Digital River 2006 Annual Report Download - page 78

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Other Assets
The following table summarizes our other assets as of December 31, 2006 and 2005 (in thousands):
2006 2005
Unamortized debt financing costs .................................. $ 5,630 $ 5,960
Cost of investment ............................................. 6,000 6,000
Other ....................................................... 327 214
Total other assets .............................................. $11,957 $12,174
During 2005, we purchased $6 million of the Series B Convertible Preferred stock of Intraware, Inc., a
provider of enterprise digital license management and other services. We account for this investment using the
cost method. Through this investment, we intend to establish a strategic partnership with Intraware that will
enhance our access to the enterprise segment of the software and digital products market.
Other Accrued Liabilities
The following table summarizes our other accrued liabilities as of December 31, 2006 and 2005 (in
thousands):
2006 2005
Accrued expenses .............................................. $15,212 $12,451
Sales, value-added and transaction taxes ............................. 13,394 5,479
Current income taxes ........................................... 11,376 3,280
Total other accrued liabilities . . ................................... $39,982 $21,210
Comprehensive Income
Comprehensive income includes revenues, expenses, gains and losses that are excluded from net earnings
under GAAP. Items of comprehensive income are unrealized gains and losses on short term investments and
foreign currency translation adjustments which are added to net income to compute comprehensive income.
Comprehensive income is net of income tax benefits or expense.
In 2006, comprehensive income included $13.5 million recorded for unrealized foreign exchange gains on
the revaluation of investments in foreign subsidiaries, and $0.6 million net of $0.2 million tax expense for
unrealized investment gains. In 2005, comprehensive income included $1.3 million recorded for unrealized
foreign exchange losses on the revaluation of investments in foreign subsidiaries, and $0.8 million net of
$0.5 million tax benefit for unrealized investment losses. In 2004, comprehensive income included $0.1 million
recorded for unrealized foreign exchange losses on the revaluation of investments in foreign subsidiaries, and
$0.3 million for unrealized investment losses. There was no tax benefit for comprehensive income in 2004 as
we had no tax expense.
Revenue Recognition
We recognize revenue from services rendered once all the following criteria for revenue recognition have
been met: (1) pervasive evidence of an agreement exists; (2) the services have been rendered; (3) the fee is
fixed and determinable and not subject to refund or adjustment; and (4) collection of the amounts due is
reasonably assured.
We evaluate the criteria outlined in Emerging Issues Task Force, (“EITF”) Issues No. 99-19, Reporting
Revenue Gross as a Principal Versus Net as an Agent, in determining whether it is appropriate to record the
74
DIGITAL RIVER, INC.
Notes to Consolidated Financial Statements — (Continued)