##### Table of Contents





UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2008.ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934.   Commission File Number:
    000-24643
  DIGITAL RIVER, INC.
 (Exact name of registrant as
    specified in its charter)
  DELAWARE


41-1901640(State or other jurisdiction
    of


(I.R.S. EmployerIncorporation or
    organization)


Identification No.
)   9625 WEST 76TH STREET
    EDEN PRAIRIE, MINNESOTA 55344 (Address of principal
    executive offices)
  (952) 253-1234
 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
 Name of each Exchange on which registered:
 Common Stock $0.01 par value Nasdaq Global Select
    Market
  Securities registered pursuant to Section 12(g) of the
    Act:
 None
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
 Large accelerated
    filer þ

Accelerated
    filer o

Non-accelerated
    filer o

Smaller reporting
    company o(Do not check if a smaller reporting company)   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K




---



##### 





TABLE OF
    CONTENTS
  PART IItem 1.


Business


3Item 1A.


Risk Factors


13Item 1B.


Unresolved Staff Comments


26Item 2.


Properties


26Item 3.


Legal Proceedings


27Item 4.


Submission of Matters to a Vote of Security
    Holders


27PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters, and Issuer Purchases of Equity
    Securities


28Item 6.


Selected Financial Data


30Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


31Item 7A.


Qualitative and Quantitative Disclosures about
    Market Risk


42Item 8.


Financial Statements and Supplementary Data


44Item 9.


Changes In and Disagreements With Accountants on
    Accounting and Financial Disclosure


44Item 9A.


Controls and Procedures


44Item 9B.


Other Information


46PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


47Item 11.


Executive Compensation


47Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


47Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


47Item 14.


Principal Accountant Fees and Services


47PART IVItem 15.


Exhibits and Financial Statement Schedules


48EX-12.1EX-21.1EX-23.1EX-31.1EX-31.2EX-32   2




---



##### Table of Contents



CAUTIONARY
    STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM
    ACT OF 1995
  This Annual Report on
    Form 10-K
    contains certain forward-looking statements within the meaning
    of Section 27A of the Securities Act of 1933, as amended,
    and Section 21E of the Securities Exchange Act of 1934, as
    amended. All statements, other than statements of historical
    fact, regarding our strategy, future operations, financial
    position, estimated revenue, projected costs, projected savings,
    prospects, plans, opportunities and objectives constitute
    forward-looking statements. The words
    may, will, expect,
    plan, anticipate, believe,
    estimate, potential, or
    continue and similar types of expressions identify
    forward-looking statements, although not all such statements
    contain these identifying words. These
    forward-looking
    statements are based upon information that is currently
    available to us
    and/or
    managements current expectations, speak only as of the
    date hereof, and are subject to risks and uncertainties. We
    expressly disclaim any obligation, except as required by law, or
    undertaking to update or revise any forward-looking statements
    contained or incorporated by reference herein to reflect any
    change or expectations with regard thereto or to reflect any
    change in events, conditions, or circumstances on which any such
    forward-looking statement is based, in whole or in part. Our
    actual results may differ materially from the results discussed
    in or implied by such forward-looking statements. We are subject
    to a number of risks, some of which may be similar to those of
    other companies of similar size in our industry, including
    pre-tax losses, rapid technological changes, competition,
    limited number of suppliers, customer concentration, failure to
    successfully integrate acquisitions, adverse government
    regulations, failure to manage international activities, and
    loss of key individuals. Risks that may affect our operating
    results include, but are not limited to, those discussed in
    Part I Item 1A, titled Risk Factors.
    Readers should carefully review the risk factors described in
    this document and in other documents that we file from time to
    time with the Securities and Exchange Commission.
 PART I  ITEM 1.
    BUSINESS.  Overview
  e-commerce e-mail
  e-commerce e-commerce e-commerce
 3




---



##### Table of Contents



e-mail
    952-253-1234.
  Form 10-K, Form 10-Q Form 8-K,
  Industry
    Background
  Growth of the Internet and
    E-Commerce. E-Commerce e-commerce e-commerce:
  Growing Interest in Direct Sales of Products to
    Consumers.
  Opportunities for Outsourced
    E-Commerce. e-commerce e-commerce e-commerce
   4




---



##### Table of Contents



e-commerce
  Shift from Physical to Electronic Delivery of
    Software. e-books,
  The
    Digital River Solution
  e-commerce e-commerce e-commerce e-commerce
  Benefits
    to Clients
  Reduced
    Total Cost of Ownership and Risk
  e-commerce e-commerce e-commerce e-commerce, e-commerce
  Revenue
    Growth
    non-U.S.-based
 5




---



##### Table of Contents



tm
  Deployment
    Speed
  e-commerce e-commerce
  Focus on
    Core Competency
  e-commerce e-commerce e-commerce
  Benefits
    to Buyers
  e-commerce
  Strategy
  e-commerce
  Attract New Clients and Expand Relationships with Existing
    Clients.
  e-commerce
 6




---



##### Table of Contents



e-commerce
  Expand International Sales.
  Provide Clients with Strategic Marketing
    Services. e-mail return-on-investment and/or
  Maintain Technology Leadership. e-commerce return-on-investment
  Continue to Seek Strategic
    Acquisitions.
  Services
    Store Design, Development and Hosting. e-commerce
 7




---



##### Table of Contents



e-mail e-mail
  e-commerce back-up
  Store Merchandising.
  Order Management and Fraud Screening. e-commerce
  and/or
  Digital and Physical Fulfillment Services.
  e-commerce
    Customer Service. e-mail
 8




---



##### Table of Contents



Advanced Reporting and Analytics.
  Strategic Marketing Services. e-mail e-commerce
  Financial Services. e-payments.
  Clients
  e-commerce
  Sales and
    Marketing
  return-on-investment
  e-marketing
 9




---



##### Table of Contents



e-mail e-mail
  e-commerce
  Technology
  e-commerce e-commerce e-commerce
  Architecture. e-commerce
    E-Commerce
    System Maintenance. e-commerce e-commerce e-commerce e-commerce e-commerce
  Security.
 10




---



##### Table of Contents



e-commerce
  Data Center Operations.
    e-commerce
  Product
    Research and Development
    e-commerce, e-commerce
  Competition
  e-commerce e-commerce e-commerce
  
    In-house development of
    e-commerce
    capabilities using tools or applications from companies such as
    Art Technology Group, Inc. and IBM Corporation;
    E-Commerce
    capabilities custom-developed by companies such as IBM Global
    Services and Accenture, Inc.;
    Other providers of outsourced
    e-commerce
    solutions, such as GSI Commerce, Inc., asknet Inc. and Arvato, a
    division of Bertelsmann AG;
    Providers of technologies, services or products that support a
    portion of the
    e-commerce
    process, such as payment processing, including CyberSource
    Corporation and PayPal Corp.; 11




---



##### Table of Contents




    Companies that offer various online marketing services,
    technologies and products, including ValueClick, Inc. and
    aQuantive, Inc.;
    High-traffic branded websites that generate a substantial
    portion of their revenue from
    e-commerce
    and may offer or provide to others the means to offer products
    for sale, such as Amazon.com, Inc. and Buy.com, Inc.; and
    Web hosting, web services and infrastructure companies that
    offer portions of our solution and are seeking to expand the
    range of their offerings, such as Network Solutions, LLC, Akamai
    Technologies, Inc., Yahoo! Inc. and eBay Inc.    Intellectual
    Property
    Government
    Regulation
       12




---



##### Table of Contents



Employees
    Executive
    Officers
    Name

Age

PositionJoel A. Ronning


52


Chief Executive OfficerThomas M. Donnelly


44


Chief Financial OfficerKevin L. Crudden


53


VP/General Counsel   Mr. Ronning
  Mr. Donnelly
  Mr. Crudden
  ITEM 1A.
    RISK
    FACTORS  The risks described below are not the only ones facing our
    company. Additional risks not presently known to us or that we
    currently deem immaterial also may impair our business
    operations. Our business, financial condition or results of
    operations could be materially adversely affected by any of
    these risks and the value of our common stock could decline due
    to any of these risks. This annual report also contains
    forward-looking statements that involve risks and uncertainties.
    Our actual results could differ materially from those
    anticipated in these forward-looking statements as a result of
    certain factors, including the risks faced by us described below
    and elsewhere in this report.
  We may
    experience significant fluctuations in our revenues, operating
    results, growth rate, and stock price.
     13




