Fair value measurement

9 Months Ended

Dec. 31, 2015

The Company's derivative instruments are recorded at fair value in other current assets and other current liabilities in the condensed consolidated balance sheets. The Company's policy is to offset fair values on the balance sheet if a foreign currency master netting arrangement exists. Gains or losses related to the foreign currency forward contracts are reported as a component of other income or loss on the Company's condensed consolidated statements of operations. For all periods presented, none of the Company's derivative instruments were designated as hedging instruments. The Company does not use foreign currency option or foreign exchange forward contracts for speculative or trading purposes.

To estimate the fair value of the derivative instruments, the Company uses valuation approaches within a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is divided into three levels based on the source of inputs as follows:


•	Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access;


•	Level 2 - Valuations for which all significant inputs are observable, either directly or indirectly, other than level 1 inputs;


•	Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used for measuring fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level of input used that is significant to the overall fair value measurement.

The Company purchases foreign currency forward contracts, generally with maturities of twelve months or less, to reduce the volatility of cash flows primarily related to forcasted payments and expenses denominated in certain foreign currencies. As of December 31, 2015, RealD had outstanding forward contracts based on the Euro with notional amounts totaling $2.4 million. The fair value measurement of the derivative instruments was as follows:



(in thousands)
Fair value measurement as of December 31, 2015:	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Assets:
Derivatives:
Foreign currency forward contracts	$	—	$	11	$	—	$	11
Total assets	$	—	$	11	$	—	$	11

Liabilities:
Derivatives:
Foreign currency forward contracts	$	—	$	—	$	—	$	—
Total liabilities	$	—	$	—	$	—	$	—

As of March 31, 2015, the carrying amount of the Company's foreign currency forward contracts was $0.4 million.

For the three and nine months ended December 31, 2015, the net realized and unrealized loss related to the foreign currency forward contracts was $8 thousand and $0.4 million, respectively and classified as other loss. For the three and nine months ended December 31, 2014, the net realized and unrealized gain related to the foreign currency forward contracts was $0.2 million and $0.3 million and classified as other income.

The Company monitors its positions with, and the credit quality of, the financial institutions that are counterparties to its financial instruments and does not currently anticipate nonperformance by the counterparties.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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