at all. The market price of our common stock could fluctuate significantly for various reasons, which include:

•

our quarterly or annual earnings or those of our competitors;

•

the public's reaction to our press releases, our other public announcements and our filings with the SEC;

32

•

changes in earnings estimates or recommendations by research analysts who track our common stock or the stock of our competitors;

•

new laws or regulations or new interpretations of laws or regulations applicable to our business;

•

changes in accounting standards, policies, guidance, interpretations or principles;

•

changes in general conditions in the domestic and global economies or financial markets, including those resulting from war, incidents of terrorism or responses to such events;

•

litigation involving our company or investigations or audits by regulators into the operations of our company or our competitors;

•

strategic action by our competitors; and

•

sales of common stock by our directors, executive officers and significant stockholders.

        In addition, the stock market in general, and the market for technology and media companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may seriously affect the market price of our common stock, regardless of actual operating performance. In addition, in the past, following periods of volatility in the overall market and the market price of a particular company's securities, securities class action litigation has often been instituted against these companies. If litigation is instituted against us, it could result in substantial costs and a diversion of our management's attention and resources even if such litigation is without merit.

         Sales of outstanding shares of our common stock (or shares of our common stock issued upon exercise of stock options) into the market in the future could cause the market price of our stock to drop significantly, even if our business is doing well.

        As of March 31, 2013, we had 49,365,135 shares of common stock outstanding which are freely tradable, subject to prior registration or qualification for an exemption from registration, including, in the case of shares held by affiliates, compliance with the volume, manner of sale, notice and availability of public information provisions of Rule 144 under the Securities Act of 1933, as amended, or the Securities Act. Our co-founders and certain other pre-IPO stockholders also have registration rights which enable them to cause us to register for sale shares held by them in the public markets. If our existing security holders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market, the trading price of our common stock could decline.

        In addition, as of March 31, 2013, there are 9,960,185 shares underlying options and restricted stock units and we have an aggregate of 2,938,973 shares of common stock reserved for future issuance under our equity incentive plan. These shares will become eligible for sale in the public market to the extent permitted by the provisions of various option and warrant agreements, maintenance of applicable registration statements and Rules 144 and 701 under the Securities Act. If additional shares are sold, or if it is perceived that they will be sold in the public market, the trading price of our stock could decline.

         Our co-founders, directors, executive officers and principal stockholders have substantial control over us and could delay or prevent a change in corporate control.

        As of March 31, 2013, our directors and executive officers, together with their affiliates, beneficially owned approximately 18% of our outstanding common stock. Of this 18%, approximately 12% was beneficially owned by Michael V. Lewis, our chairman and chief executive officer.

        These stockholders, acting together, have the ability to control, or have significant influence over, the outcome of matters submitted to our stockholders for approval, including the election of directors

33

and any merger, consolidation or sale of all or substantially all of our assets. In addition, these stockholders, acting together, have the ability to control, or have significant influence over, the management and affairs of our company. Accordingly, this concentration of ownership might harm the market price of our common stock by:

•

delaying, deferring or preventing a change in corporate control;

•

impeding a merger, consolidation, takeover or other business combination involving us; or

•

discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.

         As a public company, we are required to assess our internal control over financial reporting on an annual basis, and any future adverse results from such assessment could result in a loss of investor confidence in our financial reports and have an adverse effect on our stock price.

        As a public company, the Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular, we need to perform system and process evaluation and testing of our internal control over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our testing, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses. Our compliance with Section 404 requires that we expend significant management time on compliance-related issues. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our common stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which could require additional financial and management resources.

         Your percentage ownership in us may be diluted by future issuances of capital stock, which could reduce your influence over matters on which stockholders vote.

        Our board of directors has the authority, without action or vote of our stockholders, to issue all or any part of our authorized but unissued shares of common stock, including shares issuable upon the exercise of options, shares that may be issued to satisfy our obligations under our equity incentive plans, shares that may be issued in connection with our acquisition of other companies, assets or technology, or shares of our authorized but unissued preferred stock. Issuances of common stock or preferred voting stock could reduce your influence over matters on which our stockholders vote and, in the case of issuances of preferred stock, likely could result in your interest in us being subject to the prior rights of holders of that preferred stock. In addition, any future issuance of capital stock by us will dilute your economic interest in our company.

         We currently do not intend to pay dividends on our common stock and, consequently, your only opportunity to achieve a return on your investment is if the price of our common stock appreciates.

        We do not expect to pay dividends on shares of our common stock in the foreseeable future, and we intend to use cash generated from operations to continue to grow our business. Consequently, your only opportunity to achieve a positive return on your investment in us will be if the market price of our common stock appreciates.

34

         If securities or industry analysts cease to publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

        The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

         Provisions in our certificate of incorporation and bylaws and Delaware law may discourage, delay or prevent a change of control of our company or changes in our management and, therefore, may depress the trading price of our stock.

        Our certificate of incorporation and bylaws contain provisions that could depress the trading price of our stock by acting to discourage, delay or prevent a change of control of our company or changes in our management that some of the stockholders of our company may deem advantageous. Some of these provisions:

•

authorize the issuance of "blank check" preferred stock that our board of directors could issue to increase the number of outstanding shares to discourage a takeover attempt;

•

provide for a classified board of directors (three classes) where only one-third of our board of directors is up for re-election at the annual stockholders meeting each year;

•

provide that stockholders may only remove directors for cause;

•

provide that stockholders may only remove directors prior to the expiration of their term upon a supermajority vote of at least 80% of our outstanding common stock;

•

provide that any vacancy on our board of directors, including a vacancy resulting from an increase in the size of the board, may only be filled by the affirmative vote of a majority of our directors then in office, even if less than a quorum;

•

provide that a special meeting of stockholders may only be called by our board of directors or by our chief executive officer;

•

provide that action by written consent of the stockholders may be taken only if the board of directors first approves such action; provided that, notwithstanding the foregoing, we will hold an annual meeting of stockholders in accordance with NYSE rules, for so long as our shares are listed on NYSE, and as otherwise required by the bylaws;

•

provide that the board of directors is expressly authorized to make, alter or repeal our bylaws; and

•

establish advance notice requirements for nominations for elections to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.

        We may also adopt a "poison pill" stockholder rights plan at any time in response to a potentially hostile bid or for any or no reason due to our available "blank check" preferred stock. Additionally, we are subject to Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any "interested" stockholder for a period of three years following the date on which the stockholder became an "interested" stockholder.

Item 1B.    Unresolved staff comments

        None.

35

Item 2.    Properties

        Our principal properties as of March 31, 2013 are set forth below:

        Our corporate headquarters and principal operations are located in Beverly Hills, California, where we lease and occupy approximately 43,500 square feet. The term of our lease for our Beverly Hills corporate headquarters expires in August 2021, with an option to extend the term of the lease for one additional five-year period.

        We also have two facilities in Boulder, Colorado, where we lease and occupy a total of approximately 93,700 square feet. The terms of these leases expire in August 2016 and June 2024. One of the leases has an option to extend for four additional five-year periods.

        We also have offices outside London in Hemel Hempstead and Oxford, United Kingdom where we lease and occupy a total of approximately 7,400 square feet. The term of one lease expires in January 2020 and the other is month-to-month.

        We also have offices in Tokyo, Japan where we lease and occupy approximately 1,400 square feet. The term of this lease expires in December 2013.

        We also have offices in Shanghai, China where we lease and occupy approximately 300 square feet. The term of this lease expires in January 2016.

        We also have offices in Beijing, China where we lease and occupy approximately 500 square feet. The term of this lease expires in November 2013.

        We also have offices in Wan Chai, Hong Kong where we occupy approximately 160 square feet. The terms of these agreements expire in July 2014.

        We also have offices in Moscow, Russia where we lease and occupy approximately 440 square feet. The term of this lease expires in October 2013.

        We believe that our facilities are in good condition and generally suitable and adequate for our needs for the foreseeable future. However, we will continue to seek additional space as needed to satisfy our growth.

Item 3.    Legal proceedings

        We are involved in various legal proceedings from time to time arising from the normal course of business activities, including claims related to alleged infringement of intellectual property rights, commercial, antitrust, employment and other matters. Our management believes that losses in excess of the amounts accrued arising from such lawsuits are remote, but that litigation is necessarily uncertain and there is the potential for a material adverse effect on our financial statements if one or more matters are resolved in a particular period in an amount in excess of that anticipated by management.

Item 4.    Mining Safety Disclosures

        Not applicable.

36

PART II

Item 5.    Market for registrant's common equity, related stockholder matters and issuer purchases of equity securities

Market information and holders

        Our common stock is traded on the New York Stock Exchange under the symbol "RLD." The following table shows, for the periods indicated, the high and low per share sale prices of our common stock, as reported by the New York Stock Exchange.

	Prices
	High		Low
Fiscal year ended March 31, 2013
First quarter	$	13.92	$	10.92
Second quarter	$	15.14	$	8.92
Third quarter	$	11.21	$	8.80
Fourth quarter	$	13.10	$	10.59
Fiscal year ended March 23, 2012:
First quarter	$	35.60	$	19.51
Second quarter	$	24.89	$	9.47
Third quarter	$	13.30	$	7.85
Fourth quarter	$	13.18	$	7.89

        On May 30, 2013, the last reported sales price of our common stock on the New York Stock Exchange was $15.52 per share. According to the records of our transfer agent, we had 49,427,042 stockholders of record of our common stock on May 30, 2013. Because brokers and other institutions hold many of our shares on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.

Dividends

        We currently intend to retain any future earnings and do not expect to pay any dividends in the foreseeable future. Instead, we expect that all of our earnings in the foreseeable future will be used for the operation and growth of our business. Any future determination to pay dividends on our common stock will be at the discretion of our board of directors and will depend upon various factors, including our financial condition, results of operations, capital requirements, any restrictions that may be imposed by applicable law and our contracts and such other factors as are deemed relevant by our board of directors.

Stock repurchase program

        On April 20, 2012, we announced that our board of directors had approved an authorization to repurchase up to $50.0 million of RealD common stock. On December 17, 2012, our board of directed approved a $25 million increase in our stock repurchase plan, increasing the $50 million repurchase plan announced on April 20, 2012 to $75 million. The number of shares to be repurchased and the timing of any potential repurchases will depend on factors such as the Company's stock price, economic and market conditions, alternative uses of capital, and corporate and regulatory requirements. Repurchases of common stock may be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when RealD might otherwise be precluded from doing so under insider trading laws, and a variety of other methods, including open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, or by any combination of such methods. The repurchase program may be suspended or discontinued at any time.

37

        Pursuant to the stock repurchase plan authorized by our board of directors, we repurchased a total of 5,927,729 shares of common stock at an average price per share of $10.20, including sales commissions, for an aggregate cost of $60.4 million during the fiscal year ended March 31, 2013.

        For the three-month period ended March 31, 2012, we repurchased 1,106,030 shares of common stock at an average price of $11.47 for an aggregate purchase price of approximately $12.7 million, all of which were made pursuant to our stock repurchase plan, as follows:

Period	Total number of shares purchased		Average price paid per share		Total number of shares purchased as part of a publicly announced plan or program		Approximate dollar value of shares that may yet be purchased under the plan or program (in thousands)
January 1, 2013 to January 31, 2013		393,772	$	10.90		393,772	$	22,950
February 1, 2013 to February 28, 2013		355,282	$	11.55		355,282	$	18,846
March 1, 2013 to March 31, 2013		356,976	$	12.02		356,976	$	14,555
Total		1,106,030	$	11.47		1,106,030

Equity compensation plan information

        The following table summarizes our equity compensation plans as of March 31, 2013:

	Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights		Weighted-average Exercise Price of Outstanding Options and Rights		Number of Securities Remainaing Avaialble for Future Issuance Under Equity Compensation Plans
	(a)		(b)		(c)
Equity compensation plans approved by security holders approved by security holders(1)		9,960,185	$	12.78		2,938,973
Equity compensation plans not approved by security holders not approved by security holders		—		—		—
Total revenues		9,960,185	$	12.78		2,938,973

(1)

The weighted average exercise price under column (b) with respect to equity compensation plans does not include shares issuable upon the vesting of oustanding restricted stock units which have no exercise price.

38

Comparison of stockholder return

        The following graph compares the cumulative total return for the period from July 16, 2010 to March 31, 2013 provided to stockholders on RealD Inc.'s common stock relative to the cumulative total returns of the NYSE Composite Index, the Russell 2000 Index and the Bloomberg Hollywood Reporter Index.

Comparison of Cumulative Total Return*
Among the NYSE Composite Index, the Russell 2000 Index
and the Bloomberg Hollywood Reporter Index

	July 16, 2010		September 24, 2010		December 24, 2010(1)		March 25, 2011		June 24, 2011		September 23, 2011		December 23, 2011		March 23, 2012		June 22, 2012		September 21, 2012		December 31, 2012		March 31, 2013
RealD Inc.	$	100.00	$	102.19	$	177.63	$	147.81	$	153.81	$	67.88	$	53.69	$	81.75	$	87.00	$	57.31	$	70.06	$	81.25
NYSE Composite Index	$	100.00	$	109.32	$	119.33	$	125.98	$	121.59	$	103.89	$	116.13	$	127.18	$	119.35	$	132.15	$	134.22	$	145.69
Russell 2000 Index	$	100.00	$	110.18	$	129.93	$	136.07	$	132.16	$	108.46	$	124.84	$	139.01	$	130.31	$	144.32	$	143.97	$	161.81
Bloomberg Hollywood Reporter Index	$	100.00	$	114.71	$	128.91	$	144.50	$	146.94	$	106.88	$	106.04	$	126.43	$	111.62	$	123.03	$	131.76	$	166.04

*

Assumes that $100.00 was invested in RealD common stock and in each index at market closing prices on July 16, 2010, and that all dividends were reinvested. No cash dividends have been declared on our common stock. Stockholder returns over the indicated period should not be considered indicative of future stockholder returns.

(1)

Cumulative total return for the quarter ended December 24, 2010 is based on the closing price of the respective stock or index on December 23, 2010, the last trading day of the quarter ended December 24, 2010.

39

Item 6.    Selected financial data

        The selected financial data set forth below should be read in conjunction with our consolidated financial statements and related notes and "Management's discussion and analysis of financial condition and results of operations" in Part II, Item 7 appearing elsewhere in this Annual Report on Form 10-K.

        The selected consolidated statement of operations data for the years ended March 31, 2013, March 23, 2012 and March 25, 2011 and the selected consolidated balance sheet data as of March 31, 2013 and March 23, 2012, have been derived from our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Historical results are not necessarily indicative of the results to be expected for future periods.

	Year ended
(in thousands, except per share data)	March 31, 2013			March 23, 2012			March 25, 2011			March 26, 2010			March 27, 2009
Consolidated Statement of Operations Data:
Net revenue	$	215,552		$	246,628		$	246,136		$	149,846		$	39,675
Cost of revenue		125,360			117,938			178,396			140,603			27,107
Gross margin		90,192			128,690			67,740			9,243			12,568
Operating expenses:
Research and development		19,454			16,500			15,582			11,021			8,915
Selling and marketing		25,266			27,682			24,139			16,811			11,009
General and administrative		47,830			42,189			35,835			15,638			7,940
Total operating expenses		92,550			86,371			75,556			43,470			27,864
Operating income (loss)		(2,358	)		42,319			(7,816	)		(34,227	)		(15,296	)
Interest expense, net		(1,483	)		(971	)		(919	)		(1,730	)		(949	)
Other income (loss)		(982	)		782			6,182			(1,112	)		100
Income tax expense		5,064			5,105			4,272			2,680			219
Net income (loss)		(9,887	)		37,025			(6,825	)		(39,749	)		(16,364	)
Accretion of preferred stock		—			—			(4,934	)		(12,372	)		(9,826	)
Net income (loss) attributable to RealD Inc. common stockholders	$	(9,690	)	$	36,869		$	(12,289	)	$	(51,225	)	$	(25,463	)
Basic earnings (loss) per share of common stock(1)	$	(0.19	)	$	0.68		$	(0.29	)	$	(2.09	)	$	(1.06	)
Diluted earnings (loss) per share of common stock(1)	$	(0.19	)	$	0.65		$	(0.29	)	$	(2.09	)	$	(1.06	)
Shares used in computing basic earnings (loss) per share of common stock(1)		52,345			54,352			41,933			24,500			24,027
Shares used in computing diluted earnings (loss) per share of common stock(1)		52,345			56,852			41,933			24,500			24,027

	Year ended
(in thousands)	March 31, 2013		March 23, 2012		March 25, 2011		March 26, 2010			March 27, 2009
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	31,020	$	24,894	$	16,936	$	13,134		$	15,704
Total assets		273,048		302,175		280,147		162,146			96,548
Total indebtedness (including short-term indebtedness)		47,500		25,000		2,310		31,396			14,863
Mandatorily redeemable convertible preferred stock		—		—		—		62,831			50,459
Total equity (deficit)	$	149,189	$	197,606	$	145,100	$	(41,886	)	$	(31,945	)

40

	Year ended
(in thousands)	March 31, 2013			March 23, 2012			March 25, 2011			March 26, 2010			March 27, 2009
Consolidated Other Data:
Capital expenditures	$	34,290		$	61,468		$	102,643		$	30,161		$	12,072
Depreciation and amortization		33,131			28,266			15,737			7,952			5,598
Adjusted EBITDA(2)	$	63,323		$	104,395		$	62,195		$	22,727		$	1,072
Cash flows provided by (used in):
Operating activities	$	79,697		$	43,001		$	35,098		$	15,135		$	10,134
Investing activities		(37,900	)		(57,469	)		(87,031	)		(29,636	)		(12,107	)
Financing activities	$	(35,786	)	$	22,426		$	55,735		$	11,931		$	8,229

	Year ended
(approximate numbers)	March 31, 2013		March 23, 2012		March 25, 2011		March 26, 2010		March 27, 2009
Number of RealD-enabled screens (at period end):
Total domestic RealD-enabled screens		12,800		11,700		8,700		3,400		1,700
Total international RealD-enabled screens		9,900		8,500		6,300		1,900		400
Total RealD-enabled screens		22,700		20,200		15,000		5,300		2,100
Number of locations with RealD-enabled screens (at period end):
Total locations with domestic RealD-enabled screens		2,800		2,600		2,300		1,800		1,100
Total locations with international RealD-enabled screens		2,700		2,500		2,200		1,200		400
Total locations with RealD-enabled screens		5,500		5,100		4,500		3,000		1,500

(1)

All basic and diluted loss per share of common stock and average shares outstanding information for all periods presented have been adjusted to reflect the June 28, 2010 one-for-one and one-half (1 for 1.5) forward split of our common stock described in Note 1, "Business and basis of presentation", to our consolidated financial statements in Item 8 below. For more information regarding loss per share calculations, see Note 2, "Net income (loss) per share of common stock," to our consolidated financial statements and our consolidated financial statements.

(2)

Adjusted EBITDA is a Non-U.S. GAAP financial measure. Adjusted EBITDA is a supplemental measure of our performance. However, Adjusted EBITDA is not a recognized measurement under U.S. GAAP. We define Adjusted EBITDA as net income (loss), plus net interest expense, income and other taxes, depreciation and amortization, share-based compensation expense and exhibitor option expense, as further adjusted to eliminate the impact of certain other items that we do not consider indicative of our core operating performance. Management considers our core operating performance to be that which can be affected by our managers in any particular period through their management of the resources that affect our underlying revenue and profit generating operations for that period. Non-U.S. GAAP adjustments to our results prepared in accordance with U.S. GAAP are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

41

        Set forth below is a reconciliation of Adjusted EBITDA to net income (loss) for the following periods indicated:

	Year ended
(in thousands)	March 31, 2013			March 23, 2012			March 25, 2011
Net income (loss)	$	(9,887	)	$	37,025		$	(6,825	)
Add (deduct):
Interest expense, net		1,483			971			919
Income tax expense		5,064			5,105			4,272
Depreciation and amortization		33,131			28,266			15,737
Other (income) loss(1)		982			(782	)		(6,182	)
Share-based compensation expense(2)		18,474			15,744			8,950
Exhibitor option expense(3)		—			—			36,447
Impairment of assets and intangibles(4)		8,679			10,269			1,128
Sales and use tax(5)		3,950			6,363			6,484
Property tax(6)		1,447			1,434			1,090
Management fee(7)		—			—			175
Adjusted EBITDA	$	63,323		$	104,395		$	62,195

(1)

Includes gains and losses from foreign currency exchange and foreign currency forward contracts.

(2)

Represents share-based compensation expense of nonstatutory and incentive stock options and restricted stock units and employee stock purchase plan to employees, non-employees, officers and directors.

(3)

Represents stock options granted to some of our motion picture exhibitor licensees. The amounts are recorded as contra revenue in the consolidated financial statements.

(4)

Represents impairment of long-lived assets, such as fixed assets, theatrical equipment and related purchase commitments and identifiable intangibles.

(5)

Represents taxes incurred by us for cinema license and product revenue.

(6)

Represents property taxes on RealD Cinema Systems and digital projectors.

(7)

Represents payment of management fees to our Series C mandatorily redeemable convertible preferred stockholder (included in general and administrative expense), which were terminated upon the completion of our IPO.

        We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA in developing our internal budgets, forecasts and strategic plan, in analyzing the effectiveness of our business strategies in evaluating potential acquisitions; in making compensation decisions and in communications with our board of directors concerning our financial performance. Adjusted EBITDA has limitations as an analytical tool, which includes, among others, the following:

•

Adjusted EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

•

Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

42

•

Adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;

•

non-cash compensation is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period;

•

Adjusted EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations;

•

Adjusted EBITDA also differs from the amounts calculated under the similarly titled definition in our Credit Agreement, which is further adjusted to reflect certain other cash and non-cash charges and is used to determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments; and

•

other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

        Because of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with U.S. GAAP. We compensate for these limitations by relying primarily on our U.S. GAAP results and using Adjusted EBITDA only as a supplement. Our consolidated financial statements and the notes to those statements included elsewhere are prepared in accordance with U.S. GAAP. See also "Part II, Item 7: Management's discussion and analysis of financial condition and results of operations—Non-U.S. GAAP discussion" and "—Seasonality and quarterly performance."

        Beginning in the first quarter of fiscal 2014 that ends on June 30, 2013, RealD intends to modify its definition of Adjusted EBITDA for financial reporting purposes to align with the Adjusted EBITDA definition under RealD's expanded credit facility. As a result, for future reporting periods, RealD will no longer add back sales and use tax and property tax to calculate Adjusted EBITDA for financial reporting purposes.

Item 7.    Management's discussion and analysis of financial condition and results of operations

The following discussion should be read together with our consolidated financial statements and accompanying notes, which are included elsewhere in this Annual Report on Form 10-K. In addition to historical information, this discussion includes forward-looking information that involves risks and assumptions which could cause actual results to differ materially from management's expectations. See "Part I, Item 1A: Risk factors" and "Special note regarding forward-looking statements and other industry data" included elsewhere in this Annual Report on Form 10-K.

Overview

        We are a leading global licensor of 3D technologies. Our extensive intellectual property portfolio is used in applications that enable a premium 3D viewing experience in the theater, the home and elsewhere. We license our RealD Cinema Systems to motion picture exhibitors that show 3D motion pictures and alternative 3D content. We also provide our RealD Display, active and passive eyewear, and RealD Format technologies to consumer electronics manufacturers, content providers and distributors to enable the delivery and viewing of 3D content on a variety of visual displays and devices.

43

        For financial reporting purposes, we currently have one reportable segment. We have three operating segments: cinema, consumer electronics and professional within which we market our various applications. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our Chief Executive Officer. We aggregate our three operating segments into one reportable segment based on qualitative factors, including similar economic characteristics and the nature of the products and services. Our product portfolio is used in applications that enable a premium 3D viewing experience across these segments. We currently generate substantially all of our revenue from the license of our RealD Cinema Systems and the use and sale of our eyewear.

Key business metrics

        Our management regularly reviews a number of business metrics, including the following key metrics to evaluate our business, monitor the performance of our business model, identify trends affecting our business, determine the allocation of resources, make decisions regarding corporate strategies and evaluate forward-looking projections. The measures that we believe are the primary indicators of our quarterly and annual performance are as follows:

•

RealD box office.    Estimated domestic box office on RealD-enabled screens represents the estimated 3D box office generated on RealD-enabled domestic screens. Estimated international box office on RealD-enabled screens is the estimated 3D box office generated on RealD-enabled international screens. RealD's estimates of box office on RealD-enabled screens rely on box office tracking data. International box office reflects RealD's estimates of international box office generated on RealD-enabled screens in 20 foreign countries where box office tracking is available. RealD estimates these countries represent approximately 85% of RealD's international license revenues.

•

Number of 3D motion pictures.    Total 3D motion pictures are the number of 3D motion pictures released domestically in North America during the relevant period.

•

Number of screens.    Domestic screens are motion picture theater screens in the United States or Canada enabled with our RealD Cinema Systems. International screens are motion picture theater screens outside the United States and Canada enabled with our RealD Cinema Systems.

•

Number of locations.    Domestic locations are motion picture exhibition complexes in the United States or Canada with one or more screens enabled with our RealD Cinema Systems. International locations are motion picture exhibition complexes outside the United States and Canada with one or more screens enabled with our RealD Cinema Systems.

•

Adjusted EBITDA.    We use Adjusted EBITDA as a supplemental measure of our performance. We define Adjusted EBITDA as net income (loss), plus net interest expense, income and other taxes, depreciation and amortization, share-based compensation expense and exhibitor option expense, as further adjusted to eliminate the impact of certain other items that we do not consider indicative of our core operating performance. We consider our core operating performance to be that which can be affected by our managers in any particular period through their management of the resources that affect our underlying revenue and profit generating operations for that period. However, Adjusted EBITDA is not a recognized measurement under U.S. GAAP and should not be considered in isolation or as a substitute for performance measures calculated in accordance with U.S. GAAP. For a reconciliation of Adjusted EBITDA to U.S. GAAP net income (loss) and for further discussion regarding Adjusted EBITDA, see "—Non-U.S. GAAP discussion."

44

        The following table sets forth additional performance highlights of key business metrics for the periods presented (approximate numbers):

	Year ended
(approximate numbers, in millions)	March 31, 2013		March 23, 2012
Estimated box office on RealD enabled screens (generated during the period)
Estimated box office on RealD enabled domestic screens		1,297		1,424
Estimated box office on RealD enabled international screens		1,602		1,595
Total estimated box office on RealD enabled screens		2,899		3,019

	Year ended
(approximate numbers)	March 31, 2013		March 23, 2012		March 25, 2011
Number of RealD enabled screens (at period end)
Total domestic RealD enabled screens		12,800		11,700		8,700
Total international RealD enabled screens		9,900		8,500		6,300
Total RealD enabled screens		22,700		20,200		15,000
Number of locations with RealD enabled screens (at period end)
Total domestic locations with RealD enabled screens		2,800		2,600		2,300
Total international locations with RealD enabled screens		2,700		2,500		2,200
Total locations with RealD enabled screens		5,500		5,100		4,500
Number of 3D motion pictures (released domestically during period)		35		36		26

        Performance highlights for Adjusted EBITDA, another key business metric and a Non-U.S. GAAP financial measure, are presented below under the caption "Non-U.S. GAAP discussion."

Opportunities, trends and factors affecting comparability

        We have rapidly evolved and expanded our business since we acquired ColorLink in March 2007. This expansion has included hiring most of our senior management team, acquiring and growing our research and development facility in Boulder, Colorado, and building infrastructure to support our business. These investments in and changes to our business have allowed us to significantly increase our revenue and key business metrics. We expect to continue to invest for the foreseeable future in expanding our business as we increase our direct sales and marketing presence in the United States, Europe, Asia, Latin America, Russia and other geographic regions, enhance and expand our technology and product offerings and pursue strategic acquisitions. For example, in 2012 we established a RealD sales and operating presence in Russia, and in 2013 we established a RealD sales and operating presence in Latin America.

        On November 14, 2012, our Board of Directors approved a change in our accounting periods from the previous configuration of four 13-week periods for a total of 52 weeks to a calendar month end and calendar quarter end accounting period. This change in accounting period commenced in the third quarter of fiscal 2013 ended on December 31, 2012, which added 10 extra days to the fiscal year ended March 31, 2013 when compared to the fiscal year ended March 23, 2012. As a result, our fiscal year

45

2013 ended on March 31, 2013 instead of on March 22, 2013 as formerly planned under RealD's historical accounting period configuration.

Cinema

        The shift in the motion picture industry from analog to digital over the past decade has created an opportunity for new and transformative 3D technologies. The growth in 3D screens worldwide combined with growth in the number of 3D motion pictures has led to an increase in the worldwide box office generated by 3D screens in recent years. In 2012, 3D-enabled screens generated an estimated $7.3 billion in worldwide 3D box office (according to provisional figures from IHS), representing 21% of the $34.7 billion in total worldwide box office in 2012. Six of the top 10 grossing films worldwide in 2012 were exhibited in RealD 3D. As of March 31, 2013, there were approximately 22,700 RealD-enabled screens worldwide as compared to approximately 20,200 RealD-enabled screens worldwide as of March 23, 2012, an increase of 2,500 RealD-enabled screens or 12%. Based on the slate announcements by motion picture studios, we anticipate that approximately 36 3D motion pictures will be released worldwide in our fiscal year 2014, including sequels to successful major motion picture franchises, such as Iron Man, Thor, The Hobbit, Star Trek, 300, Monsters, Despicable Me, The Smurfs and Cloudy with a Chance of Meatballs.

Other visual display technologies

        We make available our RealD Display, active and passive eyewear, and RealD Format technologies to consumer electronics manufacturers, content providers and distributors to enable 3D in high definition televisions, laptops, tablets, smartphones and other displays in the home and elsewhere. We believe that the recent success of major 3D motion pictures, including The Avengers, The Hobbit: An Unexpected Journey, The Amazing Spider-Man, Madagascar 3: Europe's Most Wanted, Life of Pi, Iron Man 3 and Star Trek Into Darkness is leading to the creation and distribution of 3D content for consumer electronics. The development of these technologies represents a significant opportunity for new revenue.

Motion picture exhibitor stock options

        We have incurred variability in our license revenue and operating results in the past and during the period covered by this Annual Report on Form 10-K in connection with stock options issued to some of our motion picture exhibitor licensees that vested upon the achievement of screen installation targets. All of these screen installation targets have been achieved, all associated reduction of revenue has been recognized and the motion picture exhibitor stock options have vested in full as of March 25, 2011. For further discussion regarding exhibitor stock options, see "Key components of our results of operations—Revenue—Motion picture exhibitor stock options" and "Critical accounting policies and estimates."

Key components of our results of operations

Revenue

        We derive substantially all of our revenue from the license of our RealD Cinema Systems and the use and sale of our RealD eyewear.

        We license our RealD Cinema Systems in multi-year (typically five years or longer) agreements that are generally exclusive with our motion picture exhibitor licensees in both the domestic and international markets. Our license agreements for our RealD Cinema Systems are typically structured on a per-admission, periodic fixed-fee, or per-motion picture basis. Currently, our license revenue is derived principally on a per-admission basis.

46

        We generate product revenue from the distribution of RealD eyewear to motion picture studios and exhibitors worldwide. In domestic market (the United States and Canada), we provide our RealD eyewear free of charge to motion picture exhibitors and then receive a fee from the motion picture studios for the usage of that RealD eyewear by the motion picture exhibitors' consumers. Most international motion picture exhibitors purchase RealD eyewear directly from us and sell them to consumers as part of their admission or as a concession item. Product revenue is principally derived from the use and sale of RealD eyewear. International revenue is primarily earned in Europe, Central and Latin America, Asia and Australia.

        Our cinema business is strongly tied to the release of 3D motion pictures. These motion pictures tend to be released based on specific consumer entertainment dynamics, which results in seasonal patterns, with the largest number of motion pictures typically being released in the summer and early winter. Although we have not yet generated material revenue licensing our other 3D visual display technologies, we endeavor to incorporate our 3D technologies in visual displays for laptop computers, personal computers, tablets, mobile phones and other devices, and we anticipate that these licensing relationships may generate future license fees on a per unit basis.

        We record revenue net of motion picture exhibitor stock options, as discussed more fully immediately below, and estimated revenue allowances.

        Upfront payments for the purchase of RealD eyewear and license fees associated with certain motion picture exhibitor license agreements are recorded as deferred revenue until the applicable revenue recognition criteria are met.

        Motion picture exhibitor stock options.    In connection with some of our motion picture exhibitor license agreements, we issued to three motion picture exhibitors 10-year options to purchase an aggregate of 3,668,340 shares of our common stock at an exercise price of approximately $0.00667 per share. The stock options vested upon the achievement of screen installation targets, which have all been achieved. The stock options do not have net cash settlement features. Motion picture exhibitor stock options are valued at the underlying stock price during each reporting period. As of March 25, 2011, all 3,668,340 motion picture exhibitor stock options had vested and all associated reduction of revenue has been recognized. The amount recorded as revenue reduction totaled $36.4 million for the year ended March 25, 2011. There were no amounts recorded as revenue reduction related to exhibitor options for the year ended March 31, 2013 and March 23, 2012.

Cost of revenue and operating expenses

        Cost of revenue principally consists of depreciation expense of our RealD Cinema Systems deployed at a motion picture exhibitor's premises, digital projector depreciation expenses, RealD eyewear costs (including shipping, handling and recycling costs), field service and support costs and occupancy costs.

        We classify our operating expenses into three categories: research and development, selling and marketing and general and administrative. Personnel costs include salaries, bonuses, benefits and share-based compensation. We allocate share-based compensation expense resulting from the amortization of the fair value of stock options granted based on how we categorize the department in which the stock option holder works.

        Research and development.    Research and development costs principally consist of personnel costs related to our research and development staff, depreciation and amortization of research and development assets, prototype and materials costs, the cost of third-party service providers supporting our research and development efforts and occupancy costs.

47

        Selling and marketing.    Selling and marketing costs principally consist of personnel costs related to our selling and marketing staff, advertising costs, including promotional events and other brand building initiatives and product marketing expenses, corporate communications, professional fees, occupancy costs and travel expenses.

        General and administrative.    General and administrative costs principally consist of personnel costs related to our executive, legal, finance, and human resources staff, professional fees including legal and accounting costs, occupancy costs, bad debt expense and public company costs. Additionally, general and administrative costs include sales, use, goods and services tax, and property taxes. For our U.S. cinema license and product revenue, we absorb the majority of sales and use taxes and generally do not pass such costs on to our customers.

Results of operations

        The following table sets forth our consolidated statements of operations and other data for each of the periods indicated:

	Year ended
(in thousands)	March 31, 2013			March 23, 2012			March 25, 2011
Consolidated statements of operations data:
Gross revenue	$	215,552		$	246,628		$	282,583
Motion picture exhibitor options		—			—			(36,447	)
Net revenue		215,552			246,628			246,136
Cost of revenue		125,360			117,938			178,396
Gross margin		90,192			128,690			67,740
Operating expenses:
Research and development		19,454			16,500			15,582
Selling and marketing		25,266			27,682			24,139
General and administrative		47,830			42,189			35,835
Total operating expenses		92,550			86,371			75,556
Operating income (loss)		(2,358	)		42,319			(7,816	)
Interest expense, net		(1,483	)		(971	)		(919	)
Other income (loss)		(982	)		782			6,182
Income (loss) before income taxes		(4,823	)		42,130			(2,553	)
Income tax expense		5,064			5,105			4,272
Net income (loss)		(9,887	)		37,025			(6,825	)
Net (income) loss attributable to noncontrolling interest		197			(156	)		(530	)
Accretion of preferred stock		—			—			(4,934	)
Net income (loss) attributable to RealD Inc. common stockholders	$	(9,690	)	$	36,869		$	(12,289	)
Other data:
Adjusted EBITDA(1)	$	63,323		$	104,395		$	62,195

(1)

Adjusted EBITDA is not a recognized measurement under U.S. GAAP. For a definition of Adjusted EBITDA and reconciliation to net income (loss), the comparable U.S. GAAP item, see "—Non-U.S. GAAP discussion."

48

        The following table sets forth our consolidated statements of operations and other data as a percentage of net revenue for each of the periods indicated:

	Year ended
	March 31, 2013			March 23, 2012			March 25, 2011
Net revenue		100	%		100	%		100	%
Cost of revenue		58.2			47.8			72.5
Gross margin		41.8			52.2			27.5
Operating expenses:
Research and development		9.0			6.7			6.3
Selling and marketing		11.7			11.2			9.8
General and administrative		22.2			17.1			14.6
Total operating expenses		42.9			35.0			30.7
Operating income (loss)		(1.1	)		17.2			(3.2	)
Interest expense, net		(0.7	)		(0.4	)		(0.4	)
Other income (loss)		(0.5	)		0.3			2.5
Income (loss) before income taxes		(2.2	)		17.1			(1.0	)
Income tax expense		2.3			2.1			1.7
Net income (loss)		(4.6	)		15.0			(2.8	)
Net (income) loss attributable to noncontrolling interest		0.1			(0.1	)		0.2
Accretion of preferred stock		—			—			(2.0	)
Net income (loss) attributable to RealD Inc.
common stockholders		(4.5	)%		14.9	%		(5.0	)%
Other data:
Adjusted EBITDA(1)		29.4	%		42.3	%		25.3	%

(1)

For a definition of Adjusted EBITDA and reconciliation to net income (loss), the most comparable U.S. GAAP item, see "—Non-U.S. GAAP discussion."

        The following table sets forth share-based compensation and depreciation and amortization included in the above line items:

	Year Ended
(in thousands)	March 31, 2013		March 23, 2012		March 25, 2011
Share-based compensation
Cost of revenue	$	807	$	458	$	160
Research and development		2,185		2,604		1,470
Selling and marketing		5,258		4,776		2,937
General and administrative		10,224		7,906		4,383
Total	$	18,474	$	15,744	$	8,950

49

	Year Ended
(in thousands)	March 31, 2013		March 23, 2012		March 25, 2011
Depreciation and amortization
Cost of revenue	$	29,300	$	25,948	$	14,971
Research and development		1,943		1,350		481
Selling and marketing		295		229		84
General and administrative		1,593		739		201
Total	$	33,131	$	28,266	$	15,737

        In the period to period comparative discussion below, we describe our net revenue, license revenue (composed principally of revenue from our RealD Cinema Systems), and product and other revenue (principally composed of our RealD eyewear and, to a much lesser extent, professional product revenue and other revenue).

Fiscal year ended March 31, 2013 compared to fiscal year ended March 23, 2012

Revenue

        For the fiscal year ended March 31, 2013, total revenue decreased $31.1 million to $215.6 million compared to $246.6 million for the fiscal year ended March 23, 2012.

	Year ended
(in thousands)	March 31, 2013		March 23, 2012		Amount change			Percentage change
Revenue:
License revenue	$	137,752	$	147,801	$	(10,049	)		(7	)%
Product and other		77,800		98,827		(21,027	)		(21	)%
Total revenue	$	215,552	$	246,628	$	(31,076	)		(13	)%
Other data:
Number of RealD enabled screens (at period end)
Total domestic RealD enabled screens		12,800		11,700		1,100			9	%
Total international RealD enabled screens		9,900		8,500		1,400			16	%
Total RealD-enabled screens		22,700		20,200		2,500			12	%
Number of locations with RealD enabled screens (at period end)
Total domestic locations with RealD enabled screens		2,700		2,500		200			8	%
Total international locations with RealD enabled screens		2,800		2,600		200			8	%
Total locations with RealD enabled screens		5,500		5,100		400			8	%
Number of 3D motion pictures (released domestically during period)		35		36		(1	)		(3	)%

        The decrease in total revenue during the fiscal year ended March 31, 2013 compared to the fiscal year ended March 23, 2012 was primarily due to a decrease in license revenues resulting from a decrease in box office performance, lower domestic eyewear usage and lower international eyewear sales. Our international markets comprised approximately 50% of total revenue for the fiscal year ended March 31, 2013 as compared to 49% for the fiscal year ended March 23, 2012. The overall decrease in revenues attributable to international markets was driven primarily by a decrease in sales of RealD eyewear.

50

        For the fiscal year ended March 31, 2013, there were 26 motion pictures that contributed greater than $1.0 million of admission-based fees to license revenue. The top 10 pictures that contributed greater than $1.0 million admission-based fees to license revenue for the fiscal year ended March 31, 2013 included the following: The Avengers ($14.0 million), The Hobbit: An Unexpected Journey ($8.7 million), Ice Age: Continental Drift ($7.6 million), The Amazing Spider-Man ($6.7 million), Life of Pi ($6.7 million), Madagascar 3: Europe's Most Wanted ($6.4 million), Men in Black III ($4.9 million), Brave ($4.4 million), Titanic (re-release) ($3.8 million) and Oz: the Great and Powerful ($3.8 million).

        For the fiscal year ended March 23, 2012, there were 27 motion pictures that contributed greater than $1.0 million of admission-based fees to license revenue. The top 10 motion pictures that contributed greater than $1.0 million of admission-based fees to license revenue for the fiscal year ended March 23, 2012 included the following: Transformers: Dark of the Moon ($11.3 million), Harry Potter and the Deathly Hallows Part 2 ($10.9 million), Pirates of the Caribbean: On Stranger Tides ($9.3 million), Thor ($5.8 million), Kung Fu Panda 2 ($5.8 million), Puss in Boots ($5.6 million), The Smurfs ($5.4 million), Rio ($5.3 million), Cars 2 ($4.9 million) and The Adventures of Tintin ($4.7 million).

        License revenues comprised 64% and 60% of total revenue for the fiscal years ended March 31, 2013 and March 23, 2012, respectively. International license revenues comprised 59% and 56% of our license revenues for the fiscal years ended March 31, 2013 and March 23, 2012, respectively.

        The decrease in our product and other revenue in the fiscal year ended March 31, 2013, as compared to the fiscal year ended March 23, 2012, was primarily a result of a decrease in the volume of eyewear consumed or sold to our domestic and international markets and a decrease in the average revenue per unit. The decrease in RealD eyewear volume internationally compared to the prior period resulted from a growing trend among consumers to reuse RealD eyewear for multiple viewings, as well as exhibitor buying patterns relative to the film slate and purchases by certain international exhibitors from alternative suppliers, including authorized resellers of RealD eyewear. International product and other revenues comprised of $27.0 million, or 35% and $37.6 million, or 37% of total product and other revenues for the fiscal years ended March 31, 2013 and March 23, 2012, respectively. International product and other revenues were 33% of international license revenue for the fiscal year ended March 31, 2013 as compared to 45% for the fiscal year ended March 23, 2012.

        We expect our future revenue, particularly in our license business, will be driven by the number of RealD-enabled screens and motion pictures released in 3D. As the volume of RealD eyewear usage changes as a result of a changing 3D motion picture slate and box office, we may experience additional price pressure from our customers. As a result, our net revenues may increase at a slower rate or decline in future periods.

Cost of revenue

	Year ended
(in thousands)	March 31, 2013			March 23, 2012			Amount change			Percentage change
Revenue	$	215,552		$	246,628		$	(31,076	)		(13	)%
Cost of revenue:
License		47,243			39,801			7,442			19	%
Product and other		78,117			78,137			(20	)		(0	)%
Total cost of revenue	$	125,360		$	117,938		$	7,422			6	%
Gross profit	$	90,192		$	128,690		$	(38,498	)		(30	)%
Gross margin		42	%		52	%

51

        For the fiscal year ended March 31, 2013, our cost of revenue increased primarily due to the costs associated with the growth and maintenance of our global installed base as well as a reduction in the product mix of lower cost recycled eyewear in our domestic markets, freight charges related to international expansion and $0.5 million related to the impairment of eyewear tooling equipment. Cost of revenue increased, as a percentage of revenue, to 58% for the fiscal year ended March 31, 2013, as compared to 48% for the fiscal year ended March 23, 2012 due to a reduction in license revenues as well as costs associated with the growth and maintenance of our global installed base as well as a reduction in the product mix of lower cost recycled eyewear. The percentage of usage of recycled eyewear may continue to decrease in future periods resulting in lower gross profit and gross margin.

        License cost of revenue increased $7.4 million to $47.2 million for the fiscal year ended March 31, 2013 compared to $39.8 million for the fiscal year ended March 23, 2012 primarily as a result of a $3.7 million increase in depreciation expense resulting from an increase in RealD-enabled screens, $5.9 million in field support and other costs, partially offset by a decrease of $2.1 million in impairment expense. Included in license cost of sales is depreciation expense of $29.0 million and $25.3 million for the fiscal years ended March 31, 2013 and March 23, 2012, respectively. Depreciation expense as a percentage of net license revenue increased to 21% for the fiscal year ended March 31, 2013 from 17% for the fiscal year ended March 23, 2012.

        During the fiscal year ended March 31, 2013, we determined that a non-cancelable purchase commitment for certain cinema systems configurations in the aggregate amount of $3.5 million was not fully recoverable, primarily due to the initial investment costs which are expected to exceed the anticipated future cash flows for the related cinema systems. For the fiscal year ended March 31, 2013, impairment charged to cost of revenue for all our Cinema Systems totaled $8.0 million, which included the impairment of the related outstanding purchase commitment of $3.5 million.

        During the fiscal year ended March 23, 2012, we determined that certain of our cinema systems were not recoverable and that the carrying value of the assets exceeded fair value, primarily due to the number of certain of our cinema system assets on hand, including related outstanding purchase commitments and the continuing shift in the mix in the deployment of cinema systems based on the type of digital projectors installed and theater configuration. The fair value was primarily determined by evaluating the discounted future cash flows expected to be generated from the cinema systems. The impairment charged during the fiscal year ended March 23, 2012 to cost of revenue for certain of the cinema systems totaled $6.8 million. Impairment expense for all our Cinema Systems totaled $10.3 million for the year ended March 23, 2012.

        Product and other gross profit decreased $21.0 million to a gross loss of $0.3 million for the fiscal year ended March 31, 2013 as compared to a gross profit $20.7 million for the fiscal year ended March 23, 2012. The decrease in our product and other gross profit was primarily a result of the reduced percentage of lower cost recycled eyewear in the total product mix, a reduction of the average eyewear revenue per unit and the volume of eyewear consumed or sold to our domestic and international markets. Product and other gross margin decreased to a negative 0.4% for the fiscal year ended March 31, 2013 as compared to 21% for the fiscal year ended March 23, 2012.

        Film amortization costs included in product and other cost of revenue related to Carmen 3D and Madam Butterfly in 3D. There was no film amortization costs for the year ended March 31, 2013 and $2.8 million for the year ended March 23, 2012.

        Costs associated with our eyewear recycling program have been expensed in the period incurred. Recycling costs totaled $4.7 million for the fiscal year ended March 31, 2013 and $5.5 million for the fiscal year ended March 23, 2012, and included the cost to transport RealD eyewear between theaters and the recycling production facility and costs to process the RealD eyewear for reuse.

52

        Our cost of revenue as a percentage of net revenue, as well as our gross profit and gross margin, will be affected in the future by the relative mix of license and product revenue, the mix of domestic and international product revenues, the relative mix of products and any new revenue sources, impairment charges and the percentage of usage of recycled eyewear. Impairment charges in future periods may increase as a result of system upgrades and replacements as well as changes in product offerings and new technology. As the number of RealD-enabled screens and the number of 3D motion pictures and attendance increase, our total cost of revenue may continue to increase.

Operating expenses

	Year ended
(in thousands)	March 31, 2013		March 23, 2012		Amount change			Percentage change
Research and development	$	19,454	$	16,500	$	2,954			18	%
Selling and marketing		25,266		27,682		(2,416	)		(9	)%
General and administrative		47,830		42,189		5,641			13	%
Total operating expenses	$	92,550	$	86,371	$	6,179			7	%

        Research and development.    Our research and development expenses increased primarily due to increases of $1.9 million in engineering and prototype expenses, $0.6 million increase of depreciation expense, $0.3 million in occupancy costs, $0.3 million in travel and entertainment expenses and $0.1 million in personnel costs, partially offset by decreases of $0.3 million in professional fees in the fiscal year ended March 31, 2013 compared to the fiscal year ended March 23, 2012. The change in personnel costs includes an increase of $1.0 million in salaries and benefits as the number of research and development personnel increased to 36 from 30, partially offset by decreases of $0.5 million in discretionary and contractual bonuses and $0.4 million in stock compensation expense. We expect to increase our research and development expenses to support our anticipated growth in visual display projects and initiatives, primarily for additional personnel, consultants and prototype and materials costs, as well as for continued investment in our cinema business.

        Selling and marketing.    Our selling and marketing expenses decreased primarily due to decreases of $1.6 million in selling and marketing costs related to Madam Butterfly in 3D in the fiscal period ended March 31, 2013 as compared to marketing costs related to Carmen in 3D in the fiscal period ended March 23, 2012, both of which we co-produced with London's Royal Opera House, $0.7 million in professional and outside service fees, $0.4 million in personnel costs, partially offset by an increase of $0.4 million in occupancy costs. The change in personnel costs includes increases of $0.1 million in salaries and benefits and $0.5 million in stock compensation expense as the number of selling and marketing personnel increased to 35 from 31, partially offset by decreases of $1.0 million in discretionary and contractual bonuses. Personnel costs and advertising and marketing spending are expected to continue to increase in order to drive revenue growth. We expect to incur additional selling and marketing expenses in fiscal year 2014 and beyond as we increase our international marketing efforts, particularly in Asia, Latin America and Russia, build our consumer electronics business worldwide and market future 3D films.

        General and administrative.    Our general and administrative expenses increased primarily due to a $2.9 million increase in personnel costs. The increase in personnel costs includes increases of $1.3 million in salaries and benefits and $2.3 million in stock based compensation, partially offset by a decrease of $0.7 million in discretionary and contractual bonuses as the number of general and administrative employees increased to 54 from 37. We incurred increases of $2.3 million in legal, professional and outside fees, $1.0 million in general business expenses, $0.9 million in depreciation and amortization expenses, $0.7 million in bad debt expenses $0.6 million in occupancy costs and

53

$0.3 million in travel and entertainment expenses, to support the growth in our operations, particularly in Asia, Latin America and Russia. These increases were partially offset by decreases of $0.7 million in public company related expenses which include listing, registration, as well as investor relations and compliance fees. Sales and use tax expense decreased $2.4 million to $4.0 million for the fiscal year ended March 31, 2013 as compared to $6.4 million for the fiscal year ended March 23, 2012, primarily due to the decrease in U.S. revenue. We expect to incur additional general and administrative expenses to support the general growth in operations, particularly in international territories, as well as for compliance with SEC reporting requirements, stock exchange listing standards and the provisions of the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

Other

        Interest expense, net.    Net interest expense for the fiscal years ended March 31, 2013 and March 23, 2012 was $1.5 million and $1.0 million, respectively. Our interest expense increased primarily due to increased amount of borrowings under our Credit Agreement.

        Other income (loss).    Other income (loss) was a loss of $1.0 million for the year ended March 31, 2013 as compared to a gain of $0.8 million for the year ended March 23, 2012. Other income (loss) decreased primarily due foreign exchange transaction losses related to our operations from international territories.

        Income tax.    Our income tax expense was $5.1 million for the fiscal year ended March 31, 2013 as compared to $5.1 million for the fiscal year ended March 23, 2012 primarily due to similarities in foreign income tax expense. We expect to incur an increasing amount of income tax expenses that relate to federal and state income tax and international operations. We file federal income tax returns and income tax returns in various state and foreign jurisdictions. Due to the net operating loss carryforwards, our United States federal and state returns are open to examination by the Internal Revenue Service and state jurisdictions for all years since inception.

        Noncontrolling interest.    Noncontrolling interest represents a 44.4% interest in our subsidiary, Digital Link II, LLC, or Digital Link II. Digital Link II was formed for purposes of funding the deployment of digital projector systems and servers to our motion picture exhibitor licensees. The increase in the net income attributable to noncontrolling interest was primarily due to a $0.2 million impairment of digital projectors for the fiscal year ended March 31, 2013.

54

Fiscal year ended March 23, 2012 compared to fiscal year ended March 25, 2011

Revenue

        For the fiscal year ended March 23, 2012, net revenue increased $0.5 million to $246.6 million compared to $246.1 million for the fiscal year ended March 25, 2011.

	Year ended
(in thousands)	March 23, 2012		March 25, 2011			Amount change			Percentage change
Revenue:
Gross license	$	147,801	$	137,970		$	9,831			7	%
Motion picture exhibitor options		—		(36,447	)		36,447			(100	)%
Net license		147,801		101,523			46,278			46	%
Product and other		98,827		144,613			(45,786	)		(32	)%
Total net revenue	$	246,628	$	246,136		$	492			0	%
Other data:
Number of RealD enabled screens (at period end)
Total domestic RealD enabled screens		11,700		8,700			3,000			34	%
Total international RealD enabled screens		8,500		6,300			2,200			35	%
Total RealD-enabled screens		20,200		15,000			5,200			35	%
Number of locations with RealD enabled screens (at period end)
Total domestic locations with RealD enabled screens		2,500		2,300			200			9	%
Total international locations with RealD enabled screens		2,600		2,200			400			18	%
Total locations with RealD enabled screens		5,100		4,500			600			13	%
Number of 3D motion pictures (released during period)		36		26			10			38	%

        The increase in net revenue during the fiscal year ended March 23, 2012 compared to the fiscal year ended March 25, 2011 was primarily due to an increase in the number of RealD-enabled screens, an increase in the number of 3D motion pictures released and the resulting increase in the box office of 3D motion pictures on RealD-enabled screens offset by a decrease of the usage of our eyewear. Our international markets comprised approximately 49% of gross revenue for the fiscal year ended March 23, 2012.

        For the fiscal year ended March 23, 2012, there were 27 motion pictures that contributed greater than $1.0 million of admission-based fees to net license revenue. The top 10 motion pictures that contributed greater than $1.0 million of admission-based fees to net license revenue for the fiscal year ended March 23, 2012 included the following: Transformers: Dark of the Moon ($11.3 million), Harry Potter and the Deathly Hallows Part 2 ($10.9 million), Pirates of the Caribbean: On Stranger Tides ($9.3 million), Thor ($5.8 million), Kung Fu Panda 2 ($5.8 million), Puss in Boots ($5.6 million), The Smurfs ($5.4 million), Rio ($5.3 million), Cars 2 ($4.9 million) and The Adventures of Tintin ($4.7 million). For the fiscal year ended March 25, 2011, there were 25 motion pictures that contributed greater than $1.0 million of admission-based fees to net license revenue. The top 10 motion pictures that contributed greater than $1.0 million of admission-based fees to net license revenue for the fiscal year ended March 25, 2011 included the following: Toy Story 3 ($14.4 million), Shrek Forever After ($9.2 million), Despicable Me ($6.9 million), How to Train Your Dragon ($6.1 million), Tangled ($5.7 million), Alice in Wonderland ($5.5 million), Tron: Legacy ($5.1 million), Clash of the Titans ($4.8 million), The Chronicles of Narnia: The Voyage of the Dawn Treader ($4.7 million) and Megamind ($4.3 million). Our net license revenue has increased on a year-over-year basis, primarily internationally, as a result of the increased number of RealD-enabled screens and the box office

55

generated by those 3D motion picture releases. As of March 25, 2011, all 3,668,340 motion picture exhibitor stock options had vested and all associated reduction of revenue had been recognized. As a result, there was no motion picture exhibitor option expense for the year ended March 23, 2012.

