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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549



FORM 10-K

(Mark One)ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Year Ended December 31, 2009oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                        to


Commission file number 000-30135



VALUECLICK, INC.(Exact name of registrant as specified in its charter)

Delaware(State or Other Jurisdiction of
Incorporation or Organization)

77-0495335(I.R.S. Employer Identification No.)30699 RUSSELL RANCH ROAD, SUITE 250
WESTLAKE VILLAGE, CALIFORNIA 91362(Address of principal executive offices, including zip code)Registrant's Telephone Number, Including Area Code: (818) 575-4500Securities registered pursuant to Section 12(b) of the Act:




Title of each class

Name of each exchange on which registeredCommon Stock, $0.001 par value

NASDAQ Global Select Market


Securities registered pursuant to Section 12(g) of the Act:
Series A Junior Participating Preferred Stock Purchase Rights



Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes ý    No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Act. Yes o    No ý

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes ý    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files): Yes o    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý

Accelerated filer o

Non-accelerated filer o (Do not check if a
smaller reporting company)

Smaller reporting company o


Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No
ý

As of June 30, 2009, which was the last business day of the registrant's most recently completed second fiscal quarter, the approximate aggregate market
value of voting stock held by non-affiliates of the registrant was $901,062,796 (based upon the closing price for shares of the registrant's Common Stock as reported by the NASDAQ Global
Select Market as of that date). As of February 19, 2010, there were 83,529,396 shares of the registrant's Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for the 2010 Annual Meeting of the Stockholders (the "Proxy Statement"), to be filed within 120 days of the end
of the fiscal year ended December 31, 2009, are incorporated by reference in Part III hereof.



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VALUECLICK, INC.  ANNUAL REPORT ON FORM 10-K  TABLE OF CONTENTS



PagePART I

1ITEM 1.

BUSINESS

1ITEM 1A.

RISK FACTORS

8ITEM 1B.

UNRESOLVED STAFF COMMENTS

19ITEM 2.

PROPERTIES

20ITEM 3.

LEGAL PROCEEDINGS

20ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

21PART II

22ITEM 5.

MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

22ITEM 6.

SELECTED FINANCIAL DATA

24ITEM 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

28ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

46ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

47ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

47ITEM 9A.

CONTROLS AND PROCEDURES

47ITEM 9B.

OTHER INFORMATION

48PART III

48ITEM 10.

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

48ITEM 11.

EXECUTIVE COMPENSATION

48ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

49ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

49ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

49PART IV

50ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

50SIGNATURESCERTIFICATION OF CEOSarbanes-Oxley Act Section 302CERTIFICATION OF CFOSarbanes-Oxley Act Section 302CERTIFICATION OF CEOSarbanes-Oxley Act Section 906CERTIFICATION OF CFOSarbanes-Oxley Act Section 906


This annual report on Form 10-K ("Report"), including information incorporated herein by reference, contains "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to expectations concerning
matters that are not historical facts. Words such as "projects," "believes," "anticipates," "will," "estimate," "plans," "expects," "intends," and similar words and expressions are intended to
identify forward-looking statements. Although we believe that such forward-looking statements are reasonable, we cannot assure you that such expectations will prove to be correct. Important language
regarding factors which could cause actual results to differ materially from such expectations are disclosed in this Report, including without limitation under the caption "Risk Factors" beginning on
page 8 of this Report and in the other documents we file, from time to time, with the Securities and Exchange Commission, including our annual reports on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K. All forward-looking statements attributable to ValueClick, Inc. are expressly qualified in their
entirety by such language. We undertake no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.

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PART I.

ITEM 1.    BUSINESS

OVERVIEW

ValueClick is one of the world's largest and most comprehensive online marketing services companies. We sell targeted and measurable
online advertising campaigns and programs for advertisers and advertising agency customers, generating qualified customer leads, online sales and increased brand recognition on their behalf with large
numbers of online consumers.

Our
customers are primarily direct marketers, brand advertisers and the advertising agencies that service these groups. The proposition we offer our customers includes: one of the
industry's broadest online marketing services portfoliosincluding performance-based campaigns and programs where marketers only pay for advertising when it generates a customer lead or
product sale; our ability to target campaigns to reach the online consumers our customers are most interested in; and the scale at which we can deliver results for online advertising campaigns.
Additionally, our networks of online publishers provide advertisers with a cost-effective and complementary source of online consumers relative to online portals and other large website
publishers. Through this approach we have become an industry leader in generating qualified customer leads and online sales for advertisers.

We
generate the audiences for our advertisers' campaigns primarily through networks of third-party websites, other online publisher partners and search engines. We aggregate our
publisher partners' online advertising inventory into networks, optimize these networks for specific marketing goals, and deliver the campaigns across the appropriate networks' advertising inventory.
We are one of the industry's largest online network providers, with: industry expertise and proprietary technology platforms for online advertising inventory aggregation; campaign targeting and
optimization, delivery, measurement, and reporting; and, payment settlement and delivery services.

Our
publisher partners enjoy efficient and effective monetization of their online advertising inventory through representation by our direct sales teams in major U.S. and European media
markets, participation in large-scale advertiser and advertising agency campaigns they may not have access to on their own, enhanced monetization through our proprietary campaign optimization and
targeting technology, and settlement services to facilitate payments to publishers for the online inventory utilized by the advertisers. As we do not primarily compete directly with our publisher
partners for online consumers, we act as a trusted partner in helping online publishers monetize their online audience and advertising inventory.

We
believe that the effectiveness of our online marketing services is dependent on the quality of our networks and our publisher partner relationships. As such, we have established
stringent quality standards that include publisher rejection from our networks due to inappropriate content, illegal activity and fraudulent clicking activity, among other criteria. We enforce these
quality standards using a combination of manual and automated auditing processes that continually monitor and review both website content and adherence to advertiser campaign specifications.

We
derive our revenue from four business segments. These business segments are presented on a worldwide basis and include Media, Affiliate Marketing, Owned & Operated Websites,
and Technology, which are described in more detail below. For information regarding the operating performance and total assets of these segments, see Item 7 "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and Note 17 to the December 31, 2009 consolidated financial statements included herein.

MEDIA SEGMENT

ValueClick's Media segment provides a comprehensive suite of online marketing services and tailored programs that help marketers create
and increase awareness for their products and brands,

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attract
visitors and generate leads and sales through the Internet. We have aggregated thousands of online publishers to provide marketers with access to one of the largest and most reputable display
advertising networks in the industry. We partner with third-party website publishers and apply our proprietary technology platform and industry expertise to deliver our customers' display ad campaigns
to the appropriate pages of our publisher partners' websites.

With
a single buy, marketers can reach targeted online users on a large scale, using a variety of online display ad units across our entire network of publishers, any of 21 standard
channels of online content within the network, customized content channels, or a select number of websites where we are authorized to sell inventory on a single-site basis. Audiences can
be further targeted based on the demographic and psychographic composition of sites within the network and technical information such as geographic location, browser type, connection speed, ISP or
top-level domain (.com, .edu, etc.). In addition, our behavioral targeting capabilities allow marketers to retarget users who have recently visited their sites or to display highly
relevant ads based on anonymous profiles we develop based on consumers' recent online behavior such as web browsing and interaction with ads across our network.

With
10,000 active online publisher sites in the U.S. and 16,000 worldwide, our display advertising network reached 171 million unique visitors, or 83% of the U.S. internet
audience in December 2009 according to published industry data.

We
deliver a variety of display ad units to the Web pages of our online display advertising network publisher partners and track them to evaluate success against the goals of the
advertising programs. With traditional banner ads, interstitials, text links, and other online ad units, our technology maximizes
the impact of marketing campaigns by identifying the most effective placement for each type of campaign. We also execute a wide variety of rich media applications, including in-stream and
in-banner video ads, providing even greater visual and auditory impact for a marketer's online display advertising campaigns.

We
began as a performance-based marketing network and we continue to offer multiple pricing models designed around maximizing our customers' return on investment. Our display advertising
placements are offered on several pricing models including: cost-per-thousand-impression ("CPM"), whereby our customers pay based on the number of times the target audience is
exposed to the advertisement; cost-per-click ("CPC"), whereby payment is triggered only when an interested individual clicks on our customer's advertisement; and
cost-per-action ("CPA"); whereby payment is triggered only when a specific, pre-defined action is performed by an online consumer.

The
benefits that our customers enjoy in display and other Web advertising include, but are not limited to: flexible pricing models; the ability to target and reach significant numbers
of online consumers in a way that complements media buys on portals and other large websites; and the ability to improve online advertising performance while the campaigns are still running by
optimizing at site, placement and creative levels, based on both response to ads and the resulting conversions.

Publishers
in our display advertising network enjoy efficient and effective monetization of their online advertising inventory, including: representation by our direct sales teams in
major U.S. and European media markets; participation in large-scale advertiser and advertising agency campaigns they may not be able to access on their own; enhanced monetization through our campaign
optimization technology; and, settlement services to facilitate payments to publishers for the inventory utilized by the advertisers. Through our proprietary publisher interface, publishers can
control their participation in campaigns as well as their minimum acceptable level of revenue on an effective-CPM basis.



Our Media segment previously included our lead generation marketing and e-commerce businesses. We divested our lead
generation marketing business in February 2010 and our e-commerce

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business
in October 2008. These divestitures are discussed more fully in Note 5 to our consolidated financial statements contained in this annual report.

AFFILIATE MARKETING SEGMENT

Our Affiliate Marketing segment services, outlined below, are offered through our wholly-owned subsidiary Commission Junction. Through
the combination of: a large-scale pay-for-performance model built on our proprietary technology platforms; marketing expertise; and a large, quality advertising network, our
Affiliate Marketing business enables advertisers to develop their own fully-commissioned online sales force comprised of third-party affiliate publishers. We believe we are the largest provider of
affiliate marketing services.

In
affiliate marketing, a publisher joins an advertiser's affiliate marketing program and agrees to distribute the advertiser's offers in exchange for commissions on leads or sales
generated. The publisher places the advertiser's display ads or text links on their website, in email campaigns, or in search listings, and receives a commission from the advertiser only when a
visitor takes an agreed-upon action, such as filling out a form or making a purchase on the advertiser's website.

Our
Affiliate Marketing services are offered on a hosted basis to enable marketers to execute their own affiliate marketing programs without the expense of building and maintaining their
own in-house technical infrastructure and resources.



To facilitate our advertiser customers' recruitment of affiliate publishers, we manage CJ Marketplace, an advertising network dedicated
to our affiliate marketing business. Advertisers upload their offers onto CJ Marketplace, making them available for placement by affiliates. Affiliates apply to join the advertiser's program, and upon
acceptance, select and place the advertiser's offers on their websites, in email campaigns, or in search listings. These links are served and tracked by Commission Junction. When a visitor clicks on
one of the affiliate's links and then makes an online purchase or completes an agreed-upon action on the advertiser's website, that transaction is tracked and recorded by Commission
Junction.

CJ
Marketplace provides an open environment whereby affiliates can quickly view payment and conversion statistics to assess the effectiveness of every advertiser relationship and
advertisement, and advertisers can quickly gauge the quality and potential of every affiliate relationship in the marketplace, allowing them to maximize the performance and scale of their online
advertising campaigns.

Affiliate
Marketing revenues are principally driven by variable compensation that is based on either a percentage of commissions paid to affiliates or on a percentage of transaction
revenue generated from the programs managed with our affiliate marketing platforms.

In
addition to the transaction-related revenue streams, we also receive monthly service fees from our advertiser customers who elect to utilize our Program Management service offerings.
With these services, we assume full responsibility for all aspects of managing the advertiser's program including planning, affiliate recruitment, program review and management, and program
administration.



Search marketing allows advertisers to find prospective customers who are actively engaged in researching and buying products and
services online. Our CJ Search product provides a fully-managed, comprehensive search engine marketing (SEM) solution by combining proprietary technology and expert services to optimize keyword
campaigns across major search and shopping engines, and is specifically designed to complement our advertisers' affiliate marketing efforts. We use our technology and processes to create, manage and
optimize pay-per-click, paid inclusion and organic search

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campaigns
for our advertiser customers. SEM revenues are driven primarily by a percentage of the revenue we generate for our advertiser customers.

OWNED & OPERATED WEBSITES SEGMENT

Our Owned & Operated Websites segment services are offered through a number of transaction-focused branded websites including
Pricerunner, Smarter.com and Couponmountain.com. In 2009, we also launched a limited number of content websites in key online verticals such as healthcare, finance, travel, home and garden, education
and business services.

The
Pricerunner comparison shopping destination websites operate in the United Kingdom, Sweden, Germany, France, Denmark, and Austria. The Smarter.com and Couponmountain.com websites
operate primarily in the United States and, to a lesser extent, Japan and China. The Pricerunner and Smarter.com websites enable consumers to research and compare products from among thousands of
online and/or offline merchants using our proprietary technologies. We gather product and merchant data and organize it into comprehensive catalogs on our destination websites, along with relevant
consumer and professional reviews. The Couponmountain.com website allows consumers to locate coupons and deals related to products and services that may be of interest to them, and our content
websites offer consumers information and reference material across a variety of topics. Our services in these areas are free for consumers, and we generate revenue in one of three ways: on a CPC basis
for traffic delivered to the customers' websites from listings on our websites; on a CPA basis when a consumer completes a purchase or other specific event; and on a CPM basis for display advertising
shown on our websites.

In
addition to our destination websites, Search123, which operates primarily in Europe, is ValueClick's self-service paid search offering that generates its traffic primarily
through syndication relationships with other search engines, Web portals and content websites. Search syndication revenues are driven primarily on a CPC basis.

TECHNOLOGY SEGMENT

Our Technology segment provides advertisers, advertising agencies, and other companies with the tools they need to effectively manage
their online marketing programs. Our technology products and services are offered through our wholly-owned subsidiary Mediaplex, Inc. Mediaplex is an application services provider ("ASP")
offering technology infrastructure tools and consultative services that enable marketers to implement and manage their own online display advertising, SEM and email campaigns. Our Mediaplex products
are based on our proprietary MOJO® technology platform, which has the ability, among other attributes, to automatically configure advertisements in response to real-time
information from an advertiser's enterprise data system and to provide ongoing campaign optimization and analytics. Mediaplex's products are priced primarily on a CPM or email-delivered basis.

Our
Technology segment also included our Mediaplex Systems subsidiary prior to October 2008. We divested the operations of this subsidiary in October 2008. Please refer to Note 5
to our consolidated financial statements contained in this annual report on Form 10-K for further information about this divestiture.

INTERNATIONAL OPERATIONS

We currently conduct international operations through wholly-owned subsidiaries throughout Europe as well as China and Japan.

In
August 1999, we commenced operations in the European market with ValueClick Europe Ltd., a wholly-owned subsidiary of ValueClick, Inc., based in the United Kingdom.
Since then we have expanded in Europe by opening wholly-owned subsidiaries in Paris, France; Munich, Germany; Madrid, Spain; and Dublin, Ireland. In August 2004, we acquired Pricerunner AB, a leading
provider of online

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comparison
shopping services in Europe, based in Sweden. In July 2007, we acquired MeziMedia, which has operations in the United States, China and Japan. Employees in our international subsidiaries
totaled 400 as of December 31, 2009. For additional information regarding our international operations, see Note 17 to our consolidated financial statements contained in this annual
report on Form 10-K.

TECHNOLOGY PLATFORMS

Our proprietary applications are constructed from established, readily available technologies. Some of the basic components that our
products are built on come from leading software and hardware providers such as Oracle, Sybase, Sun, Dell, EMC, NetApp, and Cisco while some components are constructed from leading Open Source
initiatives such as Apache Web Server, MySQL, Java, Perl, PHP, and Linux. By striking the proper balance between using commercially available software and Open Source software, our technology
expenditures are directed toward enhancing and maintaining our technology platforms while minimizing our technology costs.

We
build high-performance, availability and reliability into our product offerings. We safeguard against the potential for service interruptions by engineering
fail-safe controls into our critical software components. ValueClick delivers its solutions from a variety of geographic locations within the United States, Europe and China. ValueClick
applications are monitored 24 hours a day, 365 days a year by specialized monitoring systems that aggregate alarms to a human-staffed network operations center.

SALES, MARKETING AND CUSTOMER SERVICE

We market our products and services primarily through direct marketing, print advertising and online advertising throughout the year.
We also market them through the ValueClick properties' websites, trade show participation and other media events. In addition, we
actively pursue public relations programs to promote our brands, products and services to potential network publishers and advertiser customers, as well as to industry analysts.

Customers

We sell our products and services to a variety of advertisers, advertising agencies and traffic distribution partners. Our Media and
Affiliate Marketing segment revenues are generated from thousands of customers, and there are no significant customer concentrations in these segments. Our Owned & Operated Websites and
Technology segment each have a significant customer that comprises a large portion of each segment's respective revenues. A loss of, or reduction of revenue from, these significant customers could
have a significant negative impact on the revenue of these segments.

Competition

We face intense competition in the Internet advertising market. We expect that this competition will continue to intensify in the
future as a result of industry consolidation, the continuing maturation of the industry and low barriers to entry. We compete with a diverse and large pool of advertising, media and Internet
companies.

Our
ability to compete depends upon several factors, including the following:



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Additional
competitive factors include, but are not limited to, our: reputation, knowledge of the advertising market, financial controls, geographical coverage, relationships with
customers, technological capability, and quality and breadth of products and services. For additional information regarding our competitors, see "If we fail to compete effectively against other
Internet advertising companies, we could lose customers or advertising inventory and our revenue and results of operations could decline" in the Item 1A Risk Factors discussion in this annual
report on Form 10-K.

Seasonality and Cyclicality

We believe that our business is subject to seasonal fluctuations with the calendar fourth quarter generally being our strongest.
Expenditures by advertisers and advertising agencies vary in cycles and tend to reflect the overall economic conditions, as well as budgeting and buying patterns.

INTELLECTUAL PROPERTY RIGHTS

We currently rely on a combination of copyright, trademark and trade secret laws and restrictions on disclosure to protect our
intellectual property rights. Our success depends on the protection of the proprietary aspects of our technology as well as our ability to operate without infringing on the proprietary rights of
others. We also enter into proprietary information and confidentiality agreements with our employees, consultants and commercial partners and control access to, and distribution of, our software
documentation and other proprietary information. We have registered the trademark "ValueClick" in the United States and the European Union. We currently have nine pending U.S. patent applications. In
addition, we have been granted ten U.S. patents. We do not know if our current patent applications or any future patent application will result in a patent being issued within the scope of the claims
we seek, if at all, or whether any patents we may have or may receive will be challenged or invalidated. Although patents are only one component of the protection of intellectual property rights, if
our patent applications are denied, it may result in increased competition and the development of products substantially similar to our own. In addition, it is difficult to monitor unauthorized use of
technology, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States, and our competitors may independently develop technology similar
to our own. We will continue to assess appropriate occasions for seeking patent and other intellectual property protections for those aspects of our technology that we believe constitute innovations
providing significant competitive advantages.

CORPORATE HISTORY AND RECENT ACQUISITIONS

We commenced operations as ValueClick, LLC, a California limited liability company, on May 1, 1998. Prior to the
formation of ValueClick, LLC, the ValueClick Internet advertising business began in July 1997 as a line of business within Web-Ignite Corporation, a company wholly owned by the
founding member of ValueClick, LLC. The reorganization and formation of ValueClick, LLC was affected by the transfer of the Internet advertising business of Web-Ignite to
ValueClick, LLC. On December 31, 1998, ValueClick, LLC reorganized as ValueClick, Inc., a Delaware corporation. On March 30, 2000, we completed our initial public
offering of common stock. Our common stock is publicly traded and is reported on the NASDAQ Global Select Market under the symbol "VCLK." We have acquired 14 companies since our inception, the most
recent of which was MeziMedia in July 2007.

PRIVACY

We may collect personally identifiable information on a permitted basis. We store this personally identifiable data securely and do not
use the data without the permission of the Web user. In addition, we use anonymous and non-personally identifiable information, in accordance with our privacy policies, for purposes that
include, without limitation, tailoring advertisements and website content to a Web

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user's
interests. We use "cookies," along with other technologies, as set forth in our privacy policies, for purposes that include, without limitation, improving the experience Web users have when
they see Web advertisements, advertising campaign reporting, and website reporting.

Please
refer to the section entitled "Government Enforcement Actions, Changes in Government Regulation and Industry Standards, Including, But Not Limited To Spyware, Privacy and Email
Matters, Could Decrease Demand For Our Products and Services and Increase Our Costs of Doing Business" in Item 1A "Risk Factors" of this annual report on Form 10-K for
further details about our compliance with privacy regulations.

EMPLOYEES

As of December 31, 2009, we had 686 employees in the U.S. and 400 employees in our international locations. None of these
employees are covered by collective bargaining agreements. Management believes that our relations with our employees are good.

EXECUTIVE OFFICERS

See Part III, Item 10 "Directors and Executive Officers of the Registrant" of this annual report on
Form 10-K for information about executive officers of the registrant.

WEBSITE ACCESS TO OUR PERIODIC SEC REPORTS

Our primary Internet address is www.valueclick.com. We make our Securities and Exchange Commission ("SEC") periodic reports
(Forms 10-Q and Forms 10-K) and current reports (Forms 8-K), and amendments to these reports, available free of charge through our website as
soon as reasonably practicable after they are filed electronically with the SEC. We may from time to time provide important disclosures to investors by posting them in the investor relations section
of our website, as allowed by SEC rules.

Materials
we file with the SEC may be read and copied at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public
Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website at www.sec.gov that contains reports, proxy and
information statements, and other information regarding our Company that we file electronically with the SEC.

CODE OF ETHICS AND BUSINESS CONDUCT

We have adopted a Code of Ethics and Business Conduct (the "Code") for our principal executive, financial and accounting, and other
officers, and our directors, employees, agents, and consultants. The Code is publicly available on our website at www.valueclick.com under the heading "About Us." Among other things, the Code
addresses such issues as conflicts of interest, corporate opportunities, confidentiality, fair dealing, protection and proper use of Company assets, compliance with applicable laws (including insider
trading laws), and reporting of illegal or unethical behavior.

Within
the Code, ValueClick has established an accounting ethics complaint procedure for all of its employees. The complaint procedure is for employees who may have concerns regarding
accounting, internal accounting controls and auditing matters. We treat all complaints confidentially and with the utmost professionalism. If an employee desires, he or she may submit any concerns or
complaints on an anonymous basis, and his or her concerns or complaints will be addressed in the same manner as any other complaints. We do not, and will not, condone any retaliation of any kind
against an employee who comes forward with an ethical concern or complaint.

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ITEM 1A.    RISK FACTORS

You should carefully consider the following risks before you decide to buy shares of our common stock. The
risks and uncertainties described below are not the only ones facing us. Additional risks and uncertainties, including those risks set forth in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" below, may also adversely impact and impair our business. If any of the following risks actually occur, our business, results of operations or financial condition
would likely suffer. In such case, the trading price of our common stock could decline, and you may lose all or part of the money you paid to buy our stock.

This annual report on Form 10-K contains forward-looking statements based on the current expectations, assumptions, estimates, and projections
about us and our industry. These forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those discussed in these forward-looking statements as a
result of certain factors, as more fully described in this section and elsewhere in this annual report on Form 10-K. We undertake no obligation to release publicly any revisions to
any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

DETERIORATING MACROECONOMIC CONDITIONS IN THE UNITED STATES HAVE NEGATIVELY IMPACTED OUR BUSINESS AND FURTHER WEAKENING OF MACROECONOMIC CONDITIONS
MAY HAVE ADDITIONAL NEGATIVE IMPACTS ON OUR BUSINESS.

In 2008, we began experiencing weakness across most of our business segments in connection with deteriorating macroeconomic conditions
in the United States and Europe. Our consolidated full year 2009 revenue and cash generated from operations decreased as compared to the prior year amounts. We are not able to predict whether general
macroeconomic conditions, or conditions in the online advertising industry specifically, will worsen or improve, or the timing of such developments. If macroeconomic conditions worsen, we are not able
to predict the impact such worsening conditions will have on the online marketing industry in general, and our results of operations specifically. Further, when macroeconomic conditions do improve,
there can be no assurances that we will be able to regain the levels of revenue, profitability and positive cash flow that we achieved prior to the macroeconomic downturn.

OUR PROFITABILITY MAY NOT REMAIN AT CURRENT LEVELS

We face risks that could prevent us from achieving our current profitability levels in future periods. These risks include, but are not
limited to, our ability to:



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If
we are unsuccessful in addressing these or other risks and uncertainties, our business, results of operations and financial condition could be materially and adversely affected.

IF ADVERTISING ON THE INTERNET LOSES ITS APPEAL, OUR REVENUE COULD DECLINE.

Our business models may not continue to be effective in the future for a number of reasons, including the following: click and
conversion rates have always been low and may decline as the number of advertisements and ad formats on the Web increases; Web users can install "filter" software programs which allow them to prevent
advertisements from appearing on their computer screens or in their email boxes; Internet advertisements are, by their nature, limited in content relative to other media; companies may be reluctant or
slow to adopt online advertising that replaces, limits or competes with their existing direct marketing efforts; companies may prefer other forms of Internet advertising we do not offer, including
certain forms of search engine placements; companies may not utilize online advertising due to concerns of "click-fraud", particularly related to search engine placements; and regulatory actions may
negatively impact certain business practices that we currently rely on to generate a portion of our revenue and profitability. If the number of companies who purchase online advertising from us does
not grow, we may experience difficulty in attracting publishers, and our revenue could decline.

OUR REVENUE COULD DECLINE IF WE FAIL TO EFFECTIVELY MANAGE OUR EXISTING ADVERTISING SPACE AND OUR GROWTH COULD BE IMPEDED IF WE FAIL TO ACQUIRE NEW
ADVERTISING SPACE.

Our success depends in part on our ability to effectively manage our existing advertising space. The Web publishers and email list
owners that list their unsold advertising space with us are not bound by long-term contracts that ensure us a consistent supply of advertising space, which we refer to as inventory. In
addition, Web publishers or email list owners can change the amount of inventory they make available to us at any time. If a Web publisher or email list owner decides not to make advertising space
from its websites, newsletters or email lists available to us, we may not be able to replace this advertising space with advertising space from other Web publishers or email list owners that have
comparable traffic patterns and user demographics quickly enough to fulfill our advertisers' requests. This would result in lost revenue.

We
expect that our advertiser customers' requirements will become more sophisticated as the Web continues to mature as an advertising medium. If we fail to manage our existing
advertising space effectively to meet our advertiser customers' changing requirements, our revenue could decline. Our growth depends, in part, on our ability to expand our advertising inventory within
our networks and to have access to new sources of advertising inventory such as ad exchange. To attract new customers, we must maintain a consistent supply of attractive advertising space. Our success
relies in part on expanding our advertising inventory by selectively adding new Web publishers and email list owners to our networks that offer attractive demographics, innovative and quality content
and growing Web user traffic and email volume. Our ability to attract new Web publishers and email list owners to our networks and to retain Web publishers and email list owners currently in our
networks will depend on various factors, some of which are beyond our control. These factors include, but are not limited to: our ability to introduce new and innovative products and services, our
ability to efficiently manage our existing advertising inventory, our pricing policies, and the cost-efficiency to Web publishers and email list owners of outsourcing their advertising
sales. In addition, the number of competing intermediaries

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that
purchase advertising inventory from Web publishers and email list owners continues to increase. We cannot assure you that the size of our advertising inventory will increase or remain constant in
the future.

