##### 









U.S. SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549




---

Form 10-Q

|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | QUARTERLY REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|  
|   |  | For the quarterly period ended
    September 30, 2003                                       
|  
|or
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|  
|   |  | For the transition period
    from           to                                             

Commission file number: 000-23709



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DoubleClick Inc.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS
CHARTER)


|                                                                   |  |                                            
|------------------------------------------------------------------ |  | -------------------------------------------
|Delaware                                                           |  | 13-3870996                                 
|(STATE OR OTHER JURISDICTION OF
    INCORPORATION OR ORGANIZATION) |  | (I.R.S. EMPLOYER
    IDENTIFICATION NUMBER)

450 West 33rd Street, 16th Floor

New York, New York 10001


(212) 683-0001


(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE
NUMBER,


INCLUDING AREA CODE OF REGISTRANTS
PRINCIPAL EXECUTIVE OFFICES)


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 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 þ          No o

Indicate
by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange
Act).     Yes o          No þ

As
of November 13, 2003 there were 137,578,564 outstanding
shares of the registrants Common Stock.



---






---



##### 



DOUBLECLICK INC.

INDEX TO FORM 10-Q

|                                   |  |                                                                                                                      |  |  |    | 
|---------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- |  |  | -- | 
|PART I:  FINANCIAL
    INFORMATION
|Item 1:                            |  | Financial Statements (unaudited)                                                                                     |  |  | 2  | 
|                                   |  | Consolidated Balance Sheets as of
    September 30, 2003 and December 31, 2002                                       |  |  | 2  | 
|                                   |  | Consolidated Statements of Operations for the
    three months and nine months ended September 30, 2003 and
    2002 |  |  | 3  | 
|                                   |  | Consolidated Statements of Cash Flows for the
    nine months ended September 30, 2003 and 2002                      |  |  | 4  | 
|                                   |  | Notes to Consolidated Financial Statements                                                                           |  |  | 5  | 
|Item 2:                            |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations                            |  |  | 21 | 
|Item 3:                            |  | Quantitative and Qualitative Disclosures about
    Market Risk                                                       |  |  | 40 | 
|Item 4:                            |  | Controls and Procedures                                                                                              |  |  | 55 | 
|PART II:  OTHER
    INFORMATION   
|Item 1:                            |  | Legal Proceedings                                                                                                    |  |  | 55 | 
|Item 6:                            |  | Exhibits and Reports on Form 8-K                                                                                     |  |  | 56 | 

1



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##### 



PART 1:     FINANCIAL
INFORMATION



|        |                                     
|------- | ------------------------------------
|Item 1: | Financial Statements
    (Unaudited)

DOUBLECLICK INC.

CONSOLIDATED BALANCE SHEETS

|                                                                                                                               |                                            |                           |           |              |  |   |           |         | 
|------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ------------------------- | --------- | ------------ |  | - | --------- | ------- | 
|                                                                                                                               |                                            | September 30,             |           | December 31,
|                                                                                                                               |                                            | 2003                      |           | 2002        
|                                                                                                                               |                                            |                           |           |             
|                                                                                                                               |                                            |                          
|                                                                                                                               |                                            | (Unaudited, in thousands,
|                                                                                                                               |                                            | except share amounts)    
|ASSETS                                                                                                                        
|CURRENT ASSETS:                                                                                                                |                                            |                           |           |              |  |   |           |        
|Cash and cash equivalents                                                                                                      |                                            | $                         | 126,692   |              |  | $ | 123,671   |        
|Investments in marketable securities                                                                                           |                                            |                           | 185,741   |              |  |   | 306,974   |        
|Restricted cash                                                                                                                |                                            |                           | 13,750    |              |  |   | 2,500     |        
|Accounts receivable, net of allowances of $8,929
    and $13,704, respectively                                                 |                                            |                           | 53,345    |              |  |   | 48,850    |        
|Prepaid expenses and other current assets                                                                                      |                                            |                           | 22,235    |              |  |   | 24,324    |        
|                                                                                                                               |                                            |                           |           |              |  |   |           |        
|                                                                                                                               | Total current assets                       |                           |           | 401,763      |  |   |           | 506,319 | 
|Investments in marketable securities                                                                                           |                                            |                           | 321,824   |              |  |   | 294,249   |        
|Restricted cash                                                                                                                |                                            |                           | 13,991    |              |  |   | 22,591    |        
|Property and equipment, net                                                                                                    |                                            |                           | 77,939    |              |  |   | 98,545    |        
|Goodwill                                                                                                                       |                                            |                           | 19,044    |              |  |   | 20,572    |        
|Intangible assets, net                                                                                                         |                                            |                           | 12,783    |              |  |   | 13,378    |        
|Investment in affiliates                                                                                                       |                                            |                           | 12,822    |              |  |   | 12,125    |        
|Other assets                                                                                                                   |                                            |                           | 11,395    |              |  |   | 9,128     |        
|                                                                                                                               |                                            |                           |           |              |  |   |           |        
|                                                                                                                               | Total assets                               |                           | $         | 871,561      |  |   | $         | 976,907 | 
|                                                                                                                               |                                            |                           |           |              |  |   |           |        
|LIABILITIES AND STOCKHOLDERS
    EQUITY                                                                                      
|CURRENT LIABILITIES:                                                                                                           |                                            |                           |           |              |  |   |           |        
|Accounts payable                                                                                                               |                                            | $                         | 6,287     |              |  | $ | 7,218     |        
|Accrued expenses and other current liabilities                                                                                 |                                            |                           | 62,332    |              |  |   | 117,320   |        
|Current portion of capital lease obligations                                                                                   |                                            |                           | 989       |              |  |   | 6,163     |        
|Deferred revenue                                                                                                               |                                            |                           | 7,874     |              |  |   | 6,245     |        
|                                                                                                                               |                                            |                           |           |              |  |   |           |        
|                                                                                                                               | Total current liabilities                  |                           |           | 77,482       |  |   |           | 136,946 | 
|Convertible subordinated notes  Zero
    Coupon, due 2023                                                                     |                                            |                           | 135,000   |              |  |   |          |        
|Convertible subordinated notes  4.75%
    Coupon, due 2006                                                                    |                                            |                           |          |              |  |   | 154,800   |        
|Long term portion of capital lease obligations                                                                                 |                                            |                           |          |              |  |   | 852       |        
|Other long term liabilities                                                                                                    |                                            |                           | 26,183    |              |  |   | 73,747    |        
|STOCKHOLDERS EQUITY:                                                                                                          |                                            |                           |           |              |  |   |           |        
|Preferred stock, par value $0.001; 5,000,000
    shares authorized, none outstanding                                           |                                            |                           |          |              |  |   |          |        
|Common stock, par value $0.001; 400,000,000
    shares authorized, 139,226,681 and 137,854,385 shares issued,
    respectively |                                            |                           | 139       |              |  |   | 138       |        
|Treasury stock, 1,680,670 shares                                                                                               |                                            |                           | (8,949    | )            |  |   | (8,949    | )      
|Additional paid-in capital                                                                                                     |                                            |                           | 1,286,920 |              |  |   | 1,281,244 |        
|Accumulated deficit                                                                                                            |                                            |                           | (653,364  | )            |  |   | (666,441  | )      
|Other accumulated comprehensive income                                                                                         |                                            |                           | 8,150     |              |  |   | 4,570     |        
|                                                                                                                               |                                            |                           |           |              |  |   |           |        
|                                                                                                                               | Total stockholders equity                 |                           |           | 632,896      |  |   |           | 610,562 | 
|                                                                                                                               |                                            |                           |           |              |  |   |           |        
|                                                                                                                               | Total liabilities and stockholders equity |                           | $         | 871,561      |  |   | $         | 976,907 | 
|                                                                                                                               |                                            |                           |           |              |  |   |           |        

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

2



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##### 



DOUBLECLICK INC.

CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                        |                                               |                                                     |         |                   |        |      |         |         |         |   |         |         |         |   |         |         |         | 
|----------------------------------------------------------------------- | --------------------------------------------- | --------------------------------------------------- | ------- | ----------------- | ------ | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                                        |                                               |                                                     |         |                  
|                                                                        |                                               | Three Months Ended                                  |         | Nine Months Ended
|                                                                        |                                               | September 30,                                       |         | September 30,    
|                                                                        |                                               |                                                     |         |                  
|                                                                        |                                               | 2003                                                |         | 2002              |        | 2003 |         | 2002   
|                                                                        |                                               |                                                     |         |                   |        |      |         |        
|                                                                        |                                               |                                                    
|                                                                        |                                               | (Unaudited, in thousands, except per share amounts)
|Revenue                                                                 |                                               | $                                                   | 74,790  |                   |        | $    | 74,625  |         |         | $ | 198,400 |         |         | $ | 233,932 |        
|Cost of revenue                                                         |                                               |                                                     | 25,383  |                   |        |      | 26,248  |         |         |   | 69,778  |         |         |   | 86,113  |        
|                                                                        |                                               |                                                     |         |                   |        |      |         |         |         |   |         |         |         |   |         |        
|                                                                        | Gross profit                                  |                                                     |         | 49,407            |        |      |         | 48,377  |         |   |         | 128,622 |         |   |         | 147,819 |        
|Operating expenses:                                                     |                                               |                                                     |         |                   |        |      |         |         |         |   |         |         |         |   |         |        
|                                                                        | Sales and marketing                           |                                                     |         | 27,175            |        |      |         | 23,225  |         |   |         | 67,683  |         |   |         | 78,685  |        
|                                                                        | General and administrative                    |                                                     |         | 8,459             |        |      |         | 12,228  |         |   |         | 25,685  |         |   |         | 36,311  |        
|                                                                        | Product development                           |                                                     |         | 10,685            |        |      |         | 9,364   |         |   |         | 27,258  |         |   |         | 30,684  |        
|                                                                        | Amortization of intangibles                   |                                                     |         | 1,561             |        |      |         | 3,127   |         |   |         | 4,880   |         |   |         | 9,281   |        
|                                                                        | Goodwill impairment                           |                                                     |         |                  |        |      |         | 45,185  |         |   |         |        |         |   |         | 45,185  |        
|                                                                        | Impairment of intangible assets               |                                                     |         |                  |        |      |         | 975     |         |   |         |        |         |   |         | 975     |        
|                                                                        | Restructuring (credits) charges, net          |                                                     |         | (2,221            | )      |      |         | 23,838  |         |   |         | (9,092  | )       |   |         | 32,596  |        
|                                                                        |                                               |                                                     |         |                   |        |      |         |         |         |   |         |         |         |   |         |        
|                                                                        |                                               | Total operating expenses                            |         |                   | 45,659 |      |         |         | 117,942 |   |         |         | 116,414 |   |         |         | 233,717 | 
|Income (loss) from operations                                           |                                               |                                                     | 3,748   |                   |        |      | (69,565 | )       |         |   | 12,208  |         |         |   | (85,898 | )      
|Other income (expense)                                                  |                                               |                                                     |         |                   |        |      |         |         |         |   |         |         |         |   |         |        
|                                                                        | Equity in (losses) income of affiliates       |                                                     |         | (126              | )      |      |         |        |         |   |         | (2,439  | )       |   |         | 219     |        
|                                                                        | Impairment of investment in affiliates        |                                                     |         |                  |        |      |         | (14,147 | )       |   |         |        |         |   |         | (14,147 | )      
|                                                                        | Gain (loss) from early extinguishment of debt |                                                     |         |                  |        |      |         | 11,855  |         |   |         | (4,406  | )       |   |         | 11,855  |        
|                                                                        | Gain on sale of businesses, net               |                                                     |         |                  |        |      |         | 7,437   |         |   |         |        |         |   |         | 17,946  |        
|                                                                        | Interest and other, net                       |                                                     |         | 3,491             |        |      |         | 4,574   |         |   |         | 9,123   |         |   |         | 10,772  |        
|                                                                        |                                               |                                                     |         |                   |        |      |         |         |         |   |         |         |         |   |         |        
|                                                                        |                                               | Total other income (expense)                        |         |                   | 3,365  |      |         |         | 9,719   |   |         |         | 2,278   |   |         |         | 26,645  | 
|Income (loss) before income taxes                                       |                                               |                                                     | 7,113   |                   |        |      | (59,846 | )       |         |   | 14,486  |         |         |   | (59,253 | )      
|Provision for income taxes                                              |                                               |                                                     | (773    | )                 |        |      | (2,620  | )       |         |   | (1,409  | )       |         |   | (6,020  | )      
|                                                                        |                                               |                                                     |         |                   |        |      |         |         |         |   |         |         |         |   |         |        
|Income (loss) before minority interest                                  |                                               |                                                     | 6,340   |                   |        |      | (62,466 | )       |         |   | 13,077  |         |         |   | (65,273 | )      
|Minority interest in results of consolidated
    subsidiaries           |                                               |                                                     |        |                   |        |      | 515     |         |         |   |        |         |         |   | 1,352   |        
|                                                                        |                                               |                                                     |         |                   |        |      |         |         |         |   |         |         |         |   |         |        
|Net income (loss)                                                       |                                               | $                                                   | 6,340   |                   |        | $    | (61,951 | )       |         | $ | 13,077  |         |         | $ | (63,921 | )      
|                                                                        |                                               |                                                     |         |                   |        |      |         |         |         |   |         |         |         |   |         |        
|Basic net income (loss) per share                                       |                                               | $                                                   | 0.05    |                   |        | $    | (0.46   | )       |         | $ | 0.10    |         |         | $ | (0.47   | )      
|                                                                        |                                               |                                                     |         |                   |        |      |         |         |         |   |         |         |         |   |         |        
|Weighted average shares used in basic net income
    (loss) per share   |                                               |                                                     | 137,366 |                   |        |      | 135,945 |         |         |   | 136,908 |         |         |   | 135,702 |        
|                                                                        |                                               |                                                     |         |                   |        |      |         |         |         |   |         |         |         |   |         |        
|Diluted net income (loss) per share                                     |                                               | $                                                   | 0.04    |                   |        | $    | (0.46   | )       |         | $ | 0.09    |         |         | $ | (0.47   | )      
|                                                                        |                                               |                                                     |         |                   |        |      |         |         |         |   |         |         |         |   |         |        
|Weighted average shares used in diluted net
    income (loss) per share |                                               |                                                     | 142,351 |                   |        |      | 135,945 |         |         |   | 140,515 |         |         |   | 135,702 |        
|                                                                        |                                               |                                                     |         |                   |        |      |         |         |         |   |         |         |         |   |         |        

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

3



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##### 



DOUBLECLICK INC.

