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5. Business Combinations, Goodwill and Intangible Assets:
The following table summarizes the purchase acquisitions completed during the three years in the period
ended December 31, 2006 (in thousands):
Acquisition
Initial
Shares
Issued
Initial
Purchase
Consideration
Acquired
Assets
Assumed
Liabilities Goodwill
Technology/
Tradenames
Customer
Relationships
Non-Compete
Agreements
Other Intangible Assets
2006
Mindvision, Inc. . . . . . . . . . — $ 24,975 $ 2,555 $ (8,036) $ 18,859 $3,170 $4,490 $ 40
Direct 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
2005
Commerce5, Inc. . . . . . . . . — $ 45,000 $ 3,321 $ (5,501) $ 38,737 $1,607 $7,639 $ —
SWReg . . . . . . . . . . . . . . . — 8,800 5,373 (6,464) 9,090 589 1,747 —
Total . . . . . . . . . . . . . . . — $ 53,800 $ 8,694 $(11,965) $ 47,827 $2,196 $9,386 $ —
2004
element 5, AG . . . . . . . . . . — $120,000 $14,662 $(16,673) $110,775 $5,654 $7,814 $ 784
Fireclick, Inc. . . . . . . . . . . — 7,500 451 (111) 7,512 701 — 250
BlueHornet Networks,
Inc. . . . . . . . . . . . . . . . . 160 1,176 756 (280) 4,280 836 1,104 250
Total . . . . . . . . . . . . . . . 160 $128,676 $15,869 $(17,064) $122,567 $7,191 $8,918 $1,284
Note: Balances as of acquisition date and do not reflect subsequent earn-outs, adjustments or currency
translation.
Acquisitions completed in 2006
In June 2006, we acquired all of the capital stock of MindVision, Inc., a privately held e-commerce
company based in Lincoln, Nebraska, for approximately $25.0 million comprised of payments to stockholders
of $21.2 million plus the assumption of certain liabilities totaling approximately $3.7 million. In November
2006, we recorded $0.2 million as acquisition cost related to a restructuring plan for employee severance to be
paid out over a six month period.
In January 2006, we acquired all of the capital stock of Direct Response Technologies, Inc. (Direct
Response), a privately held company based in Pittsburgh, Pennsylvania, for approximately $15.0 million in
cash. Direct Response, a provider of tools for managing affiliate networks, is now named DR Marketing
Solutions, Inc. The agreement also provides Direct Response shareholders with an earn-out opportunity based
on DR Marketing Solutions, Inc. achieving certain revenue and earnings targets during the first three years
subsequent to the acquisition. In 2006, we accrued $3.5 million for future earn-out payments. Earn-outs were
recorded as goodwill in 2006 as they were considered incremental to the purchase price.
Acquisitions completed in 2005
In December 2005, we acquired all of the capital stock of Commerce5, Inc. (Commerce5) for
approximately $45.1 million in cash comprised of payments to stockholders of $32.4 million plus assumption
of $12.7 million in liabilities. Commerce5, now named DR globalTech, Inc., is an outsourced e-commerce
provider to high-tech and consumer electronics manufacturers headquartered in Aliso Viejo, California.
86
DIGITAL RIVER, INC.
Notes to Consolidated Financial Statements — (Continued)