OUR OWNED & OPERATED WEBSITES SEGMENT REVENUE IS SUBJECT TO CUSTOMER CONCENTRATION RISKS. THE LOSS OF ONE OR MORE OF THE MAJOR CUSTOMERS IN
OUR OWNED & OPERATED WEBSITES SEGMENT COULD SIGNIFICANTLY AND NEGATIVELY IMPACT THE REVENUE AND PROFITABILITY LEVELS OF THIS SEGMENT.

Our Owned & Operated Websites business generates revenue through a combination of: sponsored search listings placed on our
destination websites, merchant relationships, affiliate marketing networks and display advertising on our destination websites. A large portion of the revenue in our Owned & Operated Websites
segment is generated via sponsored search listings from major search engines. Factors that could cause these relationships to cease or become significantly reduced in scale include, but are not
limited to: the non-renewal of our distribution agreement with one or more of the major search engines; the determination by one or more of the major search engines that consumer traffic
received from us does not meet their quality standards (in other words, the traffic is not converting at appropriate rates); and changes in the competitive environment, such as industry consolidation.
If our relationships with one or more of the major search engines were to cease or become significantly reduced in scale, our revenue and profitability levels could be significantly and negatively
impacted. In the fourth quarter of 2009, our largest customer in our Owned & Operated Websites segment made changes that negatively impacted the amount of traffic that we could monetize with
them. This change had a significant negative impact on the revenue levels of this segment beginning in the fourth quarter of 2009. As a result of this change, we expect our revenue from the
Owned & Operated Websites segment in 2010 to be lower than it was in 2009.

CHANGES IN HOW WE GENERATE ONLINE CONSUMER TRAFFIC FOR OUR DESTINATION WEBSITES COULD NEGATIVELY IMPACT OUR ABILITY TO MAINTAIN OR GROW THE REVENUE
AND PROFITABILITY LEVELS OF OUR OWNED & OPERATED WEBSITES SEGMENT.

We generate online consumer traffic for our destination websites using various methods, including: organic traffic, offline marketing
campaigns, distribution agreements, search engine marketing (SEM) and search engine optimization (SEO). The current revenue and profitability levels of our Owned & Operated Websites segment are
dependent upon our continued ability to use a combination of these methods to generate online consumer traffic to our websites in a cost-efficient manner. Our SEM and SEO techniques have
been developed to work with the existing search algorithms utilized by the major search engines. The major search engines frequently modify their search algorithms. Future changes in these search
algorithms could change the mix of the methods we use to generate online consumer traffic for our destination websites and could negatively impact our ability to generate such traffic in a
cost-efficient manner, which could result in a significant reduction to the revenue and profitability of our Owned & Operated Websites segment. There can be no assurances that we
will be able to maintain the current mix of online consumer traffic sources for our destination websites or that we will be able to modify our SEM and SEO techniques to address any future search
algorithm changes made by the major search engines.

WE MAY FACE INTELLECTUAL PROPERTY ACTIONS THAT ARE COSTLY OR COULD HINDER OR PREVENT OUR ABILITY TO DELIVER OUR PRODUCTS AND SERVICES.

We may be subject to legal actions alleging intellectual property infringement (including patent infringement), unfair competition or
similar claims against us. Companies may apply for or be awarded patents or have other intellectual property rights covering aspects of our technologies or businesses. We

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are
currently involved in two patent disputes with subsidiaries of AOL, Inc. On July, 15, 2008, we filed a complaint against Tacoda, Inc., a Company which was subsequently acquired by
AOL, Inc., in the United States District Court for the for the Central District of California for patent infringement of U.S. patent numbers 5,848,396 and 5,991,735. In March of 2009,
Netscape, Inc. a subsidiary of AOL, Inc., filed a complaint in the United States District Court for the Eastern District of Virginia against ValueClick, Inc.,
Mediaplex, Inc., Commission Junction, Inc., MeziMedia, Inc. Web Clients, Inc., and Fastclick, Inc. for alleged patent infringement of U.S. patent
number 5,774,670. If Netscape is successful in its patent lawsuit against us, it could result in a large monetary reward against us. If Netscape obtains an injunction from the Court against us,
it could require us to change our business practices, could potentially hinder or prevent our ability to deliver our products and services and could divert management's attention.

IF THE TECHNOLOGY THAT WE CURRENTLY USE TO TARGET THE DELIVERY OF ONLINE ADVERTISEMENTS AND TO PREVENT FRAUD ON OUR NETWORKS IS RESTRICTED OR BECOMES
SUBJECT TO REGULATION, OUR EXPENSES COULD INCREASE AND WE COULD LOSE CUSTOMERS OR ADVERTISING INVENTORY.

Websites typically place small files of non-personalized (or "anonymous") information, commonly known as cookies, on an
Internet user's hard drive. Cookies generally collect information about users on a non-personalized basis to enable websites to provide users with a more customized experience. Cookie
information is passed to the website through an Internet user's browser software. We currently use cookies to track an Internet user's movement through our advertiser customer's websites and to
monitor and prevent fraudulent activity on our networks. Most currently available Internet browsers allow Internet users to modify their browser settings to prevent cookies from being stored on their
hard drive, and some users currently do so. Internet users can also delete cookies from their hard drives at any time. Some Internet commentators and privacy advocates have suggested limiting or
eliminating the use of cookies, and legislation has been introduced in some jurisdictions to regulate the use of cookie technology. The effectiveness of our technology could be limited by any
reduction or limitation in the use of cookies. If the use or effectiveness of cookies were limited, we expect that we would need to switch to other technologies to gather demographic and behavioral
information. While such technologies currently exist, they may be less effective than cookies. We also expect that we would need to develop or acquire other technology to monitor and prevent
fraudulent activity on our networks. Replacement of cookies could require reengineering time and resources, might not be completed in time to avoid losing customers or advertising inventory, and might
not be commercially feasible. Our use of cookie technology or any other technologies designed to collect Internet usage information may subject us to litigation or investigations in the future. Any
litigation or government action against us could be costly and time consuming, could require us to change our business practices and could divert management's attention.

IF WE FAIL TO COMPETE EFFECTIVELY AGAINST OTHER INTERNET ADVERTISING COMPANIES, WE COULD LOSE CUSTOMERS OR ADVERTISING INVENTORY AND OUR REVENUE AND
RESULTS OF OPERATIONS COULD DECLINE.

The Internet advertising markets are characterized by rapidly changing technologies, evolving industry standards, frequent new product
and service introductions, and changing customer demands. The introduction of new products and services embodying new technologies and the emergence of new industry standards and practices could
render our existing products and services obsolete and unmarketable or require unanticipated technology or other investments. Our failure to adapt successfully to these changes could harm our
business, results of operations and financial condition.

The
market for Internet advertising and related products and services is highly competitive. We expect this competition to continue to increase, in part because there are no significant
barriers to

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entry
to our industry. Increased competition may result in price reductions for advertising space, reduced margins and loss of market share. Our principal competitors include other companies that
provide advertisers with Internet advertising solutions and companies that offer pay-per-click search services. We compete in the performance-based marketing segment with CPL
and CPA performance-based companies, such as Platform-A (owned by AOL), Google Affiliate Network, Trade Doubler, and Linkshare (owned by Rakuten), and we compete with other large Internet
display advertising networks. In addition, we compete in the online comparison shopping market with focused comparison shopping websites such as Shopping.com (owned by eBay), Kelkoo, NexTag, Shopzilla
(owned by EW Scripps), and Pricegrabber (owned by Experian), and with search engines and portals such as Yahoo!, Google and MSN, and with online retailers such as Amazon.com and eBay. Large websites
with brand recognition, such as Yahoo!, Google, AOL and MSN, have direct sales personnel and substantial proprietary online advertising inventory that may provide competitive advantages compared to
our networks, and they have a significant impact on pricing for online advertising overall. These companies have longer operating histories, greater name recognition and have greater financial,
technical, sales, and marketing resources than we have. Further, Google, Yahoo! and Microsoft have made acquisitions to put them in direct competition with a number of our offerings.

Competition
for advertising placements among current and future suppliers of Internet navigational and informational services, high-traffic websites and Internet service
providers ("ISPs"), as well as competition with other media for advertising placements, could result in significant price competition, declining margins and reductions in advertising revenue. In
addition, as we continue our efforts to expand the scope of our Web services, we may compete with a greater number of Web publishers and other media companies across an increasing range of different
Web services, including in vertical markets where competitors may have advantages in expertise, brand recognition and other areas. If existing or future competitors develop or offer products or
services that provide significant performance, price, creative or other advantages over those offered by us, our business, results of operations and financial condition could be negatively affected.
We also compete with traditional advertising media, such as direct mail, television, radio, cable, and print, for a share of advertisers' total advertising budgets. Many current and potential
competitors enjoy competitive advantages over us, such as longer operating histories, greater name recognition, larger customer bases, greater access to advertising space on high-traffic
websites, and significantly greater financial, technical, sales, and marketing resources. As a result, we may not be able to compete successfully. If we fail to compete successfully, we could lose
customers or advertising inventory and our revenue and results of operations could decline.

WE DEPEND ON KEY PERSONNEL, THE LOSS OF WHOM COULD HARM OUR BUSINESS.

Our success depends in part on the retention of personnel critical to our combined business operations due to, for example, unique
technical skills, management expertise or key business relationships. We may be unable to retain existing management, finance, engineering, sales, customer support, and operations personnel that are
critical to the success of the Company, which may result in disruption of operations, loss of key business relationships, information, expertise or know-how, unanticipated additional
recruitment and training costs, and diminished anticipated benefits of acquisitions, including loss of revenue and profitability.

Our
future success is substantially dependent on the continued service of our key senior management. Our employment agreements with our key personnel are short-term and on an
at-will basis. We do not have key-person insurance on any of our employees. The loss of the services of any member of our senior management team, or of any other key employees,
could divert management's time and attention, increase our expenses and adversely affect our ability to conduct our business efficiently. Our future success also depends on our continuing ability to
attract, retain and motivate highly skilled employees. We may be unable to retain our key employees or attract, retain and motivate

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other
highly qualified employees in the future. We have experienced difficulty from time to time in attracting or retaining the personnel necessary to support the growth of our business, and may
experience similar difficulties in the future.

DELAWARE LAW AND OUR STOCKHOLDER RIGHTS PLAN CONTAIN ANTI-TAKEOVER PROVISIONS THAT COULD DETER TAKEOVER ATTEMPTS THAT COULD BE BENEFICIAL
TO OUR STOCKHOLDERS.

Provisions of Delaware law could make it more difficult for a third-party to acquire us, even if doing so would be beneficial to our
stockholders. Section 203 of the Delaware General Corporation Law may make the acquisition of our company and the removal of incumbent officers and directors more difficult by prohibiting
stockholders holding 15% or more of our outstanding voting stock from acquiring us, without our board of directors' consent, for at least three years from the date they first hold 15% or more of the
voting stock. In addition, our Stockholder Rights Plan has significant anti-takeover effects by causing substantial dilution to a person or group that attempts to acquire us on terms not
approved by our board of directors.

SYSTEM FAILURES COULD SIGNIFICANTLY DISRUPT OUR OPERATIONS, WHICH COULD CAUSE US TO LOSE CUSTOMERS OR ADVERTISING INVENTORY.

Our success depends on the continuing and uninterrupted performance of our systems. Sustained or repeated system failures that
interrupt our ability to provide services to customers, including failures affecting our ability to deliver advertisements quickly and accurately and to process visitors' responses to advertisements,
would reduce significantly the attractiveness of our solutions to advertisers and Web publishers. Our business, results of operations and financial condition could also be materially and adversely
affected by any systems damage or failure that impacts data integrity or interrupts or delays our operations. Our computer systems are vulnerable to damage from a variety of sources, including
telecommunications failures, power outages, malicious or accidental human acts, and natural disasters. We lease data center space in various locations in northern and southern California; Stockholm,
Sweden; and Shanghai, China. Therefore, any of the above factors affecting any of these areas could substantially harm our business. Moreover, despite network security measures, our servers are
potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems in part because we cannot control the maintenance and operation of our
third-party data centers. Despite the precautions taken, unanticipated problems affecting our systems could cause interruptions in the delivery of our solutions in the future and our ability to
provide a record of past transactions. Our data centers and systems incorporate varying degrees of redundancy. All data centers and systems may not automatically switch over to their redundant
counterpart. Our insurance policies may not adequately compensate us for any losses that may occur due to any failures in our systems.

IT MAY BE DIFFICULT TO PREDICT OUR FINANCIAL PERFORMANCE BECAUSE OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE.

Our revenue and operating results may vary significantly from quarter to quarter due to a variety of factors, many of which are beyond
our control. You should not rely on period-to-period comparisons of our results of operations as an indication of our future performance. Our results of operations have fallen
below the expectations of market analysts and our own forecasts in the past and may also do so in some future periods. If this happens, the market price of our common stock may fall significantly. The
factors that may affect our quarterly operating results include, but are not limited to, the following:



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Expenditures
by advertisers also tend to be cyclical, reflecting overall economic conditions as well as budgeting and buying patterns. Any decline in the economic prospects of
advertisers or the economy generally may alter advertisers' current or prospective spending priorities, or may increase the time it takes us to close sales with advertisers, and could materially and
adversely affect our business, results of operations and financial condition.

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OUR EXPANDING INTERNATIONAL OPERATIONS SUBJECT US TO ADDITIONAL RISKS AND UNCERTAINTIES AND WE MAY NOT BE SUCCESSFUL WITH OUR STRATEGY TO CONTINUE TO
EXPAND SUCH OPERATIONS.

We initiated operations, through wholly-owned subsidiaries or divisions, in the United Kingdom in 1999, France and Germany in 2000,
Sweden in 2004, Japan and China in 2007, and Spain and Ireland in 2008. Our international expansion and the integration of international operations present unique challenges and risks to our company,
and require management attention. Compliance with complex foreign and U.S. laws and regulations that apply to our international operations increases our cost of doing business in international
jurisdictions and could interfere with our ability to offer our products and services to one or more countries or expose us or our employees to fines and penalties. These laws and regulations include,
but are not limited to, content requirements, tax laws, data privacy and filtering requirements, U.S. laws such as the Foreign Corrupt Practices Act, and local laws prohibiting corrupt payments to
governmental officials. Violations of these laws and regulations could result in monetary damages, criminal sanctions against us, our officers, or our employees, and prohibitions on the conduct of our
business. Our continued international expansion also subjects us to additional foreign currency exchange rate risks and will require additional management
attention and resources. We cannot assure you that we will be successful in our international expansion. Our international operations and expansion subject us to other inherent risks, including, but
not limited to:



Our
failure to address these risks adequately could materially and adversely affect our business, revenue, results of operations and financial condition.

WE MAY NOT BE ABLE TO PROTECT OUR INTELLECTUAL PROPERTY FROM UNAUTHORIZED USE, WHICH COULD DIMINISH THE VALUE OF OUR PRODUCTS AND SERVICES, WEAKEN
OUR COMPETITIVE POSITION AND REDUCE OUR REVENUE.

Our success depends in large part on our proprietary technologies, including tracking management software, our affiliate marketing
technologies, our display advertising technologies, our lead generation technologies, our technology, including SEM technology that runs our owned and operated websites, and our MOJO platform. In
addition, we believe that our trademarks are key to identifying and differentiating our products and services from those of our competitors. We may be required to spend significant resources to
monitor and police our intellectual property rights. If we fail to successfully enforce our intellectual property rights, the value of our products and services could be diminished and our competitive
position may suffer.

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We rely on a combination of copyright, trademark and trade secret laws, confidentiality procedures and licensing arrangements to establish and protect our
proprietary rights. Third-party software providers could copy or otherwise obtain and use our technologies without authorization or develop similar technologies independently, which may infringe upon
our proprietary rights. We may not be able to detect infringement and may lose competitive position in the market before we do so. In addition, competitors may design around our technologies or
develop competing technologies. Intellectual property protection may also be unavailable or limited in some foreign countries.

We
generally enter into confidentiality or license agreements with our employees, consultants, vendors, customers, and corporate partners, and generally control access to and
distribution of our technologies, documentation and other proprietary information. Despite these efforts, unauthorized parties may attempt to disclose, obtain or use our products and services or
technologies. Our precautions may not prevent misappropriation of our products, services or technologies, particularly in foreign countries where laws or law enforcement practices may not protect our
proprietary rights as fully as in the United States.

GOVERNMENT ENFORCEMENT ACTIONS, CHANGES IN GOVERNMENT REGULATION AND INDUSTRY STANDARDS, INCLUDING, BUT NOT LIMITED TO SPYWARE, PRIVACY AND EMAIL
MATTERS, COULD DECREASE DEMAND FOR OUR PRODUCTS AND SERVICES AND INCREASE OUR COSTS OF DOING BUSINESS.

Laws and regulations that apply to Internet communications, commerce and advertising are becoming more prevalent. These regulations
could affect the costs of communicating on the Web and could adversely affect the demand for our advertising solutions or otherwise harm our business, results of operations and financial condition.
The United States Congress has enacted Internet legislation regarding children's privacy, copyrights, sending of commercial email (e.g., the Federal CAN-SPAM Act of 2003), and
taxation. The United States Congress has passed legislation regarding spyware (i.e., H.R. 964, the "Spy Act of 2007") and the New York Attorney General's office has also pursued enforcement
actions against companies in this industry. The Federal Trade Commission ("FTC") conducted an investigation in 2007 into certain ValueClick websites which promise consumers a free gift of substantial
value, and the manner in which they drive traffic to such websites, in particular through email. In the first quarter of 2008, we agreed to a stipulated injunction with the FTC resolving this matter.
The injunction made clear that it constituted no finding of any impermissible conduct by us in the past under preexisting FTC regulations then in effect. But the injunction also imposed new FTC
guidelines for promotional lead generation activities, consistent with the approach that the agency applied to our competitors. In addition, the FTC issued a report and a revised set of
"Self-Regulatory Principles for Online Behavioral Advertising" which promotes principles designed to encourage meaningful self-regulation with regard to online behavioral
advertising within the industry, however its message strongly encourages that industry participants come up with more meaningful and rigorous self-regulation or invite legislation by
states, Congress or a more regulatory approach by the FTC. Such legislation or increased regulatory approach, including legislation by Congress or guidelines by the FTC that may require consumers to
"opt-in" before any data is collected about their web viewing behavior, may adversely affect our ability to grow our company and our behavioral targeting platform. Other laws and
regulations have been adopted and may be adopted in the future, and may address issues such as user privacy, spyware, "do not email" lists, pricing, intellectual property ownership and infringement,
copyright, trademark, trade secret, export of encryption technology, click-fraud, acceptable content, search terms, lead generation, behavioral targeting, taxation, and quality of products and
services. This legislation could hinder growth in the use of the Web generally and adversely affect our business. Moreover, it could decrease the acceptance of the Web as a communications, commercial
and advertising medium. We do not use any form of spam or spyware and has policies to prohibit abusive Internet behavior, including prohibiting the use of spam and spyware by our Web publisher
partners.

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Due
to the global nature of the Web, it is possible that, although our transmissions originate in California, Sweden and China, the governments of other states or foreign countries might
attempt to regulate our transmissions or levy sales or other taxes relating to our activities. In addition, the growth and development of the market for Internet commerce may prompt calls for more
stringent consumer protection laws, both in the United States and abroad, that may impose additional burdens on
companies conducting business over the Internet. The laws governing the Internet remain largely unsettled, even in areas where there has been some legislative action. It may take years to determine
how existing laws, including those governing intellectual property, privacy, libel and taxation, apply to the Internet and Internet advertising. Our business, results of operations and financial
condition could be materially and adversely affected by the adoption or modification of industry standards, laws or regulations relating to the Internet, or the application of existing laws to the
Internet or Internet-based advertising.

WE COULD BE SUBJECT TO LEGAL CLAIMS, GOVERNMENT ENFORCEMENT ACTIONS AND DAMAGE TO OUR REPUTATION AND HELD LIABLE FOR OUR OR OUR CUSTOMERS' FAILURE TO
COMPLY WITH FEDERAL, STATE AND FOREIGN LAWS, REGULATIONS OR POLICIES GOVERNING CONSUMER PRIVACY, WHICH COULD MATERIALLY HARM OUR BUSINESS.

Recent growing public concern regarding privacy and the collection, distribution and use of information about Internet users has led to
increased federal, state and foreign scrutiny and legislative and regulatory activity concerning data collection and use practices. The United States Congress currently has pending legislation
regarding privacy and data security measures (e.g., S. 495, the "Personal Data Privacy and Security Act of 2007"). Any failure by us to comply with applicable federal, state and foreign laws
and the requirements of regulatory authorities may result in, among other things, indemnification liability to our customers and the advertising agencies we work with, administrative enforcement
actions and fines, class action lawsuits, cease and desist orders, and civil and criminal liability. Recently, class action lawsuits have been filed alleging violations of privacy laws by ISPs. The
European Union's directive addressing data privacy limits our ability to collect and use information regarding Internet users. These restrictions may limit our ability to target advertising in most
European countries. Our failure to comply with these or other federal, state or foreign laws could result in liability and materially harm our business.

In
addition to government activity, privacy advocacy groups and the technology and direct marketing industries are considering various new, additional or different
self-regulatory standards. This focus, and any legislation, regulations or standards promulgated, may impact us adversely. Governments, trade associations and industry
self-regulatory groups may enact more burdensome laws, regulations and guidelines, including consumer privacy laws, affecting our customers and us. Since many of the proposed laws or
regulations are just being developed, and a consensus on privacy and data usage has not been reached, we cannot yet determine the impact these proposed laws or regulations may have on our business.
However, if the gathering of profiling information were to be curtailed, Internet advertising would be less effective, which would reduce demand for Internet advertising and harm our business.

Third
parties may bring class action lawsuits against us relating to online privacy and data collection. We disclose our information collection and dissemination policies, and we may be
subject to claims if we act or are perceived to act inconsistently with these published policies. Any claims or inquiries could be costly and divert management's attention, and the outcome of such
claims could harm our reputation and our business.

Our
customers are also subject to various federal and state laws concerning the collection and use of information regarding individuals. These laws include the Children's Online Privacy
Protection Act, the Federal Drivers Privacy Protection Act of 1994, the privacy provisions of the Gramm-Leach-Bliley

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Act,
the Federal CAN-SPAM Act of 2003, as well as other laws that govern the collection and use of consumer credit information. We cannot assure you that our customers are currently in
compliance, or will remain in compliance, with these laws and their own privacy policies. We may be held liable if our customers use our technologies in a manner that is not in compliance with these
laws or their own stated privacy policies.

OUR STOCK PRICE IS LIKELY TO BE VOLATILE AND COULD DROP UNEXPECTEDLY.

Our common stock has been publicly traded since March 30, 2000. The market price of our common stock has been subject to
significant fluctuations since the date of our initial public offering.

The
stock market has from time to time experienced significant price and volume fluctuations that have affected the market prices of securities, particularly securities of technology
companies. As a result, the market price of our common stock may materially decline, regardless of our operating performance. In the past, following periods of volatility in the market price of a
particular company's securities, securities class action litigation has often been brought against that company. We were involved in this type of litigation, which arose shortly after our stock price
dropped significantly during the third quarter of 2007. Litigation of this type is often expensive and diverts management's attention and resources.

SEVERAL STATES HAVE IMPLEMENTED OR PROPOSED REGULATIONS THAT IMPOSE SALES TAX ON CERTAIN ECOMMERCE TRANSACTIONS INVOLVING THE USE OF AFFILIATE
MARKETING PROGRAMS.

In 2008, the state of New York implemented regulations that require advertisers to collect and remit sales taxes on sales made to
residents of New York if the affiliate/publisher that facilitated that sale is a New York-based entity. In addition, several other states, including California, have proposed similar
regulations, although most of the regulations proposed by these other states have not passed. While the New York sales tax requirement has not had a material impact on our Affiliate Marketing segment
results of operations, we are unable to determine the impact on our Affiliate Marketing business if other states adopt similar requirements.

WE MAY BE REQUIRED TO RECORD A SIGNIFICANT CHARGE TO EARNINGS IF OUR GOODWILL OR AMORTIZABLE INTANGIBLE ASSETS BECOME IMPAIRED.

As disclosed in this Annual Report on Form 10-K, we recorded an impairment charge as of December 31, 2008
related to our goodwill and amortizable intangible assets totaling $269.5 million. As of December 31, 2009, we have $157.1 million and $38.7 million of goodwill and
amortizable intangible assets, respectively, remaining.

We
perform our annual impairment analysis of goodwill as of December 31 of each year, or sooner if we determine there are indicators of impairment, in accordance with accounting
principles generally accepted in the United States of America ("GAAP"). Under GAAP, the impairment analysis of goodwill must be based on estimated fair values. The determination of fair values
requires assumptions and estimates of many critical factors, including, but not limited to: expected operating results; macroeconomic conditions; our stock price; earnings multiples implied in
acquisitions in the online marketing industry; industry analyst expectations; and the discount rates used in the discounted cash flow analysis. We are required to perform our next goodwill impairment
analysis at December 31, 2010. If macroeconomic conditions deteriorate further in 2010 or our stock price experiences further declines, we may be required to record additional impairment
charges in the future.

We
are also required under GAAP to review our amortizable intangible assets for impairment whenever events and circumstances indicate that the carrying value of such assets may not be

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recoverable.
We may be required to record a significant charge to earnings in a period in which any impairment of our goodwill or amortizable intangible assets is determined.

WE MAY INCUR LIABILITIES TO TAX AUTHORITIES IN EXCESS OF AMOUNTS THAT HAVE BEEN ACCRUED WHICH MAY ADVERSELY IMPACT OUR RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.

As more fully described in Note 9 to our consolidated financial statements, we have recorded significant income tax liabilities.
The preparation of our consolidated financial statements requires estimates of the amount of income tax that will become payable in each of the jurisdictions in which we operate. We may be challenged
by the taxing authorities in these jurisdictions and, in the event that we are not able to successfully defend our position, we may incur significant additional income tax liabilities and related
interest and penalties which may have an adverse impact on our results of operations and financial condition.

IF WE FAIL TO MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROLS, WE MAY NOT BE ABLE TO ACCURATELY REPORT OUR FINANCIAL RESULTS OR PREVENT FRAUD AND
OUR BUSINESS MAY BE HARMED AND OUR STOCK PRICE MAY BE ADVERSELY IMPACTED.

Effective internal controls are necessary for us to provide reliable financial reports and to effectively prevent fraud. Any inability
to provide reliable financial reports or to prevent fraud could harm our business. The Sarbanes-Oxley Act of 2002 requires management to evaluate and assess the effectiveness of our internal control
over financial reporting. We determined that our internal control over financial reporting was effective as of December 31, 2009. In order to continue to comply with the requirements of the
Sarbanes-Oxley Act, we are required to continuously evaluate and, where appropriate, enhance our policies, procedures and internal controls. If we fail to maintain the adequacy of our internal
controls, we could be subject to litigation or regulatory scrutiny and investors could lose confidence in the accuracy and completeness of our financial reports. We cannot assure you that in the
future we will be able to fully comply with the requirements of the Sarbanes-Oxley Act or that management will conclude that our internal control over financial reporting is effective. If we fail to
fully comply with the requirements of the Sarbanes-Oxley Act, our business may be harmed and our stock price may decline.