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                 |                                                                                                        |                                                                                                      |                                        |          |         |         |         |          |         |         |  
|------------------------------------------------ | ------------------------------------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------- | -------------------------------------- | -------- | ------- | ------- | ------- | -------- | ------- | ------- | -
|                                                 |                                                                                                        |                                                                                                     
|                                                 |                                                                                                        | Nine Months Ended                                                                                   
|                                                 |                                                                                                        | September 30,                                                                                       
|                                                 |                                                                                                        |                                                                                                     
|                                                 |                                                                                                        | 2003                                                                                                 |                                        | 2002    
|                                                 |                                                                                                        |                                                                                                      |                                        |         
|                                                 |                                                                                                        |                                                                                                     
|                                                 |                                                                                                        | (Unaudited, in thousands)                                                                           
|OPERATING ACTIVITIES                             |                                                                                                        |                                                                                                      |                                        |          |         |         |         |         
|                                                 | Net income (loss)                                                                                      |                                                                                                      | $                                      | 13,077   |         |         | $       | (63,921  | )      
|                                                 | Adjustments to reconcile net income (loss) to net
    cash (used in) provided by operating activities: |                                                                                                      |                                        |          |         |         |         |          |        
|                                                 |                                                                                                        | Depreciation and leasehold amortization                                                              |                                        |          | 37,465  |         |         |          | 31,473  |        
|                                                 |                                                                                                        | Amortization of intangible assets                                                                    |                                        |          | 7,483   |         |         |          | 10,793  |        
|                                                 |                                                                                                        | Equity in losses (income) of affiliates                                                              |                                        |          | 2,439   |         |         |          | (219    | )      
|                                                 |                                                                                                        | Gain on sale of businesses, net                                                                      |                                        |          |        |         |         |          | (19,318 | )      
|                                                 |                                                                                                        | Impairment of investment in affiliates                                                               |                                        |          |        |         |         |          | 14,147  |        
|                                                 |                                                                                                        | Goodwill impairment                                                                                  |                                        |          |        |         |         |          | 45,185  |        
|                                                 |                                                                                                        | Loss (gain) on early extinguishment of debt                                                          |                                        |          | 4,406   |         |         |          | (11,855 | )      
|                                                 |                                                                                                        | Other non-cash items                                                                                 |                                        |          | 1,307   |         |         |          | 5,511   |        
|                                                 |                                                                                                        | Provisions for bad debts and advertiser discounts                                                    |                                        |          | 6,367   |         |         |          | 14,924  |        
|                                                 |                                                                                                        | Changes in operating assets and liabilities, net
    of the effect of acquisitions and dispositions: |                                        |          |         |         |         |          |         |        
|                                                 |                                                                                                        |                                                                                                      | Accounts receivable                    |          |         | (9,022  | )       |          |         | 3,468   |  
|                                                 |                                                                                                        |                                                                                                      | Prepaid expenses and other assets      |          |         | 2,714   |         |          |         | 3,770   |  
|                                                 |                                                                                                        |                                                                                                      | Accounts payable                       |          |         | (2,096  | )       |          |         | (13,275 | )
|                                                 |                                                                                                        |                                                                                                      | Lease termination and related payments |          |         | (70,874 | )       |          |         |        |  
|                                                 |                                                                                                        |                                                                                                      | Accrued expenses and other liabilities |          |         | (33,748 | )       |          |         | 8,834   |  
|                                                 |                                                                                                        |                                                                                                      | Deferred revenue                       |          |         | 1,449   |         |          |         | 381     |  
|                                                 |                                                                                                        |                                                                                                      |                                        |          |         |         |         |         
|                                                 |                                                                                                        | Net cash (used in) provided by operating
    activities                                              |                                        |          | (39,033 | )       |         |          | 29,898  |        
|INVESTING ACTIVITIES                             |                                                                                                        |                                                                                                      |                                        |          |         |         |         |         
|                                                 | Purchases of investments in marketable securities                                                      |                                                                                                      |                                        | (334,195 | )       |         |         | (283,005 | )      
|                                                 | Maturities of investments in marketable securities                                                     |                                                                                                      |                                        | 424,486  |         |         |         | 336,846  |        
|                                                 | Restricted cash                                                                                        |                                                                                                      |                                        | (2,650   | )       |         |         | (6,000   | )      
|                                                 | Proceeds placed in escrow for acquisition of
    Protagona                                             |                                                                                                      |                                        |         |         |         |         | (12,900  | )      
|                                                 | Purchases of property and equipment                                                                    |                                                                                                      |                                        | (17,234  | )       |         |         | (10,021  | )      
|                                                 | Acquisition of businesses and intangible assets,
    net of cash acquired                              |                                                                                                      |                                        | (2,757   | )       |         |         | (6,280   | )      
|                                                 | Proceeds from sale of businesses                                                                       |                                                                                                      |                                        |         |         |         |         | 16,927   |        
|                                                 | Proceeds from sale of investment in affiliates                                                         |                                                                                                      |                                        | 656      |         |         |         |         |        
|                                                 | Proceeds from sale of intangible asset, net                                                            |                                                                                                      |                                        | 900      |         |         |         |         |        
|                                                 |                                                                                                        |                                                                                                      |                                        |          |         |         |         |         
|                                                 |                                                                                                        | Net cash provided by investing activities                                                            |                                        |          | 69,206  |         |         |          | 35,567  |        
|FINANCING ACTIVITIES                             |                                                                                                        |                                                                                                      |                                        |          |         |         |         |         
|                                                 | Proceeds from the issuance of common stock                                                             |                                                                                                      |                                        | 666      |         |         |         | 1,144    |        
|                                                 | Proceeds from the exercise of stock option                                                             |                                                                                                      |                                        | 3,784    |         |         |         | 3,721    |        
|                                                 | Proceeds from issuance of convertible
    subordinated notes, net                                      |                                                                                                      |                                        | 131,963  |         |         |         |         |        
|                                                 | Repurchase of convertible subordinated notes                                                           |                                                                                                      |                                        | (157,952 | )       |         |         | (53,578  | )      
|                                                 | Purchases of treasury stock                                                                            |                                                                                                      |                                        |         |         |         |         | (4,483   | )      
|                                                 | Payments under capital lease obligations and
    notes payable                                         |                                                                                                      |                                        | (8,308   | )       |         |         | (14,381  | )      
|                                                 | Other                                                                                                  |                                                                                                      |                                        |         |         |         |         | (1,000   | )      
|                                                 |                                                                                                        |                                                                                                      |                                        |          |         |         |         |         
|                                                 |                                                                                                        | Net cash used in financing activities                                                                |                                        |          | (29,847 | )       |         |          | (68,577 | )      
|Effect of exchange rate changes on cash          |                                                                                                        |                                                                                                      | 2,695                                  |          |         |         | 4,234   |         
|                                                 |                                                                                                        |                                                                                                      |                                        |          |         |         |         |         
|Net increase in cash and cash equivalents        |                                                                                                        |                                                                                                      | 3,021                                  |          |         |         | 1,122   |         
|                                                 |                                                                                                        |                                                                                                      |                                        |          |         |         |         |         
|Cash and cash equivalents at beginning of period |                                                                                                        | $                                                                                                    | 123,671                                |          |         | $       | 99,511  |         
|                                                 |                                                                                                        |                                                                                                      |                                        |          |         |         |         |         
|Cash and cash equivalents at end of period       |                                                                                                        | $                                                                                                    | 126,692                                |          |         | $       | 100,633 |         
|                                                 |                                                                                                        |                                                                                                      |                                        |          |         |         |         |         

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

4



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##### 



DOUBLECLICK INC.



NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS


(Unaudited)


Note 1  Description of Business and
Significant Accounting Policies



| |                        
| | -----------------------
| | Description of Business

DoubleClick is a leading provider of products and
services used by direct marketers, Web publishers and
advertisers to plan, execute and analyze their marketing
programs. Combining marketing technology and data expertise,
DoubleClicks products and services help its customers to
optimize their advertising and marketing campaigns online and
through direct mail. DoubleClick offers a broad array of
marketing technology and data products and services to its
customers to allow them to address a full range of the marketing
process, from pre-campaign planning and testing, to execution,
measurement and campaign refinements.

DoubleClick derives its revenues from two
business segments: Technology (or TechSolutions) and
Data. DoubleClick TechSolutions includes its ad management
products, consisting of the DART for Publishers Service, the
DART Enterprise ad serving software product, the DART for
Advertisers Service, a suite of email products based on
DoubleClicks DARTmail Service and campaign management and
analytics products and services. DoubleClick Data includes its
Abacus and Data Management divisions. Abacus utilizes the
information contributed to the proprietary Abacus database by
Abacus Alliance members to make direct marketing more effective
for Abacus Alliance members and other clients. Data Management
was formed as a result of DoubleClicks acquisition of
Computer Strategy Coordinators, Inc. which was completed on
June 30, 2003. Data Management offers direct marketers
solutions for building and managing customer marketing
databases, tools to plan, execute and measure multi-channel
marketing campaigns, as well as list processing and data hygiene
products and services.

During 2002, through a series of transactions,
DoubleClick divested of its media businesses and as a result no
longer reports a DoubleClick Media segment.



| |                      
| | ---------------------
| | Basis of Presentation

The accompanying consolidated financial
statements include the accounts of DoubleClick, its wholly owned
subsidiaries, and subsidiaries over which it exercises a
controlling financial interest. All significant intercompany
transactions and balances have been eliminated. Investments in
entities in which DoubleClick does not have a controlling
financial interest, but over which it has significant influence
are accounted for using the equity method. Investments in which
DoubleClick does not have the ability to exercise significant
influence are accounted for using the cost method.

The accompanying interim consolidated financial
statements have been prepared in accordance with the rules and
regulations of Securities and Exchange Commission. The
accompanying interim consolidated financial statements are
unaudited, but in the opinion of management, contain all the
normal, recurring adjustments considered necessary to present
fairly the financial position, the results of operations and
cash flows for the periods presented in conformity with
generally accepted accounting principles applicable to interim
periods. Results of operations are not necessarily indicative of
the results expected for the full fiscal year or for any future
period.

The Consolidated Balance sheet at
December 31, 2002 has been derived from, but does not
include all the disclosures contained in, the audited
consolidated financial statements for the year ended
December 31, 2002. The accompanying Consolidated Financial
Statements should be read in conjunction with the audited
Consolidated Financial Statements of DoubleClick for the year
ended December 31, 2002.



| |                                                                                        
| | ---------------------------------------------------------------------------------------
| | Cash and Cash Equivalents, Investments in
    Marketable Securities and Restricted Cash

Cash and cash equivalents represent cash and
highly liquid investments with a remaining contractual maturity
at the date of purchase of three months or less.

5



---



##### 



DOUBLECLICK INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


Marketable securities consist of government and
corporate debt securities and are classified as current or
non-current assets depending on their dates of maturity. As of
September 30, 2003, all marketable securities included in
non-current assets have maturities greater than one year.

DoubleClick classifies its investments in
marketable securities as available-for-sale. Accordingly, these
investments are carried at fair value, with unrealized gains and
losses reported as a separate component of stockholders
equity. DoubleClick recognizes gains and losses when these
securities are sold using the specific identification method.
DoubleClick has not recognized any material gains or losses from
the sale of its investments in marketable securities.

Restricted cash primarily represents amounts
placed in escrow relating funds to cover office lease security
deposits and our automated clearinghouse payment function.



| |                       
| | ----------------------
| | Property and Equipment

Property and equipment is recorded at cost and
depreciated using the straight-line method over the shorter of
the estimated life of the asset or the lease term. As required
by SOP 98-1, Accounting for Costs of Computer Software
Developed or Obtained for Internal Use, DoubleClick
capitalizes certain computer software developed or obtained for
internal use. Capitalized software is depreciated using the
straight-line method over the estimated life of the software,
generally three to five years.



| |                                   
| | ----------------------------------
| | Goodwill and Intangible
    Assets

DoubleClick records as goodwill the excess of
purchase price over the fair value of the identifiable net
assets acquired. Statements of Financial Accounting Standards
(SFAS) No. 142, Goodwill and Other
Intangible Assets, prescribes a two-step process for
impairment testing of goodwill, which is performed annually, as
well as when an event triggering impairment may have occurred.
The first step tests for impairment, while the second step, if
necessary, measures the impairment. DoubleClick has elected to
perform its annual analysis during the fourth quarter of each
fiscal year as of October 1st. No indicators of impairment were
identified during the first, second and third quarters of 2003.

Intangible assets include patents, trademarks,
customer lists and purchased technology. Such intangible assets
are amortized on a straight-line basis over their estimated
useful lives, which are generally two to five years.



| |                                    
| | -----------------------------------
| | Impairment of Long-Lived
    Assets

DoubleClick assesses the recoverability of
long-lived assets, including intangible assets, held and used
whenever events or changes in circumstances indicate that future
cash flows, undiscounted and without interest charges, expected
to be generated by an assets disposition or use may not be
sufficient to support its carrying amount. If such undiscounted
cash flows are not sufficient to support the recorded value of
assets, an impairment loss is recognized to reduce the carrying
value of long-lived assets to their estimated fair value.



| |                    
| | -------------------
| | Revenue Recognition

DoubleClicks revenues are presented net of
a provision for advertiser credits, which is estimated and
established in the period in which services are provided. These
credits are generally issued in the event that delivered
advertisements do not meet contractual specifications. Actual
results could differ from these estimates.

Technology.Revenues
include fees earned from the use of DART ad management products
and services and email products and services. Revenues derived
from these products and services are recognized in

6



---



##### 



DOUBLECLICK INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


the period the advertising impressions or emails
are delivered, provided collection of the resulting receivable
is reasonably assured. DART Service activation fees are deferred
and recognized ratably over the expected term of the customer
relationship.

For DoubleClicks licensed ad serving and
campaign management software solutions, revenues are recognized
when product installation is complete, which generally occurs
when customers begin utilizing the product, there is pervasive
evidence of an arrangement, collection is reasonably assured,
the fee is fixed or determinable and vendor-specific objective
evidence exists to allocate the total fees to all elements of
the arrangement. A portion of the initial ad serving software
license fee is attributed to the customers right to
receive, at no additional charge, software upgrades released
during the subsequent twelve months. Revenues attributable to
software upgrades are deferred and recognized ratably over the
period covered by the software license agreement, which is
generally one year.

Revenues from consulting services are recognized
as the services are performed and customer-support revenues are
deferred and recognized ratably over the period covered by the
customer support agreement, which is generally one year.

Data.Abacus
provides services to its clients that result in a deliverable
product in the form of consumer and business prospect lists.
Revenues are recognized when the product is shipped to the
client, provided collection of the resulting receivable is
reasonably assured. Data Management provides list processing,
database development and management services. List processing
and database development revenues are recognized in the period
that the product is completed and delivered, provided that
collection is reasonably assured. Database Management revenues
are recognized over the period covered by the services agreement.



| |                    
| | -------------------
| | Product Development

Product development expenses consist primarily of
compensation and related benefits, consulting fees and other
operating expense associated with product development
departments. The product development departments perform
research and development, enhance and maintain existing
products, and provide quality assurance. Software development
costs are required to be capitalized when a products
technological feasibility has been established by completion of
a working model of the product and ending when a product is
available for general release to customers. To date, completion
of a working model of DoubleClicks products and general
release have substantially coincided. As a result, DoubleClick
has not capitalized any software development costs.



| |                                    
| | -----------------------------------
| | Issuance of Stock by
    Affiliates

Changes in DoubleClicks interest in its
affiliates arising as the result of their issuance of common
stock are recorded as gains and losses in the consolidated
statement of operations, except for any transactions that must
be recorded directly to equity in accordance with the provisions
of SAB No. 51.



| |             
| | ------------
| | Income Taxes

DoubleClick uses the asset and liability method
of accounting for income taxes. Under this method, deferred tax
assets and liabilities are recognized for the future tax
consequences attributable to the differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and to operating loss
and tax credit carryforwards. 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 results of operations in the period that
includes the enactment date. A valuation allowance is

7



---



##### 



DOUBLECLICK INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


provided to reduce the deferred tax assets
reported if, based on the weight of the available evidence, it
is more likely than not some portion or all of the deferred tax
assets will not be realized.



| |                 
| | ----------------
| | Foreign Currency

The functional currencies of DoubleClicks
foreign subsidiaries are their respective local currencies. The
financial statements maintained in local currencies are
translated to United States dollars using period-end rates of
exchange for assets and liabilities and average rates during the
period for revenues, cost of revenues and expenses. Translation
gains and losses are accumulated as a separate component of
stockholders equity. Net gains and losses from foreign
currency transactions are included in the consolidated
statements of operations and were not significant during the
periods presented.



| |                          
| | -------------------------
| | Equity-Based Compensation

DoubleClick accounts for its employee stock
option plans under the intrinsic value method, in accordance
with the provisions of Accounting Principles Board
(APB) Opinion No. 25, Accounting for
Stock Issued to Employees and related interpretations.
Under APB 25, generally no compensation expense is recorded
when the terms of the award are fixed and the exercise price of
the employee stock option equals or exceeds the fair value of
the underlying stock on the date of the grant. DoubleClick has
adopted the disclosure-only requirements of SFAS No. 123,
Accounting for Stock-Based Compensation which allows
entities to continue to apply the provisions of APB No. 25
for transactions with employees and provide pro forma net income
and pro forma earnings per share disclosures for employee stock
grants made as if the fair value based method of accounting in
SFAS No. 123 had been applied to these transactions.

In December 2002, the Financial Accounting
Standards Board (the FASB) issued SFAS No. 148,
Accounting for Stock-Based Compensation 
Transition and Disclosure which amends SFAS No. 123,
Accounting for Stock-Based Compensation. See
New accounting pronouncements.

Had DoubleClick determined compensation expense
of employee stock options based on the estimated fair value of
the stock options at the grant date, consistent with the
guidelines of SFAS No. 123, DoubleClicks net income
would have decreased and net loss would have increased to the
pro forma amounts indicated below:

|                                    |                       |                                          |   |                   |   |      |   |         |   |  |   |         |   |  |   |          |  
|----------------------------------- | --------------------- | ---------------------------------------- | - | ----------------- | - | ---- | - | ------- | - |  | - | ------- | - |  | - | -------- | -
|                                    |                       |                                          |   |                  
|                                    |                       | Three Months Ended                       |   | Nine Months Ended
|                                    |                       | September 30,                            |   | September 30,    
|                                    |                       |                                          |   |                  
|                                    |                       | 2003                                     |   | 2002              |   | 2003 |   | 2002   
|                                    |                       |                                          |   |                   |   |      |   |        
|                                    |                       |                                         
|                                    |                       | (In thousands, except per share amounts)
|Net income (loss)                   |                       |                                          |   |                   |   |      |   |         |   |  |   |         |   |  |   |         
|                                    | As reported           |                                          | $ | 6,340             |   |      | $ | (61,951 | ) |  | $ | 13,077  |   |  | $ | (63,921  | )
|                                    | Pro forma per FAS 123 |                                          |   | (22,527           | ) |      |   | (92,824 | ) |  |   | (73,962 | ) |  |   | (152,693 | )
|Basic net income (loss) per share   |                       |                                          |   |                   |   |      |   |         |   |  |   |         |   |  |   |         
|                                    | As reported           |                                          |   | 0.05              |   |      |   | (0.46   | ) |  |   | 0.10    |   |  |   | (0.47    | )
|                                    | Pro forma per FAS 123 |                                          |   | (0.16             | ) |      |   | (0.68   | ) |  |   | (0.54   | ) |  |   | (1.13    | )
|Diluted net income (loss) per share |                       |                                          |   |                   |   |      |   |         |   |  |   |         |   |  |   |         
|                                    | As reported           |                                          |   | 0.04              |   |      |   | (0.46   | ) |  |   | 0.09    |   |  |   | (0.47    | )
|                                    | Pro forma per FAS 123 |                                          |   | (0.16             | ) |      |   | (0.68   | ) |  |   | (0.53   | ) |  |   | (1.13    | )

8



---



##### 



DOUBLECLICK INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


The per share weighted average fair value of
options granted for the three and nine months ended
September 30, 2003 was $5.08 and $4.06, respectively and
the per share weighted average fair value of options granted for
the three and nine months ended September 30, 2002 was
$3.04 and $4.04, respectively, on the grant date with the
following weighted average assumptions:

|                        |  |                    |            |                   |  |      |            |      |  |  |            |  |  |  |            | 
|----------------------- |  | ------------------ | ---------- | ----------------- |  | ---- | ---------- | ---- |  |  | ---------- |  |  |  | ---------- | 
|                        |  |                    |            |                  
|                        |  | Three Months Ended |            | Nine Months Ended
|                        |  | September 30,      |            | September 30,    
|                        |  |                    |            |                  
|                        |  | 2003               |            | 2002              |  | 2003 |            | 2002
|                        |  |                    |            |                   |  |      |            |     
|Expected dividend yield |  |                    | 0%         |                   |  |      | 0%         |      |  |  | 0%         |  |  |  | 0%         | 
|Risk-free interest rate |  |                    | 3.14%      |                   |  |      | 3.35%      |      |  |  | 2.87%      |  |  |  | 4.08%      | 
|Expected life           |  |                    | 4.5  years |                   |  |      | 4.5  years |      |  |  | 4.5  years |  |  |  | 4.5  years | 
|Volatility              |  |                    | 60%        |                   |  |      | 70%        |      |  |  | 60%        |  |  |  | 70%        | 

