DISCONTINUED OPERATIONS

On January 9, 2018, pursuant to the Stock Purchase Agreement entered into on November 29, 2017, the Company completed the Big Fish Transaction. The Purchaser paid an aggregate consideration of $990.0 million in cash in connection with the Big Fish Transaction, subject to customary adjustments for working capital and indebtedness and certain other adjustments as set forth in the Stock Purchase Agreement.

The following table presents the financial results of Big Fish Games included in “Income (loss) from discontinued operations, net of tax”:



	Years Ended December 31,
(in millions)	2017			2016			2015
Net revenue	$	466.0		$	486.2		$	413.7
Operating expenses	369.0			398.9			340.1
Selling, general and administrative expense	27.8			20.9			15.2
Research and development	39.6			39.0			39.4
Transaction expense, net	4.7			5.8			21.7
Total operating expense	441.1			464.6			416.4
Operating income (loss)	24.9			21.6			(2.7		)
Other expense	(1.7		)	(0.9		)	(0.6		)
Income (loss) from discontinued operations before provision for income taxes	23.2			20.7			(3.3		)
Income tax provision	(5.1		)	(9.3		)	(2.3		)
Income (loss) from discontinued operations, net of tax	$	18.1		$	11.4		$	(5.6	)

The following table presents the major classes of assets and liabilities presented as held for sale related to the Big Fish Transaction as of December 31, 2017 and 2016:



	December 31,
(in millions)	2017		2016
ASSETS
Current assets:
Cash and cash equivalents	$	2.6	$	3.4
Accounts receivable	42.9		24.7
Game software development, net	6.9		9.6
Other current assets	16.7		33.1
Current assets of discontinued operations held for sale	69.1		70.8
Property and equipment, net	16.4		13.8
Game software development, net	13.5		6.3
Goodwill	530.7		530.7
Other intangible assets, net	238.8		271.7
Other assets	24.0		0.8
Long-term assets of discontinued operations held for sale	823.4		823.3
Total assets	$	892.5	$	894.1
LIABILITIES
Current liabilities:
Accounts payable	$	5.5	$	3.7
Accrued expense	35.0		26.9
Deferred revenue	85.1		81.3
Big Fish Games deferred payment	28.4		27.8
Big Fish Games earnout liability	34.2		67.9
Current liabilities of discontinued operations held for sale	188.2		207.6
Deferred income taxes	47.6		90.0
Other liabilities	7.2		2.3
Non-current liabilities of discontinued operations held for sale	54.8		92.3
Total liabilities	$	243.0	$	299.9

Stock-Based Compensation

As part of the Big Fish Transaction, the vesting dates for all outstanding unvested restricted stock awards, restricted stock unit awards, and performance share units awards (collectively the "Stock Awards") for certain Big Fish Games' employees were accelerated to vest on the closing date. Most of these Stock Awards would not have vested prior to the closing date of the Big Fish Transaction. Therefore, the related stock-based compensation expense previously recognized through the modification date was reduced to zero and a new fair value of the Stock Award was established on the date of the announcement of the Big Fish Transaction. The expense will be amortized during the period from the date of the announcement to the closing of the Big Fish Transaction. The incremental stock-based compensation expense recognized during 2017 due to the acceleration of vesting was $3.4 million, which is included in income (loss) from discontinued operations, net of tax in the accompanying Consolidated Statements of Comprehensive Income.

Total stock-based compensation expense related to Big Fish Games, which includes the accelerated vesting of the Stock Awards and stock options associated with the Company's employee stock purchase plan, was $11.1 million in 2017, $5.6 million in 2016, and $1.3 million in 2015. The Company expects to recognize $3.5 million of remaining stock-based compensation expense related to Big Fish Games in the first quarter of 2018.

Fair Value of Liabilities

We endeavor to utilize the best available information in measuring fair value. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The following tables present our liabilities measured at fair value on a recurring basis related to our discontinued operations and liabilities held for sale:



	Level 3
(in millions)	December 31, 2017		December 31, 2016
Big Fish Games deferred payments	$	28.4	$	27.8
Big Fish Games earnout liability	34.2		67.9
Total	$	62.6	$	95.7

The following table presents the change in fair value of our instruments classified within Level 3 related to our discontinued operations and liabilities held for sale:



	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
(in millions)	Big Fish Games Deferred Payments		Big Fish Games Earnout Liability			Total
Balance as of December 31, 2016	$	27.8	$	67.9		$	95.7
Payments	—		(34.2		)	(34.2		)
Change in fair value	0.6		0.5			1.1
Balance as of December 31, 2017	$	28.4	$	34.2		$	62.6

On March 27, 2017, the Company amended the Agreement and Plan of Merger associated with the Company's acquisition of Big Fish Games dated as of December 16, 2014, to extend the deferral of the earnout consideration payable and the Big Fish Games' founder deferred payment on December 15, 2017 to January 3, 2018. The estimated fair value of the Big Fish Games deferred payment and earnout liability as of December 31, 2017 was equal to the cash paid on January 3, 2018. The increase in fair values of the Big Fish Games deferred payment and earnout liability of $1.1 million in 2017, $5.7 million in 2016 and $21.7 million in 2015 is included in discontinued operations in the accompanying Consolidated Statements of Comprehensive Income.