        Net license revenues comprised 60% and 41% of total revenues for the fiscal years ended March 23, 2012 and March 25, 2011, respectively. International license revenues comprised 56% and 54% of our gross license revenues for the fiscal years ended March 23, 2012 and March 25, 2011, respectively.

        The decrease in our net product revenue in the fiscal year ended March 23, 2012, as compared to the fiscal year ended March 25, 2011, was primarily a result of a decrease in eyewear sold to our international markets. The decrease in RealD eyewear volume internationally compared to the prior period resulted from a growing trend among consumers to reuse RealD eyewear for multiple viewings, as well as the inventory build by non-U.S. motion picture exhibitors in prior periods. International product and other revenues comprised 38% and 56% of total product and other revenues for the fiscal years ended March 23, 2012 and March 25, 2011, respectively.

        We expect our future revenue, particularly in our license business, will be driven by the number of RealD-enabled screens and motion pictures released in 3D. As the volume of RealD eyewear usage changes as a result of an expanding 3D motion picture slate and box office, we may experience additional price pressure from our customers. As a result, our net revenues may increase at a slower rate or decline in future periods.

Cost of revenue

	Year ended
(in thousands)	March 23, 2012			March 25, 2011			Amount change			Percentage change
Revenue	$	246,628		$	246,136		$	492			0	%
Cost of Revenue:
License		39,801			17,994			21,807			121	%
Product and other		78,137			160,402			(82,265	)		-51	%
Total cost of revenue	$	117,938		$	178,396		$	(60,458	)		-34	%
Gross profit	$	128,690		$	67,740		$	60,950			90	%
Gross margin		52	%		28	%

        For the fiscal year ended March 23, 2012, our cost of revenue decreased primarily due to decreased RealD eyewear sales and the increased usage of recycled RealD eyewear. Cost of revenue decreased, as a percentage of revenue, to 48% for the fiscal year ended March 23, 2012, as compared to 72% for the fiscal year ended March 25, 2011. Contributing to the improvement in gross margin was an increase in license revenues, a decrease in RealD eyewear sales and the increased usage of recycled eyewear, which generates higher gross margin. The percentage of usage of recycled eyewear may decrease in future periods resulting in lower gross profit and gross margin.

        For the fiscal year ended March 25, 2011, the reduction to revenue resulting from motion picture exhibitor stock options directly contributed to a $36.4 million decrease in gross profit. Excluding the impact of motion picture exhibitor stock options of $36.4 million, gross profit would have been $104.2 million for the fiscal year ended March 25, 2011, and gross margin would have been 37%. The motion picture exhibitor stock options have vested in full as of March 25, 2011 and as a result, there was no motion picture exhibitor option expense for the fiscal year ended March 23, 2012.

        License cost of revenue increased $21.8 million to $39.8 million for the fiscal period ended March 23, 2012 compared to $18.0 million for the fiscal period ended March 25, 2011 primarily as a

56

result of a $9.1 million increase in impairment expense and a $10.7 million increase in depreciation expense resulting from an increase in RealD-enabled screens. Included in license cost of sales is depreciation expense of $25.3 million and $14.6 million for the fiscal years ended March 23, 2012 and March 25, 2011, respectively. Depreciation expense as a percentage of gross license revenue increased to 17% for the fiscal year ended March 23, 2012 from 11% for the fiscal year ended March 25, 2011

        During the three months ended September 23, 2011, we determined that certain of our cinema systems were not recoverable and that the carrying value of the assets exceeded fair value, primarily due to the number of certain of our cinema system assets on hand, including related outstanding purchase commitments and the continuing shift in the mix in the deployment of cinema systems based on the type of digital projectors installed and theater configuration. The fair value was primarily determined by evaluating the discounted future cash flows expected to be generated from the cinema systems. The impairment charged during the three months ended September 23, 2011 to cost of revenue for certain of the cinema systems totaled $6.8 million. Impairment expense for all our Cinema Systems totaled $10.3 million for the year ended March 23, 2012.

        We had a product and other gross profit of $20.7 million for the fiscal year ended March 23, 2012 as compared to a negative product and other gross profit of $15.8 million for the fiscal year ended March 25, 2011, primarily due to RealD eyewear. The decrease in our cost of product and other revenue was a result of the decrease in the volume of RealD eyewear, the increased usage of recycled eyewear and a decrease in freight related expenses. Product and other gross margin improved to 21% for the fiscal year ended March 23, 2012 as compared to negative 11% for the fiscal year ended March 25, 2011. Freight related expense decreased by an aggregate of $10.2 million as a result of the decreased volume of RealD eyewear as well as a reduction in expedited freight charges.

        Film amortization costs included in product and other cost of revenue related to Carmen 3D and Madam Butterfly in 3D was $2.8 million for the year ended March 23, 2012.

        Costs associated with our eyewear recycling program have been expensed in the period incurred. Recycling costs totaled $5.5 million for the fiscal year ended March 23, 2012 and $8.1 million for the fiscal year ended March 25, 2011, and included the cost to transport RealD eyewear between theaters and the recycling production facility and costs to process the RealD eyewear for reuse.

        Our cost of revenue as a percentage of net revenue, as well as our gross profit and gross margin, will be affected in the future by the relative mix of net license and net product revenue, the mix of domestic and international product revenues, the relative mix of products and any new revenue sources, impairment charges and the percentage of usage of recycled eyewear. Impairment charges in future periods may increase as a result of system upgrades and replacements as well as changes in product offerings and new technology. As the number of RealD-enabled screens and the number of 3D motion pictures and attendance increase, our total cost of revenue may continue to increase.

Operating expenses

	Year ended
(in thousands)	March 23, 2012		March 25, 2011		Amount change		Percentage change
Research and development	$	16,500	$	15,582	$	918		6	%
Selling and marketing		27,682		24,139		3,543		15	%
General and administrative		42,189		35,835		6,354		18	%
Total operating expenses	$	86,371	$	75,556	$	10,815		14	%

57

        Research and development.    Our research and development expenses increased primarily due to a $0.8 million increase of depreciation expense, $0.7 million in engineering and prototype expenses and $0.2 million in consultant and professional fees in the fiscal year ended March 23, 2012 compared to the fiscal year ended March 25, 2011. These increases were offset by a decrease of $0.2 million in personnel costs, $0.3 million in occupancy costs and $0.2 million in travel and entertainment expenses. The change in personnel costs includes an increase of $1.1 million of share-based compensation expense offset by decreases of $0.8 million in salaries and benefits and $0.5 million in discretionary and contractual bonuses as the number of research and development personnel decreased to 30 as of March 23, 2012 from 37 as of March 25, 2011. We expect to increase our research and development expenses to support our anticipated growth in consumer electronics projects and initiatives, primarily for additional personnel, consultants and prototype and materials costs, as well as for continued investment in our cinema business.

        Selling and marketing.    Our selling and marketing expenses increased primarily due to a $2.5 million increase in personnel costs. The change in personnel costs includes an increase of $1.2 million of salaries and benefits and $1.8 million of share-based compensation expense bonuses related to the increase in the number of selling and marketing personnel to 31 at March 23, 2012 from 21 at March 25, 2011, partially offset by a decrease of $0.5 million of discretionary and contractual bonuses. Selling and marketing expense also increased from the incurrence of additional advertising and marketing initiatives of $2.4 million, occupancy costs of $0.5 million, public relations expenses of $0.3 million, travel and entertainment expenses of $0.2 million, depreciation expense of $0.1 million, partially offset by decreases in professional fees of $0.7 million and outside services of $0.5 million in the fiscal year ended March 23, 2012. Selling and marketing expense for RealD co-produced feature films decreased $1.4 million related to the selling and marketing costs related to the feature films, Madam Butterfly in 3D, which we co-produced with London's Royal Opera House and was released in March 2012 and Carmen 3D, which we also co-produced with London's Royal Opera House and was released in March 2011. Personnel costs and advertising and marketing spending are expected to continue to increase in order to drive revenue growth. We expect to incur additional selling and marketing expenses in fiscal year 2013 and beyond as we increase our international marketing efforts, particularly in Asia and Latin America, build our consumer electronics business worldwide and market future 3D films.

        General and administrative.    Our general and administrative expenses increased primarily due to a $5.0 million increase in personnel costs. The increase in personnel costs includes an increase in salaries and benefits of $2.3 million as the number of general and administrative employees increased to 37 at March 23, 2012 from 30 at March 25, 2011 to support our overall growth, including the requirements of being a public company. Also included in personnel costs is an increase of $3.5 million related to share-based compensation expense, partially offset by a decrease of $0.8 million related to discretionary and contractual bonuses. We incurred increases in legal and professional fees of $3.1 million, occupancy costs of $1.1 million, depreciation expenses of $0.5 million, travel and entertainment expenses of $0.4 million and foreign business tax related expense of $0.6 million to support the growth in our operations. These increases were partially offset by decreases in bad debt expense of $3.8 million and public company related expenses of $0.6 million, which include listing, registration and issuance costs, as well as investor relations and compliance fees. We expect to incur additional general and administrative expenses to support the general growth in operations, as well as to comply with SEC reporting requirements, stock exchange listing standards and the provisions of the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

Other

        Interest expense, net.    Net interest expense for the fiscal years ended March 23, 2012 and March 25, 2011 was $1.0 million and $0.9 million, respectively. Our interest expense increased primarily due to the interest rates related to the borrowings under our Credit Agreement.

58

        Other income (loss).    Other income (loss) was $0.8 million for the year ended March 23, 2012 as compared to $6.2 million for the year ended March 25, 2011. Other income (loss) decreased primarily due to a $5.0 million gain from the sale of digital projectors during the year ended March 25, 2011.

        Income tax.    Our income tax expense for the fiscal year ended March 23, 2012 was $5.1 million, primarily due to an increase in our foreign tax expense. We have net operating losses that may potentially be offset against future earnings. We expect to incur an increasing amount of income tax expenses that relate to federal and state income tax and international operations. We file federal income tax returns and income tax returns in various state and foreign jurisdictions. Due to the net operating loss carryforwards, our United States federal and state returns are open to examination by the Internal Revenue Service and state jurisdictions for all years since inception.

        Noncontrolling interest.    Noncontrolling interest represents a 44.4% interest in our subsidiary, Digital Link II, LLC, or Digital Link II. Digital Link II was formed for purposes of funding the deployment of digital projector systems and servers to our motion picture exhibitor licensees. The decrease in the net income attributable to noncontrolling interest was primarily due to the gain from the sale of digital projectors for the year ended March 25, 2011.

Seasonality and quarterly performance

        Our operations are generally subject to seasonal trends based on the number of 3D motion pictures released and the box office of those 3D motion pictures. As is the case with other participants in the motion picture exhibition industry, we expect that our fiscal quarters during the summer and early winter holiday periods generally will tend to show stronger box office performance and higher revenues due to the summer and holiday movie-going seasons, when many of the largest grossing films in any given year are typically released. By comparison, the quarter ending in March traditionally does not benefit from the same box office performance due to the number and nature of the motion pictures released in those seasonal periods. We expect to experience seasonal fluctuations in results of operations as a result of these trends. Our quarterly financial results have fluctuated in the past and may continue to fluctuate in the future based on a number of factors, many of which are beyond our control. Factors that may cause our operating results to vary or fluctuate include those discussed in Part I, Item 1A below under the caption "Risk factors."

Liquidity and capital resources

        Since our inception and through March 31, 2013, we have financed our operations through the proceeds we received in connection with our IPO, the sale of redeemable convertible preferred stock, borrowings under our previous credit facility agreement and our current Credit Agreement with City National and through the net cash provided by operating activities. Our cash flow from operating activities has historically been significantly impacted by the contractual payment terms and patterns related to the license of our RealD Cinema Systems and use and sale of our RealD eyewear, as well as significant investments in research, development, selling and marketing activities and corporate infrastructure.

        Cash provided by operating activities is expected to be a primary recurring source of funds in future periods and will be driven by our expected revenue generated from the 3D motion pictures exhibited on our RealD Cinema Systems and an increase in the number of RealD-enabled screens, partially offset by an increase in working capital requirements associated with installing new RealD Cinema Systems, logistics and recycling costs for our RealD eyewear. Depending on our operating performance in any given period and the installation rate of additional RealD Cinema Systems, including system upgrades and replacements, changes in product offerings and new technology, we expect to supplement our liquidity needs primarily with borrowings under our Credit Agreement described below.

59

        On April 19, 2012, we entered into a credit agreement (the "Credit Agreement") with City National Bank, a national banking association ("City National"). Pursuant to the Credit Agreement, the lenders thereunder will make available to us:

•

a revolving credit facility (including a letter of credit sub-facility) in a maximum amount not to exceed $75 million (the "Revolving Facility"); and

•

a delayed-draw term loan facility in a maximum amount not to exceed $50 million (the "Term Loan Facility").

        The Revolving Facility and the Term Loan Facility replaced existing revolving and term loan facilities provided under our pre-existing credit and security agreement with City National, which had been most recently amended on December 6, 2011.

        We intended to borrow additional amounts under our Credit Agreement facility to fund various growth initiatives, potentially including accelerated research and product development, acquisitions, capital expenditures and stock repurchases. We expect that we will maintain a significant amount of indebtedness on an ongoing basis. Our obligations under our Credit Agreement are secured by a first priority security interest in substantially all of our tangible and intangible assets and are fully and unconditionally guaranteed by our subsidiaries, ColorLink Inc., a Delaware corporate ("ColorLink"), and Stereographics Corporation, a California corporation ("Stereographics"). In connection with our execution of the Credit Agreement, on April 19, 2012, each of ColorLink and Stereographics entered into a general continuing guaranty (the "Guaranty") in favor of City National and the lenders under the Credit Agreement, pursuant to which they irrevocably and unconditionally guaranteed our obligations under the Credit Agreement and all related loan documents. In addition, on April 19, 2012, we, ColorLink and Stereographics entered into a security agreement in favor of City National and the lenders under the Credit Agreement, pursuant to which they granted a security interest in substantially all of their assets to secure their obligations under the Credit Agreement, the Guaranty and the related loan documents.

        The Revolving Facility matures on April 17, 2015, and the Term Loan Facility matures the last day of the twelfth (12^th) full fiscal quarter after the earlier of October 18, 2013 or the date that aggregate term loan commitments have been drawn in full, which maturity dates may, in each case, be accelerated in certain circumstances.

        The Revolving Facility provides for, at our option, Eurodollar Rate Loans, which bears interest at the London Interbank Offered Rate ("LIBOR") plus two and one-half percent (2.50%) or Base Rate Loans, which bear interest at the greatest of (a) the Federal Funds Rate plus ¹/2 of 1%, (b) the Prime Rate, and (c) the Eurodollar Rate for a one month Interest Period on such day plus 1.00%, plus one and one-half percent (1.5%).

        Under the Credit Agreement, our business will be subject to certain limitations, including limitations on our ability to incur additional debt, make certain investments or acquisitions, enter into certain merger and consolidation transactions, and sell our assets other than in the ordinary course of business. We will also be required to maintain compliance with certain financial covenants, including a minimum fixed charge coverage ratio and a maximum leverage ratio. As of March 31, 2013, we were in compliance with all financial covenants in the Credit Agreement. If we fail to comply with any of the covenants or if any other event of default, as defined in the Credit Agreement, should occur, the bank lenders could elect to prevent us from borrowing and declare the indebtedness to be immediately due and payable.

        As of March 31, 2013, our primary sources of liquidity were our cash and cash equivalents of $31.0 million and funds available to be borrowed under the Credit Agreement consisting of the Revolving Facility of up to $75.0 million and the Term Loan Facility of $37.5 million, of which $65.0 million was available for borrowing.

60

        On July 21, 2010, we completed the initial public offering of our common stock, or our IPO, in which we sold and issued 6 million shares of common stock at an issue price of $16.00 per share. A total of approximately $96 million in gross proceeds were raised from our IPO, or $81.9 million in net proceeds after deducting underwriting discounts and commissions of approximately $6.7 million and other offering costs of approximately $7.4 million.

        On July 21, 2010, we repaid $25.1 million under our previous credit facility agreement.

        On July 23, 2010, 407,593 shares were issued pursuant to the exercise of motion picture exhibitor stock options.

        On December 6, 2010, we completed a secondary follow-on public offering in which certain selling stockholders sold 7,815,001 shares of our common stock at a price of $27.75 per share. We did not sell any shares in this follow-on public offering and we received no proceeds in connection with this offering.

        On December 17, 2010, 1,222,780 shares were issued pursuant to the exercise of motion picture exhibitor stock options.

        On January 31, 2011, 1,110,284 shares were issued pursuant to the exercise of motion picture exhibitor stock options.

        On March 9, 2011, 407,594 shares were issued pursuant to the exercise of motion picture exhibitor stock options.

        On March 16, 2011, 112,496 shares were issued pursuant to the exercise of motion picture exhibitor stock options.

        On May 9, 2011, 407,593 shares were issued pursuant to the exercise of motion picture exhibitor stock options.

        All 3,668,340 motion pictures exhibitor stock options have been exercised as of May 9, 2011.

        See "Part I, Item 1A: "Risk Factors—Risks related to owning our common stock—Sales of outstanding shares of our common stock (or shares of our common stock issued upon exercise of stock options) into the market in the future could cause the market price of our stock to drop significantly, even if our business is doing well."

        Our cash equivalents primarily consist of money market funds and other marketable securities that mature within three months from the date of purchase. The carrying amount of cash equivalents reasonably approximates fair value due to the short maturities of these instruments. The primary objective of our investment activities is preservation of capital, fulfillment of liquidity needs and fiduciary control of cash and investments. We also seek to maximize income from our investments without assuming significant risk. We do not enter into investments for trading or speculative purposes.

        We believe that our cash, cash equivalents, potential cash flows from operations, and our availability under our Credit Agreement will be sufficient to satisfy our currently anticipated cash requirements through at least the next 12 months.

        The following table sets forth our major sources and (uses) of cash for the periods indicated:

	Year ended
(in thousands)	March 23, 2013			March 23, 2012			March 25, 2011
Operating activities	$	79,697		$	43,001		$	35,098
Investing activities		(37,900	)		(57,469	)		(87,031	)
Financing activities	$	(35,786	)	$	22,426		$	55,735

61

Cash flow from operating activities

        Net cash inflows from operating activities during the fiscal year ended March 31, 2013 primarily resulted from a decrease in inventories and a decrease in accounts receivable, partially offset by cash used from a decrease in accrued expenses. The decrease in inventories is primarily due to the decreased volume of inventory purchases and usage of existing inventories. The decrease in accounts receivable was related to timing of customer collections and vendor payments. The decrease in accrued expenses was due to decreased business activities, resulting in reduced amounts due to vendors and compensation payable to employees.

        Net cash inflows from operating activities during the fiscal year ended March 23, 2012 primarily resulted from improved operating performance as RealD Cinema System installations and related licensing revenues driven by admissions increased. Net cash inflows from operating activities also benefited from decreased eyewear inventories.

        Net cash inflows from operating activities during the fiscal year ended March 25, 2011 primarily resulted from improved operating performance as RealD Cinema System installations and related licensing revenues driven by admissions increased. Net cash inflows from operating activities also benefited from increases in accounts payable and accrued expenses, partially offset by an increase in eyewear inventories. Increases in accounts payable and accrued expenses were due to increased business activities, resulting in significant amounts due to vendors and compensation payable to employees. Eyewear inventories grew in anticipation of the summer 2011 3D film slate and in order to support an increase in RealD Cinema System installations and admissions.

Cash flow from investing activities and capital resources

        For fiscal years 2013, 2012 and 2011, cash outflows for investing activities is primarily related to the establishment of our initial infrastructure and for the purchase of component parts for our RealD Cinema Systems, digital projectors, and other property, equipment and leasehold improvements. Capital expenditures were $34.3 million for the fiscal year ended March 31, 2013, $61.5 million for the fiscal year ended March 23, 2012, and $102.6 million for the fiscal year ended March 25, 2011. In the future, we will continue to invest in our business to grow sales and develop new products and support the related increasing employee headcount. We expect capital expenditures to represent a decreasing percentage of net revenue in the future.

        In the fiscal year ended March 31, 2013, we purchased a portfolio of 2D-to-3D conversion patents in the amount of $6.1 million and may consider future purchases of intangible assets, acquisitions or other investing activities.

        In the fiscal year ended March 31, 2013, we received proceeds of $2.5 million as a result of the sale of digital projectors to certain of our motion picture exhibitors. In the fiscal year ended March 23, 2012, we received proceeds of $4.0 million as a result of the sale of digital projectors to certain of our motion picture exhibitors. In the fiscal year ended March 25, 2011, we purchased and sold available-for-sale securities of $6.8 million. Additionally, in the fiscal year ended March 25, 2011, we received proceeds of $15.6 million as a result of the sale of digital projectors to certain of our motion picture exhibitors.

Cash flow from financing activities

        Net cash outflows from financing activities for the year ended March 31, 2013 primarily resulted from $25.0 million of repayments on our prior revolving and term loan facility, $12.5 million of repayments on the Credit Agreement, $60.4 million in stock repurchases, $1.2 million in payments of debt issuance costs and $1.0 million in distributions to a noncontrolling interest. These outflows were

62

partially offset by $60.0 million in proceeds from the Credit Agreement, $4.3 million proceeds from issuance of common stock from the exercise of stock options and our employee stock purchase plan.

        Net cash inflows from financing activities for the year ended March 23, 2012 primarily resulted from proceeds from the Credit Agreement of $30.0 million partially offset by $5.0 million of repayments on the Credit Agreement.

        Net cash inflows from financing activities for the fiscal year ended March 25, 2011 primarily resulted from the proceeds from the completion of our IPO in which we sold and issued 6 million shares of common stock at an issue price of $16.00 per share. A total of approximately $96 million in gross proceeds were raised from our IPO, or $81.9 million in net proceeds after deducting underwriting discounts and commissions of approximately $6.7 million and other offering costs of approximately $7.4 million. We used the net proceeds from our IPO to repay $25.2 million of amounts outstanding under our previous credit facility agreement. In the fiscal year ended March 25, 2011, repayments of long-term debt of $9.7 million and a noncontrolling interest distribution of $0.9 million offset proceeds from our previous credit facility agreement of $5.0 million.

        From time to time, we enter into equipment purchase agreements with certain of our vendors for the purchase of digital projectors, digital servers, lenses and accessories. We pay a portion of the cost of the equipment upon delivery and finance a portion of the purchase price by issuing notes payable. Certain of these notes payable are non-interest bearing. In those cases, we record the net present value of the notes payable assuming an implied annual interest rate which is approximately 8.4%. Interest expense is based on annual interest rates ranging from 7.0% to 8.4%. The notes are secured by the underlying equipment. Notes payable totaled $2.3 million as of March 25, 2011. There were no notes payable outstanding as of March 31, 2013 and March 23, 2012.

        On April 19, 2012, we entered into a Credit Agreement with City National to provide us with a Revolving Facility in a maximum amount not to exceed $75 million and a Term Loan Facility in a maximum amount not to exceed $50 million.

        The Revolving Facility and the Term Loan Facility replaced existing revolving and term loan facilities provided under our pre-existing credit and security agreement with City National, which had been most recently amended on December 6, 2011.

        Debt issuance costs related to the completion of the Credit Agreement totaled $1.2 million and were recorded as a deferred charge and amortized over the contractual life of the agreement recorded as interest expense.

        We intend to borrow additional amounts under the Credit Agreement to fund various growth initiatives, including potential accelerated research and product development, acquisitions, capital expenditures and stock repurchases. We expect that we will maintain a significant amount of indebtedness on an ongoing basis. Our obligations under the Credit Agreement are secured by a first priority security interest in substantially all of our tangible and intangible assets and are fully and unconditionally guaranteed by our subsidiaries, ColorLink, Inc. and Stereographics Corporation.

        Our Revolving Facility matures on April 17, 2015, and the Term Loan Facility matures the last day of the twelfth (12th) full fiscal quarter after the earlier of October 18, 2013 or the date that aggregate term loan commitments have been drawn in full, which maturity dates may, in each case, be accelerated in certain circumstances.

        Under the Credit Agreement, our business is subject to certain limitations, including limitations on our ability to incur additional debt, make certain investments or acquisitions, enter into certain merger and consolidation transactions, and sell our assets other than in the ordinary course of business. We will also be required to maintain compliance with certain financial covenants, including a minimum fixed charge coverage ratio and a maximum leverage ratio. As of March 31, 2013, we were in

63

compliance with all financial covenants in the Credit Agreement. If we fail to comply with any of the covenants or if any other event of default, as defined in the Credit Agreement, should occur, the bank could elect to prevent us from borrowing and declare the indebtedness to be immediately due and payable.

        As of March 31, 2013, there was $47.5 million outstanding under the Credit Agreement and $65.0 million available to borrow under the Credit Agreement. In the future, we may continue to utilize commercial financing, lines of credit and term loans for general corporate purposes, stock repurchases, including investing in technology.

        Proceeds from employee stock option exercises and employee stock purchase plan were $4.3 million, $1.0 million and $3.9 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively. There were no proceeds from the exercise of warrants in our common stock for the fiscal year ended March 31, 2013. Proceeds from the exercise of warrants in our common stock were $0.3 million and $0.6 million for the fiscal years ended March 23, 2012 and March 25, 2011, respectively. From time to time, we expect to receive cash from the exercise of employee stock options and warrants and our employee stock purchase plan of our common stock. Proceeds from the exercise of employee stock options and warrants outstanding and employee stock purchase plan will vary from period to period based upon, among other factors, fluctuations in the market value of our common stock relative to the exercise price of such stock options and warrants.

        During the fiscal year ended March 25, 2011, 3,260,747 shares were issued pursuant to the exercise of motion picture exhibitor stock options described elsewhere in this Annual Report on Form 10-K.

        All 3,668,340 motion pictures exhibitor stock options have been exercised as of May 9, 2011.

        On April 20, 2012, we announced that our board of directors had approved an authorization to repurchase up to $50 million of RealD common stock. On December 14, 2012, our board of directed approved a $25 million increase in our stock repurchase plan, increasing the $50 million repurchase plan announced on April 20, 2012 to $75 million. The number of shares to be repurchased and the timing of any potential repurchases will depend on factors such as the Company's stock price, economic and market conditions, alternative uses of capital, and corporate and regulatory requirements. Repurchases of common stock may be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when RealD might otherwise be precluded from doing so under insider trading laws, and a variety of other methods, including open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, or by any combination of such methods. The repurchase program may be suspended or discontinued at any time.

        Pursuant to the stock repurchase plan authorized by our board of directors, we repurchased a total of 5,927,729 shares of common stock at an average price per share of $10.20, including sales commissions, for an aggregate cost of $60.4 million during the fiscal year ended March 31, 2013.

        See "Part I, Item 1A: "Risk factors—Risks related to owning our common stock—Sales of outstanding shares of our common stock (or shares of our common stock issued upon exercise of stock options) into the market in the future could cause the market price of our stock to drop significantly, even if our business is doing well."

64

Contractual obligations and commitments

        The following table sets forth our contractual obligations and commitments as of March 31, 2013 (in thousands):

	Payments due by period
	Total		Less than 1 Year		Years 2 - 3		Years 4 - 5		More than 5 Years
Secured credit facilities(1)	$	56,988	$	2,801	$	50,697	$	3,490	$	—
Operating lease obligations(2)		38,335		4,152		8,242		7,913		18,028
Purchase obligations(3)		10,462		10,462		—		—		—
Total	$	105,785	$	17,415	$	58,939	$	11,403	$	18,028

(1)

See Note 6, "Borrowings" and Note 14, "Subsequent events (unaudited)" to our consolidated financial statements, which are included elsewhere in this Annual Report on Form 10-K. Includes additional $5.0 million proceeds from the Credit Facility in April 2013. Includes estimated interest payments related to the Credit Facility.

(2)

See Note 7, "Commitments and contingencies," to our consolidated financial statements, which are included elsewhere in this Annual Report on Form 10-K.

(3)

Consists of contractual purchase obligations with certain of our vendors including some revolving 90-day supply commitments.

Off-balance sheet arrangements

        We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities that would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in those types of relationships. We enter into guarantees in the ordinary course of business related to the guarantee of our own performance and the performance of our subsidiaries.

Non-U.S. GAAP discussion

        In addition to our U.S. GAAP results, we present Adjusted EBITDA as a supplemental measure of our performance. However, Adjusted EBITDA is not a recognized measurement under U.S. GAAP. We define Adjusted EBITDA as net income (loss), plus net interest expense, income and other taxes, depreciation and amortization, share-based compensation expense and exhibitor option expense, as further adjusted to eliminate the impact of certain other items that we do not consider indicative of our core operating performance. Management considers our core operating performance to be that which can be affected by our managers in any particular period through their management of the resources that affect our underlying revenue and profit generating operations that period. Non-U.S. GAAP adjustments to our results prepared in accordance with U.S. GAAP are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

65

        Set forth below is a reconciliation of Adjusted EBITDA to net income (loss) for the following periods indicated:

	Year ended
(in thousands)	March 31, 2013			March 23, 2012			March 25, 2011
Net income (loss)	$	(9,887	)	$	37,025		$	(6,825	)
Add (deduct):
Interest expense, net		1,483			971			919
Income tax expense		5,064			5,105			4,272
Depreciation and amortization		33,131			28,266			15,737
Other (income) loss(1)		982			(782	)		(6,182	)
Share-based compensation expense(2)		18,474			15,744			8,950
Exhibitor option expense(3)		—			—			36,447
Impairment of assets and intangibles(4)		8,679			10,269			1,128
Sales and use tax(5)		3,950			6,363			6,484
Property tax(6)		1,447			1,434			1,090
Management fee(7)		—			—			175
Adjusted EBITDA	$	63,323		$	104,395		$	62,195

(1)

Includes gains and losses from foreign currency exchange and foreign currency forward contracts.

(2)

Represents share-based compensation expense of nonstatutory and incentive stock options and restricted stock units and employee stock purchase plan to employees, non-employees, officers and directors.

(3)

Represents stock options granted to some of our motion picture exhibitor licensees. The amounts are recorded as contra revenue in the consolidated financial statements.

(4)

Represents impairment of long-lived assets, such as fixed assets, theatrical equipment and related purchase commitments and identifiable intangibles.

(5)

Represents taxes incurred by us for cinema license and product revenue.

(6)

Represents property taxes on RealD Cinema Systems and digital projectors.

(7)

Represents payment of management fees to our Series C mandatorily redeemable convertible preferred stockholder (included in general and administrative expense), which were terminated upon the completion of our IPO.

        We present Adjusted EBITDA because we believe it assists investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, we use Adjusted EBITDA in developing our internal budgets, forecasts and strategic plan; in analyzing the effectiveness of our business strategies in evaluating potential acquisitions; in making compensation decisions and in communications with our board of directors concerning our financial performance. Adjusted EBITDA has limitations as an analytical tool which includes, among others, the following:

•

Adjusted EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

•

Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

66

•

Adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debts;

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;

•

non-cash compensation is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating our ongoing operating performance for a particular period;

•

Adjusted EBITDA does not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations;

•

Adjusted EBITDA also differs from the amounts calculated under the similarly titled definition in our Credit Agreement, which is further adjusted to reflect certain other cash and non-cash charges and is used to determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments; and

•

other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

        Because of these limitations, Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with U.S. GAAP. We compensate for these limitations by relying primarily on our U.S. GAAP results and using Adjusted EBITDA only as a supplement. Our consolidated financial statements and the notes to those statements included elsewhere are prepared in accordance with U.S. GAAP.

        Beginning in the first quarter of fiscal 2014 that ends on June 30, 2013, RealD intends to modify its definition of Adjusted EBITDA for financial reporting purposes to align with the Adjusted EBITDA definition under RealD's expanded credit facility. As a result, for future reporting periods, RealD will no longer add back sales and use tax and property tax to calculate Adjusted EBITDA for financial reporting purposes.

Critical accounting policies and estimates

        The discussion in this Item 7 is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, estimates and judgments are evaluated, including those related to revenue recognition, revenue deductions, product returns, fair value of our common stock, share-based compensation, inventories, definite lived asset impairments, goodwill impairment and income taxes. These estimates and judgments are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, which form the basis for our judgments about the carrying values of assets and liabilities not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty. Actual results may differ from these estimates.

        We believe the following critical accounting policies, among others, affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.

Revenue recognition

        We derive substantially all of our revenue from the license of our RealD Cinema Systems and the product sale of our RealD eyewear. We evaluate revenue recognition for transactions using the criteria

67

set forth by the SEC in Staff Accounting Bulletin No. 104, Revenue Recognition (SAB 104) and Accounting Standards Codification Topic 605, Revenue Recognition (ASC 605). The revenue recognition guidance states that revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the seller's price to the buyer is fixed or determinable and collectability is reasonably assured.

        License revenue.    License revenue is accounted for as an operating lease. License revenue is primarily derived under a per-admission, periodic fixed fee, or per-motion picture basis with motion picture exhibitors. Amounts received up front, less estimated allowances, are deferred and recognized over the lease term using the straight-line method. Additional lease payments that are contingent upon future events outside our control, including those related to admission and usage, are recognized as revenues when the contingency is resolved and we have no more obligations to our customers specific to the contingent payment received. Certain of our license revenue from leasing our RealD Cinema Systems is earned upon admission by the motion picture exhibitor's consumers. Our licensees, however, do not report and pay for such license revenue until after the admission has occurred, which may be received subsequent to our fiscal period end. We estimate and record licensing revenue related to motion picture exhibitor consumer admissions in the quarter in which the admission occurs, but only when reasonable estimates of such amounts can be made. We determine that there is persuasive evidence of an arrangement upon the execution of a license agreement or upon the receipt of a licensee's admissions report. Revenue is deemed fixed or determinable upon receipt of a licensee's admissions report. We determine collectability based on an evaluation of the licensee's recent payment history.

        Product revenue.    We recognize product revenue, net of allowances, when title and risk of loss have passed and when there is persuasive evidence of an arrangement, the payment is fixed or determinable, and collectability of payment is reasonably assured. In the United States and Canada, certain of our product revenue from the sale of our RealD eyewear is earned upon admission and usage by the motion picture exhibitor's consumers. Our customers, however, do not report admission or usage information until after the admission and usage has occurred, and such information may be received subsequent to our fiscal period end. We estimate and record such product revenue in the quarter in which the admission and usage occurs, but only when reasonable estimates of such amounts can be made.

        Revenue reductions.    We record revenue net of motion picture exhibitor stock options and estimated revenue allowances. In connection with certain exhibitor licensing agreements, we issued the motion picture exhibitors a 10-year option to purchase shares of our common stock at approximately $0.00667 per share. The stock options vest upon the achievement of screen installation targets. Motion picture exhibitor stock options are valued at the underlying stock price at each reporting period until the targets are met. Amounts recognized are based on the number of RealD-enabled screens as a percentage of total screen installation targets. The stock options do not have net cash settlement features. Amounts recorded as a revenue reduction totaled $36.4 million for the year ended March 25, 2011. There were no amounts recorded as a revenue reduction for the year ended March 31, 2013 and March 23, 2012. As of March 25, 2011, all 3,668,340 motion picture exhibitor stock options had vested and all associated reduction of revenue had been recognized.

Share-based compensation

        We account for share-based awards granted to employees and directors by recording compensation expense based on estimated fair values. We estimate the fair value of share-based payment awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our consolidated statements of operations. Share-based awards are attributed to expense using the straight-line method over the vesting period.

68

We determine the value of each option award that contains a market condition using a lattice-based option valuation model, while all other option awards are valued using the Black-Scholes valuation model as permitted under ASC 718, Compensation—Stock Compensation. The assumptions used in calculating the fair value of share-based payment awards represent our best estimates. Our estimates of the fair values of share-based awards granted and the resulting amounts of share-based compensation recognized may be impacted by certain variables including stock price volatility, employee stock option exercise behaviors, additional stock option grants, modifications, estimates of forfeitures, and the related income tax impact.

Inventories

        Domestically, we provide our RealD eyewear free of charge to motion picture exhibitors and then receive a fee from the motion picture studios for the usage of that RealD eyewear by the motion picture exhibitors' consumers.

        For RealD eyewear located at a motion picture exhibitor, we believe that it is not operationally practical to perform physical counts or request the motion picture exhibitor to perform physical counts and confirm quantities held to ensure that losses due to damage, destruction, and shrinkage are specifically recognized in the period incurred due to the number of domestic RealD-enabled screens and related usage of RealD eyewear. We believe that the cost to monitor shrinkage or usage significantly outweighs the financial reporting benefits of using a specific identification methodology of expensing. We believe that utilizing a composite method of expensing RealD eyewear inventory costs provides a rational and reasonable approach to ensuring that shrinkage is provided for in the period incurred and that inventory costs are expensed in the periods that reasonably reflect the periods in which the related revenue is recognized. In doing so, we believe the following methodology reasonably and generally reflects periodic income or loss under these facts and circumstances:

•

For an estimated period of time following shipment to domestic motion picture exhibitors, no expense is recognized between the time of shipment and until the delivery is made as the inventory unit is in transit and unused.

•

The inventory unit cost is expensed on a straight-line basis over an estimated usage period beginning when we believe usage of the inventory unit has started. In estimating the expensing start date and related expense period, we consider various factors including, but not limited to, those relating to a 3D motion picture's opening release date, a 3D motion picture's expected release period, the number of currently playing 3D motion pictures, the motion picture exhibitor's ordering and stocking patterns and practices and the quantities shipped per inventory unit.

        We believe that the expensing methodology described above rationally and reasonably approximates the period the related usage occurs resulting in our RealD eyewear product revenue. The expensing start date following the date of shipment is meant to approximate the date at which usage begins. Additionally, as the expense recognition period has been and is expected to continue to be short, we believe it adequately recognizes inventory impairments due to loss and damage on a timely basis. We further believe that exposures due to loss or damage, if any, are considered normal shrinkage and a necessary and expected cost to generate the revenue per 3D motion picture earned through RealD eyewear usage. We continue to monitor the reasonableness of this methodology to ensure that it approximates the period over which the related RealD eyewear product revenue is earned and realizable. RealD eyewear inventory costs for products shipped that have not yet been expensed are reported as deferred costs-eyewear.

69

Impairment of long-lived assets

        We review long-lived assets, such as property and equipment, cinema systems, digital projectors and intangibles, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Factors or circumstances that could indicate the occurrence of such events include current period operating or cash flow losses combined with a history of operating or cash flow losses, a projection or forecast that demonstrates continuing operating or cash flow losses, or incurring costs in excess of amounts originally expected to acquire or construct an asset. If the asset is not recoverable, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value.

Goodwill impairment

        Goodwill is deemed to have an indefinite useful life and therefore is not amortized. We evaluate our goodwill for impairment using a two-step process that is performed at least annually during our fourth fiscal quarter, or whenever events or circumstances indicate that goodwill may be impaired. The first step is a comparison of the fair value of an internal reporting unit with its carrying amount, including goodwill. A reporting unit is an operating segment or one level below an operating segment. If the fair value of the reporting unit exceeds its carrying value, goodwill of the reporting unit is not considered impaired and the second step is unnecessary. If the carrying value of the reporting unit exceeds its fair value, the second step is performed to measure the amount of impairment by comparing the carrying amount of the goodwill to a determination of the implied value of the goodwill. If the carrying amount of goodwill is greater than the implied value, an impairment loss is recognized for the difference. We currently have one reporting unit in which goodwill resides and the reporting unit did not fail step one.

Deferred tax asset valuation and tax exposures

        In preparing our consolidated financial statements, we are required to make estimates and judgments that affect our accounting for income taxes. This process includes estimating actual current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences, including the timing of recognition of share-based compensation expense, result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. We also assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent that we believe that recovery is not likely, we have established a valuation allowance. We assess realization of our deferred tax assets based on all available evidence in order to conclude whether it is more likely than not that the deferred tax assets will be realized. Available evidence considered by us includes, but is not limited to, our historic operating results, projected future operating results, reversing temporary differences, changing business circumstances, and the ability to realize certain deferred tax assets through loss and tax credit carry-back and carry-forward strategies. As of March 31, 2013, we have determined based on the weight of the available evidence, both positive and negative, to provide for a valuation allowance against substantially all of the net deferred tax assets. The current deferred tax assets not reserved for by the valuation allowance are those in foreign jurisdictions whereby future realization is more likely than not to be obtained. If there is a change in circumstances that causes a change in judgment about the realizability of the deferred tax assets, we will adjust all or a portion of the applicable valuation allowance in the period when such change occurs.

        We are subject to ongoing tax exposures, examinations and assessments in various jurisdictions. Accordingly, we may incur additional tax expense based upon the outcomes of such matters. In addition, when applicable, we adjust tax expense to reflect our ongoing assessments of such matters which require judgment and can materially increase or decrease our effective rate as well as impact operating results.

70

        Significant judgment is required in determining the provision for income taxes, deferred tax assets and liabilities, the valuation allowance against our deferred tax assets and uncertainty in income tax positions. Our financial position and results of operations may be materially impacted if actual results significantly differ from these estimates or the estimates are adjusted in future periods.

Contingencies and assessments

        We are subject to various loss contingencies and assessments arising in the course of our business, some of which relate to litigation, claims, property taxes and sales and use or goods and services tax assessments. We consider the likelihood of the loss or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss, contingencies and assessments. An estimated loss contingency or assessment is accrued when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted. Based on the information presently available, including discussion with counsel and other consultants, management believes that resolution of these matters will not have a material adverse effect on our business, consolidated results of operations, financial condition or cash flows.

Recent accounting pronouncements

        In February 2013, the FASB issued Accounting Standards Update ("ASU") No. 2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,". ASU 2013-02 finalizes the requirements of ASU 2011-05 that ASU 2011-12 deferred, clarifying how to report the effect of significant reclassifications out of accumulated other comprehensive income. ASU 2013-02 is to be applied prospectively. We do not expect the adoption of ASU 2013-02 to have a material impact on our consolidated financial statements.

        In March 2013, the FASB issued ASU 2013-05, "Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity,". The objective of ASU 2013-05 is to resolve the diversity in practice regarding the release into net income of the cumulative translation adjustment upon derecognition of a subsidiary or group of assets within a foreign entity. We do not expect the adoption of ASU 2013-05 to have a material impact on our consolidated financial statements.

Item 7A.    Quantitative and qualitative disclosures about market risk

        We have operations outside the United States. We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate, foreign exchange and inflation risks as well as changes in the general economic conditions in the countries where we conduct business. To reduce certain of these risks, we monitor the financial condition of our large customers and limit credit exposure by collecting in advance and setting credit limits, as we deem appropriate. In addition, our investment strategy currently has been to invest in financial instruments that are highly liquid, readily convertible into cash and which mature within three months from the date of purchase. We also enter into foreign exchange derivative hedging transactions as part of our risk management program. For accounting purposes, we do not designate any of our derivative instruments as hedges and we do not use derivatives for speculating trading purposes and are not a party to leveraged derivatives.

Interest rate risk

        We are exposed to market risk related to changes in interest rates.

        Our investments are considered cash equivalents and primarily consist of money market funds. At March 31, 2013, we had cash and cash equivalents of $31.0 million. The carrying amount of cash equivalents reasonably approximates fair value due to the short maturities of these instruments. The

71

primary objective of our investment activities is preservation of capital, fulfillment of liquidity needs and fiduciary control of cash and investments. We also seek to maximize income from our investments without assuming significant risk. We do not enter into investments for trading or speculative purposes. Our investments are exposed to market risk due to a fluctuation in interest rates, which may affect our interest income and the fair market value of our investments. Due to the short-term nature of our investment portfolio, however, we do not believe an immediate 10% increase or decrease in interest rates would have a material effect on the fair market value of our portfolio, and therefore we do not expect our operating results or cash flows to be materially affected by a sudden change in market interest rates.

        We do not believe our cash equivalents have significant risk of default or illiquidity. While we believe our cash equivalents do not contain excessive risk, we cannot provide absolute assurance that in the future our investments will not be subject to adverse changes in market value. In addition, we maintain significant amounts of cash and cash equivalents at one or more financial institutions that are in excess of federally insured limits. We cannot be assured that we will not experience losses on these deposits.

        The revolving credit facility provides for, at our option, Eurodollar Rate Loans, which bears interest at the London Interbank Offered Rate ("LIBOR") plus two and one-half percent (2.50%) or Base Rate Loans, which bear interest at the greatest of (a) the Federal Funds Rate plus ¹/2 of 1%, (b) the Prime Rate, and (c) the Eurodollar Rate for a one month Interest Period on such day plus 1.00%, plus one and one-half percent (1.5%). Changes in interest rates do not affect operating results or cash flows on our fixed rate borrowings but would impact our variable rate borrowings. At March 31, 2013, we had $47.5 million in borrowings outstanding under our Credit Agreement which bear interest at approximately 3.03%.

Foreign currency risk

        We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the United States dollar. Our historical revenue has generally been denominated in United States dollars, and a significant portion of our current revenue continues to be denominated in United States dollars; however, we expect an increasing portion of our future revenue to be denominated in currencies other than the United States dollar, primarily the Euro, British pound sterling, Canadian dollar, various Latin American currencies, Japanese Yen, Chinese Yuan and Hong Kong Dollar. Our operating expenses are generally denominated in the currencies of the countries in which our operations are located, primarily the United States and United Kingdom. Increases and decreases in our international revenue from movements in foreign exchange rates are partially offset by the corresponding increases or decreases in our international operating expenses. To further reduce our net exposure to foreign exchange rate fluctuations on our results of operations, we have entered into foreign currency forward contracts.

        We had outstanding forward contracts based in British pound sterling and the Euro with notional amounts totaling $5.8 million as of March 31, 2013 and $4.3 million as of March 23, 2012. The net gain (loss) related to the change in fair value of our foreign currency forward contracts was not significant for the years ended March 31, 2013, March 23, 2012 and March 25, 2011. With regard to these contracts, a hypothetical 10.0% adverse movement in foreign exchange rates compared with the U.S. dollar relative to exchange rates on March 31, 2013 would result in a $0.6 million reduction in fair value of these forward contracts and a corresponding foreign currency loss of approximately $0.6 million. This analysis does not consider the impact that hypothetical changes in foreign currency exchange rates would have on anticipated transactions and assets and liabilities that these foreign currency sensitive instruments were designed to offset.

72

        As our international operations grow, our risks associated with fluctuation in currency rates will become greater, and we will continue to reassess our approach to managing this risk. In addition, currency fluctuations or a weakening United States dollar can increase the costs of our international expansion. As our international operations grow, we expect to conduct more of our business in currencies other than the U.S. dollar, thereby increasing risks associated with fluctuation in currency rates. As our exposure to currency risks grows, we will continue to reassess our risk management.

Inflation risk

        We do not believe that inflation has had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

Counterparty risk

        Our financial statements, including derivatives, are subject to counterparty credit risk, which we consider as part of the overall fair value measurement. We attempt to mitigate this risk through credit monitoring procedures.

73

Item 8.    Financial statements and supplementary data

Index to financial statements

	Page
Report of Independent Registered Public Accounting Firm		75
Consolidated balance sheets as of March 31, 2013 and March 23, 2012		76
Consolidated statements of operations for the years ended March 31, 2013, March 23, 2012 and March 25, 2011		77
Consolidated statements of comprehensive income (loss) for the years ended March 31, 2013, March 23, 2012 and March 25, 2011		78
Consolidated statements of changes in mandatorily redeemable convertible preferred stock and equity (deficit) for the years ended March 31, 2013, March 23, 2012 and March 25, 2011		79
Consolidated statements of cash flows for the years ended March 31, 2013, March 23, 2012 and March 25, 2011		80
Notes to consolidated financial statements		81

74

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of RealD Inc.

        We have audited the accompanying consolidated balance sheets of RealD Inc. (the "Company") as of March 31, 2013 and March 23, 2012, and the related consolidated statements of operations, comprehensive income (loss), changes in mandatorily redeemable convertible preferred stock and equity (deficit) and cash flows for each of the three years in the period ended March 31, 2013. Our audits also included the financial statement schedule listed in the Index at Item 15(a) 2. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of RealD Inc. at March 31, 2013 and March 23, 2012, and the consolidated results of its operations and its cash flows for each of the three years in the period ended March 31, 2013, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), RealD Inc.'s internal control over financial reporting as of March 31, 2013, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated June 6, 2013 expressed an unqualified opinion thereon.

	/s/ Ernst & Young LLP
Los Angeles, California June 6, 2013

75

RealD Inc.

Consolidated balance sheets

(in thousands, except per share data)

	March 31, 2013			March 23, 2012
Assets
Current assets:
Cash and cash equivalents	$	31,020		$	24,894
Accounts receivable, net		45,472			59,212
Inventories		15,430			40,577
Deferred costs—eyewear		538			932
Prepaid expenses and other current assets		3,973			2,630
Total current assets		96,433			128,245
Property and equipment, net		25,002			12,713
Cinema systems, net		125,379			141,024
Digital projectors, net-held for sale		728			1,078
Goodwill		10,657			10,657
Other intangibles, net		7,417			1,746
Deferred income taxes		3,001			3,049
Other assets		5,031			3,663
Total assets	$	273,648		$	302,175
Liabilities and equity
Current liabilities:
Accounts payable	$	22,737		$	22,617
Accrued expenses and other liabilities		25,013			28,870
Deferred revenue		9,916			7,201
Income taxes payable		603			1,121
Deferred income taxes		2,860			3,149
Current portion of long-term debt		1,042			—
Total current liabilities		62,171			62,958
Credit facility agreement		46,458			25,000
Deferred revenue, net of current portion		10,392			13,920
Other long-term liabilities, customer deposits and virtual print fee liability		5,438			2,691
Commitments and contingencies
Equity (deficit)
Common stock, $0.0001 par value, 200,000 shares authorized; 49,365 and 54,561 shares issued and outstanding at March 31, 2013 and March 23, 2012, respectively		332,694			309,894
Accumulated deficit		(182,846	)		(112,711	)
Accumulated other comprehensive income		115			—
Total RealD Inc. stockholders' equity		149,963			197,183
Noncontrolling interest		(774	)		423
Total equity		149,189			197,606
Total liabilities and equity	$	273,648		$	302,175

See accompanying notes to consolidated financial statements

76

RealD Inc.

Consolidated statements of operations

(in thousands, except per share data)

	Year ended
	March 31, 2013			March 23, 2012			March 25, 2011
Revenue:
License	$	137,752		$	147,801		$	101,523
Product and other		77,800			98,827			144,613
Total revenue		215,552			246,628			246,136
Cost of revenue:
License		47,243			39,801			17,994
Product and other		78,117			78,137			160,402
Total cost of revenue		125,360			117,938			178,396
Gross profit		90,192			128,690			67,740
Operating expenses:
Research and development		19,454			16,500			15,582
Selling and marketing		25,266			27,682			24,139
General and administrative		47,830			42,189			35,835
Total operating expenses		92,550			86,371			75,556
Operating income (loss)		(2,358	)		42,319			(7,816	)
Interest expense, net		(1,483	)		(971	)		(919	)
Other income (loss)		(982	)		782			6,182
Income (loss) before income taxes		(4,823	)		42,130			(2,553	)
Income tax expense		5,064			5,105			4,272
Net income (loss)		(9,887	)		37,025			(6,825	)
Net (income) loss attributable to noncontrolling interest		197			(156	)		(530	)
Accretion of preferred stock		—			—			(4,934	)
Net income (loss) attributable to RealD Inc. common stockholders	$	(9,690	)	$	36,869		$	(12,289	)
Earnings (loss) per common share:
Basic	$	(0.19	)	$	0.68		$	(0.29	)
Diluted	$	(0.19	)	$	0.65		$	(0.29	)
Shares used in computing earnings per common share:
Basic		52,345			54,352			41,933
Diluted		52,345			56,852			41,933

See accompanying notes to consolidated financial statements

77

RealD Inc.

Consolidated statements of comprehensive income (loss)

(in thousands, except per share data)

	Year ended
	March 31, 2013			March 23, 2012		March 25, 2011
Net income (loss)	$	(9,887	)	$	37,025	$	(6,825	)
Other comprehensive income (loss), net of tax:
Foreign currency translation gains		115			—		—
Other comprehensive income, net of tax		115			—		—
Comprehensive income (loss)	$	(9,772	)	$	37,025	$	(6,825	)

See accompanying notes to consolidated financial statements

78

RealD Inc.
Consolidated statements of changes in mandatorily redeemable convertible preferred stock and equity (deficit)
(in thousands, except share data)

	Equity (Deficit)
	Mandatorily redeemable covertible preferred stock						Convertible preferred stock
	Series C						Series A						Series B						Series D						Common stock					Accumulated other comprehensive loss
																																Accumulated deficit			Noncontrolling interest			Total equity (deficit)
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Balance, March 26, 2010		5,139,500		$	62,831			2,000,000		$	1,978			2,417,644		$	2,970			1,666,667		$	19,952			24,690,954		$	68,371	$	—	$	(137,291	)	$	2,134		$	(41,886	)
Accretion of Series C preferred stock		—			4,934			—			—			—			—			—			—			—			—		—		(4,934	)		—			(4,934	)
Share-based compensation		—			—			—			—			—			—			—			—			—			8,950		—		—			—			8,950
Exercise of stock options		—			—			—			—			—			—			—			—			2,019,816			3,875		—		—			—			3,875
Exercise of motion picture exhibitor options		—			—			—			—			—			—			—			—			3,260,747			22		—		—			—			22
Exercise of warrants		—			—			—			—			—			—			—			—			762,300			634		—		—			—			634
Motion picture exhibitor option reduction in revenue		—			—			—			—			—			—			—			—			—			36,447		—		—			—			36,447
Noncontrolling interest distribution		—			—			—			—			—			—			—			—			—			—		—		—			(888	)		(888	)
Conversion of preferred stock		(5,139,500	)		(67,765	)		(2,000,000	)		(1,978	)		(2,417,644	)		(2,970	)		(1,666,667	)		(19,952	)		16,835,714			92,665		—		—			—			67,765
Issuance of common stock in connection with initial public offering, net of issuance costs		—			—			—			—			—			—			—			—			6,000,000			81,940		—		—			—			81,940
Net income (loss)		—			—			—			—			—			—			—			—			—			—		—		(7,355	)		530			(6,825	)
Balance, March 25, 2011		—		$	—			—		$	—			—		$	—			—		$	—			53,569,531		$	292,904	$	—	$	(149,580	)	$	1,776		$	145,100
Share-based compensation		—			—			—			—			—			—			—			—			—			15,744		—		—			—			15,744
Exercise of stock options		—			—			—			—			—			—			—			—			257,354			972		—		—			—			972
Exercise of motion picture exhibitor options		—			—			—			—			—			—			—			—			407,593			3		—		—			—			3
Exercise of warrants		—			—			—			—			—			—			—			—			326,700			271		—		—			—			271
Noncontrolling interest distribution		—			—			—			—			—			—			—			—			—			—		—		—			(1,509	)		(1,509	)
Net income (loss)		—			—			—			—			—			—			—			—			—			—		—		36,869			156			37,025
Balance, March 23, 2012		—		$	—			—		$	—			—		$	—			—		$	—			54,561,178		$	309,894	$	—	$	(112,711	)	$	423		$	197,606
Share-based compensation		—			—			—			—			—			—			—			—			—			18,474		—		—			—			18,474
Exercise of stock options		—			—			—			—			—			—			—			—			543,797			3,516		—		—			—			3,516
Issuance of common stock in connection with restricted stock units		—			—			—			—			—			—			—			—			80,781			—		—		—			—			—
Purchase and distribution of stock under employee stock purchase plan		—			—			—			—			—			—			—			—			107,108			810		—		—			—			810
Repurchases of common stock		—			—			—			—			—			—			—			—			(5,927,729	)		—		—		(60,445	)		—			(60,445	)
Other comprehensive loss, net of tax		—			—			—			—			—			—			—			—			—			—		115		—			—			115
Noncontrolling interest distribution		—			—			—			—			—			—			—			—			—			—		—		—			(1,000	)		(1,000	)
Net income (loss)		—			—			—			—			—			—			—			—			—			—		—		(9,690	)		(197	)		(9,887	)
Balance, March 31, 2013		—		$	—			—		$	—			—		$	—			—		$	—			49,365,135		$	332,694	$	115	$	(182,846	)	$	(774	)	$	149,189

See accompanying notes to consolidated financial statements

79

RealD Inc.