The pro forma impact of options on the net income
(loss) for the three and nine months ended
September 30, 2003 and 2002, is not representative of the
effects on net income (loss) for future years, as future
years will include the effects of additional years stock option
grants.



| |                                                  
| | -------------------------------------------------
| | Basic and Diluted Net Income (Loss) Per
    Share

Basic net income (loss) per common share excludes
the effect of potentially dilutive securities and is computed by
dividing the net income (loss) available to common shareholders
by the weighted-average number of common shares outstanding for
the reporting period. Diluted net income (loss) per share
adjusts this calculation to reflect the impact of outstanding
convertible securities and stock options to the extent that
their inclusion would have a dilutive effect on net income
(loss) per share for the reporting period.

|                                                   |  |                                          |         |                   |  |      |         |      |  |   |         |  |  |   |         |  
|-------------------------------------------------- |  | ---------------------------------------- | ------- | ----------------- |  | ---- | ------- | ---- |  | - | ------- |  |  | - | ------- | -
|                                                   |  |                                          |         |                  
|                                                   |  | Three Months Ended                       |         | Nine Months Ended
|                                                   |  | September 30,                            |         | September 30,    
|                                                   |  |                                          |         |                  
|                                                   |  | 2003                                     |         | 2002              |  | 2003 |         | 2002
|                                                   |  |                                          |         |                   |  |      |         |     
|                                                   |  |                                         
|                                                   |  | (In thousands, except per share amounts)
|Net income (loss)                                  |  | $                                        | 6,340   |                   |  | $    | (61,951 | )    |  | $ | 13,077  |  |  | $ | (63,921 | )
|                                                   |  |                                          |         |                   |  |      |         |      |  |   |         |  |  |   |         |  
|Weighted average basic common shares outstanding   |  |                                          | 137,366 |                   |  |      | 135,945 |      |  |   | 136,908 |  |  |   | 135,702 |  
|Effect of dilutive securities: stock options       |  |                                          | 4,985   |                   |  |      |        |      |  |   | 3,607   |  |  |   |        |  
|                                                   |  |                                          |         |                   |  |      |         |      |  |   |         |  |  |   |         |  
|Weighted average diluted common shares outstanding |  |                                          | 142,351 |                   |  |      | 135,945 |      |  |   | 140,515 |  |  |   | 135,702 |  
|                                                   |  |                                          |         |                   |  |      |         |      |  |   |         |  |  |   |         |  
|Net income (loss) per common
    share  basic     |  | $                                        | 0.05    |                   |  | $    | (0.46   | )    |  | $ | 0.10    |  |  | $ | (0.47   | )
|                                                   |  |                                          |         |                   |  |      |         |      |  |   |         |  |  |   |         |  
|Net income (loss) per common
    share  diluted   |  | $                                        | 0.04    |                   |  | $    | (0.46   | )    |  | $ | 0.09    |  |  | $ | (0.47   | )
|                                                   |  |                                          |         |                   |  |      |         |      |  |   |         |  |  |   |         |  

At September 30, 2003 and 2002, outstanding
options of approximately 13.2 million and
17.9 million, respectively, to purchase shares of common
stock were not included in the computation of diluted net income
(loss) per share because to do so would have had an
antidilutive effect for the periods presented. Similarly, the
computation of diluted net income (loss) per share at
September 30, 2003 and 2002 excludes the effect of
10.3 million shares and 3.8 million shares,
respectively, issuable upon conversion of the Zero Coupon
Convertible Subordinated Notes due 2023 and the 4.75%
Convertible Subordinated Notes due 2006, respectively, since
their inclusion would also have had an antidilutive effect.

9



---



##### 



DOUBLECLICK INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)




| |                 
| | ----------------
| | Use of Estimates

The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
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 those estimates.



| |                  
| | -----------------
| | Reclassifications

Certain reclassifications have been made to prior
years financial statements to conform to current year
presentation.



| |                              
| | -----------------------------
| | New Accounting Pronouncements

In July 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities. SFAS No. 146 nullifies EITF
No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity
including Certain Costs Incurred in a Restructuring. The
principal difference between SFAS No. 146 and
EITF 94-3 relates to the recognition of a liability for a
cost associated with an exit or disposal activity. SFAS
No. 146 requires that a liability be recognized for those
costs only when the liability is incurred, that is, when it
meets the definition of a liability in the FASBs
conceptual framework. In contrast, EITF 94-3 required
recognition of a liability for an exit cost when management
committed to an exit plan. SFAS No. 146 also establishes
fair value as the objective for initial measurement of
liabilities related to exit or disposal activities. SFAS
No. 146 is effective for exit or disposal activities that
are initiated after December 31, 2002 and has no effect on
exit or disposal activities begun prior to this date.

In November 2002, the Emerging Issues Task Force
(EITF) reached a consensus on the scope of the
provisions of Issue 00-21, Revenue Arrangements with
Multiple Deliverables, addressing how to account for
arrangements that involve the delivery or performance of
multiple products, services, and/or rights to use assets. Under
EITF 00-21, revenue arrangements with multiple deliverables
are divided into separate units of accounting if the
deliverables in the arrangement meet the following criteria:
(1) the delivered item has value to the customer on a
standalone basis; (2) there is objective and reliable
evidence of the fair value of undelivered items; and
(3) delivery of any undelivered item is probable.
Arrangement consideration should be allocated among the separate
units of accounting based on their relative fair values, with
the amount allocated to the delivered item being limited to the
amount that is not contingent on the delivery of additional
items or meeting other specified performance conditions.
EITF 00-21 is applicable to agreements entered into in
fiscal periods beginning after June 15, 2003. The
application of EITF 00-21 did not have a material effect on
DoubleClicks financial condition or operating results.

In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure. SFAS
No. 148 amends SFAS No. 123, Stock-Based
Compensation, to provide alternative methods of transition
for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition,
SFAS No. 148 amends the disclosure requirements of SFAS
No. 123 to require prominent disclosures in both annual and
interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method
used on reported results. DoubleClick will continue to account
for stock-based compensation in accordance with APB No. 25.
DoubleClick has adopted the disclosure only provision of SFAS
No. 148, which has been incorporated into these financial
statements in the accompanying footnotes.

10



---



##### 



DOUBLECLICK INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)




| |                              
| | -----------------------------
| | Change in Accounting Estimate

Effective June 15, 2003, DoubleClick changed
its estimate of the useful lives of its furniture and fixtures
and leasehold improvements located at its New York headquarters.
The average remaining useful life for these assets was reduced
from approximately two and twelve years for furniture and
fixtures and leasehold improvements, respectively, to six and
one half months for both asset types in order to recognize
depreciation expense over the remaining time that the assets are
expected to remain in service. The change was due to the planned
relocation of DoubleClicks New York headquarters in the
fourth quarter of 2003. On August 19, 2003, DoubleClick
entered into a Lease Termination Agreement to terminate the
lease for its facility located in San Francisco. As a result of
this lease termination, DoubleClick accelerated the amortization
of its leasehold improvements at this facility due to the change
in useful life of these assets. The average remaining useful
life of these assets was reduced from approximately nine years
to one month as DoubleClick vacated this facility on
September 19, 2003. As a result of these changes for the
New York and San Francisco facilities, net income was reduced by
approximately $8.3 million, or $0.06 per basic and
diluted share and $9.2 million, or $0.07 per basic and
diluted share, for the three and nine months ended
September 30, 2003, respectively. The amortization of these
assets is allocated over headcount and therefore impacts cost of
revenue, sales and marketing, general and administrative and
product development expenses.

Note 2  Business
Transactions



| |             
| | ------------
| | Acquisitions



| |     
| | ----
| | 2003



| |                                         
| | ----------------------------------------
| | Computer Strategy Coordinators,
    Inc.

On June 30, 2003, DoubleClick completed its
acquisition of Computer Strategy Coordinators, Inc.
(CSC), a data management company based in
Schaumburg, Illinois. In the transaction, DoubleClick acquired
all of the outstanding shares of CSC in exchange for
approximately $2.8 million in cash, inclusive of
$0.4 million of direct acquisition costs, and the
assumption of certain indebtedness.

The purchase price has been allocated to the
assets acquired and the liabilities assumed according to their
fair value at the date of acquisition as follows (in millions):

|                          |  |   |      |  
|------------------------- |  | - | ---- | -
|Current assets            |  | $ | 2.2  |  
|Property and equipment    |  |   | 0.5  |  
|Other intangible assets   |  |   | 6.8  |  
|                          |  |   |      |  
|Total assets acquired     |  | $ | 9.5  |  
|Total liabilities assumed |  | $ | (6.7 | )
|                          |  |   |      |  
|Net assets acquired       |  | $ | 2.8  |  
|                          |  |   |      |  

On the basis of estimated fair values,
approximately $5.6 million of the purchase price has been
allocated to customer lists and $1.2 million to purchased
technology. These intangibles are being amortized on a
straight-line basis over three years based on each
intangibles estimated useful life.

The results of operations of CSC were included in
DoubleClicks Consolidated Statement of Operations
beginning in the third quarter of 2003.

11



---



##### 



DOUBLECLICK INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)




| |     
| | ----
| | 2002



| |             
| | ------------
| | MessageMedia

On January 18, 2002 DoubleClick completed
its acquisition of MessageMedia, Inc.
(MessageMedia), a provider of permission-based email
marketing and messaging solutions. The acquisition of
MessageMedia allowed DoubleClick to expand its suite of email
product and service offerings as well as broaden its client base.

DoubleClick acquired all the outstanding shares,
options, and warrants of MessageMedia in exchange for
approximately one million shares of DoubleClick common stock
valued at approximately $7.5 million, and stock options and
warrants to acquire DoubleClick common stock valued at
approximately $0.2 million. In connection with the
acquisition, DoubleClick lent $2.0 million to MessageMedia
to satisfy MessageMedias operating requirements. The loan
was extinguished upon the closing of the acquisition and
included as a component of the purchase price. The purchase
price, inclusive of approximately $1.6 million of direct
acquisitions costs, was approximately $11.3 million.



| |                     
| | --------------------
| | Abacus Direct Europe

On June 26, 2002, DoubleClick acquired the
remaining 50% of the Abacus Direct Europe B.V. (Abacus
Direct Europe) joint venture that it did not previously
own from VNU Marketing Information Europe and Asia B.V.
(VNU), an affiliate of Claritas (UK) Limited. The
joint venture was formed in November 1998 and provides
database-marketing services to the direct marketing industry,
primarily in the United Kingdom. DoubleClicks investment
in the joint venture was previously accounted for under the
equity method of accounting. DoubleClick acquired all the
outstanding shares of Abacus Direct Europe held by VNU in
exchange for approximately $3.7 million in cash and direct
acquisition costs.



| |          
| | ---------
| | Protagona

On November 4, 2002, DoubleClick completed
its acquisition of Protagona plc (Protagona), a
campaign management software company based in the United
Kingdom. In the transaction, DoubleClick acquired all the
outstanding shares of Protagona in exchange for approximately
$13.6 million in cash and approximately $0.2 million
in direct acquisition costs.



| |             
| | ------------
| | Divestitures

European
Media Business

On January 28, 2002, DoubleClick completed
the sale of its European Media business to AdLINK Internet Media
AG (AdLINK), a German provider of Internet
advertising solutions, in exchange for $26.3 million and
the assumption by AdLINK of liabilities associated with
DoubleClicks European Media business. Intercompany
liabilities in an amount equal to $4.3 million were settled
through a cash payment by AdLINK to DoubleClick at the closing
of the transaction. Following the closing of the transaction
described above, United Internet AG (United
Internet), AdLINKs largest shareholder, exercised
its right to sell to DoubleClick 15% of the outstanding common
shares of AdLINK in exchange for $30.6 million. Pursuant to
its agreement with United Internet, the exercise of this right
caused DoubleClicks option to acquire an additional 21% of
AdLINK common shares for United Internet to vest. This option is
only exercisable if AdLINK has achieved EBITDA-positive results
for two out of three consecutive fiscal quarters before December
2003. However, if AdLINK should achieve EBITDA-positive results
in the third or fourth quarters of 2003 then the option extends
to the first quarter of 2004. EBITDA, as defined in the option
agreement, is earnings before interest, taxes, depreciation,
amortization, and one-time charges, such as restructuring costs,
mergers and acquisition related costs, and other extraordinary
items, determined in accordance with generally

12



---



##### 



DOUBLECLICK INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


accepted accounting principles in the United
States. Should AdLINK fail to achieve these results, the option
will expire unexercisable in December 2003 or March 2004, as
applicable. AdLINK achieved EBITDA-positive results in the
fourth quarter of 2002 but failed to achieve EBITDA-positive
results for the three months ended March 31, 2003 and
June 30, 2003. AdLINKs results for three months ended
September 30, 2003, were not publicly available as of the
date of this filing.

As a result of the transactions described above,
DoubleClick sold its European Media business and received a 15%
interest in AdLINK, which represented approximately
3.9 million shares valued at approximately
$8.3 million. DoubleClicks option to acquire an
additional 21% of the outstanding common shares of AdLINK for
United Internet also vested. DoubleClick was partially
reimbursed $2.0 million for its cash outlays related to the
acquisitions of, and payments with respect to, the minority
interests in certain of its European subsidiaries pursuant to
its agreement to sell its European Media business.
DoubleClicks investment in AdLINK is included in
Investments in affiliates in the Consolidated
Balance Sheets.

Revenue recognized from sales to AdLINK was
approximately $0.7 million and $2.0 million during the
three and nine months ended September 30, 2003,
respectively, and approximately $0.5 million and
$1.4 million during the three and nine months ended
September 30, 2002, respectively.

North
America Media Business

On July 10, 2002, DoubleClick sold its North
American Media business to L90, Inc. Upon completion of the
transaction L90, Inc. was renamed MaxWorldwide, Inc.
(MaxWorldwide). In exchange for the North American
Media business, DoubleClick received 4.8 million shares in
MaxWorldwide and $5.0 million in cash. The 4.8 million
shares represented 16.1% of outstanding MaxWorldwide common
stock and were valued at approximately $3.1 million.
DoubleClick may also receive an additional $6.0 million if,
during the three-year period subsequent to consummation of the
transaction, MaxWorldwide has achieved EBITDA-positive results,
for two out of three consecutive quarters. EBITDA, as defined in
the merger agreement, is earnings before interest, taxes,
depreciation and amortization, excluding certain non-recurring
items. During the three months ended September 30, 2002,
December 31, 2002, March 31, 2003, and June 30,
2003, MaxWorldwide did not achieve EBITDA-positive results.
MaxWorldwides results for the three months ended
September 30, 2003 were not publicly available as of the
date of this filing.

On August 13, 2002, MaxWorldwide repurchased
5,596,972 shares of its common stock. As a result of this
repurchase, DoubleClicks ownership percentage increased to
19.8%.

DoubleClick accounts for this investment under
the equity method of accounting and reports its share of
MaxWorldwides results on a 90-day lag. The investment is
included in Investment in affiliates in the
Consolidated Balance Sheets.

On July 31, 2003, MaxWorldwide completed the
sale of its MaxOnline division to Focus Interactive, Inc. for
approximately $3.0 million in cash paid at closing,
$2.0 million in cash to be paid upon the first anniversary
of the closing, or nine months thereafter plus additional
amounts contingent upon the satisfaction of specified
conditions. DoubleClick is evaluating the effect of this
transaction on its right to receive the $6.0 million in
contingent cash consideration from the sale of
DoubleClicks North American Media business to MaxWorldwide
in July 2002 discussed above. On July 22, 2003,
MaxWorldwide stockholders approved a proposal to adopt a plan of
liquidation and dissolution, pursuant to which it would dissolve
and liquidate MaxWorldwide and its subsidiaries upon
consummation of the sale of its MaxOnline division. In its
quarterly report on Form 10-Q for the quarter ended
June 30, 2003, MaxWorldwide stated that it intended to
significantly curtail administrative expenses, discharge its
outstanding liabilities and initiate an orderly distribution of
its remaining assets to its stockholders. Based on
MaxWorldwides pro forma balance sheet

13



---



##### 



DOUBLECLICK INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


disclosed in this quarterly report, DoubleClick
currently estimates that it may receive liquidation proceeds of
up to approximately $5.0 million.

DoubleClick recognized revenue of approximately
$0.3 million and $1.7 million during the three and
nine months ended September 30, 2003, respectively, and
$1.2 million for the three months and nine months ended
September 30, 2002, relating to services provided to
MaxWorldwide.



| |      
| | -----
| | @plan

On May 6, 2002, DoubleClick sold its @plan
research product line to NetRatings, Inc.
(NetRatings), a provider of technology-driven
Internet audience information solutions for media and commerce,
in exchange for $12.0 million in cash and 505,739 shares of
NetRatings common stock valued at approximately
$6.1 million. DoubleClick sold the NetRatings shares in the
fourth quarter of 2002 and the first quarter of 2003.



| |                  
| | -----------------
| | DoubleClick Japan

On December 26, 2002, DoubleClick sold
45,049 shares of common stock in DoubleClick Japan and received
proceeds of $14.3 million, reducing its ownership interest
from 38.2% to 15.6%. As a result of this transaction,
DoubleClick accounts for its remaining 31,271 shares in
DoubleClick Japan under the equity method of accounting.
DoubleClick also retains one seat on DoubleClick Japans
board of directors. DoubleClicks investment in DoubleClick
Japan is included in Investment in affiliates in the
Consolidated Balance Sheets.

Revenue recognized through services provided to
DoubleClick Japan was approximately $0.8 million and
$2.4 million during the three and nine months ended
September 30, 2003, respectively.