---



##### Table of Contents




    Client Development and Retention.  We generate
    revenue by providing services to a wide variety of companies,
    primarily in the software and high-tech products markets.
    Therefore, it is important to our ongoing success that we
    maintain our key client relationships and, at the same time,
    develop new client relationships. If we cannot develop and
    maintain satisfactory relationships with software and digital
    products publishers, manufacturers of consumer electronics and
    other goods, online retailers and online channel partners on
    acceptable commercial terms, we will likely experience a decline
    in revenue and operating profit. We also depend on our clients
    creating and supporting products that consumers will purchase.
    If we are unable to obtain sufficient quantities of products for
    any reason, or if the quality of service provided by these
    publishers and manufacturers falls below a satisfactory level,
    we could also experience a decline in revenue, operating profit
    and consumer satisfaction, and our reputation could be harmed.
    Our contracts with our clients are generally one to two years in
    duration, with an automatic renewal provision for additional
    one-year periods, unless we are provided with a written notice
    before the end of the contract. We have no material long-term or
    exclusive contracts or arrangements with any clients that
    guarantee the availability of products. Clients that currently
    supply products to us may not continue to do so, and we may be
    unable to establish new relationships with clients to supplement
    or replace existing relationships.  tm
  
    Fluctuations in Demand.  Our quarterly and
    annual operating results are subject to fluctuations in demand
    for the products or services offered by us or our clients, such
    as anti-virus software and anti-spyware software and consumer
    electronics. In particular, sales of anti-virus software
    represented a significant portion of our revenues in recent
    years, and continue to be very important to our business. Demand
    for anti-virus software is subject to the unpredictable
    introduction of significant computer viruses. To the extent that
    software publishers successfully introduce products or services
    not sold through our platform that are competitive with the
    products and services offered by our current clients (including
    anti-virus products and services), our revenues could be
    materially adversely affected. In addition, revenue generated by
    our software and digital commerce services is likely to
    fluctuate on a seasonal basis that is typical for the software
    publishing market, consumer electronics market, and computer and
    video games markets. Softening or weakening of traditionally
    high-volume periods, such as the holiday season, can materially
    adversely affect our revenues and operating results.
    Changes in the
    E-commerce
    Industry.  The nature of our business and the
    e-commerce
    industry in which we operate has undergone, and continues to
    undergo, rapid development and change. Thus, our chances of
    financial and operational success should be evaluated in light
    of the risks, uncertainties, expenses, delays and difficulties
    associated with operating a business in a relatively rapidly
    changing industry. If we are unable to address these issues, we
    may not be financially or operationally successful. 14




---



##### Table of Contents




    Dependence on Key Personnel.  Our future
    success significantly depends on our ability to continue to
    identify, attract, hire, train, retain and motivate highly
    skilled personnel, including the continued services and
    performance of our senior management. Competition for these
    personnel is intense, particularly in the Internet industry. Our
    performance also depends on our ability to retain and motivate
    our key technical employees who are skilled in maintaining our
    proprietary technology platforms. The loss of the services of
    any of our executive officers or key employees could harm our
    business if we are unable to effectively replace that officer or
    employee, or if that person should decide to join a competitor
    or otherwise directly or indirectly compete with us. Further, we
    may need to incur additional operating expenses and divert other
    management time in order to search for a replacement.
    Operating Expenses.  Our operating expenses are
    based on our expectations of future revenue. These expenses are
    relatively fixed in the short-term. If our revenue for a quarter
    falls below our expectations and we are unable to quickly reduce
    spending in response, our operating results for that quarter
    would be harmed.
    Infrastructure.  The introduction by us of new
    websites, web stores or services, and the continued upgrading,
    development and maintenance of our systems and infrastructure to
    meet emerging market needs, leverage technical innovations, and
    remain competitive in our service and product offerings, may
    require a substantial investment of our resources and result in
    significant capital expenditures and operating costs.
    Other Factors.  Additional factors that may
    affect our revenues, operating results, continued growth, and
    our stock price include:  
    Competitive developments, including the introduction of new
    products and services and the announcement of new client and
    strategic relationships by our competitors;
    General macroeconomic conditions, including severe downturns or
    recessions in the United States and elsewhere, global unrest,
    terrorist activities, and particularly those economic conditions
    affecting the
    e-commerce
    and retailer industries;
    Changes that affect our clients or the viability of their
    product lines, and client decisions to delay new product
    launches or to invest in
    e-commerce
    initiatives;
    Conditions or trends in the Internet and online commerce
    industries in the United States and around the world, including
    slower-than-anticipated growth of the online market as a vehicle
    for the purchase of software products, changes in consumer
    confidence in the safety and security of online commerce, and
    changes in the usage of the Internet and
    e-commerce;
    The cost of compliance with U.S. and foreign laws, rules
    and regulations relating to our business, including the
    potential effect of new laws, rules and regulations, or
    interpretations of existing laws, rules and regulations, that
    affect our business operations or otherwise restrict or affect
    online commerce
    and/or the
    Internet as a whole, as well as our compliance with the rules
    and policies of entities whose services are critical for our
    continued operations, such as banks and credit card associations;
    Our announcement of significant acquisitions, strategic
    partnerships, joint ventures or capital commitments or results
    of operations or other developments related to those
    acquisitions, and our ability to successfully integrate and
    manage acquired businesses;
    Required changes in generally accepted accounting principles and
    disclosures; and
    Sales or other transactions involving our common stock or our
    convertible notes.  Failure
    to properly manage and sustain our expansion efforts could
    strain our management and other resources.
   15




---



##### Table of Contents



Our
    international expansion efforts may not be successful in
    generating additional revenue.
    
    Changes in regulatory requirements and tariffs;
    Uncertainty of application of local commercial, tax, privacy and
    other laws and regulations;
    Reduced protection of intellectual property rights;
    Difficulties in physical distribution for international sales;
    Higher incidences of credit card fraud and difficulties in
    accounts receivable collection;
    The burden and cost of complying with a variety of foreign laws,
    rules and regulations;
    The possibility of unionization of our workforce outside the
    United States, particularly in Europe;
    Political, social and economic instability and constraints on
    international trade; and
    Import and export license requirements and restrictions of the
    United States and every other country in which we operate.      New
    obligations to collect or pay transaction taxes could
    substantially increase the cost to us of doing
    business.
  e-commerce
 16




---



##### Table of Contents



We
    could be liable for fraudulent, improper or illegal uses of our
    platforms and services.
  e-commerce e-commerce
  Loss
    of our credit card acceptance privileges, or changes to payment
    networks, fees, rules or practices, would seriously hamper our
    ability to process the sale of merchandise.
    Implementing
    our acquisition strategy could result in dilution and operating
    difficulties leading to a decline in revenue and operating
    profit.
     17




---



##### Table of Contents



We may
    need to raise additional capital to achieve our business
    objectives, which could result in dilution to existing investors
    or increase our debt obligations.
    Security
    breaches could hinder our ability to securely transmit
    confidential information and could materially affect our
    reputation, business operations, operating results and financial
    condition.
   18




---



##### Table of Contents



Protecting
    our intellectual property is critical to our
    success.
      Claims
    against us related to infringement of other parties
    intellectual property rights, or the products we deliver, could
    require us to expend significant resources, enter into
    unfavorable licenses or require us to change our business
    plans.
   19




---



##### Table of Contents



If our
    internal control over financial reporting or disclosure controls
    and procedures are not effective, there may be errors in our
    financial statements that could require a restatement or our
    filings may not be timely and investors may lose confidence in
    our reported financial information, which could lead to a
    decline in our stock price.
  Form 10-K.
      Political
    and economic conditions, and current turmoil in United States
    and global markets, may adversely affect our revenue and results
    of operations, and stock price.
   20




---



##### Table of Contents



and/or
    Because
    the
    e-commerce
    industry is highly competitive and has low barriers to entry, we
    may be unable to compete effectively.
  e-commerce e-commerce
  
    In-house development of
    e-commerce
    capabilities using tools or applications from companies, such as
    Art Technology Group, Inc. and IBM Corporation;
    E-Commerce
    capabilities custom-developed by companies, such as IBM Global
    Services and Accenture, Inc.;
    Other providers of outsourced
    e-commerce
    solutions, such as GSI Commerce, Inc., and asknet Inc.;
    Companies that provide technologies, services or products that
    support a portion of the
    e-commerce
    process, such as payment processing, including CyberSource
    Corporation and PayPal Corp.;
    Companies that offer various online marketing services,
    technologies and products, including ValueClick, Inc. and
    aQuantive, Inc.;
    High-traffic, branded websites that generate a substantial
    portion of their revenue from
    e-commerce
    and may offer or provide to others the means to offer their
    products for sale, such as Amazon.com, Inc.; and
    Web hosting, web services and infrastructure companies that
    offer portions of our solution and are seeking to expand the
    range of their offering, such as Network Solutions, LLC, Akamai
    Technologies, Inc., Yahoo!, Inc., eBay, Inc. and Hostopia.com,
    Inc.   21




---



##### Table of Contents



e-commerce e-commerce
  e-commerce
  Compliance
    with laws, rules and regulations, and changes in applicable
    laws, rules and regulations, may substantially increase our
    costs of doing business, limit our Internet activities, or
    otherwise adversely affect our ability to offer our
    services.
      and/or
    
    User privacy with respect to adults and minors;
    Our ability to collect
    and/or share
    necessary information that allows us to conduct business on the
    Internet;
    Export compliance;
    Pricing, taxation, and regulatory fees;
    Fraud;
    Advertising;
    Intellectual property rights;
    Information security;
    Quality of products and services; 22




---



##### Table of Contents




    Taxes; and
    Recycling of consumer products.    We are
    subject to regulations relating to consumer
    privacy.
    and/or
    Failure
    to develop our technology to accommodate increased traffic could
    reduce demand for our services and impair the growth of our
    business.
   23




---



##### Table of Contents



e-commerce e-commerce
  System
    failures could reduce the attractiveness of our service
    offerings.
      