Consolidated statements of cash flows

(in thousands)

	Year ended
	March 31, 2013			March 23, 2012			March 25, 2011
Cash flows from operating activities
Net income (loss)	$	(9,887	)	$	37,025		$	(6,825	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		33,131			28,266			15,737
Deferred income tax		(241	)		38			(2	)
Non-cash interest expense		483			151			125
Non-cash stock compensation		18,474			15,744			8,950
Motion picture exhibitor option reduction in revenue		—			—			36,447
Gain on sale of digital projectors		—			(1,742	)		(6,720	)
Loss on disposal of property and equipment		44			452			—
Impairment of long-lived assets		8,679			10,269			1,128
Changes in operating assets and liabilities:
Accounts receivable		11,266			(6,062	)		508
Inventories		25,147			14,394			(48,432	)
Prepaid expenses and other current assets		(954	)		(896	)		(606	)
Deferred costs—eyewear		394			(883	)		1,793
Other assets		(590	)		(1,528	)		1,139
Accounts payable		125			(36,916	)		21,330
Accrued expenses and other liabilities		(7,790	)		(11,399	)		15,420
Other long-term liabilities, customer deposits and virtual print fee liability		2,747			1,989			1,791
Income taxes receivable/payable		(518	)		1,260			(1,393	)
Deferred revenue		(813	)		(7,161	)		(5,292	)
Net cash provided by operating activities		79,697			43,001			35,098
Cash flows from investing activities
Purchases of marketable securities		—			—			(6,849	)
Proceeds from sale of marketable securities		—			—			6,849
Purchases of property and equipment		(16,169	)		(8,760	)		(6,416	)
Purchases of cinema systems and related components		(18,121	)		(52,708	)		(95,756	)
Purchases of digital projectors		—			—			(471	)
Purchases of intangible assets		(6,084	)		—			—
Proceeds from sale of digital projectors		2,474			3,999			15,612
Net cash used in investing activities		(37,900	)		(57,469	)		(87,031	)
Cash flows from financing activities
Proceeds from common stock issuance, net of issuance costs		—			—			81,940
Noncontrolling interest distribution		(1,000	)		(1,509	)		(888	)
Payments of debt issuance costs		(1,167	)		—			—
Repayments of long-term debt		—			(2,311	)		(9,698	)
Proceeds from credit facility		60,000			30,000			5,000
Repayments on credit facility		(37,500	)		(5,000	)		(25,150	)
Proceeds from exercise of stock options		3,516			972			3,875
Proceeds from issuance of common stock pursuant to employee stock purchase plan		810			—			—
Proceeds from exercise of warrants		—			271			634
Proceeds from exercise of motion picture exhibitor options		—			3			22
Purchases of treasury stock		(60,445	)		—			—
Net cash provided (used) by financing activities		(35,786	)		22,426			55,735
Effect of currency exhange rate changes on cash and cash equivalents		115			—			—
Net increase (decrease) in cash and cash equivalents		6,126			7,958			3,802
Cash and cash equivalents, beginning of year		24,894			16,936			13,134
Cash and cash equivalents, end of year	$	31,020		$	24,894		$	16,936
Supplemental disclosures of cash flow information
Accretion of Series C preferred stock	$	—		$	—		$	4,934
Cash payments for income taxes		1,967			1,060			3,952
Cash payments for interest expense		1,000			820			794
Digital projectors purchased in exchange for notes		—			—			370
Sale of digital projectors in accounts receivable	$	—		$	2,474		$	—

See accompanying notes to consolidated financial statements

80

RealD Inc.

Notes to consolidated financial statements

1. Business and basis of presentation

        RealD Inc., including its subsidiaries ("RealD"), is a global licensor of stereoscopic 3D technologies.

        The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The consolidated financial statements include the accounts of RealD, its wholly owned subsidiaries and its majority owned subsidiaries. We do not have any interests in variable interest entities. For consolidated subsidiaries that are not wholly owned but are majority owned, the subsidiaries' assets, liabilities, and operating results are included in their entirety in the accompanying consolidated financial statements. The noncontrolling interests in those assets, liabilities, and operations are reflected as non-controlling interests in the consolidated balance sheets under equity (deficit) and consolidated statements of operations.

        On June 28, 2010, we amended our certificate of incorporation, which increased our total authorized capital stock to 200 million shares (comprised of 150 million shares of common stock and 50 million shares of preferred stock), and effected a split of our common stock, which resulted in each share of our common stock splitting into one and one-half shares (or a 1-for-1.5 forward split). The accompanying consolidated financial statements and notes to the consolidated financial statements have been retroactively restated to reflect the stock split for all periods presented.

        On July 21, 2010, we completed the initial public offering (IPO) of our common stock in which we sold and issued 6 million shares of common stock at an issue price of $16.00 per share. A total of approximately $96 million in gross proceeds were raised from the IPO, or $81.9 million in net proceeds after deducting underwriting discounts and commissions of approximately $6.7 million and other offering costs of approximately $7.4 million.

        All significant intercompany balances and transactions have been eliminated in consolidation.

2. Summary of significant accounting policies

Accounting period

        On November 14, 2012, our Board of Directors approved a change in our accounting periods from the previous configuration of four 13-week periods for a total of 52 weeks to a calendar month end and calendar quarter end accounting period. This change in accounting period commenced in the third quarter of fiscal 2013 ended on December 31, 2012, which added 10 extra days to the fiscal year ended March 31, 2013 when compared to the fiscal year ended March 23, 2012. As a result, our fiscal year 2013 ended on March 31, 2013 instead of on March 22, 2013 as formerly planned under RealD's historical accounting period configuration.

Use of estimates

        The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.

81

RealD Inc.

Notes to consolidated financial statements (Continued)

2. Summary of significant accounting policies (Continued)

Earnings (loss) per share of common stock

        Basic income per share of common stock is computed by dividing the net income (loss) attributable to RealD common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing net income (loss) attributable to RealD Inc. common stockholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, shares to be purchased under our employee stock purchase plan and unvested restricted stock units. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury stock method.

        The calculation of the basic and diluted earnings (loss) per share of common stock for the years ended March 31, 2013, March 23, 2012 and March 25, 2011 was as follows:

	Year ended
(in thousands, except per share data)	March 31, 2013			March 23, 2012			March 25, 2011
Numerator:
Net income (loss)	$	(9,887	)	$	37,025		$	(6,825	)
Net (income) loss attributable to noncontrolling interest		197			(156	)		(530	)
Accretion of preferred stock		—			—			(4,934	)
Net income (loss) attributable to RealD Inc. common stockholders	$	(9,690	)	$	36,869		$	(12,289	)
Denominator:
Weighted-average common shares outstanding (basic)		52,345			54,352			41,933
Effect of dilutive securities		—			2,500			—
Weighted-average common shares outstanding (diluted)		52,345			56,852			41,933
Earnings (loss) per common share:
Basic	$	(0.19	)	$	0.68		$	(0.29	)
Diluted	$	(0.19	)	$	0.65		$	(0.29	)

        Due to the loss attributable to RealD Inc. common stockholders in the years ended March 31, 2013 and March 25, 2011, basic earnings (loss) per common share and diluted earnings (loss) per common share are the same as the effect of potentially dilutive securities would be anti-dilutive.

82

RealD Inc.

Notes to consolidated financial statements (Continued)

2. Summary of significant accounting policies (Continued)

        The weighted-average number of anti-dilutive shares excluded from the calculation of diluted earnings (loss) per common share for the years ended March 31, 2013, March 23, 2012 and March 25, 2011 was as follows:

	Year ended
(in thousands)	March 31, 2013		March 23, 2012		March 25, 2011
Options and warrants to purchase common stock		8,441		3,899		9,782
Conversion of convertible preferred stock		—		—		5,180
Total		8,441		3,899		14,962

Fair value measurements

        Accounting Standards Codification Topic (ASC) 820-10, Fair Value Accounting (ASC 820), provides a common definition of fair value and establishes a framework to make the measurement of fair value in U.S. GAAP more consistent and comparable. This guidance also requires expanded disclosures to provide information about the extent to which fair value is used to measure assets and liabilities, the methods and assumptions used to measure fair value, and the effect of fair value measures on earnings. Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value be classified and disclosed in the following three categories:

•

Level 1—Quoted prices for identical instruments in active markets.

•

Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

•

Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

        Our financial assets and liabilities, which include financial instruments as defined by ASC 820, include cash and cash equivalents, accounts receivable, accounts payable, long-term debt and derivatives. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable are a reasonable approximation of fair value due to the short maturities of these instruments. The carrying amount of long-term debt approximates fair value based on borrowing rates currently available to us. The carrying amount of our derivative instruments is recorded at fair value and is determined based on observable inputs that are corroborated by market data (Level 2).

        As of March 31, 2013 and March 23, 2012, the fair values of our derivative instruments that were carried at fair value on a recurring basis were not significant.

Derivative instruments

        Our derivative instruments are recorded at fair value in other current assets or other current liabilities, respectively, in the consolidated balance sheets. Changes in fair value are reported as a component of other income or loss on our consolidated statements of operations. For all periods

83

RealD Inc.

Notes to consolidated financial statements (Continued)

2. Summary of significant accounting policies (Continued)

presented, none of our derivative instruments were designated as hedging instruments. We do not use foreign currency option or foreign exchange forward contracts for speculative or trading purposes.

        We purchase foreign currency forward contracts, generally with maturities of six months or less, to reduce the volatility of cash flows primarily related to forecasted payments and expenses denominated in certain foreign currencies. We had outstanding forward contracts based in British pound sterling and Euro with notional amounts totaling $5.8 million as of March 31, 2013. We had outstanding forward contracts based in British pound sterling, Euro and Canadian dollar with notional amounts totaling $4.3 million as of March 23, 2012. As of March 31, 2013 and March 23, 2012, the carrying amount of our foreign currency forward contracts was not significant and was classified as Level 2 fair value instruments, which was determined based on observable inputs that were corroborated by market data. For all periods presented, the net realized and unrealized gains and losses related to forward contracts were not significant.

Marketable securities

        We classify unrealized gains and losses on marketable securities reported as a component of accumulated other comprehensive income. As of March 31, 2013 and March 23, 2012, we had no marketable securities. For the year ended March 25, 2011, the unrealized gains and losses from the available-for-sale securities were not significant.

        The objectives of our investment policy are to preserve capital, provide sufficient liquidity to satisfy operating and investment purposes, and capture a market rate of return based on our investment policy parameters and market conditions. Our investment policy limits investments to certain types of debt and money market instruments issued by institutions with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer.

Cash equivalents

        We consider cash equivalents to be only those investments that are highly liquid, readily convertible into cash and which mature within three months from the date of purchase.

Accounts receivable

        Accounts receivable consist of trade receivables, VAT receivable and other receivables. We extend credit to our customers, who are primarily in the movie production and exhibition businesses. We provide for the estimated accounts receivable that will not be collected. These estimates are based on an analysis of historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in the customers' payment terms and their economic condition. Collection of accounts receivable may be affected by changes in economic or other industry conditions and may, accordingly, impact our overall credit risk. The allowance for doubtful accounts and customer credits totaled $2.6 million and $4.2 million as of March 31, 2013 and March 23, 2012, respectively.

Inventories and deferred costs-eyewear

        Inventories and deferred costs-eyewear represent eyewear and are substantially all finished goods. Inventories and deferred costs-eyewear are valued at the lower of cost (first-in, first-out method) or market value. At each balance sheet date, we evaluate ending inventories and deferred costs-eyewear

84

RealD Inc.

Notes to consolidated financial statements (Continued)

2. Summary of significant accounting policies (Continued)

for net realizable value. We also evaluate inventories for excess quantities and obsolescence. These evaluations include analyses of expected future average selling prices, projections of future demand and technology changes. In order to state inventories at lower of cost or market, we maintain reserves against such inventories. If our analyses indicate that market is lower than cost, a write-down of inventories is recorded in cost of revenue in the period the loss is identified. As of March 31, 2013 and March 23, 2012, the inventory reserve as a result of our net realizable value analyses was $0.4 million and $0.6 million, respectively.

        Domestically, we provide our RealD eyewear free of charge to motion picture exhibitors and then receive a fee from the motion picture studios for the usage of that RealD eyewear by the motion picture exhibitors' consumers.

        For RealD eyewear located at a motion picture exhibitor, we believe that it is not operationally practical to perform physical counts or request the motion picture exhibitor to perform physical counts and confirm quantities held to ensure that losses due to damage, destruction, and shrinkage are specifically recognized in the period incurred due to the number of domestic RealD-enabled screens and the related usage of RealD eyewear. We believe that the cost to monitor shrinkage or usage significantly outweighs the financial reporting benefits of using a specific identification methodology of expensing. We believe that utilizing a composite method of expensing RealD eyewear inventory costs provides a rational and reasonable approach to ensuring that shrinkage is provided for in the period incurred and that inventory costs are expensed in the periods that reasonably reflect the periods in which the related revenue is recognized. In doing so, we believe the following methodology reasonably and generally reflects periodic income or loss under these facts and circumstances:

•

For an estimated period of time following shipment to domestic motion picture exhibitors, no expense is recognized between the time of shipment and until the delivery is made as the inventory unit is in transit and unused.

•

The inventory unit cost is expensed on a straight-line basis over an estimated usage period beginning when we believe usage of the inventory unit has started. In estimating the expensing start date and related expense period, we consider various factors including, but not limited to, those relating to a 3D motion picture's opening release date, a 3D motion picture's expected release period, the number of currently playing 3D motion pictures, the motion picture exhibitor's buying and stocking patterns and practices and the quantities shipped per inventory unit.

        We believe that the expensing methodology described above rationally and reasonably approximates the period the related usage occurs resulting in our RealD eyewear product revenue. The expensing start date following the date of shipment is meant to approximate the date at which usage begins. Additionally, as the expense recognition period has been and is expected to continue to be short, we believe it adequately recognizes inventory impairments due to loss and damage on a timely basis. We further believe that exposures due to loss or damage, if any, are considered normal shrinkage and a necessary and expected cost to generate the revenue per 3D motion picture earned through RealD eyewear usage. We continue to monitor the reasonableness of this methodology to ensure that it approximates the period over which the related RealD eyewear product revenue is earned and realizable. RealD eyewear inventory costs that have not yet been expensed are reported as deferred costs-eyewear.

85

RealD Inc.

Notes to consolidated financial statements (Continued)

2. Summary of significant accounting policies (Continued)

Property and equipment, RealD Cinema Systems and digital projectors

        Property and equipment, RealD Cinema Systems and digital projectors are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. The major categories and related estimated useful lives are as follows:

RealD Cinema Systems	5 - 8 years
Digital projectors—held for sale	10 years
Leasehold improvements	Shorter of useful life or lease
Machinery and equipment	2 - 7 years
Furniture and fixtures	3 - 5 years
Computer equipment and software	3 - 5 years

        Digital projectors—held for sale (digital projectors) also include digital servers, lenses and accessories. Upon installation at the customer location, we retain title to the RealD Cinema Systems which are held and used by our customers. The digital projectors are held for sale at either a specified date or upon occurrence of certain contingent events. Depreciation for RealD Cinema Systems and digital projectors is included in cost of revenue.

        We receive virtual print fees (VPFs) from third-party motion picture studios. VPFs represent amounts from third-party motion picture studios that are paid to us when a motion picture is played on one of our digital projectors. VPFs are deferred and deducted from the selling price of the digital projector. VPFs are recorded as a liability on the accompanying consolidated balance sheets and totaled $0.3 million both as of March 31, 2013 and March 23, 2012.

        Major enhancements and improvements are capitalized. Maintenance and repairs for cinema systems and digital projectors are charged to expense as incurred. Maintenance and repairs expense totaled $0.9 million, $0.7 million and $0.8 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

Intangibles

        Intangibles are deemed to have finite lives and consist of acquired developed technologies (which are primarily patents) and are amortized over their estimated useful lives of 5 to 19 years (with a weighted average amortization period of 9.1 years) using the straight-line method.

Impairment of long-lived assets

        We review long-lived assets, such as property and equipment, cinema systems, digital projectors and intangibles, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Factors or circumstances that could indicate the occurrence of such events include current period operating or cash flow losses combined with a history of operating or cash flow losses, a projection or forecast that demonstrates continuing operating or cash flow losses, or incurring costs in excess of amounts originally expected to acquire or construct an asset. If the asset is not recoverable, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value.

        During the year ended March 31, 2013, we determined that a non-cancelable purchase commitment for certain cinema systems configurations in the aggregate amount of $3.5 million were

86

RealD Inc.

Notes to consolidated financial statements (Continued)

2. Summary of significant accounting policies (Continued)

not fully recoverable, primarily due to the initial investment costs which are expected to exceed the anticipated future cash flows for the related cinema systems.

        During the year ended March 23, 2012, we determined that certain of our cinema systems were not recoverable and that the carrying value of the assets exceeded fair value, primarily due to the number of certain of our cinema system assets on hand, including related outstanding purchase commitments and the continuing shift in the mix in the deployment of cinema systems based on the type of digital projectors installed and theater configuration. The fair value was primarily determined by evaluating the discounted future cash flows expected to be generated from the cinema systems. The impairment charged during the year ended March 23, 2012 to cost of revenue for certain of the cinema systems totaled $6.8 million.

        For the years ended March 31, 2013, March 23, 2012 and March 25, 2011, impairment charges for all impaired RealD Cinema Systems charged to cost of revenue totaled $8.0 million, $10.3 million and $1.1 million, respectively. For the year ended March 31, 2013, impairment charge for eyewear tooling charged to cost of revenue totaled $0.5 million. For the year ended March 31, 2013, impairment charge for digital projectors charged to cost of revenue totaled $0.2 million in a noncontrolling interest.

Goodwill

        Goodwill is deemed to have an indefinite useful life and therefore is not amortized. We evaluate our goodwill for impairment using a two-step process that is performed at least annually during our fourth fiscal quarter, or whenever events or circumstances indicate that goodwill may be impaired. The first step is a comparison of the fair value of an internal reporting unit with its carrying amount, including goodwill. A reporting unit is an operating segment or one level below an operating segment. If the fair value of the reporting unit exceeds its carrying value, goodwill of the reporting unit is not considered impaired and the second step is unnecessary. If the carrying value of the reporting unit exceeds its fair value, the second step is performed to measure the amount of impairment by comparing the carrying amount of the goodwill to a determination of the implied value of the goodwill. If the carrying amount of goodwill is greater than the implied value, an impairment loss is recognized for the difference. We currently have one reporting unit in which goodwill resides and the reporting unit did not fail step one.

Revenue recognition and revenue reductions

        We derive substantially all of our revenue from the license of our RealD Cinema Systems and the product sale of our RealD eyewear. We evaluate revenue recognition for transactions using the criteria set forth by the SEC in Staff Accounting Bulletin No. 104, Revenue Recognition (SAB 104) and Accounting Standards Codification Topic 605, Revenue Recognition (ASC 605). The revenue recognition guidance states that revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the seller's price to the buyer is fixed or determinable and collectability is reasonably assured.

License revenue

        License revenue is accounted for as an operating lease. License revenue is primarily derived under per-admission, periodic fixed fee, or per-motion picture basis with motion picture exhibitors. Amounts received up front, less estimated allowances, are deferred and recognized over the lease term using the

87

RealD Inc.

Notes to consolidated financial statements (Continued)

2. Summary of significant accounting policies (Continued)

straight-line method. Additional lease payments that are contingent upon future events outside our control, including those related to admission and usage, are recognized as revenues when the contingency is resolved and we have no more obligations to our customers specific to the contingent payment received. Certain of our license revenue from leasing our RealD Cinema Systems is earned upon admission by the motion picture exhibitor's consumers. Our licensees, however, do not report and pay for such license revenue until after the admission has occurred, which may be received subsequent to our fiscal period end. We estimate and record licensing revenue related to motion picture exhibitor consumer admissions in the quarter in which the admission occurs, but only when reasonable estimates of such amounts can be made. We determine that there is persuasive evidence of an arrangement upon the execution of a license agreement or upon the receipt of a licensee's admissions report. Revenue is deemed fixed or determinable upon receipt of a licensee's admissions report. We determine collectability based on an evaluation of the licensee's recent payment history.

Product revenue

        We recognize product revenue, net of allowances, when title and risk of loss have passed and when there is persuasive evidence of an arrangement, the payment is fixed or determinable, and collectability of payment is reasonably assured. In the United States and Canada, certain of our product revenue from the sale of our RealD eyewear is earned upon admission and usage by the motion picture exhibitor's consumers. Our customers, however, do not report admission or usage information until after the admission and usage has occurred, and such information may be received subsequent to our fiscal period end. We estimate and record such product revenue in the period in which the admission and usage occurs, but only when reasonable estimates of such amounts can be made.

Revenue reductions

        We record revenue net of motion picture exhibitor stock options and estimated revenue allowances. In connection with certain exhibitor licensing agreements, we issued to the motion picture exhibitors a 10-year option to purchase 3,668,340 shares of our common stock at $0.00667 per share. The stock options vest upon the achievement of screen installation targets. Motion picture exhibitor stock options are valued at the underlying stock price at each reporting period until the targets are met. Amounts recognized are based on the number of RealD-enabled screens as a percentage of total screen installation targets. The stock options do not have net cash settlement features. Amounts recorded as a revenue reduction related to motion picture exhibitor stock options totaled $36.4 million for the year ended March 25, 2011. As of March 25, 2011 all 3,668,340 motion picture exhibitor stock options had vested and all associated reduction of revenue has been recognized.

Cost of revenue

        Cost of revenue principally consists of depreciation expense of our RealD Cinema Systems deployed at a motion picture exhibitor's premises, digital projector depreciation expenses, RealD eyewear costs (including shipping, handling and recycling costs), field service and support costs and occupancy costs.

88

RealD Inc.

Notes to consolidated financial statements (Continued)

2. Summary of significant accounting policies (Continued)

Shipping and handling costs

        Amounts billed to customers for shipping and handling costs are included in revenue. Shipping and handling costs that we incur consist primarily of packaging and transportation charges and are recorded in cost of revenue. Shipping and handling costs recognized in cost of revenue were $7.9 million, $6.8 million, and $10.2 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

Research and development costs

        Research and development costs are expensed as incurred and are primarily comprised of personnel costs related to our research and development staff, depreciation and amortization of research and development assets, prototype and materials costs, the cost of third-party service providers supporting our research and development efforts and occupancy costs.

Selling and marketing costs

        Selling and marketing costs are primarily comprised of personnel costs related to our selling and marketing staff, advertising costs, including promotional events and other brand building and product marketing expenses, corporate communications, certain professional fees, occupancy costs and travel expenses.

        Advertising costs are expensed as incurred. Advertising expenses were approximately $3.7 million, $5.3 million and $4.3 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

General and administrative costs

        General and administrative costs principally consist of personnel costs related to our executive, legal, finance, and human resources staff, professional fees including legal and accounting costs, occupancy costs and public company costs. Additionally, general and administrative costs include sales, use, goods and services tax, and property taxes. For our U.S. cinema license and product revenue, we absorb the majority of sales and use taxes and do not pass such costs on to our customers.

Share-based compensation

        We account for share-based awards granted to employees and directors by recording compensation expense based on estimated fair values. We estimate the fair value of share-based payment awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our consolidated statements of operations. Share-based awards are attributed to expense using the straight-line method over the vesting period. We determine the value of each option award that contains a market condition using a lattice-based option valuation model, while all other option awards are valued using the Black-Scholes valuation model as permitted under ASC 718, Compensation—Stock Compensation. The assumptions used in calculating the fair value of share-based payment awards represent our best estimates. Our estimates of the fair values of share-based awards granted and the resulting amounts of share-based compensation recognized may be impacted by certain variables including stock price volatility, employee stock option exercise behaviors, additional stock option grants, modifications, estimates of forfeitures, and the

89

RealD Inc.

Notes to consolidated financial statements (Continued)

2. Summary of significant accounting policies (Continued)

related income tax impact. If any of the assumptions used in our valuation models significantly change, share-based compensation for future awards may differ materially from the awards granted previously. See Note 9, Share-based compensation.

Foreign currency

        Local currency transactions of our foreign operations that have the U.S. dollar as their functional currency are remeasured into U.S. dollars using current rates of exchange for monetary assets and liabilities and historical rates of exchange for nonmonetary assets and liabilities. Gains and losses from remeasurement of monetary assets and liabilities are included in other income (loss) in our statements of operations.

        The assets and liabilities of our foreign operations for which the functional currency is not the U.S. dollar are translated into U.S. dollars at exchange rates as of the balance sheet date, revenues and expenses are translated at average exchange rates for the period, and equity balances are translated at the historical rate. Resulting translation adjustments are included in other comprehensive loss, a component of equity (deficit).

        Net losses arising from exchange rate fluctuations on transactions denominated in a currency other than the functional currency and the net realized and unrealized gains and losses related to forward contracts totaled $0.9 million, $0.5 million, and $0.6 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively, and are included in other income (loss).

Income taxes

        Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities at year-end and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not to be realized.

        Accruals for uncertain tax positions are provided for in accordance with the authoritative guidance for accounting for uncertainty in income taxes (ASC 740). We may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The authoritative guidance for accounting for uncertainty in income taxes also provides guidance on derecognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and income tax disclosures. Our policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense.

Employee benefit plans

        We have a voluntary 401(k) savings plans in which most U.S. employees are eligible to participate. Eligible employees may make contributions not to exceed the maximum statutory contribution amounts. We may match a percentage of each employee's contributions consistent with the provisions of the plan

90

RealD Inc.

Notes to consolidated financial statements (Continued)

2. Summary of significant accounting policies (Continued)

for which they are eligible. All employee and employer contributions fully vest immediately. Our contributions to these plans totaled $0.6 million, $0.5 million and $0.3 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

Reclassifications

        Certain amounts presented in prior years have been reclassified to conform to the current year's presentation.

Recent accounting pronouncements

        In February 2013, the FASB issued Accounting Standards Update ("ASU") No. 2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,". ASU 2013-02 finalizes the requirements of ASU 2011-05 that ASU 2011-12 deferred, clarifying how to report the effect of significant reclassifications out of accumulated other comprehensive income. ASU 2013-02 is to be applied prospectively. We do not expect the adoption of ASU 2013-02 to have a material impact on our consolidated financial statements.

        In March 2013, the FASB issued ASU 2013-05, "Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity,". The objective of ASU 2013-05 is to resolve the diversity in practice regarding the release into net income of the cumulative translation adjustment upon derecognition of a subsidiary or group of assets within a foreign entity. We do not expect the adoption of ASU 2013-05 to have a material impact on our consolidated financial statements.

3. Property and equipment, RealD Cinema Systems and digital projectors

        Property and equipment, RealD Cinema Systems and digital projectors consist of the following:

(in thousands)	March 31, 2013			March 23, 2012
RealD Cinema Systems	$	194,527		$	184,197
Digital projectors—held for sale		1,634			1,843
Leasehold improvements		14,442			4,325
Machinery and equipment		6,198			6,641
Furniture and fixtures		1,122			12
Computer equipment and software		7,628			2,788
Construction in process		2,637			3,364
Total	$	228,188		$	203,170
Less accumulated depreciation		(77,079	)		(48,355	)
Property and equipment, RealD Cinema Systems and digital projectors, net	$	151,109		$	154,815

        Depreciation expense amounted to $32.7 million, $28.1 million and $15.6 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

91

RealD Inc.

Notes to consolidated financial statements (Continued)

3. Property and equipment, RealD Cinema Systems and digital projectors (Continued)

        During the year ended March 31, 2013, we received $2.5 million in cash from motion picture exhibitor customers for the sale of digital projectors that was included in accounts receivable as of March 23, 2012.

        During the year ended March 23, 2012, we received $4.0 million in cash and had $2.5 million of accounts receivable from motion picture exhibitor customers for the sale of digital projectors, resulting in a gain of $1.7 million in other income (loss).

        During the year ended March 25, 2011, we received $15.6 million in cash from motion picture exhibitor customers for the sale of digital projectors, resulting in a gain of $6.7 million in other income (loss). With the proceeds, we repaid an aggregate of $5.6 million of notes payable to the equipment providers.

        During the year ended March 31, 2013, we determined that a non-cancelable purchase commitment for certain cinema systems configurations in the aggregate amount of $3.5 million were not fully recoverable, primarily due to the initial investment costs which are expected to exceed the anticipated future cash flows for the related cinema systems.

        During the year ended March 22, 2012, we determined that certain of our cinema systems were not recoverable and that the carrying value of the assets exceeded fair value, primarily due to the number of certain of our cinema system assets on hand, including related outstanding purchase commitments and the continuing shift in the mix in the deployment of cinema systems based on the type of digital projectors installed and theater configuration. The fair value was primarily determined by evaluating the discounted future cash flows expected to be generated from the cinema systems. The impairment charged during the year ended March 23, 2012 to cost of revenue for certain of the cinema systems totaled $6.8 million.

        For the years ended March 31, 2013, March 23, 2012 and March 25, 2011, impairment charges for all impaired RealD Cinema Systems charged to cost of revenue totaled $8.0 million, $10.3 million and $1.1 million, respectively.

4. Goodwill and intangible assets

        Goodwill and intangible assets consist of the following at:

	March 31, 2013				March 23, 2012
(in thousands)	Gross amount		Accumulated amortization		Gross amount		Accumulated amortization
Acquired developed technologies	$	9,324	$	1,907	$	3,239	$	1,493
Goodwill		10,657		—		10,657		—
Total	$	19,981	$	1,907	$	13,896	$	1,493

        Amortization expense amounted to $0.4 million, $0.2 million and $0.1 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

        In the fiscal year ended March 31, 2013, we purchased a portfolio of 2D-to-3D conversion patents in the amount of $6.1 million and may consider future purchases of intangible assets, acquisitions or other investing activities.

92

RealD Inc.

Notes to consolidated financial statements (Continued)

4. Goodwill and intangible assets (Continued)

        At March 31, 2013 the remaining amortization expense is estimated to be as follows (in thousands):

Fiscal year 2014	$	1,300
Fiscal year 2015		1,300
Fiscal year 2016		1,303
Fiscal year 2017		1,300
Fiscal year 2018		1,287
Thereafter		927
Total	$	7,417

5. Accrued expenses and other liabilities

        Accrued expenses and other liabilities consist of the following at:

(in thousands)	March 31, 2013		March 23, 2012
Payroll and compensation	$	4,530	$	7,544
Sales, use taxes and other taxes		6,960		7,100
Professional fees		1,005		1,676
Refundable deposits		1,227		930
Marketing		545		2,516
RealD Cinema system installation fees		3,303		4,767
Purchase obligations		3,450		—
Other		3,993		4,337
Total	$	25,013	$	28,870

        For our U.S. cinema license and product revenues, we absorb the majority of sales and use taxes and do not pass such costs on to our customers.

6. Borrowings

Credit Agreement

        On April 19, 2012, we entered into a credit agreement (the "Credit Agreement") with City National Bank, a national banking association ("City National"). Pursuant to the Credit Agreement, the lenders thereunder will make available to us:

•

a revolving credit facility (including a letter of credit sub-facility) in a maximum amount not to exceed $75 million (the "Revolving Facility"); and

•

a delayed-draw term loan facility in a maximum amount not to exceed $50 million (the "Term Loan Facility").

        The Revolving Facility and the Term Loan Facility replaced existing revolving and term loan facilities provided under our pre-existing credit and security agreement with City National, which had been most recently amended on December 6, 2011.

93

RealD Inc.

Notes to consolidated financial statements (Continued)

6. Borrowings (Continued)

        Debt issuance costs related to the completion of the Credit Agreement totaled $1.2 million and were recorded as a deferred charge and amortized over the contractual life of the agreement and recorded as interest expense.

        Our obligations under the Credit Agreement are secured by a first priority security interest in substantially all of our tangible and intangible assets and are fully unconditionally guaranteed by our subsidiaries, ColorLink Inc., a Delaware corporation ("ColorLink"), and Stereographics Corporation, a California corporation ("Stereographics"). In connection with our execution of the Credit Agreement, on April 19, 2012, each of ColorLink and Stereographics entered into a general continuing guaranty (the "Guaranty") in favor of City National and the lenders under the Credit Agreement, pursuant to which they irrevocably and unconditionally guaranteed our obligations under the Credit Agreement and all related loan documents. In addition, on April 19, 2012, we, ColorLink and Stereographics entered into a security agreement in favor of City National and the lenders under the Credit Agreement, pursuant to which they granted a security interest in substantially all of their assets to secure their obligations under the Credit Agreement, the Guaranty and the related loan documents.

        The Revolving Facility matures on April 17, 2015, and the Term Loan Facility matures the last day of the twelfth (12th) full fiscal quarter after the earlier of October 18, 2013 or the date that aggregate term loan commitments have been drawn in full, which maturity dates may, in each case, be accelerated in certain circumstances.

        Under the Credit Agreement, our business is subject to certain limitations, including limitations on our ability to incur additional debt, make certain investments or acquisitions, enter into certain merger and consolidation transactions, and sell our assets other than in the ordinary course of business. We are also required to maintain compliance with certain financial covenants, including a minimum fixed charge coverage ratio and a maximum leverage ratio. As of March 31, 2013, we were in compliance with all financial covenants in our Credit Agreement. If we fail to comply with any of the covenants or if any other event of default, as defined in our Credit Agreement, should occur, the bank lenders could elect to prevent us from borrowing and declare the indebtedness to be immediately due and payable.

        The revolving credit facility provides for, at our option, Eurodollar Rate Loans, which bears interest at the London Interbank Offered Rate ("LIBOR") plus two and one-half percent (2.50%) or Base Rate Loans, which bear interest at the greatest of (a) the Federal Funds Rate plus one-half of one percent (0.50%), (b) the Prime Rate, and (c) the Eurodollar Rate for a one month Interest Period on such day plus one percent (1.00%), plus one and one-half percent (1.50%).

        As of March 31, 2013, there were $47.5 million in borrowings outstanding under the Credit Agreement. As of March 31, 2013, borrowings outstanding under the Credit Agreement bear interest at 3.03%. As of March 23, 2012, there were $25.0 million borrowings outstanding under the Credit Agreement. As of March 23, 2012, borrowings outstanding under the Credit Agreement bear interest at 3.50%. As of March 25, 2011, there were no borrowings outstanding under the Credit Agreement. Interest expense related to our borrowings under our credit and security agreement was $1.1 million, $0.9 million, and $0.6 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

94

RealD Inc.

Notes to consolidated financial statements (Continued)

6. Borrowings (Continued)

Notes payable

        From time to time, we enter into equipment purchase agreements with certain of our vendors for the purchase of digital projectors, digital servers, lenses and accessories. We pay a portion of the cost of the equipment upon delivery and finance a portion of the purchase price by issuing notes payable. The equipment is included in digital projectors in the accompanying consolidated balance sheets. Certain of these notes payables are non-interest bearing. In those cases, we record the net present value of the notes payable assuming an implied annual interest rate which is approximately 8.4%. The notes are secured by the underlying equipment. There were no notes payable outstanding as of March 31, 2013 and March 23, 2012. Interest expense is based on annual interest rates ranging from 7.0% to 8.4%. There was no interest expense related to our notes payable for the year ended March 31, 2013. Interest expense related to our notes payable was $0.1 million and $0.3 million for the years ended March 23, 2012 and March 25, 2011, respectively.

7. Commitments and contingencies

Lease obligations

        We lease certain office, production and research and development space under noncancelable operating leases that expire at various dates. Certain operating leases provide us with the option to renew for additional periods. Where operating leases contain escalation clauses, rent abatements, and/or concessions, such as rent holidays and landlord or tenant incentives or allowances, we apply them in the determination of straight-line rent expense over the lease term. Certain operating leases require the payment of real estate taxes or other occupancy costs, which may be subject to escalation.

        At March 31, 2013, our future minimum lease obligations were as follows (in thousands):

Fiscal year 2014	$	4,152
Fiscal year 2015		4,080
Fiscal year 2016		4,162
Fiscal year 2017		3,944
Fiscal year 2018		3,969
Thereafter		18,028
Total	$	38,335

        Rent expense was $5.2 million, $4.3 million and $2.6 million for the fiscal years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

Indemnities and commitments

        During the ordinary course of business, we make certain indemnities and commitments under which we may be required to make payments in relation to certain transactions. These indemnities include indemnities of certain customers and licensees of our technologies, and indemnities to our directors and officers to the maximum extent permitted under the laws of the State of California. The duration of these indemnities and commitments varies, and in certain cases, is indefinite. The majority of these indemnities and commitments do not provide for any limitation of the maximum potential future payments we could be obligated to make. We have not recorded any liability for these

95

RealD Inc.

Notes to consolidated financial statements (Continued)

7. Commitments and contingencies (Continued)

indemnities and commitments in the accompanying consolidated balance sheets. We do, however, accrue for losses for any known contingent liability, including those that may arise from indemnification provisions, when future payment is probable and estimable.

        We have entered into contracts with certain of our vendors. Future obligations under such contracts totaled $10.5 million at March 31, 2013 and include revolving 90-day supply commitments. Many of the contracts contain cancellation penalty provisions requiring payment of up to 20.0% of the unused contract.

Contingencies and assessments

        We are subject to various loss contingencies and assessments arising in the course of our business, some of which relate to litigation, claims, property taxes and sales and use tax or goods and services tax assessments. We consider the likelihood of the loss or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies and assessments. An estimated loss contingency or assessment is accrued when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted. Based on the information presently available, including discussion with counsel and other consultants, management believes that resolution of these matters will not have a material adverse effect on our business, consolidated results of operations, financial condition or cash flows.

8. Mandatorily redeemable convertible preferred stock and equity (deficit)

Initial public offering

        In July 2010, we completed the IPO of our common stock in which we sold and issued 6 million shares of common stock at $16.00 per share. A total of approximately $96 million in gross proceeds were raised from the IPO, or $81.9 million in net proceeds after deducting underwriting discounts and commissions of approximately $6.7 million and other offering costs of approximately $7.4 million. In conjunction with our IPO, all of our previously outstanding Series A, B and D convertible preferred stock in the amount of 6,084,311 shares converted at a ratio of 1:1.5 into 9,126,466 shares of common stock.

Common stock

        In November 2008, we entered into a stock purchase agreement with our Series D preferred stockholder. We sold 199,999 shares of our common stock at $10.00 per share. Total proceeds received were $2.0 million and were recorded net of issuance costs.

96

RealD Inc.

Notes to consolidated financial statements (Continued)

8. Mandatorily redeemable convertible preferred stock and equity (deficit) (Continued)

        At March 31, 2013, we reserved the following shares of common stock for future issuances in connection with (in thousands):

Restricted stock units	289
Performance stock options	589
Stock option plan:
Outstanding	9,082
Reserved for future issuance	2,939
Total	12,899

Convertible preferred stock

        Prior to April 1, 2006, we issued 2,000,000 shares of Series A preferred stock for $2.0 million, or $1.00 per share. Offering costs were recorded against the proceeds received.

        Rights and preferences afforded the stockholders of Series A preferred stock were as follows:

•

Shares were convertible into common stock at the holder's option on a 1-for-1.50 basis, subject to certain anti-dilution provisions, as defined. Shares were automatically convertible into common stock upon the occurrence of a qualified initial public offering, as defined in our certificate of incorporation. Our July 2010 IPO was a qualified initial public offering.

•

Upon a liquidating event, as defined, holders were entitled to liquidation payments equal to $1.00 per share for Series A, plus declared but unpaid dividends. Further, holders were entitled to participate in distributions to common stockholders on a pro-rata basis as if the holders had converted preferred shares into common stock. Liquidation payments to preferred stockholders ranked senior to payments to common stockholders. No liquidation events occurred prior to conversion.

•

Holders were entitled to dividends when and if declared. Dividends were participating with other classes of stock; however, they were not cumulative.

•

Were redeemable for cash upon ordinary liquidation.

•

Each holder had the number of votes for each share of convertible preferred stock held by such holder equal to the whole number of shares of common stock into which such share of convertible preferred stock would have been converted as of the record date for the vote.

        Prior to April 1, 2006, we had issued 2,417,644 shares of Series B preferred stock for $3.0 million or $1.24 per share. Offering costs have been recorded against the proceeds received.

        Rights and preferences afforded the stockholders of Series B preferred stock were as follows:

•

Shares were convertible into common stock at the holder's option on a 1-for-1.50 basis, subject to certain anti-dilution provisions, as defined. Shares were automatically converted into common stock upon the occurrence of a qualified initial public offering, as defined in our certificate of incorporation. Our July 2010 IPO was a qualified initial public offering.

•

Upon a liquidating event, as defined, holders were entitled to liquidation payments equal to $1.24 per share for Series B preferred stock, plus declared but unpaid dividends. Further,

97

RealD Inc.

Notes to consolidated financial statements (Continued)

8. Mandatorily redeemable convertible preferred stock and equity (deficit) (Continued)

holders were entitled to participate in distributions to common stockholders on a pro-rata basis as if the holders had converted preferred shares into common stock. Liquidation payments to preferred stockholders ranked senior to payments to common stockholders. No liquidation events had occurred prior to conversion.

•

Holders were entitled to dividends when and if declared. Dividends are participating with other classes of stock; however, they were not cumulative.

•

Were redeemable for cash upon ordinary liquidation, and upon a deemed liquidation such as a change in control.

•

Each holder had the number of votes for each share of convertible preferred stock held by such holder equal to the whole number of shares of common stock into which such share of convertible preferred stock would have been converted as of the record date for the vote.

        In December 2007, we sold 1,666,667 shares of Series D preferred stock at $12.00 per share. Total proceeds received were $20.0 million. Offering costs, consisting primarily of legal and placement fees, would have been recorded against the proceeds received. Rights and preferences afforded the stockholders of Series D preferred stock were as follows:

•

Shares were convertible into common stock at the holder's option on a 1-for-1.50 basis, subject to certain anti-dilution provisions, as defined. Shares were automatically convertible into common stock upon the occurrence of a qualified initial public offering, as defined in our certificate of incorporation. Our July 2010 IPO was a qualified initial public offering.

•

Upon a liquidating event, as defined, holders were entitled to liquidation payments at 1.5 times initial per share purchase price, plus declared, but unpaid dividends. Preference was pro-rata with the Series C mandatorily redeemable convertible preferred stockholders based upon relative liquidation preference and payments rank senior to all other classes of stock. No liquidation events occurred prior to conversion.

•

Were redeemable for cash upon ordinary liquidation.

•

Each holder had the number of votes for each share of convertible preferred stock held by such holder equal to the whole number of shares of common stock into which such share of convertible preferred stock would have been converted as of the record date for the vote.

•

Holders were entitled to dividends when and if declared. Dividends were participating with other classes of stock; however, they were not cumulative.

        Our previously outstanding Series A, B and D convertible preferred stock was classified as part of permanent equity within the consolidated balance sheets based on their rights and preferences set forth under the certificate of incorporation, California and Delaware law and the accounting standards pertaining to classification within the consolidated balance sheet. We therefore recorded the Series A, B and D preferred stock at their original issuance price net of applicable issuance costs. On July 21, 2010, in conjunction with our IPO, all of our previously outstanding Series A, B and D convertible preferred stock in the amount of 6,084,311 shares converted at a ratio of 1:1.5 into 9,126,466 shares of common stock.

98

RealD Inc.

Notes to consolidated financial statements (Continued)

8. Mandatorily redeemable convertible preferred stock and equity (deficit) (Continued)

Mandatorily redeemable convertible preferred stock

        During February 2007, we sold 5,139,500 shares of Series C mandatorily redeemable convertible preferred stock at $6.81 per share. Total proceeds received were $35.0 million. Offering costs, consisting primarily of legal and placement fees, incurred were $3.2 million and have been recorded against the proceeds received.

        Rights and preferences afforded the stockholders of Series C mandatorily redeemable convertible preferred stock were as follows:

•

Shares were convertible into common stock at the holder's option on a 1-for-1.50 basis, subject to certain anti-dilution provisions, as defined. Shares were automatically convertible into common stock upon the occurrence of a qualified initial public offering, as defined in our certificate of incorporation. Our July 2010 IPO was a qualified initial public offering.

•

Shares were mandatorily redeemable at the option of the holders beginning in December 2011. Redemption price is $17.025 per share, plus declared but unpaid dividends. We may elect to pay the redemption price in two installments, as defined. Amounts not paid in the first installment accrue interest at 6.0% per annum.

•

Shares were redeemable at our option at any time for liquidation value.

•

Upon a liquidating event, as defined, holders were entitled to liquidation payments equal to $17.025 per share, plus declared but unpaid dividends. Liquidation payments to holders rank senior to payments to all other classes of stock. No liquidation events occurred prior to conversion.

•

Holders were entitled to dividends when and if declared. Dividends were participating with other classes of stock; however, they were not cumulative.

        Our Series C mandatorily redeemable convertible preferred stock was classified in temporary equity under the SEC's guidance provided in Accounting Series Release No. 268, Presentation in Financial Statements of "Redeemable Preferred Stocks," (ASR 268) because the holders of our Series C mandatorily redeemable convertible preferred stock had the right to cause us to redeem the instrument for cash for a specified period. On July 21, 2010, in conjunction with our IPO, all of our previously outstanding Series C mandatorily redeemable convertible preferred stock in the amount of 5,139,500 shares converted at a ratio of 1:1.5 into 7,709,250 shares of common stock.

        We accreted the carrying value of the Series C mandatorily redeemable convertible preferred stock up to liquidation value through July 21, 2010. Accretion was provided using the effective interest-rate method. During the years ended March 25, 2011 and March 26, 2010, we recorded accretion of $4.9 million and $12.4 million, respectively.

Motion picture exhibitor stock options

        In connection with motion picture exhibitor licensing agreements, we issued to motion picture exhibitors a 10-year option to purchase 3,668,340 shares of our common stock at $0.00667 per share. These stock options to our motion picture exhibitor licensees vested upon the achievement of screen installation targets and were valued at the underlying stock price at each reporting period until the targets were met. All targets have been met and these stock options are fully vested.

99

RealD Inc.

Notes to consolidated financial statements (Continued)

8. Mandatorily redeemable convertible preferred stock and equity (deficit) (Continued)

        Amounts recorded as a revenue reduction from motion picture exhibitor stock options totaled $36.4 million and $39.2 million for the years ended March 25, 2011 and March 26, 2010, respectively. Amounts recognized are based on the number of RealD-enabled screens as a percentage of total screen installation targets. The stock options do not have net cash settlement features. As of March 25, 2011 all 3,668,340 motion picture exhibitor stock options had vested and all associated reduction of revenue has been recognized.

Warrants

        Prior to April 1, 2006, we had issued warrants to purchase a total of 1,335,000 shares of common stock. The warrants were primarily issued in exchange for cash received totaling $24,000. During April 2007, warrants to purchase 360,000 shares of common stock were exercised.

        Prior to April 1, 2006, we issued warrants and options to purchase 1,900,500 shares of common stock in exchange for cash received and as additional consideration to a person who lent us money. Prior to April 1, 2006, and when the awards were not fully vested, the lender exercised the warrants and options. The lender entered into a restricted stock agreement whereby we could repurchase the shares if the shares do not vest. During the year ended March 31, 2008, we repurchased 307,500 restricted shares that did not vest.

        As of March 25, 2011, there were warrants outstanding to purchase 326,700 shares of common stock. The warrants' weighted-average exercise price was approximately $0.83 per share.

        As of March 31, 2013 and March 23, 2012, there were no warrants outstanding.

Stock repurchase program

        On April 20, 2012, we announced that our board of directors had approved an authorization to repurchase up to $50.0 million of RealD common stock. On December 17, 2012, our board of directed approved a $25 million increase in our stock repurchase plan, increasing the $50 million repurchase plan announced on April 20, 2012 to $75 million. The number of shares to be repurchased and the timing of any potential repurchases will depend on factors such as the Company's stock price, economic and market conditions, alternative uses of capital, and corporate and regulatory requirements. Repurchases of common stock may be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when RealD might otherwise be precluded from doing so under insider trading laws, and a variety of other methods, including open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, or by any combination of such methods. The repurchase program may be suspended or discontinued at any time.

        Pursuant to the stock repurchase plan authorized by our board of directors, we repurchased a total of 5,927,729 shares of common stock at an average price per share of $10.20, including sales commissions, for an aggregate cost of $60.4 million during the fiscal year ended March 31, 2013.

9. Share-based compensation

        We account for stock options granted to employees and directors by recording compensation expense based on estimated fair values. We estimate the fair value of share-based payment awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our consolidated statements of operations.

100

RealD Inc.

Notes to consolidated financial statements (Continued)

9. Share-based compensation (Continued)

Share-based awards are attributed to expense using the straight-line method over the vesting period. We determine the value of each option award that contains a market condition using a lattice-based option valuation model, while all other option awards are valued using the Black-Scholes valuation model as permitted under ASC 718, Compensation—Stock Compensation. The assumptions used in calculating the fair value of share-based payment awards represent our best estimates. Our estimates of the fair values of stock options granted and the resulting amounts of share-based compensation recognized may be impacted by certain variables including stock price volatility, employee stock option exercise behaviors, additional stock option grants, modifications, estimates of forfeitures and the related income tax impact.

        In April 2010, our board of directors unanimously adopted the RealD Inc. 2010 Stock Incentive Plan (the "2010 Stock Plan"), and in June 2010, our stockholders approved the 2010 Stock Plan. The board of directors intends for the 2010 Stock Plan to replace our 2004 Amended and Restated Stock Incentive Plan, (the "2004 Plan"), such that, effective with our IPO, we will no longer make any new grants under the 2004 Plan. Instead, the board of directors or our compensation committee will issue equity compensation awards under the 2010 Stock Plan. The stock plan provides for the granting of nonstatutory stock options, incentive stock options, stock appreciation rights, restricted stock awards and stock units to employees, officers, directors, non-employee directors and consultants. Additionally, in June 2011 our board of directors approved the RealD Inc. 2011 Employee Stock Purchase Plan (the "ESPP Plan") and in July 2011, our stockholders approved the ESPP Plan. Stock-based compensation expense related to the ESPP Plan for the year ended March 31, 2013 was $0.8 million.

        The following table reflects the components of stock-based compensation expense recognized in our consolidated statements of operations for the years ended March 31, 2013, March 23, 2012 and March 25, 2011:

	Year ended
(in thousands)	March 31, 2013		March 23, 2012		March 25, 2011
Cost of revenue	$	807	$	458	$	160
Research and development		2,185		2,604		1,470
Selling and marketing		5,258		4,776		2,937
General and administrative		10,224		7,906		4,383
Total	$	18,474	$	15,744	$	8,950

Stock options

        Stock options granted generally vest over a four-year period, with 25% of the shares vesting after one year and monthly vesting thereafter. The options generally expire ten years from the date of grant. Share-based compensation expense related to stock options was $14.2 million, $12.3 million and $6.9 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

101

RealD Inc.

Notes to consolidated financial statements (Continued)

9. Share-based compensation (Continued)

        A summary of our stock option activity is as follows:

(in thousands, except exercise price data and contractual term data)	Options			Weighted- average exercise price		Weighted- average remaining contractual term (years)		Aggregate intrinsic value
Outstanding at March 23, 2012		7,661		$	12.54
Granted		2,155			11.21
Exercised		(544	)		6.47
Forfeited or expired		(190	)		14.61
Outstanding at March 31, 2013		9,082		$	12.59		7.1	$	26,849
Exercisable at March 31, 2013		5,135		$	10.96		5.7	$	22,481
Vested or expected to vest		8,887		$	12.52		6.9	$	26,595

        The total intrinsic value of options exercised was $2.6 million, $3.9 million and $47.0 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

        Awards that are vested or expected to vest take into consideration estimated forfeitures for awards not yet vested.

        The weighted-average grant date fair values were determined using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	Year ended
	March 31, 2013			March 23, 2012			March 25, 2011
Fair value of stock options granted	$	6.20		$	11.39		$	8.92
Expected volatility		60	%		58	%		57	%
Expected term (years)		6			6			6
Risk-free rate		1.0	%		2.0	%		2.0	%
Expected dividends		—			—			—

        For purposes of determining the expected term and in the absence of historical data relating to stock option exercises, we apply a simplified approach: the expected term of awards granted is presumed to be the mid-point between the vesting date and the end of the contractual term. We use the contractual term when valuing awards to consultants. We use the average volatility of similar, publicly traded companies as an estimate for expected volatility. The risk-free interest rate for periods within the expected or contractual life of the option, as applicable, is based on the United States Treasury yield curve in effect during the period the options were granted. Our expected dividend yield is zero.

        As of March 31, 2013, there was $30.2 million of total unrecognized compensation costs related to stock option compensation arrangements granted which is expected to be recognized over the remaining weighted-average period of 2.5 years.

102

RealD Inc.