The following unaudited pro forma results of
operations have been prepared assuming that the acquisitions of
CSC, Protagona, Abacus Direct Europe and MessageMedia,
consummated during 2003 and 2002, and the dispositions of the
European and North American Media businesses, the @plan research
product line and a portion of its interest in DoubleClick Japan
completed during 2002, occurred at the beginning of the
respective periods presented. This pro forma financial
information should not be considered indicative of the actual
results that would have been achieved had the acquisitions and
dispositions been completed on the dates indicated and does not
purport to indicate results of operations as of any future date
or any future period.

|                                              |  |                       |         |      |  |   |         |  
|--------------------------------------------- |  | --------------------- | ------- | ---- |  | - | ------- | -
|                                              |  |                      
|                                              |  | Nine Months Ended    
|                                              |  | September 30,        
|                                              |  |                      
|                                              |  | 2003                  |         | 2002
|                                              |  |                       |         |     
|                                              |  |                      
|                                              |  | (In thousands, except
|                                              |  | per share data)      
|Revenues                                      |  | $                     | 203,650 |      |  | $ | 200,670 |  
|Net income (loss)                             |  | $                     | 12,713  |      |  | $ | (73,887 | )
|Net income (loss) per basic and diluted share |  | $                     | 0.09    |      |  | $ | (0.54   | )

14



---



##### 



DOUBLECLICK INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


Note 3  Investment in
Affiliates

DoubleClicks investments in affiliates at
September 30, 2003 and December 31, 2002 consist of
the following:

|                         |  |                |        |              |  |   |        | 
|------------------------ |  | -------------- | ------ | ------------ |  | - | ------ | 
|                         |  | September 30,  |        | December 31,
|                         |  | 2003           |        | 2002        
|                         |  |                |        |             
|                         |  |               
|                         |  | (In thousands)
|AdLINK Internet Media AG |  | $              | 6,700  |              |  | $ | 2,818  | 
|NetRatings, Inc.         |  |                |       |              |  |   | 746    | 
|MaxWorldwide, Inc.       |  |                |       |              |  |   | 1,994  | 
|DoubleClick Japan        |  |                | 5,956  |              |  |   | 6,401  | 
|Other                    |  |                | 166    |              |  |   | 166    | 
|                         |  |                |        |              |  |   |        | 
|                         |  | $              | 12,822 |              |  | $ | 12,125 | 
|                         |  |                |        |              |  |   |        | 

During the first quarter of 2003, DoubleClick
sold its remaining investment in NetRatings and received
proceeds of approximately $0.6 million. The gain recognized on
the sale of this investment was not material.

DoubleClicks investment in AdLINK
represents an investment in a publicly traded company, which is
accounted for as available-for-sale marketable securities.
Accordingly this investment is carried at fair value with
changes in fair value being reported as a component of other
comprehensive income. At September 30, 2003 and
December 31, 2002, DoubleClicks cost basis in this
investment was approximately $1.9 million.

As of September 30, 2003, DoubleClicks
investment in MaxWorldwide and DoubleClick Japan represent
investments in publicly traded companies, which are accounted
under the equity method of accounting. At September 30,
2003 and December 31, 2002 the fair value of these
investments were as follows:

|                   |  |                |        |              |  |   |       | 
|------------------ |  | -------------- | ------ | ------------ |  | - | ----- | 
|                   |  | September 30,  |        | December 31,
|                   |  | 2003           |        | 2002        
|                   |  |                |        |             
|                   |  |               
|                   |  | (In thousands)
|MaxWorldwide, Inc. |  | $              | 3,504  |              |  | $ | 2,880 | 
|DoubleClick Japan  |  | $              | 12,179 |              |  | $ | 6,332 | 

In 2002, as a result of the significant decline
in the market value of Internet-based companies and the
declining access of these companies to public and private
financing, management performed an assessment of the carrying
values of its investments in affiliates. In the third quarter of
2002, DoubleClick determined that the carrying value of certain
of its investments, principally its cost-method investments in
AdLINK and NetRatings and its equity-method investment in
MaxWorldwide were impaired based on the continued decline in the
fair market value of these investments. As a result, DoubleClick
recorded an impairment charge of $11.7 million, which
represented the difference between DoubleClicks carrying
value and the estimated fair value of these investments. The
estimated fair values of DoubleClicks investments in
AdLINK, NetRatings and MaxWorldwide were based on the closing
market price of their stock on September 30, 2002.
Additionally, DoubleClicks cost method investment in the
joint venture, DoubleClick Asia, will be liquidated and has no
continuing value. As a consequence, DoubleClick wrote-off its
entire investment in DoubleClick Asia and recognized an
impairment of $2.4 million.

15



---



##### 



DOUBLECLICK INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


Note 4  Goodwill

The changes in the carrying amount of goodwill
for the nine months ended September 30, 2003 are as follows
(in thousands):

|                                                             |  |   |        |  
|------------------------------------------------------------ |  | - | ------ | -
|Balance at December 31, 2002                                 |  | $ | 20,572 |  
|Tax adjustment relating to the acquisition of
    FloNetwork |  |   | (628   | )
|Other                                                        |  |   | (900   | )
|                                                             |  |   |        |  
|Balance at September 30, 2003                                |  | $ | 19,044 |  
|                                                             |  |   |        |  

Goodwill at September 30, 2003 and
December 31, 2002 relates wholly to DoubleClicks
TechSolutions division.

Note 5  Intangible
Assets

Intangible assets consist of the following:

|                   |                                |                |           |                    |  |              |        |        |  |     |         |         |   |   |        |       |  |   |        |       | 
|------------------ | ------------------------------ | -------------- | --------- | ------------------ |  | ------------ | ------ | ------ |  | --- | ------- | ------- | - | - | ------ | ----- |  | - | ------ | ----- | 
|                   |                                |                |           |                    |  |             
|                   |                                |                |           | September 30, 2003 |  |             
|                   |                                | Weighted       |           |                    |  | December 31,
|                   |                                | Average        |           | Gross              |  |              |        | 2002  
|                   |                                | Amortization   |           | Carrying           |  | Accumulated  |        |        |  |    
|                   |                                | Period         |           | Amount             |  | Amortization |        | Net    |  | Net
|                   |                                |                |           |                    |  |              |        |        |  |    
|                   |                                |               
|                   |                                | (In thousands)
|Intangible assets: |                                |                |           |                    |  |              |        |        |  |     |         |         |   |   |        |       |  |   |        |      
|                   | Patents and trademarks         |                |           | 33 months          |  |              | $      | 2,084  |  |     | $       | (2,084  | ) |   | $      |      |  |   | $      | 322   | 
|                   | Customer lists                 |                |           | 21 months          |  |              |        | 27,345 |  |     |         | (20,188 | ) |   |        | 7,157 |  |   |        | 5,983 | 
|                   | Purchased technology and other |                |           | 31 months          |  |              |        | 11,870 |  |     |         | (6,244  | ) |   |        | 5,626 |  |   |        | 7,073 | 
|                   |                                |                |           |                    |  |              |        |        |  |     |         |         |   |   |        |       |  |   |        |      
|                   |                                |                | 25 months |                    |  | $            | 41,299 |        |  | $   | (28,516 | )       |   | $ | 12,783 |       |  | $ | 13,378 |      
|                   |                                |                |           |                    |  |              |        |        |  |     |         |         |   |   |        |       |  |   |        |      

Amortization expense was $2.5 million and
$7.5 million for the three and nine months ended
September 30, 2003, respectively, and $3.8 million and
$10.8 million for the three and nine months ended
September 30, 2002, respectively. For the three and nine
months ended September 30, 2003, $0.9 million and
$2.6 million, respectively, of amortization expense
relating to purchased technology has been included as a
component of cost of revenue in the Consolidated Statements of
Operations. For the three and nine months ended
September 30, 2002, $0.6 million and
$1.5 million, respectively, of amortization expense
relating to purchased technology has been included as a
component of cost of revenue in the Consolidated Statements of
Operations.

Based on the balance of intangible assets at
September 30, 2003, the annual amortization expense for
each of the succeeding four fiscal years is estimated to be
$4.7 million, $3.8 million, $2.0 million and
$0.4 million in 2004, 2005, 2006 and 2007, respectively.
Amortization expense for the remaining balance of fiscal 2003 is
estimated to be $1.9 million.



|         |                                                       
|-------- | ------------------------------------------------------
|Note 6  | Impairment of Goodwill and Other Intangible
    Assets

In the third quarter of 2002, based on the
prolonged softness in the economy and the then current and
projected operational performance of DoubleClicks email
reporting unit, DoubleClick initiated a third-party valuation of
its email reporting unit to determine whether the recorded
balance of goodwill related to this reporting unit was
recoverable. The outcome of this valuation resulted in an
impairment charge of approximately $45.2 million being
recorded during the quarter. The fair market value of the email
reporting unit was determined based on revenue projections, then
recent transactions involving similar businesses and

16



---



##### 



DOUBLECLICK INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


the price/ revenue multiples at which they were
bought and sold and the price/ revenue multiples of our
competitors in the email marketplace. As a result of the third
party valuation of its email reporting unit, it was also
determined that the fair value of certain intangible assets were
considered impaired. DoubleClick recorded an impairment charge
of $1.0 million in the third quarter of 2002 based on the
difference between the carrying value and estimated fair value
of the intangible assets.



|         |              
|-------- | -------------
|Note 7  | Restructuring

Throughout 2002, management took additional steps
to realign its sales, development and administrative
organization and reduce corporate overhead to position
DoubleClick for profitable growth in the future consistent with
managements long-term objectives. This involved the
involuntary termination of approximately 250 employees,
primarily from DoubleClicks TechSolutions division, as
well as charges for excess real estate space and closure of
several offices. During fiscal 2002, DoubleClick recorded
restructuring charges of approximately $98.4 million of
which $1.4 million, $7.3 million and
$23.8 million were recorded during the first, second and
third quarters, respectively.

DoubleClick did not record any restructuring
charges during the first quarter of 2003.

In the second quarter of 2003, DoubleClick
recorded a net restructuring credit of $6.9 million, which
related to real estate items. This credit resulted from a
$14.3 million reversal of a portion of the reserve relating
to its New York headquarters, partially offset by
$7.4 million in additional charges primarily relating to
DoubleClicks facilities in San Francisco and London. The
reversal of the reserve was the result of final lease
terminations with respect to DoubleClicks New York
headquarters for which the reserve was in excess of our expected
payments.

During the third quarter of 2003, DoubleClick
recorded a net restructuring credit of $2.2 million. This
resulted from a net credit from our New York headquarters of
approximately $1.5 million and the termination of the
remainder of our lease in San Francisco, which resulted in a
credit of approximately $0.7 million. The net credit
associated with our New York headquarters consisted of certain
exit costs of $2.5 million offset by the reversal of a
deferred rent liability of approximately $1.5 million, all
of which were required to be recorded during in the third
quarter in accordance with SFAS No. 146. In addition,
approximately $2.5 million of reserves were reversed as the
result of favorable settlements of other real estate related
items relating to our New York headquarters which occurred
during the current quarter. The net credit associated with
DoubleClicks San Francisco facility resulted from the
estimated restructuring reserve for this facility being in
excess of the actual payments made in connection with the lease
termination.

Total costs to terminate the lease associated
with our New York headquarters and San Francisco facility were
approximately $44.5 million and $26.4 million,
respectively, inclusive of broker commissions and related costs.
The remaining restructuring accrual consists of approximately
$9.0 million of payments to be made pursuant to the
termination agreement in connection with our New York
headquarters and $24.7 million relating to other
facilities. The accrual associated with these other facilities
represents the excess of future lease commitments over estimated
sublease income, if any. These accruals were based on an
analysis performed with the assistance of a real estate firm and
are based on the current real estate market conditions in the
local markets where these facilities are located. Should market
conditions or other circumstances change, this information may
be updated and additional charges or credits may be required.

17



---



##### 



DOUBLECLICK INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


The following table sets forth a summary of the
costs and related charges for DoubleClicks restructuring
charges and the balance of the restructuring reserves
established (in thousands):

|                                      |  |           |      |              |  |       |         |   |  |   |         |  
|------------------------------------- |  | --------- | ---- | ------------ |  | ----- | ------- | - |  | - | ------- | -
|                                      |  |           |      | Future Lease |  |      
|                                      |  | Severance |      | Costs        |  | Total
|                                      |  |           |      |              |  |      
|Balance at December 31, 2002          |  | $         | 356  |              |  | $     | 106,758 |   |  | $ | 107,114 |  
|Cash expenditures                     |  |           | (356 | )            |  |       | (77,600 | ) |  |   | (77,956 | )
|Reclass of other real estate reserves |  |           |     |              |  |       | 13,586  |   |  |   | 13,586  |  
|Restructuring charges                 |  |           |     |              |  |       | 7,444   |   |  |   | 7,444   |  
|Restructuring credits                 |  |           |     |              |  |       | (16,536 | ) |  |   | (16,536 | )
|                                      |  |           |      |              |  |       |         |   |  |   |         |  
|Balance at September 30, 2003.        |  | $         |     |              |  | $     | 33,652  |   |  | $ | 33,652  |  
|                                      |  |           |      |              |  |       |         |   |  |   |         |  

As of September 30, 2003, approximately
$12.2 million and $21.5 million remains accrued in
Accrued expenses and other current liabilities and
Other long-term liabilities, respectively. These
amounts are inclusive of $13.6 million of other real estate
reserves, which were reclassed into this accrual during the
third quarter of 2003. These reserves were primarily recorded in
connection with certain business combinations that were
consummated in prior periods.



|         |                              
|-------- | -----------------------------
|Note 8  | Convertible Subordinated Debt



| |                                                
| | -----------------------------------------------
| | Convertible Subordinated Debt 
    Zero Coupon

On June 23, 2003 DoubleClick issued
$135.0 million aggregate principal amount of Zero Coupon
Convertible Subordinated Notes due 2023 (the Zero Coupon
Notes) in a private offering. The Zero Coupon Notes do not
bear interest and have a zero yield to maturity. The Zero Coupon
Notes are convertible under certain circumstances into
DoubleClick common stock at a conversion price of approximately
$13.12 per share, which would result in an aggregate of
approximately 10.3 million shares, subject to adjustment
upon the occurrence of specified events. Each $1,000 principal
amount of the Zero Coupon Notes will initially be convertible
into 76.2311 shares of DoubleClick common stock prior to
July 15, 2023 if the sale price of our common stock
issuable upon conversion of the Zero Coupon Notes reaches a
specified threshold for a defined period of time, if specified
corporate transactions have occurred or if DoubleClick calls the
Zero Coupon Notes for redemption. The specified thresholds for
conversion prior to the maturity date are (a) during any
calendar quarter after the quarter ending June 30, 2003,
the last reported sale price of DoubleClicks common stock
for at least 20 trading days in the 30 consecutive trading days
ending on the last trading day of the previous calendar quarter
is greater than or equal to 120% of the applicable conversion
price on that 30th trading day and (b) subject to certain
exceptions, during the five business day period following any
five consecutive trading day period, the trading price per
$1,000 principal amount of Zero Coupon Notes for each of the
five consecutive trading days is less than 98% of the product of
the last reported sale price of DoubleClicks common stock
and the conversion rate (initially 76.2311) on each such day.

The Zero Coupon Notes are DoubleClicks
general unsecured obligations and are subordinated in right of
payment to all of its existing and future senior debt.
DoubleClick may not redeem the Zero Coupon Notes prior to
July 15, 2008. DoubleClick may be required to repurchase
any or all of the Zero Coupon Notes upon a change of control or
a termination of trading. DoubleClick may redeem for cash some
or all of the Zero Coupon Notes at any time on or after
July 15, 2008. Holders of the Zero Coupon Notes also have
the right to require DoubleClick to purchase some or all of
their notes for cash on July 15, 2008, July 15, 2013
and July 15, 2018, at a price equal to 100% of the
principal amount of the Zero Coupon Notes being redeemed plus
accrued and unpaid liquidated damages, if any.

DoubleClick received net proceeds of
approximately $131.5 million and incurred issuance costs of
approximately $3.5 million. The issuance costs will be
amortized from the date of issuance through July 15, 2008
and are included as a component of Other assets on
the Consolidated Balance Sheet.

18



---



##### 



DOUBLECLICK INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


The Zero Coupon Notes contain an embedded
derivative, the value of which as of September 30, 2003 has
been determined by a third party valuation to be immaterial to
our consolidated financial position. For financial accounting
purposes, the ability of the holder to convert upon the
satisfaction of a trading price condition constitutes an
embedded derivative. Any changes in its value will be reflected
in our future income statements, in accordance with Statement of
Financial Accounting Standards No. 133, Accounting
for Derivative Instruments and Hedging Activities.



| |                                                 
| | ------------------------------------------------
| | Convertible Subordinated Debt 
    4.75% Coupon

On March 17, 1999, DoubleClick issued 4.75%
Convertible Subordinated Notes due 2006 with a principal amount
of $250 million. The 4.75% Convertible Notes were
convertible into DoubleClick common stock at a conversion price
of $41.25 per share, subject to adjustment at the
occurrence of certain events and at the holders option.
Interest on the Convertible Notes is payable semiannually on
March 15 and September 15 of each year.

In 2001, DoubleClick repurchased approximately
$30.3 million of its outstanding 4.75% Convertible
Subordinated Notes for approximately $21.9 million in cash.
DoubleClick wrote off approximately $0.2 million in
deferred issuance costs and recognized a gain of approximately
$8.2 million.

In the third quarter of 2002, DoubleClick
repurchased $64.9 million of its outstanding 4.75%
Convertible Subordinated Notes for approximately
$53.6 million in cash, inclusive of $1.2 million of
accrued interest. DoubleClick wrote off approximately
$0.7 million in deferred issuance costs and recognized a
gain of approximately $11.9 million.