    Fire, flood and other natural disasters;
    Operator negligence, improper operation by, or supervision of,
    employees, physical and electronic break-ins, misappropriation,
    computer viruses and similar events; and
    Power loss, computer systems failures, denial-of-service
    attacks, and Internet and telecommunications failure.    We may
    become liable to clients who are dissatisfied with our
    services.
  e-commerce and/or
  Our
    clients sales cycles and the implementation process for
    our commerce solution are time-consuming, which may cause us to
    incur substantial expenses and expend management time without
    generating corresponding consumer revenue, which would impair
    our cash flow.
   24




---



##### Table of Contents



The
    listing of our network addresses on anti-spam lists could harm
    our ability to service our clients and deliver goods over the
    Internet.
    We are
    exposed to foreign currency exchange risk.
    Changes
    in our tax rates could affect our future results.
    Developments
    in accounting standards may cause us to increase our recorded
    expenses, which in turn would jeopardize our ability to
    demonstrate sustained profitability.
   25




---



##### Table of Contents



Provisions
    of our charter documents, other agreements and Delaware law may
    inhibit potential acquisition bids for us.
    The
    investment of our substantial cash balance and our investments
    in marketable debt securities are subject to risks which may
    cause losses and affect the liquidity of these
    investments.
  105-115
    ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    SquareDescription of Use

Primary Locations

Footage(1)


Lease ExpirationsCorporate Office Facilities

Minnesota


162,500


2011Other U.S. Office Facilities

California, Colorado, Illinois, Georgia, Nebraska, Ohio, Oregon,
    Pennsylvania, Utah


75,688


From 2009 to 2011Non-U.S.
    Office Facilities

China, Germany, Ireland, Japan, Korea, Luxembourg, Sweden,
    Taiwan, United Kingdom


71,127


From 2009 to 2014Off Site U.S. Data Centers

California, Minnesota, Utah


1,668


From 2009 to 2010Off Site non U.S. Data Centers

Germany, Ireland, Sweden


800


From 2009 to 2011     (1)
    
    Includes sub-leased space.   26




---



##### Table of Contents



ITEM 3.
    LEGAL
    PROCEEDINGS  e-commerce e-commerce patents-in-suit,
      ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   27




---



##### Table of Contents



PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES  Price
    Range of Common Stock
  mark-up,
  2007

High


LowFirst Quarter

$
58.67


$
47.80Second Quarter

$
60.30


$
43.70Third Quarter

$
49.71


$
41.71Fourth Quarter

$
53.52


$
32.382008First Quarter

$
39.48


$
29.17Second Quarter

$
42.62


$
30.68Third Quarter

$
45.45


$
31.36Fourth Quarter

$
34.02


$
16.88   Holders
    Dividend
    Policy
    Issuer
    Purchases of Equity Securities
       28




---



##### Table of Contents



Securities
    Authorized for Issuance under Equity Compensation
    Plans
    Securities
    Performance Measurement
    Comparison1
    COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN*
    Among Digital River, Inc., The NASDAQ Composite Index
    And The RDG Technology Composite Index
  
   *
    
    $100 invested on
    12/31/03 in
    stock or index-including reinvestment of dividends.     1
 29




---



##### Table of Contents



ITEM 6.
    SELECTED
    FINANCIAL DATA  Form 10-K
  Form 10-K,
  December 31,2008


2007


2006


2005


2004(In thousands)Balance Sheet Data:Current Assets

$
603,686


$
774,814


$
704,046


$
413,623


$
315,499Current Liabilities


443,662



245,102



206,159



168,976



116,752Working capital


160,024



529,712



497,887



244,647



198,747Total assets


1,070,252



1,127,744



1,006,263



669,549



504,521Long-term obligations


24,517



206,362



196,345



195,022



195,000Total stockholders equity

$
602,073


$
676,280


$
603,759


$
305,551


$
192,769   Year Ended December 31,2008


2007


2006


2005


2004(In thousands, except per share data)Statement of Income Data:Revenue

$
394,226


$
349,275


$
307,632


$
220,408


$
154,130Costs and expensesDirect cost of services


16,417



10,243



7,709



5,063



5,167Network and infrastructure


41,040



32,309



29,250



19,817



15,164Sales and marketing


150,118



134,401



113,462



69,371



52,083Product research and development


51,184



39,179



32,341



20,690



14,293General and administrative


39,525



38,937



34,158



21,484



17,006Depreciation and amortization


15,980



12,706



10,983



8,833



8,203Amortization of acquisition related intangibles


8,391



7,586



12,134



8,730



8,269Total costs and expenses


322,655



275,361



240,037



153,988



120,185Income from operations


71,571



73,914



67,595



66,420



33,945Interest Income


18,019



32,167



22,836



9,668



3,166Other income (expense), net


(3,319
)


(3,006
)


(949
)


(4,701
)


(1,525
)Income before income tax expense


86,271



103,075



89,482



71,387



35,586Income tax expense


22,676



32,261



28,672



14,875



1,079Net income

$
63,595


$
70,814


$
60,810


$
56,512


$
34,507Net income per share  basic

$
1.72


$
1.75


$
1.58


$
1.64


$
1.07Net income per share  diluted

$
1.55


$
1.58


$
1.40


$
1.41


$
0.94Shares used in per-share calculation  basic


37,016



40,444



38,593



34,536



32,328Shares used in per-share calculation  diluted


42,106



45,914



44,642



41,448



38,532  30




---



##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATION  The discussion in this Annual Report contains forward-looking
    statements that involve risks and uncertainties. Our actual
    results could differ materially from those discussed below.
    Additional factors that could cause or contribute to such
    differences include, but are not limited to, those identified
    below, and those discussed in the section entitled Risk
    Factors, included elsewhere in this Annual Report. When
    used in this document, the words believes,
    expects, anticipates,
    intends, plans, and similar expressions,
    are intended to identify certain of these forward-looking
    statements. However, these words are not the exclusive means of
    identifying such statements. In addition, any statements that
    refer to expectations, projections or other characterizations of
    future events or circumstances are forward-looking statements.
    The cautionary statements made in this document should be read
    as being applicable to all related forward-looking statements
    wherever they appear in this document.
  Overview
  e-commerce
  Acquisitions
    and Comparability of Results
    Critical
    Accounting Policies
    Revenue Recognition. (
  No. 99-19,
 31




---



##### Table of Contents



e-commerce
        No. 06-3, 06-3). EITF 06-3
  Allowance for Doubtful Accounts.
  Credit Card Chargeback Reserve.
  Goodwill, Intangibles and Other Long-Lived
    Assets.
 32




---



##### Table of Contents



Income Taxes and Deferred Taxes.
    Accounting for Uncertainty in
    Income Taxes  an interpretation of FASB Statement
    No. 109 Accounting for Income Taxes
  step-up
  Stock-Based Compensation Expense.
     33




---



##### Table of Contents



Form 10-K
  Results
    of Operations
    2008


2007


2006Revenue


100.0
%


100.0
%


100.0
%Costs and expenses:Direct cost of services


4.2



2.9



2.5Network and infrastructure


10.4



9.3



9.5Sales and marketing


38.1



38.5



36.9Product research and development


13.0



11.2



10.5General and administrative


10.0



11.1



11.1Depreciation and amortization


4.0



3.6



3.6Amortization of acquisition-related intangibles


2.1



2.2



3.9Total costs and expenses


81.8



78.8



78.0Income from operations


18.2



21.2



22.0Interest Income


4.6



9.2



7.4Other expense, net


(0.9
)


(0.9
)


(0.3
)Income before income tax expense


21.9



29.5



29.1Income tax expense


5.8



9.2



9.3Net income


16.1
%


20.3
%


19.8
%   Revenue.
 34




---



##### Table of Contents



e-commerce tm
  Direct Cost of Services. back-up
    Network and Infrastructure.
    Sales and Marketing.
 35




---



##### Table of Contents



Product Research and Development. e-commerce e-marketing
    General and Administrative.
 36




---



##### Table of Contents



Depreciation and Amortization.
    Amortization of Acquisition-Related
    Intangibles.
  Income from Operations.
  Interest Income.
 37