Notes to consolidated financial statements (Continued)

9. Share-based compensation (Continued)

Performance stock options

        Certain of our management-level employees receive performance stock options, which gives the recipient the right to receive common stock that is contingent upon achievement of specified pre-established performance goals over the performance period, which is three years. The performance goals for the performance stock options are based on the measurement of our total shareholder return, on a percentile basis, compared to a comparable group of companies. Depending on the outcome of the performance goals, the recipient may ultimately earn performance stock options equal to or less than the number of performance stock options granted. For the year ended March 25, 2011, we granted 641,250 performance stock options at a weighted average grant date fair value of $9.45 per share. There were no grants of performance stock options for the years ended March 31, 2013 and March 23, 2012. Share-based compensation expense related to performance stock options was $1.9 million and $1.7 million for the years ended March 31, 2013 and March 23, 2012.

        The lattice-based option valuation model uses terms based on the length of the performance period and compound annual growth rate goals for total stockholder return based on the provisions of the award. For purposes of determining the expected term and in the absence of historical data relating to stock option exercises, we apply a simplified approach: the expected term of awards granted is presumed to be the mid-point between the vesting date and the end of the contractual term. We use the average volatility of a peer group of companies as an estimate for expected volatility. The risk-free interest rate for periods within the expected or contractual life of the option, as applicable, is based on the United States Treasury yield curve in effect during the period the options were granted.

        A summary of our performance stock option activity is as follows:

(in thousands, except exercise price data and contractual term data)	Options		Weighted- average exercise price		Weighted- average remaining contractual term (years)
Outstanding at March 23, 2012		589	$	16.00
Granted		—		—
Exercised		—		—
Forfeited or expired		—		—
Outstanding at March 31, 2013		589	$	16.00		7.3

        As of March 31, 2013, there was $0.5 million of total unrecognized compensation costs related to performance stock option compensation arrangements granted which is expected to be recognized over the remaining weighted-average period of 0.4 years.

Restricted stock units

        The fair value of a restricted stock unit is equal to the closing price of our common stock on the grant date. The weighted-average grant date fair value of restricted stock units granted in the year ended March 31, 2013 was $10.55. The weighted-average grant date fair values of restricted stock units granted in the year ended March 23, 2012 was $20.53. Share-based compensation expense related to restricted stock units was $2.2 million and $1.7 million for the years ended March 31, 2013 and March 23, 2012, respectively.

103

RealD Inc.

Notes to consolidated financial statements (Continued)

9. Share-based compensation (Continued)

        The following summarizes select information regarding our restricted stock units during the year ended March 31, 2013:

(in thousands, except grant date fair value data)	Units			Weighted- average grant date fair value
Nonvested at March 23, 2012		153		$	21.81
Granted		178			10.55
Vested		(133	)		16.76
Forfeited		(17	)		17.49
Nonvested at March 31, 2013		181		$	14.83

        As of March 31, 2013, there was $2.7 million of total unrecognized compensation costs related to restricted stock units granted which is expected to be recognized over the remaining weighted-average period of 1.6 years.

        The total fair values of restricted stock units that vested was $2.2 million, $1.0 million and $0.7 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

10. Income taxes

        The income tax provision from continuing operations consists of the following:

	Year ended
(in thousands)	March 31, 2013			March 23, 2012		March 25, 2011
Current income tax provision:
Federal	$	—		$	—	$	—
State		103			119		87
Foreign		5,202			4,948		4,187
		5,305			5,067		4,274
Deferred income tax benefit:
Federal		—			—		—
State		—			—		—
Foreign		(241	)		38		(2	)
Total income tax provision from continuing operations	$	5,064		$	5,105	$	4,272

104

RealD Inc.

Notes to consolidated financial statements (Continued)

10. Income taxes (Continued)

        Income (loss) from continuing operations before income taxes consisted of the following:

	Year ended
(in thousands)	March 31, 2013			March 23, 2012		March 25, 2011
Domestic		(6,963	)		37,600		(5,749	)
Foreign		2,140			4,530		3,196
Total		(4,823	)		42,130		(2,553	)

        Significant components of our deferred tax balances are as follows:

(in thousands)	March 31, 2013			March 23, 2012
Deferred tax assets:
Net Operating Loss Carryforwards		26,359			30,010
Deferred Revenue		4,403			4,503
Accruals, Reserves and allowances		6,771			4,163
Stock Compensation		13,220			8,006
Intangible assets		16			825
Foreign Tax credit carryovers		11,571			8,031
Other		1,255			1,918
Total Deferred tax assets		63,595			57,456
Deferred tax liabilities
Fixed assets		(18,757	)		(17,921	)
Partnership Interest		(113	)		(154	)
Unbilled Receivables		(5,385	)		(5,371	)
Other		(115	)		(116	)
Total Deferred tax liabilities		(24,370	)		(23,562	)
Valuation Allowance		(39,084	)		(33,994	)
Net deferred tax assets (liabilities)		141			(100	)

        Due to the uncertainties surrounding the timing and realization of the benefits from our tax attributes in future tax returns, we have placed a valuation allowance against primarily all of our otherwise recognizable net deferred tax assets as of March 31, 2013, March 23, 2012 and March 25, 2011. As a result, we increased our valuation allowance through the operating statement as follows:

	Year ended
(in thousands)	March 31, 2013		March 23, 2012
Through continuing operation	$	5,090	$	(9,187	)
Increase (decrease) in valuation allowance		5,090		(9,187	)

105

RealD Inc.

Notes to consolidated financial statements (Continued)

10. Income taxes (Continued)

        The income tax provision from continuing operations differs from the amount computed by applying the U.S. statutory federal income tax rate of 34.0% to the pretax income (loss) as a result of the following differences:

	Year ended
	March 31, 2013			March 23, 2012			March 25, 2011
Federal tax at statutory rate		34.0	%		34.0	%		34.0	%
State tax, net of federal benefit		(7.7	)%		1.6	%		(1.2	)%
Foreign tax rate differential		2.9	%		0.5	%		11.3	%
LLC income minority interest not taxed		(1.3	)%		(0.1	)%		7.2	%
Revaluation of deferred taxes due to changes in effective income tax rates		3.8	%		(1.4	)%		(13.7	)%
Research tax credits		0.0	%		0.0	%		25.2	%
Permanent differences and other		3.7	%		(0.7	)%		(35.0	)%
Stock Compensation		(34.9	)%		0.0	%		0.0	%
Change in valuation allowance		(105.5	)%		(21.8	)%		(195.4	)%
Total tax provision (benefit)		(105.0	)%		12.1	%		(167.7	)%

        As of March 31, 2013, we had net operating loss carryforwards of approximately $129.6 million for federal and $66.2 million for state purposes. Federal and state net operating loss carryforwards begin to expire in year 2020 and 2019, respectively. As of March 31, 2013, we had foreign tax credit carryforwards of approximately $11.6 million for federal income tax purposes that begin to expire in the year 2019.

        The Internal Revenue Code imposes limitations on a corporation's ability to utilize net operating loss carryovers ("NOLs") if it experiences an ownership change as defined in Section 382. In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50% over a three year period. In the event that an ownership change has occurred, or were to occur, utilization of the Company's NOLs would be subject to an annual limitation under Section 382 as determined by multiplying the value of the Company's stock at the time of the ownership change by the applicable long-term tax-exempt rate as defined in the Internal Revenue Code. Any unused annual limitation may be carried over to later years. The Company could experience an ownership change under Section 382 as a result of events in the past in combination with events in the future. If so, the use of the Company's NOLs, or a portion thereof, against future taxable income may be subject to an annual limitation under Section 382, which may result in expiration of a portion of the NOLs before utilization. Therefore, the Company could be liable for income taxes sooner than otherwise would be true if the Company were not subject to Section 382 limitations. The Company is performing a study to determine the extent of the limitation, if any. Any carry-forwards that expire prior to utilization as a result of such limitations will be removed, if applicable, from deferred tax assets with a corresponding reduction of the valuation allowance.

        We recognize excess tax benefits associated with share-based compensation and motion picture exhibitor options to stockholders' equity only when realized. As of March 31, 2013, we have approximately $22.7 million of unrealized excess tax benefits associated with share-based compensation

106

RealD Inc.

Notes to consolidated financial statements (Continued)

10. Income taxes (Continued)

and exhibitor options. These tax benefits will be accounted for as a credit to additional paid-in capital, if and when realized, rather than a reduction of the provision for income taxes.

        We adopted accounting for uncertain tax positions pursuant to ASC 740, Income Taxes. The following table summarizes the activity related to our unrecognized tax benefits (in thousands):

Balance as of March 23, 2012	$	346
Increases related to prior year tax positions		—
Increase related to current year tax positions		—
Expiration of the statute of limitations for the assessment of taxes		—
Settlements		—
Balance as of March 31, 2013	$	346

        Approximately $0.3 million of the unrecognized tax benefits will decrease the effective tax rate if recognized, subject to the valuation allowance.

        It is not anticipated that there will be a significant change in the unrecognized tax benefits over the next 12 months.

        Due to the net operating loss carryforwards, our United States federal and state returns are open to examination by the Internal Revenue Service and state jurisdictions for all years since inception.

        Our policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. As of March 31, 2013, amounts for accrued interest and penalties associated with uncertain tax positions were not significant.

        As of March 31, 2013, unremitted earnings of the subsidiary outside of the United States were approximately $14.8 million, on which no United States taxes had been provided. Our current intention is to reinvest these earnings outside the United States. It is not practicable to estimate the amount of additional taxes that might be payable upon repatriation of foreign earnings.

11. Related-party transactions

        In November 2007, we sold our 51.0% interest in ColorLink Japan to its noncontrolling interest owner. In conjunction with the November 2007 disposition of ColorLink Japan, we entered into a Technology and License Agreement with the previous noncontrolling interest owner of ColorLink Japan, and ColorLink Japan granting the parties certain exclusive and non-exclusive rights to make, use and sell designated inventions. As consideration for the grant of these rights, the parties have agreed to pay a royalty equal to 8.0% of revenue earned on the sale of the licensed products. Royalties earned in the year ended March 31, 2013 totaled $1.2 million, of which none remained due and outstanding as of March 31, 2013. Royalties earned in the year ended March 23, 2012 totaled $2.4 million, of which $0.3 million remained due and outstanding as of March 23, 2012. Royalties earned in the year ended March 25, 2011 totaled $5.9 million, of which $0.2 million remained due and outstanding as of March 25, 2011.

        In addition, we purchased inventory from the previous noncontrolling interest owner of ColorLink Japan. Inventory amounts purchased totaled $6.8 million and $7.0 million for the years ended March 31, 2013 and March 23, 2012, respectively. As of March 31, 2013 and March 23, 2012, we owed

107

RealD Inc.

Notes to consolidated financial statements (Continued)

11. Related-party transactions (Continued)

the previous noncontrolling interest owner of ColorLink Japan $0.6 million and $0.9 million, respectively. Amounts purchased from us by the noncontrolling interest owner of ColorLink Japan in the year ended March 31, 2013 totaled $2.3 million of which $0.4 million remained outstanding. A principal of the previous noncontrolling interest owner of ColorLink Japan owns less than 5% share of our common stock.

        During the year ended March 25, 2011, we purchased digital projectors from the noncontrolling interest owner of our subsidiaries totaling $0.8 million. Of this amount, $0.5 million was paid upfront and $0.3 million was financed as long-term debt.

        During the years ended March 25, 2011, we paid a $0.2 million management fee to the holder of our Series C mandatorily redeemable convertible preferred stock, respectively. Upon the closing of our IPO in July 2010, our obligation to pay this management fee ceased.

        On May 19, 2011, we entered into a separation agreement and general release of claims with Joshua Greer, a former director and executive officer of the Company. Pursuant to the terms of the separation agreement, Mr. Greer received the following benefits: (i) cash severance of $450,000 paid in ten equal installments, with the first such installment paid on October 15, 2011; (ii) reimbursement from us for insurance coverage under COBRA for 18 months following July 15, 2011 or such earlier time as Mr. Greer becomes eligible for insurance through another employer; (iii) a pro-rated cash performance bonus for fiscal year 2012 (to be paid no later than June 15, 2012), in an amount equal to 30% of 80% of Mr. Greer's salary, computed assuming that Mr. Greer had remained as our president through the end of fiscal year 2012; and (iv) acceleration of a time-based vesting stock option for 105,000 shares granted to Mr. Greer on July 15, 2010 as of July 15, 2011, which remained exercisable for six months following the end of the term of the consulting agreement that we entered into with Mr. Greer on the same date. A second stock option for 105,000 shares granted to Mr. Greer on July 15, 2010 was entirely forfeited and cancelled without consideration. We entered into a consulting agreement with Mr. Greer pursuant to which Mr. Greer was paid $275,000 per year commencing as of July 16, 2011. The consulting agreement with Mr. Greer expired on July 16, 2012. On June 21, 2012, Mr. Greer notified us of his resignation from our board of directors, effective on July 16, 2012 upon the expiration of the consulting agreement. During the year ended March 31, 2013, we paid Mr. Greer $225,000 pursuant to his separation agreement and $148,958 pursuant to his consulting agreement.

        We entered into a consulting agreement, effective as of May 29, 2012 (the "DCH Agreement"), with DCH Consultants LLC ("DCH"), an entity controlled by Mr. David Habiger. Mr. Habiger is a member of the Company's Board of Directors, its Nominating and Corporate Governance Committee, and its Compensation Committee.

        Pursuant to the DCH Agreement, DCH provided certain consulting services regarding the application of one or more of our technologies in the consumer electronics industry. The DCH Agreement had a term of 4 months and DCH was entitled to receive aggregate fixed compensation of $20,000 per month during the term of the DCH Agreement. Although we had the right to extend the engagement for up to two additional months on the same terms, by providing DCH with 10 days written notice prior to the end of the original term, we did not extend the DCH Agreement and it expired as of September 29, 2012.

        During the year ended March 31, 2013, we paid DCH $80,239 pursuant to the DCH Agreement.

108

RealD Inc.

Notes to consolidated financial statements (Continued)

12. Segment and geographic information

        For financial reporting purposes we currently have one reportable segment. We have three operating segments: cinema, consumer electronics and professional. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our Chief Executive Officer. We aggregate our three operating segments into one reportable segment based on qualitative factors including similar economic characteristics and the nature of the products and services. Our product portfolio is used in applications that enable a premium 3D viewing experience across the segments. We currently generate substantially all of our revenue from the license of our RealD Cinema Systems and the sale of our eyewear, which together enable a digital cinema projector to show 3D motion pictures.

        Our top 10 customers with an accounts receivable balance represented approximately 47% and 45% of our net accounts receivable as of March 31, 2013 and March 23, 2012, respectively. Our top 10 customers accounted for approximately 44%, 46% and 50% of our revenue for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

        No individual customer accounted for greater than 10% of our revenues during the years ended March 31, 2013, March 23, 2012 and March 25, 2011.

Geographic information

        Revenue by geographic region, as determined based on the location of our customers or the anticipated destination of use was as follows:

	Year ended
(in thousands)	March 31, 2013		March 23, 2012		March 25, 2011
Domestic (United States and Canada)	$	106,979	$	126,151	$	91,259
International		108,573		120,477		154,877
Total revenues	$	215,552	$	246,628	$	246,136

        Long-lived tangible assets, net of accumulated depreciation, by geographic region were as follows:

(in thousands)	March 31, 2013		March 23, 2012
Domestic (United States and Canada)	$	101,438	$	105,851
International		49,671		48,964
Total long-lived tangible assets	$	151,109	$	154,815

109

RealD Inc.

Notes to consolidated financial statements (Continued)

13. Quarterly financial data (unaudited)

	Three months ended
(dollars in thousands, except per share data)	March 31, 2013			December 31, 2012			September 21, 2012			June 22, 2012
Net revenue	$	45,449		$	46,939		$	54,986		$	68,178
Gross profit		20,274			20,919			17,654			31,345
Net income		(4,444	)		(4,159	)		(4,231	)		2,947
Net income attributable to RealD Inc. common stockholders	$	(4,336	)	$	(4,160	)	$	(4,173	)	$	2,979
Earnings per common share:
Basic	$	(0.09	)	$	(0.08	)	$	(0.08	)	$	0.05
Diluted	$	(0.09	)	$	(0.08	)	$	(0.08	)	$	0.05

	Three months ended
(dollars in thousands, except per share data)	March 23, 2012		December 23, 2011		September 23, 2011		June 24, 2011
Net revenue	$	50,047	$	49,026	$	87,995	$	59,560
Gross profit		26,895		23,954		42,522		35,319
Net income (loss)		5,683		2,763		19,177		9,402
Net income (loss) attributable to RealD Inc. common stockholders	$	5,536	$	2,833	$	18,905	$	9,595	(1)
Earnings (loss) per common share:
Basic	$	0.10	$	0.05	$	0.35	$	0.18
Diluted	$	0.10	$	0.05	$	0.33	$	0.17

(1)

Includes undistributed earnings attributable to preferred stockholders of $2.0 million.

110

Item 9.    Changes in and disagreements with accountants on accounting and financial disclosure

        None.

Item 9A.    Controls and procedures

Evaluation of disclosure controls and procedures

        We maintain "disclosure controls and procedures," as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, or the Exchange Act, that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

        Subject to the limitations noted above, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the fiscal period covered by this Annual Report on Form 10-K. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective to meet the objective for which they were designed and operate at the reasonable assurance level.

Management's Report on Internal Control Over Financial Reporting

        Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal controls over financial reporting based on the framework in "Internal Control—Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on our evaluation, management has concluded that our internal control over financial reporting was effective as of March 31, 2013.

        Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

        Our independent registered public accounting firm, Ernst & Young LLP, which has audited and reported on our financial statements, issued an attestation report regarding our internal controls over

111

financial reporting as of March 31, 2013. Ernst & Young LLP's report is included in this annual report below.

Inherent Limitations on Effectiveness of Controls

        Our management, including our chief executive officer ("CEO") and chief financial officer ("CFO"), does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Changes in internal control over financial reporting

        There were no changes in our internal control over financial reporting during the fiscal quarter ended March 31, 2013, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

112

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of RealD Inc.

        We have audited RealD Inc.'s (the "Company") internal control over financial reporting as of March 31, 2013, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). RealD Inc.'s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, RealD Inc. maintained, in all material respects, effective internal control over financial reporting as of March 31, 2013, based on the COSO criteria.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of RealD Inc. as of March 31, 2013 and March 23, 2012, and the related consolidated statements of operations, comprehensive income (loss), changes in mandatorily redeemable convertible preferred stock and equity (deficit) and cash flows for each of the three years in the period ended March 31, 2013 of RealD Inc. and our report dated June 6, 2013 expressed an unqualified opinion thereon.

	/s/ Ernst & Young LLP
Los Angeles, California June 6, 2013

113

Item 9B.    Other information

        Due to the evolving and changing nature of our business and operations, on June 5, 2013, Mr. Skarupa, our Chief Financial Officer, has voluntarily relinquished his title of Chief Operating Officer. The change in Mr. Skarupa's title is a result of several factors, including (i) Mr. Skarupa transitioning many of his responsibilities as Chief Operating Officer to other members of our management team, including Mr. Bannon, our Executive Vice-President of Global Operations, who joined us in late 2011; and (ii) allowing Mr. Skarupa to focus on his responsibilities as our Chief Financial Officer. Additionally, on June 5, 2013, our board of directors amended Article II, Section 2.11 of our Amended and Restated Bylaws to provide that director nominees shall be elected by the affirmative vote of the majority of votes cast at an annual meeting of shareholders, with a plurality vote standard retained for contested director elections. Prior to this amendment, all elections of directors were by a plurality vote.

PART III

Item 10.    Directors, executive officers and corporate governance

        Information required by this item regarding directors and director nominees, executive officers, the board of directors and its committees, and certain corporate governance matters is incorporated by reference to the information contained in RealD's definitive Proxy Statement for its 2013 Annual Meeting of Stockholders under the headings "Proposal One—Election of Class III Directors," "Board Structure," "Corporate Governance" and "Executive Officers". Information required by this item regarding compliance with Section 16(a) of the Exchange Act is incorporated by reference to the information set forth under the heading "Section 16(a) Beneficial Ownership Reporting Compliance" in RealD's definitive Proxy Statement for its 2013 Annual Meeting of Stockholders.

Item 11.    Executive compensation

        Information required by this item regarding executive compensation is incorporated by reference to the information set forth under the headings "Compensation Discussion and Analysis," "Board Structure," "Corporate Governance—Compensation Committee Interlocks and Insider Participation" and "Compensation Committee Report" in RealD's definitive Proxy Statement for its 2013 Annual Meeting of Stockholders.

Item 12.    Security ownership of certain beneficial owners and management and related stockholder matters

        Information required by this item regarding security ownership of certain beneficial owners and management is incorporated by reference to the information set forth under the heading "Security Ownership of Management and Certain Beneficial Owners" in RealD's definitive Proxy Statement for its 2013 Annual Meeting of Stockholders. Information required by this item regarding securities authorized for issuance under our equity compensation plans is incorporated by reference to the information set forth under the heading "Compensation Discussion and Analysis—Incentive Compensation Plans" in RealD's definitive Proxy Statement for its 2013 Annual Meeting of Stockholders.

Item 13.    Certain relationships and related transactions, and director independence

        Information required by this item regarding certain relationships and related transactions is incorporated by reference to the information set forth under the heading "Corporate Governance—Certain Relationships and Related Transactions" in RealD's definitive Proxy Statement for its 2013 Annual Meeting of Stockholders. Information required by this item regarding director independence is incorporated by reference to the information set forth under the heading "Board Structure" in RealD's definitive Proxy Statement for its 2013 Annual Meeting of Stockholders.

114

Item 14.    Principal accounting fees and services

        Information required by this item regarding principal accounting fees and services is incorporated by reference to the information set forth under the heading "Proposal Two—Ratification of the Selection of Independent Registered Public Accounting Firm For Fiscal Year 2014" in RealD's definitive Proxy Statement for its 2013 Annual Meeting of Stockholders.

115

PART IV

Item 15.    Exhibit and financial statement schedules

(a)

The following documents are filed as part of or are included in this Annual Report on Form 10-K:

(1)

Financial Statements

See Index to Consolidated Financial Statements on page 67 of this Annual Report on Form 10-K.

(2)

Financial Statement Schedules

Financial Statement Schedule II: Valuation and Qualifying Accounts that follows the Notes to Consolidated Financial Statements is filed as part of this Annual Report Form 10-K. Other financial statement schedules have been omitted since they are either not required or the information is otherwise included.

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

	Balance at beginning of period		Additions charged to cost and expenses		Other Adjustments/ Deductions(1)			Balance at end of period
Allowance for doubtful accounts and customer credits:
Year ended March 31, 2013	$	4,224	$	—	$	(1,575	)	$	2,649
Year ended March 23, 2012	$	6,803	$	—	$	(2,579	)	$	4,224
Year ended March 25, 2011	$	1,201	$	5,432	$	170		$	6,803
Deferred tax valuation allowance:
Year ended March 31, 2013	$	33,994	$	5,090	$	—		$	39,084
Year ended March 23, 2012	$	43,181	$	—	$	(9,187	)	$	33,994
Year ended March 25, 2011	$	38,195	$	4,986	$	—		$	43,181

(1)

Other adjustments and deductions primarily consist of adjustments to deferred revenue and write-offs of amounts previously charged to the provision.

(3)

List of Exhibits

The Exhibits filed as part of this Annual Report on Form 10-K, or incorporated by reference, are listed on the Exhibit Index immediately preceding such Exhibits, which Exhibit Index is incorporated herein by reference.

116

SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	RealD Inc. (Registrant)
June 6, 2013	By:	/s/ MICHAEL V. LEWIS Michael V. Lewis Chief Executive Officer

POWER OF ATTORNEY

        Each person whose individual signature appears below hereby constitutes and appoints Michael V. Lewis, Andrew A. Skarupa and Craig S. Gatarz, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof.

        Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ MICHAEL V. LEWIS Michael V. Lewis	Chief Executive Officer and Director (Principal Executive Officer)	June 6, 2013
/s/ ANDREW A. SKARUPA Andrew A. Skarupa	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	June 6, 2013
/s/ LAURA J. ALBER Laura J. Alber	Director	June 6, 2013
/s/ FRANK J. BIONDI, JR. Frank J. Biondi, Jr.	Director	June 6, 2013

117

Signature	Title	Date
/s/ RICHARD L. GRAND-JEAN Richard L. Grand-Jean	Director	June 6, 2013
/s/ SHERRY LANSING Sherry Lansing	Director	June 6, 2013
/s/ DAVID HABIGER David Habiger	Director	June 6, 2013
/s/ P. GORDON HODGE P. Gordon Hodge	Director	June 6, 2013

118

EXHIBIT INDEX

Exhibit Number			Exhibit Description	Incorporated by Reference						Filed Herewith
				Form	SEC File No.		Exhibit		Filing Date
	3.1		Amended and Restated Certificate of Incorporation as filed with the Secretary of State of the State of Delaware on July 15, 2010.	10-Q		001-34818		3.1	July 29, 2011
	3.2		Amended and Restated Bylaws as became effective on July 15, 2010.	10-Q		001-34818		3.2	July 28, 2011
	3.3		Amended and Restated Bylaws as amended and restated June 5, 2013.							X
	4.1		Specimen of common stock certificate.	S-1/A		333-165988		4.1	May 26, 2010
	4.2		Amended and Restated Investors' Rights Agreement, dated December 24, 2007, by and among the registrant, the founders and the investors named therein.	S-1/A		333-165988		4.2	May 26, 2010
	4.3		Amendment and Agreement to Amended and Restated Investors' Rights Agreement, dated June 11, 2010, by and among the registrant and the other signatories thereto.	S-1/A		333-165988		4.6	June 29, 2010
	4.4		Side letter, dated June 25, 2010, to Amended and Restated Investors' Rights Agreement, as amended.	S-1/A		333-165988		4.8	June 29, 2010
	10.1	#	2004 Amended and Restated Stock Incentive Plan.	S-1/A		333-165988		10.1	June 29, 2010
	10.2	#	Form of Stock Option Agreement for 2004 Amended and Restated Stock Incentive Plan.	S-1		333-165988		10.2	April 9, 2010
	10.3	#	2010 Stock Incentive Plan.	S-1/A		333-165988		10.3	June 29, 2010
	10.4	#	2010 Stock Incentive Plan—Form of Nonstatutory Stock Option Agreement between the Chief Executive Officer and the registrant.	S-1/A		333-165988		10.4	June 29, 2010

119

Exhibit Number			Exhibit Description	Incorporated by Reference						Filed Herewith
				Form	SEC File No.		Exhibit		Filing Date
	10.5	#	2010 Stock Incentive Plan—Form of Nonstatutory Stock Option Agreement between the executive officers and the registrant.	S-1/A		333-165988		10.5	June 29, 2010
	10.6	#	2010 Stock Incentive Plan—Form of Performance Stock Option Agreement issued in connection with the initial public offering between the Chief Executive Officer and the registrant.	S-1/A		333-165988		10.6	June 29, 2010
	10.7	#	2010 Stock Incentive Plan—Form of Performance Stock Option Agreement issued in connection with the initial public offering between the executive officers and the registrant.	S-1/A		333-165988		10.7	June 29, 2010
	10.8	#	2010 Stock Incentive Plan—Form of Stock Unit Agreement between the non-employee directors and the registrant.	S-1/A		333-165988		10.8	June 29, 2010
	10.9	#	Employment Agreement, dated May 25, 2010, between Michael V. Lewis and the registrant.	S-1/A		333-165988		10.9	June 29, 2010
	10.10	#	Employee Invention Assignment and Confidentiality Agreement dated May 25, 2010 between Michael V. Lewis and the registrant.	S-1/A		333-165988		10.10	June 29, 2010
	10.11	#	Indemnification Agreement, dated April 8, 2010, between Michael V. Lewis and the registrant.	S-1/A		333-165988		10.11	May 26, 2010
	10.12	#	Form of Separation Agreement and General Release of Claims between Michael V. Lewis and the registrant.	S-1/A		333-165988		10.12	May 26, 2010

120

Exhibit Number			Exhibit Description	Incorporated by Reference						Filed Herewith
				Form	SEC File No.		Exhibit		Filing Date
	10.13	#	Form of Indemnification Agreement between the registrant and its directors and officers.	S-1		333-165988		10.13	April 9, 2010
	10.14	+	Real D System License Agreement (U.S. 2008), dated October 15, 2008, by and between REGAL Cinemas, Inc. and the registrant.	S-1/A		333-165988		10.14	June 29, 2010
	10.15	+	Real D Nonqualified Stock Option Grant and Real D Stock Option Agreement, both dated, October 15, 2008, by and between REGAL Cinemas, Inc. and the registrant.	S-1/A		333-165988		10.15	May 10, 2010
	10.16	+	Amended and Restated Real D System License Agreement (U.S. 2009), dated May 19, 2009, by and between Cinemark USA, Inc. and the registrant.	S-1/A		333-165988		10.16	June 29, 2010
	10.17	+	Real D Nonqualified Stock Option Grant and Real D Stock Option Agreement, both dated May 19, 2009, by and between Cinemark USA, Inc. and the registrant.	S-1/A		333-165988		10.17	May 10, 2010
	10.18	+	Second Amended and Restated RealD System License Agreement (2010), dated May 9, 2010, by and between American Multi-Cinema, Inc. and the registrant.	S-1/A		333-165988		10.18	June 29, 2010
	10.19		Operating Agreement of Digital Link II, LLC, dated March 2, 2007.	S-1/A		333-165988		10.19	May 10, 2010

121

Exhibit Number			Exhibit Description	Incorporated by Reference						Filed Herewith
				Form	SEC File No.		Exhibit		Filing Date
	10.20	+	RealD Inc. Amended and Restated Nonqualified Stock Option Grant and RealD Inc. Amended and Restated Stock Option Agreement, both dated May 9, 2010, by and between American Multi-Cinema, Inc. and the registrant.	S-1/A		333-165988		10.24	May 10, 2010
	10.21	#	Director Offer Letter and Consent, dated May 17, 2010, by and between P. Gordon Hodge and the registrant.	S-1/A		333-165988		10.25	May 26, 2010
	10.22	#	Employment Agreement, dated May 25, 2010, between Andrew A. Skarupa and the registrant.	S-1/A		333-165988		10.27	June 29, 2010
	10.23	#	Employment Agreement, dated May 25, 2010, between Joshua Greer and the registrant.	S-1/A		333-165988		10.28	June 29, 2010
	10.24	#	Employment Agreement, dated May 25, 2010, between Joseph Peixoto and the registrant.	S-1/A		333-165988		10.29	June 29, 2010
	10.25	#	Employment Agreement, dated May 25, 2010, between Robert Mayson and the registrant.	S-1/A		333-165988		10.30	June 29, 2010
	10.26	#	Form of Separation Agreement and General Release of Claims between the registrant and Andrew A. Skarupa, Joshua Greer, Joseph Peixoto and Robert Mayson.	S-1/A		333-165988		10.31	May 26, 2010
	10.27	#	Form of Employee Invention Assignment and Confidentiality Agreement between the registrant and Andrew A. Skarupa, Joshua Greer, Joseph Peixoto, Robert Mayson and other non-executive employees.	S-1/A		333-165988		10.32	May 26, 2010

122

Exhibit Number			Exhibit Description	Incorporated by Reference						Filed Herewith
				Form	SEC File No.		Exhibit		Filing Date
	10.28	#	Employment Agreement, dated January 21, 2010, between Craig Gatarz and the registrant.	S-1/A		333-165988		10.33	May 26, 2010
	10.29		Credit and Security Agreement, dated June 24, 2010, by and between City National Bank and the registrant.	S-1/A		333-165988		10.34	June 29, 2010
	10.30	#	Amended and Restated Agreement of Employment, dated September 1, 2007, between Andrew A. Skarupa and the registrant.	S-1/A		333-165988		10.35	June 29, 2010
	10.31	#	Amended and Restated Agreement of Employment, dated September 1, 2007, between Joseph Peixoto and the registrant.	S-1/A		333-165988		10.36	June 29, 2010
	10.32	#	Employment Agreement, dated February 25, 2010, between Robert Mayson and the registrant.	S-1/A		333-165988		10.37	May 26, 2010
	10.33		Employment Agreement, dated November 5, 2008, between Robert Mayson and RealD Europe Limited.#	S-1/A		333-165988		10.38	May 26, 2010
	10.34	#	Director Offer Letter and Consent, dated May 20, 2010, by and between Sherry Lansing and the registrant.	S-1/A		333-165988		10.39	May 26, 2010
	10.35	#	Director Offer Letter and Consent, dated May 17, 2010, by and between Frank J. Biondi, Jr. and the registrant.	S-1/A		333-165988		10.40	May 26, 2010
	10.36	#	Director Offer Letter and Consent, dated May 17, 2010, by and between Richard Grand-Jean and the registrant.	S-1/A		333-165988		10.41	May 26, 2010
	10.37	#	Director Offer Letter and Consent, dated May 20, 2010, by and between James Cameron and the registrant.	S-1/A		333-165988		10.42	June 29, 2010

123

Exhibit Number			Exhibit Description	Incorporated by Reference						Filed Herewith
				Form	SEC File No.		Exhibit		Filing Date
	10.38	#	2010 Management Incentive Plan.	S-1/A		333-165988		10.43	June 29, 2010
	10.39	#	Employment Agreement, dated October 18, 2010, between Craig Gatarz and the registrant.	S-1		333-170766		10.39	November 22, 2010
	10.40	+	First Amendment to Real D System License Agreement (U.S. 2008), dated as of January 26, 2011, by and between RealD Inc. and Regal Cinemas, Inc.	8-K		001-34818		10.1	January 27, 2011
	10.41		First Amendment to Credit and Security Agreement, dated as of April 5, 2011, between RealD, Inc. and City National Bank.	8-K		001-34818		10.1	April 8, 2011
	10.42		Continuing Guaranty, dated as of April 5, 2011, executed by ColorLink Inc. in favor of City National Bank.	8-K		001-34818		10.2	April 8, 2011
	10.43		Continuing Guaranty, dated as of April 5, 2011, executed by Stereographics Corporation in favor of City National Bank.	8-K		001-34818		10.3	April 8, 2011
	10.44	#	Separation Agreement and General Release of Claims, dated as of May 16, 2011, by and between Joshua Greer and the registrant.	10-K		001-34818		10.44	June 10, 2011
	10.45	#	Consulting Agreement, dated as of May 16, 2011, by and between Joshua Greer and the registrant.	10-K		001-34818		10.45	June 10, 2011
	10.46	#	2010 Stock Incentive Plan—Form of Stock Unit Agreement between the executive officers and the registrant.	10-K		001-34818		10.46	June 10, 2011

124

Exhibit Number			Exhibit Description	Incorporated by Reference						Filed Herewith
				Form	SEC File No.		Exhibit		Filing Date
	10.47	+	First Amendment to Amended and Restated RealD System License Agreement (U.S. 2009), dated as of July 20, 2011, by and between Cinemark USA, Inc. and the registrant.	8-K		001-34818		10.1	July 21, 2011
	10.48	+	Amendment Number 1 to the Second Amended and Restated RealD System License Agreement, dated as of July 28, 2011, by and between American Multi-Cinema, Inc. and the registrant.	8-K		001-		10.1	July 29, 2011
	10.49	#	RealD 2011 Employee Stock Purchase Plan.	8-K		001-34818		10.1	August 2, 2011
	10.50		Second Amendment to Credit and Security Agreement, dated as of December 6, 2011, between City National Bank and the registrant, acknowledged by each of ColorLink, Inc. and Stereographics Corporation.	8-K		001-34818		10.1	December 8, 2011
	10.51	#	Employment Agreement, dated April 18, 2012, between Robert Mayson and the registrant.	8-K		001-34818		10.1	April 18, 2012
	10.52	#	Secondment Letter, dated April 18, 2012, by and between Robert Mayson and the registrant.	8-K		001-34818		10.2	April 18, 2012
	10.53	+	Credit Agreement, dated as of April 19, 2012, among City National Bank, U.S. Bank National Association, HSBC Bank USA, N.A., the lenders party thereto and the registrant.	8-K/A		001-34818		10.1	April 25, 2012

125

Exhibit Number			Exhibit Description	Incorporated by Reference						Filed Herewith
				Form	SEC File No.		Exhibit		Filing Date
	10.54		General Continuing Guaranty, dated as of April 19, 2012, executed by Stereographics Corporation and ColorLink Inc. in favor of City National Bank and the lenders party to the Credit Agreement, dated as of April 19, 2012.	8-K/A		001-34818		10.2	April 25, 2012
	10.55	+	Security Agreement, dated as of April 19, 2012, among Stereographics Corporation, ColorLink Inc., City National Bank and the registrant.	8-K/A		001-34818		10.3	April 25, 2012
	10.56		Consulting Agreement, dated May 29, 2012, by and between DCH Consultants LLC and the registrant	10-Q		001-34818		10.6	July 31 2012
	10.57	#	Director Offer Letter and Consent, dated January 27, 2013, by and between Laura Alber and the registrant.							X
	10.58	#	Employment Agreement, dated February 6, 2013, between Minard Hamilton and the registrant.							X
	21.1		List of significant subsidiaries of the registrant.							X
	23.1		Consent of Independent Registered Public Accounting Firm.							X
	24.1		Power of Attorney (included on signature page to this Annual Report on Form 10-K).							X
	31.1		Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.							X

126

Exhibit Number			Exhibit Description	Incorporated by Reference				Filed Herewith
				Form	SEC File No.	Exhibit	Filing Date
	31.2		Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
	32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
	32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					X
	101.INS	*	XBRL Instance Document.
	101.SCH	*	XBRL Taxonomy Extension Schema Document.
	101.CAL	*	XBRL Taxonomy Extension Calculation Linkbase Document.
	101.DEF	*	XBRL Taxonomy Extension Definition Linkbase Document.
	101.LAB	*	XBRL Taxonomy Extension Label Linkbase Document.
	101.PRE	*	XBRL Taxonomy Extension Presentation Linkbase Document.

+

Certain provisions of this exhibit have been omitted pursuant to a request for confidential treatment.

#

Indicates management contract or compensatory plan, contract, or agreement.

*

XBRL (Extensible Business Reporting Language) information is furnished and not filed herewith, is not a part of a registration statement or Prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

127

EX-3.3

Exhibit 3.3

AMENDED AND RESTATED BYLAWS OF

REALD INC.

(a Delaware corporation)

TABLE OF CONTENTS

		Page
ARTICLE I - CORPORATE OFFICES		1
1.1	REGISTERED OFFICE	1
1.2	OTHER OFFICES	1
ARTICLE II - MEETINGS OF STOCKHOLDERS		1
2.1	PLACE OF MEETINGS	1
2.2	ANNUAL MEETING	2
2.3	SPECIAL MEETING	2
2.4	ADVANCE NOTICE PROCEDURES FOR BUSINESS BROUGHT BEFORE A MEETING	2
2.5	ADVANCE NOTICE PROCEDURES FOR NOMINATIONS OF DIRECTORS	7
2.6	NOTICE OF STOCKHOLDERS’ MEETINGS	11
2.7	MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE	11
2.8	QUORUM	12
2.9	ADJOURNED MEETING; NOTICE	12
2.10	CONDUCT OF BUSINESS	12
2.11	VOTING	13
2.12	STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING	14
2.13	RECORD DATE	14
2.14	PROXIES	14
2.15	LIST OF STOCKHOLDERS ENTITLED TO VOTE	15
2.16	INSPECTORS OF ELECTION	15
ARTICLE III - DIRECTORS		16

-i-

3.1	POWERS	16
3.2	CLASSIFICATION OF DIRECTORS	16
3.3	NUMBER OF DIRECTORS	16
3.4	ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS	17
3.5	RESIGNATION AND VACANCIES	17
3.6	PLACE OF MEETINGS; MEETINGS BY TELEPHONE	17
3.7	REGULAR MEETINGS	18
3.8	SPECIAL MEETINGS; NOTICE	18
3.9	QUORUM	18
3.10	BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING	19
3.11	FEES AND COMPENSATION OF DIRECTORS	19
3.12	REMOVAL OF DIRECTORS	19
ARTICLE IV - COMMITTEES		19
4.1	COMMITTEES OF DIRECTORS	19
4.2	COMMITTEE MINUTES	19
4.3	MEETINGS AND ACTION OF COMMITTEES	20
4.4	SUBCOMMITTEES	20
ARTICLE V - OFFICERS		20
5.1	OFFICERS	20
5.2	APPOINTMENT OF OFFICERS	21
5.3	SUBORDINATE OFFICERS	21
5.4	REMOVAL AND RESIGNATION OF OFFICERS	21
5.5	VACANCIES IN OFFICES	21
5.6	REPRESENTATION OF SHARES OF OTHER CORPORATIONS	21
5.7	AUTHORITY AND DUTIES OF OFFICERS	22

-ii-

ARTICLE VI - GENERAL MATTERS		22
6.1	EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS	22
6.2	ISSUANCE OF STOCK	22
6.3	STOCK CERTIFICATES; PARTLY PAID SHARES	22
6.4	SPECIAL DESIGNATION ON CERTIFICATES	23
6.5	LOST CERTIFICATES	23
6.6	CONSTRUCTION; DEFINITIONS; TIME PERIODS	23
6.7	DIVIDENDS	24
6.8	FISCAL YEAR	24
6.9	SEAL	24
6.10	TRANSFER OF STOCK	24
6.11	STOCK TRANSFER AGREEMENTS	24
6.12	REGISTERED STOCKHOLDERS	25
6.13	WAIVER OF NOTICE	25
6.14	NOTICE TO STOCKHOLDERS SHARING AN ADDRESS	25
6.15	NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL	25
6.16	EVIDENCE OF AUTHORITY	26
6.17	CERTIFICATE OF INCORPORATION	26
6.18	RELIANCE UPON BOOKS, REPORTS AND RECORDS	26
ARTICLE VII - NOTICE BY ELECTRONIC TRANSMISSION		26
7.1	NOTICE BY ELECTRONIC TRANSMISSION	26
7.2	DEFINITION OF ELECTRONIC TRANSMISSION	27
ARTICLE VIII - INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS		27
8.1	RIGHT TO INDEMNIFICATION	27

-iii-

8.2	ADVANCEMENT OF EXPENSES	28
8.3	RIGHT OF INDEMNITEE TO BRING SUIT	28
8.4	NONEXCLUSIVITY RIGHTS	29
8.5	INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION	30
8.6	NATURE OF RIGHTS	30
ARTICLE IX - AMENDMENTS		30

-iv-

AMENDED AND RESTATED
BYLAWS OF
REALD INC.

(as amended and restated on June 5, 2013)

______________________________

ARTICLE I - CORPORATE OFFICES

1.1REGISTERED OFFICE.

The registered office of RealD Inc. (the “Corporation”) shall be fixed in the Corporation’s certificate of incorporation, as the same may be amended from time to time.

1.2OTHER OFFICES.

The Corporation’s board of directors (the “Board”) may at any time establish other offices at any place or places. The Board may change any office from one location to another or eliminate any office or offices.

ARTICLE II - MEETINGS OF STOCKHOLDERS

2.1PLACE OF MEETINGS.

(i)Meetings of the stockholders shall be held at any place within or outside of the State of Delaware as determined by the Board, and if no such determination is made, at such place as may be determined by the chairperson of the Board.  If no location is so determined, the meeting shall be held at the principal executive office of the Corporation. Notwithstanding the foregoing, the Board may, in its sole discretion, determine that an annual meeting shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 2.1(ii).

(ii)If authorized by the Board in its sole discretion, and subject to such guidelines and procedures as the Board may adopt, stockholders and proxy holders not physically present at a meeting of stockholders may, by means of remote communication: (a) participate in a meeting of stockholders; and (b) be deemed present in person and vote at a meeting of stockholders, whether such meeting is to be held at a designated place or solely by means of remote communication; provided that (1) the Corporation implements reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxy holder, (2) the Corporation implements reasonable measures to provide such stockholders and proxy holders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (3) if any stockholder or proxy holder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action is maintained by the Corporation.

-1-

2.2ANNUAL MEETING.

The Board shall designate the date and time of the annual meeting.  At the annual meeting, directors shall be elected and other proper business properly brought before the meeting in accordance with Section 2.4 of this ARTICLE II may be transacted.

2.3SPECIAL MEETING.

Special meetings of the stockholders may be called, for any purpose or purposes, by (i) the Board, (ii) the chairperson of the Board, or (iii) the chief executive officer of the Corporation or, in the absence of such chief executive officer, the president of the Corporation. Special meetings of the stockholders may not be called by any other person or persons. The Board may cancel, postpone or reschedule any previously scheduled special meeting of the stockholders at any time, and from time to time, before or after notice for such meeting has been provided to the stockholders.

No business may be transacted at a special meeting of the stockholders other than the business specified in such notice to stockholders.  Nothing contained in this Section 2.3 shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board may be held.

2.4ADVANCE NOTICE PROCEDURES FOR BUSINESS BROUGHT BEFORE A MEETING

(i)At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting.  To be properly brought before an annual meeting, business must be (a) brought before the meeting by the Corporation and specified in the notice of meeting given by or at the direction of the Board, (b) brought before the meeting by or at the direction of the Board or any committee thereof or (c) otherwise properly brought before the meeting by a stockholder who (1) was a stockholder of record of the Corporation (and, with respect to any beneficial owner, if different, on whose behalf such business is proposed, only if such beneficial owner was the beneficial owner of shares of the Corporation) both at the time of giving the notice provided for in this Section 2.4 and at the time of the meeting, (2) is entitled to vote at the meeting and (3) has complied with this Section 2.4 as to such business.  Except for proposals properly made in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (as so amended and inclusive of such rules and regulations, the “Exchange Act”), and included in the notice of meeting given by or at the direction of the Board, the foregoing clause (c) shall be the exclusive means for a stockholder to propose business to be brought before an annual meeting.  Stockholders shall not be permitted to propose business to be brought before a special meeting of the stockholders, and the only matters that may be brought before a special meeting are the matters specified in the notice of meeting given by or at the direction of the person calling the meeting pursuant to ARTICLE II, Section 2.3.  Stockholders seeking to nominate persons for election to the Board must comply with Section 2.5 and this Section 2.4 shall not be applicable to nominations except as expressly provided in Section 2.5.

-2-

(ii)Without qualification, for business to be properly brought before an annual meeting by a stockholder, the stockholder must (a) provide Timely Notice (as defined below) thereof in writing and in proper form to the secretary of the Corporation and (b) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.4, and any such proposed business must constitute a proper matter for stockholder action.  To be timely, a stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the one-year anniversary of the preceding year’s annual meeting; provided, however, that if the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered, or mailed and received, not earlier than the 120th and not later than the 90th day prior to such annual meeting or, if later, the 10th day following the day on which public disclosure of the date of such annual meeting was first made (such notice within such time periods, “Timely Notice”).  In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of Timely Notice as described above.

(iii)To be in proper form for purposes of this Section 2.4, a stockholder’s notice to the secretary of the Corporation shall set forth:

(a)As to each Proposing Person (as defined below), (1) the name and address of such Proposing Person (including, if applicable, the name and address that appear on the Corporation’s books and records), (2) the class or series and number of shares of the Corporation that are, directly or indirectly, owned of record or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by such Proposing Person, except that such Proposing Person shall in all events be deemed to beneficially own any shares of any class or series of the Corporation as to which such Proposing Person has a right to acquire beneficial ownership at any time in the future, (3) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business, and (4) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (A) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve the business proposal and/or (B) otherwise to solicit proxies or votes from stockholders in support of such business proposal (the disclosures to be made pursuant to the foregoing clauses (1) through (4) are referred to as “Stockholder Information”);

(b)As to each Proposing Person, (1) any derivative, swap or other transaction or series of transactions engaged in, directly or indirectly, by such Proposing Person, the purpose or effect of which is to give such Proposing Person economic risk similar to ownership of shares of any class or series of the Corporation, including due to the fact that the value of such derivative, swap or other transactions are determined by reference to the price, value or volatility of any shares of any class or series of the Corporation, or which derivative, swap or other transactions provide, directly or indirectly, the opportunity to profit from any increase in the price or value of shares of any class or series of the Corporation (“Synthetic Equity Interests”),

-3-

which Synthetic Equity Interests shall be disclosed without regard to whether (A) the derivative, swap or other transactions convey any voting rights in such shares to such Proposing Person, (B) the derivative, swap or other transactions are required to be, or are capable of being, settled through delivery of such shares or (C) such Proposing Person may have entered into other transactions that hedge or mitigate the economic effect of such derivative, swap or other transactions, (2) any proxy (other than a revocable proxy or consent given in response to a solicitation made pursuant to, and in accordance with, Section 14(a) of the Exchange Act by way of a solicitation statement filed on Schedule 14A), agreement, arrangement, understanding or relationship pursuant to which such Proposing Person has or shares a right to vote any shares of any class or series of the Corporation, (3) any agreement, arrangement, understanding or relationship, including any repurchase or similar so-called “stock borrowing” agreement or arrangement, engaged in, directly or indirectly, by such Proposing Person, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of shares of any class or series of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such Proposing Person with respect to the shares of any class or series of the Corporation, or which provides, directly or indirectly, the opportunity to profit from any decrease in the price or value of the shares of any class or series of the Corporation (“Short Interests”), (4) any rights to dividends on the shares of any class or series of the Corporation owned beneficially by such Proposing Person that are separated or separable from the underlying shares of the Corporation, (5) any performance related fees (other than an asset based fee) that such Proposing Person is entitled to based on any increase or decrease in the price or value of shares of any class or series of the Corporation, or any Synthetic Equity Interests or Short Interests, if any, (6) (A) if such Proposing Person is not a natural person, the identity of the natural person or persons associated with such Proposing Person responsible for the formulation of and decision to propose the business to be brought before the meeting (such person or persons, the “Responsible Person”), the manner in which such Responsible Person was selected, any fiduciary duties owed by such Responsible Person to the equity holders or other beneficiaries of such Proposing Person, the qualifications and background of such Responsible Person and any material interests or relationships of such Responsible Person that are not shared generally by any other record or beneficial holder of the shares of any class or series of the Corporation and that reasonably could have influenced the decision of such Proposing Person to propose such business to be brought before the meeting, and (B) if such Proposing Person is a natural person, the qualifications and background of such natural person and any material interests or relationships of such natural person that are not shared generally by any other record or beneficial holder of the shares of any class or series of the Corporation and that reasonably could have influenced the decision of such Proposing Person to propose such business to be brought before the meeting, (7) any significant equity interests or any Synthetic Equity Interests or Short Interests in any principal competitor of the Corporation held by such Proposing Persons, (8) any direct or indirect interest of such Proposing Person in any contract with the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), (9) any pending or threatened litigation in which such Proposing Person is a party or material participant involving the Corporation or any of its officers or directors, or any affiliate of the Corporation, (10) any material transaction occurring during the prior 12 months between such Proposing Person, on the one hand, and the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation, on the other hand, (11) a summary of any material discussions regarding the business proposed to be brought before the meeting (A) between or among any of the Proposing Persons or (B) between or among any Proposing Person and any other record or beneficial holder of the shares of any class or series of the Corporation (including their names) and (12) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act (the disclosures to be made pursuant to the foregoing clauses (1) through (12) are referred to as “Disclosable Interests”); provided, however, that Disclosable Interests shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner; and

-4-

(c)As to each item of business that the stockholder proposes to bring before the annual meeting, (1) a reasonably brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each Proposing Person, (2) the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the bylaws of the Corporation, the language of the proposed amendment) and (3) a reasonably detailed description of all agreements, arrangements and understandings between or among any of the Proposing Persons or between or among any Proposing Person and any other person or entity (including their names) in connection with the proposal of such business by such stockholder.

(iv)For purposes of this Section 2.4, the term “Proposing Person” shall mean (a) the stockholder providing the notice of business proposed to be brought before an annual meeting, (b) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the business proposed to be brought before the annual meeting is made, (c) any affiliate or associate (each within the meaning of Rule 12b-2 under the Exchange Act for the purposes of these bylaws) of such stockholder or beneficial owner and (d) any other person with whom such stockholder or beneficial owner (or any of their respective affiliates or associates) is Acting in Concert (as defined below).

-5-

(v)A person shall be deemed to be “Acting in Concert” with another person for purposes of these bylaws if such person knowingly acts (whether or not pursuant to an express agreement, arrangement or understanding) in concert with, or towards a common goal relating to the management, governance or control of the Corporation in parallel with, such other person where (a) each person is conscious of the other person’s conduct or intent and this awareness is an element in their decision-making processes, and (b) at least one additional factor suggests that such persons intend to act in concert or in parallel, which such additional factors may include, without limitation, exchanging information (whether publicly or privately), attending meetings, conducting discussions, or making or soliciting invitations to act in concert or in parallel; provided, that a person shall not be deemed to be Acting in Concert with any other person solely as a result of the solicitation or receipt of revocable proxies or consents from such other person in response to a solicitation made pursuant to, and in accordance with, Section 14(a) of the Exchange Act by way of a proxy or consent solicitation statement filed on Schedule 14A.  A person Acting in Concert with another person shall be deemed to be Acting in Concert with any third party who is also Acting in Concert with such other person.

(vi)A stockholder providing notice of business proposed to be brought before an annual meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.4 shall be true and correct as of the record date for notice of the meeting and as of the date that is 10 business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the secretary of the Corporation at the principal executive offices of the Corporation not later than 5 business days after the record date for notice of the meeting (in the case of the update and supplement required to be made as of the record date for notice), and not later than 8 business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of 10 business days prior to the meeting or any adjournment or postponement thereof).

(vii)Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at an annual meeting except in accordance with this Section 2.4.  The chairperson of the meeting shall have the power and duty to, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with this Section 2.4, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.  Notwithstanding the foregoing provisions of this Section 2.4, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting to present the proposed business, such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.  For purposes of this Section 2.4, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the annual meeting and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at that annual meeting.

-6-

(viii)This Section 2.4 is expressly intended to apply to any business proposed to be brought before an annual meeting of stockholders other than any proposal made pursuant to Rule 14a-8 under the Exchange Act.  In addition to the requirements of this Section 2.4 with respect to any business proposed to be brought before an annual meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such business.  Nothing in this Section 2.4 shall be deemed to affect the rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

(ix)For purposes of these bylaws, “public disclosure” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.

(x)Notwithstanding the foregoing provisions of this Section 2.4, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 2.4; provided however, that any references in these bylaws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to proposals as to any other business to be considered pursuant to this Section 2.4 (including clause (c) of Section 2.4(i)), and compliance with clause (c) of Section 2.4(i) shall be the exclusive means for a stockholder to make nominations or submit other business (other than, as provided in the third sentence of 2.4(i), business brought properly under and in compliance with Rule 14a-8 of the Exchange Act, as may be amended from time to time).  Nothing in this Section 2.4 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to applicable rules and regulations promulgated under the Exchange Act.

2.5ADVANCE NOTICE PROCEDURES FOR NOMINATIONS OF DIRECTORS.