On June 24, 2003, DoubleClick called for
redemption of its remaining $154.8 million outstanding
aggregate principal amount of 4.75% Convertible Subordinated
Notes due 2006. On July 24, 2003, DoubleClick redeemed
these notes at a redemption price equal to 102.036% of the
aggregate principal (approximately $158.0 million) plus
accrued and unpaid interest. The proceeds from the sale of the
Zero Coupon Convertible Subordinated Notes due 2023, together
with existing cash, were used towards this redemption. As a
result of the redemption, DoubleClick recorded a loss of
approximately $4.4 million associated with the redemption
premium and write-off of deferred issuance costs during the
second quarter of 2003.

Note 9 
Contingencies

In April 2002, a consolidated amended class
action complaint alleging violation of the federal securities
laws in connection with DoubleClicks follow-on offerings
was filed in the United States District Court for the Southern
District of New York naming as defendants DoubleClick, some of
its officers and directors and certain underwriters of
DoubleClicks follow-on offerings. In October 2002, the
action was dismissed against the named officers and directors
without prejudice. However, claims against DoubleClick remain.
In July 2002, DoubleClick and the other issuers in the
consolidated cases filed motions to dismiss the amended
complaint for failure to state a claim, which was denied as to
DoubleClick in February 2003.

In June 2003, DoubleClicks Board of
Directors conditionally approved a proposed partial settlement
with the plaintiffs in this matter. The settlement would
provide, among other things, a release of DoubleClick and of the
individual defendants for the conduct alleged in the action to
be wrongful in the amended complaint. DoubleClick would agree to
undertake other responsibilities under the partial settlement,
including agreeing to assign away, not assert, or release
certain potential claims it may have against its underwriters.
The Board agreed to approve the settlement subject to a number
of conditions, including the participation of a substantial
number of other issuer defendants in the proposed settlement,
the consent of our insurers to the settlement, and the
completion of acceptable final settlement documentation.
Furthermore, the settlement is subject to a hearing on fairness
and approval by the Court overseeing the IPO litigations. If
this settlement is not finalized, DoubleClick intends to dispute
these allegations and defend this lawsuit vigorously.

19



---



##### 



DOUBLECLICK INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


DoubleClick is currently defending an arbitration
claim in Sweden brought by a former shareholder of DoubleClick
Scandinavia AB. The shareholder claims that DoubleClick
breached its obligation to issue and register shares of
DoubleClicks common stock, which the shareholder claims
caused it to incur damages. The arbitration hearing is currently
scheduled for the end of November 2003. If the shareholder is
successful, other former shareholders of DoubleClick Scandinavia
AB may make similar claims for damages. DoubleClick disputes
these allegations and intends to defend this arbitration
vigorously.

In October 2003, DoubleClick received a grand
jury subpoena from the United States Attorneys Office for
the Southern District of New York (U.S. Attorneys
Office) seeking documents regarding certain vendors that
provided services to DoubleClick during the period from 1999
through 2001. The services provided by these vendors are
unrelated to the products and services provided by DoubleClick
to its customers. DoubleClick is fully cooperating with the U.S.
Attorneys Office. In addition, DoubleClick is conducting
an internal investigation and implementing remedial measures to
improve its selection, use and oversight of its vendors. Based
on the internal investigation completed to date, DoubleClick
does not believe that any overpayments made by it or other
inappropriate payments, if any, relating to these vendors are
material with respect to its financial statements for the
periods in question or its current financial condition.

Note 10  Segment
Reporting

DoubleClick is organized into two segments:
Technology (or TechSolutions) and Data. During 2002,
through a series of transactions, DoubleClick divested of its
media businesses and no longer reports a DoubleClick Media
segment. Revenues and gross profit by segment are as follows (in
thousands):

|                                |  |                    |        |                    |  |       |        |            |  |      |        |       |  |       |        |   |  |   |        |   |  |   |       |  |  |   |        |  
|------------------------------- |  | ------------------ | ------ | ------------------ |  | ----- | ------ | ---------- |  | ---- | ------ | ----- |  | ----- | ------ | - |  | - | ------ | - |  | - | ----- |  |  | - | ------ | -
|                                |  |                    |        |                   
|                                |  | Three Months Ended |        | Three Months Ended
|                                |  | September 30, 2003 |        | September 30, 2002
|                                |  |                    |        |                   
|                                |  | Technology         |        | Data               |  | Total |        | Technology |  | Data |        | Media |  | Total
|                                |  |                    |        |                    |  |       |        |            |  |      |        |       |  |      
|Revenue                         |  | $                  | 43,514 |                    |  | $     | 31,276 |            |  | $    | 74,790 |       |  | $     | 45,098 |   |  | $ | 26,811 |   |  | $ | 3,130 |  |  | $ | 75,039 |  
|Intersegment elimination        |  |                    |       |                    |  |       |       |            |  |      |       |       |  |       | (277   | ) |  |   | (137   | ) |  |   |      |  |  |   | (414   | )
|                                |  |                    |        |                    |  |       |        |            |  |      |        |       |  |       |        |   |  |   |        |   |  |   |       |  |  |   |        |  
|Revenue from external customers |  | $                  | 43,514 |                    |  | $     | 31,276 |            |  | $    | 74,790 |       |  | $     | 44,821 |   |  | $ | 26,674 |   |  | $ | 3,130 |  |  | $ | 74,625 |  
|                                |  |                    |        |                    |  |       |        |            |  |      |        |       |  |       |        |   |  |   |        |   |  |   |       |  |  |   |        |  
|Segment gross profit            |  | $                  | 26,980 |                    |  | $     | 22,427 |            |  | $    | 49,407 |       |  | $     | 28,102 |   |  | $ | 19,644 |   |  | $ | 768   |  |  | $ | 48,514 |  
|                                |  |                    |        |                    |  |       |        |            |  |      |        |       |  |       |        |   |  |   |        |   |  |   |       |  |  |   |        |  
|Data commission fee             |  |                    |        |                    |  |       |        |            |  |      |       |       |  |       |        |   |  |   |        |   |  |   |       |  |  |   | (137   | )
|                                |  |                    |        |                    |  |       |        |            |  |      |        |       |  |       |        |   |  |   |        |   |  |   |       |  |  |   |        |  
|Consolidated gross profit       |  |                    |        |                    |  |       |        |            |  | $    | 49,407 |       |  |       |        |   |  |   |        |   |  |   |       |  |  | $ | 48,377 |  
|                                |  |                    |        |                    |  |       |        |            |  |      |        |       |  |       |        |   |  |   |        |   |  |   |       |  |  |   |        |  

|                                |  |                    |         |                    |  |       |        |            |  |      |         |       |  |       |         |   |  |   |        |   |  |   |        |  |  |   |         |  
|------------------------------- |  | ------------------ | ------- | ------------------ |  | ----- | ------ | ---------- |  | ---- | ------- | ----- |  | ----- | ------- | - |  | - | ------ | - |  | - | ------ |  |  | - | ------- | -
|                                |  |                    |         |                   
|                                |  | Nine Months Ended  |         | Nine Months Ended 
|                                |  | September 30, 2003 |         | September 30, 2002
|                                |  |                    |         |                   
|                                |  | Technology         |         | Data               |  | Total |        | Technology |  | Data |         | Media |  | Total
|                                |  |                    |         |                    |  |       |        |            |  |      |         |       |  |      
|Revenue                         |  | $                  | 128,511 |                    |  | $     | 69,889 |            |  | $    | 198,400 |       |  | $     | 143,534 |   |  | $ | 62,921 |   |  | $ | 30,250 |  |  | $ | 236,705 |  
|Intersegment elimination        |  |                    |        |                    |  |       |       |            |  |      |        |       |  |       | (2,472  | ) |  |   | (301   | ) |  |   |       |  |  |   | (2,773  | )
|                                |  |                    |         |                    |  |       |        |            |  |      |         |       |  |       |         |   |  |   |        |   |  |   |        |  |  |   |         |  
|Revenue from external customers |  | $                  | 128,511 |                    |  | $     | 69,889 |            |  | $    | 198,400 |       |  | $     | 141,062 |   |  | $ | 62,620 |   |  | $ | 30,250 |  |  | $ | 233,932 |  
|                                |  |                    |         |                    |  |       |        |            |  |      |         |       |  |       |         |   |  |   |        |   |  |   |        |  |  |   |         |  
|Segment gross profit            |  | $                  | 79,329  |                    |  | $     | 49,293 |            |  | $    | 128,622 |       |  | $     | 93,717  |   |  | $ | 45,057 |   |  | $ | 9,338  |  |  | $ | 148,112 |  
|                                |  |                    |         |                    |  |       |        |            |  |      |         |       |  |       |         |   |  |   |        |   |  |   |        |  |  |   |         |  
|Data commission fee             |  |                    |         |                    |  |       |        |            |  |      |        |       |  |       |         |   |  |   |        |   |  |   |        |  |  |   | (293    | )
|                                |  |                    |         |                    |  |       |        |            |  |      |         |       |  |       |         |   |  |   |        |   |  |   |        |  |  |   |         |  
|Consolidated gross profit       |  |                    |         |                    |  |       |        |            |  | $    | 128,622 |       |  |       |         |   |  |   |        |   |  |   |        |  |  | $ | 147,819 |  
|                                |  |                    |         |                    |  |       |        |            |  |      |         |       |  |       |         |   |  |   |        |   |  |   |        |  |  |   |         |  



|          |                            
|--------- | ---------------------------
|Note 11  | Comprehensive Income (Loss)

Comprehensive income (loss) consists of net
income (loss), unrealized gains and losses on marketable
securities and foreign currency translation adjustments.
Comprehensive income was $7.5 million and
$16.7 million for the three and nine months ended
September 30, 2003, respectively. Comprehensive loss was
$62.8 million and $54.4 million for the three and nine
months ended September 30, 2002, respectively.

20



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis
    of Financial Condition and Results of Operations

DOUBLECLICK INC.

MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION

AND RESULTS OF OPERATIONS


Forward Looking Statements

THIS QUARTERLY REPORT ON FORM 10-Q AND, IN
PARTICULAR, THIS MANAGEMENT DISCUSSION AND ANALYSIS CONTAIN OR
INCORPORATE A NUMBER OF 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
FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT EXPECTATIONS,
ESTIMATES, FORECASTS AND PROJECTIONS ABOUT THE INDUSTRY AND
MARKETS IN WHICH WE OPERATE AND MANAGEMENTS BELIEFS AND
ASSUMPTIONS. ANY STATEMENTS CONTAINED HEREIN, INCLUDING WITHOUT
LIMITATION STATEMENTS TO THE EFFECT THAT DOUBLECLICK OR ITS
MANAGEMENT BELIEVES, EXPECTS,
ANTICIPATES, PLANS AND SIMILAR
EXPRESSIONS, THAT ARE NOT STATEMENTS OF HISTORICAL FACT SHOULD
BE CONSIDERED FORWARD-LOOKING STATEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH OUR CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN THIS REPORT.
THESE STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND
INVOLVE CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT ARE
DIFFICULT TO PREDICT. THERE ARE A NUMBER OF IMPORTANT FACTORS
THAT COULD CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS. THESE
FACTORS INCLUDE, WITHOUT LIMITATION, THOSE SET FORTH BELOW UNDER
THE HEADINGS RISK FACTORS AND OTHER
INFORMATION. WE MAY NOT UPDATE PUBLICLY ANY
FORWARD-LOOKING STATEMENTS WHETHER AS A RESULT OF NEW
INFORMATION, FUTURE EVENTS OR OTHERWISE.

Overview

DoubleClick provides marketing technology and
data products and services that direct marketers, Web publishers
and advertisers use to optimize their marketing programs and
efficiently reach their customers. These technologies have
become leading tools for online advertising, email delivery,
offline database marketing, campaign management and marketing
analytics. Our products and services are designed to improve the
performance and simplify the complexities of marketing.

We derive revenues from two business segments:



| |   |                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------
| |  | DoubleClick Technology Solutions, which we refer
    to as our Technology or TechSolutions segment; and
|
| |  | DoubleClick Data, which we refer to as our Data
    segment.                                           

During 2002, through a series of transactions, we
divested of our media businesses and as a result we no longer
report a DoubleClick Media segment.

DoubleClick TechSolutions.DoubleClick TechSolutions includes our
ad management products and services, advertiser products, email
technology products and campaign management and analytics
products and services. Our ad management products enable Web
sites to generate advertising revenue with a choice between our
DART for Publishers Service, a Web-based application, and DART
Enterprise, our licensed ad serving software product. Our
advertiser products include DART for Advertisers, a Web hosted
advertising management and serving solution that helps marketers
reach their online goals efficiently and effectively, and
MediaVisor, a hosted, Web-based media planning, buying and
campaign management workflow solution.

21



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##### 



Our suite of email technology products includes
both the DARTmail Service, which is a Web-based application, and
Unitymail, a licensed software product. These products and
services allow direct marketers and Web publishers to manage and
deliver their email marketing campaigns. Following the
acquisition of Protagona plc in November 2002, we began to offer
DoubleClick Ensemble, a campaign management software product and
other related products and services. We also offer SiteAdvance,
a hosted Web site measurement and analysis solution that was
designed specifically for online merchants.

DoubleClick Data.DoubleClick Data consists of our
Abacus and Data Management divisions, which provides products
and services to direct marketers. Abacus maintains the Abacus
Alliance database, which is the largest proprietary database of
consumer transactions used for target marketing purposes. Abacus
combines the power of this shared data with advanced statistical
modeling to Alliance participants to help improve profitability
and increase market share. Abacus key products and
services include prospecting, housefile modeling and direct
third party list optimization. DoubleClick also maintains an
Alliance database in the United Kingdom. In the United States,
Abacus also offers a Business-to-Business Alliance and
ChannelView, an analytics tool that tracks multi-channel sales
so marketers can effectively measure their promotion and
campaign results. In addition, as a result of DoubleClicks
acquisition of Computer Strategy Coordinators, Inc., a data
management company, in June 2003 we began to offer a direct
marketers solutions for building and managing customer marketing
databases and other related products and services as part of the
new Data Management division.

Critical Accounting Policies

DoubleClicks discussion and analysis of its
financial condition and results of operations are based upon
DoubleClicks consolidated financial statements, which have
been prepared in accordance with generally accepted accounting
principles. The preparation of these consolidated financial
statements requires DoubleClick to make estimates, judgments,
and assumptions, which are believed to be reasonable, based on
the information available. These estimates and assumptions
affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent liabilities. A
variance in the estimates or assumptions used could yield a
materially different accounting result. Described below are the
areas where we believe that the estimates, judgments or
assumptions that we have made, if different, would have yielded
the most significant differences in our financial statements.



| |                        
| | -----------------------
| | Restructuring Estimates

DoubleClicks restructuring reserves are
primarily related to our facilities in New York, Louisville,
Colorado and London. In determining the restructuring accrual
associated with our future lease commitments, DoubleClick
engaged a third party real estate firm to provide it with
estimates of the future sublease income, if any, for its excess
and idle space, which also includes an estimate of the time
period required to identify sublessees. This analysis was
performed based on the current real estate market conditions in
the local markets where DoubleClicks facilities are
located. This real estate firm also provided estimates of lease
termination and buyout fees landlords may charge to terminate
existing leases rather than subleasing idle and excess space.
DoubleClicks restructuring accrual relating to future
lease commitments is based on its review of this information.
Should market conditions change, this information may be updated
and additional charges or credits may be required.



| |                                    
| | -----------------------------------
| | Advertiser Credits and Bad
    Debt

DoubleClick records reductions to revenue for the
estimated future credits issuable to its customers in the event
that delivered advertisements do not meet contractual
specifications. DoubleClick follows this method since reasonably
dependable estimates of such credits can be made based on
historical experience. Should the actual amount of customer
credits differ from DoubleClicks estimates, revisions to
the associated allowance may be required. DoubleClick maintains
an allowance for doubtful accounts for estimated losses
resulting from the inability of its customers to make required
payments. If the financial condition of DoubleClicks
customers were to deteriorate, resulting in an impairment of
their ability to make payments, additional allowances may be
required in subsequent periods.

22



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| |                                           
| | ------------------------------------------
| | Valuation of Investments in
    Affiliates

DoubleClick invests in other companies that are
within its strategic focus, some of which have highly volatile
fair values and uncertain profit potentials. DoubleClick
evaluates its investments for impairment on a periodic basis and
reduces the carrying values of such assets to their estimated
fair value when it believes an investment has experienced a
decline in value that is other than temporary. Future adverse
changes in market conditions or poor operating results of
strategic investments could indicate an inability to recover the
carrying value of the investments, thereby possibly requiring
impairment charges in the future.

When it is determined that the carrying value of
investments may not be recoverable, management measures
impairment based on projected discounted cash flows, revenue
projections, recent transactions involving similar businesses
and the price/revenue multiples at which they were bought and
sold, the price/revenue multiples of competitors and the closing
market price for investments that are publicly traded.



| |                                                                            
| | ---------------------------------------------------------------------------
| | Valuation of Goodwill and Long-lived Assets
    Including Intangible Assets

DoubleClick evaluates its goodwill for impairment
annually, as well as when an event triggering impairment may
have occurred. DoubleClick has elected to perform its annual
analysis during the fourth quarter of each fiscal year as of
October 1st. In accordance with Statements of Financial
Accounting Standards No. 142, Goodwill and Other
Intangible Assets, DoubleClick utilizes a two-step process
for impairment. Management tests for impairment based on
projected discounted cash flows, revenue projections, recent
transactions involving similar businesses and the price/revenue
multiples at which they were bought and sold and the
price/revenue multiples of competitors.