---



##### Table of Contents



Other Expense, Net.
  Income Tax Expense.
      Comprehensive Income.
   38




---



##### Table of Contents



Liquidity
    and Capital Resources
        105-115
   39




---



##### Table of Contents




    determination of the penalty coupon rate, frequency of reset
    period associated with each ARS
    an average redemption period of seven years
    a contribution of the ARS paying its contractually stated
    interest rate
    determination of the risk adjusted discount rate based on LIBOR
    rates for these maturities plus market information on student
    loan credit spreads        Payment due by period (In thousands)Total Amount











2013 andContractual Obligations

Committed


2009


2010


2011-2012


ThereafterOperating Lease Obligations

$
12,527


$
5,048


$
3,735


$
2,999


$
745Convertible Senior Notes

$
198,335


$
187,934


$
110


$
220


$
10,071Total

$
210,862


$
192,982


$
3,845


$
3,219


$
10,816      40




---



##### Table of Contents



2009
    Outlook
    New
    Accounting Standards
  Disclosures about Derivative Instruments and Hedging
    Activities, an amendment of FAS 133 Accounting for Derivative Instruments and Hedging
    Activities
 41




---



##### Table of Contents



Non-controlling Interests in Consolidated Financial
    Statements
    Off
    Balance Sheet Arrangements
    ITEM 7A.
    QUALITATIVE
    AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK  Interest
    Rate Risk
    Foreign
    Currency Risk
     42




---



##### Table of Contents



Year Ended December 31, 2008


Year Ended December 31, 2007


Year Ended December 31, 2006At Prior


Exchange





At Prior


Exchange





At Prior


ExchangeYear


Rate


As


Year


Rate


As


Year


Rate


AsRates(1)


Effect(2)


Reported


Rates(1)


Effect(2)


Reported


Rates(1)


Effect(2)


ReportedRevenue

$
391,481


$
2,745


$
394,226


$
341,293


$
7,982


$
349,275


$
307,071


$
561


$
307,632Costs and expenses


318,471



4,184



322,655



269,682



5,679


$
275,361



239,621



416


$
240,037Income from operations

$
73,010


$
(1,439
)

$
71,571


$
71,611


$
2,303


$
73,914


$
67,450


$
145


$
67,595     (1)
    
    Represents the outcome that would have resulted had exchange
    rates in the current period been the same as those in effect in
    the comparable prior-year period for operating results.(2)
    
    Represents the increase (decrease) in reported amounts resulting
    from changes in exchange rates from those in effect in the
    comparable prior-year period for operating results.  Transaction
    Exposure
    Translation
    Exposure
   43




---



##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  QUARTERLY
    FINANCIAL DATA (UNAUDITED)
    Quarter EndedMarch 31


June 30


September 30


December 31(In thousands, except per share data)2008Revenue

$
103,634


$
98,374


$
96,301


$
95,917Income from operations


20,617



14,227



17,515



19,212Net income


18,283



13,219



15,634



16,459Net income per share  basic

$
0.47


$
0.36


$
0.43


$
0.45Net income per share  diluted

$
0.43


$
0.33


$
0.39


$
0.41   Quarter EndedMarch 31


June 30


September 30


December 31(In thousands, except per share data)2007Revenue

$
91,631


$
78,227


$
82,539


$
96,878Income from operations


23,015



12,998



14,646



23,255Net income


20,706



14,493



15,299



20,316Net income per share  basic

$
0.51


$
0.35


$
0.38


$
0.51Net income per share  diluted

$
0.46


$
0.32


$
0.35


$
0.46   ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  (a)
    Disclosure
    Controls and Procedures  Rules 13a-15(e) 15d-15(e) Form 10-K Form 10-K.
  (b)
    Managements
    Annual Report on Internal Control over Financial
    Reporting   44




---



##### Table of Contents



(c)
    Changes
    in Internal Control over Financial Reporting    (d)
    Report of
    Independent Registered Public Accounting Firm     Internal Control 
    Integrated Framework
     45




---



##### Table of Contents



/s/  Ernst &
    Young LLP
     ITEM 9B.
    OTHER
    INFORMATION   46




---



##### Table of Contents



PART III    ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE      ITEM 11.
    EXECUTIVE
    COMPENSATION    ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE   ITEM 14.  PRINCIPAL
    ACCOUNTANT FEES AND SERVICES   47




---



##### Table of Contents



PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES    Financial Statements.
     Report of Independent Registered Public
    Accounting Firm


52Consolidated Balance Sheets


53Consolidated Statements of Income


54Consolidated Statements of Stockholders
    Equity


55Consolidated Statements of Cash Flows


56Notes to Consolidated Financial Statements


57   Financial Statement Schedules.
  Form 10-K,
  (3)
    Exhibits.  ExhibitNumber

Description of Document3
.1(2)

Amended and Restated Certificate of Incorporation of the
    Registrant, as currently in effect.3
.2(4)

Amended and Restated Bylaws of the Registrant, as currently in
    effect.4
.1(5)

Specimen Stock Certificate.4
.2(9)

Indenture dated as of June 1, 2004, between Digital River,
    Inc. and Wells Fargo Bank, N.A. as trustee, including therein
    the form of the Note.10
.1(5)

Form of Indemnity Agreement between Registrant and each of its
    directors and executive officers.10
.3(5)

Consent to Assignment and Assumption of Lease dated
    April 22, 1998, by and between CSM Investors, Inc.,
    IntraNet Integration Group, Inc. and Registrant.10
.4(3)

Assignment of Lease dated April 21, 1998, by and between
    Intranet Integration Group, Inc. and Registrant.10
.5(3)

Lease Agreement dated January 18, 2000, between Property
    Reserve, Inc. and Registrant.10
.6(4)

First Amendment of Lease dated January 31, 2001, to that
    certain Lease dated April 24, 1996, between CSM Investors,
    Inc. and Registrant (as assignee of Intranet Integration Group,
    Inc.).10
.7(6)

1998 Stock Option Plan, as amended and superseded by
    Exhibit 10.18.*10
.8(7)

1999 Stock Option Plan, formerly known as the 1999 Non-Officer
    Stock Option Plan, as amended and superseded by
    Exhibit 10.18.*10
.9(6)

2000 Employee Stock Purchase Plan, as amended, and offering.*10
.11(8)

Second Amendment of Lease dated April 22, 2002, to that
    certain Lease dated April 24, 1996, between CSM Investors,
    Inc. and Registrant (as assignee of Intranet Integration Group,
    Inc.) as amended.10
.12(8)

Second Amendment of Lease dated April 28, 2003, to that
    certain Lease dated January 18, 2000, between Property
    Reserve Inc. and Registrant.10
.15(9)

Registration Rights Agreement dated as of June 1, 2004,
    between Digital River, Inc. and the initial purchasers of Senior
    Convertible Notes due January 1, 2024. 48




---



##### Table of Contents



ExhibitNumber

Description of Document10
.16(13)

Summary of Compensation Program for Non-Employee Directors.10
.17(14)

Second Amended and Restated Symantec Online Store Agreement, by
    and among Symantec Corporation, Symantec Limited, Digital River,
    Inc. and Digital River Ireland Limited effective April 1,
    2006 10
.18(10)

1998 Equity Incentive Plan (formerly known as 1998 Stock Option
    Plan).*10
.19(13)

Amended and Restated Employment Agreement for Joel A. Ronning.*10
.20(13)

Change of Control and Severance Agreement for Thomas M.
    Donnelly.*10
.21(11)

Form of Amendment to Non-Qualified Stock Option Agreement.*10
.22(12)

Inducement Equity Incentive Plan.*10
.23(15)

2007 Equity Incentive Plan.*10
.24(13)

Change of Control and Severance Agreement for Kevin L. Crudden.*12
.1++

Computation of Ratio of Earnings to Fixed Charges.21
.1++

Subsidiaries of Digital River, Inc.23
.1++

Consent of Independent Registered Public Accounting Firm, dated
    February 19, 2009.24
.1++

Power of Attorney, pursuant to which amendments to this Annual
    Report on
    Form 10-K
    may be filed, is included on the signature pages of this Annual
    Report on
    Form 10-K.31
.1++

Certification of Digital River, Inc.s Chief Executive
    Officer, pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.31
.2++

Certification of Digital River, Inc.s Chief Financial
    Officer, pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.32
++

Certification of Digital River, Inc.s Chief Executive
    Officer and Chief Financial Officer pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.     ++
    
    Filed herewith.*
    
    Management contract or compensatory plan.
    