DECREASED EFFECTIVENESS OF EQUITY COMPENSATION COULD ADVERSELY AFFECT OUR ABILITY TO ATTRACT AND RETAIN EMPLOYEES AND HARM OUR BUSINESS.

We have historically used equity compensation as a key component of our employee compensation program in order to align employees'
interests with the interests of our stockholders, encourage employee retention, and provide competitive compensation packages. Volatility or lack of positive performance in our stock price may
adversely affect our ability to retain key employees, many of whom have been granted equity awards, or to attract additional highly-qualified personnel. As of December 31, 2009, many of our
outstanding employee stock options have exercise prices in excess of the stock price on that date. To the extent this continues to occur, our ability to retain employees may be adversely affected.
Moreover, applicable NASDAQ listing standards relating to obtaining stockholder approval of equity compensation plans could make it more difficult or expensive for us to grant stock options or other
stock-based awards to employees in the future. As a result, we may incur increased compensation costs, change our equity compensation strategy or find it difficult to attract, retain and motivate
employees, any of which could materially, adversely affect our business.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.

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ITEM 2.    PROPERTIES

As of December 31, 2009, we leased facilities at the following locations (including square-feet and primary
function/segment(s) using the facility):



We
own land and a building, approximating 61,900 square-feet and 23,800 square-feet, respectively, in Simi Valley, California. We also lease small office space
and facilities in: Monrovia, California; Chicago, Illinois; Paris, France; Munich, Germany; Dublin, Ireland; Madrid, Spain; Stockholm, Sweden; Hong Kong, China and, Tokyo, Japan. In addition, we use
third-party co-location facilities that house our Web servers in: Sunnyvale, California; San Jose, California; Los Angeles, California; El Segundo, California; Irvine, California; Santa
Clara, California; Stockholm, Sweden; and Shanghai, China. As a result of the divestiture of our lead generation business, operated through our Web Clients subsidiary, the lease on our Harrisburg,
Pennsylvania facility was assumed by the buyer in February 2010. For additional information regarding our obligations under leases, see Note 16 to our consolidated financial statements included
in this annual report on Form 10-K.

ITEM 3.    LEGAL PROCEEDINGS

Internet Cookie Patent Litigation

In March of 2009, Netscape, Inc., a subsidiary of AOL, Inc., filed a complaint in the United States District Court for
the Eastern District of Virginia against ValueClick, Inc., Mediaplex, Inc., Commission Junction, Inc., MeziMedia, Inc., Web Clients, Inc., and Fastclick, Inc.
for alleged patent infringement of U.S. patent number 5,774,670, colloquially known as the "Internet Cookies Patent." On July 23, 2009, we filed a cross complaint against Netscape for,
among other things, fraud.

The
complaint seeks an unspecified amount of damages in addition to injunctive relief. Should the plaintiff be successful in this litigation, we could be liable for a royalty relating to
the alleged use of the technology, the amount of which is not specified but which could be material to our financial position, operating results, and cash flows in the period in which the litigation
is resolved (and possibly for future periods for future alleged use of the technology). The effectiveness of our operations could be limited by any reduction or limitation in our ability to utilize
any alleged related technology. If we lose at trial and are forced to utilize replacement technology, such replacement technology could require reengineering time and resources, might not be completed
in time to avoid losing customers or advertising inventory, and might not be commercially feasible.

On
January 29, 2010, the court issued a ruling in this matter with respect to the parties' motions for summary judgment. On our motion for summary judgment, the court granted our
motion concerning 35 U.S.C. Sec. 102(b) with respect to Claim 1 on the patent, and ruled Claim 1 to be invalid. The validity of the remaining claims of the Internet Cookies Patent will be litigated at
trial. The

20

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Table of Contents

court
also granted our motion with respect to willfulness, which eliminates plaintiff's claim for a finding of willful infringement and treble damages. On the plaintiff's motion for summary judgment,
the court granted their motion with respect to equitable estoppel, public use, inventorship and preemption of our state law counterclaims, including our claim for fraud. The court's decision
eliminates those defenses and counter-claims by us. We believe we have valid remaining defenses and intend to defend ourselves vigorously at trial in this matter.

The
plaintiff has filed a motion for reconsideration of the court's summary judgment ruling concerning Claim 1 of the Internet Cookies Patent and a hearing date for that motion has been
set for March 19, 2010. A trial date for the remaining claims has been set in this matter for May 11, 2010. At this time, and based on all available evidence, we are unable to estimate
the range of potential loss, if any, associated with this matter. Accordingly, the accompanying consolidated financial statements do not reflect an accrual of any amount for possible loss in this
matter. Given the pending trial date in May 2010, it is reasonably possible that there will be developments in this matter in the near future. Such developments, if any, will be considered by us in
evaluating the need for an accrual in subsequent reporting periods.

Other Litigation

On April 8, 2008, Hypertouch, Inc. filed an action against us in the Superior Court of California, County of Los Angeles.
The complaint asserts causes of action for violation of California Business & Professions Code §§ 17529.5 and 17200, et seq., arising from the plaintiff's alleged
receipt of a large number of email messages allegedly transmitted by us "and/or (our) agents" and seeks statutory damages for each such email. We filed our answer to the complaint on May 28,
2008. On May 4, 2009, the court granted our motion for summary judgment which ended the case in this court. Hypertouch has appealed the Court's ruling. The appeal is pending.

On
July 15, 2008, we filed a complaint against Tacoda, Inc. in the United States District Court for the Central District of California for patent infringement of U.S.
patent numbers 5,848,396 and 5,991,735. We are seeking an unspecified amount of damages in addition to injunctive relief. This case has been put on hold by the Court until May 25, 2010,
pending a review by the Patent and Trademark Office of U.S. patent numbers 5,848,396 and 5,991,735.

From
time to time, we may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. In addition, we may receive letters alleging infringement
of patent or other intellectual property rights. We are not currently a party to any material legal proceedings, except as discussed above, nor are we aware of any pending or threatened litigation
that would have a material adverse effect on our business, operating results, cash flows or financial condition should such litigation be resolved unfavorably.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the quarter ended December 31, 2009.

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Table of Contents

PART II.

ITEM 5.    MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock has traded on the NASDAQ Global Select Market (including its predecessor markets) under the symbol "VCLK" since our
initial public offering on March 30, 2000. The following table sets forth, for the periods indicated, the high and low sales prices per share of our common stock as reported on the NASDAQ
Global Select Market. On February 19, 2010, the last sale price of our common stock reported by the NASDAQ Global Select Market was $9.45 per share.

Price Range of Common StockHigh

LowFiscal Year Ended December 31, 2009Fourth Quarter

$
13.94

$
9.08Third Quarter

$
13.54

$
9.38Second Quarter

$
12.39

$
8.31First Quarter

$
8.75

$
5.47




Price Range of Common StockHigh

LowFiscal Year Ended December 31, 2008Fourth Quarter

$
10.18

$
4.66Third Quarter

$
15.47

$
9.44Second Quarter

$
21.00

$
14.90First Quarter

$
23.75

$
16.11


Stockholders

As of December 31, 2009, there were 553 stockholders of record who held shares of our common stock.

Dividend Policy

We have not declared or paid any cash dividends on our capital stock since our inception and we do not anticipate paying cash dividends
in the foreseeable future.

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Table of Contents

Stockholder Return Performance Graph

Set forth below is a graph comparing the cumulative total stockholder return of $100 invested in our common stock on
December 31, 2004 through December 31, 2009 relative to the cumulative total return of $100 invested in the NASDAQ Composite Index and the RDG Internet Composite Index calculated
similarly for the same period.

GRAPHIC

Issuer Purchases of Equity Securities

The table below summarizes our common stock repurchases during the three months ended December 31, 2009 (dollar amounts, except
per share data, are in millions).

Period

Total Number
of Shares
Purchased(1)

Average Price
Paid per
Share(2)

Total Number of Shares
Purchased as Part of
Publicly Announced
Plans or Programs

Approximate Dollar
Value of Shares that
May Yet Be Purchased
Under the Plans or ProgramsOctober 1, 2009 through October 31, 2009


250,000

$
9.87


250,000

$
102.5November 1, 2009 through November 30, 2009


1,835,416


9.76


1,835,416


84.6December 1, 2009 through December 31, 2009


1,514,015


9.75


1,514,015


69.9Total


3,599,431

$
9.76


3,599,431

$
69.9


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Table of Contents



ITEM 6.    SELECTED FINANCIAL DATA

The selected consolidated financial data set forth below with respect to our consolidated statements of operations for the years ended
December 31, 2009, 2008 and 2007 and with respect to our consolidated balance sheets as of December 31, 2009 and 2008 have been derived from the audited consolidated financial statements
of ValueClick which are included elsewhere herein. The consolidated statement of operations data for the years ended December 31, 2006 and 2005 and the consolidated balance sheet data as of
December 31, 2007, 2006 and 2005 have been derived from our audited consolidated financial statements not included herein, and as adjusted for reclassification of previously reported operating
results arising from discontinued operations. The selected consolidated financial data set forth below is qualified in its entirety by, and should be read in conjunction with both Item 7
"Management's Discussion and Analysis of Financial Condition and Results of Operations" of this annual report on Form 10-K, and the consolidated financial statements and the notes
to those consolidated financial statements included in Item 8 "Financial Statements and Supplementary Data" of this annual report on Form 10-K.

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Table of Contents

CONSOLIDATED STATEMENT OF OPERATIONS DATA

For the Year Ended December 31,2009

2008

2007

2006

2005(in thousands, except per share data)Consolidated Statement of Operations Data(1):Revenue

$
422,723

$
455,441

$
375,515

$
256,760

$
187,378Cost of revenue


116,509


139,470


118,127


85,442


50,948Gross profit


306,214


315,971


257,388


171,318


136,430Operating expenses:Sales and marketing(2)


118,457


136,466


95,939


62,395


36,004General and administrative(2)


60,373


88,745


60,711


47,032


33,924Technology(2)


25,050


31,160


27,715


25,403


18,218Amortization of intangible assets


19,803


21,733


16,480


10,953


6,121Impairment of goodwill and intangible assets





269,500








Restructuring benefit, net














(73
)Total operating expenses


223,683


547,604


200,845


145,783


94,194Income (loss) from operations


82,531


(231,633
)

56,543


25,535


42,236Interest and other income, net


302


2,451


12,025


7,903


5,072Income (loss) before income taxes and minority interest


82,833


(229,182
)

68,568


33,438


47,308Income tax expense (benefit)


21,264


(33,814
)

28,406


14,353


19,604Income (loss) from continuing operations


61,569


(195,368
)

40,162


19,085


27,704Discontinued operations:Income (loss) from discontinued operations, net of tax


7,047


(23,728
)

30,450


43,489


12,940Gain on disposition, net of tax





4,984








Net income (loss) from discontinued operations


7,047


(18,744
)

30,450


43,489


12,940Net income (loss)

$
68,616

$
(214,112
)
$
70,612

$
62,574

$
40,644Basic net income (loss) per common shareContinuing operations

$
0.71

$
(2.12
)
$
0.40

$
0.19

$
0.32Discontinued operations

$
0.08

$
(0.20
)
$
0.31

$
0.44

$
0.15Net income (loss)

$
0.79

$
(2.32
)
$
0.71

$
0.63

$
0.46Diluted net income (loss) per common shareContinuing operations

$
0.71

$
(2.12
)
$
0.40

$
0.19

$
0.30Discontinued operations

$
0.08

$
(0.20
)
$
0.30

$
0.43

$
0.14Net income (loss)

$
0.79

$
(2.32
)
$
0.70

$
0.62

$
0.45Weighted-average shares used to calculate basic net income (loss) per common share


86,716


92,325


99,224


99,600


87,722Weighted-average shares used to calculate diluted net income (loss) per common share


87,210


92,325


100,518


101,721


90,857


(1)The
amounts included in the Consolidated Statement of Operations Data for the years presented reflect the following acquisitions from their effective dates:


25

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Table of Contents

Acquisitions

DateMeziMedia

July 2007Shopping.net

December 2006Fastclick, Inc.

September 2005




Dispositions

Disposition DateMediaplex Systems

October 2008E-Babylon, Inc

October 2008Web Marketing Holdings, LLC ("Web Clients")

February 2010


For the Year Ended December 31,2009

2008

2007

2006

2005Sales and marketing

$
1,907

$
15,621

$
4,645

$
4,215

$
817General and administrative


6,034


30,620


9,526


4,878


382Technology


928


1,925


1,218


1,826


823$
8,869

$
48,166

$
15,389

$
10,919

$
2,022


Consolidated Balance Sheet Data:

As of December 31,2009

2008

2007

2006

2005(in thousands)Cash, cash equivalents and marketable securities

$
180,523

$
150,412

$
287,517

$
281,594

$
240,783Working capital

$
160,531

$
77,183

$
179,649

$
315,576

$
259,797Total assets

$
566,562

$
603,279

$
1,011,022

$
793,266

$
720,861Total non-current liabilities

$
61,669

$
73,195

$
81,890

$
62,143

$
35,372Total stockholders' equity

$
406,489

$
353,479

$
709,933

$
643,709

$
618,543


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Table of Contents

Quarterly Results

The following table sets forth certain selected financial information for our eight most recent fiscal quarters. In the opinion of our
management, this unaudited financial information has been prepared on the same basis as the audited financial statements, and includes all adjustments, consisting only of normal recurring adjustments,
necessary to fairly state this information when read in conjunction with our consolidated financial statements and the related notes contained elsewhere herein. These operating results are not
necessarily indicative of results of any future period.

For the Three-Month Period EndedDec. 31,
2009

Sept. 30,
2009

Jun. 30,
2009

Mar. 31,
2009

Dec. 31,
2008

Sept. 30,
2008

Jun. 30,
2008

Mar. 31,
2008(in thousands, except per share data)Revenue

$
110,394

$
105,166

$
104,090

$
103,073

$
110,059

$
104,848

$
115,284

$
125,250Cost of revenue


31,173


26,146


28,232


30,958


35,611


33,471


34,764


35,624Gross profit


79,221


79,020


75,858


72,115


74,448


71,377


80,520


89,626Operating expenses:Sales and marketing(1)


27,228


31,093


30,927


29,209


27,155


38,836


32,963


37,512General and administrative(1)


14,434


16,700


14,810


14,429


18,057


36,796


15,661


18,231Technology(1)


6,179


6,143


6,244


6,484


7,205


8,104


8,019


7,832Amortization of intangible assets


4,999


4,991


4,924


4,889


4,992


5,538


5,613


5,590Impairment of goodwill and intangible assets














269,500








Total operating expenses


52,840


58,927


56,905


55,011


326,909


89,274


62,256


69,165Income (loss) from operations


26,381


20,093


18,953


17,104


(252,461
)

(17,897
)

18,264


20,461Interest and other income (expense), net


(176
)

(513
)

1,133


(142
)

(1,728
)

(269
)

1,408


3,040Income (loss) before income taxes


26,205


19,580


20,086


16,962


(254,189
)

(18,166
)

19,672


23,501Income tax expense (benefit)


8,834


(3,677
)

8,129


7,978


(35,635
)

(16,522
)

8,440


9,903Income (loss) from continuing operations


17,371


23,257


11,957


8,984


(218,554
)

(1,644
)

11,232


13,598Discontinued operations:Income (loss) from discontinued operations, net of tax(1)


(1,874
)

1,773


2,915


4,233


(38,197
)

3,643


5,257


5,569Gain on disposition, net of tax














4,984








Net income (loss) from discontinued operations


(1,874
)

1,773


2,915


4,233


(33,213
)

3,643


5,257


5,569Net income (loss)

$
15,497

$
25,030

$
14,872

$
13,217

$
(251,767
)
$
1,999

$
16,489

$
19,167Basic net income (loss) per common shareContinuing operations

$
0.20

$
0.27

$
0.14

$
0.10

$
(2.52
)
$
(0.02
)
$
0.12

$
0.14Discontinued operations

$
(0.02
)
$
0.02

$
0.03

$
0.05

$
(0.38
)
$
0.04

$
0.06

$
0.06Net income (loss)

$
0.18

$
0.29

$
0.17

$
0.15

$
(2.90
)
$
0.02

$
0.17

$
0.20Diluted net income (loss) per common shareContinuing operations

$
0.20

$
0.26

$
0.14

$
0.10

$
(2.52
)
$
(0.02
)
$
0.12

$
0.14Discontinued operations

$
(0.02
)
$
0.02

$
0.03

$
0.05

$
(0.38
)
$
0.04

$
0.05

$
0.06Net income (loss)

$
0.18

$
0.29

$
0.17

$
0.15

$
(2.90
)
$
0.02

$
0.17

$
0.19


(1)Includes
stock-based compensation for the following periods (in thousands):


For the Three-Month Period EndedDec. 31,
2009

Sept. 30,
2009

Jun. 30,
2009

Mar. 31,
2009

Dec. 31,
2008

Sept. 30,
2008

Jun. 30,
2008

Mar. 31,
2008Sales and marketing

$
355

$
394

$
575

$
583

$
581

$
11,936

$
1,575

$
1,529General and administrative


1,361


1,555


1,542


1,576


1,531


23,011


2,911


3,167Technology


197


228


242


261


291


978


331


325$
1,913

$
2,177

$
2,359

$
2,420

$
2,403

$
35,925

$
4,817

$
5,021


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Table of Contents

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated
financial statements and the related notes thereto included elsewhere in this annual report on Form 10-K beginning on page F-1.

The
following discussion contains forward-looking statements based on the current expectations, assumptions, estimates, and projections about us and our industry. These forward-looking
statements involve risks and uncertainties. Our actual results could differ materially from those discussed in these forward- looking statements as a result of certain factors, as more fully described
in Item 1A "Risk Factors" and elsewhere in this annual report on Form 10-K. We undertake no obligation to release publicly any revisions to any forward-looking statements to
reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Overview

We offer a suite of products and services that enable marketers to advertise and sell their products through all major online marketing
channels, including display advertising, search marketing, comparison shopping, and affiliate marketing. We also offer technology infrastructure tools and services that enable marketers to implement
and manage their own online display advertising and email campaigns, and that assist online publishers with management of their website inventory. The broad range of products and services that we
provide enables our customers to address all aspects of their online marketing process, from strategic planning through execution, including results measurement and campaign refinements.

In
October 2008, we completed the dispositions of our Mediaplex Systems subsidiary and our e-commerce operations. In February 2010, we completed the disposition of our Web
Clients subsidiary. This business is treated as a disposal group and classified in our consolidated financial statements as held-for-sale as of December 31, 2009. The
results of operations of these disposed businesses and disposal group have been classified as discontinued operations in our consolidated financial statements. All current year and prior year
financial information discussed herein pertains to the remaining continuing operations.

On
July 30, 2007, we completed the acquisition of MeziMedia. We have included the results of operations of MeziMedia in our consolidated results of operations beginning on the
date of acquisition. Note 4 to our consolidated financial statements included in this annual report on Form 10-K provides unaudited pro forma revenue, net income and basic
and diluted net income per common share for the year ended December 31, 2007 as if the acquisition of MeziMedia occurred as of January 1, 2007.

We
derive our revenue from four business segments. These business segments are presented on a worldwide basis and include: Media, Affiliate Marketing, Owned & Operated Websites,
and Technology. Each of these four business segments is described in Item 1 "Business" of this annual report on Form 10-K.

Our
operations and financial performance depend on general economic conditions. The economies in which we primarily operate have experienced, and could continue to experience, an
economic downturn due to various factors including: the crisis in credit markets, slower economic activity, decreased consumer confidence, high consumer debt levels and unemployment rates, and other
adverse business conditions. Such fluctuations in these economies could cause, among others, deterioration and continued decline in business and consumer spending, reductions in our customer's
advertising budgets, and a decrease in demand for the types of online marketing services we provide or the products our customers offer. These factors have negatively impacted our revenue levels and
could continue to negatively impact our business in the future.

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Table of Contents

The
following table provides revenue, gross profit, operating expenses, and income from operations information for each of our four business segments. Segment income from operations, as
shown below, excludes the effects of: stock-based compensation; amortization of intangible assets; impairment of goodwill and intangible assets, and corporate expenses, as these items are excluded
from the segment performance measures utilized by our chief operating decision maker in evaluating the performance of the segments. Corporate expenses consist of those costs not directly attributable
to a business segment, and include: salaries and benefits for our executive, finance, legal, corporate governance, human resources, and facilities organizations; fees for professional service
providers including audit, tax, Sarbanes-Oxley compliance, and certain legal matters; insurance; and other corporate expenses. A reconciliation of segment income from operations to consolidated income
from operations and a reconciliation of segment revenue to consolidated revenue are also provided in the following table.

For the Year Ended December 31,2009

2008

2007(in thousands)Media SegmentRevenue

$
135,086

$
130,891

$
125,319Cost of revenue


71,320


71,638


70,066Gross profit


63,766


59,253


55,253Operating expenses


30,505


34,038


32,798Segment income from operations

$
33,261

$
25,215

$
22,455Affiliate Marketing SegmentRevenue

$
111,903

$
121,972

$
115,977Cost of revenue


15,617


19,374


12,978Gross profit


96,286


102,598


102,999Operating expenses


38,165


43,143


39,798Segment income from operations

$
58,121

$
59,455

$
63,201Owned & Operated Websites SegmentRevenue

$
149,599

$
177,145

$
112,706Cost of revenue


27,002


46,950


33,695Gross profit


122,597


130,195


79,011Operating expenses


87,563


89,263


56,504Segment income from operations

$
35,034

$
40,932

$
22,507Technology SegmentRevenue

$
27,686

$
28,670

$
23,741Cost of revenue


3,709


4,147


3,880Gross profit


23,977


24,523


19,861Operating expenses


11,202


10,923


9,324Segment income from operations

$
12,775

$
13,600

$
10,537Reconciliation of segment income from operations to consolidated income from operations:Total segment income from operations

$
139,191

$
139,202

$
118,700Corporate expenses


(27,988
)

(31,436
)

(30,288
)Stock-based compensation


(8,869
)

(48,166
)

(15,389
)Amortization of intangible assets


(19,803
)

(21,733
)

(16,480
)Impairment of goodwill and intangible assets





(269,500
)

Consolidated income (loss) from operations

$
82,531

$
(231,633
)
$
56,543Reconciliation of segment revenue to consolidated revenue:Media

$
135,086

$
130,891

$
125,319Affiliate Marketing


111,903


121,972


115,977Owned & Operated Websites


149,599


177,145


112,706Technology


27,686


28,670


23,741Inter-segment eliminations


(1,551
)

(3,237
)

(2,228
)Consolidated revenue

$
422,723

$
455,441

$
375,515


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Table of Contents

RESULTS OF OPERATIONSFiscal Years Ended December 31, 2009 and 2008

Revenue.Consolidated revenue for the year ended December 31, 2009 was $422.7 million, representing a 7.2% decrease
from the prior year
total of $455.4 million.

Media
segment revenue increased 3.2% to $135.1 million for the year ended December 31, 2009 compared to $130.9 million for 2008. This growth was due to strength in
our U.S. display advertising business, offset by weakness in our European display advertising business.

Affiliate
Marketing segment revenue decreased to $111.9 million for the year ended December 31, 2009 compared to $122.0 million in 2008. This decrease of
$10.1 million, or 8.3%, was due to a decrease, both in the U.S. and Europe, in e-commerce transaction activity conducted through our network and, to a lesser extent, lower prices
for our services.

Owned &
Operated Websites segment revenue decreased to $149.6 million for the year ended December 31, 2009 compared to $177.1 million in 2008. The decrease of
$27.5 million, or 15.5%, was primarily attributable to a decrease in consumer traffic to our destination websites, lower conversion rates experienced by advertisers, and a change made by the
largest customer is this segment at the end of the third quarter of 2009 that significantly reduced our volume with that customer. The Owned & Operated Websites segment has a significant
customer that comprises a large portion of this segment's revenues. A loss of, or reduction of revenue from, this customer could have a significant negative impact on the revenue of this segment.

Technology
segment revenue was $27.7 million for the year ended December 31, 2009 compared to $28.7 million in 2008, a decrease of $1.0 million, or 3.4%. The
decrease in revenue was primarily related to lower volumes of ad serving during the year ended December 31, 2009 compared to the prior year. The Technology segment has a significant customer
that comprises a large portion of this segment's revenues. A loss of, or reduction of revenue from, this customer could have a significant negative impact on the revenue of this segment.

Cost of Revenue and Gross Profit.Cost of revenue for the Media and Owned & Operated Websites segments consists
primarily of amounts that we
pay to website publishers that are directly related to a revenue-generating event. We pay these publishers on a CPC, CPA, CPL, or CPM basis. Cost of revenue for all segments also includes labor costs,
depreciation on revenue-producing technologies and Internet access costs. Consolidated cost of revenue was $116.5 million for the year ended December 31, 2009 compared to
$139.5 million in 2008, a decrease of $23.0 million, or 16.5%. The consolidated gross margin increased to 72.4% for the year ended December 31, 2009 compared to 69.4% for the year
ended December 31, 2008 due to the segment-level movements in gross margin as described below.

Cost
of revenue for the Media segment remained relatively consistent at $71.3 million for the year ended December 31, 2009 compared to $71.6 million in 2008. Our
Media segment gross margin increased to 47.2% for the year ended December 31, 2009 compared to 45.3% for the same period in 2008. The increase in Media segment gross margin resulted primarily
from our ability to utilize our technology platform to use advertising inventory more effectively than in the year ago period. In addition, our U.S. display advertising business has launched a number
of vertical ad networks, which allows us to achieve a higher effective CPM than our broad-based ad network due to the branding nature of the campaigns running in the vertical networks.

Cost
of revenue for the Affiliate Marketing segment was $15.6 million for the year ended December 31, 2009 compared to $19.4 million in 2008. Our Affiliate Marketing
segment gross margin increased to 86.0% for the year ended December 31, 2009 from 84.1% for the same period in 2008 due to a decline in the mix of certain lower margin revenue streams in the
current year as compared to the prior year.

Cost
of revenue for the Owned & Operated Websites segment was $27.0 million for the year ended December 31, 2009 compared to $47.0 million in 2008. The
decrease in cost of revenue was due

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to
the lower revenue described above. Our Owned & Operated Websites segment gross margin increased to 82.0% for 2009 from 73.5% in 2008 due primarily to a mix shift in this segment's traffic
acquisition strategies, which reduced the mix of consumer traffic coming from distribution partners with a revenue-share relationship.

Technology
segment cost of revenue was $3.7 million for the year ended December 31, 2009 compared to $4.1 million in 2008. Our Technology segment gross margin
remained relatively consistent at 86.6% in 2009 compared to 85.5% in 2008. As the gross margin for the Technology segment is highly dependent upon revenue due to the existing operating leverage, any
increases or decreases in segment revenue may have a significant impact on segment gross margin.



Sales and Marketing.Sales and marketing expenses consist primarily of compensation and employee benefits of sales and marketing,
network development
and related support teams, certain online and offline advertising costs, travel, trade shows, and marketing materials. Online advertising costs included in sales and marketing expenses are primarily
comprised of amounts that we pay to search engines for driving consumer traffic to our owned and operated websites. Sales and marketing expenses for the year ended December 31, 2009 were
$118.5 million compared to $136.5 million in 2008, a decrease of $18.0 million, or 13.2%. Sales and marketing expenses decreased primarily due to lower stock-based compensation
and other labor costs. Please refer to the Stock-Based Compensation section below for a discussion of the lower stock-based compensation expense in 2009. Our sales and marketing expenses as a
percentage of revenue decreased to 28.0% for the year ended December 31, 2009 compared to 30.0% in 2008 due to the lower stock-based compensation.