DoubleClick assesses the recoverability of
long-lived assets, including intangible assets held and used,
whenever events or changes in circumstances indicate that future
cash flows, undiscounted and without interest charges, expected
to be generated by an assets disposition or use may not be
sufficient to support its carrying value. If such undiscounted
cash flows are not sufficient to support the recorded value of
assets, an impairment loss is recognized to reduce the carrying
value of long-lived assets to their estimated fair value.



| |                    
| | -------------------
| | Deferred Tax Assets

Pursuant to SFAS 109, DoubleClick records a
valuation allowance to the extent its deferred tax assets are
not more likely than not expected to be realized. As of
September 30, 2003 and December 31, 2002, DoubleClick
has recorded a full valuation allowance against its net deferred
tax assets since management believes that after considering all
the available objective evidence, both positive and negative,
historical and prospective, with greater weight given to
historical evidence, it is not more likely than not that these
assets will be realized. In the event that DoubleClick were to
determine that it would be able to realize some or all of its
deferred tax assets, an adjustment to the net deferred tax asset
would increase income and/or adjust additional paid-in capital
and/or adjust goodwill or other intangible assets, in the period
such determination was made.



| |                       
| | ----------------------
| | Property and Equipment

Property and equipment is stated at cost and
depreciated using the straight-line method over the shorter of
the estimated life of the asset or the lease term. DoubleClick
periodically reviews the useful lives of its assets for
appropriateness. In the event that it is determined that the
estimated useful life of its assets needs to be adjusted to
reflect depreciation expense over the remaining time that the
assets are expected to remain in service, future income or
losses will be impacted in the subsequent periods after such a
determination is made.



| |                                     
| | ------------------------------------
| | Recent Accounting
    Pronouncements

In July 2002, the Financial Accounting Standards
Board issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities.
SFAS No. 146 nullifies EITF Issue No. 94-3,
Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity including Certain
Costs Incurred in a Restructuring. The principal
difference between SFAS No. 146 and EITF 94-3
relates to the recognition of a liability for a cost associated
with an exit or disposal activity. SFAS No. 146
requires that

23



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##### 



a liability be recognized for those costs only
when the liability is incurred, that is, when it meets the
definition of a liability in the FASBs conceptual
framework. In contrast, EITF 94-3 required recognition of a
liability for an exit cost when management committed to an exit
plan. SFAS No. 146 also establishes fair value as the
objective for initial measurement of liabilities related to exit
or disposal activities. SFAS No. 146 is effective for
exit or disposal activities that are initiated after
December 31, 2002 and has no effect on exit or disposal
activities begun prior to this date.


In November 2002, the Emerging Issues Task Force
(EITF) reached a consensus on the scope of the
provisions of Issue 00-21, Revenue Arrangements with
Multiple Deliverables, addressing how to account for
arrangements that involve the delivery or performance of
multiple products, services, and/or rights to use assets. Under
EITF 00-21, revenue arrangements with multiple deliverables
are divided into separate units of accounting if the
deliverables in the arrangement meet the following criteria:
(1) the delivered item has value to the customer on a
standalone basis; (2) there is objective and reliable
evidence of the fair value of undelivered items; and
(3) delivery of any undelivered item is probable.
Arrangement consideration should be allocated among the separate
units of accounting based on their relative fair values, with
the amount allocated to the delivered item being limited to the
amount that is not contingent on the delivery of additional
items or meeting other specified performance conditions.
EITF 00-21 is applicable to agreements entered into in
fiscal periods beginning after June 15, 2003. The
application of EITF 00-21 did not have a material effect on
the DoubleClicks financial condition or operating results.

In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure.
SFAS No. 148 amends SFAS No. 123,
Stock-Based Compensation, to provide alternative
methods of transition for a voluntary change to the fair value
based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require
prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based
employee compensation and the effect of the method used on
reported results. The disclosure provisions of
SFAS No. 148 are effective for fiscal years ending
after December 15, 2002 and have been incorporated into
these financial statements and accompanying footnotes.

Business Transactions



| |             
| | ------------
| | Acquisitions



| |     
| | ----
| | 2003



| |    
| | ---
| | CSC

On June 30, 2003, DoubleClick completed its
acquisition of Computer Strategy Coordinators, Inc. a data
management company known as CSC and based in Schaumburg,
Illinois. In the transaction, DoubleClick acquired all of the
outstanding shares of CSC in exchange for approximately
$2.8 million in cash, inclusive of $0.4 million of
direct acquisition costs, and the assumption of certain
indebtedness.



| |     
| | ----
| | 2002



| |             
| | ------------
| | MessageMedia

On January 18, 2002, DoubleClick completed
its acquisition of MessageMedia, Inc., a provider of
permission-based, email marketing and messaging solutions.
DoubleClick acquired all the outstanding shares, options and
warrants of MessageMedia in exchange for approximately one
million shares of DoubleClick common stock valued at
approximately $7.5 million, and stock options and warrants
to acquire DoubleClick common stock valued at approximately
$0.2 million. In connection with the acquisition,
DoubleClick lent $2.0 million to MessageMedia to satisfy
MessageMedias operating requirements. The loan was
extinguished upon the closing of the acquisition and included as
a component of the purchase price. The purchase price, inclusive
of approximately $1.6 million of direct acquisition costs,
was approximately $11.3 million.

24



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##### 





| |                     
| | --------------------
| | Abacus Direct Europe

On June 26, 2002, DoubleClick acquired the
remaining 50% of the Abacus Direct Europe B.V. joint venture
that it did not previously own from VNU Marketing Information
Europe & Asia B.V, an affiliate of Claritas (UK)
Limited. The joint venture was formed in November 1998 and
provides database-marketing services to the direct marketing
industry, primarily in the United Kingdom. DoubleClicks
investment in the joint venture was previously accounted for
under the equity method of accounting. DoubleClick acquired all
the outstanding shares of Abacus Direct Europe held by VNU in
exchange for approximately $3.7 million in cash and direct
acquisition costs.



| |          
| | ---------
| | Protagona

On November 4, 2002, DoubleClick completed
its acquisition of Protagona plc, a campaign management software
company based in the United Kingdom. In the transaction,
DoubleClick acquired all the outstanding shares of Protagona in
exchange for approximately $13.6 million in cash.



| |             
| | ------------
| | Divestitures



| |                        
| | -----------------------
| | European Media Business

On January 28, 2002, DoubleClick completed
the sale of its European Media business to AdLINK Internet Media
AG, a German provider of Internet advertising solutions, in
exchange for $26.3 million and the assumption by AdLINK of
liabilities associated with DoubleClicks European Media
business. Intercompany liabilities in an amount equal to
$4.3 million were settled through a cash payment by AdLINK
to DoubleClick at the closing of the transaction. Following the
closing of the transaction described above, United Internet AG
AdLINKs largest shareholder, exercised its right to sell
to DoubleClick 15% of the outstanding common shares of AdLINK in
exchange for $30.6 million. Pursuant to its agreement with
United Internet, the exercise of this right caused
DoubleClicks option to acquire an additional 21% of AdLINK
common shares from United Internet to vest. This option is only
exercisable if AdLINK has achieved EBITDA-positive results for
two out of three consecutive fiscal quarters before December
2003. However, if AdLINK should achieve EBITDA-positive results
in the third or fourth quarters of 2003 then the option extends
to the first quarter of 2004. EBITDA, as defined in the option
agreement, is earnings before interest, taxes, depreciation,
amortization, and one-time charges such as restructuring costs,
mergers and acquisition related costs, and other extraordinary
items, determined in accordance with generally accepted
accounting principles in the United States. Should AdLINK fail
to achieve these results, the option will expire unexercisable
in December 2003 or March 2004, as applicable. AdLINK achieved
EBITDA-positive results in the fourth quarter of 2002 but failed
to achieve EBITDA-positive results for the three months ended
March 31, 2003 and June 30, 2003. AdLINKs
results for three months ended September 30, 2003 were not
publicly available as of the date of this filing.

As the result of the transactions described
above, DoubleClick sold its European Media business and received
a 15% interest in AdLINK, which represented approximately
3.9 million shares valued at approximately
$8.3 million. DoubleClicks option to acquire an
additional 21% of the outstanding common shares of AdLINK from
United Internet also vested. DoubleClick was partially
reimbursed $2.0 million for its cash outlays related to the
acquisitions of, and payments with respect to, the minority
interests in certain of its European subsidiaries pursuant to
its agreement to sell its European Media business. As a result
of this transaction, DoubleClick recognized a loss of
approximately $1.7 million, which has been included in
Gain on sale of businesses, net in the Consolidated
Statements of Operations.



| |                             
| | ----------------------------
| | North America Media Business

On July 10, 2002, DoubleClick sold its North
American Media business to L90, Inc. Upon completion of the
transaction, L90, Inc. was renamed MaxWorldwide, Inc. In
exchange for the North American Media business, DoubleClick
received 4.8 million shares in MaxWorldwide and
$5.0 million in cash. The 4.8 million shares
represented 16.1% of outstanding MaxWorldwide common stock and
were valued at approximately $3.1 million. DoubleClick may
also receive an additional $6.0 million if, during the
three-year period

25



---



##### 



subsequent to consummation of the transaction,
MaxWorldwide has achieved EBITDA-positive results, for two out
of three consecutive quarters. EBITDA, as defined in the merger
agreement, is earnings before interest, taxes, depreciation and
amortization, excluding certain non-recurring items. During the
three months ended September 30, 2002, December 31,
2002, March 31, 2003 and June 30, 2003, MaxWorldwide
did not achieve EBITDA-positive results. MaxWorldwides
results for the three months ended September 30, 2003 were
not publicly available as of the date of this filing.


On July 31, 2003, MaxWorldwide completed the
sale of its MaxOnline division to Focus Interactive, Inc. for
approximately $3.0 million in cash paid at closing,
$2.0 million in cash to be paid upon the first anniversary
of the closing, or nine months thereafter plus additional
amounts contingent upon the satisfaction of specified
conditions. DoubleClick is evaluating the effect of this
transaction on its right to receive the $6.0 million in
contingent cash consideration from the sale of
DoubleClicks North American Media business to MaxWorldwide
in July 2002 discussed above. On July 22, 2003,
MaxWorldwide stockholders approved a proposal to adopt a plan of
liquidation and dissolution, pursuant to which it would dissolve
and liquidate MaxWorldwide and its subsidiaries upon
consummation of the sale of its MaxOnline division. In its
quarterly report on Form 10-Q for the quarter ended
June 30, 2003, MaxWorldwide stated that it intended to
significantly curtail administrative expenses, discharge its
outstanding liabilities and initiate an orderly distribution of
its remaining assets to its stockholders. Based on
MaxWorldwides pro forma balance sheet disclosed in this
quarterly report, DoubleClick currently estimates that it may
receive liquidation proceeds of up to approximately
$5.0 million.



| |      
| | -----
| | @plan

On May 6, 2002, DoubleClick sold its @plan
research product line to NetRatings, Inc., a provider of
technology-driven Internet audience information solutions for
media and commerce, in exchange for $12.0 million in cash
and 505,739 shares of NetRatings common stock valued at
approximately $6.1 million. DoubleClick sold these shares
in the fourth quarter of 2002 and the first quarter 2003.



| |                  
| | -----------------
| | DoubleClick Japan

On December 26, 2002, DoubleClick sold
45,049 shares of common stock in DoubleClick Japan and received
proceeds of $14.3 million, reducing its ownership interest
to 15.6%. As a result of this transaction, DoubleClick accounts
for its remaining 31,271 shares in DoubleClick Japan under
the equity method of accounting. DoubleClick also retains one
seat on DoubleClick Japans board of directors.

Three Months Ended September 30, 2003
Compared to the Three Months Ended September 30,
2002



| |                      
| | ---------------------
| | Results of Operations

Revenues and gross profit by segment are as
follows (in thousands):

|                                |  |                    |        |                    |  |       |        |            |  |      |        |       |  |       |        |   |  |   |        |   |  |   |       |  |  |   |        |  
|------------------------------- |  | ------------------ | ------ | ------------------ |  | ----- | ------ | ---------- |  | ---- | ------ | ----- |  | ----- | ------ | - |  | - | ------ | - |  | - | ----- |  |  | - | ------ | -
|                                |  |                    |        |                   
|                                |  | Three Months Ended |        | Three Months Ended
|                                |  | September 30, 2003 |        | September 30, 2002
|                                |  |                    |        |                   
|                                |  | Technology         |        | Data               |  | Total |        | Technology |  | Data |        | Media |  | Total
|                                |  |                    |        |                    |  |       |        |            |  |      |        |       |  |      
|Revenue                         |  | $                  | 43,514 |                    |  | $     | 31,276 |            |  | $    | 74,790 |       |  | $     | 45,098 |   |  | $ | 26,811 |   |  | $ | 3,130 |  |  | $ | 75,039 |  
|Intersegment elimination        |  |                    |       |                    |  |       |       |            |  |      |       |       |  |       | (277   | ) |  |   | (137   | ) |  |   |      |  |  |   | (414   | )
|                                |  |                    |        |                    |  |       |        |            |  |      |        |       |  |       |        |   |  |   |        |   |  |   |       |  |  |   |        |  
|Revenue from external customers |  | $                  | 43,514 |                    |  | $     | 31,276 |            |  | $    | 74,790 |       |  | $     | 44,821 |   |  | $ | 26,674 |   |  | $ | 3,130 |  |  | $ | 74,625 |  
|                                |  |                    |        |                    |  |       |        |            |  |      |        |       |  |       |        |   |  |   |        |   |  |   |       |  |  |   |        |  
|Segment gross profit            |  | $                  | 26,980 |                    |  | $     | 22,427 |            |  | $    | 49,407 |       |  | $     | 28,102 |   |  | $ | 19,644 |   |  | $ | 768   |  |  | $ | 48,514 |  
|                                |  |                    |        |                    |  |       |        |            |  |      |        |       |  |       |        |   |  |   |        |   |  |   |       |  |  |   |        |  
|Data commission fee             |  |                    |        |                    |  |       |        |            |  |      |       |       |  |       |        |   |  |   |        |   |  |   |       |  |  |   | (137   | )
|                                |  |                    |        |                    |  |       |        |            |  |      |        |       |  |       |        |   |  |   |        |   |  |   |       |  |  |   |        |  
|Consolidated gross profit       |  |                    |        |                    |  |       |        |            |  | $    | 49,407 |       |  |       |        |   |  |   |        |   |  |   |       |  |  | $ | 48,377 |  
|                                |  |                    |        |                    |  |       |        |            |  |      |        |       |  |       |        |   |  |   |        |   |  |   |       |  |  |   |        |  

26



---



##### 





| |                          
| | -------------------------
| | DoubleClick TechSolutions

DoubleClick TechSolutions revenue is derived
primarily from the sales of our ad management products, which
consist of our DART for Publishers and DART for Advertisers
services as well as the DART Enterprise ad serving software
product. TechSolutions revenue is also generated through sales
of our suite of email products, based on DoubleClicks
DARTmail service, DoubleClick Ensemble, our campaign management
software product and our analytics products and services.
TechSolutions cost of revenue consists of expenses associated
with the delivery of advertisements and emails, including
Internet access costs, depreciation of our ad and email delivery
systems, the amortization of purchased technology, and facility-
and personnel-related costs incurred to operate and support our
ad management, email and campaign management products.

TechSolutions revenue decreased 3.5% to
$43.5 million for the three months ended September 30,
2003 from $45.1 million for the three months ended
September 30, 2002. The decrease in TechSolutions revenue
was primarily attributable to our ad management product
offerings, which experienced a continuing shift in our customer
mix towards larger, lower-priced customers and increased levels
of price competition. These pricing-related declines were
partially offset by ad management volume increases and
acquisition-related revenue growth from our Ensemble campaign
management product. Ad management revenue decreased 12.4% to
$31.0 million for the three months ended September 30,
2003 from $35.4 million for the three months ended
September 30, 2002. Effective pricing for our ad management
products decreased approximately 26.1% and was offset by an
increase in volume of approximately 18.3%. DARTmail revenues
decreased slightly to $9.6 million for the three months
ended September 30, 2003 from $9.7 million for the
three months ended September 30, 2002. DARTmail volumes
decreased approximately 23.1% while effective pricing increased
approximately 26.6% from the three months ended
September 30, 2002.

DoubleClick TechSolutions gross margin was 62.0%
for the three months ended September 30, 2003, compared to
62.3% for the three months ended September 30, 2002. The
decrease in gross margin was primarily attributable to the
decline in revenues. In addition, it was affected by an increase
in depreciation expense of approximately $1.3 million due
to the accelerated amortization of leasehold improvements and
furniture and fixtures associated with the change in useful life
of these assets relating to the planned relocation of our New
York headquarters and the termination of our lease for our
facility in San Francisco. These amounts were partially offset
by productivity gains in our ad management and email products
and reductions in Internet access costs. The decline in Internet
access costs was due to the favorable renegotiation of many of
our contracts with Internet service providers.

We anticipate slight increases in the absolute
dollar amount of TechSolutions quarterly revenues in the last
quarter of the year as compared to the third quarter of 2003,
resulting primarily from seasonal volume growth and our product
integration initiatives. We expect a slight increase in gross
margin in the last quarter of 2003 due to the anticipated
decrease in depreciation expense associated with the termination
of our lease of our facility in San Francisco. The expected
slight increase in gross margin is inclusive of the accelerated
amortization of our New York leasehold improvements and
furniture and fixtures that will continue to impact margins
until the relocation of our New York headquarters in the fourth
quarter of 2003. We believe that our TechSolutions business is
tied to the relative health of the economy. Significant changes
within the economy may materially impact these results.



| |                 
| | ----------------
| | DoubleClick Data

DoubleClick Data revenue historically has been
derived primarily from its Abacus division, which provides
products and services such as prospecting, house-file modeling
and list optimization to direct marketers and merchants in the
Abacus member alliances. As a result of DoubleClicks
acquisition of CSC in June 2003, we began to offer direct
marketers solutions for building and managing customer marketing
databases and other related products and services as part of the
new Data Management division. DoubleClick Datas cost of
revenue includes expenses associated with maintaining and
updating the Abacus database, the technical infrastructure to
produce our products and services, facility and
personnel-related expenses to operate and support our production
equipment, the amortization of purchased intangible assets, and

27



---



##### 



subscriptions to third party providers of
lifestyle and demographic data that is used to supplement our
transactions based database.