(i)Subject to Section 3.2, nominations of any person for election to the Board at an annual meeting or at a special meeting (but only if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting) may be made at such meeting only (a) pursuant to the Corporation’s notice of meeting (or any supplement thereto), (b) by or at the direction of the Board, including by any committee or persons appointed by the Board, or (c) by a stockholder who (1) was a stockholder of record of the Corporation (and, with respect to any beneficial owner, if different, on whose behalf such nomination is proposed to be made, only if such beneficial owner was the beneficial owner of shares of the Corporation) both at the time of giving the notice provided for in this Section 2.5 and at the time of the meeting, (2) is entitled to vote at the meeting and upon such election and (3) has complied with this Section 2.5 as to such nomination.  The foregoing clause (c) shall be the exclusive means for a stockholder to make any nomination of a person or persons for election to the Board to be considered by the stockholders at an annual meeting or special meeting.

-7-

(ii)Without qualification, for a stockholder to make any nomination of a person or persons for election to the Board at an annual meeting, the stockholder must (a) provide Timely Notice (as defined in Section 2.4(ii)) thereof in writing and in proper form to the secretary of the Corporation and (b) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5.  Without qualification, if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person calling such special meeting, then for a stockholder to make any nomination of a person or persons for election to the Board at a special meeting, the stockholder must (1) provide timely notice thereof in writing and in proper form to the secretary of the Corporation at the principal executive offices of the Corporation and (2) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5.  To be timely, a stockholder’s notice for nominations to be made at a special meeting must be delivered to, or mailed and received at, the principal executive offices of the Corporation not earlier than the 120th day prior to such special meeting and not later than the 90th day prior to such special meeting or, if later, the 10th day following the day on which public disclosure (as defined in Section 2.4(ix)) of the date of such special meeting was first made.  In no event shall any adjournment or postponement of an annual meeting or special meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above.

(iii)Notwithstanding anything in Section 2.5(ii) to the contrary, in the event that the number of directors to be elected to the Board at the annual meeting is increased effective after the time period for which nominations would otherwise be due under Section 2.5(ii) and there is no public announcement by the Corporation naming the nominees for the additional directorships at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Section 2.5 shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public disclosure is first made by the Corporation.

(iv)To be in proper form for purposes of this Section 2.5, a stockholder’s notice to the secretary of the Corporation shall set forth:

(a)As to each Nominating Person (as defined below), the Stockholder Information (as defined in Section 2.4(iii)(a) except that for purposes of this Section 2.5, the term “Nominating Person” shall be substituted for the term “Proposing Person” and “nomination” shall be substituted for the term “business” in all places it appears in Section 2.4(iii)(a));

(b)As to each Nominating Person, any Disclosable Interests (as defined in Section 2.4(iii)(b), except that for purposes of this Section 2.5 the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(iii)(b) and the disclosure in clause (12) of Section 2.4(iii)(b) shall be made with respect to the election of directors at the meeting);

-8-

(c)As to each person whom a Nominating Person proposes to nominate for election as a director, (1) all information with respect to such proposed nominee that would be required to be set forth in a stockholder’s notice pursuant to this Section 2.5 if such proposed nominee were a Nominating Person, (2) all information relating to such proposed nominee that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14(a) under the Exchange Act (including such proposed nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), (3) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among any Nominating Person, on the one hand, and each proposed nominee, his or her respective affiliates and associates and any other persons with whom such proposed nominee (or any of his or her respective affiliates and associates) is Acting in Concert (as defined in Section 2.4(v)), on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such Nominating Person were the “registrant” for purposes of such rule and the proposed nominee were a director or executive officer of such registrant (the disclosures to be made pursuant to the foregoing clauses (1) through (3) are referred to as “Nominee Information”), and (4) a completed and signed questionnaire, representation and agreement as provided in Section 2.5(vii); and

(d)The Corporation may require any proposed nominee to furnish such other information (1) as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation in accordance with the Corporation’s corporate governance guidelines, as the same may be in effect from time to time, or (2) that could be material to a reasonable stockholder’s understanding of the independence or lack of independence of such proposed nominee.

(v)For purposes of this Section 2.5, the term “Nominating Person” shall mean (a) the stockholder providing the notice of the nomination proposed to be made at the meeting, (b) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be made at the meeting is made, (c) any affiliate or associate of such stockholder or beneficial owner and (d) any other person with whom such stockholder or such beneficial owner (or any of their respective affiliates or associates) is Acting in Concert.

(vi)A stockholder providing notice of any nomination proposed to be made at a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.5 shall be true and correct as of the record date for notice of the meeting and as of the date that is 10 business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the secretary of the Corporation at the principal executive offices of the Corporation not later than 5 business days after the record date for notice of the meeting (in the case of the update and supplement required to be made as of the record date for notice), and not later than 8 business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of 10 business days prior to the meeting or any adjournment or postponement thereof).

-9-

(vii)Notwithstanding anything in these bylaws to the contrary, no person shall be eligible for election as a director of the Corporation unless nominated in accordance with this Section 2.5.  The chairperson at the meeting shall have the power and duty, if the facts warrant, determine that a nomination was not properly made in accordance with this Section 2.5, and if he or she should so determine, he or she shall so declare such determination to the meeting and the defective nomination shall be disregarded.  Notwithstanding the foregoing provisions of this Section 2.5, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the meeting of stockholders to present the nomination, such nomination shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the Corporation.  For purposes of this Section 2.5, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at that meeting.

(viii)To be eligible to be a nominee for election as a director of the Corporation, the proposed nominee must deliver (in accordance with the time periods prescribed for delivery of notice under this Section 2.5) to the secretary of the Corporation at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of such proposed nominee (which questionnaire shall be provided by the secretary of the Corporation upon written request) and a written representation and agreement (in form provided by the secretary of the Corporation upon written request) that such proposed nominee (a) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such proposed nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (2) any Voting Commitment that could limit or interfere with such proposed nominee’s ability to comply, if elected as a director of the Corporation, with such proposed nominee’s fiduciary duties under applicable law, (b) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed to the Corporation and (c) in such proposed nominee’s individual capacity and on behalf of the stockholder (or the beneficial owner, if different) on whose behalf the nomination is made, would be in compliance, if elected as a director of the Corporation, and will comply with applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.

-10-

(ix)       Notwithstanding the foregoing provisions of this Section 2.5, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 2.5; provided however, that any references in these bylaws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to and shall not limit any requirements applicable to nominations to be considered pursuant to this Section 2.5 (including clause (c) of Section 2.5(i)), and compliance with clause (c) of Section 2.5(i) shall be the exclusive means for a stockholder to make nominations.

2.6NOTICE OF STOCKHOLDERS’ MEETINGS.

Unless otherwise provided by law, the certificate of incorporation or these bylaws, the notice of any meeting of stockholders shall be sent or otherwise given in accordance with either Section 2.7 or Section 7.1 not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at the meeting as of the record date for determining the stockholders entitled to notice of the meeting.  The notice shall specify the place, if any, date and hour of the meeting, the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for stockholders entitled to notice of the meeting), the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.

2.7MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.

Notice of any meeting of stockholders shall be deemed given:

(i)         if mailed, when deposited in the United States mail, postage prepaid, directed to the stockholder at his or her address as it appears on the Corporation’s records; or

(ii)        if electronically transmitted as provided in Section 7.1.

An affidavit of the secretary or an assistant secretary of the Corporation or of the transfer agent or any other agent of the Corporation that the notice has been given by mail or by a form of electronic transmission, as applicable, shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

-11-

2.8QUORUM.

The holders of a majority of the stock issued and outstanding and entitled to vote, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. Where a separate vote by a class or series or classes or series is required, a majority of the outstanding shares of such class or series or classes or series, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter, except as otherwise provided by law, the certificate of incorporation or these bylaws.

2.9ADJOURNED MEETING; NOTICE.

Any meeting of stockholders may be adjourned to any other time and to any other place at which a meeting of stockholders may be held under these bylaws by the chairperson of the meeting or, in the absence of such person, by any officer of the Corporation entitled to preside at or to act as secretary of such meeting, or by the holders of a majority of the shares of stock present or represented at the meeting and entitled to vote, although less than a quorum. When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix a new record date for notice of such adjourned meeting in accordance with Section 213(a) of the Delaware General Corporation Law (“DGCL”) and Section 2.13, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting.

2.10CONDUCT OF BUSINESS.

The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of business. The chairperson of any meeting of stockholders shall be designated by the Board.  In the absence of such designation, meetings of stockholders shall be presided over by the chairperson of the Board, if any, or the chief executive officer of the Corporation (in the absence of the chairperson of the Board) or the president of the Corporation (in the absence of the chairperson of the Board and the chief executive officer of the Corporation), or in their absence, any other executive officer of the Corporation. The secretary of the Corporation shall act as secretary of the meeting, but in his or her absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.  Unless otherwise approved by the chairperson of the meeting, attendance at a meeting of stockholders is restricted to stockholders of record for that meeting, persons authorized in accordance with Section 2.14 to act by proxy, and officers of the Corporation.  The Board may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate.  Except to the extent inconsistent with such rules and regulations as adopted by the Board, the chairperson of the meeting shall also conduct the meeting in an orderly manner, rule on the precedence of, and procedure on, motions and other procedural matters, and exercise discretion with respect to such procedural matters with fairness and good faith toward all those entitled to take part.  Without limiting the foregoing, the chairperson of the meeting may (i) restrict attendance at any time to bona fide stockholders of record for that meeting and their proxies and other persons in attendance at the invitation of the presiding officer or Board, (ii) restrict use of audio or video recording devices at the meeting, and (iii) impose reasonable limits on the amount of time taken up at the meeting on discussion in general or on remarks by any one stockholder.  Should any person in attendance become unruly or obstruct the meeting proceedings, the chairperson shall have the power to have such person removed from the meeting.

-12-

2.11VOTING.

(a)        The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.13, subject to Section 217  (relating to voting rights of fiduciaries, pledgors and join owners of stock) and Section 218 (relating to voting trusts and other voting agreements) of the DGCL.

(b)        Except as may be otherwise provided in the certificate of incorporation or these bylaws, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder that has voting power upon the matter in question.

(c)        All matters other than the election of directors shall be determined by the affirmative vote of holders of a majority of voting power entitled to vote thereon, present in person or represented by proxy, except to the extent that the vote of a larger number may be required by law or the rules of any stock exchange upon which the Corporation’s securities are listed. Where a separate vote by class or classes or series is required, all matters other than the election of directors shall be determined by the affirmative vote of holders of a majority of voting power of that class or classes or series entitled to vote thereon, present in person or represented by proxy, except to the extent that the vote of a larger number may be required by law or the rules of any stock exchange upon which the Corporation’s securities are listed.

(d)       Except as provided in Section 3.5 of these Bylaws, each director shall be elected by the vote of the majority of the votes cast with respect to the director at any meeting for the election of directors at which a quorum is present, provided, however, that at any meeting of stockholders for which the secretary of the Corporation determines that the number of nominees exceeds the number to be elected as of the record date for such meeting, the directors shall be elected by vote of the plurality of the shares, present in person or represented by proxy and entitled to vote on the election of directors. For purposes of this section, a majority of the votes cast means that the number of shares voted “for” a director must exceed the number of votes cast “against” that director. Votes cast shall include votes “for” and “against” a nominee and exclude “abstentions” and “broker non-votes” with respect to that nominee’s election. The Board has established procedures under which any director who is not elected shall promptly tender his or her resignation to the Board following certification of the stockholder vote. The Nominating and Corporate Governance Committee shall consider the resignation offer and recommend to the Board of Directors the action to be taken with respect to the offered resignation. In determining its recommendation, the Nominating and Corporate Governance Committee shall consider all factors it deems relevant.

-13-

2.12STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.

Subject to the rights of the holders of the shares of any series of preferred stock or any other class of stock or series thereof then outstanding that have been expressly granted the right to take action by written consent, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders.

2.13RECORD DATE.

(a)        In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board and which record date shall not be more than 60 nor less than 10 days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination.

(b)        If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of and to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

(c)        In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

2.14PROXIES.

Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. A written proxy may be in the form of a telegram, cablegram, or other means of electronic transmission which sets forth, or is submitted with information from which it can be determined that, the telegram, cablegram, or other means of electronic transmission was authorized by the person.

-14-

Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to the foregoing paragraph may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

2.15LIST OF STOCKHOLDERS ENTITLED TO VOTE.

The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting; provided, however, if the record date for determining the stockholders entitled to vote is less than 10 days before the meeting date, the list shall reflect the stockholders entitled to vote as of the 10th day before the meeting date. The stockholder list shall be arranged in alphabetical order and show the address of each stockholder and the number of shares registered in the name of each stockholder. The Corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting for a period of at least 10 days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the Corporation’s principal executive office. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be examined by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.

2.16INSPECTORS OF ELECTION.

Before any meeting of stockholders, the Board may, and if required by law, shall, appoint an inspector or inspectors of election to act at the meeting or its adjournment. The number of inspectors shall be either one or three. If any person appointed as inspector fails to appear or fails or refuses to act, then the chairperson of the meeting may, and upon the request of any stockholder or a stockholder’s proxy shall, appoint a person to fill that vacancy. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector or inspectors so appointed and designated shall (i) ascertain the number of shares of capital stock of the Corporation outstanding and the voting power of each share, (ii) determine the shares of capital stock of the Corporation represented at the meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors and (v) certify their determination of the number of shares of capital stock of the Corporation represented at the meeting and such inspector or inspectors’ count of all votes and ballots. In determining the validity and counting of proxies and ballots cast at any meeting of stockholders of the Corporation, the inspector or inspectors may consider such information as is permitted by applicable law. If there are three inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all.

-15-

ARTICLE III - DIRECTORS

3.1POWERS.

Subject to the provisions of the DGCL and any limitations in the certificate of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the Corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board.  In the event of a vacancy in the Board, the remaining directors, except as otherwise provided by law, may exercise the powers of the full Board until the vacancy is filled.

3.2CLASSIFICATION OF DIRECTORS

The Board shall be divided into three classes, designated Class I, Class II and Class III.  Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board.  The initial division of the Board into classes shall be made by the decision of the affirmative vote of a majority of the entire Board in existence immediately prior to the consummation of the Corporation’s initial public offering.  The term of the initial Class I directors shall terminate on the date of the first annual meeting to occur after the Corporation’s initial public offering; the term of the initial Class II directors shall terminate on the date of the second annual meeting to occur after the Corporation’s initial public offering; and the term of the initial Class III directors shall terminate on the date of the third annual meeting to occur after the Corporation’s initial public offering.  If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional directors of any class elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director.  Except as provided in this Section 3.2, a director shall hold office for a three-year term until the annual meeting for the year in which his or her term expires or until his or her successor shall be elected and shall qualify, subject however, to prior death, resignation, retirement, disqualification or removal from office.

3.3NUMBER OF DIRECTORS.

Subject to the rights of any series of preferred stock then outstanding to elect additional directors under specified circumstances, and unless the certificate of incorporation fixes the number of directors, the number of directors which shall constitute the whole Board initially shall be eight (8), and, thereafter shall be fixed exclusively by one or more resolutions adopted from time to time by the Board.  No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.

-16-

3.4ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.

Except as provided in Section 3.5, each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal.  Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws.  The certificate of incorporation or these bylaws may prescribe other qualifications for directors.

3.5RESIGNATION AND VACANCIES.

Any director may resign at any time upon notice given in writing or by electronic transmission to the Corporation; provided, however, that if such notice is given by electronic transmission, such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the director. A resignation is effective when the resignation is delivered unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events. Acceptance of such resignation shall not be necessary to make it effective. A resignation which is conditioned upon the director failing to receive a specified vote for reelection as a director may provide that it is irrevocable. Unless otherwise provided in the certificate of incorporation or these bylaws, when one or more directors resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies.

Subject to the rights of the holders of any series of preferred stock then outstanding, any vacancies on the Board resulting from death, disqualification, removal or other causes and any newly created directorships resulting from any increase in the number of directors shall, unless the Board determines by resolution that any such vacancies or newly created directorships shall be filled by the stockholders, except as otherwise provided by law, be filled only by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board, and not by the stockholders.  Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director’s successor shall have been elected and qualified.

3.6PLACE OF MEETINGS; MEETINGS BY TELEPHONE.

The Board may hold meetings, both regular and special, either within or outside the State of Delaware.

Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

-17-

3.7REGULAR MEETINGS.

Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board.  A regular meeting of the Board may be held without notice immediately after and at the same place as the annual meeting of stockholders.

3.8SPECIAL MEETINGS; NOTICE.

Special meetings of the Board for any purpose or purposes may be called at any time by the chairperson of the Board, the chief executive officer of the Corporation, the president of the Corporation, the secretary of the Corporation or a majority of the authorized number of directors, at such times and places as he or she or they shall designate.

Notice of the time and place of special meetings shall be:

(i)         delivered personally by hand, by courier or by telephone;

(ii)        sent by United States first-class mail, postage prepaid;

(iii)       sent by facsimile; or

(iv)       sent by electronic mail,

directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, as the case may be, as shown on the Corporation’s records.

If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or (iii) sent by electronic mail, it shall be delivered or sent at least 24-hours before the time of the holding of the meeting.  If the notice is sent by United States mail, it shall be deposited in the United States mail at least four days before the time of the holding of the meeting.  The notice need not specify the place of the meeting (if the meeting is to be held at the Corporation’s principal executive office) nor the purpose of the meeting.

3.9QUORUM.

At all meetings of the Board, a majority of the authorized number of directors shall constitute a quorum for the transaction of business.  The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the certificate of incorporation or these bylaws.  If a quorum is not present at any meeting of the Board, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.  Interested directors may be counted in determining the presence of a quorum at a meeting of the Board or at a meeting of a committee which authorizes a particular contract or transaction.

A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.

-18-

3.10BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.

Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board may be taken without a meeting if all members of the Board consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board.  Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

3.11FEES AND COMPENSATION OF DIRECTORS.

Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board shall have the authority to fix the compensation of directors.  No such payment shall preclude any director from serving the Corporation or any of its parent or subsidiary corporations in any other capacity and receiving compensation for such service.

3.12REMOVAL OF DIRECTORS.

Any director or the entire Board may be removed from office by the stockholders at any annual or special meeting of stockholders of the Corporation, the notice of which shall state that the removal of a director or directors is among the purposes of the meeting, but only for cause and only by the affirmative vote of the holders of not less than 80% of the shares of stock entitled to vote generally in the election of directors.

ARTICLE IV- COMMITTEES

4.1COMMITTEES OF DIRECTORS.

The Board may designate one or more committees, each committee to consist of one or more of the directors of the Corporation.  The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.  In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member.  Any such committee, to the extent provided in the resolution of the Board or in these bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, or (ii) amend, after, change or repeal any bylaw of the Corporation.

4.2COMMITTEE MINUTES.

Each committee shall keep regular minutes of its meetings and report the same to the Board when required.

-19-

4.3MEETINGS AND ACTION OF COMMITTEES.

Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:

(i)         Section 3.6 (place of meetings; meetings by telephone);

(ii)        Section 3.7 (regular meetings);

(iii)       Section 3.8 (special meeting; notice);

(iv)       Section 3.9 (quorum);

(v)        Section 3.10 (action without a meeting), and

(vi)       Section 6.13 (waiver of notice),

with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board and its members.  However:

(i)         the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee;

(ii)        special meetings of committees may also be called by resolution of the Board; and

(iii)       notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee.

The Board may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.

4.4SUBCOMMITTEES

Unless otherwise provided in the certificate of incorporation, these bylaws or the resolutions of the Board designating the committee, a committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and delegate to a subcommittee any or all of the powers and authority of the committee.

ARTICLE V- OFFICERS

5.1OFFICERS.

The officers of the Corporation shall be a chief executive officer, president and a secretary.  The Corporation may also have, at the discretion of the Board, a chairperson of the Board, a vice chairperson of the Board, a chief financial officer or treasurer, one or more vice presidents, one or more assistant vice presidents, one or more assistant treasurers, one or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws.  Any number of offices may be held by the same person.

-20-

5.2APPOINTMENT OF OFFICERS.

The Board shall appoint the officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3, subject to the rights, if any, of an officer under any contract of employment.  No stockholder shall be entitled to appoint any officers.

5.3SUBORDINATE OFFICERS.

The Board may appoint, or empower the chief executive officer or, in the absence of a chief executive officer, the president, to appoint, such other officers and agents as the business of the Corporation may require.  Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board may from time to time determine.  No stockholder shall be entitled to appoint any such officers or agents.

5.4REMOVAL AND RESIGNATION OF OFFICERS.

Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board at any regular or special meeting of the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.  No stockholder shall be entitled to remove any officer.

Any officer may resign at any time by giving written notice to the Corporation.  Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice.  Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective.  Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.

5.5VACANCIES IN OFFICES.

Any vacancy occurring in any office of the Corporation shall be filled only by the Board or as provided in Section 5.2.  No stockholder shall be entitled to appoint any officers.

5.6REPRESENTATION OF SHARES OF OTHER CORPORATIONS.

The chairperson of the Board, the president, any vice president, the treasurer, the secretary or assistant secretary of the Corporation, or any other person authorized by the Board or the president or a vice president, is authorized to vote, represent and exercise on behalf of the Corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of the Corporation.  The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

-21-

5.7AUTHORITY AND DUTIES OF OFFICERS.

All officers of the Corporation shall respectively have such authority and perform such duties in the management of the business of the Corporation as may be designated from time to time by the Board and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.

ARTICLE VI - GENERAL MATTERS

6.1EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.

The Board, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances.  Unless so authorized or ratified by the Board or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

6.2ISSUANCE OF STOCK.

Subject to the provisions of the certificate of incorporation, the whole or any part of any unissued balance of the authorized capital stock of the Corporation or the whole or any part of any unissued balance of the authorized capital stock of the Corporation held in its treasury may be issued, sold, transferred or otherwise disposed of by vote of the Board in such manner, for such consideration and on such terms as the Board may determine.

6.3STOCK CERTIFICATES; PARTLY PAID SHARES.

The shares of the Corporation shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares.  Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation.  Notwithstanding the adoption of such a resolution by the Board, every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the Corporation by the chairperson or vice-chairperson of the Board, or the president or a vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the Corporation representing the number of shares registered in certificate form.  Any or all of the signatures on the certificate may be a facsimile.  In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. The Corporation shall not have power to issue a certificate in bearer form.

The Corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor.  Upon the face or back of each stock certificate issued to represent any such partly paid shares, or upon the books and records of the Corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated.  Upon the declaration of any dividend on fully paid shares, the Corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.

-22-

6.4SPECIAL DESIGNATION ON CERTIFICATES.

If the Corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such powers, designations, preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such powers, designations, preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to this Section 6.4 or Sections 156, 202(a) or 218(a) of the DGCL or with respect to this Section 6.4 a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Except as otherwise expressly provided by law, the rights and obligations of the holders of uncertificated stock and the rights and obligations of the holders of certificates representing stock of the same class and series shall be identical.

6.5LOST CERTIFICATES.

Except as provided in this Section 6.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and cancelled at the same time.  The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

6.6CONSTRUCTION; DEFINITIONS; TIME PERIODS.

Unless the context requires otherwise, the general provisions, rules of construction and definitions in the DGCL shall govern the construction of these bylaws.  Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.  In applying any provision of these bylaws which requires that an act be done or not done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included.  Unless otherwise specified, all references to article and section in these bylaws are to articles and sections of these bylaws.

-23-

6.7DIVIDENDS.

The Board, subject to any restrictions contained in either the certificate of incorporation or applicable law, may declare and pay dividends upon the shares of the Corporation’s capital stock.  Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock, subject to the provisions of the certificate of incorporation.

The Board may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve.  Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting contingencies.

6.8FISCAL YEAR.

The fiscal year of the Corporation shall be fixed by resolution of the Board and may be changed by the Board.

6.9SEAL.

The Corporation may adopt a corporate seal, which shall be adopted and which may be altered by the Board.  The Corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

6.10TRANSFER OF STOCK.

Shares of the Corporation shall be transferable in the manner prescribed by law and in these bylaws.  Shares of stock of the Corporation shall be transferred on the books of the Corporation only by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the Corporation of the certificate or certificates representing such shares endorsed by the appropriate person or persons (or by delivery of duly executed instructions with respect to uncertificated shares), with such evidence of the authenticity of such endorsement or execution, transfer, authorization and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps.  No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing the names of the persons from and to whom it was transferred.

6.11STOCK TRANSFER AGREEMENTS.

The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.

-24-

6.12REGISTERED STOCKHOLDERS.

The Corporation:

(i)         shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner;

(ii)        shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares; and

(iii)       shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

6.13WAIVER OF NOTICE.

Whenever notice is required to be given to stockholders, directors or other persons under any provision of the DGCL, the certificate of incorporation or these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice.  Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.  Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders or the Board need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws.

6.14NOTICE TO STOCKHOLDERS SHARING AN ADDRESS

Except as otherwise prohibited under the DGCL, without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the corporation under the provisions of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a single written notice to stockholders who share an address if consented to by the stockholders at that address to whom such notice is given. Any such consent shall be revocable by the stockholder by written notice to the corporation. Any stockholder who fails to object in writing to the corporation, within 60 days of having been given written notice by the corporation of its intention to send the single notice, shall be deemed to have consented to receiving such single written notice.

6.15NOTICE TO PERSON WITH WHOM COMMUNICATION IS UNLAWFUL

Whenever notice is required to be given, under the DGCL, the certificate of incorporation or these bylaws, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the corporation is such as to require the filing of a certificate under the DGCL, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.

-25-

6.16EVIDENCE OF AUTHORITY.

A certificate by the secretary, an assistant secretary, or a temporary secretary, as to any action taken by the stockholders, directors, a committee or any officer or representative of the Corporation shall as to all persons who rely on the certificate in good faith be conclusive evidence of such action.

6.17CERTIFICATE OF INCORPORATION.

All references in these bylaws to the certificate of incorporation shall be deemed to refer to the Amended and Restated Certificate of Incorporation of the Corporation, as amended and in effect from time to time, including the terms of any certificate of designations of any series of preferred stock of the Corporation.

6.18RELIANCE UPON BOOKS, REPORTS AND RECORDS.

To the fullest extent permitted by law, each director, each member of any committee designated by the Board, and each officer of the Corporation shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation as provided by law, including reports made to the Corporation by any of its officers, by an independent certified public accountant, or by an appraiser selected with reasonable care.

ARTICLE VII - NOTICE BY ELECTRONIC TRANSMISSION

7.1NOTICE BY ELECTRONIC TRANSMISSION.

Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the certificate of incorporation or these bylaws, any notice to stockholders given by the Corporation under any provision of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given.  Any such consent shall be revocable by the stockholder by written notice to the Corporation.  Any such consent shall be deemed revoked if:

(i)         the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance with such consent; and

-26-

(ii)        such inability becomes known to the secretary or an assistant secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice.

However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.

Any notice given pursuant to the preceding paragraph shall be deemed given:

(iii)       if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;

(iv)       if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice;

(v)        if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and

(vi)       if by any other form of electronic transmission, when directed to the stockholder.

An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the Corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

7.2DEFINITION OF ELECTRONIC TRANSMISSION.

An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

ARTICLE VIII - INDEMNIFICATION OF DIRECTORS, OFFICERS,
 EMPLOYEES AND AGENTS

8.1RIGHT TO INDEMNIFICATION.

(a)        Each person who was or is made a party, or is threatened to be made a party, to any actual, threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative or any predecessor of the Corporation, by reason of the fact that (i) he or she is or was a director or executive officer (as such term is defined in Section 16 of the Exchange Act) of the Corporation (hereinafter an “indemnitee”) or (ii) he or she is or was serving at the request of the Board or an executive officer (as such term is defined in Section 16 of the Exchange Act) of the Corporation as a director or officer of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan (each person referred to in the preceding clause (i) or (ii), hereinafter an “indemnitee”), shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended, or by other applicable law as then in effect, against all expense, liability, and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) actually and reasonably incurred or suffered by such indemnitee in connection therewith.  The right to indemnification provided by this ARTICLE VIII shall apply whether or not the basis of such proceeding is alleged action in an official capacity as such director or officer or in any other capacity while serving as such director, officer, employee or agent.  Notwithstanding anything in this Section 8.1 to the contrary, except as provided in Section 8.3 with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Corporation.

-27-

(b)        Each person who was or is made a party, or is threatened to be made a party, to any actual, threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative or any predecessor of the Corporation, by reason of the fact that (i) he or she is or was a non-executive officer, employee or agent of the Corporation or (ii) he or she is or was serving at the request of the Board or an executive officer (as such term is defined in Section 16 of the Exchange Act) of the Corporation as an officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, may be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended, or by other applicable law as then in effect, against all expense, liability, and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) actually and reasonably incurred or suffered by such person in connection therewith.

8.2ADVANCEMENT OF EXPENSES.

The right to indemnification conferred in Section 8.1, shall include the right to have the expenses incurred in defending or preparing for any such proceeding in advance of its final disposition (hereinafter an “advancement of expenses”) paid by the Corporation; provided, however, that if the DGCL requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is to be rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking containing such terms and conditions, including the requirement of security, as the Board deems appropriate (hereinafter an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified for such expenses under this ARTICLE VIII or otherwise.  The Corporation shall not be obligated to advance fees and expenses to an employee or agent in connection with a proceeding instituted by the Corporation against such person.

8.3RIGHT OF INDEMNITEE TO BRING SUIT.

If a claim under Section 8.1 or 8.2 is not paid in full by the Corporation within 60 calendar days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses under Section 8.2, in which case the applicable period shall be 30 calendar days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim.  If the indemnitee is successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit.  In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) in any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met any applicable standard for indemnification set forth in the DGCL.  Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit.  In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this ARTICLE VIII or otherwise shall be on the Corporation.

-28-

8.4NONEXCLUSIVITY RIGHTS.

(i)         The rights to indemnification and to the advancement of expenses conferred in this ARTICLE VIII shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provisions of the certificate of incorporation, bylaw, agreement, vote of stockholders or disinterested directors, or otherwise.

(ii)        The Corporation may maintain insurance, at its expense, to protect itself and any past or present director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.  The Corporation may enter into contracts with any indemnitee in furtherance of the provisions of this ARTICLE VIII and may create a trust fund, grant a security interest or use other means (including, without limitation, a letter of credit) to ensure the payment of such amounts as may be necessary to effect indemnification as provided in this ARTICLE VIII.

(iii)       The Corporation may without reference to Sections 8.1 through 8.4(i) and (ii) hereof, pay the expenses, including attorneys’ fees, incurred by any director, officer, employee or agent of the Corporation who is subpoenaed, interviewed or deposed as a witness or otherwise incurs expenses in connection with any civil, arbitration, criminal or administrative proceeding or governmental or internal investigation to which the Corporation is a party, target, or potentially a party or target, or of any such individual who appears as a witness at any trial, proceeding or hearing to which the Corporation is a party, if the Corporation determines that such payments will benefit the Corporation and if, at the time such expenses are incurred by such individual and paid by the Corporation, such individual is not a party, and is not threatened to be made a party, to such proceeding or investigation.

-29-

8.5INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE CORPORATION.

The Corporation may grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation to the fullest extent permitted by law.  The Corporation may, by action of the Board, authorize one or more officers to grant rights for indemnification or the advancement of expenses to employees and agents of the Corporation on such terms and conditions as such officers deem appropriate.

8.6NATURE OF RIGHTS.

The rights conferred upon indemnitees in this ARTICLE VIII shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer or trustee and shall inure to the benefit of the indemnitee’s heirs, executors and administrators.  Any amendment, alteration or repeal of this ARTICLE VIII that adversely affects any right of an indemnitee or its successors shall be prospective only and shall not limit or eliminate any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment or repeal.

ARTICLE IX- AMENDMENTS

These bylaws may be altered, amended or repealed only as provided in the certificate of incorporation.

-30-

REALD INC.

CERTIFICATE OF AMENDMENT AND RESTATEMENT OF BYLAWS

The undersigned hereby certifies that he is the duly elected, qualified, and acting Secretary of RealD Inc., a Delaware corporation, and that the foregoing bylaws were amended and restated on June 5, 2013 by the corporation’s board of directors.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 5th day of June, 2013.

/s/ Craig Gatarz

Craig Gatarz

Secretary

[Signature Page to Amended and Restated Bylaws]

EX-10.57

Exhibit 10.57

January 27, 2013

Ms. Laura Alber

President and CEO

Williams-Sonoma, Inc.

3250 Van Ness Avenue

San Francisco, CA 94109

Re: RealD Inc. Board of Directors

Dear Laura:

We are very pleased to offer you a position as a member of the Board of Directors (the “Board”) of RealD Inc. (the “Company”). Your nomination will be considered and voted on by the Board at its next meeting on February 7, 2013.

Our offer to join the Board is based on the following terms and conditions:

Start Date:	As of February 7, 2013 (the “Effective Date”). You will serve as a Class I member of the Board until the annual meeting for the year in which your term expires or until your successor has been elected and qualified, subject however, to your prior death, resignation, retirement, disqualification or removal from office.
Term:	Your initial term on the Board shall be until the Company’s 2014 Annual Meeting in the summer of 2014.
Committees:	You acknowledge and agree that, in order to meet SEC and NYSE rules, you may be required to serve on one or more of the Board’s Audit Committee, Compensation Committee and Nominating and Governance Committee, and that such committee assignments will be as agreed between you and the Company, and that you will be compensated for service on any committee as provided herein. The Board will consider your initial committee assignments, if any, at the time our committee membership is next re-constituted, which is typically in the spring or early summer of each year.
Compensation:	In consideration of your services as a member of the Board you will receive a $35,000 annual cash retainer to be paid in equal quarterly installments for so long as you remain a member of the Board.

100 N. Crescent Drive, Suite 120   Beverly Hills, CA 90210

(310) 385-4000   www.reald.com

	In consideration for your services as Chair of the Audit Committee, if applicable, you will receive a $15,000 annual cash retainer to be paid in equal quarterly installments for so long as you remain the Audit Committee Chair.
	In consideration for your services as Chair of the Compensation Committee, if applicable, you will receive a $10,000 annual cash retainer to be paid in equal quarterly installments for so long as you remain the Compensation Committee Chair.
	In consideration for your services as Chair of the Nominating and Governance Committee, if applicable, you will receive a $7,500 annual cash retainer to be paid in equal quarterly installments for so long as you remain the Nominating and Governance Committee Chair.
	All or a portion of your annual cash retainer may be deferred in an amount equal to at least fifty percent (50%) of your annual cash retainer into a restricted stock unit account. The election for deferring your annual cash retainer must be made prior to the beginning of the annual Board cycle, which shall initially be July 1, or earlier as necessary to comply with Internal Revenue Code §409A.
	For each in-person Board and committee meeting you attend, you will receive: (A) $1,500 per meeting that you attend in person; or (B) 1,000 per meeting that you attend by telephone. For each telephonic Board and committee meeting you attend, you will receive: (1) $1,500 per meeting; or (2) $1,000 per meeting that lasts less than 30 minutes.
Restricted Stock Units:	In connection with the commencement of your service as a member of the Board, you will be granted a one-time restricted stock unit award under the RealD Inc. 2010 Stock Incentive Plan (“2010 Plan”) for the number of shares equal to $50,000 at a price per share equal to the Company’s stock on the grant date which will vest at the rate of l/24th per month on the 1st day of each of the 24 months following the month of the grant date, subject to your continued service as a member of the Board.
	As soon as practicable after the Company’s annual meeting of stockholders, in connection with your continuing service as a member of the Board, you will be granted an annual restricted stock unit award under the 2010 Plan for the number of shares equal to $135,000 at a price per share equal to the Company’s stock price on the grant date which will vest at the rate of 1/12h per month on the 1st day of each of the 12 months following the month of the grant date, subject to your continued service as a member of the Board. The annual restricted stock unit award will be pro-rated for service if a director joins mid-year,

2

	which is measured from annual stockholder meeting to annual stockholder meeting. Your initial annual restricted stock unit award will be pro-rated for service from the Effective Date through the first annual stockholder meeting after the Effective Date.
Holding Period for Restricted Stock Units and Stock Ownership Guidelines:	In order to promote long-term alignment of directors and stockholders interests, the Company requires that the restricted stock units granted to you be held for five (5) years from the grant date. You are also required to own the Company’s common stock in an amount equal to five (5) times the annual cash retainer you receive for your services as a member of the Board. Until the stock ownership guidelines are satisfied, all net after-tax profit shares must be held after the restricted stock units have vested. So long as the stock ownership guidelines are satisfied, this mandatory retention requirement for all net after-tax profit shares no longer applies.
Responsibilities:	As a director of the Company, your duties and responsibilities will be those reasonably and customarily associated with such position, including, without limitation, attendance at all regular and special meetings of the Board and, if you are a member of a committee of the Board, attendance at all regular and special meetings of such committee.
Expenses:	The Company will reimburse you for all reasonable, out-of-pocket costs and expenses incurred by you in connection with attending Board meetings and, if you are a member of a committee of the Board, committee meetings.
Confidentiality:	As a condition of this offer, you will be required to preserve the Company’s proprietary and confidential information and you must comply with the Company’s policies and procedures. Accordingly, as a pre-condition to your appointment to the Board, you are required to execute the Nondisclosure Agreement enclosed herewith. This agreement will be effective as of the Effective Date.
Indemnification:	In the interest of retaining and attracting qualified individuals to provide services to the Company, the Company has or will enter into an Indemnification Agreement with each of its directors and executive officers. An Indemnification Agreement will be provided to you to sign upon your acceptance.

Your engagement as a member of the Board is contingent on all of the following: (a) formal acceptance of this offer; and (b) execution of the Non-Disclosure Agreement enclosed herewith. This offer to serve as a member of the Board shall be at the will of the Board, which means that this relationship can be terminated at any time by either party. Upon accepting our offer to join

3

the Board, you agree we will have the right to mention your name and other customary information in documents we file with the Securities and Exchange Commission press releases and other business documentation as appropriate.

To accept this offer, please sign the acknowledgment at the end of this letter acknowledging and agreeing to the terms and conditions of your service as a member of the Board of the Company. Please contact me with any questions regarding the foregoing. We look forward to working with you.

	Sincerely,
	REALD INC.
	By:	/s/ Michael V. Lewis
		Michael V. Lewis
		Chief Executive Officer and
		Chairman of the Board
ACKNOWLEDGED AND AGREED TO BY:
/s/ Laura Alber
Laura Alber
Date: February 4, 2013

4

EX-10.58

Exhibit 10.58

February 6, 2013

Minard Hamilton

c/o RealD Inc.

100 N. Crescent Dr., Suite 120

Beverly Hills, CA 90210

Dear Minard:

On behalf of RealD Inc., a Delaware corporation (the “Company”), I am pleased to provide you with this letter setting forth the terms and conditions of your prospective employment with the Company (the “Agreement”).

1.Title; Duties; Reporting. Effective upon the commencement of employment with the Company on February 6, 2013 (the “Effective Date”), you will serve as the Company’s Executive Vice-President, Mobile and Consumer, and will report directly to the Executive Vice-President, Global Operations, of the Company. In your role as Executive Vice-President, Mobile and Consumer, you shall be responsible for, among other things, the Company’s consumer business, including product development and management, business development and distribution. You shall be a member of the Company’s senior management team and shall have such duties and responsibilities as shall be consistent with your position. You shall work out of the Company’s offices in Beverly Hills, CA, with travel to other locations, including the Company’s facilities in Boulder, CO, as necessary to fulfill your duties and responsibilities. You will also devote your full time, efforts, abilities, and energies to promote the general welfare and interests of the Company and any related enterprises of the Company. You will loyally, conscientiously and professionally do and perform all duties and responsibilities of your position, as well as any other duties and responsibilities as may be reasonably assigned to you by the Company, consistent with your position. You will strictly adhere to and obey all Company rules, policies, procedures, regulations and guidelines including, but not limited to, those contained in the Company’s employee handbook, as well as any others that the Company may establish. You will strictly adhere to all applicable state and/or federal laws and/or regulations relating to your employment with the Company.

(a)No Conflicting Obligations. By signing this Agreement, you confirm to the Company that you have no contractual commitments or other legal obligations that would prohibit you from performing your duties for the Company.

(b)Start Date. The effective date of this Agreement shall be the Effective Date.

(c)Outside Activities. Notwithstanding anything to the contrary contained herein, you may (i) serve as a director or member of a committee or organization involving no actual or potential conflict of interest with the Company and its subsidiaries and affiliates; (ii) deliver lectures and fulfill speaking engagements; (iii) engage in charitable and community activities; and (iv) invest your personal assets in such form or manner that will not violate this Agreement; provided, however, that the activities described in clauses (i), (ii), (iii) or (iv) do not materially affect or interfere with the performance of your duties and obligations to the Company and further, provided, that the Company’s Chief Executive Officer must provide his/her advance written consent with respect to the items referenced in clause (i).

2.Term.

(a)Length of Term. The term of this Agreement shall extend from the Effective Date through March 31, 2015 (“Term”) unless terminated earlier in accordance with the terms herein. On April 1, 2014, and on each subsequent April 1st thereafter, the end date of the Term shall automatically be extended by one (1) additional year, unless either party has previously provided written notice to the other party to not so extend the Term. Once such notice has been provided, then the Term shall no longer be extended on any following April 1st. Notwithstanding anything to the contrary, this Agreement shall in all cases expire no later than (and cannot be extended beyond) March 31, 2018. Upon expiration of the Term due to either parties’ providing written notice to not extend the Term then, except as provided in Section 2(c) below, your employment with the Company shall terminate (if not terminated earlier in accordance with the terms herein) as of the end of the Term. The terms of Sections 6 through 13 shall survive any termination or expiration of this Agreement or of your employment.

(b)Resignation. If you voluntarily terminate your employment for any reason, you shall be deemed to have immediately resigned from all positions as an employee or officer with the Company, and any of its affiliates, as of your last day of employment. Upon termination of your employment for any reason, you shall be deemed to have immediately resigned from any position as a director of the Company or any of its affiliates, as of your last day of employment.

(c)At-Will Status After Expiration of the Term. If the Term ends on March 31, 2018 and if you are then still employed by the Company, then your employment shall thereafter continue on an “at will” basis and during such at-will period, either party can terminate your employment without obligation (including, without limitation, any obligation to provide severance payments or benefits) and/or the Company can change any or all of the terms of your employment at any time for any reason or no reason by providing written notice of the same. For the avoidance of doubt, no advance written

2

notice will be required to effectuate a termination of your employment after the expiration of the Term.

(d)No Eligibility for Severance. For the avoidance of doubt, the act of either party providing written notice of its intention to not extend the Term, or the expiration of the Term either on March 31, 2018 or as a result of a party providing such written notice to not extend the Term, shall not trigger any rights to or eligibility for severance, including without limitation, those payments and benefits described under Sections 3(d)(i) or 3(d)(ii).

3.Compensation.

(a)Base Salary.

(i)As of the Effective Date, your base salary is $300,000 per year, payable in accordance with the Company’s standard payroll procedures.

(ii)For all purposes of this Agreement, the term “Base Salary” shall refer to the base salary in effect from time to time. During the Term, your Base Salary will be reviewed annually and is subject to increase (but not decrease) at the discretion of the Board or a committee of members of the Board.

(b)Bonus.

During each fiscal year of the Term, beginning with the fiscal year ending March 31, 2014, you will annually be eligible to earn a cash performance bonus (“Performance Bonus”) with a target amount of eighty percent (80%) of your Base Salary. The Performance Bonus will be issued and administered under the Company’s 2010 Management Incentive Plan (or any successor incentive compensation plan). Your actual bonus, if any, for each fiscal year shall be based on your successful completion of the performance objectives (“MBO Goals”) prescribed and established by the Company (although you may have input into the development of such MBO Goals). The Performance Bonus shall be paid to you no later than the 15th day of the third month immediately following the fiscal year with respect to which the Performance Bonus relates. To earn any Performance Bonus, you must remain employed by the Company through the end of the fiscal year(s) with respect to which the Performance Bonus relates, except in the event a “Pro-Rated Bonus” (defined below) is payable pursuant to Section 3(d)(i)(B) below (Qualifying Termination), Section 4(d) below (death) or Section 4(e) below (Disability).

(c)Company-Sponsored Benefits.

As a member of the senior management team of the Company, you will also be eligible to receive all employee benefits pursuant to the Company’s

3

standard benefit plans that the Company generally provides to the other members of the senior management team that may be in effect from time to time. These currently include, without limitation, paid vacation, group health benefits, 401(k) retirement benefits, business expense reimbursements, PTO, sick time and Company-paid holidays. The Company may, in its sole discretion and from time to time, amend or eliminate any of these benefits.

(d)Severance and Other Termination Benefits.

(i)Qualifying Termination. If your employment is terminated during the Term without Cause (as defined below) by the Company or by you for “Good Reason” (as defined below) (each, a “Qualifying Termination”), the Company shall pay you (or cause to occur, as applicable) each of the following:

(A)cash severance installment payments in an aggregate amount equal to one hundred percent (100%) of your annual Base Salary as in effect on your Termination Date (“Cash Severance”) being paid in ten monthly pro-rata installments with the first installment of Cash Severance being paid on the 90th day after your “separation from service” (within the meaning of Internal Revenue Code (“Code”) Section 409A (“Section 409A”)) from the Company (“Termination Date”), and the last installment being paid on the first anniversary of the Termination Date;

(B)a pro-rated cash Performance Bonus, calculated as follows: the product of (x) the Performance Bonus that would have been earned during the fiscal year in which the Qualifying Termination occurred, assuming that the Qualifying Termination had not occurred and that you remained as Executive Vice-President, Mobile and Consumer of the Company through the end of such fiscal year, which Performance Bonus, if any, shall be based on the extent to which the Company achieved the MBO Goals (or the performance standards set forth in the 2010 Management Incentive Plan or any successor incentive plan) during such fiscal year, multiplied by (y) a fraction, the numerator of which is the number of days of the Company’s fiscal year prior to the Termination Date and the denominator of which is 365 days. This pro-rated Performance Bonus (a “Pro-Rated Bonus”) shall be paid to you no later than the 15th day of the third month immediately following the fiscal year in which the Qualifying Termination has occurred;

(C)the Company will continue to pay the cost (to the same extent that the Company was doing so immediately before the Termination Date) for all group employee benefit coverage continuation under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) to the same extent provided by the Company’s group plans immediately before the Termination Date for twelve (12) months after the Termination

4

Date or until you become eligible for group insurance benefits from another employer, whichever occurs first, provided that you timely elect COBRA coverage (“COBRA Benefits”). You agree (i) at any time either before or during the period of time you are receiving benefits under this subsection (C), to inform the Company promptly in writing if you become eligible to receive group health coverage from another employer; and (ii) that you may not increase the number of your designated dependents, if any, during this time unless you do so at your own expense. The period of such COBRA Benefits shall be considered part of your COBRA coverage entitlement period; and

(D)the “Accrued Obligations” (defined below) as of the Termination Date.

For avoidance of doubt, the payments and benefits that may be provided under Sections 3(d)(i) above or 3(d)(ii) below shall not be provided more than once and if payments and benefits are provided under either one of these subsections, then no payments or benefits will otherwise be provided again under either one of these subsections.

(ii)Change in Control. If, during the Term, there is a Qualifying Termination and your Termination Date occurs (because of such Qualifying Termination) during the time period that commences on the date that is ninety (90) days before a “Change in Control” (defined below) and extends through the date that is twenty-four (24) months after a Change in Control, then: (a) the amount of the total Cash Severance in Section 3(d)(i)(A) shall be equal to one hundred percent (100%) of the then annual Base Salary; (b) the duration of your COBRA Benefits under Section 3(d)(i)(C) shall be increased from twelve (12) months to eighteen (18) months; and (c) one hundred percent (100%) of the Option (defined below), including any additional stock options and other equity compensation incentives granted to you during the Term (collectively, the “Equity Incentives”)(but excluding any portion of any performance awards which are/were forfeited due to failure to achieve the requisite performance objectives) which are outstanding and unvested as of the Termination Date shall become fully vested and exercisable as of the later of your Termination Date or immediately prior to the date of the Change in Control. Subject to Section 13 below, your Cash Severance shall instead be fully paid to you in a single lump sum payment on the 90th day after your Termination Date. For avoidance of doubt, the payments and benefits that may be provided under Sections 3(d)(i) or 3(d)(ii) shall not be duplicated and if payments and benefits are provided under one such subsection then no payments or benefits will be provided under the other subsection and vice-versa.

5

(iii)Release of Claims. Notwithstanding anything to the contrary, in order to receive any payments or benefits under Section 3(d)(i) or Section 3(d)(ii) as applicable, you must timely execute and deliver (and not revoke) a separation agreement and general release of claims in favor of the Company, any affiliates or related entities, and their employees and affiliates, in the form and content attached as Exhibit A hereto, within the time period specified in the release, but in no event after the 60th day following the Termination Date. However, you shall receive payment or benefits from the Company of the Accrued Obligations, as applicable, regardless of whether a separation agreement and general release of claims in the form and content attached as Exhibit A hereto is executed and timely provided to the Company.

(iv)Golden Parachute Excise Tax. If any payment or benefit received or to be received by you (including any payment or benefit received pursuant to this Agreement or otherwise) would be (in whole or part) subject to the excise tax imposed by Code Section 4999, or any successor provision thereto, or any similar tax imposed by state or local law, or any interest or penalties with respect to such excise tax (such tax or taxes, together with any such interest and penalties, are hereafter collectively referred to as the “Excise Tax”), then the payments or benefits provided under this Agreement or any other agreement pursuant to which you receive payments that give rise to the Excise Tax will either be: (a) paid in full; or (b) reduced to the extent necessary to make such payments and benefits not subject to such Excise Tax. The Company shall reduce or eliminate the payments first by reducing those payments that are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments that are to be paid the farthest in time from the determination. You shall receive the greater, on an after-tax basis, of (a) or (b). However, if the imposition of such Excise Tax could be avoided by approval of stockholders as described in Code Section 280G(b)(5)(B), then you may request the Company to solicit a vote of such stockholders (described in Code Section 280G(b)(5)(B) and in which case you will cooperate and execute any such waivers of compensation as may be necessary to enable the stockholder vote to comply with the requirements specified under Code Section 280G and the regulations promulgated thereunder. In no event will the Company be required to gross up any payment or benefit to you to avoid the effects of the Excise Tax or to pay any regular or excise taxes arising from the application of the Excise Tax. Unless the Company and you otherwise agree in writing, any parachute payment calculation will be made in writing by independent public accountants selected by the Company, whose calculations will be conclusive and binding upon the Company and you for all purposes. The Company and you will furnish to the accountants such information and documents as the accountants may reasonably request in order to make a parachute payment determination. The accountants also will provide its calculations, together with detailed supporting documentation, both to the Company and to you, before making any payments that may be subject to the Excise Tax. As expressly permitted by Q/A #32 of the Code Section 280G

6

regulations, with respect to performing any present value calculations that are required in connection with this Section, the parties affirmatively elect to utilize the Applicable Federal Rates that are in effect on the Effective Date (the “Agreement AFRs”) and the accountants shall therefore use such Agreement AFRs in their determinations and calculations.

(e)Expense Reimbursement. You shall be reimbursed for all documented reasonable business expenses that are incurred in the ordinary course of business in accordance with the Company’s expense reimbursement policy as in effect from time to time. Any reimbursements or in-kind benefits provided under this Agreement that are subject to Section 409A shall be made or provided in compliance with the requirements of Section 409A, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the period of time specified in this Agreement, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a fiscal year may not affect the expenses eligible for reimbursement or in-kind benefits to be provided, in any other fiscal year, (iii) the reimbursement of an eligible expense will be made no later than the last day of the fiscal year following the year in which the expense is incurred, and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

4.Other Termination Rules.

Notwithstanding anything to the contrary in this Agreement whether express or implied, the Company may at any time terminate your employment with the Company and the Term, for any reason or no reason, and with or without Cause, and you may resign from your employment with or without Good Reason and terminate the Term, all as set forth in greater detail in this Section 4. If your employment terminates due to your resignation without Good Reason, or due to your death or Disability or by the Company for Cause, or the Agreement is terminated at the end of the Term due to non-renewal in accordance with Section 2, then you will not be eligible for any severance benefits, except as provided in Sections 4(d) and 4(e).

(a)The following definitions shall apply for purposes of this Agreement:

(i)“Accrued Obligations” shall mean the sum of (i) any portion of your accrued but unpaid Base Salary through the Termination Date; (ii) subject to Section 13, any compensation previously earned but deferred by you (together with any interest or earnings thereon) that has not yet been paid and that is not otherwise to be paid at a later date pursuant to any deferred compensation arrangement of the Company to which you are a party, if any; (iii) your accrued but unpaid vacation pay through the Termination Date; (iv) any reimbursements that you are entitled to receive under Section 3(e) of the Agreement or otherwise; and (v) any vested benefits or amounts that you are otherwise entitled to receive under any plan, policy, practice or program of or any other contract or agreement with the Company in accordance with the terms thereof (other than any such plan,

7

policy, practice or program of the Company that provides benefits in the nature of severance or continuation pay).

(ii)“Cause” shall mean (i) your commission of fraud against the Company, (ii) your willful misconduct that materially harms the Company’s interests, (iii) your material violation of Company policies or practices, (iv) your use or disclosure of Confidential Information (as defined below) that is unauthorized by this Agreement, or (v) your performance of any act or omission which, if you were prosecuted, would constitute a felony, in each case as determined by the Board (or a committee of members of the Board), whose determination shall be conclusive and binding.

(iii)“Change in Control” shall mean:

(1)any person or group of persons (as defined in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) together with its affiliates, but excluding (i) the Company or any of its subsidiaries, (ii) any employee benefit plans of the Company, or (iii) a corporation or other entity owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company (individually, a “Person” and collectively, “Persons”), is or becomes, directly or indirectly, the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) of securities of the Company representing 50% or more of the combined voting power of the Company’s then-outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates);

(2)the consummation of a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation or other entity regardless of which entity is the survivor, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company, such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or

(3)there is consummated an agreement for the sale or disposition of all or substantially all of the Company’s assets.

(iv)“Confidential Information” shall mean: The Company’s confidential and proprietary business information, including but not limited to, the Company’s products, services, customers, contracts, fees, prices, costs, business

8

affairs, marketing, accounting, financial statements, employees, research, inventions, data, software, and any other confidential and proprietary business information of any kind, nature or description, tangible or intangible, in whatever form.

(v)           “Disability” shall mean your medically-determined incapacity due to physical or mental illness which makes you unable to perform substantially the duties pertaining to your employment with or without reasonable accommodation for a period of six (6) consecutive months.

(vi)          “Good Reason” shall mean any one or more of the following: (1) a material diminution in your Base Salary, (2) a material diminution in your authority, duties, reporting or responsibilities as the Company’s Executive Vice-President, Consumer and Mobile, (3) a material change in the geographic location at which you must perform your services to the Company, which shall be defined to be a relocation of your principal workplace to a new location that is more than thirty miles away from the workplace location specified in Section 1 above, or (4) a material breach by the Company of this Agreement.