    Confidential treatment has been requested for portions of this
    agreement, which portions have been filed  separately with
    the SEC.(1)
    
    Incorporated by reference from the Companys Current Report
    on
    Form 8-K
    filed on May 4, 2004.(2)
    
    Incorporated by reference from the Companys Current Report
    on
    Form 8-K
    filed on June 1, 2006.(3)
    
    Incorporated by reference from the Companys Annual Report
    on
    Form 10-K
    for the year ended December 31, 1999, filed on
    March 30, 2000.(4)
    
    Incorporated by reference from the Companys Annual Report
    on
    Form 10-K
    for the year ended December 31, 2000, filed on
    March 27, 2001.(5)
    
    Incorporated by reference from the Companys Registration
    Statement on
    Form S-1
    (File
    No. 333-56787),
    declared effective on August 11, 1998.(6)
    
    Incorporated by reference from the Companys Registration
    Statement on
    Form S-8
    (File
    No. 333-105864)
    filed on June 5, 2003.(7)
    
    Incorporated by reference from the Companys Quarterly
    Report on Form
    10-Q for the
    quarter ended June 30, 2003, filed on August 14, 2003.(8)
    
    Incorporated by reference from the Companys Quarterly
    Report on Form
    10-Q for the
    quarter ended March 31, 2003, filed on May 15, 2003.(9)
    
    Incorporated by reference from the Companys Current Report
    on
    Form 8-K
    filed on July 13, 2004.(10)
    
    Incorporated by reference from the Companys Current Report
    on
    Form 8-K
    filed on May 31, 2005. 49




---



##### Table of Contents



(11)
    
    Incorporated by reference from the Companys Quarterly
    Report on Form
    10-Q for the
    quarter ended June 30, 2005, filed on August 9, 2005.(12)
    
    Incorporated by reference from the Companys Current Report
    on
    Form 8-K
    filed on December 20, 2005.(13)
    
    Incorporated by reference from the Companys Current Report
    on
    Form 8-K
    filed on March 10, 2008.(14)
    
    Incorporated by reference from the Companys Annual Report
    on
    Form 10-K
    for the year ended December 31, 2006, filed on
    March 1, 2007.(15)
    
    Incorporated by reference from the Companys Annual Report
    on
    Form 10-K
    for the year ended December 31, 2007, filed on
    February 29, 2008. 50




---



##### Table of Contents



SIGNATURES
  Form 10-K
    By:
    /s/  Joel
    A. Ronning     Form 10-K
  Form 10-K
  Signature

Title

Date/s/  Joel
    A. RonningJoel
    A. Ronning

Chief Executive Officer and Director
    (Principal Executive Officer)

February 19, 2009/s/  Thomas
    M. DonnellyThomas
    M. Donnelly

Chief Financial Officer and Treasurer
    (Principal Financial and Accounting Officer)

February 19, 2009/s/  Perry
    W. SteinerPerry
    W. Steiner

Director

February 19, 2009/s/  William
    LansingWilliam
    Lansing

Director

February 19, 2009/s/  Thomas
    F. MadisonThomas
    F. Madison

Director

February 19, 2009/s/  J. Paul
    ThorinPaul
    Thorin

Director

February 19, 2009/s/  Frederic
    SeegalFrederic
    Seegal

Director

February 19, 2009  51




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm           Internal Control-Integrated Framework
  /s/  Ernst &
    Young LLP
    52




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Consolidated
    Balance Sheets
  December 31,


December 31,2008


2007(In thousands)ASSETSCURRENT ASSETS:Cash and cash equivalents

$
490,335


$
381,788Short-term investments


10,000



315,636Accounts receivable, net of allowance of $2,457 and $2,489


53,216



64,914Deferred income taxes


7,613



7,899Prepaid expenses and other


42,522



4,577Total current assets


603,686



774,814Property and equipment, net


41,733



31,102Goodwill


273,788



261,885Intangible assets, net of accumulated amortization of $66,345
    and $59,493


32,222



32,382Long-term investments


93,213



Deferred income taxes


24,824



15,606Other assets


786



11,955TOTAL ASSETS

$
1,070,252


$
1,127,744LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Convertible senior notes

$
186,195


$
Accounts payable


184,361



180,386Accrued payroll


14,841



12,704Deferred revenue


13,651



10,384Accrued acquisition costs


3,278



399Other accrued liabilities


41,336



41,229Total current liabilities


443,662



245,102NON-CURRENT LIABILITIES:Convertible senior notes


8,805



195,000Other liabilities


15,712



11,362Total non-current liabilities


24,517



206,362TOTAL LIABILITIES


468,179



451,464COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Preferred Stock, $.01 par value; 5,000,000 shares
    authorized; no shares issued or outstanding






Common Stock, $.01 par value; 120,000,000 shares
    authorized; 43,225,401 and 42,502,019 shares issued


432



425Treasury stock at cost; 6,211,477 and 1,952,884 shares


(216,163
)


(77,707
)Additional paid-in capital


623,778



597,128Retained earnings


189,096



125,501Accumulated other comprehensive income


4,930



30,933Total stockholders equity


602,073



676,280TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
1,070,252


$
1,127,744    53




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Consolidated
    Statements of Income
  For the Years Ended December 312008


2007


2006(In thousands except per share data)Revenue

$
394,226


$
349,275


$
307,632Costs and expensesDirect cost of services


16,417



10,243



7,709Network and infrastructure


41,040



32,309



29,250Sales and marketing


150,118



134,401



113,462Product research and development


51,184



39,179



32,341General and administrative


39,525



38,937



34,158Depreciation and amortization


15,980



12,706



10,983Amortization of acquisition-related intangibles


8,391



7,586



12,134Total costs and expenses


322,655



275,361



240,037Income from operations


71,571



73,914



67,595Interest Income


18,019



32,167



22,836Other expense, net


(3,319
)


(3,006
)


(949
)Income before income tax expense


86,271



103,075



89,482Income tax expense


22,676



32,261



28,672Net income

$
63,595


$
70,814


$
60,810Net income per share  basic

$
1.72


$
1.75


$
1.58Net income per share  diluted

$
1.55


$
1.58


$
1.40Shares used in per-share calculation  basic


37,016



40,444



38,593Shares used in per-share calculation  diluted


42,106



45,914



44,642    54




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Consolidated
    Statements of Stockholders Equity
  RetainedAdditional





Accumulated


Earnings


TotalCommon Stock


Treasury


Paid-In


Deferred


Comprehensive


(Accumulated


Stockholders


ComprehensiveShares


Amount


Stock


Capital


Compensation


Income (Loss)


Deficit)


Equity


Income (Loss)(In thousands)BALANCE, December 31, 2005


35,034


$
355


$
(13,586
)

$
329,327


$
(1,990
)

$
(2,431
)

$
(6,123
)

$
305,552


$
54,411Net income


























60,810



60,810



60,810Reclassification of deferred compensation balance upon adoption
    of SFAS 123(R)














(1,990
)


1,990















Unrealized gain on investments






















576







576



576Foreign currency translation gain






















13,463







13,463



13,463Sale of common stock


4,000



40







172,740















172,780



Stock Issued for Acquisition


28







(12
)


1,184















1,172



Exercise of stock options


1,220



12







21,106















21,118



Stock-based compensation


113



1







13,903















13,904



Tax withheld in restricted stock vesting


(8
)






(426
)


















(426
)


Tax benefit of stock-based compensation














12,700















12,700



Common stock issued under the Employee Stock Purchase Plan


71



1







2,110















2,111



BALANCE, December 31, 2006


40,458


$
409


$
(14,024
)

$
551,080


$



$
11,608


$
54,687


$
603,760


$
74,849Net income


























70,814



70,814



70,814Unrealized gain on investments






















1,006







1,006



1,006Foreign currency translation gain






















18,319







18,319



18,319Repurchase of common stock


(1,372
)






(62,968
)


















(62,968
)Stock Issued for Acquisition


44



1



(189
)


2,337















2,149



Exercise of stock options


1,220



12







13,498















13,510



Stock-based compensation














13,742















13,742



Restricted stock issued under equity incentive plans, net of
    forfeitures


135



2







(2
)










Tax withheld in restricted stock vesting


(11
)






(526
)


















(526
)


Tax benefit of stock-based compensation














13,990















13,990



Common stock issued under the Employee Stock Purchase Plan


76



1







2,483















2,484



BALANCE, December 31, 2007


40,550


$
425


$
(77,707
)

$
597,128


$



$
30,933


$
125,501


$
676,280


$
90,139Net income


























63,595



63,595



63,595Unrealized loss on investments






















(10,822
)






(10,822
)


(10,822
)Foreign currency translation loss






















(15,181
)






(15,181
)


(15,181
)Repurchase of common stock


(4,239
)






(137,858
)


















(137,858
)Exercise of stock options


426



4







7,167















7,171



Stock-based compensation














12,548















12,548



Restricted stock issued under equity incentive plans, net of
    forfeitures


186



2







(2
)


















Tax withheld in restricted stock vesting


(19
)






(598
)


















(598
)


Tax benefit of stock-based compensation














4,223















4,223



Common stock issued under the Employee Stock Purchase Plan


112



1







2,714















2,715



BALANCE, December 31, 2008


37,016


$
432


$
(216,163
)

$
623,778


$



$
4,930


$
189,096


$
602,073


$
37,592    55




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Consolidated
    Statements of Cash Flows
  For the Years Ended December 31,2008


