##### Table of Contents





UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
 
 Form 10-K/A
 
  (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, 2008ORo

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(State or other jurisdiction
    of
    Incorporation or organization)

41-1901640(I.R.S. Employer
    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 filero

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




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##### Table of Contents





EXPLANATORY
    NOTE
 
 
 
 
  Form 10-K/A Form 10-K
 
 
 
 
  Rule 12b-15 Form 10-K/A
 
 
 
 
  10-K 10-K, 10-K.




---



##### 



DIGITAL
    RIVER, INC.
    INDEX TO
    FORM 10-K/A
    For the Year Ended December 31, 2008
 
 
   
 
 
 PagePART IItem 15.  Exhibits and Financial
    Statement Schedules


2Signatures


33Exhibit 23.1


35Exhibit 31.1


36Exhibit 31.2


37Exhibit 32


38EX-23.1EX-31.1EX-31.2EX-32  
 
 
  1




---



##### 



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


5Consolidated Balance Sheets


6Consolidated Statements of Income


7Consolidated Statements of Stockholders
    Equity


8Consolidated Statements of Cash Flows


9Notes to Consolidated Financial Statements


10  
   Financial Statement Schedules.
  Form 10-K,
  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. 2




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##### 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(16)

Computation of Ratio of Earnings to Fixed Charges.21
.1(16)

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

Consent of Independent Registered Public Accounting Firm, dated
    February 19, 2009.24
.1(16)

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. 3




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##### 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. 
  (16)
    
    Incorporated by reference from the Companys Annual Report
    on
    Form 10-K
    for the year ended December 31, 2008, filed on
    February 19, 2009. 
 4




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm           Internal Control-Integrated Framework
  /s/  Ernst &
    Young LLP
    5




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##### 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  
   6




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##### 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    7




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##### 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    8




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##### 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


381,788



390,243



131,770CASH AND CASH EQUIVALENTS, end of year

$
490,335


$
381,788


$
390,243SUPPLEMENTAL 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  
   9




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##### 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
   10




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##### 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
   11




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##### 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
  (
 12




---



##### 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
   13




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##### 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
     14




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##### 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 Accounting for Derivative Instruments and Hedging
    Activities
  Non-controlling Interests in Consolidated Financial
    Statements
    2.
    Net
    Income per Share   15




---



##### 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    16




---



##### 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
       17




---



##### 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    18




---



##### 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    19




---



##### 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     20




---



##### 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        21




---



##### 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  22




---



##### 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
)


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    23




---



##### 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
     24




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Indemnification
    Provisions
      8.
    Debt     25




---



##### 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
    an average redemption period of seven years 26




---



##### Table of Contents



DIGITAL
    RIVER, INC.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   
    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
   27




---



##### 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
     28




---



##### 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    29




---



##### 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
   30




---



##### 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   31




---



##### 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 32




---



##### Table of Contents



SIGNATURES
 
 
  Form 10-K/A
 
 
   
 
  By:
    /s/  Joel
    A. Ronning 
 
 
  
 
  
 33




---



##### Table of Contents



INDEX TO
    EXHIBITS
 
  
 23
.1++

Consent of Independent Registered Public Accounting Firm.31
.1++

Certification of CEO pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.31
.2++

Certification of CFO pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.32++

Certification of CEO and CFO pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.  
    ++
    
    Filed herewith. 
  (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. 34