General and Administrative.General and administrative expenses consist primarily of facilities costs, executive and administrative
compensation and
employee benefits, depreciation, professional services fees, insurance costs, and other general overhead costs. General and administrative expenses decreased to $60.4 million for the year ended
December 31, 2009 compared to $88.7 million in 2008, a decrease of $28.4 million, or 32.0%. General and administrative expenses decreased due to a decrease of
$24.6 million in stock-based compensation and an overall focus on reducing operating expenses in the face of a difficult economic environment. Please refer to the Stock-Based Compensation
section below for a discussion of the lower stock-based compensation expense in 2009. As a result, our general and administrative expenses as a percentage of revenue decreased to 14.3% for the year
ended December 31, 2009 compared to 19.5% in 2008.

Technology.Technology expenses include costs associated with the maintenance of our technology platforms, including compensation and
employee
benefits for our engineering and network operations departments, as well as costs for contracted services and supplies. Technology expenses for the year ended December 31, 2009 were
$25.1 million compared to $31.2 million in 2008, a decrease of $6.1 million, or 19.6%. The decrease in technology expenses was due primarily due to lower labor costs and
stock-based compensation. Please refer to the Stock-Based Compensation section below for a discussion of the lower stock-based compensation expense in 2009. Our technology expenses as a percentage of
revenue decreased to 5.9% for the year ended December 31, 2009 compared to 6.8% in 2008.

Segment Income from Operations.Media segment income from operations for the year ended December 31, 2009 increased 31.9%,
or
$8.0 million, to $33.3 million, from $25.2 million in the prior year, and represented 24.6% and 19.3% of Media segment revenue in these respective periods. Media segment operating
margin increased due to the higher revenue and gross margin described above, and lower operating expenses.

Affiliate
Marketing segment income from operations for the year ended December 31, 2009 decreased 2.2%, or $1.3 million, to $58.1 million, from $59.5 million
in the prior year, and represented 51.9% and 48.7% of Affiliate Marketing segment revenue in these respective periods. The higher operating margin was due to the higher gross margin as described above
and lower operating expenses.

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Owned & Operated Websites segment income from operations for the year ended December 31, 2009 decreased to $35.0 million, from
$40.9 million in the prior year, and remained relatively consistent at 23.4% and 23.1% of Owned & Operated Websites segment revenue in these respective periods.

Technology
segment income from operations for the year ended December 31, 2009 decreased to $12.8 million, from $13.6 million in the prior year, and represented
46.1% and 47.4% of Technology segment revenue in these respective periods. The decrease in Technology segment income from operations and operating margin was primarily attributable to the operating
leverage associated with the lower revenue as described above.

Stock-Based Compensation.Stock-based compensation for the year ended December 31, 2009 amounted to $8.9 million
compared to
$48.2 million in 2008. The decrease of $39.3 million was primarily due to the impact of a one-time stock-based compensation charge in 2008, which represented the acceleration
of expense associated with unvested stock options that were repurchased by the Company through a tender offer process and the resulting reduction in expense thereafter.

We
currently anticipate total stock-based compensation of approximately $10 million for the year ending December 31, 2010. Such amounts may change as a result of higher or
lower than anticipated equity
award grants to new and existing employees, differences between actual and estimated forfeitures of stock options and restricted stock, fluctuations in the market value of our common stock,
modifications to our existing stock option programs, additions of new stock-based compensation programs, or other factors.

Amortization of Intangible Assets.Amortization of intangible assets for the year ended December 31, 2009 was
$19.8 million compared to
$21.7 million in 2008. This expense represents the amortization of intangible assets acquired through business combinations. The decrease compared to the prior year was related to certain
intangible assets that became fully amortized. We currently anticipate total amortization of intangible assets of approximately $19 million for the year ending December 31, 2010.

Impairment of Goodwill and Intangible Assets.In 2008, we recorded an impairment charge on our goodwill and intangible assets of
$269.5 million related to our Media and Owned & Operated Websites reporting units. No such charge was recorded in continuing operations in 2009.

Interest and Other Income, net.Interest and other income, net, consists principally of interest earned on our cash and cash
equivalents and
marketable securities and foreign currency exchange gains or losses. Interest and other income, net was $302,000 for 2009 compared to $2.5 million for the same period in 2008. The decrease of
$2.1 million was primarily attributable to a reduction in interest income, due to lower average cash and cash equivalents and marketable securities balances in 2009 and the achievement of lower
investment yields as compared to the prior year, offset by a reduction in foreign exchange currency losses.

Income Tax Expense.For the year ended December 31, 2009, we recorded an income tax expense of $21.3 million compared
to an income tax
benefit of $33.8 million in 2008. The increase in the effective income tax rate for the year ended December 31, 2009 to 25.7% from (14.8)% for the year ended December 31, 2008 was
primarily due to income from continuing operations before income taxes in 2009 of $82.8 million, the tax impact of which was partially offset by the recognition of $14.5 million in tax
benefits related to the reversal of contingency reserves due to the expiration of certain statutes of limitations, compared to a tax benefit associated with the loss from continuing operations before
income taxes of $229.2 million in 2008. We currently expect our effective tax rate to be approximately 42.0% in the year ending December 31, 2010.

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RESULTS OF OPERATIONSFiscal Years Ended December 31, 2008 and 2007

Revenue.Consolidated revenue for the year ended December 31, 2008 was $455.4 million, representing a 21.3% increase
over the prior
year total of $375.5 million.

Media
segment revenue increased 4.4% to $130.9 million for the year ended December 31, 2008 compared to $125.3 million for 2007 due to growth in our European display
advertising business, offset by a decline in our U.S. display advertising business.

Affiliate
Marketing segment revenue increased to $122.0 million for the year ended December 31, 2008 compared to $116.0 million in 2007. This increase of
$6.0 million, or 5.2%, was due to an increase, both in the U.S. and Europe, in the number of customers and an increase in transaction volumes associated with both our new and existing
customers, offset by the loss of a major customer in the first half of 2008.

Owned &
Operated Websites segment revenue increased to $177.1 million for the year ended December 31, 2008 compared to $112.7 million in 2007. The increase of
$64.4 million, or 57.2%, was primarily attributable to the acquisition of MeziMedia in July 2007 as well as growth in our existing European comparison shopping operations.

Technology
segment revenue was $28.7 million for the year ended December 31, 2008 compared to $23.7 million in 2007, an increase of $4.9 million, or 20.8%.
The increase in revenue was primarily related to higher volumes of ad serving, both domestically and in Europe, during the year ended December 31, 2008 compared to the same period of the prior
year.

Cost of Revenue and Gross Profit.Consolidated cost of revenue was $139.5 million for the year ended December 31, 2008
compared to
$118.1 million in 2007, an increase of $21.3 million, or 18.1%. The consolidated gross margin increased from 68.5% for the year ended December 31, 2007 to 69.4% for the year ended
December 31, 2008. This increase in consolidated gross margin is primarily a result of the higher gross margin in our Owned & Operated Websites segment and the relative size of that
segment following the acquisition of MeziMedia as described below.

Cost
of revenue for the Media segment increased $1.6 million, or 2.2%, to $71.6 million for the year ended December 31, 2008 compared to $70.1 million in
2007. Our Media segment gross margin remained relatively consistent at 45.3% for the year ended December 31, 2008 compared to 44.1% for the same period in 2007.

Cost
of revenue for the Affiliate Marketing segment was $19.4 million for the year ended December 31, 2008 compared to $13.0 million in 2007. Our Affiliate Marketing
segment gross margin decreased to 84.1% for the year ended December 31, 2008 from 88.8% for the same period in 2007 due to the mix of lower margin services revenue in the current year as
compared to the prior year.

Cost
of revenue for the Owned & Operated Websites segment was $47.0 million for the year ended December 31, 2008 compared to $33.7 million in 2007. The
increase in cost of revenue was primarily due to the acquisition of MeziMedia, acquired in July 2007. Our Owned & Operated Websites segment gross margin increased to 73.5% for 2008 from 70.1%
in 2007 due primarily to the full year impact in 2008 of the acquisition of MeziMedia.

Technology
segment cost of revenue was $4.1 million for the year ended December 31, 2008 compared to $3.9 million in 2007. Our Technology segment gross margin
increased to 85.5% in 2008 from 83.7% in 2007 due to the operating leverage associated with higher revenue.

Operating Expenses:

Sales and Marketing.Sales and marketing expenses for the year ended December 31, 2008 were $136.5 million compared to
$95.9 million in 2007, an increase of $40.5 million, or 42.2%. Sales and

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marketing
expenses increased primarily due the inclusion of a full year of online advertising costs for MeziMedia, acquired in July 2007, and higher stock-based compensation. Please refer to the
Stock-Based Compensation section below for a discussion of the higher stock-based compensation expense in 2008. Our sales and marketing expenses as a percentage of revenue increased to 30.0% for the
year ended December 31, 2008 compared to 25.5% in 2007 due to the inclusion of a full year of MeziMedia, which has higher sales and marketing costs as a percentage of revenue as compared to our
other businesses, and the increase in stock-based compensation.

General and Administrative.General and administrative expenses increased to $88.7 million for the year ended December 31,
2008
compared to $60.7 million in 2007, an increase of $28.0 million, or 46.2%. General and administrative expenses increased primarily due to an increase of $21.1 million in
stock-based compensation. Please refer to the Stock-Based Compensation section below for a discussion of the higher stock-based compensation expense in 2008. As a result, our general and
administrative expenses as a percentage of revenue increased to 19.5% for the year ended December 31, 2008 compared to 16.2% in 2007.

Technology.Technology expenses for the year ended December 31, 2008 were $31.2 million compared to $27.7 million in
2007, an
increase of $3.4 million, or 12.4%. The increase in technology expenses was due primarily to the inclusion of a full year of MeziMedia's technology expenses. Our technology expenses as a
percentage of revenue decreased to 6.8% for the year ended December 31, 2008 compared to 7.4% in 2007 primarily due to the operating leverage associated with the higher revenue.

Segment Income from Operations.Media segment income from operations for the year ended December 31, 2008 increased 12.3%,
or
$2.8 million, to $25.2 million, from $22.5 million in the prior year. Media segment operating margin remained relatively consistent at 19.3% and 17.9% of Media segment revenue in
these respective periods.

Affiliate
Marketing segment income from operations for the year ended December 31, 2008 decreased 5.9%, or $3.7 million, to $59.5 million, from $63.2 million
in the prior year, and represented 48.7% and 54.5% of Affiliate Marketing segment revenue in these respective periods. The lower operating margin
was due primarily to the lower gross margin as described above and higher operating costs associated with our international expansion.

Owned &
Operated Websites segment income from operations for the year ended December 31, 2008 increased to $40.9 million, from $22.5 million in the prior
year, and represented 23.1% and 20.0% of segment revenue in these respective periods. The increase in Owned & Operated Websites segment income from operations and operating margin was largely
attributable to the full year impact of MeziMedia, which was acquired in July 2007.

Technology
segment income from operations for the year ended December 31, 2008 increased to $13.6 million, from $10.5 million in the prior year, and represented
47.4% and 44.4% of Technology segment revenue in these respective periods. The increase in Technology segment income from operations and the higher operating margin was attributable to the operating
leverage associated with the higher revenue as described above.

Stock-Based Compensation.Stock-based compensation for the year ended December 31, 2008 amounted to $48.2 million
compared to
$15.4 million in 2007. The increase of $32.8 million was primarily due to the impact of a one-time stock-based compensation charge, which represents the acceleration of
expense associated with unvested stock options repurchased by the Company through a tender offer process completed during 2008.

Amortization of Intangible Assets.Amortization of intangible assets for the year ended December 31, 2008 was
$21.7 million compared to
$16.5 million in 2007. This expense represents the

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amortization
of intangible assets acquired through business combinations. The increase compared to the prior year was due to the intangible assets purchased in the MeziMedia acquisition in July 2007.

Impairment of Goodwill and Intangible Assets.During 2008 we recorded an impairment charge on our goodwill and intangible assets
of
$269.5 million related to our Media and Owned & Operated Websites reporting units. We believe this impairment charge is primarily a result of the significant decline in our stock price
during 2008 and the weak macroeconomic environment. Refer to Critical Accounting Policies below for further details about this impairment charge.

Interest and Other Income, net.Interest and other income, net, consists principally of interest earned on our cash and cash
equivalents and
marketable securities and foreign currency exchange gains or losses. Interest and other income, net was $2.5 million for 2008 compared to $12.0 million for the same period in 2007. The
decrease of $9.6 million was primarily attributable to a reduction in interest income as a result of lower average cash and cash equivalents and marketable securities balances in 2008, as well
as the achievement of lower investment yields as compared to the prior year. In addition, the significant strengthening of the U.S. dollar in the second half of 2008 resulted in a foreign currency
exchange loss in the amount of $3.6 million due primarily to the requirement to mark-to-market certain intercompany loan balances with certain of our European
subsidiaries.

Income Tax Expense.For the year ended December 31, 2008, we recorded an income tax benefit of $33.8 million compared
to income tax
expense of $28.4 million in 2007. The decrease in the effective income tax rate for the year ended December 31, 2008 to (14.8)% from 41.4% for the year ended December 31, 2007 was
primarily a result of our $229.2 million loss from continuing operations before income taxes associated with the goodwill impairment, and the recognition of $10.0 million in tax benefits
related to the reversal of contingency reserves due to the expiration of certain statutes of limitations.

Liquidity and Capital Resources

In recent years, we have financed our operations and our cash acquisitions primarily through working capital generated from operations.
At December 31, 2009, our combined cash and cash equivalents and marketable securities balances totaled $180.5 million ($22.0 million of which is classified as
non-current as more fully described under "Marketable Securities" below).

Net
cash provided by operating activities totaled $123.7 million for the year ended December 31, 2009 compared to $130.9 million in 2008 and $142.5 million in
2007. The decrease in net cash provided by operating activities of $7.2 million from 2008 to 2009 was primarily due to a decrease in net income before non-cash depreciation and
amortization, stock-based compensation and goodwill impairment in our discontinued lead generation business offset by lower income tax payments. The decrease in net cash provided by operating
activities of $11.6 million from 2007 to 2008 was primarily due to higher income tax payments in 2008 as compared to 2007.

Net
cash used in investing activities for the year ended December 31, 2009 of $59.0 million was the result of earnout payments related to the acquisition of MeziMedia of
$62.7 million and purchases of property and equipment of $4.6 million, offset by proceeds from the maturity and sale of marketable
securities of $8.3 million. Net cash provided by investing activities for the year ended December 31, 2008 of $67.4 million was the result of net sales and maturities of
marketable securities of $168.3 million and cash proceeds from the disposition of businesses of $11.7 million, offset by earnout payments related to the acquisition of MeziMedia of
$105.4 million and the use of $7.2 million for equipment purchases. Net cash used in investing activities for the year ended December 31, 2007 of $110.5 million was the
result of net cash used of $102.1 million, net, related to the acquisition of MeziMedia and $9.3 million used for equipment purchases, offset by proceeds from the net sales and
maturities of marketable securities of $0.9 million.

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Net
cash used in financing activities for the year ended December 31, 2009 of $32.1 million was primarily attributable to the use of $35.1 million to repurchase
common stock under our stock repurchase program, offset by proceeds from exercises of stock options of $2.9 million. Net cash used in financing activities for the year ended December 31,
2008 of $148.8 million was primarily attributable to the use of $151.3 million to repurchase our common stock under our stock repurchase program. Net cash used in financing activities
for the year ended December 31, 2007 of $26.3 million was primarily attributable to $44.0 million used to repurchase our common stock under our stock repurchase program, offset by
proceeds of $13.2 million received from the exercises of stock options and $4.5 million of excess tax benefits from stock option exercises.

Marketable Securities

Marketable securities as of December 31, 2009 consisted of auction rate securities ("ARS") collateralized by student loan
portfolios that are government supported or privately insured. As of December 31, 2009, our marketable securities portfolio included ARS with a par value of $27.6 million and an
estimated fair value of $22.0 million. ARS are designed to provide liquidity via a dutch auction process that resets the applicable interest rate at predetermined calendar intervals (usually
every seven to thirty-five days) and historically have allowed existing investors to either rollover their holdings, whereby they would continue to own their respective interest in the
ARS, or gain immediate liquidity by selling such ARS at par. Beginning in February 2008, the auctions for our ARS began failing due to insufficient demand for these securities. As a result of these
failed auctions, we have been unable to liquidate these securities and the interest rates on these ARS reset to contractually stipulated "fail rates" that are variable based on short-term
municipal bond or other market indices. In the event we need to sell these ARS, we will not be able to do so until a future auction on these investments is successful, the issuer redeems the
outstanding securities, the securities mature, or we sell the securities in the secondary market.

As
a result of the remaining uncertainty in the market for ARS, we have classified these investments as "non-current" in the accompanying consolidated balance sheet as of
December 31, 2009. Additionally, we have reduced the fair value for these investments from their par value of $27.6 million to an estimated fair value of $22.0 million. Because we
do not currently intend to sell any of our ARS at a significant loss, nor do we believe we will be required to sell any of these securities before recovering their cost basis, we consider this
reduction in value to be temporary, and have recorded it as an unrealized loss in accumulated other comprehensive income. During 2009, we liquidated $6.3 million of our ARS and received net
proceeds of $6.2 million. As a result, we reversed $2.6 million of previously recorded unrealized loss associated with these redeemed securities and recorded a realized loss of $147,000.

As
discussed in Note 3 to our consolidated financial statements, we adopted new accounting guidance for fair value estimates as of January 1, 2008. We have determined that
we utilize unobservable (Level 3) inputs in establishing the estimated fair value of the ARS of $22.0 million at December 31, 2009. In periods prior to February 2008, due to
successful auctions, quoted market prices were readily available for these ARS, which would qualify as Level 1 inputs under GAAP. However, due to the events discussed above which resulted in
the lack of an active market for ARS, and due to the lack of other observable market data with similar characteristics to our ARS holdings, we have estimated the fair values of these ARS utilizing a
discounted cash flow analysis as of December 31, 2009. These analyses consider, among other factors, the collateralization underlying the security, the creditworthiness of the counterparty, the
timing of expected future cash flows, and expectations of when the ARS are expected to have successful auctions. Due to these events, we reclassified all of our ARS fair value measurements as
Level 3 in the first quarter of 2008.

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Line of Credit

In November 2008, we entered into a $100 million line of credit with a bank group. The line of credit has a term of three years
and the availability under the line of credit is subject to our meeting certain financial and non-financial covenants, as more fully described in Note 15 to our consolidated
financial statements. The line of credit provides us with additional financial flexibility for pursuing acquisitions, repurchasing our common stock, and for general corporate purposes. We did not
borrow against the line of credit during 2009, and thus no amount was outstanding against the line of credit at December 31, 2009.

Stock Repurchase Program

In September 2001, our board of directors authorized a stock repurchase program (the "Program") to allow for the repurchase of shares
of our common stock at prevailing market prices in the open market or through unsolicited negotiated transactions. Since the inception of the Program and through December 31, 2008, our board of
directors had authorized a total of $479.1 million for repurchases under the Program, and we had repurchased a total of 47.1 million shares of our common stock for $374.2 million,
leaving approximately $105 million available under the Program as of December 31, 2008. During the year ended December 31, 2009, we repurchased 3.6 million shares of our
common stock for $35.1 million, leaving $69.9 million available under the Program as of December 31, 2009.

In
the period from January 1, 2010 through February 25, 2010, we repurchased an additional 1.9 million shares of our common stock for $17.7 million, leaving
$52.2 million available under the program as of February 25, 2010.

Repurchases
have been funded from available working capital, and all shares have been retired subsequent to their repurchase. There is no guarantee as to the exact number of shares that
will be repurchased by us, and we may discontinue repurchases at any time that management or our board of directors determines additional repurchases are not warranted. The amounts authorized by our
board of directors exclude broker commissions.

Commitments and Contingencies

Contractual obligations at December 31, 2009 are as follows (in thousands):

Payments due by periodTotal

Less than
1 year

1 to less
than
3 years

3 to less
than
5 years

More than
5 years

OtherOperating leases(1)

$
20,205

$
5,600

$
7,564

$
4,348

$
2,693

$
Purchase obligations(2)


2,286


1,924


362








Liability for unrecognized tax benefits(3)


52,032














52,032Total contractual obligations

$
74,523

$
7,524

$
7,926

$
4,348

$
2,693

$
52,032


(1)The
operating lease obligations shown in the table have not been reduced by minimum non-cancelable sublease rentals aggregating $557,000. We
remain secondarily liable under these leases in the event that any sublessee defaults under the sublease terms. We do not currently believe that material payments will be required as a result of the
secondary liability provisions of the primary lease agreements.(2)Purchase
obligations include agreements to purchase goods or services that are enforceable, legally binding and specify all significant terms. Purchase
obligations exclude agreements that are cancelable without penalty.


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(3)Please
refer to Note 9 to the consolidated financial statements for a description of the liability for unrecognized tax benefits. As more fully
described in Note 9, because the ultimate resolution of this unrecognized tax benefit depends on many factors and assumptions, we are not able to estimate the timing of any payments that may
result from this liability.


Other
commercial commitments as of December 31, 2009 are as follows (in thousands):

Other Commercial CommitmentsTotal

Less than
1 year

1 to less
than
3 years

3 to less
than
5 years

More than
5 yearsStandby letters of credit

$
521

$
521

$


$


$



The
standby letters of credit are maintained pursuant to certain of our lease agreements and remain in effect at declining levels through the terms of the related leases.

In
the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, and other parties with respect to
certain matters, including, but not limited to, losses arising out of our breach of such agreements, services to be provided by us, or from intellectual property infringement claims made by
third-parties. In addition, we have entered into indemnification agreements with our directors and certain of our officers and employees that will require us, among other things, to indemnify them
against certain liabilities that may arise by reason of their status or service as directors, officers or employees. We have also agreed to indemnify certain former officers, directors and employees
of acquired companies in connection with the acquisition of such companies. We maintain director and officer insurance, which may cover certain liabilities arising from our obligation to indemnify our
directors and certain of our officers, employees and former officers, directors and employees of acquired companies, in certain circumstances.

It
is not possible to determine the maximum potential amount of exposure under these indemnification agreements due to the limited history of prior indemnification claims and the unique
facts and circumstances involved in each particular agreement. Such indemnification agreements may not be subject to maximum loss clauses.

Capital Resources

We believe that the combination of: our existing cash and cash equivalents; our liquid marketable securities; our $100 million
line of credit; and our expected future cash flows from operations, will provide us with sufficient liquidity to fund our operations and capital requirements for at least the next twelve months.
However, it is possible that we may need or elect to raise additional funds to fund our activities beyond the next year or to consummate acquisitions of other businesses, products or technologies. We
could raise such funds by selling more stock to the public or to selected investors, or by borrowing, whether under the existing line of credit or a new facility. In addition, even though we may not
need additional funds, we may still elect to sell additional equity securities for other reasons. We cannot assure you that we will be able to obtain additional funds on commercially favorable terms,
or at all. If we raise additional funds by issuing additional equity or convertible debt securities, the ownership percentages of existing stockholders may be reduced. In addition, the equity or debt
securities that we issue may have rights, preferences or privileges senior to those of the holders of our common stock.

Although
we believe we have sufficient capital to fund our activities for at least the next twelve months, our future capital requirements may vary materially from those now planned. The
amount of capital that we will need in the future will depend on many factors, including:



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Off-Balance Sheet Arrangements

None.

Critical Accounting Policies and Estimates

Management's discussion and analysis of financial condition and results of operations is based upon our consolidated financial
statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenue, and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and assumptions, including, but not limited
to, those related to revenue recognition, allowance for doubtful accounts and sales credits, investments, income taxes, goodwill and other intangible assets, and contingencies and litigation. We base
our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and assumptions.

We
apply the following critical accounting policies in the preparation of our consolidated financial statements:





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40

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Risk-free interest rates


2.4
%Expected lives (in years)


3.6Dividend yield


0
%Expected volatility


55
%






42

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Recently Issued Accounting Pronouncements

On January 1, 2009, we adopted new accounting guidance issued by the Financial Accounting Standards Board ("FASB") for business
combinations. The new accounting guidance establishes principles and requirements for how an acquirer in a business combination recognizes and measures in its financial statements the identifiable
assets acquired, liabilities assumed, and any noncontrolling interests in the acquiree, as well as the goodwill acquired. Significant changes from previous guidance resulting from this new guidance
include the expansion of the definitions of a "business" and a "business combination." For all business combinations (whether partial, full or step acquisitions), the acquirer will record 100% of all
assets and liabilities of the acquired business, including goodwill, generally at their fair values; contingent consideration will be recognized at its fair value on the acquisition date and; for
certain arrangements, changes in fair value will be recognized in earnings until settlement; and acquisition-related transaction and restructuring costs will be expensed rather than treated as part of
the cost of the acquisition. The new accounting guidance also establishes disclosure requirements to enable users to evaluate the nature and financial effects of the business combination. The adoption
of this accounting guidance did not have a material impact on our consolidated financial statements.

In
April 2009, the FASB revised the authoritative guidance that defines disclosure requirements for the fair value of financial instruments, to require disclosures about fair value of
financial instruments of publicly traded companies for interim reporting periods as well as in annual financial statements. The guidance is effective for interim and annual periods ending after
June 15, 2009. The adoption of the guidance did not impact our consolidated financial statements. See Note 3 to our consolidated financial statements for further information.

In
April 2009, the FASB issued updated authoritative guidance on other-than-temporary impairments. The objective of an
other-than-temporary impairment analysis under existing GAAP is to determine whether the holder of an investment in a debt or equity security for which changes in fair value
are not regularly recognized in earnings (such as securities classified as held-to-maturity or available-for-sale) should recognize a loss in earnings
when the investment is impaired. An investment is impaired if the fair value of the investment is less than its amortized cost basis. This updated guidance amends the
other-than-temporary impairment guidance in GAAP for debt securities to make it more operational and to improve the presentation and disclosure of
other-than-temporary impairments on debt and equity securities in the financial statements. It does not amend existing recognition and measurement guidance related to
other-than-temporary impairments of equity securities. This guidance is effective for interim and annual periods ending after June 15, 2009. In response to the revised
guidance, in April 2009, the SEC published a bulletin in which the SEC maintains the staff's previous views related to equity securities. It also amends the SEC's previous bulletin to exclude debt
securities from its scope. The adoption of the guidance did not impact our consolidated financial statements.

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In
April 2009, the FASB issued additional authoritative guidance on fair value measurements for estimating fair value when the volume and level of activity for the asset or liability
have significantly decreased and on identifying circumstances that indicate a transaction is not orderly. It emphasizes that even if there has been a significant decrease in the volume and level of
activity for the asset or liability, and regardless of the valuation technique(s) used, the objective of a fair value measurement remains the same. Fair value is the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market
conditions. This guidance is effective for interim and annual periods ending after June 15, 2009. Its adoption did not impact our consolidated financial statements.