(vii)         “Separation from Service” has the meaning set forth in Treasury Regulations Section 1.409A-1(h)(1).

(viii)        “termination or resignation for Good Reason” shall mean any termination or resignation by you of your employment for Good Reason.

(ix)          “termination without Cause” shall mean any termination of your employment by the Company for any reason other than Cause or your death or Disability.

(b)           Termination for Cause. The Company may terminate your employment and the Term at any time for Cause, provided, however, that in the event the Board determines to terminate your employment for Cause, such termination shall only become effective if the Board shall first provide you with written notice detailing the alleged grounds for such Cause, and if such act or omission is susceptible to cure, provide you a 30 day period to cure such act or omission. Upon a termination of your employment by the Company for Cause, you only will be entitled to any salary and other benefits earned, but unpaid (including accrued but unpaid vacation), and any reimbursement for expenses owed to you by the Company, as of the Termination Date.

(c)           Termination without Cause. The Company shall have the unilateral right to terminate your employment and the Term at any time without Cause, and without notice, in the Company’s sole and absolute discretion. Any such termination without Cause shall not constitute a breach of any term of this Agreement, express or implied, or a wrongful deprivation of your office or position. If the Company terminates your employment and the Term without Cause, it shall be treated as a Qualifying Termination

9

and the Company shall have no obligation to you, except to continue to pay you (or cause to occur, if applicable) the amounts (and actions) set forth in Section 3(d)(i) above in accordance with the terms thereof and any related provisions of this Agreement.

(d)           Termination due to Death. Your employment and the Term will be automatically terminated on the date of your death. In the event of your death, the Company shall pay your estate or assignees (or allow your estate or assignees to retain, as applicable) within thirty (30) days of the Termination Date the Accrued Obligations, subject to Section 13 below. In addition, you shall be eligible to receive a Pro-Rated Bonus for the year in which your employment is terminated, calculated with reference to the Termination Date and calculated and paid as provided in Section 3(d)(i)(B) above. The vested Equity Incentives as of the date of your death shall be exercisable by your estate or assignees until the earliest of (x) twelve (12) months following the Termination Date; (y) the scheduled expiration date of the Equity Incentives; or (z) the date on which the Equity Incentives are canceled (and not substituted or assumed) pursuant to a Change in Control or merger or acquisition or similar transaction involving the Company.

(e)           Termination due to Disability. If you are subject to a Disability, and if within thirty (30) days after written notice is provided to you by the Company you shall not have returned to perform substantially your duties, your employment and the Term may be terminated by the Company for Disability. During any period prior to such termination during which you are unable to perform substantially such duties due to Disability, the Company shall continue to pay all amounts required to be paid under this Agreement (including without limitation your Base Salary), offset by any amounts payable to your under any disability insurance plan or policy provided by the Company, and the Company shall continue to provide all benefits to you hereunder. Upon termination of your employment due to Disability, the Company shall pay you (or allow you to retain, as applicable) within thirty (30) days of such termination the Accrued Obligations, subject to Section 13 below. In addition, you shall be eligible to receive a Pro-Rated Bonus for the year in which your employment is terminated, calculated with reference to the Termination Date and calculated and paid as provided in Section 3(d)(i)(B) above. The vested Equity Incentives as of the Termination Date shall be exercisable by you until the earliest of (x) twelve (12) months following the Termination Date; (y) the scheduled expiration date of the Equity Incentives; or (z) the date on which the Equity Incentives are canceled (and not substituted or assumed) pursuant to a Change in Control or merger or acquisition or similar transaction involving the Company.

(f)            Resignation for Good Reason. You may terminate your employment and the Term at any time for Good Reason, provided that you provide written notice to the Company describing the existence of any Good Reason condition(s) within ninety (90) days of the date of the initial existence of the condition(s) or else you will be deemed to have waived any Good Reason with respect to such condition(s). Upon the Company’s receipt of such written notice, the Company shall then have thirty (30) days during which it may cure or remedy the condition(s). If the Company does cure or remedy the condition(s) during such thirty (30) day period then Good Reason will be deemed to have

10

not occurred with respect to such condition(s). If the Company does not cure or remedy the condition(s) during such thirty (30) day period, then your employment with the Company and the Term shall be terminated for Good Reason as of the day following the expiration of the thirty (30) day cure/remedy period. If you terminate your employment for Good Reason in accordance with the provisions of this Section 4(f), it shall be treated as a Qualifying Termination and the Company shall pay you (or cause to occur, if applicable) the amounts (and actions) set forth in Section 3(d)(i) above in accordance with the terms thereof and any related provisions of this Agreement.

(g)           Resignation without Good Reason. You may terminate your employment and the Term at any time for no reason, or for any reason that does not otherwise constitute Good Reason, in your sole and absolute discretion, but only if you provide written notice to the Company at least six (6) months prior to the effective date of your resignation (and such notice must specify the effective date of your resignation of employment). In the event you so terminate your employment without Good Reason, you shall only be entitled to receive (subject to Section 13 below) the Accrued Obligations through the effective date of your resignation, as well as all other compensation and benefits required under this Agreement through the effective date of your resignation, and neither you nor the Company shall have any further obligations to the other except as set forth in Section 6 (Confidential Information), Section 7 (Covenants) and Sections 8 through and including 13. However, in the event you terminate your employment without Good Reason and your Termination Date occurs prior to the end of the required minimum six-month notice period provided in this Section 4(g), then the Option and any additional stock options or stock appreciation rights granted to you after the Effective Date shall immediately expire and be forfeited as of such Termination Date. The Company is not obligated to actually utilize your services at any time during the six-month period preceding the effective date of your resignation, and may prevent you from accessing any of the Company premises or resources during such six-month period. Additionally, as long as the Company provides you with any compensation and benefits that would have been earned by you pursuant to Sections 3(a), 3(b) and 3(c) during the six-month period preceding the effective date of your resignation had you remained employed during such period, the Company may terminate your employment prior to the expiration of such six-month period without triggering any rights to or eligibility for severance, including without limitation those payments and benefits described under Sections 3(d)(i) or 3(d)(ii).

5.             Equity Compensation.

(a)           Management will recommend to the Board and/or the Board’s Compensation Committee that you should be granted a non-qualified stock option under the Company’s 2010 Stock Incentive Plan (“Stock Plan”) to purchase 275,000 shares of common stock (the “Option”) of the Company. The grant of the Option (and the number of shares subject to the Option) shall be determined in the discretion of the Board or its Compensation Committee. The Option will vest over four years subject to your continued employment with the Company, except as otherwise provided herein. The

11

Option’s per share exercise price will be equal to not less than the fair market value of a Company common share on the date of grant as determined in accordance with the Stock Plan. The Option will be on other terms and conditions set forth in the stock option agreement evidencing the grant, which stock option agreement will include the terms and conditions of the Option as set forth in this Agreement, and which you must execute as a condition of grant, with vesting to commence on the date of the grant and in accordance with the vesting schedule set forth in the Stock Plan and Option agreement consistent with the terms of this Agreement. The number of shares subject to the Options may be proportionately adjusted upon any stock split of the Company’s common shares which occurs before the Option is granted.

(b)           You shall be eligible to be considered for additional equity awards during each year of the Term at the discretion of the Board (or an appropriate committee thereof).

6.             Confidential Information. As an employee of the Company, you will have access to certain confidential information of the Company and you may, during the course of your employment or thereafter, develop certain information or inventions which will be the property of the Company. In consideration of, and as a condition to, your employment with the Company, and as an essential inducement to the Company to enter into this Agreement, this Agreement is expressly subject to your executing (and complying with) the RealD Inc. Employee Invention Assignment and Confidentiality Agreement (the “Confidentiality Agreement”) in the form enclosed hereto as Exhibit B.

7.             Covenants. You agree to timely and fully comply with all of the covenants set forth in this Section 7 and further understand and agree that such covenants shall survive any termination of your employment and termination or expiration of this Agreement.

(a)           Return of Company Property. On your Termination Date, or at any other time as required by the Company, you will immediately surrender to the Company all Company property, including but not limited to, Confidential Information (as such term is defined in the Confidentiality Agreement), keys, key cards, computers, telephones, pagers, credit cards, automobiles, equipment and/or other similar property of theCompany. The Company shall reimburse you for any reasonable expenses to ship its property back to the Company’s offices, as applicable.

(b)           Non-disparagement. You will not at any time during the period of your employment with the Company and during any period in which you are receiving severance payments under Section 3(d), make (or direct anyone else to make) any disparaging statements (oral or written) about the Company, or any of its affiliated entities, officers, directors, employees, stockholders, representatives or agents, or any of the Company’s products or services or work-in-progress, that are harmful to their businesses, business reputations or personal reputations.

12

(c)           Cooperation. You agree that, upon the Company’s request and without any payment therefore, you shall reasonably cooperate with the Company (and be available as necessary) after the Termination Date in connection with any matters involving events that occurred during your period of employment with the Company.

(d)           Amounts Due. You will fully pay off any outstanding amounts owed to the Company no later than their applicable due date or within thirty days of the Termination Date (if no other due date has previously been established). Within thirty (30) days of the Termination Date, you will submit any outstanding business expense reports to the Company for business expenses incurred prior to the Termination Date.

(e)           Company Resources. As of the Termination Date, you will no longer represent that you are an officer, director or employee of the Company or any Company affiliate and you will immediately discontinue using the Company mailing address, telephone, facsimile machines, voice mail and e-mail.

(f)            Notice of New Employment. You will provide written notice to the Company within three (3) business days after the date that you agree to accept new full or part time employment or agree to provide consulting or other services to another entity or venture.

(g)           Representations. You represent that you have not entered into any agreements, understandings, or arrangements with any person or entity that you would breach as a result of, or that would in any way preclude or prohibit you from entering into, this Agreement with the Company or performing any of the duties and responsibilities provided for in this Agreement. You represent that you do not possess any confidential, proprietary business information belonging to any other entity, and will not use any confidential, proprietary business information belonging to any other entity in connection with your employment with the Company. You represent that you are not resigning employment or relocating any residence in reliance on any promise or representation by the Company regarding the kind, character, or existence of such work, or the length of time such work will last, or the compensation therefor.

(h)           Clawback Policy. Without limiting the requirement in Section 1 that you will strictly adhere to and obey Company policies, you understand and acknowledge that the Company has adopted a policy (which the Company may in the future amend in its discretion) on the recoupment of compensation (“Clawback Policy”). As a result, you may be required to repay to the Company certain previously paid compensation (that was earned or accrued on or after the Effective Date) in accordance with any such Clawback Policy and/or in accordance with applicable law.

(i)            Violations. You acknowledge that (i) upon a violation of any of the covenants contained in this Section 7; or (ii) if the Company is terminating your employment for Cause as provided under this Agreement, the Company would sustain irreparable harm as a result and that the Company would not have entered into this

13

Agreement without such restrictions, and, therefore, you agree that in addition to any other remedies which the Company may have, the Company shall be entitled, without bond of any kind, to seek equitable relief including specific performance and injunctions restraining you from committing or continuing any such violation.

8.             Entire Agreement. This Agreement and its Exhibits, the Employee Invention Assignment and Confidentiality Agreement, and the Company’s Stock Plan, and any other plans or agreements referenced herein, as amended or superseded from time to time, contain the entire agreement between you and the Company regarding their terms and supersede any and all prior written or oral understandings. Except as otherwise provided herein, this Agreement may not be amended or modified except in a writing, executed by you and a duly authorized officer of the Company other than yourself. This Agreement may be executed by facsimile signatures and in counterparts, each of which shall constitute an original, and all of which shall constitute one and the same instrument.

9.             Choice of Law; Severability; Waiver. This Agreement will be governed by the laws of the State of California, United States, without reference to the conflict of law provisions thereof. If any provision of this Agreement, or portion thereof, shall be held invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall attach only to such provision or portion thereof, and shall not in any manner affect or render invalid or unenforceable any other provision, or portion thereof, of this Agreement. No breach of any provision hereof can be waived unless in writing. Waiver of any one breach of any provision hereof will not be deemed to be a waiver of any other breach of the same or any other provision of this Agreement.

10.          Successors and Assigns. The Company may assign this Agreement to any successor (whether by amalgamation, merger, consolidation, sale of assets, purchase or otherwise) to all or substantially all of the equity, assets or business of the Company, and this Agreement will be binding upon and inure to the benefit of such successors and assigns, including any successor entity. You may not assign this Agreement or your obligations hereunder.

11.          Notice. Any and all notices required or permitted to be given to you or the Company pursuant to the provisions of this Agreement will be in writing, and will be effective and deemed to provide such party sufficient notice hereunder on the earliest of the following: (i) at the time of personal delivery, if delivery is in person; (ii) one (1) business day after deposit with an express overnight courier for United States deliveries, or two (2) business days after such deposit for deliveries outside of the United States; (iii) three (3) business days after deposit in the United States mail by certified mail (return receipt requested) for United States deliveries. All notices that the Company is required to or may desire to give you that are not delivered personally will be sent with postage and/or other charges prepaid and properly addressed to you at your home address of record with the Company, or at such other address as you may from time to time designate by one of the indicated means of notice herein. All notices that you are required to or may desire to give to the Company that are not delivered personally will be sent with postage and/or other charges prepaid and properly addressed to the Company’s General Counsel at its

14

principal office, or at such other office as the Company may from time to time designate by one of the indicated means of notice herein.

12.          Withholding and Taxes. The Company shall have the right to withhold and deduct from any payment hereunder any federal, state or local taxes of any kind required by law to be withheld with respect to any such payment. The Company (including, without limitation, members of the Board) shall not be liable to you or other persons as to any unexpected or adverse tax consequence realized by you and you shall be solely responsible for the timely payment of all taxes arising from this Agreement that are imposed on you.

13.          Section 409A. The payments under this Agreement are intended to be exempt from the application of Section 409A pursuant to the “short-term deferral” exception and “separation pay plan” exception under Section 409A to the fullest extent possible. Each individual payment provided under Sections 3(d), 4(d) or 4(e) is intended to be a separate payment and not a series of payments for purposes of Section 409A. Anything in this Agreement to the contrary notwithstanding, if the severance payment above constitutes an item of nonqualified deferred compensation subject to Section 409A, the Company and you shall take all steps necessary (including with regard to any post-termination services you may perform) to ensure that any such termination constitutes a “separation from service” within the meaning of Section 409A. In addition, if you are deemed at the time of your “separation from service” to be a “specified employee” within the meaning of that term under Section 409A and to the extent delaying commencement of payment of nonqualified deferred compensation (that is payable on account of your separation from service) is required in order to avoid the imposition of taxes under Section 409A, then all such payments and benefits will instead be paid to you in a lump sum without interest on the earlier of (a) the first business day of the seventh month following your “separation from service” or (b) five business days after the date the Company receives written confirmation of your death. It is intended that payments under this Agreement will be exempt from or comply with Section 409A, but the Company makes no representation or covenant to ensure that the payments under this Agreement are exempt from, or compliant with, Section 409A, and will have no liability to you or any other party if a payment under this Agreement that is intended to be exempt from, or compliant with, Section 409A is not so exempt or compliant.

14.          Exhibits. All Exhibits attached to this Agreement shall be incorporated herein by this reference as though fully set forth herein.

A duplicate original of this Agreement is enclosed for your records. If you decide to accept the terms of this Agreement, please sign the enclosed copy of this Agreement and the Employee Invention Assignment and Confidentiality Agreement in the spaces indicated and return it to me. Your signature will acknowledge that you have read and understood and agreed to the terms and conditions of this Agreement and Employee Invention Assignment and Confidentiality

15

Agreement. Should you have anything else that you wish to discuss, please do not hesitate to contact me.

Sincerely,
RealD Inc.
By:	/s/ Michael V. Lewis
	Michael V. Lewis
	Chief Executive Officer

I have read, understand, and accept this offer. Furthermore, in choosing to accept this offer, I agree that I am not relying on any representations, whether verbal or written, except as specifically set out within this Agreement.

/s/ Minard Hamilton

Minard Hamilton

Date: February 6, 2013

Enclosures:Duplicate Original Letter

EXHIBIT A:FORM OF SEPARATION AGREEMENT AND RELEASE OF CLAIMS

EXHIBIT B:EMPLOYEE INVENTION ASSIGNMENT AND CONFIDENTIALITY AGREEMENT

16

EXHIBIT A

FORM OF SEPARATION AGREEMENT AND RELEASE OF CLAIMS

[SEE EXHIBIT NUMBER 10.26]

EXHIBIT B

EMPLOYEE INVENTION ASSIGNMENT AND CONFIDENTIALITY AGREEMENT

[SEE EXHIBIT NUMBER 10.27]

EX-21.1

QuickLinks -- Click here to rapidly navigate through this document

EXHIBIT 21.1

LIST OF SIGNIFICANT SUBSIDIARIES OF REGISTRANT

1.

Stereographics Corporation—Incorporated in California

2.

ColorLink, Inc.—Incorporated in Delaware

3.

Digital Link LLC—Incorporated in California

4.

Digital Link II LLC—Incorporated in Delaware

5.

Real D International Godo Kaisha—Incorporated in Japan

6.

Real D Europe Limited—Incorporated in the United Kingdom

7.

RealD Hong Kong Limited—Incorporated in Hong Kong

8.

RealD Shanghai 3D equipment leasing Co., Ltd.—Incorporated in China

9.

RealD DDMG Acquisition, LLC—Incorporated in Delaware

QuickLinks

EXHIBIT 21.1

LIST OF SIGNIFICANT SUBSIDIARIES OF REGISTRANT

EX-23.1

QuickLinks -- Click here to rapidly navigate through this document

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        We consent to the incorporation by reference in the following Registration Statements on Form S-8:

•

Registration Statement (Form S-8 No. 333-168538) pertaining to the 2004 Amended and Restated Stock Incentive Plan and the 2010 Stock Incentive Plan of RealD Inc.

•

Registration Statement (Form S-8 No. 333-176109) pertaining to the 2010 Stock Incentive Plan of RealD Inc.

•

Registration Statement (Form S-8 No. 333-181816) pertaining to the 2010 Stock Incentive Plan of RealD Inc.

•

Registration Statement (Form S-8 No. 333-187823) pertaining to the 2010 Stock Incentive Plan of RealD Inc.

of our reports dated June 6, 2013, with respect to the consolidated financial statements and schedule of RealD Inc., and the effectiveness of internal control over financial reporting of RealD Inc., included in this Annual Report (Form 10-K) for the year ended March 31, 2013.

/s/ Ernst & Young LLP

Los Angeles, California
June 6, 2013

QuickLinks

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

EX-31.1

QuickLinks -- Click here to rapidly navigate through this document

EXHIBIT 31.1

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

        I, Michael V. Lewis, certify that:

        1.     I have reviewed this Annual Report on Form 10-K of RealD Inc. for the fiscal year ended March 31, 2013;

        2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

        3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

        4.     The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

        (a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

        (b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

        (c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

        (d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

        5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

        (a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

        (b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

        Dated: June 6, 2013

/s/ MICHAEL V. LEWIS
Michael V. Lewis
Chief Executive Officer and Chairman of the Board of Directors

QuickLinks

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

EX-31.2

QuickLinks -- Click here to rapidly navigate through this document

EXHIBIT 31.2

CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

        I, Andrew A. Skarupa, certify that:

        1.     I have reviewed this Annual Report on Form 10-K of RealD Inc. for the fiscal year ended March 31, 2013;

        2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

        3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

        4.     The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

        (a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

        (b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

        (c)   Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

        (d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

        5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

        (a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

        (b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

        Dated: June 6, 2013

/s/ ANDREW A. SKARUPA
Andrew A. Skarupa
Chief Financial Officer

QuickLinks

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

EX-32.1

QuickLinks -- Click here to rapidly navigate through this document

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report of RealD Inc. (the "Company") on Form 10-K for the fiscal year ended March 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Michael V. Lewis, Chief Executive Officer of the Company and Chairman of the Board of Directors, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

        1.     The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

        2.     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ MICHAEL V. LEWIS
Michael V. Lewis
Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)

June 6, 2013

*

This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and is not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

QuickLinks

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

EX-32.2

QuickLinks -- Click here to rapidly navigate through this document

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report of RealD Inc. (the "Company") on Form 10-K for the fiscal year ended March 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Andrew A. Skarupa, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

        1.     The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

        2.     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ ANDREW A. SKARUPA
Andrew A. Skarupa
Chief Financial Officer (Principal Financial Officer)

June 6, 2013

*

This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and is not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

QuickLinks

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

XML

Income taxes

12 Months Ended

Mar. 31, 2013

Income taxes

Income taxes

10. Income taxes

        The income tax provision from continuing operations consists of the following:

	Year ended
(in thousands)	March 31, 2013			March 23, 2012		March 25, 2011
Current income tax provision:
Federal	$	—		$	—	$	—
State		103			119		87
Foreign		5,202			4,948		4,187
		5,305			5,067		4,274
Deferred income tax benefit:
Federal		—			—		—
State		—			—		—
Foreign		(241	)		38		(2	)
Total income tax provision from continuing operations	$	5,064		$	5,105	$	4,272

        Income (loss) from continuing operations before income taxes consisted of the following:

	Year ended
(in thousands)	March 31, 2013			March 23, 2012		March 25, 2011
Domestic		(6,963	)		37,600		(5,749	)
Foreign		2,140			4,530		3,196
Total		(4,823	)		42,130		(2,553	)

        Significant components of our deferred tax balances are as follows:

(in thousands)	March 31, 2013			March 23, 2012
Deferred tax assets:
Net Operating Loss Carryforwards		26,359			30,010
Deferred Revenue		4,403			4,503
Accruals, Reserves and allowances		6,771			4,163
Stock Compensation		13,220			8,006
Intangible assets		16			825
Foreign Tax credit carryovers		11,571			8,031
Other		1,255			1,918
Total Deferred tax assets		63,595			57,456
Deferred tax liabilities
Fixed assets		(18,757	)		(17,921	)
Partnership Interest		(113	)		(154	)
Unbilled Receivables		(5,385	)		(5,371	)
Other		(115	)		(116	)
Total Deferred tax liabilities		(24,370	)		(23,562	)
Valuation Allowance		(39,084	)		(33,994	)
Net deferred tax assets (liabilities)		141			(100	)

        Due to the uncertainties surrounding the timing and realization of the benefits from our tax attributes in future tax returns, we have placed a valuation allowance against primarily all of our otherwise recognizable net deferred tax assets as of March 31, 2013, March 23, 2012 and March 25, 2011. As a result, we increased our valuation allowance through the operating statement as follows:

	Year ended
(in thousands)	March 31, 2013		March 23, 2012
Through continuing operation	$	5,090	$	(9,187	)
Increase (decrease) in valuation allowance		5,090		(9,187	)

        The income tax provision from continuing operations differs from the amount computed by applying the U.S. statutory federal income tax rate of 34.0% to the pretax income (loss) as a result of the following differences:

	Year ended
	March 31, 2013			March 23, 2012			March 25, 2011
Federal tax at statutory rate		34.0	%		34.0	%		34.0	%
State tax, net of federal benefit		(7.7	)%		1.6	%		(1.2	)%
Foreign tax rate differential		2.9	%		0.5	%		11.3	%
LLC income minority interest not taxed		(1.3	)%		(0.1	)%		7.2	%
Revaluation of deferred taxes due to changes in effective income tax rates		3.8	%		(1.4	)%		(13.7	)%
Research tax credits		0.0	%		0.0	%		25.2	%
Permanent differences and other		3.7	%		(0.7	)%		(35.0	)%
Stock Compensation		(34.9	)%		0.0	%		0.0	%
Change in valuation allowance		(105.5	)%		(21.8	)%		(195.4	)%
Total tax provision (benefit)		(105.0	)%		12.1	%		(167.7	)%

        As of March 31, 2013, we had net operating loss carryforwards of approximately $129.6 million for federal and $66.2 million for state purposes. Federal and state net operating loss carryforwards begin to expire in year 2020 and 2019, respectively. As of March 31, 2013, we had foreign tax credit carryforwards of approximately $11.6 million for federal income tax purposes that begin to expire in the year 2019.

        The Internal Revenue Code imposes limitations on a corporation's ability to utilize net operating loss carryovers ("NOLs") if it experiences an ownership change as defined in Section 382. In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50% over a three year period. In the event that an ownership change has occurred, or were to occur, utilization of the Company's NOLs would be subject to an annual limitation under Section 382 as determined by multiplying the value of the Company's stock at the time of the ownership change by the applicable long-term tax-exempt rate as defined in the Internal Revenue Code. Any unused annual limitation may be carried over to later years. The Company could experience an ownership change under Section 382 as a result of events in the past in combination with events in the future. If so, the use of the Company's NOLs, or a portion thereof, against future taxable income may be subject to an annual limitation under Section 382, which may result in expiration of a portion of the NOLs before utilization. Therefore, the Company could be liable for income taxes sooner than otherwise would be true if the Company were not subject to Section 382 limitations. The Company is performing a study to determine the extent of the limitation, if any. Any carry-forwards that expire prior to utilization as a result of such limitations will be removed, if applicable, from deferred tax assets with a corresponding reduction of the valuation allowance.

        We recognize excess tax benefits associated with share-based compensation and motion picture exhibitor options to stockholders' equity only when realized. As of March 31, 2013, we have approximately $22.7 million of unrealized excess tax benefits associated with share-based compensation and exhibitor options. These tax benefits will be accounted for as a credit to additional paid-in capital, if and when realized, rather than a reduction of the provision for income taxes.

        We adopted accounting for uncertain tax positions pursuant to ASC 740, Income Taxes. The following table summarizes the activity related to our unrecognized tax benefits (in thousands):

Balance as of March 23, 2012	$	346
Increases related to prior year tax positions		—
Increase related to current year tax positions		—
Expiration of the statute of limitations for the assessment of taxes		—
Settlements		—
Balance as of March 31, 2013	$	346

        Approximately $0.3 million of the unrecognized tax benefits will decrease the effective tax rate if recognized, subject to the valuation allowance.

        It is not anticipated that there will be a significant change in the unrecognized tax benefits over the next 12 months.

        Due to the net operating loss carryforwards, our United States federal and state returns are open to examination by the Internal Revenue Service and state jurisdictions for all years since inception.

        Our policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. As of March 31, 2013, amounts for accrued interest and penalties associated with uncertain tax positions were not significant.

        As of March 31, 2013, unremitted earnings of the subsidiary outside of the United States were approximately $14.8 million, on which no United States taxes had been provided. Our current intention is to reinvest these earnings outside the United States. It is not practicable to estimate the amount of additional taxes that might be payable upon repatriation of foreign earnings.

XML

Segment and geographic information (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Sep. 21, 2012	Jun. 22, 2012	Mar. 23, 2012	Dec. 23, 2011	Sep. 23, 2011	Jun. 24, 2011	Mar. 31, 2013	Mar. 23, 2012	Mar. 25, 2011
Geographic information
Total revenues	$ 45,449	$ 46,939	$ 54,986	$ 68,178	$ 50,047	$ 49,026	$ 87,995	$ 59,560	$ 215,552	$ 246,628	$ 246,136
Total long-lived tangible assets	151,109				154,815				151,109	154,815
Domestic (United States and Canada)
Geographic information
Total revenues									106,979	126,151	91,259
Total long-lived tangible assets	101,438				105,851				101,438	105,851
International
Geographic information
Total revenues									108,573	120,477	154,877
Total long-lived tangible assets	$ 49,671				$ 48,964				$ 49,671	$ 48,964

XML

Consolidated statements of operations (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Mar. 31, 2013	Mar. 23, 2012	Mar. 25, 2011
Revenue:
License	$ 137,752	$ 147,801	$ 101,523
Product and other	77,800	98,827	144,613
Total revenue	215,552	246,628	246,136
Cost of revenue:
License	47,243	39,801	17,994
Product and other	78,117	78,137	160,402
Total cost of revenue	125,360	117,938	178,396
Gross profit	90,192	128,690	67,740
Operating expenses:
Research and development	19,454	16,500	15,582
Selling and marketing	25,266	27,682	24,139
General and administrative	47,830	42,189	35,835
Total operating expenses	92,550	86,371	75,556
Operating income (loss)	(2,358)	42,319	(7,816)
Interest expense, net	(1,483)	(971)	(919)
Other income (loss)	(982)	782	6,182
Income (loss) before income taxes	(4,823)	42,130	(2,553)
Income tax expense	5,064	5,105	4,272
Net income (loss)	(9,887)	37,025	(6,825)
Net (income) loss attributable to noncontrolling interest	197	(156)	(530)
Accretion of preferred stock			(4,934)
Net income (loss) attributable to RealD Inc. common stockholders	$ (9,690)	$ 36,869	$ (12,289)
Earnings (loss) per common share:
Basic (in dollars per share)	$ (0.19)	$ 0.68	$ (0.29)
Diluted (in dollars per share)	$ (0.19)	$ 0.65	$ (0.29)
Shares used in computing earnings per common share:
Basic (in shares)	52,345	54,352	41,933
Diluted (in shares)	52,345	56,852	41,933

XML

Property and equipment, RealD Cinema Systems and digital projectors

12 Months Ended

Mar. 31, 2013

Property and equipment, RealD Cinema Systems and digital projectors

Property and equipment, RealD Cinema Systems and digital projectors

3. Property and equipment, RealD Cinema Systems and digital projectors

        Property and equipment, RealD Cinema Systems and digital projectors consist of the following:

(in thousands)	March 31, 2013			March 23, 2012
RealD Cinema Systems	$	194,527		$	184,197
Digital projectors—held for sale		1,634			1,843
Leasehold improvements		14,442			4,325
Machinery and equipment		6,198			6,641
Furniture and fixtures		1,122			12
Computer equipment and software		7,628			2,788
Construction in process		2,637			3,364
Total	$	228,188		$	203,170
Less accumulated depreciation		(77,079	)		(48,355	)
Property and equipment, RealD Cinema Systems and digital projectors, net	$	151,109		$	154,815

        Depreciation expense amounted to $32.7 million, $28.1 million and $15.6 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

        During the year ended March 31, 2013, we received $2.5 million in cash from motion picture exhibitor customers for the sale of digital projectors that was included in accounts receivable as of March 23, 2012.

        During the year ended March 23, 2012, we received $4.0 million in cash and had $2.5 million of accounts receivable from motion picture exhibitor customers for the sale of digital projectors, resulting in a gain of $1.7 million in other income (loss).

        During the year ended March 25, 2011, we received $15.6 million in cash from motion picture exhibitor customers for the sale of digital projectors, resulting in a gain of $6.7 million in other income (loss). With the proceeds, we repaid an aggregate of $5.6 million of notes payable to the equipment providers.

        During the year ended March 31, 2013, we determined that a non-cancelable purchase commitment for certain cinema systems configurations in the aggregate amount of $3.5 million were not fully recoverable, primarily due to the initial investment costs which are expected to exceed the anticipated future cash flows for the related cinema systems.

        During the year ended March 22, 2012, we determined that certain of our cinema systems were not recoverable and that the carrying value of the assets exceeded fair value, primarily due to the number of certain of our cinema system assets on hand, including related outstanding purchase commitments and the continuing shift in the mix in the deployment of cinema systems based on the type of digital projectors installed and theater configuration. The fair value was primarily determined by evaluating the discounted future cash flows expected to be generated from the cinema systems. The impairment charged during the year ended March 23, 2012 to cost of revenue for certain of the cinema systems totaled $6.8 million.

        For the years ended March 31, 2013, March 23, 2012 and March 25, 2011, impairment charges for all impaired RealD Cinema Systems charged to cost of revenue totaled $8.0 million, $10.3 million and $1.1 million, respectively.

XML

Property and equipment, RealD Cinema Systems and digital projectors (Tables)

12 Months Ended

Mar. 31, 2013

Property and equipment, RealD Cinema Systems and digital projectors

Schedule of property and equipment of RealD Cinema Systems and digital projectors

(in thousands)	March 31, 2013			March 23, 2012
RealD Cinema Systems	$	194,527		$	184,197
Digital projectors—held for sale		1,634			1,843
Leasehold improvements		14,442			4,325
Machinery and equipment		6,198			6,641
Furniture and fixtures		1,122			12
Computer equipment and software		7,628			2,788
Construction in process		2,637			3,364
Total	$	228,188		$	203,170
Less accumulated depreciation		(77,079	)		(48,355	)
Property and equipment, RealD Cinema Systems and digital projectors, net	$	151,109		$	154,815

XML

Related-party transactions

12 Months Ended

Mar. 31, 2013

Related-party transactions

Related-party transactions

11. Related-party transactions

        In November 2007, we sold our 51.0% interest in ColorLink Japan to its noncontrolling interest owner. In conjunction with the November 2007 disposition of ColorLink Japan, we entered into a Technology and License Agreement with the previous noncontrolling interest owner of ColorLink Japan, and ColorLink Japan granting the parties certain exclusive and non-exclusive rights to make, use and sell designated inventions. As consideration for the grant of these rights, the parties have agreed to pay a royalty equal to 8.0% of revenue earned on the sale of the licensed products. Royalties earned in the year ended March 31, 2013 totaled $1.2 million, of which none remained due and outstanding as of March 31, 2013. Royalties earned in the year ended March 23, 2012 totaled $2.4 million, of which $0.3 million remained due and outstanding as of March 23, 2012. Royalties earned in the year ended March 25, 2011 totaled $5.9 million, of which $0.2 million remained due and outstanding as of March 25, 2011.

        In addition, we purchased inventory from the previous noncontrolling interest owner of ColorLink Japan. Inventory amounts purchased totaled $6.8 million and $7.0 million for the years ended March 31, 2013 and March 23, 2012, respectively. As of March 31, 2013 and March 23, 2012, we owed the previous noncontrolling interest owner of ColorLink Japan $0.6 million and $0.9 million, respectively. Amounts purchased from us by the noncontrolling interest owner of ColorLink Japan in the year ended March 31, 2013 totaled $2.3 million of which $0.4 million remained outstanding. A principal of the previous noncontrolling interest owner of ColorLink Japan owns less than 5% share of our common stock.

        During the year ended March 25, 2011, we purchased digital projectors from the noncontrolling interest owner of our subsidiaries totaling $0.8 million. Of this amount, $0.5 million was paid upfront and $0.3 million was financed as long-term debt.

        During the years ended March 25, 2011, we paid a $0.2 million management fee to the holder of our Series C mandatorily redeemable convertible preferred stock, respectively. Upon the closing of our IPO in July 2010, our obligation to pay this management fee ceased.

        On May 19, 2011, we entered into a separation agreement and general release of claims with Joshua Greer, a former director and executive officer of the Company. Pursuant to the terms of the separation agreement, Mr. Greer received the following benefits: (i) cash severance of $450,000 paid in ten equal installments, with the first such installment paid on October 15, 2011; (ii) reimbursement from us for insurance coverage under COBRA for 18 months following July 15, 2011 or such earlier time as Mr. Greer becomes eligible for insurance through another employer; (iii) a pro-rated cash performance bonus for fiscal year 2012 (to be paid no later than June 15, 2012), in an amount equal to 30% of 80% of Mr. Greer's salary, computed assuming that Mr. Greer had remained as our president through the end of fiscal year 2012; and (iv) acceleration of a time-based vesting stock option for 105,000 shares granted to Mr. Greer on July 15, 2010 as of July 15, 2011, which remained exercisable for six months following the end of the term of the consulting agreement that we entered into with Mr. Greer on the same date. A second stock option for 105,000 shares granted to Mr. Greer on July 15, 2010 was entirely forfeited and cancelled without consideration. We entered into a consulting agreement with Mr. Greer pursuant to which Mr. Greer was paid $275,000 per year commencing as of July 16, 2011. The consulting agreement with Mr. Greer expired on July 16, 2012. On June 21, 2012, Mr. Greer notified us of his resignation from our board of directors, effective on July 16, 2012 upon the expiration of the consulting agreement. During the year ended March 31, 2013, we paid Mr. Greer $225,000 pursuant to his separation agreement and $148,958 pursuant to his consulting agreement.

        We entered into a consulting agreement, effective as of May 29, 2012 (the "DCH Agreement"), with DCH Consultants LLC ("DCH"), an entity controlled by Mr. David Habiger. Mr. Habiger is a member of the Company's Board of Directors, its Nominating and Corporate Governance Committee, and its Compensation Committee.

        Pursuant to the DCH Agreement, DCH provided certain consulting services regarding the application of one or more of our technologies in the consumer electronics industry. The DCH Agreement had a term of 4 months and DCH was entitled to receive aggregate fixed compensation of $20,000 per month during the term of the DCH Agreement. Although we had the right to extend the engagement for up to two additional months on the same terms, by providing DCH with 10 days written notice prior to the end of the original term, we did not extend the DCH Agreement and it expired as of September 29, 2012.

        During the year ended March 31, 2013, we paid DCH $80,239 pursuant to the DCH Agreement.

XML

Income taxes (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Mar. 31, 2013	Mar. 23, 2012	Mar. 25, 2011
Current income tax provision:
State	$ 103	$ 119	$ 87
Foreign	5,202	4,948	4,187
Total current income tax provision	5,305	5,067	4,274
Deferred income tax benefit:
Foreign	(241)	38	(2)
Total income tax provision from continuing operations	5,064	5,105	4,272
Income (loss) from continuing operations before income taxes
Domestic	(6,963)	37,600	(5,749)
Foreign	2,140	4,530	3,196
Income (loss) before income taxes	(4,823)	42,130	(2,553)
Deferred tax assets:
Net operating loss carryforwards	26,359	30,010
Deferred revenues	4,403	4,503
Accruals, reserves and allowances	6,771	4,163
Stock compensation	13,220	8,006
Intangible assets	16	825
Foreign tax creditcarryovers	11,571	8,031
Other	1,255	1,918
Total deferred tax assets	63,595	57,456
Deferred tax liabilities
Fixed assets	(18,757)	(17,921)
Partnership interest	(113)	(154)
Unbilled receivables	(5,385)	(5,371)
Other	(115)	(116)
Total deferred tax liabilities	(24,370)	(23,562)
Valuation allowance	(39,084)	(33,994)
Net deferred tax assets (liabilities)	$ 141	$ (100)

XML

Summary of significant accounting policies (Details 5) (USD $)	12 Months Ended
	Mar. 31, 2013 item	Mar. 23, 2012	Mar. 25, 2011	Mar. 26, 2010
Goodwill
Number of reporting units	1
Revenue recognition and revenue reductions
Tenure of options issued to motion picture exhibitors	10 years
Number of shares of common stock to be purchased under motion picture exhibitor options	3,668,340
Price of option to purchase shares of common stock (in dollars per share)	$ 0.00667
Motion picture exhibitor option reduction in revenue			$ 36,447,000	$ 39,200,000
Number of motion picture options vested			3,668,340
Shipping and handling costs
Shipping and handling costs	7,900,000	6,800,000	10,200,000
Selling and marketing costs
Advertising expenses	3,700,000	5,300,000	4,300,000
Foreign currency
Net realized and unrealized gains and losses related to forward contracts	900,000	500,000	600,000
Employee benefit plans
Contributions to voluntary 401(k) savings plans	600,000	500,000	300,000
Cinema systems configurations under non-cancellable purchase agreement
Impairment of long-lived assets
Aggregate amount of non-cancellable purchase agreement for certain cinema systems configurations	3,500,000
Non-recoverable cinema systems
Impairment of long-lived assets
Impairment charges including related purchase commitments		6,800,000
RealD Cinema Systems
Impairment of long-lived assets
Impairment charges including related purchase commitments	8,000,000	10,300,000	1,100,000
Eyewear tools
Impairment of long-lived assets
Impairment charges including related purchase commitments	500,000
Digital projects
Impairment of long-lived assets
Impairment charges including related purchase commitments		$ 200,000

XML

Commitments and contingencies (Tables)

12 Months Ended

Mar. 31, 2013

Commitments and contingencies

Schedule of future minimum lease obligations

At March 31, 2013, our future minimum lease obligations were as follows (in thousands):

Fiscal year 2014	$	4,152
Fiscal year 2015		4,080
Fiscal year 2016		4,162
Fiscal year 2017		3,944
Fiscal year 2018		3,969
Thereafter		18,028
Total	$	38,335

XML

Accrued expenses and other liabilities (Tables)

12 Months Ended

Mar. 31, 2013

Accrued expenses and other liabilities

Schedule of accrued expenses and other liabilities

(in thousands)	March 31, 2013		March 23, 2012
Payroll and compensation	$	4,530	$	7,544
Sales, use taxes and other taxes		6,960		7,100
Professional fees		1,005		1,676
Refundable deposits		1,227		930
Marketing		545		2,516
RealD Cinema system installation fees		3,303		4,767
Purchase obligations		3,450		—
Other		3,993		4,337
Total	$	25,013	$	28,870

XML

Share-based compensation (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Mar. 31, 2013	Mar. 23, 2012	Mar. 25, 2011
Share-based compensation
Share-based compensation expense (in dollars)	$ 18,474	$ 15,744	$ 8,950
Cost of revenue
Share-based compensation
Share-based compensation expense (in dollars)	807	458	160
Research and development
Share-based compensation
Share-based compensation expense (in dollars)	2,185	2,604	1,470
Selling and marketing
Share-based compensation
Share-based compensation expense (in dollars)	5,258	4,776	2,937
General and administrative
Share-based compensation
Share-based compensation expense (in dollars)	10,224	7,906	4,383
Employee stock purchase plan
Share-based compensation
Share-based compensation expense (in dollars)	$ 800

XML

Summary of significant accounting policies (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Sep. 21, 2012	Jun. 22, 2012	Mar. 23, 2012	Dec. 23, 2011	Sep. 23, 2011	Jun. 24, 2011	Mar. 31, 2013	Mar. 23, 2012	Mar. 25, 2011
Accounting period
Length of period									12 months
Length of quarter									91 days
Length of fiscal year									364 days
Number of extra days added to the current third quarter of fiscal 2013									10 days
Numerator:
Net income (loss)	$ (4,444)	$ (4,159)	$ (4,231)	$ 2,947	$ 5,683	$ 2,763	$ 19,177	$ 9,402	$ (9,887)	$ 37,025	$ (6,825)
Net (income) loss attributable to noncontrolling interest									197	(156)	(530)
Accretion of preferred stock											(4,934)
Net income (loss) attributable to RealD Inc. common stockholders	$ (4,336)	$ (4,160)	$ (4,173)	$ 2,979	$ 5,536	$ 2,833	$ 18,905	$ 9,595	$ (9,690)	$ 36,869	$ (12,289)
Denominator:
Weighted-average common shares outstanding (basic)									52,345	54,352	41,933
Effect of dilutive securities (in shares)										2,500
Weighted-average common shares outstanding (diluted)									52,345	56,852	41,933
Earnings (loss) per common share:
Basic (in dollars per share)	$ (0.09)	$ (0.08)	$ (0.08)	$ 0.05	$ 0.10	$ 0.05	$ 0.35	$ 0.18	$ (0.19)	$ 0.68	$ (0.29)
Diluted (in dollars per share)	$ (0.09)	$ (0.08)	$ (0.08)	$ 0.05	$ 0.10	$ 0.05	$ 0.33	$ 0.17	$ (0.19)	$ 0.65	$ (0.29)
Net income (loss) per share of common stock
Weighted-average number of anti-dilutive shares excluded from the calculation of diluted earnings (loss) per common share									8,441	3,899	14,962
Options and warrants to purchase common stock
Net income (loss) per share of common stock
Weighted-average number of anti-dilutive shares excluded from the calculation of diluted earnings (loss) per common share									8,441	3,899	9,782
Conversion of convertible preferred stock
Net income (loss) per share of common stock
Weighted-average number of anti-dilutive shares excluded from the calculation of diluted earnings (loss) per common share											5,180

XML

Goodwill and intangible assets (Details) (USD $)	12 Months Ended
	Mar. 31, 2013	Mar. 23, 2012	Mar. 25, 2011
Goodwill and intangible assets
Gross amount of acquired developed technologies	$ 9,324,000	$ 3,239,000
Accumulated amortization of acquired developed technologies	1,907,000	1,493,000
Goodwill	10,657,000	10,657,000
Total	19,981,000	13,896,000
Amortization expense	400,000	200,000	100,000
Estimated amortization expense
Fiscal year 2014	1,300,000
Fiscal year 2015	1,300,000
Fiscal year 2016	1,303,000
Fiscal year 2017	1,300,000
Fiscal year 2018	1,287,000
Thereafter	927,000
Total	7,417,000
2D-to-3D conversion patents
Goodwill and intangible assets
Assets purchased	$ 6,100,000

XML

Income taxes (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Mar. 31, 2013	Mar. 23, 2012	Mar. 25, 2011
Taxation
Increase (decrease) in valuation allowance	$ 5,090	$ (9,187)
Reconciliation of income tax rate
Federal tax at statutory rate (as a percent)	34.00%	34.00%	34.00%
State tax, net of federal benefit (as a percent)	(7.70%)	1.60%	(1.20%)
Foreign tax rate differential (as a percent)	2.90%	0.50%	11.30%
LLC income minority interest not taxed (as a percent)	(1.30%)	(0.10%)	7.20%
Revaluation of deferred taxes due to changes in effective income tax rates (as a percent)	3.80%	(1.40%)	(13.70%)
Research tax credits (as a percent)	0.00%	0.00%	25.20%
Permanent differences and other (as a percent)	3.70%	(0.70%)	(35.00%)
Stock compensation (as a percent)	(34.90%)	0.00%	0.00%
Change in valuation allowance (as a percent)	(105.50%)	(21.80%)	(195.40%)
Total tax provision (benefit) (as a percent)	(105.00%)	12.10%	(167.70%)
Continuing Operations
Taxation
Increase (decrease) in valuation allowance	$ 5,090	$ (9,187)

XML

Segment and geographic information (Tables)

12 Months Ended

Mar. 31, 2013

Segment and geographic information

Schedule of revenue by geographic region, as determined based on the location of customers or the anticipated destination of use

	Year ended
(in thousands)	March 31, 2013		March 23, 2012		March 25, 2011
Domestic (United States and Canada)	$	106,979	$	126,151	$	91,259
International		108,573		120,477		154,877
Total revenues	$	215,552	$	246,628	$	246,136

Schedule of long-lived tangible assets, net of accumulated depreciation by geographic region

(in thousands)	March 31, 2013		March 23, 2012
Domestic (United States and Canada)	$	101,438	$	105,851
International		49,671		48,964
Total long-lived tangible assets	$	151,109	$	154,815

XML

Commitments and contingencies (Details) (USD $)	12 Months Ended
	Mar. 31, 2013	Mar. 23, 2012	Mar. 25, 2011
Future minimum lease obligations
Fiscal year 2014	$ 4,152,000
Fiscal year 2015	4,080,000
Fiscal year 2016	4,162,000
Fiscal year 2017	3,944,000
Fiscal year 2018	3,969,000
Thereafter	18,028,000
Total	38,335,000
Rent expense	5,200,000	4,300,000	2,600,000
Purchase Commitment
Indemnities and commitments
Future obligations	$ 10,500,000
Revolving supply commitments	90 days
Purchase Commitment | Maximum
Indemnities and commitments
Payment required under the cancellation penalty provisions as a percentage of the unused contract	20.00%

XML

Goodwill and intangible assets (Tables)

12 Months Ended

Mar. 31, 2013

Goodwill and intangible assets

Schedule of components of goodwill and intangible assets

	March 31, 2013				March 23, 2012
(in thousands)	Gross amount		Accumulated amortization		Gross amount		Accumulated amortization
Acquired developed technologies	$	9,324	$	1,907	$	3,239	$	1,493
Goodwill		10,657		—		10,657		—
Total	$	19,981	$	1,907	$	13,896	$	1,493

Schedule of estimated remaining amortization expense

At March 31, 2013 the remaining amortization expense is estimated to be as follows (in thousands):

Fiscal year 2014	$	1,300
Fiscal year 2015		1,300
Fiscal year 2016		1,303
Fiscal year 2017		1,300
Fiscal year 2018		1,287
Thereafter		927
Total	$	7,417

XML

Consolidated statements of changes in mandatorily redeemable convertible preferred stock and equity (deficit) (USD $) In Thousands, except Share data, unless otherwise specified	Total USD ($)	Common stock USD ($)	Accumulated other comprehensive loss USD ($)	Accumulated deficit USD ($)	Noncontrolling interest USD ($)	Series C USD ($)	Series C Mandatorily redeemable convertible preferred stock USD ($)	Series A	Series A Convertible preferred stock USD ($)	Series B	Series B Convertible preferred stock USD ($)	Series D	Series D Convertible preferred stock USD ($)
Balance at Mar. 26, 2010	$ (41,886)	$ 68,371		$ (137,291)	$ 2,134		$ 62,831		$ 1,978		$ 2,970		$ 19,952
Balance (in shares) at Mar. 26, 2010		24,690,954					5,139,500		2,000,000		2,417,644		1,666,667
Increase (Decrease) in Stockholders' Equity
Accretion of Series C preferred stock	(4,934)			(4,934)		4,900	4,934
Share-based compensation	8,950	8,950
Exercise of stock options	3,875	3,875
Exercise of stock options (in shares)		2,019,816
Exercise of motion picture exhibitor options	22	22
Exercise of motion picture exhibitor options (in shares)		3,260,747
Exercise of warrants	634	634
Exercise of warrants (in shares)		762,300
Motion picture exhibitor option reduction in revenue	36,447	36,447
Noncontrolling interest distribution	(888)				(888)
Conversion of preferred stock	67,765	92,665					(67,765)		(1,978)		(2,970)		(19,952)
Conversion of preferred stock (in shares)		16,835,714					(5,139,500)		(2,000,000)		(2,417,644)		(1,666,667)
Issuance of common stock in connection with initial public offering, net of issuance costs	81,940	81,940
Issuance of common stock in connection with initial public offering, net of issuance costs (in shares)		6,000,000
Net income (loss)	(6,825)			(7,355)	530
Balance at Mar. 25, 2011	145,100	292,904		(149,580)	1,776
Balance (in shares) at Mar. 25, 2011		53,569,531
Increase (Decrease) in Stockholders' Equity
Share-based compensation	15,744	15,744
Exercise of stock options	972	972
Exercise of stock options (in shares)		257,354
Exercise of motion picture exhibitor options	3	3
Exercise of motion picture exhibitor options (in shares)		407,593
Exercise of warrants	271	271
Exercise of warrants (in shares)		326,700
Noncontrolling interest distribution	(1,509)				(1,509)
Net income (loss)	37,025			36,869	156
Balance at Mar. 23, 2012	197,606	309,894		(112,711)	423
Balance (in shares) at Mar. 23, 2012		54,561,178
Increase (Decrease) in Stockholders' Equity
Share-based compensation	18,474	18,474
Exercise of stock options	3,516	3,516
Exercise of stock options (in shares)		543,797
Issuance of common stock in connection with restricted stock units (in shares)		80,781
Purchase and distribution of stock under employee stock purchase plan	810	810
Purchase and distribution of stock under employee stock purchase plan (in shares)		107,108
Repurchases of common stock	(60,445)			(60,445)
Repurchases of common stock (in shares)		(5,927,729)
Other comprehensive loss, net of tax	115		115
Noncontrolling interest distribution	(1,000)				(1,000)
Net income (loss)	(9,887)			(9,690)	(197)
Balance at Mar. 31, 2013	$ 149,189	$ 332,694	$ 115	$ (182,846)	$ (774)
Balance (in shares) at Mar. 31, 2013		49,365,135

XML

Business and basis of presentation

12 Months Ended

Mar. 31, 2013

Business and basis of presentation

Business and basis of presentation

1. Business and basis of presentation

        RealD Inc., including its subsidiaries ("RealD"), is a global licensor of stereoscopic 3D technologies.

        The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The consolidated financial statements include the accounts of RealD, its wholly owned subsidiaries and its majority owned subsidiaries. We do not have any interests in variable interest entities. For consolidated subsidiaries that are not wholly owned but are majority owned, the subsidiaries' assets, liabilities, and operating results are included in their entirety in the accompanying consolidated financial statements. The noncontrolling interests in those assets, liabilities, and operations are reflected as non-controlling interests in the consolidated balance sheets under equity (deficit) and consolidated statements of operations.

        On June 28, 2010, we amended our certificate of incorporation, which increased our total authorized capital stock to 200 million shares (comprised of 150 million shares of common stock and 50 million shares of preferred stock), and effected a split of our common stock, which resulted in each share of our common stock splitting into one and one-half shares (or a 1-for-1.5 forward split). The accompanying consolidated financial statements and notes to the consolidated financial statements have been retroactively restated to reflect the stock split for all periods presented.

        On July 21, 2010, we completed the initial public offering (IPO) of our common stock in which we sold and issued 6 million shares of common stock at an issue price of $16.00 per share. A total of approximately $96 million in gross proceeds were raised from the IPO, or $81.9 million in net proceeds after deducting underwriting discounts and commissions of approximately $6.7 million and other offering costs of approximately $7.4 million.

        All significant intercompany balances and transactions have been eliminated in consolidation.

XML

Goodwill and intangible assets

12 Months Ended

Mar. 31, 2013

Goodwill and intangible assets

Goodwill and intangible assets

4. Goodwill and intangible assets

        Goodwill and intangible assets consist of the following at:

	March 31, 2013				March 23, 2012
(in thousands)	Gross amount		Accumulated amortization		Gross amount		Accumulated amortization
Acquired developed technologies	$	9,324	$	1,907	$	3,239	$	1,493
Goodwill		10,657		—		10,657		—
Total	$	19,981	$	1,907	$	13,896	$	1,493

        Amortization expense amounted to $0.4 million, $0.2 million and $0.1 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

        In the fiscal year ended March 31, 2013, we purchased a portfolio of 2D-to-3D conversion patents in the amount of $6.1 million and may consider future purchases of intangible assets, acquisitions or other investing activities.

        At March 31, 2013 the remaining amortization expense is estimated to be as follows (in thousands):

Fiscal year 2014	$	1,300
Fiscal year 2015		1,300
Fiscal year 2016		1,303
Fiscal year 2017		1,300
Fiscal year 2018		1,287
Thereafter		927
Total	$	7,417

XML

Summary of significant accounting policies

12 Months Ended

Mar. 31, 2013

Summary of significant accounting policies

Summary of significant accounting policies

2. Summary of significant accounting policies

Accounting period

        On November 14, 2012, our Board of Directors approved a change in our accounting periods from the previous configuration of four 13-week periods for a total of 52 weeks to a calendar month end and calendar quarter end accounting period. This change in accounting period commenced in the third quarter of fiscal 2013 ended on December 31, 2012, which added 10 extra days to the fiscal year ended March 31, 2013 when compared to the fiscal year ended March 23, 2012. As a result, our fiscal year 2013 ended on March 31, 2013 instead of on March 22, 2013 as formerly planned under RealD's historical accounting period configuration.

Use of estimates

        The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.