2007


2006(In thousands)OPERATING ACTIVITIES:Net income

$
63,595


$
70,814


$
60,810Adjustments to reconcile net income to net cash provided by
    operating activities:Amortization of acquisition-related intangibles


8,391



7,586



12,134Change in accounts receivable allowance, net of acquisitions


434



(174
)


1,215Depreciation and amortization


15,980



12,706



10,983Stock-based compensation expense related to stock-based
    compensation plans


12,548



13,742



13,904Excess tax benefits from stock-based compensation


(4,390
)


(12,030
)


(8,980
)Deferred income taxes and other


4,971



27,522



19,583Change in operating assets and liabilities (net of acquisitions):Accounts receivable


11,332



(6,863
)


(14,678
)Prepaid and other assets


(26,505
)


1,325



(1,293
)Accounts payable


6,531



32,181



3,701Deferred revenue


3,235



3,046



811Income tax payable


(5,366
)


(7,076
)


8,126Accrued payroll and other accrued liabilities


4,478



3,609



11,190Net cash provided by operating activities


95,234



146,388



117,506INVESTING ACTIVITIES:Purchases of investments


(480,917
)


(436,806
)


(193,609
)Sales of investments


676,108



358,470



179,296Cash paid for acquisitions, net of cash received


(23,465
)


(31,625
)


(37,800
)Purchases of equipment and capitalized software


(26,898
)


(18,722
)


(15,907
)Net cash provided by/(used for) investing activities


144,828



(128,683
)


(68,020
)FINANCING ACTIVITIES:Proceeds from sales of common stock










172,780Exercise of stock options


7,171



13,510



21,118Sales of common stock under employee stock purchase plan


2,715



2,483



2,109Repurchase of common stock


(137,858
)


(62,968
)


Repurchase of restricted stock to satisfy tax withholding
    obligation


(598
)


(528
)


(426
)Excess tax benefits from stock-based compensation


4,390



12,030



8,980Net cash (used for)/provided by financing activities


(124,180
)


(35,473
)


204,561EFFECT OF EXCHANGE RATE CHANGES ON CASH


(7,335
)


9,313



4,426NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


108,547



(8,455
)


258,473CASH AND CASH EQUIVALENTS, beginning of year


774,814



704,046



413,623CASH AND CASH EQUIVALENTS, end of year

$
883,361


$
695,591


$
672,096SUPPLEMENTAL DISCLOSURES:Cash paid for interest on Convertible Senior Notes

$
2,438


$
2,438


$
2,438Cash paid for income taxes

$
20,503


$
8,232


$
2,006Noncash investing and financing activities:Common stock issued in acquisitions and earn-outs

$



$
2,150


$
1,172    56




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes
    to Consolidated Financial Statements
 December 31,
    2008 and 2007
  1.
    Nature of
    Operations and Summary of Significant Accounting
    Policies  e-commerce
  Principles
    of Consolidation and Classification
    Use of
    Estimates
    Foreign
    Currency Translation
        Cash
    and Cash Equivalents
   57




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Short-Term
    Investments
    Property
    and Equipment
    2008


2007Computer hardware and software

$
78,660


$
60,977Furniture, fixtures and leasehold improvements


15,475



13,077Total property and equipment

$
94,135


$
74,054Accumulated depreciation


(52,402
)


(42,952
)Net property and equipment

$
41,733


$
31,102   Purchased
    Intangible Assets
    Long-Lived
    Assets
   58




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Other
    Assets
    2008


2007Unamortized debt financing costs

$
224


$
5,298Cost of investment






6,000Other


562



657Total other assets

$
786


$
11,955     Other
    Accrued Liabilities
    2008


2007Accrued expenses

$
24,148


$
20,631Sales, value-added and transaction taxes


19,788



20,598Current income taxes


(2,600
)


Total other accrued liabilities

$
41,336


$
41,229   Comprehensive
    Income
      Revenue
    Recognition
  (
 59




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    No. 99-19, e-commerce
        No. 06-3, 06-3). EITF 06-3
  Deferred
    Revenue
    Advertising
    Costs
    Income
    Taxes
   60




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Interest
    Income
    Other
    (Expense), Net
    Research
    and Development and Software Development
  No. 98-1,
  Stock-Based
    Compensation Expense
     61




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        Recent
    Accounting Pronouncements
  Disclosures about Derivative Instruments and Hedging
    Activities, an amendment of FAS 133 non-derivative Accounting for Derivative
    Instruments and Hedging Activities
  Non-controlling Interests in Consolidated Financial
    Statements
    2.
    Net
    Income per Share   62




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    For the Years Ended December 31,2008


2007


2006Earnings per share  basicNet income  basic

$
63,595


$
70,814


$
60,810Weighted average shares outstanding  basic


37,016



40,444



38,593Earnings per share  basic

$
1.72


$
1.75


$
1.58Earnings per share  dilutedNet income  basic


63,595


$
70,814


$
60,810Exclude: Interest expense and amortized financing cost of
    convertible senior notes, net of tax benefit


1,739



1,739



1,739Net income  diluted

$
65,334


$
72,553


$
62,549Weighted average shares outstanding  basic


37,016



40,444



38,593Dilutive impact of non-vested stock and options outstanding


665



1,045



1,624Dilutive impact of convertible senior notes


4,425



4,425



4,425Weighted average shares outstanding  diluted


42,106



45,914



44,642Earnings per share  diluted

$
1.55


$
1.58


$
1.40   No. 04-8,
  3.
    Investments    Unrealized Gain/(Loss)





Maturities/Reset DatesLess than 12


Greater than 12





Less than 12


Greater than 12Cost


Months


Months


Fair Value


Months


Months2008U.S. government sponsored entities

$
9,900


$
100


$



$
10,000


$
10,000


$
Student loan bonds


109,500



(16,287
)






93,213







93,213Total available-for-sale securities

$
119,400


$
(16,187
)

$



$
103,213


$
10,000


$
93,2132007U.S. government sponsored entities

$
139,377


$
94


$
859


$
140,330


$
69,070


$
71,260Student loan bonds


119,750











119,750



119,750



Other


55,556











55,556



55,556



Total available-for-sale securities

$
314,683


$
94


$
859


$
315,636


$
244,376


$
71,260    63




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  4.
    Business
    Combinations, Goodwill and Intangible Assets    Initial


Initial











Other Intangible AssetsShares


Purchase


Acquired


Assumed





Technology/


Customer


Non-competeAcquisition

Issued


Consideration


Assets


Liabilities


Goodwill


Tradenames


Relationships


Agreements2008Think Subscription, Inc.





$
5,100


$
644


$
(1,019
)

$
2,007


$
1,209


$
1,813


$
CustomCD, Inc.






7,000



764



(355
)


3,136



2,059



1,468DigitalSwift Corporation






9,200



427



(459
)


4,673



487



4,325



Total





$
21,300


$
1,835


$
(1,833
)

$
9,816


$
3,755


$
7,606


$
2007Netgiro Systems AB





$
27,386


$
8,567


$
(7,477
)

$
9,742


$
4,424


$
12,372


$
Total





$
27,386


$
8,567


$
(7,477
)

$
9,742


$
4,424


$
12,372


$
2006Mindvision, Inc.





$
24,975


$
2,555


$
(8,036
)

$
18,859


$
3,170


$
4,490


$
40Direct Response Technologies, Inc.






14,876



1,573



(3,723
)


11,343



2,465



3,620



Total





$
39,851


$
4,128


$
(11,759
)

$
30,202


$
5,635


$
8,110


$
40     Acquisitions
    completed in 2008
       64




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Acquisitions
    completed in 2007
    Acquisitions
    completed in 2006
  e-commerce
    Future
    Earn-outs
    Pro
    Forma Operating Results (Unaudited)
    2008


2007


2006Revenue

$
395,698


$
366,208


$
322,296Income from operations


70,373



70,590



68,260Net income


62,400



67,494



61,338Diluted income per share

$
1.52


$
1.51


$
1.41    65




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Goodwill
        TotalBalance as of December 31, 2006

$
243,799Goodwill from acquisitions and earn-outs


13,774Adjustments(1)


4,312Balance as of December 31, 2007

$
261,885Goodwill from acquisitions and earn-outs


14,955Adjustments(1)


(3,052
)Balance as of December 31, 2008

$
273,788     (1)
    
    Adjustments to goodwill during the year ended December 31,
    2008 and December 31, 2007, resulted primarily from foreign
    currency translation and tax adjustments relating to goodwill
    associated with our current and prior period acquisitions.  Intangible
    Assets
    As of December 31, 2008Carrying Amount