In
April 2009, the FASB revised the authoritative guidance on business combinations. The guidance amends the previously existing provisions for the initial recognition and measurement,
subsequent measurement and accounting, and disclosures for assets and liabilities arising from contingencies in business combinations. The revised guidance eliminates the distinction between
contractual and non-contractual contingencies, including the initial recognition and measurement criteria and instead carries forward most of the provisions from previous guidance for
acquired contingencies. It is effective for contingent assets and contingent liabilities acquired in business combinations for which the acquisition date is on or after the beginning of the first
annual reporting period beginning on or after December 15, 2008. The nature and magnitude of the specific effects that this guidance will have on our consolidated financial statements will
depend upon the nature, term and size of acquired contingencies resulting from future acquisitions.

In
May 2009, the FASB issued authoritative guidance on management's assessment of subsequent events. The guidance is effective prospectively for interim and annual periods ending after
June 15, 2009. The guidance requires entities to disclose the date through which subsequent events have been evaluated and whether the date corresponds with the release of the entities'
financial statements. The implementation of this standard did not have a material impact on our consolidated financial position and results of operations. See Note 1 to our consolidated
financial statements for further information.

In
June 2009, the FASB issued the FASB Accounting Standards Codification ("Codification"). The Codification will become the single source for all authoritative GAAP recognized by the
FASB to be applied for financial statements issued for periods ending after September 15, 2009. The Codification
does not change GAAP and will not have an effect on our financial position, results of operations or liquidity. We have adjusted historical GAAP references herein to reflect accounting guidance
references as prescribed by the Codification.

Inflation

Inflation was not a material factor in either revenue or operating expenses during the fiscal years ended December 31, 2009,
2008 and 2007.

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ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

The primary objective of our investment activities is to preserve capital while at the same time maximizing yields without
significantly increasing risk. We are exposed to the impact of interest rate changes and changes in the market values of our investments in marketable securities. Our interest income is sensitive to
changes in the general level of U.S. interest rates. Our exposure to market rate risk for changes in interest rates relates primarily to our marketable securities portfolio. We have not used
derivative financial instruments in our marketable securities portfolio. We invest a portion of our excess cash in debt instruments of high-quality issuers and, as a
matter of policy, limit the amount of credit exposure to any one issuer. We protect and preserve our invested funds by limiting default, market and reinvestment risk. Investments in both
fixed-rate and floating-rate interest-earning instruments carry a degree of interest rate risk. Fixed-rate securities may have their fair market value adversely
impacted due to a rise in interest rates, while floating-rate securities may produce less income than expected if interest rates fall. Due in part to these factors, our future investment
income may fall short of expectations due to changes in interest rates, or we may suffer losses in principal if forced to sell securities which have declined in market value due to changes in interest
rates.

Marketable
securities as of December 31, 2009 consisted of highly rated auction rate securities ("ARS") collateralized by student loan portfolios that are government supported or
privately insured. ARS are designed to provide liquidity via a dutch auction process that resets the applicable interest rate at predetermined calendar intervals (usually every seven to
thirty-five days) and historically has allowed existing investors to either rollover their holdings, whereby they would continue to own their respective interest in the ARS, or gain
immediate liquidity by selling the ARS at par. See further discussion of our marketable securities portfolio and ARS holdings in the "Liquidity and Capital Resources" section of Item 7 of this
Form 10-K under the header "Marketable Securities".

Management's
internal investment policy requires a weighted-average time to maturity of the overall investment portfolio to be no greater than 365 days and allows for ARS to be
weighted based on the auction reset date. Due to the current illiquidity in the ARS market, we have temporarily excluded our ARS from the determination of compliance with the maturity limitations of
our internal investment policy. We classify all of our investments as available-for-sale. Available-for-sale securities are carried at fair value, with
unrealized gains and losses, net of tax, reported in a separate component of stockholders' equity. As of December 31, 2009, the net unrealized loss in our investments in marketable securities
totaled $5.5 million due to a temporary decline in fair value of our ARS, reflecting the current lack of liquidity for these instruments.

During
the year ended December 31, 2009, our investments in marketable securities yielded an annual effective interest rate of 1.0%. If interest rates were to decrease by one
half, or 50 basis points, the result would be an annual decrease in our interest income related to our cash and cash equivalents and marketable securities of approximately $156,000.

FOREIGN CURRENCY RISK

We transact business in various foreign countries and are thus subject to exposure from adverse movements in foreign currency exchange
rates. This exposure is primarily related to revenue and operating expenses of our foreign subsidiaries, which denominate their transactions primarily in British Pounds, Euros, Swedish Kronor,
Japanese Yen, and Chinese Yuan Renminbi. The effect of foreign currency exchange rate fluctuations for the year ended December 31,
2009 was not material to our consolidated results of operations. In 2009 we began hedging certain of our exposures to currency exchange rate fluctuations related to intercompany balances. There were
not material gains or losses in 2009 associated with our requirement to mark-to-market certain of our intercompany loan balances or with our hedging activities.

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In
the future, if there were an adverse change of 10% in overall foreign currency exchange rates over an entire year, the result of translations would be a reduction of revenue of
approximately $8.8 million, a reduction of income before income taxes of approximately $783,000 and a reduction of net assets, excluding intercompany balances, of approximately
$7.6 million. As of December 31, 2009, we had $45.1 million in cash and cash equivalents and $13.5 million in total current liabilities denominated in foreign currencies,
including British Pounds, Euros, Swedish Kronor, Japanese Yen, and Chinese Yuan Renminbi.

Our
international business is subject to risks typical of an international business, including, but not limited to, differing economic conditions, changes in political climate, differing
tax structures, other regulations and restrictions, and foreign currency exchange rate volatility. Accordingly, our future results could be materially and adversely affected by changes in these or
other factors.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Company's financial statements, schedules and supplementary data, as listed under Item 15, appear in a separate section of
this annual report on Form 10-K beginning on page F-1.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.    CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that the information required to be disclosed in
the Company's reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules
and forms, and that such information is accumulated and communicated to management, including the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), as appropriate, to
allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

In
connection with the preparation of this annual report on Form 10-K as of December 31, 2009, an evaluation was performed under the supervision and with the
participation of the Company's management, including the CEO and CFO, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in
Rule 13a-15(e) under the Exchange Act). Based on this evaluation, the Company's CEO and CFO have concluded that the Company's disclosure controls and procedures are effective as of
December 31, 2009 to provide reasonable assurance that the information required to be disclosed by it in reports or submitted under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to management, including the Company's CEO and CFO, as
appropriate, to allow timely decisions regarding required disclosure.

Management's Report on Internal Control over Financial Reporting

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company's internal control over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of consolidated financial statements

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for
external purposes in accordance with generally accepted accounting principles. The Company's internal control over financial reporting includes those policies and procedures
that:



Because
of its inherent limitations, internal control over financial reporting may not prevent or detect financial statement misstatements. Also, projections of any evaluation of
internal control effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

The
Company's management has assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2009. In making this assessment, management
used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal ControlIntegrated Framework. Based on this evaluation, the Company's
management has concluded that the Company's internal control
over financial reporting was effective as of December 31, 2009.

The
effectiveness of the Company's internal control over financial reporting as of December 31, 2009 has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, as stated in their report which appears in this annual report on Form 10-K.

Changes in Internal Control over Financial Reporting

Additionally, the Company's Chief Executive Officer and Chief Financial Officer have determined that there have been no changes to the
Company's internal control over financial reporting during the three-month period ended December 31, 2009 that have materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.

ITEM 9B.    OTHER INFORMATION

None.

PART III.

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item is incorporated by reference from our definitive Proxy Statement for the 2010 Annual Meeting of
Stockholders to be held on or about May 6, 2010.

ITEM 11.    EXECUTIVE COMPENSATION

The information required by this Item is incorporated by reference from our definitive Proxy Statement for the 2010 Annual Meeting of
Stockholders to be held on or about May 6, 2010.

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ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Equity Compensation Plan Information

The following table provides aggregated information with respect to our compensation plans under which equity securities of ValueClick
are authorized for issuance as of December 31, 2009:

Plan category

Number of securities
to be issued upon
exercise of outstanding
options, warrants
and rights

Weighted-average
exercise price of
outstanding options,
warrants and rights(1)

Number of securities
remaining available
for future issuance
under equity
compensation plans(3)Equity compensation plans approved by security holders


3,956,325

$
13.45


6,946,089Equity compensation plans not approved by security holders(2)


168,401

$
43.70


Total


4,124,726

$
14.66


6,946,089


(1)For
additional information with respect to the outstanding option pricing categories as of December 31, 2009, refer to Note 11 to the
consolidated financial statements included in Item 8 "Financial Statements and Supplementary Data."(2)The
equity compensation plans not approved by security holders represent stock option plans assumed in business combinations.(3)Of
these shares, 956,365 were available under the Employee Stock Purchase Plan and 5,989,724 were available for award grant purposes under the 2002 Stock
Incentive Plan. During the current purchase period, which ends on February 26, 2010, an estimated 119,000 shares of the Company's common stock may become issuable under the Employee Stock
Purchase Plan. The 2002 Stock Incentive Plan provides for an automatic increase on January 1 of each year equal to 1% of the total outstanding shares of ValueClick common stock as of the last
day of the previous year. An additional 838,776 shares were made available under the 2002 Stock Incentive Plan effective January 1, 2010, which are not included in the 6,946,089 shares shown
herein.


The
remaining information required by this Item is incorporated by reference from our definitive Proxy Statement for the 2010 Annual Meeting of Stockholders to be held on or about
May 6, 2010.

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item is incorporated by reference from our definitive Proxy Statement for the 2010 Annual Meeting of
Stockholders to be held on or about May 6, 2010.

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item is incorporated by reference from our definitive Proxy Statement for the 2010 Annual Meeting of
Stockholders to be held on or about May 6, 2010.

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PART IV.

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULE



PageValueClick, Inc. Consolidated Financial StatementsReport of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm

F-2Consolidated Balance Sheets at December 31, 2009 and 2008

F-3Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and
2007

F-4Consolidated Statements of Stockholders' Equity for the years ended December 31, 2009, 2008
and 2007

F-5Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and
2007

F-6Notes to Consolidated Financial Statements

F-72.

Financial Statement Schedule.The following financial statement schedule of
ValueClick, Inc. is included in a separate section of this annual report on Form 10-K commencing on the pages referenced below. All other schedules have been omitted because they are not applicable, not required, or the information is
included in the consolidated financial statements or notes thereto.Schedule IIValuation and Qualifying Accounts

F-41




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Exhibit Number

Description of Document2.1(1)

Amended and Restated Agreement and Plan of Merger, dated as of July 24, 2007 and effective as of July 13, 2007, by and among ValueClick, MM Acquisition Corp. and MeziMedia2.2(2)

Agreement and Plan of Merger, dated as of June 13, 2005, by and among ValueClick and E-Babylon, Inc.2.3(3)

Agreement and Plan of Merger, dated as of June 10, 2005, by and among ValueClick, Spider Acquisition Corporation and Web Marketing Holdings, Inc.2.4(4)

Agreement and Plan of Merger and Reorganization, dated as of August 10, 2005, among ValueClick, Fastclick, Inc. and FC Acquisition Sub, Inc.2.5(5)

Agreement and Plan of Merger, dated as of August 6, 2004, by and among ValueClick and Pricerunner AB2.6(6)

Stock Purchase Agreement, dated January 29, 2004, by and among ValueClick and Livedoor Co., Ltd (formerly Edge Co., Ltd), a Japanese Corporation2.7(7)

Agreement and Plan of Merger, dated as of December 7, 2003, by and among ValueClick, HS Acquisition Corporation and HiSpeed Media, Inc.2.8(8)

Agreement and Plan of Merger, dated as of October 9, 2003, by and among ValueClick, NCJ Acquisition Corporation and Commission Junction, Inc.2.9(9)

Agreement and Plan of Merger, dated as of May 30, 2003, by and among ValueClick, Search123.com Acquisition Corporation and Search1233.1(10)

Second Amended and Restated Certificate of Incorporation of ValueClick3.2(11)

Amended and Restated Bylaws of ValueClick4.1

See Exhibits 3.1 and 3.2 for provisions of the Certificate of Incorporation and Bylaws for ValueClick, Inc. defining the rights of holders of common stock of ValueClick, Inc.4.2(12)

Specimen stock certificate for the ValueClick common stock4.3(13)

Rights Agreement, dated as of June 4, 2002, between ValueClick, Inc. and Mellon Investor Services LLC, a New Jersey limited liability company, which includes the form of Certificate of Designation for the
Series A junior participating preferred stock as Exhibit A, the form of Rights Certificate as Exhibit B and the Summary of Rights to Purchase Series A Preferred Stock as Exhibit C10.1(14)

Form of Indemnification Agreement by and between ValueClick and directors and executive officers10.2(12)

Deed of Assignment, dated January 1, 1999 by and between Web-Ignite Corporation and ValueClick10.3(12)

Trademark Assignment, dated as of May 1, 1998 from Web-Ignite Corporation to ValueClick10.4(12)

Exchange Agreement, dated December 31, 1998, by and between ValueClick and ValueClick, LLC10.5(12)

Bill of Sale and Assignment and Assumption of Liabilities, dated December 31, 199810.6(12)

License and Option Agreement, dated January 1, 1999, by and between ValueClick, LLC and ValueClick Japan, Inc. in effect from January 1, 1999 to December 17, 199910.7(12)

Share Purchase Agreement, dated December 31, 1999, by and between ValueClick and James R. Zarley10.8(12)

License Agreement, dated August 17, 1999, between ValueClick and ValueClick Europe, Limited


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Exhibit Number

Description of Document10.9(15)

1999 Stock Option Plan, as amended, and form of option agreement10.10(16)

2002 Stock Incentive Plan and form of option agreement10.11(17)

2007 Employee Stock Purchase Plan and form of subscription agreement10.12(23)

Key Employee Agreement between ValueClick and James R. Zarley dated February 7, 200810.13(18)

Key Employee Agreement between ValueClick and Samuel J. Paisley dated January 1, 200210.14(24)

Key Employee Agreement between ValueClick and Peter Wolfert dated February 7, 200810.15(25)

Key Employee Agreement between ValueClick and Tom A. Vadnais dated February 7, 200810.16(26)

Key Employee Agreement between ValueClick and John P. Pitstick dated February 7, 200810.17(27)

Key Employee Agreement between ValueClick and Scott P. Barlow dated February 7, 200810.18(12)

Intercompany License Agreement dated December 19, 1999, between ValueClick and ValueClick Japan, Inc.10. 19(28)

Key Employee Agreement between ValueClick and David Yovanno dated February 7, 200810.20(20)

Credit Agreement dated as of November 14, 2008 by and among ValueClick, Inc., Wells Fargo Bank, National Association (as Administrative Agent, Swing Line Lender and L/C Issuer), and certain other financial
institutions from time to time party thereto10.21(21)

Security Agreement dated as of November 14, 2008 by and among ValueClick, Inc., Hi-Speed Media, Inc., Web Marketing Holdings, LLC, Web Clients, LLC, I-Deal Direct Interactive, LLC, Mezi Media,
 Inc., Search123.com Inc., Mediaplex, Inc., BeFree, Inc., Commission Junction, Inc. and Wells Fargo Bank, National Association10.22(22)

Guaranty Agreement dated as of November 14, 2008 by Hi-Speed Media, Inc., Web Marketing Holdings, LLC, Web Clients, LLC, I-Deal Direct Interactive, LLC, Mezi Media, Inc.,
Search123.com Inc., Mediaplex, Inc., Be Free, Inc., and Commission Junction, Inc. in favor of Wells Fargo Bank, National Association10.23(29)

Amendment to Credit Agreement dated as of November 14, 2008 by and among ValueClick, Inc., Wells Fargo Bank, National Association (as Administrative Agent, Swing Line Lender and L/C Issuer), and certain other
financial institutions from time to time party thereto21.1

Subsidiaries of ValueClick23.1

Consent of PricewaterhouseCoopers LLP31.1

Certification of CEO Pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2

Certification of CFO Pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1

Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



PageValueClick, Inc. Consolidated Financial StatementsReport of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm

F-2Consolidated Balance Sheets at December 31, 2009 and 2008

F-3Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007

F-4Consolidated Statements of Stockholders' Equity for the years ended December 31, 2009, 2008 and
2007

F-5Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007

F-6Notes to Consolidated Financial Statements

F-7Schedule IIValuation and Qualifying Accounts

F-41


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and Stockholders of
ValueClick, Inc.

In
our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of
ValueClick, Inc. and its subsidiaries at December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended
December 31, 2009 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index
appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in
our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on criteria established in Internal ControlIntegrated
Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's
management is responsible for these financial
statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial
reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the
financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of
material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as
we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A
company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/
PricewaterhouseCoopers LLP

Los
Angeles, California
February 26, 2010

F-2

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VALUECLICK, INC.        CONSOLIDATED BALANCE SHEETS

As of December 31,2009

2008(in thousands,
except share data)AssetsCurrent assets:Cash and cash equivalents

$
158,497

$
122,487Marketable securities





2,175Accounts receivable, net of allowances of $4,225 and $5,886 as of December 31, 2009 and 2008, respectively


68,484


108,611Prepaid expenses and other current assets


5,246


5,155Income taxes receivable


7,629


4,313Deferred tax assets


7,981


11,047Current assets held for sale


11,098


Total current assets


258,935


253,788Assets held for sale, less current portion


25,777


Marketable securities, less current portion


22,026


25,750Property and equipment, net


11,272


15,514Goodwill


157,123


172,583Intangible assets acquired in business combinations, net


38,718


80,042Deferred tax assets, less current portion


51,357


53,661Other assets


1,354


1,941Total assets

$
566,562

$
603,279Liabilities and Stockholders' EquityCurrent liabilities:Accounts payable and accrued expenses

$
91,703

$
173,407Income taxes payable


1,136


1,722Deferred tax liabilities


9


15Deferred revenue


1,150


1,461Liabilities related to assets held for sale


4,406


Total current liabilities


98,404


176,605Income taxes payable, less current portion


60,154


71,021Deferred tax liabilities, less current portion


1,515


2,174Total liabilities


160,073


249,800Commitments and contingencies (Note 16)Stockholders' equity:Convertible preferred stock, $0.001 par value; 20,000,000 shares authorized; no shares issued or outstanding at December 31, 2009 and 2008





Common stock, $0.001 par value; 500,000,000 shares authorized; 83,877,696 and 86,743,612 shares issued and outstanding at December 31, 2009 and 2008,
respectively


84


87Additional paid-in capital


583,682


607,143Accumulated other comprehensive loss


(9,857
)

(17,715
)Accumulated deficit


(167,420
)

(236,036
)Total stockholders' equity


406,489


353,479Total liabilities and stockholders' equity

$
566,562

$
603,279


The
accompanying notes are an integral part of these consolidated financial statements.

F-3

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VALUECLICK, INC.        CONSOLIDATED STATEMENTS OF OPERATIONS

For the Year Ended December 31,2009

2008

2007(in thousands, except per share data)Revenue

$
422,723

$
455,441

$
375,515Cost of revenue


116,509


139,470


118,127Gross profit


306,214


315,971


257,388Operating expenses:Sales and marketing (includes stock-based compensation of $1,907, $15,621 and $4,645 for 2009, 2008 and 2007, respectively)


118,457


136,466


95,939General and administrative (includes stock-based compensation of $6,034, $30,620 and $9,526 for 2009, 2008 and 2007, respectively)


60,373


88,745


60,711Technology (includes stock-based compensation of $928, $1,925 and $1,218 for 2009, 2008 and 2007, respectively)


25,050


31,160


27,715Amortization of intangible assets acquired in business combinations


19,803


21,733


16,480Impairment of goodwill and intangible assets





269,500


Total operating expenses


223,683


547,604


200,845Income (loss) from operations


82,531


(231,633
)

56,543Interest and other income, net


302


2,451


12,025Income (loss) before income taxes


82,833


(229,182
)

68,568Income tax expense (benefit)


21,264


(33,814
)

28,406Income (loss) from continuing operations


61,569


(195,368
)

40,162Discontinued operations (Note 5):Income (loss) from discontinued operations, net of tax


7,047


(23,728
)

30,450Gain on sale, net of tax





4,984


Net income (loss) from discontinued operations


7,047


(18,744
)

30,450Net income (loss)

$
68,616

$
(214,112
)
$
70,612Basic net income (loss) per common shareContinuing operations

$
0.71

$
(2.12
)
$
0.40Discontinued operations


0.08


(0.20
)

0.31$
0.79

$
(2.32
)
$
0.71Diluted net income (loss) per common shareContinuing operations

$
0.71

$
(2.12
)
$
0.40Discontinued operations


0.08


(0.20
)

0.30$
0.79

$
(2.32
)
$
0.70Weighted-average shares used to calculate net income (loss) per common share:Basic


86,716


92,325


99,224Diluted


87,210


92,325


100,518


The
accompanying notes are an integral part of these consolidated financial statements.

F-4

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Table of Contents



VALUECLICK, INC.        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Preferred Stock

Common Stock



Accumulated
Other
Comprehensive
Income (Loss)

Retained
Earnings
(Accumulated
Deficit)Additional
Paid-In
Capital

Total
Stockholders'
EquityShares

Amount

Shares

Amount(in thousands, except share data)Balance at December 31, 2006








99,413,324

$
99

$
632,884

$
5,232

$
5,494

$
643,709Non-cash, stock-based compensation














18,332








18,332Shares issued in connection with employee stock programs








1,102,184


1


13,209








13,210Repurchase and retirement of common stock








(2,303,559
)

(2
)

(15,055
)




(28,980
)

(44,037
)Tax benefit from stock option exercises














4,060








4,060Comprehensive income:Net income




















70,612


70,612Change in market value of marketable securities, net of tax

















685





685Foreign currency translation

















3,362





3,362Total comprehensive income























74,659Balance at December 31, 2007








98,211,949

$
98

$
653,430

$
9,279

$
47,126

$
709,933Non-cash, stock-based compensation














53,376








53,376Shares issued in connection with employee stock programs








714,954


1


6,849








6,850Repurchase and retirement of common stock








(12,183,291
)

(12
)

(82,196
)




(69,050
)

(151,258
)Tax benefit shortfall from employee stock transactions














(44
)







(44
)Repurchase of employee stock options














(5,029
)







(5,029
)Tax effect related to the repurchase of employee stock options














(19,243
)







(19,243
)Comprehensive loss:Net loss




















(214,112
)

(214,112
)Change in market value of marketable securities, net of tax

















(8,344
)




(8,344
)Foreign currency translation

















(18,650
)




(18,650
)Total comprehensive loss























(241,106
)Balance at December 31, 2008








86,743,612

$
87

$
607,143

$
(17,715
)
$
(236,036
)
$
353,479Non-cash, stock-based compensation














9,241








9,241Shares issued in connection with employee stock programs








733,515





2,914








2,914Repurchase and retirement of common stock








(3,599,431
)

(3
)

(35,145
)







(35,148
)Tax benefit shortfall from employee stock transactions














(471
)







(471
)Comprehensive income:Net income




















68,616


68,616Change in market value of marketable securities, net of tax

















2,577





2,577Foreign currency translation

















5,281





5,281Total comprehensive income























76,474Balance at December 31, 2009








83,877,696

$
84

$
583,682

$
(9,857
)
$
(167,420
)
$
406,489


The accompanying notes are an integral part of these consolidated financial statements.

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Table of Contents



VALUECLICK, INC.        CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Year Ended December 31,2009

2008

2007(in thousands)Cash flows from operating activities:Net income (loss)

$
68,616

$
(214,112
)
$
70,612Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization expense


33,576


39,264


35,706Provision for doubtful accounts and sales credits


4,865


7,212


7,762Non-cash, stock-based compensation


9,241


53,376


18,332Impairment of goodwill and intangible assets


5,500


322,000


Gain on sale of businesses, net of tax





(4,984
)

Benefit from deferred income taxes


4,501


(55,520
)

(15,954
)Net tax windfall (shortfall) from stock-based awards


(452
)

442


4,289Excess tax benefit from stock-based awards


(175
)

(599
)

(4,508
)Changes in operating assets and liabilities, net of effects of acquisitions:Accounts receivable


25,253


5,174


(16,504
)Prepaid expenses and other assets


438


(843
)

327Accounts payable and accrued expenses


(15,826
)

2,703


12,789Income taxes receivable/payable


(11,746
)

(20,021
)

29,249Deferred revenue


(55
)

(240
)

532Other non-current liabilities





(2,951
)

(107
)Net cash provided by operating activities


123,736


130,901


142,525Cash flows from investing activities:Proceeds from the maturities and sales of marketable securities


8,333


207,971


324,675Purchases of marketable securities





(39,660
)

(323,745
)Acquisition of businesses, net of cash acquired


(62,696
)

(105,419
)

(102,126
)Proceeds from disposition of businesses, net of cash disposed and taxes paid





11,746


Purchases of property and equipment


(4,625
)

(7,227
)

(9,344
)Net cash provided by (used in) investing activities


(58,988
)

67,411


(110,540
)Cash flows from financing activities:Repurchases and retirement of common stock


(35,148
)

(151,258
)

(44,037
)Repurchase of employee stock options





(5,029
)

Proceeds from shares issued under employee stock programs


2,914


6,850


13,210Excess tax benefit from stock-based awards


175


599


4,508Net cash used in financing activities


(32,059
)

(148,838
)

(26,319
)Effect of foreign currency translations


3,321


(9,754
)

332Net increase in cash and cash equivalents


36,010


39,720


5,998Cash and cash equivalents, beginning of period


122,487


82,767


76,769Cash and cash equivalents, end of period

$
158,497

$
122,487

$
82,767Supplemental disclosures of cash flow information:Cash paid for interest

$


$


$
Cash paid for income taxes, net

$
33,002

$
50,346

$
37,491


The accompanying notes are an integral part of these consolidated financial statements.

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Table of Contents

VALUECLICK, INC.        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Summary of Significant Accounting Policies

Organization and Basis of Presentation

ValueClick, Inc. and its subsidiaries ("ValueClick" or "the Company") offer a suite of products and services that enable
marketers to advertise and sell their products through major online marketing channelsdisplay advertising, search marketing, comparison shopping, and affiliate marketing. The Company also
offers technology infrastructure tools and services that enable marketers to implement and manage their own online display advertising and email campaigns. The broad range of products and services
that the Company provides enables its customers to address all aspects of their online marketing process, from strategic planning through execution, including results measurement and campaign
refinements. The Company derives its revenue from four business segments. These business segments are presented on a worldwide basis and include: Media, Affiliate Marketing, Owned & Operated
Websites, and Technology.

MEDIAValueClick's Media segment provides a comprehensive suite of online marketing services and tailored programs that help
marketers create and increase awareness for their products and brands, attract visitors and generate leads and sales through the Internet. The Company has aggregated thousands of online publishers to
provide marketers with access to one of the largest display advertising networks. The Company's Media services are sold on a variety of pricing models, including cost-per-lead
("CPL"), cost-per-action ("CPA"), cost-per-thousand-impression ("CPM"), and cost-per-click ("CPC").

The
Company has classified its lead generation marketing business, which was sold on February 1, 2010, as held for sale at December 31, 2009. In October 2008, the Company
divested its interest in its e-commerce websites and has reported the results of operations of the lead generation marketing and e-commerce businesses as discontinued
operations for all periods presented.

AFFILIATE MARKETINGValueClick's Affiliate Marketing segment, through the combination of: a large-scale
pay-for-performance model built on the Company's proprietary technology platforms; marketing expertise; and a large, quality advertising network, enables the Company's
customers to develop their own fully-commissioned online sales force comprised of third-party affiliate publishers. Affiliate Marketing segment revenues are driven primarily by variable compensation
that is generally based on either a percentage of commissions paid to affiliates or on a percentage of transaction revenue generated from the programs managed with the Company's affiliate marketing
platforms.

