Digital River 2001 Annual Report Download - page 44

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The following is a summary of the Company’s investment securities:
As of December 31, 2001 and 2000, all securities are due in less than one year.The Company had
proceeds from sales of investments of $17,999,000, $36,416,000 and $78,000,000 in the years ended
December 31, 2001, 2000 and 1999, respectively.The cost basis of investments and gains and losses are
based on specific identification. R ealized gains and/ or losses on sales of investments were not material
in the years ended December 31, 2001, 2000 and 1999.
Property and Equipm ent
Property and equipment is stated at cost and is being depreciated under the straight-line method using
lives of three to seven years and consists mainly of computer equipment and software licenses.
Goodwill and Other Intangibles
Goodwill and other intangible assets, consisting of customer base, non-compete agreements, and technology
/ tradename have been recorded as a result of certain acquisitions made by the Company and are being
amortized under the straight-line method using a life of two to three years.
Impairment losses are recorded on goodwill and long-lived assets in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated by those assets are
less than the assets’ carrying amount.The Company regularly performs reviews to determine if indicators
of impairment of its goodwill and other long-lived assets exist.The Company’s evaluation considers
nonfinancial data such as changes in the operating environment and business strategy, competitive
information, market trends and operating performance. Impairment losses are measured by comparing
the fair value of assets, as determined by discounting the future cash flows at a market rate of interest,
to their carrying amount. Based upon regular reviews, management believes that no conditions that
would require impairment charges have arisen through December 31, 2001.
Patents
The costs of developing patents are amortized over a three-year period utilizing the straight-line
method of amortization once the patent application is filed. Patents are included in other assets on the
accompanying consolidated balance sheets, net of accumulated amortization of $400,000 and $352,000
as of December 31, 2001 and 2000.
42
Notes to Consolidated Financial Statements December 31, 2001 and 2000
Digital River 2001 Annual Report
December 31, 2001
Commercial Paper $ 9,978,000 $ ,- $ 9,978,000
December 31, 2000
U.S. Government securities $14,999,000 $0,22,000 $14,977,000
Cost Unrealized loss Fair Value