Earnings (loss) per share of common stock

        Basic income per share of common stock is computed by dividing the net income (loss) attributable to RealD common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing net income (loss) attributable to RealD Inc. common stockholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, shares to be purchased under our employee stock purchase plan and unvested restricted stock units. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury stock method.

        The calculation of the basic and diluted earnings (loss) per share of common stock for the years ended March 31, 2013, March 23, 2012 and March 25, 2011 was as follows:

	Year ended
(in thousands, except per share data)	March 31, 2013			March 23, 2012			March 25, 2011
Numerator:
Net income (loss)	$	(9,887	)	$	37,025		$	(6,825	)
Net (income) loss attributable to noncontrolling interest		197			(156	)		(530	)
Accretion of preferred stock		—			—			(4,934	)
Net income (loss) attributable to RealD Inc. common stockholders	$	(9,690	)	$	36,869		$	(12,289	)
Denominator:
Weighted-average common shares outstanding (basic)		52,345			54,352			41,933
Effect of dilutive securities		—			2,500			—
Weighted-average common shares outstanding (diluted)		52,345			56,852			41,933
Earnings (loss) per common share:
Basic	$	(0.19	)	$	0.68		$	(0.29	)
Diluted	$	(0.19	)	$	0.65		$	(0.29	)

        Due to the loss attributable to RealD Inc. common stockholders in the years ended March 31, 2013 and March 25, 2011, basic earnings (loss) per common share and diluted earnings (loss) per common share are the same as the effect of potentially dilutive securities would be anti-dilutive.

        The weighted-average number of anti-dilutive shares excluded from the calculation of diluted earnings (loss) per common share for the years ended March 31, 2013, March 23, 2012 and March 25, 2011 was as follows:

	Year ended
(in thousands)	March 31, 2013		March 23, 2012		March 25, 2011
Options and warrants to purchase common stock		8,441		3,899		9,782
Conversion of convertible preferred stock		—		—		5,180
Total		8,441		3,899		14,962

Fair value measurements

        Accounting Standards Codification Topic (ASC) 820-10, Fair Value Accounting (ASC 820), provides a common definition of fair value and establishes a framework to make the measurement of fair value in U.S. GAAP more consistent and comparable. This guidance also requires expanded disclosures to provide information about the extent to which fair value is used to measure assets and liabilities, the methods and assumptions used to measure fair value, and the effect of fair value measures on earnings. Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value be classified and disclosed in the following three categories:

• •

  Level 1—Quoted prices for identical instruments in active markets.

  •

  Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

  •

  Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

        Our financial assets and liabilities, which include financial instruments as defined by ASC 820, include cash and cash equivalents, accounts receivable, accounts payable, long-term debt and derivatives. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable are a reasonable approximation of fair value due to the short maturities of these instruments. The carrying amount of long-term debt approximates fair value based on borrowing rates currently available to us. The carrying amount of our derivative instruments is recorded at fair value and is determined based on observable inputs that are corroborated by market data (Level 2).

        As of March 31, 2013 and March 23, 2012, the fair values of our derivative instruments that were carried at fair value on a recurring basis were not significant.

Derivative instruments

        Our derivative instruments are recorded at fair value in other current assets or other current liabilities, respectively, in the consolidated balance sheets. Changes in fair value are reported as a component of other income or loss on our consolidated statements of operations. For all periods presented, none of our derivative instruments were designated as hedging instruments. We do not use foreign currency option or foreign exchange forward contracts for speculative or trading purposes.

        We purchase foreign currency forward contracts, generally with maturities of six months or less, to reduce the volatility of cash flows primarily related to forecasted payments and expenses denominated in certain foreign currencies. We had outstanding forward contracts based in British pound sterling and Euro with notional amounts totaling $5.8 million as of March 31, 2013. We had outstanding forward contracts based in British pound sterling, Euro and Canadian dollar with notional amounts totaling $4.3 million as of March 23, 2012. As of March 31, 2013 and March 23, 2012, the carrying amount of our foreign currency forward contracts was not significant and was classified as Level 2 fair value instruments, which was determined based on observable inputs that were corroborated by market data. For all periods presented, the net realized and unrealized gains and losses related to forward contracts were not significant.

Marketable securities

        We classify unrealized gains and losses on marketable securities reported as a component of accumulated other comprehensive income. As of March 31, 2013 and March 23, 2012, we had no marketable securities. For the year ended March 25, 2011, the unrealized gains and losses from the available-for-sale securities were not significant.

        The objectives of our investment policy are to preserve capital, provide sufficient liquidity to satisfy operating and investment purposes, and capture a market rate of return based on our investment policy parameters and market conditions. Our investment policy limits investments to certain types of debt and money market instruments issued by institutions with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer.

Cash equivalents

        We consider cash equivalents to be only those investments that are highly liquid, readily convertible into cash and which mature within three months from the date of purchase.

Accounts receivable

        Accounts receivable consist of trade receivables, VAT receivable and other receivables. We extend credit to our customers, who are primarily in the movie production and exhibition businesses. We provide for the estimated accounts receivable that will not be collected. These estimates are based on an analysis of historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in the customers' payment terms and their economic condition. Collection of accounts receivable may be affected by changes in economic or other industry conditions and may, accordingly, impact our overall credit risk. The allowance for doubtful accounts and customer credits totaled $2.6 million and $4.2 million as of March 31, 2013 and March 23, 2012, respectively.

Inventories and deferred costs-eyewear

        Inventories and deferred costs-eyewear represent eyewear and are substantially all finished goods. Inventories and deferred costs-eyewear are valued at the lower of cost (first-in, first-out method) or market value. At each balance sheet date, we evaluate ending inventories and deferred costs-eyewear for net realizable value. We also evaluate inventories for excess quantities and obsolescence. These evaluations include analyses of expected future average selling prices, projections of future demand and technology changes. In order to state inventories at lower of cost or market, we maintain reserves against such inventories. If our analyses indicate that market is lower than cost, a write-down of inventories is recorded in cost of revenue in the period the loss is identified. As of March 31, 2013 and March 23, 2012, the inventory reserve as a result of our net realizable value analyses was $0.4 million and $0.6 million, respectively.

        Domestically, we provide our RealD eyewear free of charge to motion picture exhibitors and then receive a fee from the motion picture studios for the usage of that RealD eyewear by the motion picture exhibitors' consumers.

        For RealD eyewear located at a motion picture exhibitor, we believe that it is not operationally practical to perform physical counts or request the motion picture exhibitor to perform physical counts and confirm quantities held to ensure that losses due to damage, destruction, and shrinkage are specifically recognized in the period incurred due to the number of domestic RealD-enabled screens and the related usage of RealD eyewear. We believe that the cost to monitor shrinkage or usage significantly outweighs the financial reporting benefits of using a specific identification methodology of expensing. We believe that utilizing a composite method of expensing RealD eyewear inventory costs provides a rational and reasonable approach to ensuring that shrinkage is provided for in the period incurred and that inventory costs are expensed in the periods that reasonably reflect the periods in which the related revenue is recognized. In doing so, we believe the following methodology reasonably and generally reflects periodic income or loss under these facts and circumstances:

• •

  For an estimated period of time following shipment to domestic motion picture exhibitors, no expense is recognized between the time of shipment and until the delivery is made as the inventory unit is in transit and unused.

  •

  The inventory unit cost is expensed on a straight-line basis over an estimated usage period beginning when we believe usage of the inventory unit has started. In estimating the expensing start date and related expense period, we consider various factors including, but not limited to, those relating to a 3D motion picture's opening release date, a 3D motion picture's expected release period, the number of currently playing 3D motion pictures, the motion picture exhibitor's buying and stocking patterns and practices and the quantities shipped per inventory unit.

        We believe that the expensing methodology described above rationally and reasonably approximates the period the related usage occurs resulting in our RealD eyewear product revenue. The expensing start date following the date of shipment is meant to approximate the date at which usage begins. Additionally, as the expense recognition period has been and is expected to continue to be short, we believe it adequately recognizes inventory impairments due to loss and damage on a timely basis. We further believe that exposures due to loss or damage, if any, are considered normal shrinkage and a necessary and expected cost to generate the revenue per 3D motion picture earned through RealD eyewear usage. We continue to monitor the reasonableness of this methodology to ensure that it approximates the period over which the related RealD eyewear product revenue is earned and realizable. RealD eyewear inventory costs that have not yet been expensed are reported as deferred costs-eyewear.

Property and equipment, RealD Cinema Systems and digital projectors

        Property and equipment, RealD Cinema Systems and digital projectors are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. The major categories and related estimated useful lives are as follows:

RealD Cinema Systems	5 - 8 years
Digital projectors—held for sale	10 years
Leasehold improvements	Shorter of useful life or lease
Machinery and equipment	2 - 7 years
Furniture and fixtures	3 - 5 years
Computer equipment and software	3 - 5 years

        Digital projectors—held for sale (digital projectors) also include digital servers, lenses and accessories. Upon installation at the customer location, we retain title to the RealD Cinema Systems which are held and used by our customers. The digital projectors are held for sale at either a specified date or upon occurrence of certain contingent events. Depreciation for RealD Cinema Systems and digital projectors is included in cost of revenue.

        We receive virtual print fees (VPFs) from third-party motion picture studios. VPFs represent amounts from third-party motion picture studios that are paid to us when a motion picture is played on one of our digital projectors. VPFs are deferred and deducted from the selling price of the digital projector. VPFs are recorded as a liability on the accompanying consolidated balance sheets and totaled $0.3 million both as of March 31, 2013 and March 23, 2012.

        Major enhancements and improvements are capitalized. Maintenance and repairs for cinema systems and digital projectors are charged to expense as incurred. Maintenance and repairs expense totaled $0.9 million, $0.7 million and $0.8 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

Intangibles

        Intangibles are deemed to have finite lives and consist of acquired developed technologies (which are primarily patents) and are amortized over their estimated useful lives of 5 to 19 years (with a weighted average amortization period of 9.1 years) using the straight-line method.

Impairment of long-lived assets

        We review long-lived assets, such as property and equipment, cinema systems, digital projectors and intangibles, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Factors or circumstances that could indicate the occurrence of such events include current period operating or cash flow losses combined with a history of operating or cash flow losses, a projection or forecast that demonstrates continuing operating or cash flow losses, or incurring costs in excess of amounts originally expected to acquire or construct an asset. If the asset is not recoverable, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value.

        During the year ended March 31, 2013, we determined that a non-cancelable purchase commitment for certain cinema systems configurations in the aggregate amount of $3.5 million were not fully recoverable, primarily due to the initial investment costs which are expected to exceed the anticipated future cash flows for the related cinema systems.

        During the year ended March 23, 2012, we determined that certain of our cinema systems were not recoverable and that the carrying value of the assets exceeded fair value, primarily due to the number of certain of our cinema system assets on hand, including related outstanding purchase commitments and the continuing shift in the mix in the deployment of cinema systems based on the type of digital projectors installed and theater configuration. The fair value was primarily determined by evaluating the discounted future cash flows expected to be generated from the cinema systems. The impairment charged during the year ended March 23, 2012 to cost of revenue for certain of the cinema systems totaled $6.8 million.

        For the years ended March 31, 2013, March 23, 2012 and March 25, 2011, impairment charges for all impaired RealD Cinema Systems charged to cost of revenue totaled $8.0 million, $10.3 million and $1.1 million, respectively. For the year ended March 31, 2013, impairment charge for eyewear tooling charged to cost of revenue totaled $0.5 million. For the year ended March 31, 2013, impairment charge for digital projectors charged to cost of revenue totaled $0.2 million in a noncontrolling interest.

Goodwill

        Goodwill is deemed to have an indefinite useful life and therefore is not amortized. We evaluate our goodwill for impairment using a two-step process that is performed at least annually during our fourth fiscal quarter, or whenever events or circumstances indicate that goodwill may be impaired. The first step is a comparison of the fair value of an internal reporting unit with its carrying amount, including goodwill. A reporting unit is an operating segment or one level below an operating segment. If the fair value of the reporting unit exceeds its carrying value, goodwill of the reporting unit is not considered impaired and the second step is unnecessary. If the carrying value of the reporting unit exceeds its fair value, the second step is performed to measure the amount of impairment by comparing the carrying amount of the goodwill to a determination of the implied value of the goodwill. If the carrying amount of goodwill is greater than the implied value, an impairment loss is recognized for the difference. We currently have one reporting unit in which goodwill resides and the reporting unit did not fail step one.

Revenue recognition and revenue reductions

        We derive substantially all of our revenue from the license of our RealD Cinema Systems and the product sale of our RealD eyewear. We evaluate revenue recognition for transactions using the criteria set forth by the SEC in Staff Accounting Bulletin No. 104, Revenue Recognition (SAB 104) and Accounting Standards Codification Topic 605, Revenue Recognition (ASC 605). The revenue recognition guidance states that revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the seller's price to the buyer is fixed or determinable and collectability is reasonably assured.

License revenue

        License revenue is accounted for as an operating lease. License revenue is primarily derived under per-admission, periodic fixed fee, or per-motion picture basis with motion picture exhibitors. Amounts received up front, less estimated allowances, are deferred and recognized over the lease term using the straight-line method. Additional lease payments that are contingent upon future events outside our control, including those related to admission and usage, are recognized as revenues when the contingency is resolved and we have no more obligations to our customers specific to the contingent payment received. Certain of our license revenue from leasing our RealD Cinema Systems is earned upon admission by the motion picture exhibitor's consumers. Our licensees, however, do not report and pay for such license revenue until after the admission has occurred, which may be received subsequent to our fiscal period end. We estimate and record licensing revenue related to motion picture exhibitor consumer admissions in the quarter in which the admission occurs, but only when reasonable estimates of such amounts can be made. We determine that there is persuasive evidence of an arrangement upon the execution of a license agreement or upon the receipt of a licensee's admissions report. Revenue is deemed fixed or determinable upon receipt of a licensee's admissions report. We determine collectability based on an evaluation of the licensee's recent payment history.

Product revenue

        We recognize product revenue, net of allowances, when title and risk of loss have passed and when there is persuasive evidence of an arrangement, the payment is fixed or determinable, and collectability of payment is reasonably assured. In the United States and Canada, certain of our product revenue from the sale of our RealD eyewear is earned upon admission and usage by the motion picture exhibitor's consumers. Our customers, however, do not report admission or usage information until after the admission and usage has occurred, and such information may be received subsequent to our fiscal period end. We estimate and record such product revenue in the period in which the admission and usage occurs, but only when reasonable estimates of such amounts can be made.

Revenue reductions

        We record revenue net of motion picture exhibitor stock options and estimated revenue allowances. In connection with certain exhibitor licensing agreements, we issued to the motion picture exhibitors a 10-year option to purchase 3,668,340 shares of our common stock at $0.00667 per share. The stock options vest upon the achievement of screen installation targets. Motion picture exhibitor stock options are valued at the underlying stock price at each reporting period until the targets are met. Amounts recognized are based on the number of RealD-enabled screens as a percentage of total screen installation targets. The stock options do not have net cash settlement features. Amounts recorded as a revenue reduction related to motion picture exhibitor stock options totaled $36.4 million for the year ended March 25, 2011. As of March 25, 2011 all 3,668,340 motion picture exhibitor stock options had vested and all associated reduction of revenue has been recognized.

Cost of revenue

        Cost of revenue principally consists of depreciation expense of our RealD Cinema Systems deployed at a motion picture exhibitor's premises, digital projector depreciation expenses, RealD eyewear costs (including shipping, handling and recycling costs), field service and support costs and occupancy costs.

Shipping and handling costs

        Amounts billed to customers for shipping and handling costs are included in revenue. Shipping and handling costs that we incur consist primarily of packaging and transportation charges and are recorded in cost of revenue. Shipping and handling costs recognized in cost of revenue were $7.9 million, $6.8 million, and $10.2 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

Research and development costs

        Research and development costs are expensed as incurred and are primarily comprised of personnel costs related to our research and development staff, depreciation and amortization of research and development assets, prototype and materials costs, the cost of third-party service providers supporting our research and development efforts and occupancy costs.

Selling and marketing costs

        Selling and marketing costs are primarily comprised of personnel costs related to our selling and marketing staff, advertising costs, including promotional events and other brand building and product marketing expenses, corporate communications, certain professional fees, occupancy costs and travel expenses.

        Advertising costs are expensed as incurred. Advertising expenses were approximately $3.7 million, $5.3 million and $4.3 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

General and administrative costs

        General and administrative costs principally consist of personnel costs related to our executive, legal, finance, and human resources staff, professional fees including legal and accounting costs, occupancy costs and public company costs. Additionally, general and administrative costs include sales, use, goods and services tax, and property taxes. For our U.S. cinema license and product revenue, we absorb the majority of sales and use taxes and do not pass such costs on to our customers.

Share-based compensation

        We account for share-based awards granted to employees and directors by recording compensation expense based on estimated fair values. We estimate the fair value of share-based payment awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our consolidated statements of operations. Share-based awards are attributed to expense using the straight-line method over the vesting period. We determine the value of each option award that contains a market condition using a lattice-based option valuation model, while all other option awards are valued using the Black-Scholes valuation model as permitted under ASC 718, Compensation—Stock Compensation. The assumptions used in calculating the fair value of share-based payment awards represent our best estimates. Our estimates of the fair values of share-based awards granted and the resulting amounts of share-based compensation recognized may be impacted by certain variables including stock price volatility, employee stock option exercise behaviors, additional stock option grants, modifications, estimates of forfeitures, and the related income tax impact. If any of the assumptions used in our valuation models significantly change, share-based compensation for future awards may differ materially from the awards granted previously. See Note 9, Share-based compensation.

Foreign currency

        Local currency transactions of our foreign operations that have the U.S. dollar as their functional currency are remeasured into U.S. dollars using current rates of exchange for monetary assets and liabilities and historical rates of exchange for nonmonetary assets and liabilities. Gains and losses from remeasurement of monetary assets and liabilities are included in other income (loss) in our statements of operations.

        The assets and liabilities of our foreign operations for which the functional currency is not the U.S. dollar are translated into U.S. dollars at exchange rates as of the balance sheet date, revenues and expenses are translated at average exchange rates for the period, and equity balances are translated at the historical rate. Resulting translation adjustments are included in other comprehensive loss, a component of equity (deficit).

        Net losses arising from exchange rate fluctuations on transactions denominated in a currency other than the functional currency and the net realized and unrealized gains and losses related to forward contracts totaled $0.9 million, $0.5 million, and $0.6 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively, and are included in other income (loss).

Income taxes

        Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities at year-end and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not to be realized.

        Accruals for uncertain tax positions are provided for in accordance with the authoritative guidance for accounting for uncertainty in income taxes (ASC 740). We may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The authoritative guidance for accounting for uncertainty in income taxes also provides guidance on derecognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and income tax disclosures. Our policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense.

Employee benefit plans

        We have a voluntary 401(k) savings plans in which most U.S. employees are eligible to participate. Eligible employees may make contributions not to exceed the maximum statutory contribution amounts. We may match a percentage of each employee's contributions consistent with the provisions of the plan for which they are eligible. All employee and employer contributions fully vest immediately. Our contributions to these plans totaled $0.6 million, $0.5 million and $0.3 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

Reclassifications

        Certain amounts presented in prior years have been reclassified to conform to the current year's presentation.

Recent accounting pronouncements

        In February 2013, the FASB issued Accounting Standards Update ("ASU") No. 2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,". ASU 2013-02 finalizes the requirements of ASU 2011-05 that ASU 2011-12 deferred, clarifying how to report the effect of significant reclassifications out of accumulated other comprehensive income. ASU 2013-02 is to be applied prospectively. We do not expect the adoption of ASU 2013-02 to have a material impact on our consolidated financial statements.

        In March 2013, the FASB issued ASU 2013-05, "Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity,". The objective of ASU 2013-05 is to resolve the diversity in practice regarding the release into net income of the cumulative translation adjustment upon derecognition of a subsidiary or group of assets within a foreign entity. We do not expect the adoption of ASU 2013-05 to have a material impact on our consolidated financial statements.

XML

Accrued expenses and other liabilities (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Mar. 23, 2012
Accrued expenses and other liabilities
Payroll and compensation	$ 4,530	$ 7,544
Sales, use taxes and other taxes	6,960	7,100
Professional fees	1,005	1,676
Refundable deposits	1,227	930
Marketing	545	2,516
RealD Cinema system installation fees	3,303	4,767
Purchase obligations	3,450
Other	3,993	4,337
Total	$ 25,013	$ 28,870

XML

Mandatorily redeemable convertible preferred stock and equity (deficit) (Tables)

12 Months Ended

Mar. 31, 2013

Mandatorily redeemable convertible preferred stock and equity (deficit)

Schedule of reserve of common stock for future issuances

At March 31, 2013, we reserved the following shares of common stock for future issuances in connection with (in thousands):

Restricted stock units	289
Performance stock options	589
Stock option plan:
Outstanding	9,082
Reserved for future issuance	2,939
Total	12,899

XML

Quarterly financial data (unaudited) (Tables)

12 Months Ended

Mar. 31, 2013

Quarterly financial data (unaudited)

Schedule of quarterly financial data

	Three months ended
(dollars in thousands, except per share data)	March 31, 2013			December 31, 2012			September 21, 2012			June 22, 2012
Net revenue	$	45,449		$	46,939		$	54,986		$	68,178
Gross profit		20,274			20,919			17,654			31,345
Net income		(4,444	)		(4,159	)		(4,231	)		2,947
Net income attributable to RealD Inc. common stockholders	$	(4,336	)	$	(4,160	)	$	(4,173	)	$	2,979
Earnings per common share:
Basic	$	(0.09	)	$	(0.08	)	$	(0.08	)	$	0.05
Diluted	$	(0.09	)	$	(0.08	)	$	(0.08	)	$	0.05

	Three months ended
(dollars in thousands, except per share data)	March 23, 2012		December 23, 2011		September 23, 2011		June 24, 2011
Net revenue	$	50,047	$	49,026	$	87,995	$	59,560
Gross profit		26,895		23,954		42,522		35,319
Net income (loss)		5,683		2,763		19,177		9,402
Net income (loss) attributable to RealD Inc. common stockholders	$	5,536	$	2,833	$	18,905	$	9,595	(1)
Earnings (loss) per common share:
Basic	$	0.10	$	0.05	$	0.35	$	0.18
Diluted	$	0.10	$	0.05	$	0.33	$	0.17

(1)

Includes undistributed earnings attributable to preferred stockholders of $2.0 million.

XML

Summary of significant accounting policies (Details 4)	12 Months Ended
	Mar. 31, 2013
Minimum
Intangibles
Estimated useful lives	5 years
Maximum
Intangibles
Estimated useful lives	19 years
Weighted average
Intangibles
Estimated useful lives	9 years 1 month 6 days

XML

SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Mar. 31, 2013	Mar. 23, 2012	Mar. 25, 2011
Allowance for doubtful accounts and customer credits
Valuation allowances
Balance at beginning of period	$ 4,224	$ 6,803	$ 1,201
Additions charged to cost and expenses			5,432
Other Adjustments/Deductions	(1,575)	(2,579)	170
Balance at end of period	2,649	4,224	6,803
Deferred tax valuation allowance
Valuation allowances
Balance at beginning of period	33,994	43,181	38,195
Additions charged to cost and expenses	5,090		4,986
Other Adjustments/Deductions		(9,187)
Balance at end of period	$ 39,084	$ 33,994	$ 43,181

XML

Income taxes (Details 3) (USD $)	12 Months Ended
	Mar. 31, 2013	Mar. 23, 2012
Operating loss carryforwards
Unrealized excess tax benefits associated with share-based compensation and exhibitor options	$ 22,700,000
Reduction of deferred tax assets and valuation allowance upon adoption of accounting for uncertain tax positions	5,090,000	(9,187,000)
Activity related to our unrecognized tax benefits
Balance at the beginning of the year	346,000
Balance at the end of the year	346,000	346,000
Unrecognized tax benefits that will decrease the effective tax rate if recognized	300,000
Unremitted earnings of the subsidiary outside of the United States	14,800,000
Federal
Operating loss carryforwards
Net operating loss carryforwards	129,600,000
State
Operating loss carryforwards
Net operating loss carryforwards	66,200,000
Foreign
Operating loss carryforwards
Foreign tax credit carryforwards	$ 11,600,000

XML

Mandatorily redeemable convertible preferred stock and equity (deficit) (Details 2) (USD $)	0 Months Ended		1 Months Ended		12 Months Ended				0 Months Ended		1 Months Ended		12 Months Ended		0 Months Ended	1 Months Ended	0 Months Ended		1 Months Ended	0 Months Ended	1 Months Ended	12 Months Ended
	Jul. 21, 2010	Mar. 31, 2006	Jul. 31, 2010	Apr. 30, 2007	Mar. 31, 2013	Mar. 25, 2011	Mar. 26, 2010	Mar. 23, 2012	Dec. 17, 2012 Common stock	Apr. 20, 2012 Common stock	Jul. 31, 2010 Common stock	Nov. 30, 2008 Common stock	Mar. 31, 2013 Common stock	Mar. 31, 2008 Restricted shares	Jul. 21, 2010 Series A, B and D preferred stock	Jul. 31, 2010 Series A, B and D preferred stock	Mar. 31, 2006 Series A preferred stock	Mar. 31, 2006 Series B preferred stock	Dec. 31, 2007 Series D preferred stock	Jul. 21, 2010 Series C mandatorily redeemable convertible preferred stock	Feb. 28, 2007 Series C mandatorily redeemable convertible preferred stock item	Mar. 25, 2011 Series C mandatorily redeemable convertible preferred stock	Mar. 26, 2010 Series C mandatorily redeemable convertible preferred stock
Mandatorily redeemable convertible preferred stock and equity (deficit)
Share issued (in shares)	6,000,000										6,000,000	199,999					2,000,000	2,417,644	1,666,667		5,139,500
Proceed from issuance of convertible preferred stock																	$ 2,000,000	$ 3,000,000	$ 20,000,000		$ 35,000,000
Issue price (in dollars per share)	$ 16.00										$ 16.00	$ 10.00					$ 1.00	$ 1.24	$ 12.00		$ 6.81
Convertible preferred stock conversion ratio															1.5	1.5	1.50	1.50	1.50	1.50	1.50
Liquidation payments (in dollars per share)																	$ 1.00	$ 1.24
Liquidation payments multiplier																			1.5
Convertible preferred stock shares converted															6,084,311	6,084,311				5,139,500
Number of shares of common stock issued on conversion of convertible preferred stock															9,126,466	9,126,466				7,709,250
Offering costs, consisting primarily of legal and placement fees, incurred			7,400,000																		3,200,000
Redemption price (in dollars per share)																					$ 17.025
Number of installments to pay redemption price																					2
Interest rate on amount not paid on the first installment (as a percent)																					6.00%
Liquidation payments (in dollars per share)																					$ 17.025
Accretion						(4,934,000)																4,900,000	12,400,000
Motion picture exhibitor stock options
Tenure of options issued to motion picture exhibitors					10 years
Number of shares of common stock to be purchased under motion picture exhibitor options (in shares)					3,668,340
Price of option to purchase shares of common stock (in dollars per share)					$ 0.00667
Revenue reduction from motion picture exhibitor stock options						36,447,000	39,200,000
Number of motion picture options vested						3,668,340
Stock repurchase program
Value of common stock authorized to be repurchased									75,000,000	50,000,000
Increase in the value of common stock authorized to be repurchased									25,000,000
Number of shares of common stock repurchased													5,927,729	307,500
Average price per share of common stock (in dollars per share)													$ 10.20
Value of common stock repurchased					60,445,000								60,445,000
Warrants
Number of shares of common stock to be purchased by warrants issued (in shares)		1,335,000				326,700
Warrants issued in exchange of cash received		$ 24,000
Number of common stock to be purchased on exercise of warrants (in shares)				360,000
Number of shares of common stock to be purchased by warrants and options for cash received and as additional consideration (in shares)		1,900,500
Weighted-average exercise price (in dollars per share)						$ 0.83
Warrants outstanding (in shares)					0			0

XML

Consolidated balance sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Mar. 31, 2013	Mar. 23, 2012
Consolidated balance sheets
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000	200,000
Common stock, shares issued	49,365	54,561
Common stock, shares outstanding	49,365	54,561

XML

Commitments and contingencies

12 Months Ended

Mar. 31, 2013

Commitments and contingencies

Commitments and contingencies

7. Commitments and contingencies

Lease obligations

        We lease certain office, production and research and development space under noncancelable operating leases that expire at various dates. Certain operating leases provide us with the option to renew for additional periods. Where operating leases contain escalation clauses, rent abatements, and/or concessions, such as rent holidays and landlord or tenant incentives or allowances, we apply them in the determination of straight-line rent expense over the lease term. Certain operating leases require the payment of real estate taxes or other occupancy costs, which may be subject to escalation.

        At March 31, 2013, our future minimum lease obligations were as follows (in thousands):

Fiscal year 2014	$	4,152
Fiscal year 2015		4,080
Fiscal year 2016		4,162
Fiscal year 2017		3,944
Fiscal year 2018		3,969
Thereafter		18,028
Total	$	38,335

        Rent expense was $5.2 million, $4.3 million and $2.6 million for the fiscal years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

Indemnities and commitments

        During the ordinary course of business, we make certain indemnities and commitments under which we may be required to make payments in relation to certain transactions. These indemnities include indemnities of certain customers and licensees of our technologies, and indemnities to our directors and officers to the maximum extent permitted under the laws of the State of California. The duration of these indemnities and commitments varies, and in certain cases, is indefinite. The majority of these indemnities and commitments do not provide for any limitation of the maximum potential future payments we could be obligated to make. We have not recorded any liability for these indemnities and commitments in the accompanying consolidated balance sheets. We do, however, accrue for losses for any known contingent liability, including those that may arise from indemnification provisions, when future payment is probable and estimable.

        We have entered into contracts with certain of our vendors. Future obligations under such contracts totaled $10.5 million at March 31, 2013 and include revolving 90-day supply commitments. Many of the contracts contain cancellation penalty provisions requiring payment of up to 20.0% of the unused contract.

Contingencies and assessments

        We are subject to various loss contingencies and assessments arising in the course of our business, some of which relate to litigation, claims, property taxes and sales and use tax or goods and services tax assessments. We consider the likelihood of the loss or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies and assessments. An estimated loss contingency or assessment is accrued when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted. Based on the information presently available, including discussion with counsel and other consultants, management believes that resolution of these matters will not have a material adverse effect on our business, consolidated results of operations, financial condition or cash flows.

XML

Consolidated statements of comprehensive income (loss) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Mar. 31, 2013	Mar. 23, 2012	Mar. 25, 2011
Consolidated statements of comprehensive income (loss)
Net income (loss)	$ (9,887)	$ 37,025	$ (6,825)
Other comprehensive income (loss), net of tax:
Foreign currency translation gains	115
Other comprehensive income , net of tax	115
Comprehensive income (loss)	$ (9,772)	$ 37,025	$ (6,825)

XML

Consolidated balance sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Mar. 23, 2012
Current assets:
Cash and cash equivalents	$ 31,020	$ 24,894
Accounts receivable, net	45,472	59,212
Inventories	15,430	40,577
Deferred costs - eyewear	538	932
Prepaid expenses and other current assets	3,973	2,630
Total current assets	96,433	128,245
Property and equipment, net	25,002	12,713
Cinema systems, net	125,379	141,024
Digital projectors, net-held for sale	728	1,078
Goodwill	10,657	10,657
Other intangibles, net	7,417	1,746
Deferred income taxes	3,001	3,049
Other assets	5,031	3,663
Total assets	273,648	302,175
Current liabilities:
Accounts payable	22,737	22,617
Accrued expenses and other liabilities	25,013	28,870
Deferred revenue	9,916	7,201
Income taxes payable	603	1,121
Deferred income taxes	2,860	3,149
Current portion of long-term debt	1,042
Total current liabilities	62,171	62,958
Credit facility agreement	46,458	25,000
Deferred revenue, net of current portion	10,392	13,920
Other long-term liabilities, customer deposits and virtual print fee liability	5,438	2,691
Commitments and contingencies
Equity (deficit)
Common stock, $0.0001 par value, 200,000 shares authorized; 49,365 and 54,561 shares issued and outstanding at March 31, 2013 and March 23, 2012, respectively	332,694	309,894
Accumulated deficit	(182,846)	(112,711)
Accumulated other comprehensive income	115
Total RealD Inc. stockholders' equity	149,963	197,183
Noncontrolling interest	(774)	423
Total equity	149,189	197,606
Total liabilities and equity	$ 273,648	$ 302,175

XML

Related-party transactions (Details) (USD $)	12 Months Ended									0 Months Ended	12 Months Ended		12 Months Ended		0 Months Ended		12 Months Ended	0 Months Ended	1 Months Ended
	Mar. 25, 2011	Mar. 31, 2013 Previous noncontrolling interest owner of ColorLink Japan	Mar. 23, 2012 Previous noncontrolling interest owner of ColorLink Japan	Mar. 31, 2013 ColorLink Japan and previous noncontrolling interest owner of ColorLink Japan	Mar. 23, 2012 ColorLink Japan and previous noncontrolling interest owner of ColorLink Japan	Mar. 25, 2011 ColorLink Japan and previous noncontrolling interest owner of ColorLink Japan	Mar. 31, 2013 Principal of the previous noncontrolling interest owner of ColorLink Japan Maximum	Mar. 25, 2011 Noncontrolling interest of Subsidiaries	Mar. 25, 2011 Holder of Series C mandatorily redeemable convertible preferred stock	May 19, 2011 Joshua Greer item	Mar. 31, 2013 Joshua Greer	Jul. 16, 2011 Joshua Greer	Mar. 31, 2013 Joshua Greer Time-based vesting stock option	May 19, 2011 Joshua Greer Time-based vesting stock option	May 19, 2011 Joshua Greer Second stock option	May 29, 2012 DCH item	Mar. 31, 2013 DCH	May 29, 2012 DCH Maximum	Nov. 30, 2007 ColorLink Japan
Related-party transactions
Interest sold (as a percent)																			51.00%
Management fees paid									$ 200,000
Royalty earned (as a percent)				8.00%
Royalty earned				1,200,000	2,400,000	5,900,000
Amount outstanding		400,000		0	300,000	200,000
Purchased from related parties	370,000	6,800,000	7,000,000					800,000
Amount due to related parties		600,000	900,000
Amount purchased from us		2,300,000
Percentage of common stock held by related party							5.00%
Amount paid upfront	471,000							500,000
Amount of purchase financed as long-term debt								300,000
Cash severance amount										450,000
Number of equal installments of cash severance to be paid										10
Maximum period of reimbursement by the entity for insurance coverage under COBRA under the terms of the separation agreement										18 months
Pro-rated cash performance bonus as a percentage of salary to be paid pursuant to the terms of the separation agreement										30.00%
Percentage of annual salary used for determining pro-rated cash performance bonus										80.00%
Number of shares which had vesting periods accelerated under the terms of the separation agreement														105,000
Number of shares forfeited pursuant to the terms of the separation agreement															105,000
Term of exercising options following the end of the term of the consulting agreement													6 months
Amount to be paid annually as per the consulting agreement												275,000
Amount paid pursuant to the separation agreement											225,000
Amount paid pursuant to the consulting agreement											148,958
Number of applications for which consulting services provided																1
Tenure of agreement																4 months
Fixed monthly compensation payable per agreement																20,000
Additional extension to the tenure of agreement																		2 months
Notice period for additional extension to the tenure of agreement																10 days
Compensation paid																	$ 80,239

XML

Share-based compensation (Tables)

12 Months Ended

Mar. 31, 2013

Share-based compensation

Schedule of components of stock-based compensation expense recognized in our consolidated statements of operations

	Year ended
(in thousands)	March 31, 2013		March 23, 2012		March 25, 2011
Cost of revenue	$	807	$	458	$	160
Research and development		2,185		2,604		1,470
Selling and marketing		5,258		4,776		2,937
General and administrative		10,224		7,906		4,383
Total	$	18,474	$	15,744	$	8,950

Share-based compensation

Summary of restricted stock units

(in thousands, except grant date fair value data)	Units			Weighted- average grant date fair value
Nonvested at March 23, 2012		153		$	21.81
Granted		178			10.55
Vested		(133	)		16.76
Forfeited		(17	)		17.49
Nonvested at March 31, 2013		181		$	14.83

Stock options

Share-based compensation

Summary of stock option activity

(in thousands, except exercise price data and contractual term data)	Options			Weighted- average exercise price		Weighted- average remaining contractual term (years)		Aggregate intrinsic value
Outstanding at March 23, 2012		7,661		$	12.54
Granted		2,155			11.21
Exercised		(544	)		6.47
Forfeited or expired		(190	)		14.61
Outstanding at March 31, 2013		9,082		$	12.59		7.1	$	26,849
Exercisable at March 31, 2013		5,135		$	10.96		5.7	$	22,481
Vested or expected to vest		8,887		$	12.52		6.9	$	26,595

Schedule of weighted-average assumptions to determine weighted-average grant date fair values

	Year ended
	March 31, 2013			March 23, 2012			March 25, 2011
Fair value of stock options granted	$	6.20		$	11.39		$	8.92
Expected volatility		60	%		58	%		57	%
Expected term (years)		6			6			6
Risk-free rate		1.0	%		2.0	%		2.0	%
Expected dividends		—			—			—

Performance stock option

Share-based compensation

Summary of stock option activity

(in thousands, except exercise price data and contractual term data)	Options		Weighted- average exercise price		Weighted- average remaining contractual term (years)
Outstanding at March 23, 2012		589	$	16.00
Granted		—		—
Exercised		—		—
Forfeited or expired		—		—
Outstanding at March 31, 2013		589	$	16.00		7.3

XML

Summary of significant accounting policies (Tables)

12 Months Ended

Mar. 31, 2013

Summary of significant accounting policies

Schedule of calculation of the basic and diluted earnings (loss) per share of common stock

	Year ended
(in thousands, except per share data)	March 31, 2013			March 23, 2012			March 25, 2011
Numerator:
Net income (loss)	$	(9,887	)	$	37,025		$	(6,825	)
Net (income) loss attributable to noncontrolling interest		197			(156	)		(530	)
Accretion of preferred stock		—			—			(4,934	)
Net income (loss) attributable to RealD Inc. common stockholders	$	(9,690	)	$	36,869		$	(12,289	)
Denominator:
Weighted-average common shares outstanding (basic)		52,345			54,352			41,933
Effect of dilutive securities		—			2,500			—
Weighted-average common shares outstanding (diluted)		52,345			56,852			41,933
Earnings (loss) per common share:
Basic	$	(0.19	)	$	0.68		$	(0.29	)
Diluted	$	(0.19	)	$	0.65		$	(0.29	)

Schedule of weighted-average number of anti-dilutive shares excluded from the calculation of diluted earnings (loss) per common share

	Year ended
(in thousands)	March 31, 2013		March 23, 2012		March 25, 2011
Options and warrants to purchase common stock		8,441		3,899		9,782
Conversion of convertible preferred stock		—		—		5,180
Total		8,441		3,899		14,962

Schedule of major categories and related estimated useful lives

RealD Cinema Systems	5 - 8 years
Digital projectors—held for sale	10 years
Leasehold improvements	Shorter of useful life or lease
Machinery and equipment	2 - 7 years
Furniture and fixtures	3 - 5 years
Computer equipment and software	3 - 5 years

XML

Mandatorily redeemable convertible preferred stock and equity (deficit) (Details) (USD $)	0 Months Ended	1 Months Ended		12 Months Ended
	Jul. 21, 2010	Jul. 31, 2010	Nov. 30, 2008	Mar. 25, 2011	Mar. 31, 2013
Mandatorily redeemable convertible preferred stock and equity (deficit)
Shares issued	6,000,000
Issue price (in dollars per share)	$ 16.00
Gross proceeds raised from IPO	$ 96,000,000	$ 96,000,000
Net proceeds	81,900,000	81,900,000		81,940,000
Underwriting discounts and commissions	6,700,000	6,700,000
Other offering costs	7,400,000	7,400,000
Total proceeds received net of issuance cost			$ 2,000,000
Shares of common stock reserved for future issuances
Common stock for future issuance (in shares)					12,899,000
Restricted stock units
Shares of common stock reserved for future issuances
Common stock for future issuance (in shares)					289,000
Performance stock options
Shares of common stock reserved for future issuances
Common stock for future issuance (in shares)					589,000
Stock option plan
Shares of common stock reserved for future issuances
Outstanding (in shares)					9,082,000
Reserved for future issuance (in shares)					2,939,000
Common stock
Mandatorily redeemable convertible preferred stock and equity (deficit)
Shares issued		6,000,000	199,999
Issue price (in dollars per share)		$ 16.00	$ 10.00
Series A, B and D preferred stock
Mandatorily redeemable convertible preferred stock and equity (deficit)
Convertible preferred stock shares converted	6,084,311	6,084,311
Convertible preferred stock conversion ratio	1.5	1.5
Number of shares of common stock issued on conversion of convertible preferred stock	9,126,466	9,126,466

XML

Quarterly financial data (unaudited) (Details) (USD $)	3 Months Ended								12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Sep. 21, 2012	Jun. 22, 2012	Mar. 23, 2012	Dec. 23, 2011	Sep. 23, 2011	Jun. 24, 2011	Mar. 31, 2013	Mar. 23, 2012	Mar. 25, 2011
Quarterly financial data (unaudited)
Net revenue	$ 45,449,000	$ 46,939,000	$ 54,986,000	$ 68,178,000	$ 50,047,000	$ 49,026,000	$ 87,995,000	$ 59,560,000	$ 215,552,000	$ 246,628,000	$ 246,136,000
Gross profit	20,274,000	20,919,000	17,654,000	31,345,000	26,895,000	23,954,000	42,522,000	35,319,000	90,192,000	128,690,000	67,740,000
Net income (loss)	(4,444,000)	(4,159,000)	(4,231,000)	2,947,000	5,683,000	2,763,000	19,177,000	9,402,000	(9,887,000)	37,025,000	(6,825,000)
Net income (loss) attributable to RealD Inc. common stockholders	(4,336,000)	(4,160,000)	(4,173,000)	2,979,000	5,536,000	2,833,000	18,905,000	9,595,000	(9,690,000)	36,869,000	(12,289,000)
Earnings (loss) per common share:
Basic (in dollars per share)	$ (0.09)	$ (0.08)	$ (0.08)	$ 0.05	$ 0.10	$ 0.05	$ 0.35	$ 0.18	$ (0.19)	$ 0.68	$ (0.29)
Diluted (in dollars per share)	$ (0.09)	$ (0.08)	$ (0.08)	$ 0.05	$ 0.10	$ 0.05	$ 0.33	$ 0.17	$ (0.19)	$ 0.65	$ (0.29)
Undistributed earnings attributable to preferred stockholders								$ 2,000,000

XML

Property and equipment, RealD Cinema Systems and digital projectors (Details) (USD $)	12 Months Ended
	Mar. 31, 2013	Mar. 23, 2012	Mar. 25, 2011
Property and equipment, RealD Cinema Systems and digital projectors
Property and equipment, RealD Cinema Systems and digital projectors, gross	$ 228,188,000	$ 203,170,000
Less accumulated depreciation	(77,079,000)	(48,355,000)
Property and equipment, RealD Cinema Systems and digital projectors, net	151,109,000	154,815,000
Depreciation expense	32,700,000	28,100,000	15,600,000
Proceeds from collection of accounts receivable from sale of digital projectors	2,500,000
Cash received from motion picture exhibitor customers for the sale of digital projectors	2,474,000	3,999,000	15,612,000
Accounts receivable from motion picture exhibitor customers from the sale of digital projectors		2,474,000
Gain on sale of digital projectors		1,742,000	6,720,000
Repayment of notes payable to the equipment providers			5,600,000
Cinema systems configurations under non-cancellable purchase agreement
Property and equipment, RealD Cinema Systems and digital projectors
Aggregate amount of non-cancellable purchase agreement for certain cinema systems configurations	3,500,000
Non-recoverable cinema systems
Property and equipment, RealD Cinema Systems and digital projectors
Impairment charges including related purchase commitments		6,800,000
RealD Cinema Systems
Property and equipment, RealD Cinema Systems and digital projectors
Property and equipment, RealD Cinema Systems and digital projectors, gross	194,527,000	184,197,000
Impairment charges including related purchase commitments	8,000,000	10,300,000	1,100,000
Digital projectors - held for sale
Property and equipment, RealD Cinema Systems and digital projectors
Property and equipment, RealD Cinema Systems and digital projectors, gross	1,634,000	1,843,000
Leasehold improvements
Property and equipment, RealD Cinema Systems and digital projectors
Property and equipment, RealD Cinema Systems and digital projectors, gross	14,442,000	4,325,000
Machinery and equipment
Property and equipment, RealD Cinema Systems and digital projectors
Property and equipment, RealD Cinema Systems and digital projectors, gross	6,198,000	6,641,000
Furniture and fixtures
Property and equipment, RealD Cinema Systems and digital projectors
Property and equipment, RealD Cinema Systems and digital projectors, gross	1,122,000	12,000
Computer equipment and software
Property and equipment, RealD Cinema Systems and digital projectors
Property and equipment, RealD Cinema Systems and digital projectors, gross	7,628,000	2,788,000
Construction in process
Property and equipment, RealD Cinema Systems and digital projectors
Property and equipment, RealD Cinema Systems and digital projectors, gross	$ 2,637,000	$ 3,364,000

XML

Summary of significant accounting policies (Details 2) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Mar. 31, 2013	Mar. 23, 2012
Marketable securities
Marketable securities	$ 0	$ 0
Accounts receivable
Allowance for doubtful accounts and customer credits	2.6	4.2
Inventories and deferred costs-eyewear
Inventory reserve	0.4	0.6
Designated as hedging instrument
Derivative instruments
Number of derivative instruments	0
Foreign currency forward contract | Not designated as hedging instrument | Level 2
Derivative instruments
Foreign currency forward contracts, maturity period	6 months
Foreign currency forward contracts, notional amount	$ 5.8	$ 4.3

XML

Summary of significant accounting policies (Details 3) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Mar. 31, 2013	Mar. 23, 2012	Mar. 25, 2011
Property and equipment, RealD Cinema Systems and digital projectors
VPFs recorded as a liability	$ 0.3	$ 0.3
Maintenance and repairs for cinema systems and digital projectors	$ 0.9	$ 0.7	$ 0.8
RealD Cinema Systems | Minimum
Property and equipment, RealD Cinema Systems and digital projectors
Estimated useful lives	5 years
RealD Cinema Systems | Maximum
Property and equipment, RealD Cinema Systems and digital projectors
Estimated useful lives	8 years
Digital projectors - held for sale
Property and equipment, RealD Cinema Systems and digital projectors
Estimated useful lives	10 years
Machinery and equipment | Minimum
Property and equipment, RealD Cinema Systems and digital projectors
Estimated useful lives	2 years
Machinery and equipment | Maximum
Property and equipment, RealD Cinema Systems and digital projectors
Estimated useful lives	7 years
Furniture and fixtures | Minimum
Property and equipment, RealD Cinema Systems and digital projectors
Estimated useful lives	3 years
Furniture and fixtures | Maximum
Property and equipment, RealD Cinema Systems and digital projectors
Estimated useful lives	5 years
Computer equipment and software | Minimum
Property and equipment, RealD Cinema Systems and digital projectors
Estimated useful lives	3 years
Computer equipment and software | Maximum
Property and equipment, RealD Cinema Systems and digital projectors
Estimated useful lives	5 years

XML

Borrowings

12 Months Ended

Mar. 31, 2013

Borrowings

Borrowings

6. Borrowings

Credit Agreement

        On April 19, 2012, we entered into a credit agreement (the "Credit Agreement") with City National Bank, a national banking association ("City National"). Pursuant to the Credit Agreement, the lenders thereunder will make available to us:

• •

  a revolving credit facility (including a letter of credit sub-facility) in a maximum amount not to exceed $75 million (the "Revolving Facility"); and

  •

  a delayed-draw term loan facility in a maximum amount not to exceed $50 million (the "Term Loan Facility").

        The Revolving Facility and the Term Loan Facility replaced existing revolving and term loan facilities provided under our pre-existing credit and security agreement with City National, which had been most recently amended on December 6, 2011.

        Debt issuance costs related to the completion of the Credit Agreement totaled $1.2 million and were recorded as a deferred charge and amortized over the contractual life of the agreement and recorded as interest expense.

        Our obligations under the Credit Agreement are secured by a first priority security interest in substantially all of our tangible and intangible assets and are fully unconditionally guaranteed by our subsidiaries, ColorLink Inc., a Delaware corporation ("ColorLink"), and Stereographics Corporation, a California corporation ("Stereographics"). In connection with our execution of the Credit Agreement, on April 19, 2012, each of ColorLink and Stereographics entered into a general continuing guaranty (the "Guaranty") in favor of City National and the lenders under the Credit Agreement, pursuant to which they irrevocably and unconditionally guaranteed our obligations under the Credit Agreement and all related loan documents. In addition, on April 19, 2012, we, ColorLink and Stereographics entered into a security agreement in favor of City National and the lenders under the Credit Agreement, pursuant to which they granted a security interest in substantially all of their assets to secure their obligations under the Credit Agreement, the Guaranty and the related loan documents.

        The Revolving Facility matures on April 17, 2015, and the Term Loan Facility matures the last day of the twelfth (12th) full fiscal quarter after the earlier of October 18, 2013 or the date that aggregate term loan commitments have been drawn in full, which maturity dates may, in each case, be accelerated in certain circumstances.

        Under the Credit Agreement, our business is subject to certain limitations, including limitations on our ability to incur additional debt, make certain investments or acquisitions, enter into certain merger and consolidation transactions, and sell our assets other than in the ordinary course of business. We are also required to maintain compliance with certain financial covenants, including a minimum fixed charge coverage ratio and a maximum leverage ratio. As of March 31, 2013, we were in compliance with all financial covenants in our Credit Agreement. If we fail to comply with any of the covenants or if any other event of default, as defined in our Credit Agreement, should occur, the bank lenders could elect to prevent us from borrowing and declare the indebtedness to be immediately due and payable.

        The revolving credit facility provides for, at our option, Eurodollar Rate Loans, which bears interest at the London Interbank Offered Rate ("LIBOR") plus two and one-half percent (2.50%) or Base Rate Loans, which bear interest at the greatest of (a) the Federal Funds Rate plus one-half of one percent (0.50%), (b) the Prime Rate, and (c) the Eurodollar Rate for a one month Interest Period on such day plus one percent (1.00%), plus one and one-half percent (1.50%).

        As of March 31, 2013, there were $47.5 million in borrowings outstanding under the Credit Agreement. As of March 31, 2013, borrowings outstanding under the Credit Agreement bear interest at 3.03%. As of March 23, 2012, there were $25.0 million borrowings outstanding under the Credit Agreement. As of March 23, 2012, borrowings outstanding under the Credit Agreement bear interest at 3.50%. As of March 25, 2011, there were no borrowings outstanding under the Credit Agreement. Interest expense related to our borrowings under our credit and security agreement was $1.1 million, $0.9 million, and $0.6 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

Notes payable

        From time to time, we enter into equipment purchase agreements with certain of our vendors for the purchase of digital projectors, digital servers, lenses and accessories. We pay a portion of the cost of the equipment upon delivery and finance a portion of the purchase price by issuing notes payable. The equipment is included in digital projectors in the accompanying consolidated balance sheets. Certain of these notes payables are non-interest bearing. In those cases, we record the net present value of the notes payable assuming an implied annual interest rate which is approximately 8.4%. The notes are secured by the underlying equipment. There were no notes payable outstanding as of March 31, 2013 and March 23, 2012. Interest expense is based on annual interest rates ranging from 7.0% to 8.4%. There was no interest expense related to our notes payable for the year ended March 31, 2013. Interest expense related to our notes payable was $0.1 million and $0.3 million for the years ended March 23, 2012 and March 25, 2011, respectively.

XML

Income taxes (Tables)

12 Months Ended

Mar. 31, 2013

Income taxes

Schedule of income tax provision from continuing operations

	Year ended
(in thousands)	March 31, 2013			March 23, 2012		March 25, 2011
Current income tax provision:
Federal	$	—		$	—	$	—
State		103			119		87
Foreign		5,202			4,948		4,187
		5,305			5,067		4,274
Deferred income tax benefit:
Federal		—			—		—
State		—			—		—
Foreign		(241	)		38		(2	)
Total income tax provision from continuing operations	$	5,064		$	5,105	$	4,272

Schedule of income (loss) from continuing operations before income taxes

	Year ended
(in thousands)	March 31, 2013			March 23, 2012		March 25, 2011
Domestic		(6,963	)		37,600		(5,749	)
Foreign		2,140			4,530		3,196
Total		(4,823	)		42,130		(2,553	)

Schedule of components of deferred tax balances

(in thousands)	March 31, 2013			March 23, 2012
Deferred tax assets:
Net Operating Loss Carryforwards		26,359			30,010
Deferred Revenue		4,403			4,503
Accruals, Reserves and allowances		6,771			4,163
Stock Compensation		13,220			8,006
Intangible assets		16			825
Foreign Tax credit carryovers		11,571			8,031
Other		1,255			1,918
Total Deferred tax assets		63,595			57,456
Deferred tax liabilities
Fixed assets		(18,757	)		(17,921	)
Partnership Interest		(113	)		(154	)
Unbilled Receivables		(5,385	)		(5,371	)
Other		(115	)		(116	)
Total Deferred tax liabilities		(24,370	)		(23,562	)
Valuation Allowance		(39,084	)		(33,994	)
Net deferred tax assets (liabilities)		141			(100	)

Schedule of increase in valuation allowance through the operating statement

	Year ended
(in thousands)	March 31, 2013		March 23, 2012
Through continuing operation	$	5,090	$	(9,187	)
Increase (decrease) in valuation allowance		5,090		(9,187	)

Schedule of differences between the income tax provision from continuing operations and taxes computed by applying the U.S. statutory federal income tax rate to the pretax income (loss)

	Year ended
	March 31, 2013			March 23, 2012			March 25, 2011
Federal tax at statutory rate		34.0	%		34.0	%		34.0	%
State tax, net of federal benefit		(7.7	)%		1.6	%		(1.2	)%
Foreign tax rate differential		2.9	%		0.5	%		11.3	%
LLC income minority interest not taxed		(1.3	)%		(0.1	)%		7.2	%
Revaluation of deferred taxes due to changes in effective income tax rates		3.8	%		(1.4	)%		(13.7	)%
Research tax credits		0.0	%		0.0	%		25.2	%
Permanent differences and other		3.7	%		(0.7	)%		(35.0	)%
Stock Compensation		(34.9	)%		0.0	%		0.0	%
Change in valuation allowance		(105.5	)%		(21.8	)%		(195.4	)%
Total tax provision (benefit)		(105.0	)%		12.1	%		(167.7	)%

Summary of activity related to unrecognized tax benefits

The following table summarizes the activity related to our unrecognized tax benefits (in thousands):

Balance as of March 23, 2012	$	346
Increases related to prior year tax positions		—
Increase related to current year tax positions		—
Expiration of the statute of limitations for the assessment of taxes		—
Settlements		—
Balance as of March 31, 2013	$	346

XML

Borrowings (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended	12 Months Ended				12 Months Ended
	Apr. 19, 2012	Mar. 31, 2013 Revolving Facility	Mar. 23, 2012 Revolving Facility	Mar. 25, 2011 Revolving Facility	Apr. 19, 2012 Revolving Facility Maximum	Mar. 31, 2013 Revolving Facility LIBOR	Mar. 31, 2013 Revolving Facility Prime Rate	Mar. 31, 2013 Revolving Facility Base Rate - Federal Funds Rate	Mar. 31, 2013 Revolving Facility Base Rate - Eurodollar Rate	Mar. 31, 2013 Revolving Facility Base Rate	Mar. 31, 2013 Notes payable	Mar. 23, 2012 Notes payable	Mar. 25, 2011 Notes payable	Mar. 31, 2013 Notes payable Minimum	Mar. 31, 2013 Notes payable Maximum	Apr. 19, 2012 Term Loan Facility Maximum
Borrowings
Borrowing capacity					$ 75											$ 50
Debt issuance costs	1.2
Variable rate basis						LIBOR	Prime Rate	Federal Funds Rate	Eurodollar Rate for a one month Interest Period	Base Rate Loans
Interest rate added to base rate (as a percent)						2.50%		0.50%	1.00%	1.50%
Borrowings outstanding under Credit Agreement		47.5	25.0	0
Interest rate (as a percent)		3.03%	3.50%
Interest expense		1.1	0.9	0.6							0	0.1	0.3
Implied annual interest rate assumed on non-interest bearing debt (as a percent)											8.40%
Notes payable outstanding											$ 0	$ 0
Annual interest rate (as a percent)														7.00%	8.40%

XML

Share-based compensation

12 Months Ended

Mar. 31, 2013

Share-based compensation

Share-based compensation

9. Share-based compensation

        We account for stock options granted to employees and directors by recording compensation expense based on estimated fair values. We estimate the fair value of share-based payment awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our consolidated statements of operations. Share-based awards are attributed to expense using the straight-line method over the vesting period. We determine the value of each option award that contains a market condition using a lattice-based option valuation model, while all other option awards are valued using the Black-Scholes valuation model as permitted under ASC 718, Compensation—Stock Compensation. The assumptions used in calculating the fair value of share-based payment awards represent our best estimates. Our estimates of the fair values of stock options granted and the resulting amounts of share-based compensation recognized may be impacted by certain variables including stock price volatility, employee stock option exercise behaviors, additional stock option grants, modifications, estimates of forfeitures and the related income tax impact.