DoubleClick Data revenue increased 16.7% to
$31.3 million for the three months ended September 30,
2003 from $26.8 million for the three months ended
September 30, 2002. The increase in Data revenues was
associated with our Abacus division and from acquisition related
growth in the Data Management division. Abacus revenues
increased 7.3% to $28.8 million while Data Management
revenues were approximately $2.5 million. The growth in
revenues from the Abacus division was split equally between its
Business-to-Consumer and Business-to-Business segments for the
three months ended September 30, 2003. This growth is
related primarily to increases in prospecting services provided
to Abacus Alliance and Business-to-Business Alliance members.

Gross margin decreased to 71.7% for the three
months ended September 30, 2003 from 73.3% for the three
months ended September 30, 2002. The decrease in gross
margin for the three months ended September 30, 2003
compared to the prior year period was primarily attributable to
the increase in costs associated with the acquisition of CSC,
which was consummated at the end of the second quarter. The
costs included additional facility- and personnel-related costs
as well as the amortization of purchased intangible assets.

We anticipate revenues and gross margins of
DoubleClick Data to decrease in the last quarter of 2003 as
compared to the third quarter of 2003 due to seasonal volume
associated with the Abacus business, partially offset by growth
in our Data Management business.



| |                  
| | -----------------
| | DoubleClick Media

DoubleClick Media revenue was derived primarily
from the sale and delivery of advertising impressions through
third-party Web sites comprising the DoubleClick Media network.
DoubleClick Media cost of revenue consisted primarily of service
fees paid to Web publishers for impressions delivered on our
network, and the costs of ad delivery and technology support
provided by DoubleClick TechSolutions.

During 2002, through a series of transactions,
DoubleClick divested of its media businesses. Revenue for
DoubleClick Media was $3.1 million for the three months
ended September 30, 2002. On January 28, 2002,
DoubleClick completed the sale of the European Media business to
AdLINK. On July 10, 2002, DoubleClick completed the sale of
the North American Media business to L90, which was renamed
MaxWorldwide. On December 26, 2002, DoubleClick sold 45,049
shares of common stock in DoubleClick Japan and reduced its
ownership interest to 15.6%. As a result of this transaction,
DoubleClick accounts for its remaining 31,271 shares in
DoubleClick Japan under the equity method of accounting and no
longer consolidates its results of operations. For the three
months ended September 30, 2002, revenues derived by the North
American and DoubleClick Japan Media businesses were
$0.7 million and $2.4 million, respectively.

DoubleClick Medias gross margin was 24.5%
for the three months ended September 30, 2002. Gross
profits recognized by the North American and DoubleClick Japan
Media businesses were approximately $0.3 million and $0.5
million, respectively, for the three months ended
September 30, 2002.



| |                   
| | ------------------
| | Operating Expenses



| |                    
| | -------------------
| | Sales and Marketing

Sales and marketing expenses consist primarily of
compensation and related benefits, sales commissions, general
marketing costs, advertising, bad debt expense and other
operating expenses associated with the sales and marketing
departments. Sales and marketing expenses were
$27.2 million, or 36.3% of revenue, for the three months
ended September 30, 2003, and $23.2 million, or 31.1%
of revenue, for the three months ended September 30, 2002.
The $4.0 million increase in sales and marketing expense
was primarily attributable to increases in depreciation expense
of $3.5 million, personnel-related costs of
$1.2 million, offset by reductions in bad debt expense of
$1.5 million. The increase in depreciation expense was due
to the accelerated amortization of leasehold improvements and
furniture and fixtures associated with the change in useful life
of these assets relating to the planned relocation of our New
York headquarters and the termination of the lease

28



---



##### 



for our facility in San Francisco. The increase
in personnel related costs was due to an increase in headcount
during this quarter primarily relating to our acquisition of
CSC. The reduction in bad debt expense reflects our improved
collection efforts. We expect sales and marketing expenses to
decrease in absolute dollars during the fourth quarter of 2003
primarily due to a decrease in depreciation expense. This
expected decline is associated with our San Francisco lease
termination for which the acceleration of leasehold improvement
amortization only impacted the third quarter of 2003. We expect
sales and marketing expenses as a percentage of revenues to
remain flat for the fourth quarter of 2003 due to anticipated
lower revenues as compared to the third quarter of 2003.




| |                           
| | --------------------------
| | General and Administrative

General and administrative expenses consist
primarily of compensation and related benefits, professional
services, and other operating expenses associated with our
executive, finance, human resources, legal, facilities and
administrative departments. General and administrative expenses
were $8.5 million, or 11.3% of revenue, for the three
months ended September 30, 2003, and $12.2 million, or
16.4% of revenue, for the three months ended September 30,
2002. The $3.7 million decrease in general and
administrative expense was primarily the result of reductions in
personnel-related costs of $2.2 million and professional
services of $2.4 million offset by an increase in
depreciation expense of $0.9 million. Personnel-related
costs declined as the result of headcount reductions associated
with our restructuring activities. The reduction in professional
service fees was primarily the result of the receipt of an
approximately $1.4 million insurance claim settlement
during the quarter. The increase in depreciation expense was due
to the accelerated amortization of leasehold improvements and
furniture and fixtures associated with the change in useful life
of these assets relating to the planned relocation of our New
York headquarters and the termination of the lease for our
facility in San Francisco. We expect general and administrative
expenses to increase in absolute dollars and as a percentage of
revenues during the fourth quarter of 2003 as compared to the
third quarter of 2003. This expected increase is the result of
anticipated lower revenues and the absence of the beneficial
impact of the insurance claim settlement received during the
third quarter of 2003.



| |                    
| | -------------------
| | Product Development

Product development expenses consist primarily of
compensation and related benefits, consulting fees and other
operating expenses associated with the product development
departments. The product development departments perform
research and development, enhance and maintain existing
products, and provide quality assurance. Product development
expenses were $10.7 million, or 14.3% of revenue, for the
three months ended September 30, 2003, and
$9.4 million, or 12.5% of revenues, for the three months
ended September 30, 2002. The $1.3 million increase in
product development expenses was primarily the result of
increase in personnel-related costs of $0.6 million and
depreciation expense of $0.9 million. The increase in
personnel related costs relates to an increase in headcount. The
increase in depreciation expense was due to the accelerated
amortization of leasehold improvements and furniture and
fixtures associated with the change in useful life of these
assets relating to the planned relocation of our New York
headquarters in the fourth quarter of 2003. Although we will
continue to concentrate on the efficient allocation of our
resources, we believe that on-going investment in product
development is critical to the attainment of our strategic
objectives. We expect product development expenses to increase
slightly in absolute dollars due to an increase in headcount,
which will be offset by a decrease in depreciation expense. We
expect product development expenses to increase as a percentage
of revenues for the remainder of 2003 due to anticipated lower
revenues as compared to the third quarter of 2003.



| |                                      
| | -------------------------------------
| | Amortization of Other
    Intangibles

Amortization of intangible assets consists
primarily of the amortization of customer lists and patents.
Amortization expense was $1.6 million for the three months
ended September 30, 2003 and $3.1 million for the
three months ended September 30, 2002. The
$1.5 million decrease was primarily the result of
intangible assets becoming fully amortized and impairment
charges recorded during 2002.

29



---



##### 





| |                    
| | -------------------
| | Goodwill Impairment

In the third quarter of 2002, based on the
prolonged softness in the economy and the then current and
operational performance of DoubleClicks email reporting
unit, DoubleClick initiated a third-party valuation of its email
reporting unit to determine whether the recorded balance of
goodwill related to this reporting unit was recoverable. The
outcome of this valuation resulted in an impairment charge of
approximately $45.2 million being recorded during the
quarter. The fair market value of the email reporting unit was
determined based on revenue projections, then recent transaction
involving similar businesses and the price/revenue multiples at
which they were bought and sold, and the price/revenue multiples
of our competitors in the email marketplace.

DoubleClick did not record any goodwill
impairment charges in the third quarter of 2003.

DoubleClick continues to evaluate its acquired
intangible assets for evidence of impairment. If economic
conditions continue to deteriorate and/or our investments do not
perform in line with expectations, additional impairment charges
related to our acquired intangible assets could be recorded in
future periods.



| |                                    
| | -----------------------------------
| | Impairment of Intangible
    Assets

In the third quarter of 2002, as a result of the
third party valuation of its email reporting unit, the fair
value of certain intangible assets were considered impaired. As
a result, DoubleClick recorded an impairment charge of
$1.0 million during the quarter based on the difference
between the carrying value and estimated fair value of the
intangible assets.

We recognized no such charges during the three
months ended September 30, 2003.



| |                                         
| | ----------------------------------------
| | Restructuring (Credits) Charges,
    Net

During the third quarter of 2003, DoubleClick
recorded a net restructuring credit of $2.2 million. This
resulted from a net credit from our New York headquarters of
approximately $1.5 million and the termination of the
remainder of our lease in San Francisco, which resulted in a
credit of approximately $0.7 million. The net credit
associated with our New York headquarters consisted of certain
exit costs of $2.5 million offset by the reversal of a
deferred rent liability of approximately $1.5 million, all
of which were required to be recorded during in the third
quarter in accordance with SFAS No. 146. In addition,
approximately $2.5 million of reserves were reversed as the
result of favorable settlements of other real estate related
items relating to our New York headquarters which occurred
during the current quarter. The net credit associated with our
San Francisco facility resulted from our estimated restructuring
reserve for this facility being in excess of our actual payments
made in connection with the lease termination.

Of the remaining $33.7 million in cash
outlays relating to our restructuring activities, we estimate
that we will pay approximately $2.0 million in the fourth
quarter of 2003, and approximately $31.7 million in 2004
and the following years. We anticipate that these outlays will
be funded from available sources of liquidity.

DoubleClick is continuing to review its
operational performance and may incur additional restructuring
credits or charges in 2003, principally related to changes in
estimates and assumptions surrounding excess real estate.

During the three months ended September 30,
2002, our management took certain actions to further increase
operational efficiencies and to bring costs in line with
revenues. As a result, DoubleClick recorded a restructuring
charge totaling approximately $23.8 million. This charge
included estimated costs of approximately $21.2 million for
the write-off of fixed assets, accrual of future lease costs,
net of estimated sublease income and deferred rent, as well as
approximately $2.6 million in additional severance charges
related to the involuntary termination of approximately
98 employees.



| |                              
| | -----------------------------
| | Income (Loss) from Operations

DoubleClicks operating income was
$3.7 million for the three months ended September 30,
2003, compared to an operating loss of $69.6 million for
the three months ended September 30, 2002. The increase

30



---



##### 



in its operating income of $73.3 million is
primarily attributable to an increase in gross profits of
approximately $1.0 million, a goodwill impairment charge of
$45.2 million expensed in 2002, $1.0 million for an
impairment of intangible assets expensed in 2002, a decrease in
general and administrative expenses of $3.7 million, a
decrease in intangible amortization of $1.6 million and the
decrease in restructuring charges of $26.1 million. This
was partially offset by an increase in sales and marketing
expenses of $4.0 million and an increase in product
development costs of $1.3 million. DoubleClick continues to
manage its operations with a focus on productivity and
profitability, but due to the general economic and industry
trends it may incur future losses from operations.




| |                                            
| | -------------------------------------------
| | Equity in (Losses) Income of
    Affiliates

For the three months ended September 30,
2003, DoubleClick recognized equity losses of $0.1 million
relating to its 15.6% interest in DoubleClick Japan and 19.8%
investment in MaxWorldwide.

We recognized no such losses or income during the
three months ended September 30, 2002.



| |                                    
| | -----------------------------------
| | Gain on Sale of Businesses,
    Net

DoubleClicks net gain on sale of businesses
was $7.4 million for the three months ended
September 30, 2002. The amount represents a gain incurred
on the sale of our North American Media operations in July 2002.

We recognized no such gains or losses during the
three months ended September 30, 2003.



| |                        
| | -----------------------
| | Interest and Other, Net

Interest and other, net was $3.5 million for
the three months ended September 30, 2003 and
$4.6 million for the three months ended September 30,
2002. Interest and other, net included $3.7 million of
interest income for the three months ended September 30,
2003, partially offset by $0.8 million in interest expense.
For the three months ended September 30, 2002, Interest and
other, net included $6.2 million of interest income and
$0.6 million in contract termination fee income, partially
offset by $2.6 million in interest expense. The decrease in
interest income was attributable to the decrease in average
investment yields due to declines in interest rates and the
decline in our average quarterly balances of our investments in
marketable securities due to payments associated with real
estate terminations. The decrease in interest expense is
directly associated with the redemption of the remaining
principal amount of the 4.75% Convertible Subordinated Notes due
2006 during July 2003. Interest and other, net in future periods
may fluctuate in correlation with the average cash and
investment balances we maintain and as a result of changes in
the market rates of our investments.



| |                                           
| | ------------------------------------------
| | Gain from Early Extinguishment of
    Debt

In the third quarter of 2002, DoubleClick
repurchased $64.9 million of its outstanding 4.75%
Convertible Subordinated Notes due 2006 for approximately
$53.6 million in cash. DoubleClick wrote off approximately
$0.7 million in deferred issuance costs and recognized a
gain of approximately $11.9 million as a result of the
early retirement of this debt.

We recognized no such gains or losses during the
three months ended September 30, 2003.



| |                           
| | --------------------------
| | Provision for Income Taxes

The provision for income taxes recorded for the
three months ended September 30, 2003 of $0.8 million
consists principally of income taxes of $0.7 million on the
earnings of some of DoubleClicks foreign subsidiaries and
$0.1 million of state and local taxes. The provision for
income taxes recorded for the three months ended
September 30, 2002 of $2.6 million consists
principally of income taxes of $1.5 million on the earnings
of certain of DoubleClicks foreign subsidiaries. In
addition, DoubleClick recorded $0.6 million of federal
alternative minimum tax related to gains on the sale of
DoubleClicks North American Media business and on the
early extinguishment of debt. DoubleClick also recorded
approximately $0.5 million for state and

31



---



##### 



local taxes. The provision for income taxes for
the three months ended September 30, 2003 and 2002 does not
reflect tax benefits attributable to DoubleClicks net
operating loss and other tax carryforwards due to limitations
and uncertainty surrounding DoubleClicks prospective
realization of such benefit.




| |                                                              
| | -------------------------------------------------------------
| | Minority Interest in Results of
    Consolidated Subsidiaries

Minority interest in results of consolidated
subsidiaries was $0.5 million for the three months ended
September 30, 2002. This amount consisted wholly of our
consolidated subsidiary, DoubleClick Japan, of which DoubleClick
held a 38.2% ownership interest. On December 26, 2002,
DoubleClick sold 45,049 shares of common stock in DoubleClick
Japan, reducing its ownership interest to 15.6%. DoubleClick
accounts for its remaining 31,271 shares in DoubleClick Japan
under the equity method of accounting. As a result, we no longer
record minority interest.

Nine Months Ended September 30, 2003
Compared to the Nine Months Ended September 30,
2002



| |                      
| | ---------------------
| | Results of Operations

Revenues and gross profit by segment are as
follows (in thousands):

|                                |  |                    |         |                    |  |       |        |            |  |      |         |       |  |       |         |   |  |   |        |   |  |   |        |  |  |   |         |  
|------------------------------- |  | ------------------ | ------- | ------------------ |  | ----- | ------ | ---------- |  | ---- | ------- | ----- |  | ----- | ------- | - |  | - | ------ | - |  | - | ------ |  |  | - | ------- | -
|                                |  |                    |         |                   
|                                |  | Nine Months Ended  |         | Nine Months Ended 
|                                |  | September 30, 2003 |         | September 30, 2002
|                                |  |                    |         |                   
|                                |  | Technology         |         | Data               |  | Total |        | Technology |  | Data |         | Media |  | Total
|                                |  |                    |         |                    |  |       |        |            |  |      |         |       |  |      
|Revenue                         |  | $                  | 128,511 |                    |  | $     | 69,889 |            |  | $    | 198,400 |       |  | $     | 143,534 |   |  | $ | 62,921 |   |  | $ | 30,250 |  |  | $ | 236,705 |  
|Intersegment elimination        |  |                    |        |                    |  |       |       |            |  |      |        |       |  |       | (2,472  | ) |  |   | (301   | ) |  |   |       |  |  |   | (2,773  | )
|                                |  |                    |         |                    |  |       |        |            |  |      |         |       |  |       |         |   |  |   |        |   |  |   |        |  |  |   |         |  
|Revenue from external customers |  | $                  | 128,511 |                    |  | $     | 69,889 |            |  | $    | 198,400 |       |  | $     | 141,062 |   |  | $ | 62,620 |   |  | $ | 30,250 |  |  | $ | 233,932 |  
|                                |  |                    |         |                    |  |       |        |            |  |      |         |       |  |       |         |   |  |   |        |   |  |   |        |  |  |   |         |  
|Segment gross profit            |  | $                  | 79,329  |                    |  | $     | 49,293 |            |  | $    | 128,622 |       |  | $     | 93,717  |   |  | $ | 45,057 |   |  | $ | 9,338  |  |  | $ | 148,112 |  
|                                |  |                    |         |                    |  |       |        |            |  |      |         |       |  |       |         |   |  |   |        |   |  |   |        |  |  |   |         |  
|Data commission fee             |  |                    |         |                    |  |       |        |            |  |      |        |       |  |       |         |   |  |   |        |   |  |   |        |  |  |   | (293    | )
|                                |  |                    |         |                    |  |       |        |            |  |      |         |       |  |       |         |   |  |   |        |   |  |   |        |  |  |   |         |  
|Consolidated gross profit       |  |                    |         |                    |  |       |        |            |  | $    | 128,622 |       |  |       |         |   |  |   |        |   |  |   |        |  |  | $ | 147,819 |  
|                                |  |                    |         |                    |  |       |        |            |  |      |         |       |  |       |         |   |  |   |        |   |  |   |        |  |  |   |         |  



| |                          
| | -------------------------
| | DoubleClick TechSolutions

TechSolutions revenue decreased 10.5% to
$128.5 million for the nine months ended September 30,
2003 from $143.5 million for the nine months ended
September 30, 2002. The decrease in TechSolutions revenue
was primarily attributable to declines in our ad management
products, partially offset by acquisition-related growth from
our Ensemble product offering. Ad management revenue decreased
17.2% to $94.7 million for the nine months ended
September 30, 2003 from $114.4 million for the nine
months ended September 30, 2002. Effective pricing for our
ad management products decreased approximately 13.0% while
volume dropped approximately 4.9%. A portion of these declines
were caused by a reduction in volume-based technology support
fees from our North American Media business, which was sold to
MaxWorldwide in July 2002. Additionally we experienced a shift
in our customer mix towards larger, lower priced customers.
DARTmail revenue decreased 2.4% to $28.5 million for the
nine months ended September 30, 2003 from
$29.2 million for the nine months ended September 30,
2002. DARTmail volumes decreased approximately 8.6% and
effective pricing increased approximately 5.9% as compared to
the nine months ended September 30, 2002.