Accumulated


Carrying AmountGross


Amortization


NetCustomer relationships

$
62,265


$
37,931


$
24,334Non-compete agreements


5,312



5,301



11Technology/tradename


30,991



23,114



7,877Total

$
98,568


$
66,346


$
32,222   As of December 31, 2007Carrying Amount


Accumulated


Carrying AmountGross


Amortization


NetCustomer relationships

$
57,327


$
33,761


$
23,566Non-compete agreements


5,351



5,328



23Technology/tradename


29,197



20,404



8,793Total

$
91,875


$
59,493


$
32,382    66




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2008


2007


2006Weighted





Weighted





WeightedAverage





Average





AverageAmount


Life


Amount


Life


Amount


LifeCustomer relationships

$
7,606



6 years


$
12,372



10 years


$
8,110



8 yearsNon-compete agreements


















40



4 yearsTechnology/tradename


3,755



4 years



4,424



8 years



5,635



4 yearsTotal

$
11,361



5 years


$
16,796



10 years


$
13,785



6 years     Year2009

$
7,3782010


5,8682011


4,7062012


4,5432013


2,617Thereafter


7,110Total

$
32,222     2008


2007Tangible assets

$
1,835


$
8,567Liabilities assumed


(1,833
)


(7,477
)Customer relationships


7,606



12,372Technology/tradename


3,755



4,424Goodwill ( year of acquisition)


9,816



9,742Goodwill (subsequent to year of acquisition)






5,058Net assets acquired

$
21,179


$
32,686   5.
    Stock-Based
    Compensation     67




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Expense
    Information under SFAS 123(R)
    Year Ended December 31,2008


2007(In thousands)


(In thousands)Costs and expensesDirect cost of services

$
785


$
807Network and infrastructure


192



270Sales and marketing


4,562



5,028Product research and development


1,258



1,736General and administrative


5,751



5,901Stock-based compensation included in costs and expenses


12,548



13,742Tax benefit


(2,802
)


(3,737
)Stock-based compensation expense, net of tax

$
9,746


$
10,005   Valuation
    Information under SFAS 123(R)
    2008


2007


2006Risk-free interest rate


2.0
%


4.5
%


4.7
%Expected life (years)


3.37



3.46



4.08Volatility factor


0.45



0.50



0.59Expected dividends










Weighted average fair value of options granted

$
10.74


$
23.11


$
19.00        68




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  6.
    Income
    Taxes    Year Ended December 31,2008


2007


2006United States

$
46,988


$
74,595


$
65,171International


39,283



28,480



24,311Total

$
86,271


$
103,075


$
89,482     Year Ended December 31,2008


2007


2006Current tax expense (benefit):United States federal

$
18,792


$
29,204


$
34,362State and local


1,223



1,842



2,160International


6,858



5,939



2,915Total current provision for income taxes


26,873



36,985



39,437Deferred tax expense (benefit):United States federal


(3,926
)


(3,896
)


(10,136
)State and local


(255
)


(227
)


(637
)International


(16
)


(601
)


8Total deferred provision (benefit) for income taxes


(4,197
)


(4,724
)


(10,765
)Provision for income taxes

$
22,676


$
32,261


$
28,672     Year Ended December 31,2008


2007


2006Tax expense at statutory rate

$
30,195


$
36,076


$
31,319State taxes, net of federal benefit


968



1,615



1,469International rate differential


(7,860
)


(4,623
)


(3,193
)Tax Credits


(955
)


(671
)


(1,909
)Nondeductible expense and other


328



(136
)


986Total

$
22,676


$
32,261


$
28,672  69




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2008


2007Deferred tax assets:Net operating loss and credit carryforwards

$
8,646


$
12,412Nondeductible reserves and accruals


21,075



9,144Depreciation and amortization


4,777



3,339Valuation allowance


(2,061
)


(1,390
)Total deferred tax assets


32,437



23,505Deferred tax liabilities:Depreciation


(1,191.00
)


Other intangibles


(11,016
)


(5,054
)Total deferred tax liabilities


(12,207
)


(5,054
)Net deferred tax assets

$
20,230


$
18,451         Balance at January 1, 2007

$
3,340Increases for tax positions taken during current year


1,072Decreases for tax positions taken during prior years


1,035Balance at December 31, 2007


5,447Increases for tax positions taken during current year


2,957Increases for tax positions taken during prior years


613Decreases as a result of settlements with taxing authorities


(2,622
)Balance at December 31, 2008

$
6,395    70




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    2004-2008
  step-up
  7.
    Commitments
    and Contigencies  Leases
    Year ending December 31,

Lease Obligations2009


5,0482010


3,7352011


2,3122012


687Thereafter


745Total future minimum obligations

$
12,527   Litigation
     71




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Indemnification
    Provisions
      8.
    Debt     72




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      9.
    Fair
    Value Measurements      
    105-115
      
    determination of the penalty coupon rate, frequency of reset
    period associated with each ARS 73




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   
    an average redemption period of seven years
    a contribution of the ARS paying its contractually stated
    interest rate
    determination of the risk adjusted discount rate based on LIBOR
    rates for these maturities plus market information on student
    loan credit spreads      Fair Value MeasurementsAs of December 31, 2008Total


Level 1


Level 2


Level 3Cash equivalents

$
490,335


$
490,335


$



$
Short-term investments


10,000



10,000







Long-term investments


93,213











93,213Total assets measured at fair value

$
593,548


$
500,335


$



$
93,213       Fair Value Measurements UsingSignificant Unobservable Inputs(Level 3)Short-term


Long-termInvestments


Investments


TotalBalance as of January 1, 2008

$
119,750


$



$
119,750Total gains or losses (realized/unrealized)Included in other comprehensive income






(16,287
)


(16,287
)Purchases, issuances, and settlements


(10,250
)






(10,250
)Transfers in and/or out of Level 3


(109,500
)


109,500



Balance as of December 31, 2008

$



$
93,213


$
93,213   Fair
    Value of Financial Instruments
   74




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  10.
    Stockholders
    Equity  Share
    Repurchase Program
          11.
    Employee
    Benefit Plans  Option
    and Restricted Stock Awards
  2007
    Plan
    1998
    Plan
    General
    Stock Award Information
     75




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      WeightedShares





Options


AverageAvailable


Options


Price


Pricefor Grant


Outstanding


Per Share


Per ShareBalance, December 31, 2005


1,928,584



4,523,385


$
2.59 - $31.13


$
16.69Granted


(395,000
)


395,000



29.75 - 57.36



38.64Restricted stock effect on shares available for grant


(134,250
)


N/A



N/A



N/AExercised






(1,219,736
)


2.59 - 45.24



17.31Canceled/expired


140,866



(140,866
)


2.59 - 30.69



22.57Balance, December 31, 2006


1,540,200



3,557,783


$
2.59 - $57.36


$
18.68Granted


(573,376
)


573,376



45.07 - 56.61



54.17Restricted stock effect on shares available for grant


(251,426
)


N/A



N/A



N/AExercised






(1,219,519
)


2.59 - 45.24



11.08Canceled/expired


133,330



(133,330
)


4.56 - 56.61



38.01Additional Shares Reserved


2,000,000



N/A



N/A



N/ABalance, December 31, 2007


2,848,728



2,778,310


$
2.59 - $57.36


$
28.41Granted


(807,000
)


807,000



19.28 - 41.44



31.10Restricted stock effect on shares available for grant


(278,952
)


N/A



N/A



N/AExercised






(425,774
)


4.56 - 38.17



16.84Canceled/expired


213,686



(213,686
)


9.13 - 56.61



38.59Balance, December 31, 2008


1,976,462



2,945,850


$
2.59 - $57.36


$
30.08     Options Outstanding


Options ExercisableWeighted


Weighted


Aggregate





Weighted


AggregateNumber


Average


Average


Intrinsic


Number


Average


IntrinsicExercise Price


Outstanding


Life Remaining


Price


Value


Exercisable


Price


Value$ 2.59 - $ 3.88



19,187



2.0 years


$
2.74


$
423,171



19,187


$
2.74


$
423,1714.56 -  7.55



148,423



2.4 years



5.39



2,880,668



148,423



5.39



2,880,6689.12 - 13.92



344,355



3.8 years



11.74



4,497,656



296,145



11.88



3,827,53716.72 - 22.98



423,446



5.1 years



22.09



1,149,141



364,695



22.55



821,46023.01 - 30.69



621,982



6.5 years



28.02



72,897



439,592



28.41



71,77233.58 - 57.36



1,388,457



8.4 years



41.01







468,235



44.04



$ 2.59 - $57.36



2,945,850



6.6 years


$
30.08


$
9,023,533



1,736,277


$
26.32


$
8,024,608    76




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   WeightedRestricted


AverageStock


Fair ValueNon-Vested Balance, December 31, 2005





$
Granted


89,500



39.96Vested






Forfeited






Non-Vested Balance, December 31, 2006


89,500


$
39.96Granted


198,889



53.75Vested


(23,713
)


39.19Forfeited


(31,272
)


48.54Non-Vested Balance, December 31, 2007


233,404


$
50.64Granted


498,550



29.04Vested


(66,010
)