        In April 2010, our board of directors unanimously adopted the RealD Inc. 2010 Stock Incentive Plan (the "2010 Stock Plan"), and in June 2010, our stockholders approved the 2010 Stock Plan. The board of directors intends for the 2010 Stock Plan to replace our 2004 Amended and Restated Stock Incentive Plan, (the "2004 Plan"), such that, effective with our IPO, we will no longer make any new grants under the 2004 Plan. Instead, the board of directors or our compensation committee will issue equity compensation awards under the 2010 Stock Plan. The stock plan provides for the granting of nonstatutory stock options, incentive stock options, stock appreciation rights, restricted stock awards and stock units to employees, officers, directors, non-employee directors and consultants. Additionally, in June 2011 our board of directors approved the RealD Inc. 2011 Employee Stock Purchase Plan (the "ESPP Plan") and in July 2011, our stockholders approved the ESPP Plan. Stock-based compensation expense related to the ESPP Plan for the year ended March 31, 2013 was $0.8 million.

        The following table reflects the components of stock-based compensation expense recognized in our consolidated statements of operations for the years ended March 31, 2013, March 23, 2012 and March 25, 2011:

	Year ended
(in thousands)	March 31, 2013		March 23, 2012		March 25, 2011
Cost of revenue	$	807	$	458	$	160
Research and development		2,185		2,604		1,470
Selling and marketing		5,258		4,776		2,937
General and administrative		10,224		7,906		4,383
Total	$	18,474	$	15,744	$	8,950

Stock options

        Stock options granted generally vest over a four-year period, with 25% of the shares vesting after one year and monthly vesting thereafter. The options generally expire ten years from the date of grant. Share-based compensation expense related to stock options was $14.2 million, $12.3 million and $6.9 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

        A summary of our stock option activity is as follows:

(in thousands, except exercise price data and contractual term data)	Options			Weighted- average exercise price		Weighted- average remaining contractual term (years)		Aggregate intrinsic value
Outstanding at March 23, 2012		7,661		$	12.54
Granted		2,155			11.21
Exercised		(544	)		6.47
Forfeited or expired		(190	)		14.61
Outstanding at March 31, 2013		9,082		$	12.59		7.1	$	26,849
Exercisable at March 31, 2013		5,135		$	10.96		5.7	$	22,481
Vested or expected to vest		8,887		$	12.52		6.9	$	26,595

        The total intrinsic value of options exercised was $2.6 million, $3.9 million and $47.0 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

        Awards that are vested or expected to vest take into consideration estimated forfeitures for awards not yet vested.

        The weighted-average grant date fair values were determined using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	Year ended
	March 31, 2013			March 23, 2012			March 25, 2011
Fair value of stock options granted	$	6.20		$	11.39		$	8.92
Expected volatility		60	%		58	%		57	%
Expected term (years)		6			6			6
Risk-free rate		1.0	%		2.0	%		2.0	%
Expected dividends		—			—			—

        For purposes of determining the expected term and in the absence of historical data relating to stock option exercises, we apply a simplified approach: the expected term of awards granted is presumed to be the mid-point between the vesting date and the end of the contractual term. We use the contractual term when valuing awards to consultants. We use the average volatility of similar, publicly traded companies as an estimate for expected volatility. The risk-free interest rate for periods within the expected or contractual life of the option, as applicable, is based on the United States Treasury yield curve in effect during the period the options were granted. Our expected dividend yield is zero.

        As of March 31, 2013, there was $30.2 million of total unrecognized compensation costs related to stock option compensation arrangements granted which is expected to be recognized over the remaining weighted-average period of 2.5 years.

Performance stock options

        Certain of our management-level employees receive performance stock options, which gives the recipient the right to receive common stock that is contingent upon achievement of specified pre-established performance goals over the performance period, which is three years. The performance goals for the performance stock options are based on the measurement of our total shareholder return, on a percentile basis, compared to a comparable group of companies. Depending on the outcome of the performance goals, the recipient may ultimately earn performance stock options equal to or less than the number of performance stock options granted. For the year ended March 25, 2011, we granted 641,250 performance stock options at a weighted average grant date fair value of $9.45 per share. There were no grants of performance stock options for the years ended March 31, 2013 and March 23, 2012. Share-based compensation expense related to performance stock options was $1.9 million and $1.7 million for the years ended March 31, 2013 and March 23, 2012.

        The lattice-based option valuation model uses terms based on the length of the performance period and compound annual growth rate goals for total stockholder return based on the provisions of the award. For purposes of determining the expected term and in the absence of historical data relating to stock option exercises, we apply a simplified approach: the expected term of awards granted is presumed to be the mid-point between the vesting date and the end of the contractual term. We use the average volatility of a peer group of companies as an estimate for expected volatility. The risk-free interest rate for periods within the expected or contractual life of the option, as applicable, is based on the United States Treasury yield curve in effect during the period the options were granted.

        A summary of our performance stock option activity is as follows:

(in thousands, except exercise price data and contractual term data)	Options		Weighted- average exercise price		Weighted- average remaining contractual term (years)
Outstanding at March 23, 2012		589	$	16.00
Granted		—		—
Exercised		—		—
Forfeited or expired		—		—
Outstanding at March 31, 2013		589	$	16.00		7.3

        As of March 31, 2013, there was $0.5 million of total unrecognized compensation costs related to performance stock option compensation arrangements granted which is expected to be recognized over the remaining weighted-average period of 0.4 years.

Restricted stock units

        The fair value of a restricted stock unit is equal to the closing price of our common stock on the grant date. The weighted-average grant date fair value of restricted stock units granted in the year ended March 31, 2013 was $10.55. The weighted-average grant date fair values of restricted stock units granted in the year ended March 23, 2012 was $20.53. Share-based compensation expense related to restricted stock units was $2.2 million and $1.7 million for the years ended March 31, 2013 and March 23, 2012, respectively.

        The following summarizes select information regarding our restricted stock units during the year ended March 31, 2013:

(in thousands, except grant date fair value data)	Units			Weighted- average grant date fair value
Nonvested at March 23, 2012		153		$	21.81
Granted		178			10.55
Vested		(133	)		16.76
Forfeited		(17	)		17.49
Nonvested at March 31, 2013		181		$	14.83

        As of March 31, 2013, there was $2.7 million of total unrecognized compensation costs related to restricted stock units granted which is expected to be recognized over the remaining weighted-average period of 1.6 years.

        The total fair values of restricted stock units that vested was $2.2 million, $1.0 million and $0.7 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

XML

Accrued expenses and other liabilities

12 Months Ended

Mar. 31, 2013

Accrued expenses and other liabilities

Accrued expenses and other liabilities

5. Accrued expenses and other liabilities

        Accrued expenses and other liabilities consist of the following at:

(in thousands)	March 31, 2013		March 23, 2012
Payroll and compensation	$	4,530	$	7,544
Sales, use taxes and other taxes		6,960		7,100
Professional fees		1,005		1,676
Refundable deposits		1,227		930
Marketing		545		2,516
RealD Cinema system installation fees		3,303		4,767
Purchase obligations		3,450		—
Other		3,993		4,337
Total	$	25,013	$	28,870

        For our U.S. cinema license and product revenues, we absorb the majority of sales and use taxes and do not pass such costs on to our customers.

XML

Consolidated statements of cash flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Mar. 31, 2013	Mar. 23, 2012	Mar. 25, 2011
Cash flows from operating activities
Net income (loss)	$ (9,887)	$ 37,025	$ (6,825)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	33,131	28,266	15,737
Deferred income tax	(241)	38	(2)
Non-cash interest expense	483	151	125
Non-cash stock compensation	18,474	15,744	8,950
Motion picture exhibitor option reduction in revenue			36,447
Gain on sale of digital projectors		(1,742)	(6,720)
Loss on disposal of property and equipment	44	452
Impairment of long-lived assets	8,679	10,269	1,128
Changes in operating assets and liabilities:
Accounts receivable	11,266	(6,062)	508
Inventories	25,147	14,394	(48,432)
Prepaid expenses and other current assets	(954)	(896)	(606)
Deferred costs - eyewear	394	(883)	1,793
Other assets	(590)	(1,528)	1,139
Accounts payable	125	(36,916)	21,330
Accrued expenses and other liabilities	(7,790)	(11,399)	15,420
Other long-term liabilities, customer deposits and virtual print fee liability	2,747	1,989	1,791
Income taxes receivable/payable	(518)	1,260	(1,393)
Deferred revenue	(813)	(7,161)	(5,292)
Net cash provided by operating activities	79,697	43,001	35,098
Cash flows from investing activities
Purchases of marketable securities			(6,849)
Proceeds from sale of marketable securities			6,849
Purchases of property and equipment	(16,169)	(8,760)	(6,416)
Purchases of cinema systems and related components	(18,121)	(52,708)	(95,756)
Purchases of digital projectors			(471)
Purchases of intangible assets	(6,084)
Proceeds from sale of digital projectors	2,474	3,999	15,612
Net cash used in investing activities	(37,900)	(57,469)	(87,031)
Cash flows from financing activities
Proceeds from common stock issuance, net of issuance costs			81,940
Noncontrolling interest distribution	(1,000)	(1,509)	(888)
Payments of debt issuance costs	(1,167)
Repayments of long-term debt		(2,311)	(9,698)
Proceeds from credit facility	60,000	30,000	5,000
Repayments on credit facility	(37,500)	(5,000)	(25,150)
Proceeds from exercise of stock options	3,516	972	3,875
Proceeds from issuance of common stock pursuant to employee stock purchase plan	810
Proceeds from exercise of warrants		271	634
Proceeds from exercise of motion picture exhibitor options		3	22
Purchases of treasury stock	(60,445)
Net cash provided (used) by financing activities	(35,786)	22,426	55,735
Effect of currency exhange rate changes on cash and cash equivalents	115
Net increase (decrease) in cash and cash equivalents	6,126	7,958	3,802
Cash and cash equivalents, beginning of year	24,894	16,936	13,134
Cash and cash equivalents, end of year	31,020	24,894	16,936
Supplemental disclosures of cash flow information
Accretion of Series C preferred stock			4,934
Cash payments for income taxes	1,967	1,060	3,952
Cash payments for interest expense	1,000	820	794
Digital projectors purchased in exchange for notes			370
Sale of digital projectors in accounts receivable		$ 2,474

XML

Segment and geographic information (Details)	12 Months Ended
	Mar. 31, 2013 item	Mar. 23, 2012 item	Mar. 25, 2011 item
Segment and geographic information
Number of reportable segments	1
Number of operating segments	3
Accounts receivable | Credit concentration | Top ten customers
Segment and geographic information
Number of customers aggregated for disclosure of concentration risk	10	10
Accounts receivable and revenue (as a percent)	47.00%	45.00%
Revenue | Customer concentration | Top ten customers
Segment and geographic information
Number of customers aggregated for disclosure of concentration risk	10	10	10
Accounts receivable and revenue (as a percent)	44.00%	46.00%	50.00%

XML

Share-based compensation (Details 2) (USD $)	12 Months Ended
	Mar. 31, 2013	Mar. 23, 2012	Mar. 25, 2011
Share-based compensation
Share-based compensation expense (in dollars)	$ 18,474,000	$ 15,744,000	$ 8,950,000
Stock options
Share-based compensation
Vesting period	4 years
Percentage of shares that vest after one year from the date of grant	25.00%
Period from grant date after which awards begin to vest	1 year
Term of options	10 years
Share-based compensation expense (in dollars)	14,200,000	12,300,000	6,900,000
Options
Outstanding at the beginning of the period (in shares)	7,661,000
Granted (in shares)	2,155,000
Exercised (in shares)	(544,000)
Forfeited or expired (in shares)	(190,000)
Outstanding at the end of the period (in shares)	9,082,000	7,661,000
Exercisable (in shares)	5,135,000
Vested or expected to vest (in shares)	8,887,000
Weighted-average exercise price
Outstanding at the beginning of the period (in dollars per share)	$ 12.54
Granted (in dollars per share)	$ 11.21
Exercised (in dollars per share)	$ 6.47
Forfeited or expired (in dollars per share)	$ 14.61
Outstanding at the end of the period (in dollars per share)	$ 12.59	$ 12.54
Exercisable (in dollars per share)	$ 10.96
Vested or expected to vest (in dollars per share)	$ 12.52
Weighted-average remaining contractual term
Outstanding	7 years 1 month 6 days
Outstanding	7 years 1 month 6 days
Exercisable	5 years 8 months 12 days
Vested or expected to vest	6 years 10 months 24 days
Aggregate intrinsic value
Outstanding (in dollars)	26,849,000
Exercisable (in dollars)	22,481,000
Vested or expected to vest (in dollars)	26,595,000
Total intrinsic value of options exercised (in dollars)	2,600,000	3,900,000	47,000,000
Weighted Average assumptions
Fair value of stock options granted (in dollars per share)	$ 6.20	$ 11.39	$ 8.92
Expected volatility (as a percent)	60.00%	58.00%	57.00%
Expected term	6 years	6 years	6 years
Risk-free rate (as a percent)	1.00%	2.00%	2.00%
Total unrecognized compensation costs (in dollars)	30,200,000
Remaining weighted-average period for recognition	2 years 6 months
Performance stock options
Share-based compensation
Share-based compensation expense (in dollars)	1,900,000	1,700,000
Performance period	3 years
Options
Outstanding at the beginning of the period (in shares)	589,000
Granted (in shares)	0	0	641,250
Outstanding at the end of the period (in shares)	589,000	589,000
Weighted-average exercise price
Outstanding at the beginning of the period (in dollars per share)	$ 16.00
Outstanding at the end of the period (in dollars per share)	$ 16.00	$ 16.00
Weighted-average remaining contractual term
Outstanding	7 years 3 months 18 days
Outstanding	7 years 3 months 18 days
Weighted Average assumptions
Fair value of stock options granted (in dollars per share)			$ 9.45
Total unrecognized compensation costs (in dollars)	500,000
Remaining weighted-average period for recognition	4 months 24 days
Restricted stock units
Share-based compensation
Share-based compensation expense (in dollars)	2,200,000	1,700,000
Weighted Average assumptions
Total unrecognized compensation costs (in dollars)	2,700,000
Remaining weighted-average period for recognition	1 year 7 months 6 days
Restricted stock units
Nonvested at the beginning of the year (in shares)	153,000
Granted (in shares)	178,000
Vested (in shares)	(133,000)
Forfeited (in shares)	(17,000)
Nonvested at the end of the year (in shares)	181,000	153,000
Weighted-average grant date fair value
Nonvested at the beginning of the year (in dollars per share)	$ 21.81
Granted (in dollars per share)	$ 10.55	$ 20.53
Vested (in dollars per share)	$ 16.76
Forfeited (in dollars per share)	$ 17.49
Nonvested at the end of the year (in dollars per share)	$ 14.83	$ 21.81
Fair values of restricted stock units vested (in dollars)	$ 2,200,000	$ 1,000,000	$ 700,000

XML

Business and basis of presentation (Details) (USD $)	0 Months Ended		1 Months Ended	12 Months Ended
	Jul. 21, 2010	Jun. 28, 2010	Jul. 31, 2010	Mar. 25, 2011	Mar. 31, 2013	Mar. 23, 2012
Business and basis of presentation
Total authorized capital stock (in shares)		200,000,000
Common stock, shares authorized		150,000,000			200,000,000	200,000,000
Preferred stock shares authorized		50,000,000
Common stock conversion ratio		0.67
Share issued in initial public offering	6,000,000
Issue price (in dollars per share)	$ 16.00
Gross proceeds	$ 96,000,000		$ 96,000,000
Net proceeds	81,900,000		81,900,000	81,940,000
Underwriting discounts and commissions	6,700,000		6,700,000
Other offering costs	$ 7,400,000		$ 7,400,000

XML

Segment and geographic information

12 Months Ended

Mar. 31, 2013

Segment and geographic information

Segment and geographic information

12. Segment and geographic information

        For financial reporting purposes we currently have one reportable segment. We have three operating segments: cinema, consumer electronics and professional. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our Chief Executive Officer. We aggregate our three operating segments into one reportable segment based on qualitative factors including similar economic characteristics and the nature of the products and services. Our product portfolio is used in applications that enable a premium 3D viewing experience across the segments. We currently generate substantially all of our revenue from the license of our RealD Cinema Systems and the sale of our eyewear, which together enable a digital cinema projector to show 3D motion pictures.

        Our top 10 customers with an accounts receivable balance represented approximately 47% and 45% of our net accounts receivable as of March 31, 2013 and March 23, 2012, respectively. Our top 10 customers accounted for approximately 44%, 46% and 50% of our revenue for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

        No individual customer accounted for greater than 10% of our revenues during the years ended March 31, 2013, March 23, 2012 and March 25, 2011.

Geographic information

        Revenue by geographic region, as determined based on the location of our customers or the anticipated destination of use was as follows:

	Year ended
(in thousands)	March 31, 2013		March 23, 2012		March 25, 2011
Domestic (United States and Canada)	$	106,979	$	126,151	$	91,259
International		108,573		120,477		154,877
Total revenues	$	215,552	$	246,628	$	246,136

        Long-lived tangible assets, net of accumulated depreciation, by geographic region were as follows:

(in thousands)	March 31, 2013		March 23, 2012
Domestic (United States and Canada)	$	101,438	$	105,851
International		49,671		48,964
Total long-lived tangible assets	$	151,109	$	154,815

XML

Mandatorily redeemable convertible preferred stock and equity (deficit)

12 Months Ended

Mar. 31, 2013

Mandatorily redeemable convertible preferred stock and equity (deficit)

Mandatorily redeemable convertible preferred stock and equity (deficit)

8. Mandatorily redeemable convertible preferred stock and equity (deficit)

Initial public offering

        In July 2010, we completed the IPO of our common stock in which we sold and issued 6 million shares of common stock at $16.00 per share. A total of approximately $96 million in gross proceeds were raised from the IPO, or $81.9 million in net proceeds after deducting underwriting discounts and commissions of approximately $6.7 million and other offering costs of approximately $7.4 million. In conjunction with our IPO, all of our previously outstanding Series A, B and D convertible preferred stock in the amount of 6,084,311 shares converted at a ratio of 1:1.5 into 9,126,466 shares of common stock.

Common stock

        In November 2008, we entered into a stock purchase agreement with our Series D preferred stockholder. We sold 199,999 shares of our common stock at $10.00 per share. Total proceeds received were $2.0 million and were recorded net of issuance costs.

        At March 31, 2013, we reserved the following shares of common stock for future issuances in connection with (in thousands):

Restricted stock units	289
Performance stock options	589
Stock option plan:
Outstanding	9,082
Reserved for future issuance	2,939
Total	12,899

Convertible preferred stock

        Prior to April 1, 2006, we issued 2,000,000 shares of Series A preferred stock for $2.0 million, or $1.00 per share. Offering costs were recorded against the proceeds received.

        Rights and preferences afforded the stockholders of Series A preferred stock were as follows:

• •

  Shares were convertible into common stock at the holder's option on a 1-for-1.50 basis, subject to certain anti-dilution provisions, as defined. Shares were automatically convertible into common stock upon the occurrence of a qualified initial public offering, as defined in our certificate of incorporation. Our July 2010 IPO was a qualified initial public offering.

  •

  Upon a liquidating event, as defined, holders were entitled to liquidation payments equal to $1.00 per share for Series A, plus declared but unpaid dividends. Further, holders were entitled to participate in distributions to common stockholders on a pro-rata basis as if the holders had converted preferred shares into common stock. Liquidation payments to preferred stockholders ranked senior to payments to common stockholders. No liquidation events occurred prior to conversion.

  •

  Holders were entitled to dividends when and if declared. Dividends were participating with other classes of stock; however, they were not cumulative.

  •

  Were redeemable for cash upon ordinary liquidation.

  •

  Each holder had the number of votes for each share of convertible preferred stock held by such holder equal to the whole number of shares of common stock into which such share of convertible preferred stock would have been converted as of the record date for the vote.

        Prior to April 1, 2006, we had issued 2,417,644 shares of Series B preferred stock for $3.0 million or $1.24 per share. Offering costs have been recorded against the proceeds received.

        Rights and preferences afforded the stockholders of Series B preferred stock were as follows:

• •

  Shares were convertible into common stock at the holder's option on a 1-for-1.50 basis, subject to certain anti-dilution provisions, as defined. Shares were automatically converted into common stock upon the occurrence of a qualified initial public offering, as defined in our certificate of incorporation. Our July 2010 IPO was a qualified initial public offering.

  •

  Upon a liquidating event, as defined, holders were entitled to liquidation payments equal to $1.24 per share for Series B preferred stock, plus declared but unpaid dividends. Further, holders were entitled to participate in distributions to common stockholders on a pro-rata basis as if the holders had converted preferred shares into common stock. Liquidation payments to preferred stockholders ranked senior to payments to common stockholders. No liquidation events had occurred prior to conversion.

  •

  Holders were entitled to dividends when and if declared. Dividends are participating with other classes of stock; however, they were not cumulative.

  •

  Were redeemable for cash upon ordinary liquidation, and upon a deemed liquidation such as a change in control.

  •

  Each holder had the number of votes for each share of convertible preferred stock held by such holder equal to the whole number of shares of common stock into which such share of convertible preferred stock would have been converted as of the record date for the vote.

        In December 2007, we sold 1,666,667 shares of Series D preferred stock at $12.00 per share. Total proceeds received were $20.0 million. Offering costs, consisting primarily of legal and placement fees, would have been recorded against the proceeds received. Rights and preferences afforded the stockholders of Series D preferred stock were as follows:

• •

  Shares were convertible into common stock at the holder's option on a 1-for-1.50 basis, subject to certain anti-dilution provisions, as defined. Shares were automatically convertible into common stock upon the occurrence of a qualified initial public offering, as defined in our certificate of incorporation. Our July 2010 IPO was a qualified initial public offering.

  •

  Upon a liquidating event, as defined, holders were entitled to liquidation payments at 1.5 times initial per share purchase price, plus declared, but unpaid dividends. Preference was pro-rata with the Series C mandatorily redeemable convertible preferred stockholders based upon relative liquidation preference and payments rank senior to all other classes of stock. No liquidation events occurred prior to conversion.

  •

  Were redeemable for cash upon ordinary liquidation.

  •

  Each holder had the number of votes for each share of convertible preferred stock held by such holder equal to the whole number of shares of common stock into which such share of convertible preferred stock would have been converted as of the record date for the vote.

  •

  Holders were entitled to dividends when and if declared. Dividends were participating with other classes of stock; however, they were not cumulative.

        Our previously outstanding Series A, B and D convertible preferred stock was classified as part of permanent equity within the consolidated balance sheets based on their rights and preferences set forth under the certificate of incorporation, California and Delaware law and the accounting standards pertaining to classification within the consolidated balance sheet. We therefore recorded the Series A, B and D preferred stock at their original issuance price net of applicable issuance costs. On July 21, 2010, in conjunction with our IPO, all of our previously outstanding Series A, B and D convertible preferred stock in the amount of 6,084,311 shares converted at a ratio of 1:1.5 into 9,126,466 shares of common stock.

Mandatorily redeemable convertible preferred stock

        During February 2007, we sold 5,139,500 shares of Series C mandatorily redeemable convertible preferred stock at $6.81 per share. Total proceeds received were $35.0 million. Offering costs, consisting primarily of legal and placement fees, incurred were $3.2 million and have been recorded against the proceeds received.

        Rights and preferences afforded the stockholders of Series C mandatorily redeemable convertible preferred stock were as follows:

• •

  Shares were convertible into common stock at the holder's option on a 1-for-1.50 basis, subject to certain anti-dilution provisions, as defined. Shares were automatically convertible into common stock upon the occurrence of a qualified initial public offering, as defined in our certificate of incorporation. Our July 2010 IPO was a qualified initial public offering.

  •

  Shares were mandatorily redeemable at the option of the holders beginning in December 2011. Redemption price is $17.025 per share, plus declared but unpaid dividends. We may elect to pay the redemption price in two installments, as defined. Amounts not paid in the first installment accrue interest at 6.0% per annum.

  •

  Shares were redeemable at our option at any time for liquidation value.

  •

  Upon a liquidating event, as defined, holders were entitled to liquidation payments equal to $17.025 per share, plus declared but unpaid dividends. Liquidation payments to holders rank senior to payments to all other classes of stock. No liquidation events occurred prior to conversion.

  •

  Holders were entitled to dividends when and if declared. Dividends were participating with other classes of stock; however, they were not cumulative.

        Our Series C mandatorily redeemable convertible preferred stock was classified in temporary equity under the SEC's guidance provided in Accounting Series Release No. 268, Presentation in Financial Statements of "Redeemable Preferred Stocks," (ASR 268) because the holders of our Series C mandatorily redeemable convertible preferred stock had the right to cause us to redeem the instrument for cash for a specified period. On July 21, 2010, in conjunction with our IPO, all of our previously outstanding Series C mandatorily redeemable convertible preferred stock in the amount of 5,139,500 shares converted at a ratio of 1:1.5 into 7,709,250 shares of common stock.

        We accreted the carrying value of the Series C mandatorily redeemable convertible preferred stock up to liquidation value through July 21, 2010. Accretion was provided using the effective interest-rate method. During the years ended March 25, 2011 and March 26, 2010, we recorded accretion of $4.9 million and $12.4 million, respectively.

Motion picture exhibitor stock options

        In connection with motion picture exhibitor licensing agreements, we issued to motion picture exhibitors a 10-year option to purchase 3,668,340 shares of our common stock at $0.00667 per share. These stock options to our motion picture exhibitor licensees vested upon the achievement of screen installation targets and were valued at the underlying stock price at each reporting period until the targets were met. All targets have been met and these stock options are fully vested.

        Amounts recorded as a revenue reduction from motion picture exhibitor stock options totaled $36.4 million and $39.2 million for the years ended March 25, 2011 and March 26, 2010, respectively. Amounts recognized are based on the number of RealD-enabled screens as a percentage of total screen installation targets. The stock options do not have net cash settlement features. As of March 25, 2011 all 3,668,340 motion picture exhibitor stock options had vested and all associated reduction of revenue has been recognized.

Warrants

        Prior to April 1, 2006, we had issued warrants to purchase a total of 1,335,000 shares of common stock. The warrants were primarily issued in exchange for cash received totaling $24,000. During April 2007, warrants to purchase 360,000 shares of common stock were exercised.

        Prior to April 1, 2006, we issued warrants and options to purchase 1,900,500 shares of common stock in exchange for cash received and as additional consideration to a person who lent us money. Prior to April 1, 2006, and when the awards were not fully vested, the lender exercised the warrants and options. The lender entered into a restricted stock agreement whereby we could repurchase the shares if the shares do not vest. During the year ended March 31, 2008, we repurchased 307,500 restricted shares that did not vest.

        As of March 25, 2011, there were warrants outstanding to purchase 326,700 shares of common stock. The warrants' weighted-average exercise price was approximately $0.83 per share.

        As of March 31, 2013 and March 23, 2012, there were no warrants outstanding.

Stock repurchase program

        On April 20, 2012, we announced that our board of directors had approved an authorization to repurchase up to $50.0 million of RealD common stock. On December 17, 2012, our board of directed approved a $25 million increase in our stock repurchase plan, increasing the $50 million repurchase plan announced on April 20, 2012 to $75 million. The number of shares to be repurchased and the timing of any potential repurchases will depend on factors such as the Company's stock price, economic and market conditions, alternative uses of capital, and corporate and regulatory requirements. Repurchases of common stock may be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when RealD might otherwise be precluded from doing so under insider trading laws, and a variety of other methods, including open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, or by any combination of such methods. The repurchase program may be suspended or discontinued at any time.

        Pursuant to the stock repurchase plan authorized by our board of directors, we repurchased a total of 5,927,729 shares of common stock at an average price per share of $10.20, including sales commissions, for an aggregate cost of $60.4 million during the fiscal year ended March 31, 2013.

XML

Summary of significant accounting policies (Policies)

12 Months Ended

Mar. 31, 2013

Summary of significant accounting policies

Accounting period

Accounting period

        On November 14, 2012, our Board of Directors approved a change in our accounting periods from the previous configuration of four 13-week periods for a total of 52 weeks to a calendar month end and calendar quarter end accounting period. This change in accounting period commenced in the third quarter of fiscal 2013 ended on December 31, 2012, which added 10 extra days to the fiscal year ended March 31, 2013 when compared to the fiscal year ended March 23, 2012. As a result, our fiscal year 2013 ended on March 31, 2013 instead of on March 22, 2013 as formerly planned under RealD's historical accounting period configuration.

Use of estimates

Use of estimates

        The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.

Earnings (loss) per share of common stock

Earnings (loss) per share of common stock

        Basic income per share of common stock is computed by dividing the net income (loss) attributable to RealD common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing net income (loss) attributable to RealD Inc. common stockholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if the potentially dilutive securities had been issued. Potentially dilutive securities include outstanding stock options, shares to be purchased under our employee stock purchase plan and unvested restricted stock units. The dilutive effect of potentially dilutive securities is reflected in diluted earnings per common share by application of the treasury stock method.

        The calculation of the basic and diluted earnings (loss) per share of common stock for the years ended March 31, 2013, March 23, 2012 and March 25, 2011 was as follows:

	Year ended
(in thousands, except per share data)	March 31, 2013			March 23, 2012			March 25, 2011
Numerator:
Net income (loss)	$	(9,887	)	$	37,025		$	(6,825	)
Net (income) loss attributable to noncontrolling interest		197			(156	)		(530	)
Accretion of preferred stock		—			—			(4,934	)
Net income (loss) attributable to RealD Inc. common stockholders	$	(9,690	)	$	36,869		$	(12,289	)
Denominator:
Weighted-average common shares outstanding (basic)		52,345			54,352			41,933
Effect of dilutive securities		—			2,500			—
Weighted-average common shares outstanding (diluted)		52,345			56,852			41,933
Earnings (loss) per common share:
Basic	$	(0.19	)	$	0.68		$	(0.29	)
Diluted	$	(0.19	)	$	0.65		$	(0.29	)

        Due to the loss attributable to RealD Inc. common stockholders in the years ended March 31, 2013 and March 25, 2011, basic earnings (loss) per common share and diluted earnings (loss) per common share are the same as the effect of potentially dilutive securities would be anti-dilutive.

        The weighted-average number of anti-dilutive shares excluded from the calculation of diluted earnings (loss) per common share for the years ended March 31, 2013, March 23, 2012 and March 25, 2011 was as follows:

	Year ended
(in thousands)	March 31, 2013		March 23, 2012		March 25, 2011
Options and warrants to purchase common stock		8,441		3,899		9,782
Conversion of convertible preferred stock		—		—		5,180
Total		8,441		3,899		14,962

Fair value measurements

Fair value measurements

        Accounting Standards Codification Topic (ASC) 820-10, Fair Value Accounting (ASC 820), provides a common definition of fair value and establishes a framework to make the measurement of fair value in U.S. GAAP more consistent and comparable. This guidance also requires expanded disclosures to provide information about the extent to which fair value is used to measure assets and liabilities, the methods and assumptions used to measure fair value, and the effect of fair value measures on earnings. Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants and requires that assets and liabilities carried at fair value be classified and disclosed in the following three categories:

• •

  Level 1—Quoted prices for identical instruments in active markets.

  •

  Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

  •

  Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

        Our financial assets and liabilities, which include financial instruments as defined by ASC 820, include cash and cash equivalents, accounts receivable, accounts payable, long-term debt and derivatives. The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable are a reasonable approximation of fair value due to the short maturities of these instruments. The carrying amount of long-term debt approximates fair value based on borrowing rates currently available to us. The carrying amount of our derivative instruments is recorded at fair value and is determined based on observable inputs that are corroborated by market data (Level 2).

        As of March 31, 2013 and March 23, 2012, the fair values of our derivative instruments that were carried at fair value on a recurring basis were not significant.

Derivative instruments

Derivative instruments

        Our derivative instruments are recorded at fair value in other current assets or other current liabilities, respectively, in the consolidated balance sheets. Changes in fair value are reported as a component of other income or loss on our consolidated statements of operations. For all periods presented, none of our derivative instruments were designated as hedging instruments. We do not use foreign currency option or foreign exchange forward contracts for speculative or trading purposes.

        We purchase foreign currency forward contracts, generally with maturities of six months or less, to reduce the volatility of cash flows primarily related to forecasted payments and expenses denominated in certain foreign currencies. We had outstanding forward contracts based in British pound sterling and Euro with notional amounts totaling $5.8 million as of March 31, 2013. We had outstanding forward contracts based in British pound sterling, Euro and Canadian dollar with notional amounts totaling $4.3 million as of March 23, 2012. As of March 31, 2013 and March 23, 2012, the carrying amount of our foreign currency forward contracts was not significant and was classified as Level 2 fair value instruments, which was determined based on observable inputs that were corroborated by market data. For all periods presented, the net realized and unrealized gains and losses related to forward contracts were not significant.

Marketable securities

Marketable securities

        We classify unrealized gains and losses on marketable securities reported as a component of accumulated other comprehensive income. As of March 31, 2013 and March 23, 2012, we had no marketable securities. For the year ended March 25, 2011, the unrealized gains and losses from the available-for-sale securities were not significant.

        The objectives of our investment policy are to preserve capital, provide sufficient liquidity to satisfy operating and investment purposes, and capture a market rate of return based on our investment policy parameters and market conditions. Our investment policy limits investments to certain types of debt and money market instruments issued by institutions with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer.

Cash equivalents

Cash equivalents

        We consider cash equivalents to be only those investments that are highly liquid, readily convertible into cash and which mature within three months from the date of purchase.

Accounts receivable

Accounts receivable

        Accounts receivable consist of trade receivables, VAT receivable and other receivables. We extend credit to our customers, who are primarily in the movie production and exhibition businesses. We provide for the estimated accounts receivable that will not be collected. These estimates are based on an analysis of historical bad debts, customer concentrations, customer creditworthiness, current economic trends and changes in the customers' payment terms and their economic condition. Collection of accounts receivable may be affected by changes in economic or other industry conditions and may, accordingly, impact our overall credit risk. The allowance for doubtful accounts and customer credits totaled $2.6 million and $4.2 million as of March 31, 2013 and March 23, 2012, respectively.

Inventories and deferred costs-eyewear

Inventories and deferred costs-eyewear

        Inventories and deferred costs-eyewear represent eyewear and are substantially all finished goods. Inventories and deferred costs-eyewear are valued at the lower of cost (first-in, first-out method) or market value. At each balance sheet date, we evaluate ending inventories and deferred costs-eyewear for net realizable value. We also evaluate inventories for excess quantities and obsolescence. These evaluations include analyses of expected future average selling prices, projections of future demand and technology changes. In order to state inventories at lower of cost or market, we maintain reserves against such inventories. If our analyses indicate that market is lower than cost, a write-down of inventories is recorded in cost of revenue in the period the loss is identified. As of March 31, 2013 and March 23, 2012, the inventory reserve as a result of our net realizable value analyses was $0.4 million and $0.6 million, respectively.

        Domestically, we provide our RealD eyewear free of charge to motion picture exhibitors and then receive a fee from the motion picture studios for the usage of that RealD eyewear by the motion picture exhibitors' consumers.

        For RealD eyewear located at a motion picture exhibitor, we believe that it is not operationally practical to perform physical counts or request the motion picture exhibitor to perform physical counts and confirm quantities held to ensure that losses due to damage, destruction, and shrinkage are specifically recognized in the period incurred due to the number of domestic RealD-enabled screens and the related usage of RealD eyewear. We believe that the cost to monitor shrinkage or usage significantly outweighs the financial reporting benefits of using a specific identification methodology of expensing. We believe that utilizing a composite method of expensing RealD eyewear inventory costs provides a rational and reasonable approach to ensuring that shrinkage is provided for in the period incurred and that inventory costs are expensed in the periods that reasonably reflect the periods in which the related revenue is recognized. In doing so, we believe the following methodology reasonably and generally reflects periodic income or loss under these facts and circumstances:

• •

  For an estimated period of time following shipment to domestic motion picture exhibitors, no expense is recognized between the time of shipment and until the delivery is made as the inventory unit is in transit and unused.

  •

  The inventory unit cost is expensed on a straight-line basis over an estimated usage period beginning when we believe usage of the inventory unit has started. In estimating the expensing start date and related expense period, we consider various factors including, but not limited to, those relating to a 3D motion picture's opening release date, a 3D motion picture's expected release period, the number of currently playing 3D motion pictures, the motion picture exhibitor's buying and stocking patterns and practices and the quantities shipped per inventory unit.

        We believe that the expensing methodology described above rationally and reasonably approximates the period the related usage occurs resulting in our RealD eyewear product revenue. The expensing start date following the date of shipment is meant to approximate the date at which usage begins. Additionally, as the expense recognition period has been and is expected to continue to be short, we believe it adequately recognizes inventory impairments due to loss and damage on a timely basis. We further believe that exposures due to loss or damage, if any, are considered normal shrinkage and a necessary and expected cost to generate the revenue per 3D motion picture earned through RealD eyewear usage. We continue to monitor the reasonableness of this methodology to ensure that it approximates the period over which the related RealD eyewear product revenue is earned and realizable. RealD eyewear inventory costs that have not yet been expensed are reported as deferred costs-eyewear.

Property and equipment, RealD Cinema Systems and digital projectors

Property and equipment, RealD Cinema Systems and digital projectors

        Property and equipment, RealD Cinema Systems and digital projectors are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. The major categories and related estimated useful lives are as follows:

RealD Cinema Systems	5 - 8 years
Digital projectors—held for sale	10 years
Leasehold improvements	Shorter of useful life or lease
Machinery and equipment	2 - 7 years
Furniture and fixtures	3 - 5 years
Computer equipment and software	3 - 5 years

        Digital projectors—held for sale (digital projectors) also include digital servers, lenses and accessories. Upon installation at the customer location, we retain title to the RealD Cinema Systems which are held and used by our customers. The digital projectors are held for sale at either a specified date or upon occurrence of certain contingent events. Depreciation for RealD Cinema Systems and digital projectors is included in cost of revenue.

        We receive virtual print fees (VPFs) from third-party motion picture studios. VPFs represent amounts from third-party motion picture studios that are paid to us when a motion picture is played on one of our digital projectors. VPFs are deferred and deducted from the selling price of the digital projector. VPFs are recorded as a liability on the accompanying consolidated balance sheets and totaled $0.3 million both as of March 31, 2013 and March 23, 2012.

        Major enhancements and improvements are capitalized. Maintenance and repairs for cinema systems and digital projectors are charged to expense as incurred. Maintenance and repairs expense totaled $0.9 million, $0.7 million and $0.8 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

Intangibles

Intangibles

        Intangibles are deemed to have finite lives and consist of acquired developed technologies (which are primarily patents) and are amortized over their estimated useful lives of 5 to 19 years (with a weighted average amortization period of 9.1 years) using the straight-line method.

Impairment of long-lived assets

Impairment of long-lived assets

        We review long-lived assets, such as property and equipment, cinema systems, digital projectors and intangibles, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Factors or circumstances that could indicate the occurrence of such events include current period operating or cash flow losses combined with a history of operating or cash flow losses, a projection or forecast that demonstrates continuing operating or cash flow losses, or incurring costs in excess of amounts originally expected to acquire or construct an asset. If the asset is not recoverable, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value.

        During the year ended March 31, 2013, we determined that a non-cancelable purchase commitment for certain cinema systems configurations in the aggregate amount of $3.5 million were not fully recoverable, primarily due to the initial investment costs which are expected to exceed the anticipated future cash flows for the related cinema systems.

        During the year ended March 23, 2012, we determined that certain of our cinema systems were not recoverable and that the carrying value of the assets exceeded fair value, primarily due to the number of certain of our cinema system assets on hand, including related outstanding purchase commitments and the continuing shift in the mix in the deployment of cinema systems based on the type of digital projectors installed and theater configuration. The fair value was primarily determined by evaluating the discounted future cash flows expected to be generated from the cinema systems. The impairment charged during the year ended March 23, 2012 to cost of revenue for certain of the cinema systems totaled $6.8 million.

        For the years ended March 31, 2013, March 23, 2012 and March 25, 2011, impairment charges for all impaired RealD Cinema Systems charged to cost of revenue totaled $8.0 million, $10.3 million and $1.1 million, respectively. For the year ended March 31, 2013, impairment charge for eyewear tooling charged to cost of revenue totaled $0.5 million. For the year ended March 31, 2013, impairment charge for digital projectors charged to cost of revenue totaled $0.2 million in a noncontrolling interest.

Goodwill

Goodwill

        Goodwill is deemed to have an indefinite useful life and therefore is not amortized. We evaluate our goodwill for impairment using a two-step process that is performed at least annually during our fourth fiscal quarter, or whenever events or circumstances indicate that goodwill may be impaired. The first step is a comparison of the fair value of an internal reporting unit with its carrying amount, including goodwill. A reporting unit is an operating segment or one level below an operating segment. If the fair value of the reporting unit exceeds its carrying value, goodwill of the reporting unit is not considered impaired and the second step is unnecessary. If the carrying value of the reporting unit exceeds its fair value, the second step is performed to measure the amount of impairment by comparing the carrying amount of the goodwill to a determination of the implied value of the goodwill. If the carrying amount of goodwill is greater than the implied value, an impairment loss is recognized for the difference. We currently have one reporting unit in which goodwill resides and the reporting unit did not fail step one.

Revenue recognition and revenue reductions

Revenue recognition and revenue reductions

        We derive substantially all of our revenue from the license of our RealD Cinema Systems and the product sale of our RealD eyewear. We evaluate revenue recognition for transactions using the criteria set forth by the SEC in Staff Accounting Bulletin No. 104, Revenue Recognition (SAB 104) and Accounting Standards Codification Topic 605, Revenue Recognition (ASC 605). The revenue recognition guidance states that revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the seller's price to the buyer is fixed or determinable and collectability is reasonably assured.

License revenue

        License revenue is accounted for as an operating lease. License revenue is primarily derived under per-admission, periodic fixed fee, or per-motion picture basis with motion picture exhibitors. Amounts received up front, less estimated allowances, are deferred and recognized over the lease term using the straight-line method. Additional lease payments that are contingent upon future events outside our control, including those related to admission and usage, are recognized as revenues when the contingency is resolved and we have no more obligations to our customers specific to the contingent payment received. Certain of our license revenue from leasing our RealD Cinema Systems is earned upon admission by the motion picture exhibitor's consumers. Our licensees, however, do not report and pay for such license revenue until after the admission has occurred, which may be received subsequent to our fiscal period end. We estimate and record licensing revenue related to motion picture exhibitor consumer admissions in the quarter in which the admission occurs, but only when reasonable estimates of such amounts can be made. We determine that there is persuasive evidence of an arrangement upon the execution of a license agreement or upon the receipt of a licensee's admissions report. Revenue is deemed fixed or determinable upon receipt of a licensee's admissions report. We determine collectability based on an evaluation of the licensee's recent payment history.

Product revenue

        We recognize product revenue, net of allowances, when title and risk of loss have passed and when there is persuasive evidence of an arrangement, the payment is fixed or determinable, and collectability of payment is reasonably assured. In the United States and Canada, certain of our product revenue from the sale of our RealD eyewear is earned upon admission and usage by the motion picture exhibitor's consumers. Our customers, however, do not report admission or usage information until after the admission and usage has occurred, and such information may be received subsequent to our fiscal period end. We estimate and record such product revenue in the period in which the admission and usage occurs, but only when reasonable estimates of such amounts can be made.

Revenue reductions

        We record revenue net of motion picture exhibitor stock options and estimated revenue allowances. In connection with certain exhibitor licensing agreements, we issued to the motion picture exhibitors a 10-year option to purchase 3,668,340 shares of our common stock at $0.00667 per share. The stock options vest upon the achievement of screen installation targets. Motion picture exhibitor stock options are valued at the underlying stock price at each reporting period until the targets are met. Amounts recognized are based on the number of RealD-enabled screens as a percentage of total screen installation targets. The stock options do not have net cash settlement features. Amounts recorded as a revenue reduction related to motion picture exhibitor stock options totaled $36.4 million for the year ended March 25, 2011. As of March 25, 2011 all 3,668,340 motion picture exhibitor stock options had vested and all associated reduction of revenue has been recognized.

Cost of revenue

Cost of revenue

        Cost of revenue principally consists of depreciation expense of our RealD Cinema Systems deployed at a motion picture exhibitor's premises, digital projector depreciation expenses, RealD eyewear costs (including shipping, handling and recycling costs), field service and support costs and occupancy costs.

Shipping and handling costs

Shipping and handling costs

        Amounts billed to customers for shipping and handling costs are included in revenue. Shipping and handling costs that we incur consist primarily of packaging and transportation charges and are recorded in cost of revenue. Shipping and handling costs recognized in cost of revenue were $7.9 million, $6.8 million, and $10.2 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

Research and development costs

Research and development costs

        Research and development costs are expensed as incurred and are primarily comprised of personnel costs related to our research and development staff, depreciation and amortization of research and development assets, prototype and materials costs, the cost of third-party service providers supporting our research and development efforts and occupancy costs.

Selling and marketing costs

Selling and marketing costs

        Selling and marketing costs are primarily comprised of personnel costs related to our selling and marketing staff, advertising costs, including promotional events and other brand building and product marketing expenses, corporate communications, certain professional fees, occupancy costs and travel expenses.

        Advertising costs are expensed as incurred. Advertising expenses were approximately $3.7 million, $5.3 million and $4.3 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

General and administrative costs

General and administrative costs

        General and administrative costs principally consist of personnel costs related to our executive, legal, finance, and human resources staff, professional fees including legal and accounting costs, occupancy costs and public company costs. Additionally, general and administrative costs include sales, use, goods and services tax, and property taxes. For our U.S. cinema license and product revenue, we absorb the majority of sales and use taxes and do not pass such costs on to our customers.

Share-based compensation

Share-based compensation

        We account for share-based awards granted to employees and directors by recording compensation expense based on estimated fair values. We estimate the fair value of share-based payment awards on the date of grant. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our consolidated statements of operations. Share-based awards are attributed to expense using the straight-line method over the vesting period. We determine the value of each option award that contains a market condition using a lattice-based option valuation model, while all other option awards are valued using the Black-Scholes valuation model as permitted under ASC 718, Compensation—Stock Compensation. The assumptions used in calculating the fair value of share-based payment awards represent our best estimates. Our estimates of the fair values of share-based awards granted and the resulting amounts of share-based compensation recognized may be impacted by certain variables including stock price volatility, employee stock option exercise behaviors, additional stock option grants, modifications, estimates of forfeitures, and the related income tax impact. If any of the assumptions used in our valuation models significantly change, share-based compensation for future awards may differ materially from the awards granted previously. See Note 9, Share-based compensation.

Foreign currency

Foreign currency

        Local currency transactions of our foreign operations that have the U.S. dollar as their functional currency are remeasured into U.S. dollars using current rates of exchange for monetary assets and liabilities and historical rates of exchange for nonmonetary assets and liabilities. Gains and losses from remeasurement of monetary assets and liabilities are included in other income (loss) in our statements of operations.

        The assets and liabilities of our foreign operations for which the functional currency is not the U.S. dollar are translated into U.S. dollars at exchange rates as of the balance sheet date, revenues and expenses are translated at average exchange rates for the period, and equity balances are translated at the historical rate. Resulting translation adjustments are included in other comprehensive loss, a component of equity (deficit).

        Net losses arising from exchange rate fluctuations on transactions denominated in a currency other than the functional currency and the net realized and unrealized gains and losses related to forward contracts totaled $0.9 million, $0.5 million, and $0.6 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively, and are included in other income (loss).

Income taxes

Income taxes

        Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities at year-end and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount more likely than not to be realized.

        Accruals for uncertain tax positions are provided for in accordance with the authoritative guidance for accounting for uncertainty in income taxes (ASC 740). We may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The authoritative guidance for accounting for uncertainty in income taxes also provides guidance on derecognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and income tax disclosures. Our policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense.

Employee benefit plans

Employee benefit plans

        We have a voluntary 401(k) savings plans in which most U.S. employees are eligible to participate. Eligible employees may make contributions not to exceed the maximum statutory contribution amounts. We may match a percentage of each employee's contributions consistent with the provisions of the plan for which they are eligible. All employee and employer contributions fully vest immediately. Our contributions to these plans totaled $0.6 million, $0.5 million and $0.3 million for the years ended March 31, 2013, March 23, 2012 and March 25, 2011, respectively.

Reclassifications

Reclassifications

        Certain amounts presented in prior years have been reclassified to conform to the current year's presentation.

Recent accounting pronouncements

Recent accounting pronouncements

        In February 2013, the FASB issued Accounting Standards Update ("ASU") No. 2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income,". ASU 2013-02 finalizes the requirements of ASU 2011-05 that ASU 2011-12 deferred, clarifying how to report the effect of significant reclassifications out of accumulated other comprehensive income. ASU 2013-02 is to be applied prospectively. We do not expect the adoption of ASU 2013-02 to have a material impact on our consolidated financial statements.

        In March 2013, the FASB issued ASU 2013-05, "Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity,". The objective of ASU 2013-05 is to resolve the diversity in practice regarding the release into net income of the cumulative translation adjustment upon derecognition of a subsidiary or group of assets within a foreign entity. We do not expect the adoption of ASU 2013-05 to have a material impact on our consolidated financial statements.

XML

Quarterly financial data (unaudited)

12 Months Ended

Mar. 31, 2013

Quarterly financial data (unaudited)

Quarterly financial data (unaudited)

13. Quarterly financial data (unaudited)

	Three months ended
(dollars in thousands, except per share data)	March 31, 2013			December 31, 2012			September 21, 2012			June 22, 2012
Net revenue	$	45,449		$	46,939		$	54,986		$	68,178
Gross profit		20,274			20,919			17,654			31,345
Net income		(4,444	)		(4,159	)		(4,231	)		2,947
Net income attributable to RealD Inc. common stockholders	$	(4,336	)	$	(4,160	)	$	(4,173	)	$	2,979
Earnings per common share:
Basic	$	(0.09	)	$	(0.08	)	$	(0.08	)	$	0.05
Diluted	$	(0.09	)	$	(0.08	)	$	(0.08	)	$	0.05

	Three months ended
(dollars in thousands, except per share data)	March 23, 2012		December 23, 2011		September 23, 2011		June 24, 2011
Net revenue	$	50,047	$	49,026	$	87,995	$	59,560
Gross profit		26,895		23,954		42,522		35,319
Net income (loss)		5,683		2,763		19,177		9,402
Net income (loss) attributable to RealD Inc. common stockholders	$	5,536	$	2,833	$	18,905	$	9,595	(1)
Earnings (loss) per common share:
Basic	$	0.10	$	0.05	$	0.35	$	0.18
Diluted	$	0.10	$	0.05	$	0.33	$	0.17

(1)

Includes undistributed earnings attributable to preferred stockholders of $2.0 million.

XML

Document and Entity Information (USD $)	12 Months Ended
	Mar. 31, 2013	May 30, 2013	Sep. 21, 2012
Document and Entity Information
Entity Registrant Name	RealD Inc.
Entity Central Index Key	0001327471
Document Type	10-K
Document Period End Date	Mar. 31, 2013
Amendment Flag	false
Current Fiscal Year End Date	--03-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 429,774,957
Entity Common Stock, Shares Outstanding		49,427,042
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	FY

XML

SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS

12 Months Ended

Mar. 31, 2013

SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS

SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

	Balance at beginning of period		Additions charged to cost and expenses		Other Adjustments/ Deductions(1)			Balance at end of period
Allowance for doubtful accounts and customer credits:
Year ended March 31, 2013	$	4,224	$	—	$	(1,575	)	$	2,649
Year ended March 23, 2012	$	6,803	$	—	$	(2,579	)	$	4,224
Year ended March 25, 2011	$	1,201	$	5,432	$	170		$	6,803
Deferred tax valuation allowance:
Year ended March 31, 2013	$	33,994	$	5,090	$	—		$	39,084
Year ended March 23, 2012	$	43,181	$	—	$	(9,187	)	$	33,994
Year ended March 25, 2011	$	38,195	$	4,986	$	—		$	43,181

(1)

Other adjustments and deductions primarily consist of adjustments to deferred revenue and write-offs of amounts previously charged to the provision.