OWNED & OPERATED WEBSITESValueClick's Owned & Operated Websites segment services are offered through a number
of transaction-focused branded websites including Pricerunner, Smarter.com and Couponmountain.com. In 2009, ValueClick also launched a limited number of content
websites in key online verticals such as healthcare, finance, travel, home and garden, education and business services.

The
Pricerunner comparison shopping destination websites operate in the United Kingdom, Sweden, Germany, France, Denmark, and Austria. The Smarter.com and Couponmountain.com websites
operate primarily in the United States and, to a lesser extent, Japan and China. The Pricerunner and Smarter.com websites enable consumers to research and compare products from among thousands of
online and/or offline merchants using its proprietary technologies. The Company gathers product and merchant data and organizes it into comprehensive catalogs on its destination websites, along with
relevant consumer and professional reviews. The Couponmountain.com website allows consumers to locate coupons and deals related to products and services that may be of interest to them, and the
Company's content websites offer consumers information and reference material

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Table of Contents

across
a variety of topics. The Company's services in these areas are free for consumers, and revenue is generated in one of three ways: on a CPC basis for traffic delivered to the customers' websites
from listings on the Company's websites; on a CPA basis when a consumer completes a purchase or other specific event; and on a CPM basis for display advertising shown on the Company's websites.

In
addition to the Company's destination websites, Search123, which operates primarily in Europe, is ValueClick's self-service paid search offering that generates its traffic
primarily through syndication relationships with other search engines, Web portals and content websites. Search syndication revenues are driven primarily on a CPC basis.

TECHNOLOGYValueClick's Technology segment operates through its wholly-owned subsidiary Mediaplex. Mediaplex is an application
services provider ("ASP") offering technology products and services that enable marketers to implement and manage their online advertising across multiple channels including display, email, paid
search, natural search, on-site, offline and affiliate. Mediaplex's MOJO® product suite is supported by a single proprietary technology platform, which has the ability to
manage all aspects of online advertising from campaign implementation to real-time behavioral targeting to enterprise-level cross channel analysis. Revenues are primarily driven by
software access and usage fees which are priced on a CPM or email-delivered basis.

In
October 2008, the Company sold its Mediaplex Systems business, which had previously been included in the Company's Technology segment. As a result, the Company has classified
Mediaplex Systems as discontinued operations for all periods presented.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany
transactions and balances have been eliminated in consolidation.

The
consolidated financial statements include the accounts of the Company and its subsidiaries from the acquisition date of majority voting control and through the date of disposition,
if any.

Basis of Presentation and Use of Estimates

Accounting principles generally accepted in the United States ("GAAP") require management of the Company to make estimates and
assumptions in the preparation of these consolidated financial statements that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates and assumptions.

The
most significant areas that require management judgment and which are susceptible to possible change in the near term include the Company's revenue recognition, allowance for
doubtful accounts and sales credits, investments, stock-based compensation, income taxes, goodwill and other intangible assets, and contingencies and litigation. The accounting policies for these
areas are discussed elsewhere in these consolidated financial statements.

The
Company has evaluated subsequent events through February 25, 2010. Other than the disposition of the lead generation business that is discussed in Note 5 and the common
stock repurchases that are discussed in Note 10, no material subsequent events have occurred since December 31, 2009 that required recognition or disclosure in these financial
statements.

Cash and Cash Equivalents

The Company considers all short-term highly liquid investments with a remaining maturity at the date of purchase of three
months or less to be cash equivalents. At December 31, 2009 and 2008, cash equivalents consisted primarily of money market accounts.

F-8

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Table of Contents

Marketable Securities

Marketable securities are classified as available-for-sale and accordingly are recorded at fair value with
unrealized gains and losses reflected as a separate component of stockholders' equity titled accumulated other comprehensive income (loss), net of tax, until realized or until a determination is made
that an other-than-temporary decline in market value has occurred. Factors considered by management in assessing whether an other-than-temporary
impairment has occurred include: the nature of the investment; whether the decline in fair value is attributable to specific adverse conditions affecting the investment; the financial condition of the
investee; the severity and the duration of the impairment; and whether the Company intends to sell the investment or will be required to sell the investment before recovery of its amortized cost
basis. When it is determined that an other-than-temporary impairment has occurred, the investment is written down to its fair value at the end of the period in which it is
determined that an other-than-temporary decline has occurred, and the Company recognizes a corresponding loss for the amount of the unrealized loss not previously recognized.
The cost of marketable securities sold is based upon the specific identification method. Fair value of the Company's marketable securities is determined based upon quoted market rates when available.
Refer to Notes 2 and 3 for additional details on the Company's determination of fair value of its auction rate securities. Additionally, see Note 2 for further details on the Company's
marketable securities portfolio and events that occurred in 2008 that impacted the classification of auction rate securities in the Company's consolidated balance sheets.

Accounts Receivable and Allowance for Doubtful Accounts and Sales Credits

Trade receivables are stated at gross invoice amount less an allowance for doubtful accounts and sales credits.

The
Company estimates its allowance for doubtful accounts using two methods. First, the Company evaluates specific accounts where information indicates the Company's customers may have
an inability to meet financial obligations, such as due to bankruptcy, and receivable amounts outstanding for an extended period beyond contractual terms. In these cases, the Company uses assumptions
and judgment, based on the best available facts and circumstances, to record a specific allowance for those customers against amounts due to reduce the receivable to the amount expected to be
collected. These specific allowances are re-evaluated and adjusted as additional information is received. Second, an allowance is established for all customers based on a range of loss
percentages applied to receivables aging categories based upon the Company's historical collection and write-off experience. The amounts calculated from each of these methods are analyzed
to determine the total amount of the allowance for doubtful accounts. The Company also estimates an allowance for sales credits based upon its historical sales credits experience.

Property and Equipment

Property and equipment are stated at historical cost less accumulated depreciation and amortization. Depreciation and amortization
expense are computed using the straight-line method over the estimated useful lives of the assets, generally, three years for computer equipment and purchased software, three to five years
for furniture and equipment, the shorter of five years or the term of the lease for leasehold improvements, three years for vehicles, and 30 years for buildings.

Business Combinations

The Company's historical acquisitions were accounted for utilizing the purchase method of accounting. Under the purchase method of
accounting, the total consideration paid is allocated to the underlying assets and liabilities, based on their respective estimated fair values. The excess of the purchase price over the estimated
fair values of the net tangible and identifiable intangible assets

F-9

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acquired
is recorded as goodwill. Determining the fair value of certain acquired assets and liabilities, identifiable intangible assets in particular, is subjective in nature and often involves the
use of significant estimates and assumptions including, but not limited to: estimates of revenue growth rates; determination of appropriate discount rates; estimates of advertiser and publisher
turnover rates; and estimates of terminal values. These assumptions are generally made based on available historical information. Definite-lived identifiable intangible assets are amortized on a
straight-line basis, as this basis approximates the expected cash flows from the Company's existing definite-lived identifiable intangible assets.

As
described more fully below under "Recently Issued Accounting Standards," on January 1, 2009, the Company adopted new accounting guidance issued by the Financial Accounting
Standards Board ("FASB") for business combinations. The new guidance includes changes from previous guidance that may have a significant impact on the accounting results of future business
combinations. The Company did not enter into any business combinations in 2009 that would have been accounted for under the new guidance.

Goodwill

The Company tests goodwill for impairment in accordance with GAAP. Accordingly, the Company tests for impairment of goodwill annually
as of December 31 at the reporting unit level or whenever events or circumstances indicate that goodwill might be impaired. The Company has determined its reporting units based on FASB
guidance. As of December 31, 2009, the Company's reporting units consisted of the Media, Affiliate Marketing, Owned & Operated Websites, and Technology operating segments. The impairment
test is a two-step process, whereby in the first step, the Company compares the estimated fair value of the reporting unit with the reporting unit's carrying amount, including goodwill.
The Company generally determines the estimated fair value of each reporting unit using a discounted cash flow approach, giving consideration to the market valuation approach. If the carrying amount of
a reporting unit exceeds the reporting unit's fair value, the Company performs the second step of the goodwill impairment test to determine the amount of impairment, if any. Due to the weakening
economy and the significant decline of the Company's stock
price, the Company determined that there was an impairment of goodwill for the year ended December 31, 2008. See Note 6 for a discussion of the impairment charge taken. For the years
ended December 31, 2009 and 2007, there was no impairment of goodwill for the Company's continuing operations. For the year ended December 31, 2009, the Company recorded a goodwill
impairment charge related to its discontinued operations of $3.2 million.

Long-lived Assets

Management evaluates the recoverability of the Company's identifiable intangible assets and other long-lived assets in
accordance with GAAP, which generally requires the assessment of these assets for recoverability when events or circumstances indicate a potential impairment exists. Events and circumstances
considered by the Company in determining whether the carrying value of identifiable intangible assets and other long-lived assets may not be recoverable include, but are not limited to:
significant changes in performance relative to expected operating results; significant changes in the use of the assets; significant negative industry or economic trends; a significant decline in the
Company's stock price for a sustained period of time; and changes in the Company's business strategy. In determining if impairment exists, the Company estimates the undiscounted cash flows to be
generated from the use and ultimate disposition of these assets. If impairment is indicated based on a comparison of the assets' carrying values and the undiscounted cash flows, the impairment loss is
measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. During the year ended December 31, 2008, as a result of the weakening economy and revenue
results for certain businesses that were lower than initial expectations, the Company tested its long-lived assets for

F-10

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Table of Contents

impairment,
and recorded an impairment loss related to certain identifiable intangible assets. See Note 6 for a discussion of the impairment charge taken. The Company determined that there was
no impairment of long-lived assets for the years ended December 31, 2009 and 2007 for the Company's continuing operations. For the year ended December 31, 2009, the Company
recorded an impairment charge on long-lived assets related to its discontinued operations of $2.3 million.

Revenue Recognition

The Company recognizes revenue when the following criteria have been met: persuasive evidence of an arrangement exists, no significant
Company obligations remain, collection of the related receivable is reasonably assured, and the fees are fixed or determinable.

The
Company's Media and Owned & Operated Websites segments revenue is recognized in the period that the advertising impressions, click-throughs or actions occur, when
lead-based information is delivered, provided that no significant Company obligations remain, collection of the resulting receivable is reasonably assured, and the fees are fixed or
determinable. The Company acts as a principal in Media and Owned & Operated Websites segment transactions in that the Company is the primary obligor to the advertiser customers. Revenue is
recognized in the Company's Media and Owned & Operated Websites segments on a gross basis and publisher expenses that are directly related to a revenue-generating event are recorded as a
component of cost of revenue.

Revenue
for the Company's Affiliate Marketing segment is generated primarily from: commission fees earned from transactions, including product sales made by the Company's advertiser
customers, occurring on the Company's affiliate marketing networks; fixed monthly fees from program management services; commission fees earned for the Company's search engine marketing ("SEM")
services; and, to a lesser extent, implementation fees. Commission fee revenue from transactions on the Company's affiliate marketing networks and from the Company's SEM services are recognized on a
net basis as the Company acts as an agent in these transactions and the payments to publishers are the contractual obligation of the advertiser customers. Commission fee revenue is recognized in the
period that the Company's advertiser customer generates a sale or other agreed-upon action on the Company's affiliate marketing networks or as a result of the Company's SEM services,
provided that no significant Company obligations remain, collection of the resulting receivable is reasonably assured, and the fees are fixed or determinable. Program management services fees revenue
is recognized over the contractual service period, provided no significant Company obligations remain, collection of the resulting receivable is reasonably assured, and the fees are fixed or
determinable. Implementation fee revenue is recognized over the estimated customer lives, provided no significant Company obligations remain, collection of the resulting receivable is reasonably
assured, and the fees are fixed or determinable.

Revenue
for the Company's Technology segment is generated primarily from fixed monthly fees or monthly transaction volume-based fees earned by the Company for making its technologies
available to the Company's customers on an ASP basis. Such revenue is recognized monthly, provided no significant Company obligations remain, collection of the resulting receivable is reasonably
assured, and the fees are fixed or determinable. The Company also generates a nominal amount of other services fee revenue in its Technology segment. Such other services fee revenue is recognized when
the services are performed provided no significant Company obligations remain, collection of the resulting receivable is reasonably assured, and the fees are fixed or determinable.

The
Company's customers do not have the right to take possession of the Company's software at any time during or after the term of the relevant customer agreement. Accordingly, the
Company's revenue recognition is outside the scope of prescribed accounting guidance relevant to software revenue recognition.

F-11

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Table of Contents

Deferred
revenue consists primarily of the unrecognized portion of implementation fee revenue for the Company's Affiliate Marketing segment. Prepayments and amounts on deposit from
customers are classified as an advertiser deposit liability.

The
Company estimates a provision for sales returns which is recorded as a reduction to revenue. The provision for sales returns reflects an estimate of commission based fee reversals
related to product returns from consumers of the Company's Affiliate Marketing customers. In determining the estimate for sales returns, the Company relies upon historical data, contract information
and other factors. The estimated provision for sales returns can vary from actual results. More or less product may be returned from consumers of the Company's Affiliate Marketing as compared to what
was estimated. These factors and unanticipated changes in the economic and industry environment could make the provision for sales returns estimates differ from actual returns.

Cost of Revenue

Cost of revenue consists of payments to website publishers that are directly related to a revenue-generating event, labor costs, and
depreciation on revenue-producing technologies and Internet access costs. The Company becomes obligated to make payments related to website publishers in the period the advertising impressions,
click-throughs, actions or lead-based information are delivered or occur. Such expenses are classified as cost of revenue in the corresponding period in which the revenue is recognized in
the accompanying consolidated statement of operations.

Sales and Marketing

Sales and marketing expenses consist primarily of compensation and employee benefits of sales and marketing, network development and
related support teams, certain online and offline advertising costs, travel, trade shows, and marketing materials. Online advertising costs included in sales and marketing expenses are primarily
comprised of amounts that the Company pays to search engines for driving consumer traffic to the Company's owned and operated websites.

Advertising
costs are expensed as incurred and totaled $65.2 million, $64.0 million and $35.0 million for the years ended December 31, 2009, 2008 and 2007,
respectively.

General and Administrative

General and administrative expenses include facilities costs, executive and administrative compensation and employee benefits,
depreciation, professional services fees, insurance costs, and other general overhead costs.

Technology

Technology expenses include costs associated with the maintenance of the Company's technology platforms, including compensation and
employee benefits associated with the Company's engineering and network operations departments, as well as costs for contracted services and supplies. The Company capitalizes certain costs incurred in
the application development stage when developing or obtaining computer software for internal use. No internal software development costs were capitalized in the years ended December 31, 2009,
2008 and 2007.

Stock-based Compensation

The Company records stock-based compensation in accordance with GAAP, which requires companies to estimate the fair value of
stock-based awards to employees and directors on the date of grant using an option-pricing model. The value of the portion of an award that is ultimately expected

F-12

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Table of Contents

to
vest is recognized as an expense over the requisite service period using the straight-line attribution method.

Accounting
guidance prohibits recognition of a deferred tax asset for an excess tax benefit that has not been realized. The Company will recognize a benefit from stock-based compensation
in stockholders' equity if an incremental tax benefit is realized by following the ordering provisions of the U.S. tax law. In addition, the Company has elected to account for the indirect effects of
stock-based awards on other tax attributes, such as the research tax credit, through the consolidated statements of operations.

Refer
to Note 11 for information on the accounting impact of the stock-based compensation guidance and the assumptions used to calculate the fair value of share-based employee
compensation.

Foreign Currency Translation

The Company's foreign subsidiaries record their assets, liabilities and results of operations in their respective local currencies,
which are their functional currencies. The Company translates its subsidiaries' financial statements into U.S. dollars each reporting period for purposes of consolidation.

Assets
and liabilities of the Company's foreign subsidiaries are translated at the period-end currency exchange rates while revenue, expenses, gains, and losses are
translated at the average currency exchange rates in effect for the period. Except for certain intercompany balances that have been designated as short-term in nature, the effects of these
translation adjustments are reported in a separate component of stockholders' equity titled accumulated other comprehensive income. The effects of the translation adjustments for those intercompany
balances that have been designated as short-term in nature were not significant in the year ended December 31, 2007 and were included in general and administrative expenses. In the
first quarter of 2008 and thereafter, the Company began recording the effects of the translation adjustments for these intercompany balances in interest and other income, net. These amounts were
immaterial in 2009 and totaled $3.6 million for the year ended December 31, 2008.

Transaction
gains and losses related to transactions with third parties denominated in other than the functional currency were not significant for the years ended December 31,
2009, 2008 and 2007.

Concentration of Credit Risk and Significant Customers

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash and cash equivalents,
marketable securities and accounts receivable. Cash and cash equivalents are deposited in the local currency with a limited number of
financial institutions in the United States and Europe. The balances in the United States held at any one financial institution are generally in excess of Federal Deposit Insurance Corporation
("FDIC") insurance limits and certain balances in Europe may not be insured. Marketable securities are held in local currency with major financial institutions and, with the exception of the Company's
investments in certain municipal obligations, are generally not insured.

Credit
is extended to customers based on an evaluation of their financial condition and other factors. The Company generally does not require collateral or other security to support
accounts receivable. The Company performs ongoing credit evaluations of its customers and maintains an allowance for doubtful accounts and sales credits. At December 31, 2009 and 2008, no
customers accounted for more than 10% of the accounts receivable balance. For the year ended December 31, 2009, one customer accounted for approximately 17.0% of total revenue and another
customer accounted for approximately 10.6% of total revenue. For the year ended December 31, 2008, one customer accounted for approximately 16.8% of total revenue and another customer accounted
for

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Table of Contents

approximately
11.1% of total revenue. For the year ended December 31, 2007, no customers accounted for more than 10% of total revenue.

Fair Value of Financial Instruments

The Company's financial instruments, including cash and cash equivalents, net accounts receivable, accounts payable and accrued
expenses, are carried at historical cost. At December 31, 2009 and 2008, the carrying amounts of these instruments approximated their fair values because of the short-term nature of
these instruments. The Company's marketable securities are carried at fair value as discussed in Note 2.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with GAAP. Under this method, income tax
expense is recognized for the amount of: (i) taxes payable or refundable for the current year; and, (ii) deferred tax consequences of temporary differences resulting from matters that
have been recognized in an entity's financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the
period that includes the enactment date. A valuation
allowance is provided to reduce the deferred tax assets reported if, based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred
tax assets will not be realized. A liability (including interest if applicable) is established in the consolidated financial statements to the extent a current benefit has been recognized on a tax
return for matters that are considered contingent upon the outcome of an uncertain tax position. Interest and penalties, if any, are included as components of income tax expense and income taxes
payable.

The
Company follows FASB guidance when accounting for tax contingencies. The guidance prescribes a comprehensive model for how companies should recognize, measure, present, and disclose
in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under GAAP, tax benefits are initially recognized in the consolidated financial statements when it
is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that
is greater than 50 percent likely of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. See Note 9 for additional
information.

Basic and Diluted Net Income per Common Share

Basic net income per common share is computed by dividing net income by the weighted-average number of shares of common stock
outstanding for the period. Diluted net income per common share is computed using the weighted-average number of common shares outstanding for the period, and, if dilutive, potential common shares
outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and release of restricted stock awards, and shares issuable
under the Company's Employee Stock Purchase Plan, determined using the treasury stock method. The Company determines potential windfall tax benefits and shortfalls on stock options on an "as if" basis
for purposes of calculating assumed stock option proceeds under the treasury stock method when determining the denominator for diluted net income per common share.

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Comprehensive Income

GAAP establishes standards for reporting comprehensive income and its components in financial statements. Comprehensive income, as
defined, includes all changes in equity (net assets) during a period from non-owner sources. The elements of comprehensive income, other than net income, relate to foreign currency
translation adjustments and unrealized gains/losses on marketable securities for the years ended December 31, 2009, 2008 and 2007. As of December 31, 2009 and 2008, the accumulated
balance of the foreign currency translation adjustment was a $4.3 million loss and a $9.6 million loss, respectively. As of December 31, 2009, the unrealized loss on marketable
securities was $5.5 million, net of tax and valuation allowance. The Company has recorded a full valuation allowance against the related deferred tax asset associated with the unrealized losses
on marketable securities due to the uncertainty as to whether such losses and related deferred tax asset will be realized. As of December 31, 2008, unrealized gain on marketable securities was
$8.1 million, net of tax and valuation allowance and as of December 31, 2007, unrealized loss on marketable securities was $242,000, net of income tax liability of $170,000.

Business Segments

The Company uses the "management approach" to identify its operating segments. The management approach designates the internal
organization used by management for making operating decisions and assessing performance as the basis for identifying the Company's operating segments.

Recently Issued Accounting Standards

On January 1, 2009, the FASB issued new accounting guidance for business combinations. The new accounting guidance establishes
principles and requirements for how an acquirer in a business combination recognizes and measures in its financial statements the identifiable assets acquired, liabilities assumed, and any
noncontrolling interests in the acquiree, as well as the goodwill acquired. Significant changes from previous guidance resulting from this new guidance include the expansion of the definitions of a
"business" and a "business combination." For all business combinations (whether partial, full or step acquisitions), the acquirer will record 100% of all assets and liabilities of the acquired
business, including goodwill, generally at their fair values; contingent consideration will be recognized at its fair value on the acquisition date and; for certain arrangements, changes in fair value
will be recognized in earnings until settlement; and acquisition-related transaction and restructuring costs will be expensed rather than treated as part of the cost of the acquisition. The new
accounting guidance also establishes disclosure requirements to enable users to evaluate the nature and financial effects of the business combination. The adoption of this accounting guidance did not
have a material impact on the Company's consolidated financial statements.

In
April 2009, the FASB revised the authoritative guidance that defines disclosure requirements for the fair value of financial instruments, to require disclosures about fair value of
financial instruments of publicly traded companies for interim reporting periods as well as in annual financial statements. The guidance is effective for interim and annual periods ending after
June 15, 2009. The adoption of the guidance did not impact the Company's consolidated financial statements. See Note 3 for further information.

In
April 2009, the FASB issued updated authoritative guidance on other-than-temporary impairments. The objective of an
other-than-temporary impairment analysis under existing GAAP is to determine whether the holder of an investment in a debt or equity security for which changes in fair value
are not regularly recognized in earnings (such as securities classified as held-to-maturity or available-for-sale) should recognize a loss in earnings
when the investment is impaired. An investment is impaired if the fair value of the investment is less than its amortized cost basis. This updated guidance amends the
other-than-temporary impairment guidance in GAAP for debt securities to make

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Table of Contents

it
more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. It does not
amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. This guidance is effective for interim and annual periods
ending after June 15, 2009. In response to the revised guidance, in April 2009, the SEC published a bulletin in which the SEC maintains the staff's previous views related to equity securities.
It also amends the SEC's previous bulletin to exclude debt securities from its scope. The adoption of the guidance did not impact the Company's consolidated financial statements.

In
April 2009, the FASB issued additional authoritative guidance on fair value measurements for estimating fair value when the volume and level of activity for the asset or liability
have significantly decreased and on identifying circumstances that indicate a transaction is not orderly. It emphasizes that even if there has been a significant decrease in the volume and level of
activity for the asset or liability, and regardless of the valuation technique(s) used, the objective of a fair value measurement remains the same. Fair value is the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market
conditions. This guidance is effective for interim and annual periods ending after June 15, 2009. Its adoption did not impact the Company's consolidated financial statements.

In
April 2009, the FASB revised the authoritative guidance on business combinations. The guidance amends the previously existing provisions for the initial recognition and measurement,
subsequent measurement and accounting, and disclosures for assets and liabilities arising from contingencies in business combinations. The revised guidance eliminates the distinction between
contractual and non-contractual contingencies, including the initial recognition and measurement criteria and instead carries forward most of the provisions from previous guidance for
acquired contingencies. It is effective for contingent assets and contingent liabilities acquired in business combinations for which the acquisition date is on or after the beginning of the first
annual reporting period beginning on or after December 15, 2008. The nature and magnitude of the specific effects that this guidance will have on the Company's consolidated financial statements
will depend upon the nature, term and size of acquired contingencies resulting from future acquisitions.

In
May 2009, the FASB issued authoritative guidance on management's assessment of subsequent events. The guidance is effective prospectively for interim and annual periods ending after
June 15, 2009. The guidance requires entities to disclose the date through which subsequent events have been evaluated and whether the date corresponds with the release of the entities'
financial statements. The implementation of this standard did not have a material impact on the Company's consolidated financial position and results of operations.

In
June 2009, the FASB issued the FASB Accounting Standards Codification ("Codification"). The Codification will become the single source for all authoritative GAAP recognized by the
FASB to be applied for financial statements issued for periods ending after September 15, 2009. The Codification does not change GAAP and will not have an effect on the Company's financial
position, results of operations or liquidity. The Company has adjusted historical GAAP references herein to reflect accounting guidance references as prescribed by the Codification.

2. Marketable Securities

Marketable securities consisted of municipal student loan-backed auction rate securities as of December 31, 2009 (in
thousands):

Cost

Unrealized
Gains

Unrealized
Losses

Estimated
Fair ValueMunicipal obligations

$
27,550

$


$
(5,524
)
$
22,026


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Marketable
securities consisted of the following as of December 31, 2008 (in thousands):

Cost

Unrealized
Gains

Unrealized
Losses

Estimated
Fair ValueMunicipal obligations

$
33,850

$


$
(8,100
)
$
25,750Corporate obligations


2,176





(1
)

2,175Total marketable securities

$
36,026

$


$
(8,101
)
$
27,925


The
following table summarizes the amortized cost and estimated fair value of marketable securities classified by the remaining maturity of the security as of December 31, 2009
(in thousands):

Cost

Estimated
Fair ValueDue within ten years

$


$
Due after ten years


27,550


22,026Total

$
27,550

$
22,026


Realized
losses from sales and maturities of marketable securities are included in interest and other income, net, in the consolidated statements of operations and were immaterial for
the years ended December 31, 2009, 2008 and 2007. The Company recognizes realized gains and losses upon sale or maturity of marketable securities using the specific identification method.

The
following table summarizes, for all investments in an unrealized loss position, the fair value and gross unrealized losses of investments aggregated by type of investment instrument
and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2009 (in thousands):

Less Than 12 Months

12 Months or Greater

TotalFair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
LossesMunicipal obligations

$


$


$
22,026

$
5,524

$
22,026

$
5,524


The
following table summarizes, for all investments in an unrealized loss position, the fair value and gross unrealized losses of investments aggregated by type of investment instrument
and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2008 (in thousands):

Less Than 12 Months

12 Months or Greater

TotalFair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
LossesMunicipal obligations

$
25,750

$
(8,100
)
$


$


$
25,750

$
(8,100
)Corporate obligations


2,175


(1
)







2,175


(1
)Total

$
27,925

$
(8,101
)
$


$


$
27,925

$
(8,101
)


Auction Rate Securities ("ARS")

Included in the Company's municipal obligations are auction rate securities totaling $22.0 million and $25.8 million as
of December 31, 2009 and 2008, respectively. ARS are securities that are structured with short-term reset dates of generally less than 90 days but with maturities generally
greater than 10 years. At the end of the reset period, investors can generally sell or continue to hold the securities at par value. The assets underlying these investments are student loan
portfolios that are

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Table of Contents

insured
or government backed. The auction events, which have historically provided liquidity for these securities, began failing during the first quarter of 2008, and there have been no successful
auction events for the Company's ARS since that time. The principal amounts associated with the ARS will not be accessible until a successful auction occurs, a buyer is found outside of the auction
process, the issuer calls the security, or the security matures according to contractual terms.