49.42Forfeited


(312,582
)


33.61Non-Vested Balance, December 31, 2008


353,362


$
35.45   Employee
    Stock Purchase Plan
    Inducement
    Equity Incentive Plan
    Employee
    Benefit Plan
   77




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  12.
    Segment
    Information  e-commerce
    2008


2007


2006United States

$
225,385


$
198,388


$
180,905Europe


112,211



103,385



87,854Other


56,630



47,502



38,873Total

$
394,226


$
349,275


$
307,632       2008


2007United States


Europe


United States


EuropeTotal property and equipment

$
79,781


$
14,354


$
59,359


$
14,695Accumulated depreciation


(43,686
)


(8,716
)


(34,185
)


(8,767
)Net property and equipment

$
36,095


$
5,638


$
25,174


$
5,928Total intangible assets

$
66,951


$
31,617


$
56,302


$
35,573Accumulated amortization


(47,487
)


(18,859
)


(41,385
)


(18,108
)Net intangible assets

$
19,464


$
12,758


$
14,917


$
17,465Total goodwill

$
154,061


$
142,182


$
139,136


$
145,204Accumulated amortization


(22,455
)






(22,455
)


Net goodwill

$
131,606


$
142,182


$
116,681


$
145,204   13.
    Subsequent
    Events   78




---



##### Table of Contents



Digital
    River, Inc.
  Schedule II
    For Years Ended December 31, 2008, 2007 and 2006
    (In thousands)
  Charges toBalance at


Costs and





Balance at2008

Beginning of Year


Expenses


Deductions


End of YearAllowance for doubtful accounts

$
2,489


$
5,214


$
(5,246
)

$
2,457Accrued chargeback reserve


1,186



9,514



(9,092
)


1,608   Charges toBalance at


Costs and





Balance at2007

Beginning of Year


Expenses


Deductions


End of YearAllowance for doubtful accounts

$
2,339


$
581


$
(431
)

$
2,489Accrued chargeback reserve


834



6,829



(6,477
)


1,186   Charges toBalance at


Costs and





Balance at2006

Beginning of Year


Expenses


Deductions


End of YearAllowance for doubtful accounts

$
1,023


$
1,426


$
(110
)

$
2,339Accrued chargeback reserve


1,445



2,937



(3,548
)

$
834   Charged /Charged /


(Credited) toDeferred income tax asset

Balance at


(Credited) to


Other


Balance atValuation Allowance

Beginning of Year


Expenses


Accounts(1)


End of Year2008

$
1,390


$



$
(19
)

$
1,3712007


12,961







(11,571
)


1,3902006


17,504







(4,543
)


12,961     (1)
    
    Amounts not charged (credited) to expenses were charged
    (credited) to equity or goodwill 79




---



##### Table of Contents



INDEX TO
    EXHIBITS
  ExhibitNumber

Description of Document3
.1(2)

Amended and Restated Certificate of Incorporation of the
    Registrant, as currently in effect.3
.2(4)

Amended and Restated Bylaws of the Registrant, as currently in
    effect.4
.1(5)

Specimen Stock Certificate.4
.2(9)

Indenture dated as of June 1, 2004, between Digital River,
    Inc. and Wells Fargo Bank, N.A. as trustee, including therein
    the form of the Note.10
.1(5)

Form of Indemnity Agreement between Registrant and each of its
    directors and executive officers.10
.3(5)

Consent to Assignment and Assumption of Lease dated
    April 22, 1998, by and between CSM Investors, Inc.,
    IntraNet Integration Group, Inc. and Registrant.10
.4(3)

Assignment of Lease dated April 21, 1998, by and between
    Intranet Integration Group, Inc. and Registrant.10
.5(3)

Lease Agreement dated January 18, 2000, between Property
    Reserve, Inc. and Registrant.10
.6(4)

First Amendment of Lease dated January 31, 2001, to that
    certain Lease dated April 24, 1996, between CSM Investors,
    Inc. and Registrant (as assignee of Intranet Integration Group,
    Inc.).10
.7(6)

1998 Stock Option Plan, as amended and superseded by
    Exhibit 10.19.*10
.8(7)

1999 Stock Option Plan, formerly known as the 1999 Non-Officer
    Stock Option Plan, as amended and superseded by
    Exhibit 10.19.*10
.9(6)

2000 Employee Stock Purchase Plan, as amended, and offering.*10
.11(8)

Second Amendment of Lease dated April 22, 2002, to that
    certain Lease dated April 24, 1996, between CSM Investors,
    Inc. and Registrant (as assignee of Intranet Integration Group,
    Inc.) as amended.10
.12(8)

Second Amendment of Lease dated April 28, 2003, to that
    certain Lease dated January 18, 2000, between Property
    Reserve Inc. and Registrant.10
.15(9)

Registration Rights Agreement dated as of June 1, 2004,
    between Digital River, Inc. and the initial purchasers of Senior
    Convertible Notes due January 1, 2024.10
.16(13)

Summary of Compensation Program for Non-Employee Directors.10
.17(14)

Second Amended and Restated Symantec Online Store Agreement, by
    and among Symantec Corporation, Symantec Limited, Digital River,
    Inc. and Digital River Ireland Limited effective April 1,
    2006 10
.18(10)

1998 Equity Incentive Plan (formerly known as 1998 Stock Option
    Plan).*10
.19(13)

Amended and Restated Employment Agreement for Joel A. Ronning.*10
.20(13)

Change of Control and Severance Agreement for Thomas M.
    Donnelly.*10
.21(11)

Form of Amendment to Non-Qualified Stock Option Agreement.*10
.22(12)

Inducement Equity Incentive Plan.*10
.23(15)

2007 Equity Incentive Plan.*10
.24(13)

Change of Control and Severance Agreement for Kevin L. Crudden.12
.1++

Computation of Ratio of Earnings to Fixed Charges.21
.1++

Subsidiaries of Digital River, Inc.23
.1++

Consent of Independent Registered Public Accounting Firm, dated
    February 19, 2009.24
.1++

Power of Attorney, pursuant to which amendments to this Annual
    Report on
    Form 10-K
    may be filed, is included on the signature pages of this Annual
    Report on
    Form 10-K. 80




---



##### Table of Contents



ExhibitNumber

Description of Document31
.1++

Certification of Digital River, Inc.s Chief Executive
    Officer, pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.31
.2++

Certification of Digital River, Inc.s Chief Financial
    Officer, pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.32
++

Certification of Digital River, Inc.s Chief Executive
    Officer and Chief Financial Officer pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.     ++
    
    Filed herewith.*
    
    Management contract or compensatory plan.
    
    Confidential treatment has been requested for portions of this
    agreement, which portions have been filed separately with the
    SEC.(1)
    
    Incorporated by reference from the Companys Current Report
    on
    Form 8-K
    filed on May 4, 2004.(2)
    
    Incorporated by reference from the Companys Current Report
    on
    Form 8-K
    filed on June 1, 2006.(3)
    
    Incorporated by reference from the Companys Annual Report
    on
    Form 10-K
    for the year ended December 31, 1999, filed on
    March 30, 2000.(4)
    
    Incorporated by reference from the Companys Annual Report
    on
    Form 10-K
    for the year ended December 31, 2000, filed on
    March 27, 2001.(5)
    
    Incorporated by reference from the Companys Registration
    Statement on
    Form S-1
    (File
    No. 333-56787),
    declared effective on August 11, 1998.(6)
    
    Incorporated by reference from the Companys Registration
    Statement on
    Form S-8
    (File
    No. 333-105864)
    filed on June 5, 2003.(7)
    
    Incorporated by reference from the Companys Quarterly
    Report on Form
    10-Q for the
    quarter ended June 30, 2003, filed on August 14, 2003.(8)
    
    Incorporated by reference from the Companys Quarterly
    Report on Form
    10-Q for the
    quarter ended March 31, 2003, filed on May 15, 2003.(9)
    
    Incorporated by reference from the Companys Current Report
    on
    Form 8-K
    filed on July 13, 2004.(10)
    
    Incorporated by reference from the Companys Current Report
    on
    Form 8-K
    filed on May 31, 2005.(11)
    
    Incorporated by reference from the Companys Quarterly
    Report on Form
    10-Q for the
    quarter ended June 30, 2005, filed on August 9, 2005.(12)
    
    Incorporated by reference from the Companys Current Report
    on
    Form 8-K
    filed on December 20, 2005.(13)
    
    Incorporated by reference from the Companys Current Report
    on
    Form 8-K
    filed on March 10, 2008.(14)
    
    Incorporated by reference from the Companys Annual Report
    on
    Form 10-K
    for the year ended December 31, 2006, filed on
    March 1, 2007.(15)
    
    Incorporated by reference from the Companys Annual Report
    on
    Form 10-K
    for the year ended December 31, 2007, filed on
    February 29, 2008. 81