Due
to the auction failures, these ARS do not have a readily determinable market value. As a result, fair values were estimated utilizing discounted cash flow analyses as of
December 31, 2009. These analyses consider, among other factors, the collateralization underlying the security investments, the creditworthiness of the counterparty, the timing of expected
future cash flows, and the expectation of the next time the ARS are expected to have a successful auction (liquidity). These ARS were also compared when possible, to other observable market data with
similar characteristics to the ARS held by the Company.

As
a result of the remaining uncertainty in the market for ARS, the Company has classified these investments as "non-current" assets in the accompanying consolidated balance
sheet as of December 31, 2009. Additionally, the fair value of these investments has been reduced from their par value of $27.6 million to an estimated fair value of
$22.0 million. Because the Company does not intend to sell any of these securities, it is not more likely than not that the Company will be required to sell any of these securities before
recovering its cost basis, and it expects to recover each security's entire amortized cost basis, the decline in fair value is considered temporary, and has been recorded as an unrealized loss in
accumulated other comprehensive income. If the Company were to determine that a decline in fair value is other-than-temporary, a charge would be recorded to earnings in the
period such determination was made.

3. Fair Value Measurements

Effective January 1, 2008, the Company adopted the new authoritative guidance for financial assets and liabilities recorded at
fair value. The guidance defines fair value, establishes a framework for measuring fair value in accordance with GAAP, and expands disclosures about fair value measurements. Although the adoption of
the new guidance did not materially impact its financial condition, results of operations, or cash flows, the Company is now required to provide additional disclosures as part of its consolidated
financial statements.

The
accounting guidance establishes a three-tier fair value of hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1,
defined as fair value measured based on observable inputs such as quoted prices in active markets for identical assets; Level 2, defined as fair value measured based on observable inputs such
as quoted prices in active markets for similar assets, and inputs other than quoted prices in active markets that are either directly or indirectly observable and for identifiable assets in less
active markets; and Level 3, defined as fair value measured based on unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

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Table of Contents

The
Company's assets measured at fair value on a recurring basis subject to the disclosure requirements at December 31, 2009, were as follows (in thousands):

Fair Value Measurements at Reporting Date UsingDecember 31,
2009

Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)Description:Auction rate securities measured at fair value

$
22,026

$


$


$
22,026


As
discussed in Note 2, the Company changed its valuation methodology for ARS to a discounted cash flow analysis during the first quarter of 2008 as quoted prices in an active
market were not available due to the auction failures. Accordingly, these ARS changed from Level 1 to Level 3 within the GAAP hierarchy since the Company's initial adoption of the new
accounting guidance at January 1, 2008.

The
following table presents the Company's assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at December 31, 2009 (in
thousands):

Fair Value
Measurements Using
Significant
Unobservable Inputs
(Level 3)Auction Rate
SecuritiesBalance at December 31, 2007

$
Transfers to Level 3


33,850Total unrealized losses included in other comprehensive income


(8,100
)Balance at December 31, 2008

$
25,750Less: Sales and redemptions


(6,300
)Reversals of unrealized losses on securities sold or redeemed


2,576Balance at December 31, 2009

$
22,026


4. Recent Business Combinations

MeziMedia.On July 30, 2007, the Company completed the acquisition of MeziMedia, a leading operator of U.S. comparison
shopping and coupon
websites. Under the terms of the agreement, the Company acquired all outstanding equity interests in MeziMedia for initial cash consideration of $96.3 million, net of cash acquired of
$18.9 million, plus approximately $700,000 in transaction costs, resulting in a total initial cash consideration of $97.0 million.

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Table of Contents

The
final allocation of the initial purchase price (excluding contingent consideration) to the assets acquired and liabilities assumed and the useful lives, in years, assigned to
intangible assets is as follows (in thousands):

Cash acquired




$
18,944Other tangible assets acquired





9,540Useful lifeAmortizable intangible assets:Customer relationships


3


2,100Trademarks, trade names and domain names


5


10,400Developed technologies


4


26,700Covenants not to compete


4


7,500Total identifiable intangible assets





46,700Goodwill





58,025Total assets acquired





133,209Liabilities assumed





(17,230
)Total




$
115,979


The
intangible assets were valued using a combination of valuation methods, including future discounted cash flows expected to be generated from the assets, comparison of market prices
for other similar assets, and the cost of replacing the assets. The Company is amortizing each intangible asset on a straight-line basis over the asset's useful life as this method
approximates the pattern in which the economic benefits of the assets are consumed. All of the goodwill resulting from this acquisition is tax deductible.

In
addition to the initial cash consideration, the shareholders of MeziMedia earned $62.6 million and $106.1 million in contingent cash consideration for achieving certain
revenue and earnings performance targets for the years ended December 31, 2008 and 2007, respectively. No additional cash consideration was earned during the year ended December 31,
2009, and no further contingent consideration exists related to this acquisition as of December 31, 2009. The cash consideration earned related to MeziMedia's 2008 and 2007 performance has been
accounted for as additional purchase price and was recorded as additional goodwill during the years ended December 31, 2008 and 2007, respectively. The $62.6 million earned for 2008
performance was accrued as a liability in the accompanying consolidated balance sheet as of December 31, 2008 and was paid in the first quarter of 2009. The $106.1 million earned for
2007 performance was paid in February 2008, less an indemnity holdback amount which was paid in January 2009.

MeziMedia
provided the Company with additional opportunities to monetize online traffic and expanded its online presence in the United States, China and Japan. This factor contributed to
a purchase price in excess of the fair value of MeziMedia's net tangible and intangible assets acquired, and, as a result, the Company recorded goodwill in connection with this transaction. The
results of MeziMedia's operations are included in the Company's consolidated financial statements beginning on the date of acquisition.

The
historical operating results of acquired entities prior to the respective acquisition dates have not been included in the Company's historical operating results. Pro forma data
(unaudited) for the

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Table of Contents

year
ended December 31, 2007 as if the MeziMedia acquisition was completed on January 1, 2007 is as follows (in thousands, except per share data):

2007(pro forma)Revenue

$
420,324Net income (loss)

$
43,606Basic net income per common share

$
0.44Diluted net income per common share

$
0.43


These
unaudited, pro forma results of operations are not necessarily indicative of future operating results.

5. Discontinued Operations

In October 2008, the Company sold two non-core businesses, Mediaplex Systems and the ink-jet
e-commerce business. Mediaplex Systems was included in the Company's Technology operating segment, while the e-commerce business was included in the Media operating segment.
The divestitures generated total gross consideration in 2008 of $15.9 million and a pretax gain of $10.1 million ($5.0 million, net of income taxes).

On
February 1, 2010, the Company completed the disposition of its lead generation marketing business, operated through its subsidiary Web Marketing Holdings LLC ("Web
Clients"). The proceeds from the sale were approximately $32.8 million, consisting of the estimated discounted fair value of a $45 million (face amount) five year note receivable bearing
interest at the rate of five percent, with monthly payments amortized over a ten year period and a balloon payment at the end of the fifth year. The note is collateralized by substantially all of the
assets of the buyer, consisting of Web Clients and other unrelated businesses. The assets and liabilities of Web Clients are classified as held for sale as of December 31, 2009, and the
historical results of Web Clients are treated as discontinued operations
herein. The Company determined that Web Clients met the definition of an asset held for sale in October 2009.

The
following amounts related to Web Clients, Mediaplex Systems and the ink-jet e-commerce business were derived from historical financial information and have
been segregated from continuing operations and reported as discontinued operations (in thousands):

Year Ended December 31,2009

2008

2007Revenues

$
103,004

$
188,134

$
270,101Income (loss) before income taxes from discontinued operations


11,055


(17,302
)

53,677Income tax expense


4,008


6,426


23,227Income (loss) from discontinued operations, net of tax, before gain on sale


7,047


(23,728
)

30,450Gain on sale, net of tax of $5,154





4,984


Net income from discontinued operations

$
7,047

$
(18,744
)
$
30,450


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Table of Contents

The components of assets and liabilities held for sale at December 31, 2009 are as follows:

December 31,
2009Current assets held for sale:Receivables, net

$
10,814Other current assets


284$
11,098Assets held for sale, less current portion:Property and equipment, net

$
664Goodwill


14,512Intangible assets acquired in business combinations


10,541Other assets


60$
25,777Liabilities related to assets held for sale:Accounts payable and accrued expenses

$
4,224Other current liabilities


182$
4,406


6. Goodwill and Intangible Assets

In accordance with GAAP, the Company does not amortize goodwill, but rather tests goodwill for impairment annually as of
December 31 at the reporting unit level. The Company's testing approach utilizes a discounted cash flow analysis corroborated by comparative market multiples to determine the fair value of its
reporting units for comparison to their corresponding book values. If the book value exceeds the estimated fair value of a reporting unit, a potential impairment is indicated and accounting guidance
prescribes the approach for measuring the impairment amount, if any. In performing the annual goodwill impairment test as of December 31, 2009 for the Company's held and used reporting units,
no impairment was identified. Furthermore, the estimated fair values of each of our reporting units exceeded their carrying values by at least 31% as of December 31, 2009. In addition, the
Company evaluates recoverability of its identifiable intangible assets and other long-lived assets when events or circumstances indicate a potential impairment exists. During 2009, no
events or circumstances indicated the existence of a potential impairment in the Company's held and used intangible assets. Accordingly, an impairment test was not performed for the Company's held and
used intangible assets.

In
accordance with GAAP, the Company performed its impairment testing for its assets held for sale in the following order: 1) goodwill, and 2) the remainder of the disposal
group. The book value of the disposal group exceeded the estimated fair value of the disposal group, and consequently the Company determined that the goodwill of the disposal group was impaired by
$3.2 million. Additionally, after recording this goodwill impairment, the Company recorded intangible asset impairment of $2.3 million in order to reduce the remaining book value of the
disposal group to the estimated fair value of the disposal group less estimated costs to sell. As a result, the Company recorded a total impairment charge of $5.5 million related to the assets
held for sale. This charge is reported in discontinued operations and was primarily driven by the diminishing financial performance of the disposal group during 2009. The tax benefit related to the
impairment charge was $1.4 million.

After
conducting its impairment test as of December 31, 2008, the Company determined that goodwill in its Media and Owned & Operated Websites reporting units was impaired
by $112 million and $210 million, respectively. The total goodwill impairment charge of $322 million is included in the consolidated results of operations for the year ended
December 31, 2008. The goodwill impairment

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charge
was primarily driven by the significant decline in the Company's stock price during 2008 and the weak economic environment, which resulted in lower projected cash flows for these reporting
units as compared to projections used in goodwill impairment tests completed in prior periods. The tax benefit related to the impairment charge was $51.2 million. No goodwill impairment was
recorded as a result of the Company's annual impairment test for the years ended December 31, 2007.

The
Company determined its reporting units based on GAAP. As of December 31, 2009, the Company's reporting units consisted of the Media, Affiliate Marketing, Owned &
Operated Websites, and Technology operating segments. As required by GAAP, the Company assigned goodwill to its reporting units. The Technology segment has no goodwill associated with it. Below is
assigned goodwill by reporting unit (in thousands):

Media

Affiliate
Marketing

Owned &
Operated
Websites

TotalBalance at December 31, 2007

$
232,000

$
30,733

$
176,799

$
439,532Accumulated impairment losses











232,000


30,733


176,799


439,532Foreign currency translation adjustments


(379
)

(893
)

(3,530
)

(4,802
)Earn-out consideration








59,474


59,474Impairment write-down(1)


(112,000
)




(210,000
)

(322,000
)Other


(166
)




545


379Balance at December 31, 2008


231,455


29,840


233,288


494,583Accumulated impairment losses


(112,000
)




(210,000
)

(322,000
)119,455


29,840


23,288


172,583Foreign currency translation adjustments


144


337


677


1,158Tax adjustments


(20
)




(2,820
)

(2,840
)Allocation to disposal group(2)


(13,778
)







(13,778
)Balance at December 31, 2009


217,802


30,177


231,144


479,123Accumulated impairment losses


(112,000
)




(210,000
)

(322,000
)$
105,802

$
30,177

$
21,144

$
157,123


(1)The
impairment write-down in 2008 for the Media segment of $112 million was allocated to discontinued operations ($59.5 million)
and continuing operations ($52.5 million) based upon an estimated relative fair value calculation.(2)Allocation
to disposal group was based upon an estimated relative fair value calculation.


As
of December 31, 2009, goodwill with a book value of $31.6 million, of which $21.1 million related to the Owned & Operated Websites reporting unit and
$10.5 million related to the Media reporting unit, is tax deductible. As of December 31, 2008, $34.0 million of goodwill was tax deductible.

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Table of Contents

The
Company's acquired intangible assets as of December 31, 2009 are being amortized on a straight-line basis over the following weighted-average useful lives (in
years):

Weighted-
Average
Useful LifeCustomer, affiliate and advertiser relationships


7Trademarks, trade names and domain names


7Developed technologies and websites


4Covenants not to compete


4


The
gross carrying amounts and accumulated amortization of the Company's acquired intangible assets were as follows at December 31, 2008 and 2007 (in thousands):

Gross
Balance

Accumulated
Amortization

Net Carrying
AmountDecember 31, 2009:Customer, affiliate and advertiser relationships

$
46,793

$
(32,246
)
$
14,547Trademarks, trade names and domain names


23,211


(12,532
)

10,679Developed technologies and websites


26,700


(16,167
)

10,533Covenants not to compete


7,525


(4,566
)

2,959Total intangible assets

$
104,229

$
(65,511
)

38,718December 31, 2008:Customer, affiliate and advertiser relationships

$
81,596

$
(44,793
)
$
36,803Trademarks, trade names and domain names


32,929


(11,739
)

21,190Developed technologies and websites


30,992


(13,784
)

17,208Covenants not to compete


15,819


(10,978
)

4,841Total intangible assets

$
161,336

$
(81,294
)
$
80,042


Gross
Intangible Assets decreased $57.1 million from $161.3 million at December 31, 2008 to $104.2 million at December 31, 2009. In 2009, the Company
wrote off fully amortized intangible assets totaling $17.5 million and reclassified $41.3 million to the disposal group classified as assets held for sale. This decrease in the gross
balance of the intangible assets at December 31, 2009 was offset by foreign currency translation adjustments totaling approximately $1.7 million. In 2008, $2.0 million was removed
from the intangible asset balances due to the disposition of the e-commerce business. Additionally, the Company recorded an impairment charge of $248,000 in 2008 related to developed
technologies and websites. Amortization expense related to intangible assets was $19.8 million, $21.7 million and $16.5 million for the years ended December 31, 2009, 2008
and 2007, respectively. Estimated intangible asset amortization expense for the next five years ending December 31 and thereafter is as follows (in thousands):

2010

$
19,3672011

$
12,1962012

$
4,6662013

$
3782014

$
378Thereafter

$
1,733


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Table of Contents

7. Property and Equipment

Property and equipment consisted of the following (in thousands):

As of December 31,2009

2008Land

$
1,470

$
1,470Building


1,330


1,330Computer equipment and purchased software


32,984


46,276Furniture and equipment


4,066


4,412Vehicles


35


56Leasehold improvements


2,979


3,29942,864


56,843Less: accumulated depreciation and amortization


(31,592
)

(41,329
)$
11,272

$
15,514


Total
depreciation expense, including the amortization of leasehold improvements, for the years ended December 31, 2009, 2008 and 2007 was $7.6 million, $8.5 million
and $8.1 million, respectively.

8. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following (in thousands):

As of December 31,2009

2008Accounts payable, including amounts due to publishers

$
53,954

$
59,941Advertiser deposits


17,232


16,026Accrued salaries and benefits


7,357


5,992Accrued contingent consideration





62,563Other accrued expenses


13,160


28,885$
91,703

$
173,407


Accrued
contingent consideration of $62.6 million for the year ended December 31, 2008 represents the contingent cash consideration earned by MeziMedia for achieving
certain revenue and earnings performance targets for the year ended December 31, 2008 as per the terms of the merger agreement. These amounts were paid in February 2009. See Note 4.

9. Income Taxes

The components of income from continuing operations before income taxes are as follows (in thousands):

Year Ended December 31,2009

2008

2007United States

$
75,584

$
(234,148
)
$
56,828Foreign


7,249


4,966


11,740Income before income taxes

$
82,833

$
(229,182
)
$
68,568


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Table of Contents

Income
tax expense attributable to continuing operations is comprised of the following provision (benefit) components (in thousands):

Year Ended December 31,2009

2008

2007Current:Federal

$
9,256

$
6,659

$
29,552State


6,861


4,137


7,126Foreign


2,190


1,950


4,26318,307


12,746


40,941Deferred:Federal


1,910


(36,649
)

(7,876
)State


1,994


(9,784
)

(2,729
)Foreign


(947
)

(127
)

(1,930
)2,957


(46,560
)

(12,535
)Income tax expense

$
21,264

$
(33,814
)
$
28,406


Income
tax expense attributable to discontinued operations is $4.0 million, $11.6 million, and $23.2 million for the years ended December 31, 2009, 2008 and
2007, respectively.

Income
tax expense of $0.5 million attributable to stock option grants and restricted stock awards during 2009, and income tax expense primarily attributable to employee stock
option tender offer of $19.2 million during 2008 were recorded as decreases to additional paid-in capital and did not, therefore, result in an expense in the consolidated statements
of operations for the years ended December 31, 2009 and December 31, 2008, respectively. The income tax benefit of employee stock options exercised of $4.1 million during 2007 was
recorded as increase to additional paid-in capital and did not, therefore, result in a benefit in the consolidated statement of operations for the year ended December 31, 2007. For
the year ended December 31, 2007, the Company recorded a decrease to goodwill of $0.1 million related to tax benefits from exercises in 2007 of nonqualified employee stock options that
were assumed and fully vested at the time of acquisition. No such decreases were recorded in the years ended December 31, 2009 and 2008.

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Table of Contents

The
components of the deferred tax assets and deferred tax liabilities are as follows (in thousands):

As of December 31,2009

2008Deferred tax assets:Net operating loss carryforwards

$
6,701

$
7,904Depreciation and amortization


49,660


52,492Stock options


5,079


3,929State tax


4,152


5,865Unrealized loss on marketable securities


2,395


3,515Deferred book gain on asset sale





2,853Other


8,552


10,625Gross deferred tax assets


76,539


87,183Valuation allowance


(3,676
)

(4,574
)Net deferred tax assets


72,863


82,609Deferred tax liabilities:Acquired intangible assets


13,517


19,786Other


1,532


304Total deferred tax liabilities


15,049


20,090Net deferred tax assets


57,814


62,519Current portion of net deferred tax assets


7,972


11,032Long-term portion of net deferred tax assets


49,842


51,487Net deferred tax assets

$
57,814

$
62,519


In
evaluating the need for a valuation allowance at December 31, 2009 and 2008, the Company evaluated both positive and negative evidence in accordance with GAAP. As of
December 31, 2009, based upon both positive and negative evidence, the Company determined it is more likely than not
that certain deferred tax assets may not be realizable. As of December 31, 2009 and 2008, the valuation allowance attributable to deferred tax assets was $3.7 million and
$4.6 million, respectively, representing an overall decrease of $0.9 million. The decrease in valuation allowance relates primarily to a decrease in unrealized capital losses on
marketable securities which the Company deems more likely than not will expire unutilized. As of December 31, 2009, the Company had net operating loss carryforwards for federal and state
purposes of $14.4 million and $11.5 million, respectively. The federal and state net operating loss carryforwards begin to expire in 2019 and 2013, respectively.

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Table of Contents

A
reconciliation of the beginning and ending amount of unrecognized tax benefits during 2009 and 2008 is as follows (in thousands):

2009

2008

2007Unrecognized tax benefits balance at January 1

$
62,476

$
68,597

$
48,567Add:Additions based on tax positions related to the current year


1,888


2,349


19,887Additions for tax positions of prior years


1,071


919


364Deduct:Settlements with tax authorities





(120
)

Reductions as a result of lapse of applicable statute of limitations


(12,815
)

(8,819
)

(221
)Reductions for tax positions of prior years


(588
)

(450
)

Unrecognized tax benefits balance at December 31

$
52,032

$
62,476

$
68,597


The
total amount of unrecognized tax benefits of $52.0 million at December 31, 2009, if ultimately recognized, will reduce the Company's annual effective tax rate.

The
Company's policy is to recognize interest and penalties expense, if any, related to uncertain tax positions as a component of income tax expense. For the years ended
December 31, 2009, 2008, and 2007, the Company recognized $2.6 million, $4.3 million, and $3.5 million, respectively, in gross interest and penalties expense related to
uncertain tax positions. During the years ended December 31, 2009 and 2008, gross interest expense was offset by a reversal of prior accrued interest of $2.8 million and
$2.1 million, respectively, as a result of the expiration of certain statutes of limitations. As of December 31, 2009 and 2008, the Company had an accrued liability of
$8.3 million and $8.5 million, respectively, for interest and penalties related to uncertain tax positions. These amounts are included in non-current income taxes payable.

The
Company's uncertain tax positions are related to tax years that remain subject to examination by the relevant tax authorities. These include the 2006 through 2009 tax years for
federal purposes, 1999 and 2004 through 2009 tax years for various state jurisdictions, and 2004 through 2009 tax years for various foreign jurisdictions. The Company is currently under examination by
various state tax authorities for the 2004 through 2007 tax years and under federal examination for the 2007 tax year. Facts and circumstances could arise in the twelve-month period following
December 31, 2009 that could cause the Company to reduce the liability for unrecognized tax benefits, including, but not limited to, settlement of income tax positions or expiration of the
statutes of limitations. Since the ultimate resolution of uncertain tax positions depends on many factors and assumptions, the Company is not able to estimate the range of potential changes in the
liability for unrecognized tax benefits or the timing of such changes.

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Table of Contents

The
overall effective income tax rate for continuing operations differs from the statutory federal tax rate as follows:

Year Ended December 31,2009

2008

2007Tax provision (benefit) based on the federal statutory rate


35.0
%

(35.0
)%

35.0
%State income taxes, net of federal benefit


6.9


(1.5
)

4.2Stock-based compensation


0.7


0.4


0.7Research and experimentation credit


(0.3
)

(0.2
)

(0.6
)Goodwill impairment





24.8


Effects of foreign income


(1.3
)




(0.7
)Adjustment to valuation allowance, net of purchase accounting adjustments


0.2





(0.5
)Lapse of statute of limitations


(17.5
)

(4.4
)

(0.3
)Other, net


2.0


1.1


3.6Overall effective income tax rate


25.7
%

(14.8
)%

41.4
%


The
Company files a consolidated federal income tax return as well as state and foreign tax returns.

As
of December 31, 2009, withholding and U.S. income taxes have not been provided on $21.9 million of unremitted earnings of certain non-U.S. subsidiaries
because such earnings will be permanently reinvested in foreign operations. The determination of taxes associated with the $21.9 million of unremitted earnings is not practicable.

10. Capitalization

Share Repurchase Program

In September 2001, the Company's board of directors authorized a stock repurchase program (the "Program") to allow for the repurchase
of shares of the Company's common stock at prevailing market prices in the open market or through unsolicited negotiated transactions.

Since
the inception of the Program and through December 31, 2008, the Company's board of directors had authorized a total of $479.1 million for repurchases under the
Program and the Company had repurchased a total of 47.1 million shares of its common stock for approximately $374.2 million, leaving approximately $105 million available under the
Program as of December 31, 2008. During the year ended December 31, 2009, the Company repurchased 3.6 million shares of its common stock for $35.1 million, leaving
approximately $69.9 million available under the Program as of December 31, 2009.

In
the period from January 1, 2010 through February 25, 2010, the Company repurchased an additional 1.9 million shares of its common stock for $17.7 million,
leaving $52.2 million available under the program as of February 25, 2010.

Repurchases
have been funded from available working capital and all shares have been retired subsequent to their repurchase. There is no guarantee as to the exact number of shares that
will be repurchased by the Company, and the Company may discontinue repurchases at any time that management or the Company's board of directors determines additional repurchases are not warranted. The
amounts authorized by the Company's board of directors exclude broker commissions.

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Stockholder Rights Plan

On June 4, 2002, the board of directors of ValueClick, Inc. declared a dividend of one preferred share purchase right for
each outstanding share of the Company's common stock. The dividend was payable on June 14, 2002 to the stockholders of record at the close of business on that date. Each right entitles the
registered holder to purchase from the Company one unit consisting of one-thousandth of a share of Series A junior participating preferred stock of the Company at a price of $25.00
per unit. The description and terms of the rights are set forth in a Rights Agreement, dated as of June 4, 2002, by and between the Company and Mellon Investor Services LLC, a New Jersey
Limited Liability Company, as Rights Agent.

Until
the earlier to occur of (i) the close of business on the tenth day after a public announcement that a person or group of affiliated or associated persons has acquired
beneficial ownership of 15% or more of the Company's outstanding common stock or (ii) ten business days (or such later date as may be determined by action of the Company's board of directors
prior to such time as any person becomes an acquiring person) following the commencement of, or announcement of an intention to make, a tender offer or exchange offer, the consummation of which would
result in the bidder's beneficial ownership of
15% or more of the Company's outstanding common stock (the earlier of such dates being called the distribution date), the rights will be evidenced by the Company's common stock certificates.

The
rights are not exercisable until the distribution date. The rights will expire at the close of business on June 4, 2012 unless the final expiration date is extended or the
rights are earlier redeemed or exchanged by the Company.

The
Series A junior participating preferred stock purchasable upon exercise of the rights will not be redeemable. Each share of Series A junior participating preferred
stock will be entitled to a dividend of 1,000 times the dividend declared per share of common stock. In the event of liquidation, the holders of the shares of Series A junior participating
preferred stock will be entitled to a payment of 1,000 times the payment made per share of common stock. Each share of Series A junior participating preferred stock will have 1,000 votes,
voting together with the common stock. Finally, in the event of any merger, consolidation or other transaction in which shares of common stock are exchanged, each share of Series A junior
participating preferred stock will be entitled to receive 1,000 times the amount received per share of common stock. These rights are protected by customary anti-dilution provisions.

The
terms of the rights may be amended by the board of directors of the Company without the consent of the holders of the rights except that from and after such time that there is an
acquiring person no amendment may adversely affect the interests of the holders of the rights.

Until
a right is exercised, the holder of a right will have no rights by virtue of ownership as a stockholder of the Company, including, without limitation, the right to vote or to
receive dividends.

11.   Stock-Based Compensation

1999 Stock Option Plan and 2002 Stock Incentive Plan

On May 13, 1999, the Board of Directors adopted and the stockholders approved the 1999 Stock Option Plan (the "1999 Stock
Plan"). A total of 5,000,000 shares of common stock were reserved for issuance under the 1999 Stock Plan.

On
May 23, 2002, the Board of Directors adopted and the stockholders approved the 2002 Stock Incentive Plan and reserved an additional 10,000,000 shares of common stock for
issuance under this plan. The 2002 Stock Incentive Plan replaced the 1999 Stock Plan and all available shares under the 1999 Stock Plan were transferred to the 2002 Stock Incentive Plan (collectively
the "2002 Stock Plan"),

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Table of Contents

resulting
in 15,000,000 common shares reserved for issuance. In addition, the shares under the 2002 Stock Plan increase annually on January 1 of each year equal to 1% of the total outstanding
shares of ValueClick common stock as of the last day of the previous year. As of December 31, 2009, there are 5,989,724 shares available for future grant.

The
2002 Stock Plan provides for the granting of non-statutory and incentive stock options and restricted stock awards to, among other parties, employees, officers and
directors of the Company. Stock options granted to new employees or officers generally begin vesting on the new employee's or officer's first date of employment, and vest over a four-year
period, with one-fourth vesting on the first anniversary date and the remainder vesting pro-rata monthly over the remaining three years, and expire five to ten years from the
date of grant. Stock options granted to existing employees or officers typically vest on a monthly pro-rata basis over a four-year period and expire five to ten years from the
date of grant. Stock options granted to directors generally vest over a two-year period and expire five to ten years from the date of grant. Restricted stock grants generally vest over a
four-year period.

Pursuant
to the Company's business combinations with Fastclick, Web Clients, HiSpeed Media, Commission Junction, Be Free, and Mediaplex, the Company assumed certain stock options and
related plans. No stock options are available for future grants under these assumed stock plans.

The
following table summarizes stock option activity under the Company's stock plans for the years ended December 31, 2009, 2008, and 2007:

Shares

Weighted-
Average
Exercise Price

Weighted-
Average
Remaining
Contractual
Term

Aggregate
Intrinsic Value(in years)

(in thousands)Options outstanding at December 31, 2006


5,464,288

$
13.66Granted


6,300,000

$
26.95Exercised


(1,102,184
)
$
12.00Forfeited/expired


(1,536,626
)
$
19.59Options outstanding at December 31, 2007


9,125,478

$
22.04Granted


150,000

$
21.27Exercised


(420,394
)
$
9.48Forfeited/expired


(5,875,317
)
$
26.31Options outstanding at December 31, 2008


2,979,767

$
15.35Granted





Exercised


(83,062
)
$
9.22Forfeited/expired


(279,790
)
$
16.73Options outstanding at December 31, 2009


2,616,915

$
15.40


3.85

$
2,095Options vested at December 31, 2009 and expected to vest after December 31, 2009


2,615,626

$
15.39


3.84

$
2,095Options exercisable at December 31, 2009


2,521,535

$
15.20


3.90

$
2,095


The
total intrinsic value of stock options exercised during the years ended December 31, 2009, 2008 and 2007 was $193,000, $2.6 million and $16.9 million,
respectively. There were no stock options granted in 2009. The weighted-average estimated grant date fair value of stock options granted for the years ended December 31, 2008 and 2007 was $8.89
and $10.74, respectively.

As
of December 31, 2009 and 2008, there were $579,000 and $3.6 million, respectively, of total unrecognized stock-based compensation related to unvested stock options. The
remaining vesting period for such unvested stock options ranges up to 4 years, with a weighted-average remaining vesting period of 1.3 years.

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Table of Contents

Tender Offer

In September 2008, the Company completed a tender offer process in which it agreed to purchase certain underwater stock options from
eligible employees, officers and directors. Under the terms of the tender offer process, the Company acquired and cancelled 4.8 million outstanding stock options with exercise prices ranging
from $25.66 to $29.73, which resulted in cash payments of $5.0 million. The completed tender offer triggered the acceleration of stock-based compensation resulting in an additional charge of
$30.3 million in the three-month period ended September 30, 2008, which represents the product of the number of unvested stock options purchased times the original Black-Scholes value
that was established for each option on the original grant date.

Restricted Stock

The Company began granting restricted stock awards in 2008. During 2008, the Company granted 2.0 million shares of restricted
stock under the Company's 2002 Stock Incentive Plan to its executive officers, board of directors and certain of its employees. Under the terms
of the restricted stock awards, the shares granted generally vest over a four year period. If the employment of any recipient of a restricted stock grant terminates for any reason, the Company shall
automatically reacquire any unvested shares without cost to the Company.

The
following table summarizes activity for restricted stock awards during the year ended December 31, 2009:

Shares

Weighted-Average
Grant Date
Fair ValueOutstanding at December 31, 2008


1,890,435

$
10.69Granted




$
Vested


(321,500
)
$
12.98Forfeited


(61,125
)
$
10.34Outstanding at December 31, 2009


1,507,810

$
10.22


At
December 31, 2009, the intrinsic value of outstanding restricted stock awards was $15.3 million. The fair value of restricted stock that vested during the year ended
December 31, 2009 was $3.3 million. As of December 31, 2009, there was $12.8 million of total unrecognized stock-based compensation related to unvested restricted stock
awards. The weighted-average remaining vesting period is 2.7 years for these awards.

Employee Stock Purchase Plan

The Company commenced its Employee Stock Purchase Plan ("the Purchase Plan") in September 2007, which allows employees to purchase
shares of the Company's common stock through payroll deductions of up to 10 percent of their annual, eligible compensation subject to certain Internal Revenue Code and Purchase Plan
limitations. The Purchase Plan provides
for the issuance of a cumulative maximum of 1.5 million shares of common stock. The price of common stock purchased under the Purchase Plan is equal to 85 percent of the lower of the
fair market value of the common stock on the commencement date of each twelve-month offering period or the specified purchase date. For the year ended December 31, 2009, 329,000 shares were
purchased. For the year ended December 31, 2008, 215,000 shares were purchased. No shares were purchased for the year ended December 31, 2007. For the years ended December 31,
2009, 2008 and 2007, stock-based compensation recognized under the Purchase Plan was $972,000, $1.1 million and $394,000, respectively. As of December 31, 2009, there was $645,000 of
unrecognized compensation cost related to the Purchase Plan which is expected to be recognized over a weighted average period of approximately five months.

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Table of Contents

Valuation and Expense Information of Stock-Based Compensation

For the years ended December 31, 2009, 2008 and 2007, the Company recognized stock-based compensation of $8.9 million,
$48.2 million and $15.4 million, respectively, in continuing operations. The following table summarizes, by consolidated statement of operations line item the impact of stock-based
compensation and the related income tax benefits recognized for the years ended December 31, 2009, 2008 and 2007, (in thousands):

Year Ended
December 31,
2009

Year Ended
December 31,
2008

Year Ended
December 31,
2007Sales and marketing

$
1,907

$
15,621

$
4,645General and administrative


6,034


30,620


9,526Technology


928


1,925


1,218Stock-based compensation


8,869


48,166


15,389Related income tax benefits


(2,884
)

(18,123
)

(5,677
)Stock-based compensation, net of tax benefits

$
5,985

$
30,043

$
9,712


Stock-based
compensation of $400,000, $5.2 million and $3.1 million, net of tax, was recorded in discontinued operations for the years ended December 31, 2009, 2008
and 2007, respectively. The Company has not capitalized as an asset any stock-based compensation for the years ended December 31, 2009, 2008 and 2007.

GAAP
requires cash flows resulting from excess tax benefits to be classified as a financing activity. Excess tax benefits are realized tax benefits from tax deductions for exercised
stock options in excess of the deferred tax asset attributable to the recognized stock-based compensation for such stock options. Pursuant to GAAP, $175,000, $599,000 and $4.5 million of excess
tax benefits for the years ended December 31, 2009, 2008 and 2007, respectively, have been classified as a financing activity in the consolidated statements of cash flows.

The
Company calculated the estimated fair value of each stock-based award on the date of grant using the Black-Scholes option-pricing model and the following weighted-average
assumptions:

Stock OptionsYear Ended December 31,2009

2008

2007Risk-free interest rates





2.4
%

4.5
%Expected lives (in years)





3.6


3.6Dividend yield





0
%

0
%Expected volatility





55
%

48
%




Employee Stock Purchase PlanYear Ended December 31,2009

2008

2007Risk-free interest rates


0.3
%

2.0
%

4.5
%Expected lives (in years)


0.7


0.7


0.7Dividend yield


0
%

0
%

0
%Expected volatility


61
%

57
%

51
%


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No
stock options were granted by the Company in 2009. The risk-free interest rate used in the Company's fair value estimates are based on the implied yield available on U.S.
Treasury securities with an equivalent remaining term. The Company estimated the expected life of each stock option granted in 2008 and 2007 using the short-cut method permissible under
GAAP, which utilizes the weighted-average expected life of each tranche of the granted stock option, which was determined based on the sum of each tranche's vesting period plus one-half of
the period from the vesting date of each tranche to its expiration. The expected life of options granted
under the Purchase Plan represents the weighted-average amount of time remaining in the twelve-month offering period. The Company's computation of expected volatility for the years ended
December 31, 2009, 2008 and 2007 was based on a combination of historical and market-based implied volatility from traded options on the Company's common stock.

12.   Net Income Per Common Share

The following table sets forth the computation of basic and diluted net income per common share for the periods indicated (in thousands, except per share data):

Year Ended December 31,2009

2008

2007Numerator:Income (loss) from continuing operations

$
61,569

$
(195,368
)
$
40,162Income (loss) from discontinued operations


7,047


(18,744
)

30,450Net (loss) income


68,616

$
(214,112
)
$
70,612Denominator:Denominator for basic calculationweighted-average common shares


86,716


92,325


99,224Weighted-average effect of dilutive securities


494





1,294Denominator for diluted calculation


87,210


92,325


100,518Net income per common share:Basic income (loss) from continuing operations

$
0.71

$
(2.12
)
$
0.40Basic income (loss) from discontinued operations


0.08


(0.20
)

0.31Basic net income (loss)

$
0.79

$
(2.32
)
$
0.71Diluted income (loss) from continuing operations

$
0.71

$
(2.12
)
$
0.40Diluted income (loss) from discontinued operations


0.08


(0.20
)

0.30Diluted net income (loss)

$
0.79

$
(2.32
)
$
0.70


The
diluted net income per common share computations exclude common stock options which were anti-dilutive as a result of their exercise price being greater than the average
market price of the Company's common stock for the years ended December 31, 2009 and 2007. There were no stock options included in the denominator for the diluted calculation for the year ended
December 31, 2008 as the Company recognized a loss from continuing operations and, therefore, inclusion of stock options would be anti-dilutive to the Company's loss per share. The
number of shares excluded from the diluted net income per common share computation was 2.8 million, 6.4 million and 4.2 million for the years ended December 31, 2009, 2008
and 2007, respectively.

13.   Defined Contribution Plans

Prior to 2006, the Company had various savings plans (the "Savings Plans") that qualified as defined contribution plans under Section 401(k) of the
Internal Revenue Code. In 2006, the Savings Plans were consolidated into one savings plan (the "Master Savings Plan"), which also qualifies as a

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defined
contribution plan under Section 401(k) of the Internal Revenue Code. Under the Master Savings Plan, participating employees may defer a percentage of their eligible pre-tax
earnings up to the Internal Revenue Service's annual contribution limit. All full-time domestic employees of the Company are eligible to participate in the Master Savings Plan. The Master
Savings Plan does not permit investment of participant contributions in the Company's common stock. Company matching contributions to the Master Savings Plan is discretionary. Company contributions to
the Master Savings Plan amounted to $734,000, $764,000 and $555,000 for the years ended December 31, 2009, 2008 and 2007, respectively.

14.   Related Party Transactions

For the years ended December 31, 2009, 2008 and 2007, the Company recorded advertising costs in discontinued operations totaling $656,000,
$1.2 million and $313,000, which were paid to Acquisis LLC, of which a member of the Company's board of directors is the managing partner and greater than 5% owner. The Company had
outstanding amounts due to this entity of $43,000 and $131,000 as of December 31, 2009 and 2008, respectively, which are reflected in liabilities related to assets held for sale at
December 31, 2009, and accounts payable and accrued expenses at December 31, 2008.

15.   Line of Credit

In November 2008, the Company obtained a line of credit with a bank group which allows for borrowings of up to $100 million through November 14,
2011 ("Line of Credit"). The Line of Credit was amended on February 1, 2010. Advances under the Line of Credit bear interest at either (i) the Base Rate, which is equal to the highest of
(a) the Agent's prime rate, (b) the federal funds rate plus 1.50%, and (c) the one month reserve adjusted daily LIBOR rate plus 1.50%, or (ii) the London Interbank Offered
Rate ("LIBOR"), in each case plus an applicable margin as in effect at each interest calculation date. The applicable margin in effect from time to time is based on the Company's total leverage ratio.
The applicable margins range from 1.50% to 2.25% for LIBOR loans and from 0.50% to 1.25% for Base Rate loans.

Certain
of the Company's domestic subsidiaries have guaranteed the obligations of the Company and all future domestic subsidiaries of the Company also are required to guarantee the
obligations of the Company under the Line of Credit. The Company's obligations are secured by a lien on substantially
all of its present and future assets pursuant to a separate Security Agreement (the "Security Agreement"). In addition, the obligations of each subsidiary Guarantor are secured by a lien on
substantially all of such subsidiary's present and future assets. The subsidiary guarantees and the collateral under the Security Agreement are subject to release upon fulfillment of certain
conditions specified in the Credit Agreement, Security Agreement and the Guaranty Agreement.

The
Line of Credit is available to be used by the Company, among other things, to fund its working capital needs and for other general corporate purposes, including acquisitions and
stock repurchases. The Company will pay a commitment fee on unused amounts that ranges, based on the Company's total leverage ratio, from 0.35% to 0.50% of the unused portion of the Line of Credit.
The agreement also contains customary events of default such as failure to pay interest or principal when due, material inaccuracy of representations or warranties, bankruptcy events, change of
control, a material adverse change in financial condition or operations, or a default of covenant. Upon the occurrence of an event of default, the principal and accrued interest under the Line of
Credit then outstanding may be declared due and payable. At December 31, 2009, no amount was outstanding on the Line of Credit.

The
Company has provided various representations and agreed to certain financial covenants including a total leverage ratio, minimum trailing-twelve month EBITDA of $100 million,
and minimum

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unrestricted,
unencumbered liquid asset requirements. At December 31, 2009, the Company was in compliance with all of the financial covenants of the Line of Credit.

16.   Commitments and Contingencies

Leases

Future minimum lease payments as of December 31, 2009 under noncancellable operating leases, and related sublease income, with
initial lease terms in excess of one year, for the next five years and thereafter are as follows (in thousands):

Year Ending December 31:

Operating
Lease
Commitments

Operating
Sublease
Income2010

$
5,600

$
(468
)2011


4,214


(89
)2012


3,350


2013


2,498


2014


1,850


Thereafter


2,693


Total minimum lease payments

$
20,205

$
(557
)


Operating
leases consist primarily of facility leases. Certain of the Company's operating leases include escalation clauses that periodically adjust rental expense to reflect changes in
price indices. The Company records rent expense on a straight-line basis over the lease term.

Total
rent expense under operating leases, net of sublease income, was $5.6 million, $6.2 million and $4.6 million for the years ended December 31, 2009, 2008
and 2007, respectively.

As
of December 31, 2009, the Company had the following purchase obligations (in thousands):

Payments due by periodTotal

Less than
1 year

1 to less
than
3 years

3 to less
than
5 years

More
than
5 yearsPurchase obligations

$
2,286

$
1,924

$
362

$


$



Purchase
obligations include agreements to purchase goods or services that are enforceable, legally binding and specify all significant terms. Purchase obligations exclude agreements
that are cancelable without penalty.

Standby
letters of credit are maintained pursuant to certain of the Company's lease agreements. The standby letters of credit remain in effect at declining levels through the terms of
the related leases. Commitments under standby letters of credit as of December 31, 2009 are scheduled to expire as follows (in thousands):

Total

Less than
1 year

1 to less
than
3 years

3 to less
than
5 years

More than
5 yearsStandby letters of credit

$
521

$
521

$


$


$



Other Commitments

In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors,
business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company's breach of such agreements,

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services
to be provided by the Company, or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with its directors
and certain of its officers and employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as
directors, officers or employees. The Company has also agreed to indemnify certain former officers, directors and
employees of acquired companies in connection with the acquisition of such companies. The Company maintains director and officer insurance, which may cover certain liabilities arising from its
obligation to indemnify its directors and certain of its officers and employees, and former officers, directors and employees of acquired companies, in certain circumstances.

It
is not possible to determine the maximum potential amount of exposure under these indemnification agreements due to the limited history of prior indemnification claims and the unique
facts and circumstances involved in each particular agreement. Such indemnification agreements may not be subject to maximum loss clauses.

Legal Action

Internet Cookie Patent Litigation

In March of 2009, Netscape, Inc., a subsidiary of AOL, Inc., filed a complaint in the United States District Court (the
"Court") for the Eastern District of Virginia against ValueClick, Inc., Mediaplex, Inc., Commission Junction, Inc., MeziMedia, Inc., Web Clients, Inc., and
Fastclick, Inc. for alleged patent infringement of U.S. patent number 5,774,670, colloquially known as the "Internet Cookies Patent." On July 23, 2009, the Company filed a cross
complaint against Netscape for, among other things, fraud.

The
complaint seeks an unspecified amount of damages in addition to injunctive relief. Should the plaintiff be successful in this litigation, the Company could be liable for a royalty
relating to the alleged use of the technology, the amount of which is not specified but which could be material to its financial position, operating results, and cash flows in the period in which the
litigation is resolved (and possibly for future periods for future alleged use of the technology). The effectiveness of the Company's operations could be limited by any reduction or limitation in its
ability to utilize any alleged related technology. If the Company loses at trial and is forced to utilize replacement technology, such replacement technology could require reengineering time and
resources, might not be completed in time to avoid losing customers or advertising inventory, and might not be commercially feasible.

On
January 29, 2010, the Court issued a ruling in this matter with respect to the parties' motions for summary judgment. On the Company's motion for summary judgment, the court
granted its motion concerning 35 U.S.C. Sec. 102(b) with respect to Claim 1 on the patent, and ruled Claim 1 to be invalid. The validity of the remaining claims of the Internet Cookies Patent will be
litigated at trial. The
court also granted the Company's motion with respect to willfulness, which eliminates the plaintiff's claim for a finding of willful infringement and treble damages. On the plaintiff's motion for
summary judgment, the court granted their motion with respect to equitable estoppel, public use, inventorship and preemption of the Company's state law counterclaims, including its claim for fraud.
The court's decision eliminates those defenses and counter-claims by the Company. The Company believes it has valid remaining defenses and intends to defend itself vigorously at trial in this matter.

The
plaintiff has filed a motion for reconsideration of the court's summary judgment ruling concerning Claim 1 of the Internet Cookies Patent and a hearing date for that motion has been
set for March 19, 2010. A trial date for the remaining claims has been set in this matter for May 11, 2010. At this time, and based on all available evidence, the Company is unable to
estimate the range of potential loss, if any, associated with this matter. Accordingly, the accompanying consolidated financial statements do not reflect an accrual of any amount for possible loss in
this matter. Given the pending trial date in May 2010, it is reasonably possible that there will be developments in this matter in the

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near
future. Such developments, if any, will be considered by the Company in evaluating the need for an accrual in subsequent reporting periods.

Other Litigation

On April 8, 2008, Hypertouch, Inc. filed an action against the Company in the Superior Court of California, County of Los
Angeles. The complaint asserts causes of action for violation of California Business & Professions Code §§ 17529.5 and 17200, et seq., arising from the
plaintiff's alleged receipt of a large number of email messages allegedly transmitted by the Company "and/or (its) agents" and seeks statutory damages for each such email. The Company filed its answer
to the complaint on May 28, 2008. On May 4, 2009, the court granted the Company's motion for summary judgment which ended the case in this court. Hypertouch has appealed the Court's
ruling. The appeal is pending.

On
July 15, 2008, the Company filed a complaint against Tacoda, Inc. in the United States District Court for the Central District of California for patent infringement of
U.S. patent numbers 5,848,396 and 5,991,735. The Company is seeking an unspecified amount of damages in addition to injunctive relief. This case has been put on hold by the court until
May 25, 2010, pending a review by the Patent and Trademark Office of U.S. patent numbers 5,848,396 and 5,991,735.

In
the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, and other parties with respect
to certain matters, including, but not limited to, losses arising out of the Company's breach of such agreements,
services to be provided by the Company, or from intellectual property infringement claims made by third-parties. In addition, the Company has entered into indemnification agreements with its directors
and certain of its officers and employees that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as
directors, officers or employees. The Company has also agreed to indemnify certain former officers, directors and employees of acquired companies in connection with the acquisition of such companies.
The Company maintains director and officer insurance, which may cover certain liabilities arising from its obligation to indemnify its directors and certain of its officers and employees, and former
officers, directors and employees of acquired companies, in certain circumstances.

It
is not possible to determine the maximum potential amount of exposure under these indemnification agreements due to the limited history of prior indemnification claims and the unique
facts and circumstances involved in each particular agreement. Such indemnification agreements may not be subject to maximum loss clauses.

From
time to time, the Company may become subject to legal proceedings, claims and litigation arising in the ordinary course of business. In addition, the Company may receive letters
alleging infringement of patent or other intellectual property rights. The Company is not currently a party to any material legal proceedings, except as discussed above, nor is the Company aware of
any pending or threatened litigation that would have a material adverse effect on the Company's business, operating results, cash flows or financial condition should such litigation be resolved
unfavorably.

17.   Segments and Geographic Information

The Company derives its revenue from four business segments. These business segments are presented on a worldwide basis and include: Media, Affiliate Marketing,
Owned & Operated Websites, and Technology. The following table provides revenue, segment income from operations and total assets for each of the Company's four business segments. Segment income
from operations, as shown below, excludes the effects of: stock-based compensation; amortization of intangible assets; impairment of goodwill and intangible assets; and corporate expenses as these
items are excluded from the segment performance measures utilized by the Company's chief operating decision maker in evaluating the performance of the segments. Corporate expenses consist of those
costs not directly attributable to a

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business
segment, and include: salaries and benefits for the Company's executive, finance, legal, corporate governance, human resources, and facilities organizations; fees for professional service
providers including audit, tax, Sarbanes-Oxley compliance and certain legal fees; insurance; and, other corporate expenses.

Revenue

Segment Income from Operations

Total Assets2009

2008

2007

2009

2008

2007

2009

2008(in thousands)Media

$
135,086

$
130,891

$
125,319

$
33,261

$
25,215

$
22,455

$
282,135

$
98,731Affiliate Marketing


111,903


121,972


115,977


58,121


59,455


63,201


50,980


322,247Owned & Operated Websites


149,599


177,145


112,706


35,034


40,932


22,507


87,058


121,929Technology


27,686


28,670


23,741


12,775


13,600


10,537


6,951


60,372Inter-segment revenue


(1,551
)

(3,237
)

(2,228
)













Corporate assets




















139,438


Total

$
422,723

$
455,441

$
375,515

$
139,191

$
139,202

$
118,700

$
566,562

$
603,279


A reconciliation of segment income from operations to consolidated income from operations is as follows for each period (in thousands):

Segment Income from Operations2009

2008

2007Segment income from operations

$
139,191

$
139,202

$
118,700Corporate expenses


(27,988
)

(31,436
)

(30,288
)Stock-based compensation


(8,869
)

(48,166
)

(15,389
)Amortization of intangible assets


(19,803
)

(21,733
)

(16,480
)Impairment of goodwill and intangible assets





(269,500
)

Consolidated income (loss) from operations

$
82,531

$
(231,633
)
$
56,543


Depreciation
and leasehold amortization expense included in the determination of segment income from operations as presented above for the Media, Affiliate Marketing, Owned &
Operated Websites, and Technology segments is as follows for each period (in thousands):

Depreciation and Leasehold
Amortization Expense2009

2008

2007Media

$
2,135

$
2,351

$
1,977Affiliate Marketing


1,057


1,786


2,029Owned & Operated Websites


1,878


2,038


1,687Technology


1,017


935


1,466Total

$
6,087

$
7,110

$
7,159


The
Company's operations are domiciled in the United States with operations in Europe, China and Japan through wholly-owned subsidiaries. Revenue is attributed to individual countries
based upon the country in which the customer relationship is maintained. The Company's operations in China primarily support the revenue generated in the United States, and therefore, the costs
associated with these operations are attributed to the United States in the determination of geographic income from operations shown below. Geographic long-lived assets exclude deferred
tax assets and other assets in the Company's consolidated balance sheets.

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The
Company's geographic information was as follows (in thousands):

Year Ended December 31, 2009Long-lived
Assets at
December 31,
2009Revenue

Income
from
OperationsUnited States

$
339,684

$
76,516

$
9,735International


87,605


6,015


1,537Inter-regional eliminations


(4,566
)




Total

$
422,723

$
82,531

$
11,272




Year Ended
December 31, 2008Long-lived
Assets at
December 31,
2008Revenue

Income (loss)
from
OperationsUnited States

$
351,134

$
(235,629
)
$
13,329International


111,380


3,996


2,185Inter-regional eliminations


(7,073
)




Total

$
455,441

$
(231,633
)
$
15,514




Year Ended
December 31, 2007Long-lived
Assets at
December 31,
2007Revenue

Income from
OperationsUnited States

$
285,930

$
47,937

$
16,964International


100,818


8,606


2,393Inter-regional eliminations


(11,233
)




Total

$
375,515

$
56,543

$
19,357


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SCHEDULE II

VALUECLICK, INC.        VALUATION AND QUALIFYING ACCOUNTS  (in thousands)

Balance at
Beginning of
Period

Additions
Charged To
Expense/
Against
Revenue

Other
Adjustments(2)

Deductions

Balance at
End of PeriodAllowance for doubtful accounts and sales credits(1):Year ended December 31, 2009

$
5,886

$
4,860

$
(196
)
$
(6,325
)
$
4,225Year ended December 31, 2008

$
6,535

$
7,212

$
37

$
(7,898
)
$
5,886Year ended December 31, 2007

$
4,124

$
7,762

$
31

$
(5,382
)
$
6,535


(1)Items
relating to the allowance for doubtful accounts are charged to expense. Items relating to sales credits are charged against revenue.(2)Other
adjustments represent increases from acquisitions and decreases from the reclassification of amounts related to assets held for sale.


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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
annual report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Westlake Village, State of California, on the 26th day of
February, 2010.

VALUECLICK, INC.By:

/s/ TOM A. VADNAIS Tom A. Vadnais Chief Executive Officer


POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, the undersigned hereby constitute and appoint each of Tom A. Vadnais and John Pitstick their true and
lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for them and in their name, place and stead, in any and all capacities, to sign any and
all amendments to this annual report on Form 10-K, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite or necessary to be done in
connection therewith, as fully to all intents and purposes as they might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his
respective substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on
the dates indicated:

Signature

Title

Date/s/ TOM A. VADNAIS Tom A. Vadnais

Director and
Chief Executive Officer
(Principal Executive Officer)

February 26, 2010/s/ JOHN PITSTICK John Pitstick

Chief Financial Officer
(Principal Financial and Accounting Officer)

February 26, 2010/s/ JAMES R. ZARLEY James R. Zarley

Chairman of the Board of Directors

February 26, 2010/s/ DAVID S. BUZBY David S. Buzby

Director

February 26, 2010/s/ MARTIN T. HART Martin T. Hart

Director

February 26, 2010/s/ JEFFREY F. RAYPORT Jeffrey F. Rayport

Director

February 26, 2010/s/ JAMES A. CROUTHAMEL James A. Crouthamel

Director

February 26, 2010/s/ JAMES R. PETERS James R. Peters

Director

February 26, 2010


---