DoubleClick TechSolutions gross margin was 61.7%
for the nine months ended September 30, 2003, compared to
65.3% for the nine months ended September 30, 2002. The
decrease in gross margin was primarily attributable to the
decline in revenues. In addition, it was affected by an increase
in depreciation expense of approximately $1.4 million due
to the accelerated amortization of leasehold improvements and
furniture and fixtures associated with the change in useful life
of these assets relating to the planned relocation of our New
York headquarters and the termination of our lease for our
facility in San Francisco. These amounts were partially offset
by productivity gains in our ad management and email products
and reductions in Internet access costs. The decline in Internet
access costs was due to the renegotiation of many of our
contracts with our Internet service providers.

32



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##### 



We anticipate slight increases in the absolute
dollar amount of TechSolutions quarterly revenues in the last
quarter of 2003, resulting primarily from seasonal volume growth
and our product integration initiatives. We expect a slight
increase in gross margin in the last quarter of 2003 due to the
anticipated decrease in depreciation expense associated with the
termination of the lease our facility in San Francisco. The
expected slight increase in gross margin is inclusive of the
accelerated amortization of our New York leasehold improvements
and furniture and fixtures that will continue to impact margins
until our relocation of our New York headquarters in the fourth
quarter of 2003. We believe that our TechSolutions business is
tied to the relative health of the economy. Significant changes
within the economy may materially impact these results.



| |                 
| | ----------------
| | DoubleClick Data

DoubleClick Data revenue increased 11.1% to
$69.9 million for the nine months ended September 30,
2003 from $62.9 million for the nine months ended
September 30, 2002. Gross margin decreased to 70.5% for the
nine months ended September 30, 2003 from 71.6% for the
nine months ended September 30, 2002.

On May 6, 2002, DoubleClick sold its @plan
research product line to NetRatings, Inc., a provider of
technology-driven Internet audience information solutions for
media and commerce, in exchange for $12.0 million in cash
and 505,739 shares of NetRatings common stock, valued at
approximately $6.1 million. Revenue and gross profits
recognized by the @plan research product line were approximately
$3.1 million and $1.9 million, respectively, for the
nine months ended September 30, 2002.

On June 26, 2002, DoubleClick acquired the
remaining 50% of the Abacus Direct Europe B.V. joint
venture that it did not previously own from VNU Marketing
Information Europe & Asia B.V., an affiliate of Claritas
(UK) Limited. The joint venture was formed in November 1998
and provides database-marketing services to the direct marketing
catalog industry, primarily in the United Kingdom. The results
of operations for Abacus Direct Europe have been included in
DoubleClicks Consolidated Statements of Operations from
the date of acquisition. Revenues and gross profits recognized
for Abacus Direct Europe were approximately $5.6 million
and $2.6 million, respectively, for the nine months ended
September 30, 2003. Revenues for Abacus Direct Europe were
primarily related to prospecting services provided to Abacus
Alliance members in the United Kingdom.

On June 30, 2003, DoubleClick completed its
acquisition of CSC. The results of operations for CSC have been
included in DoubleClicks Consolidated Statements of
Operations beginning in the third quarter of 2003.

Overall, DoubleClick Data revenue for the nine
months ended September 30, 2003 represents an increase in
revenues over the prior year period generated from the Abacus
US business of $3.3 million, revenues generated from
Abacus Direct Europe of $3.2 million and acquisition
related growth in the Data Management division of
$2.5 million, offset by the impact of the sale of the @plan
research product line in May 2002. Overall volumes and
effective-costs per thousand, known as e-cpms, are slightly
higher than a year ago. We believe we have continued to increase
our share of total dollars spent by our clients on customer
marketing databases and brokered lists through strong account
management and more advanced modeling techniques.

The decrease in gross margin for the nine months
ended September 30, 2003 compared to the prior year period
was primarily attributable to the increase in costs associated
with the acquisition of the 50% of Abacus Direct Europe we did
not previously own in June 2002 and the acquisition of CSC in
June 2003. The costs included additional facility- and
personnel-related costs as well as the amortization of purchased
intangible assets.

We anticipate revenues and gross margins of
DoubleClick Data to decrease in the last quarter of 2003 as
compared to the third quarter of 2003 due to seasonal volume
associated with the Abacus business, partially offset by growth
in our Data Management business.



| |                  
| | -----------------
| | DoubleClick Media

During 2002, through a series of transactions,
DoubleClick divested of its Media businesses. Revenue for
DoubleClick Media was $30.3 million for the nine months
ended September 30, 2002. On January 28, 2002,
DoubleClick completed the sale of the European Media business to
AdLINK. On July 10, 2002, DoubleClick

33



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##### 



completed the sale of the North American Media
business to L90, which was renamed MaxWorldwide. On
December 26, 2002, DoubleClick sold 45,049 shares of
common stock in DoubleClick Japan and reduced its ownership
interest to 15.6%. As a result of this transaction, DoubleClick
accounts for its remaining 31,271 shares in DoubleClick Japan
under the equity method of accounting and no longer consolidates
its results of operations. For the nine months ended
September 30, 2002, revenues derived by the European, North
American and DoubleClick Japan Media businesses were
$1.1 million, $20.7 million and $8.5 million,
respectively.


DoubleClick Medias gross margin was 30.9%
for the nine months ended September 30, 2002. Gross profits
recognized by the European, North American and DoubleClick Japan
Media businesses were approximately $0.4 million,
$7.1 million and $1.8 million, respectively, for the
nine months ended September 30, 2002.



| |                   
| | ------------------
| | Operating Expenses



| |                    
| | -------------------
| | Sales and Marketing

Sales and marketing expenses consist primarily of
compensation and related benefits, sales commissions, general
marketing costs, advertising, bad debt expense and other
operating expenses associated with the sales and marketing
departments. Sales and marketing expenses were
$67.7 million, or 34.1% of revenue, for the nine months
ended September 30, 2003, and $78.7 million, or 33.6%
of revenue, for the nine months ended September 30, 2002.
The $11.0 million decrease in sales and marketing expense
was primarily attributable to reductions in personnel-related
costs of $5.9 million, as well as reductions in bad debt
expense of $5.4 million, telephone and computer hardware
expenses of $1.5 million, rent and utilities of
$0.8 million and marketing expenses of $0.5 million.
This was partially offset by an increase of $3.3 million
for depreciation due to the accelerated amortization of
leasehold improvements and furniture and fixtures associated
with the change in useful life of these assets relating to the
planned relocation of our New York headquarters and the
termination of the lease for our facility in San Francisco. The
decrease in personnel-related costs and rent and utilities was
based on headcount reductions associated with our restructuring
activities and other cost savings initiatives. The reduction in
bad debt expense reflects our improved collection efforts. We
expect sales and marketing expenses to decrease in absolute
dollars during the fourth quarter of 2003 primarily due to a
decrease in depreciation expense. This expected decline is
associated with our San Francisco lease termination for which
the acceleration of leasehold improvement amortization only
impacted the third quarter. We expect sales and marketing
expenses as a percentage of revenues to remain flat for the
fourth quarter of 2003 due to anticipated lower revenues as
compared to the third quarter of 2003.



| |                           
| | --------------------------
| | General and administrative

General and administrative expenses consist
primarily of compensation and related benefits, professional
services, and other operating expenses associated with our
executive, finance, human resources, legal, facilities, and
administrative departments. General and administrative expenses
were $25.7 million, or 12.9% of revenue, for the nine
months ended September 30, 2003, and $36.3 million, or
15.5% of revenue, for the nine months ended September 30,
2002. The $10.6 million decrease in general and
administrative expense was primarily the result of reductions in
personnel-related costs of $5.0 million and professional
and outside services of $3.6 million. Personnel-related
costs declined as the result of headcount reductions associated
with our restructuring activities. The reduction in professional
service fees was primarily the result of an insurance claim
during the third quarter of 2003. We expect general and
administrative expenses to increase in absolute dollars and as a
percentage of revenues during the fourth quarter of 2003 as
compared to the third quarter of 2003. This expected increase is
the result of anticipated lower revenues and the absence of the
beneficial impact of the insurance claim settlement received
during the third quarter of 2003.



| |                    
| | -------------------
| | Product Development

Product development expenses consist primarily of
compensation and related benefits, consulting fees and other
operating expenses associated with the product development
departments. The product development

34



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##### 



departments perform research and development,
enhance and maintain existing products, and provide quality
assurance. Product development expenses were $27.3 million,
or 13.7% of revenue, for the nine months ended
September 30, 2003, and $30.7 million, or 13.1% of
revenues, for the nine months ended September 30, 2002. The
$3.4 million decrease in product development expenses was
primarily the result of reductions in personnel-related costs of
$1.0 million, rent and utilities of $0.7 million and
telephone and computer hardware of $1.5 million.
Personnel-related costs declined as the result of headcount
reductions associated with our restructuring activities in 2002.
The reduction in rent and utilities was a result of headcount
reductions as well as office closures and consolidations.
Although we will continue to concentrate on the efficient
allocation of our resources, we believe that on-going investment
in product development is critical to the attainment of our
strategic objectives. We expect product development expenses to
increase slightly in absolute dollars due to an increase in
headcount, which will be offset by a decrease in depreciation
expense. We expect product development expenses to increase as a
percentage of revenues for the remainder of 2003 due to
anticipated lower revenues as compared to the third quarter of
2003.




| |                                      
| | -------------------------------------
| | Amortization of Other
    Intangibles

Amortization of intangible assets consists
primarily of the amortization of customer lists and patents.
Amortization expense was $4.9 million for the nine months
ended September 30, 2003 and $9.3 million for the nine
months ended September 30, 2002. The $4.4 million
decrease was primarily the result of intangible assets becoming
fully amortized and impairment charges recorded during 2002.



| |                    
| | -------------------
| | Goodwill Impairment

In the third quarter of 2002, based on the
prolonged softness in the economy and the then current and
operational performance of DoubleClicks email reporting
unit, DoubleClick initiated a third-party valuation of its email
reporting unit to determine whether the recorded balance of
goodwill related to this reporting unit was recoverable. The
outcome of this valuation resulted in an impairment charge of
approximately $45.2 million being recorded during the nine
months ended September 30, 2002. The fair market value of
the email reporting unit was determined based on revenue
projections, then recent transaction involving similar
businesses and the price/ revenue multiples at which they were
bought and sold, and the price/revenue multiples of our
competitors in the email marketplace.

DoubleClick did not record any goodwill
impairment charges in the nine months ended September 30,
2003.

DoubleClick continues to evaluate its acquired
intangible assets for evidence of impairment. If economic
conditions continue to deteriorate and/or our investments do not
perform in line with expectations, additional impairment charges
related to our acquired intangible assets could be recorded in
future periods.



| |                                    
| | -----------------------------------
| | Impairment of Intangible
    Assets

In the third quarter of 2002, as a result of the
third party valuation of its email reporting unit, the fair
value of certain intangible assets was considered impaired. As a
result, DoubleClick recorded an impairment charge of
$1.0 million during the nine months ended
September 30, 2002, based on the difference between the
carrying value and estimated fair value of the intangible assets.

We recognized no such charges during the nine
months ended September 30, 2003.



| |                                         
| | ----------------------------------------
| | Restructuring (Credits) Charges,
    Net

During nine months ended September 30, 2003,
DoubleClick recorded restructuring credits of approximately
$16.5 million offset by restructuring charges of
approximately $7.4 million. This resulted in a net
restructuring credit of $9.1 million. This credit was due
to the reversal of a portion of its real estate reserve relating
to its New York headquarters and its San Francisco
facility. The reversal of the reserve was a result of final
lease terminations with respect to our New York headquarters and
San Francisco facility for which our reserve was in excess of
our expected payments. Total costs to terminate the lease
associated with these

35



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##### 



facilities were approximately $44.5 million
and $26.4 million, respectively, inclusive of broker
commissions and related costs. DoubleClick anticipates average
annual cash rent savings of approximately $14 million
during the period, commencing January 2004 and extending through
January 2015 as a result of the New York and San Francisco lease
terminations.


Of the remaining $33.7 million in cash
outlays relating to our restructuring activities, we estimate
that we will pay approximately $2.0 million in the fourth
quarter of 2003, and approximately $31.7 million in 2004
and the following years. We anticipate that these outlays will
be funded from available sources of liquidity. However, there
can be no assurance that such cost reductions can be sustained
or that estimated costs of such actions would not change.

DoubleClick is continuing to review its
operational performance and may incur additional restructuring
credits or charges in 2003, principally related to changes in
estimates and assumptions surrounding excess real estate.

During the nine months ended September 30,
2002, management took certain actions to further increase
operational efficiencies and to bring costs in line with
revenues. These measures included the involuntary terminations
of approximately 230 employees, primarily from our
TechSolutions operations, as well as the consolidation of some
of our leased office space and the closure of several of our
offices. As a consequence, we recorded $32.6 million to
operations during the nine months ended September 30, 2002.
This charge included approximately $4.7 million for
severance-related payments to terminated employees, and
approximately $27.9 million for the write-off of fixed
assets, the accrual of future lease costs (net of estimated
sublease income and deferred rent liabilities previously
recorded) and other exit charges.

Income
(Loss) from Operations

DoubleClicks operating income was
$12.2 million for the nine months ended September 30,
2003, compared to an operating loss of $85.9 million for
the nine months ended September 30, 2002. The increase in
its operating income of $98.1 million is primarily
attributable to a goodwill impairment charge of
$45.2 million expensed in 2002, $1.0 million for an
impairment of intangible assets expensed in 2002, a decrease in
our sales and marketing expenses of $11.0 million, a
decrease in general and administrative expenses of
$10.6 million, a decrease in product development costs of
$3.4 million, a decrease in intangible amortization of
$4.4 million and the decrease in restructuring charges of
$41.7 million. This was partially offset by a decrease in
gross profits of approximately $19.2 million. DoubleClick
continues to manage its operations with a focus on productivity
and manage its headcount accordingly, but due to the general
economic and industry trends, it may incur future losses from
operations.



| |                                            
| | -------------------------------------------
| | Equity in (Losses) Income of
    Affiliates

For the nine months ended September 30,
2003, DoubleClick recognized equity losses of $2.4 million
relating to its 15.6% interest in DoubleClick Japan and 19.8%
investment in MaxWorldwide. For the nine months ended
September 30, 2002, DoubleClick recognized equity income of
$0.2 million relating to its 50% interest in Abacus Direct
Europe. Since the June 26, 2002 acquisition of the
remaining 50% interest of Abacus Direct Europe that DoubleClick
did not previously own, the results from operations of Abacus
Direct Europe have been consolidated into DoubleClicks
operations.



| |                                    
| | -----------------------------------
| | Gain on Sale of Businesses,
    Net

DoubleClicks net gain on sale of businesses
was $17.9 million for the nine months ended
September 30, 2002. The amount represents a gain incurred
on the sale of our North American Media operations in July 2002
and @plan research product line in May 2002 offset by a loss on
the sale of our European Media operations in January 2002.

We recognized no such gains or losses during the
nine months ended September 30, 2003.

36



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| |                        
| | -----------------------
| | Interest and Other, Net

Interest and other, net was $9.1 million for
the nine months ended September 30, 2003 and
$10.8 million for the nine months ended September 30,
2002. Interest and other, net included $12.8 million of
interest income for the nine months ended September 30,
2003, partially offset by $5.1 million in interest expense.
For the nine months ended September 30, 2002, Interest and
other, net included $20.2 million of interest income,
partially offset by $8.7 million in interest expense. The
decrease in interest income was attributable to the decrease in
average investment yields due to declines in interest rates. The
decrease in interest expense is directly associated with the
repurchase of a portion of the 4.75% Convertible Subordinated
Notes due 2006 during the third quarter of 2002 and the
redemption of its remaining principal outstanding of these
Convertible Subordinated Notes in July of 2003. Interest and
other, net in future periods may fluctuate in correlation with
the average cash and investment balances we maintain and as a
result of changes in the market rates of our investments.



| |                                                  
| | -------------------------------------------------
| | Gain (Loss) from Early Extinguishment of
    Debt

On June 24, 2003, DoubleClick called for
redemption of its remaining $154.8 million outstanding
aggregate principal amount of 4.75% Convertible Subordinated
Notes due 2006. On July 24, 2003, DoubleClick redeemed
these notes at a redemption price equal to 102.036% of the
aggregate principal (approximately $158.0 million) plus
accrued and unpaid interest. The proceeds from the sale of the
Zero Coupon Convertible Subordinated Notes due 2023, together
with existing cash, were used towards this redemption. As a
result of the redemption, DoubleClick recorded a loss of
approximately $4.4 million associated with the redemption
premium and write-off of deferred issuance costs during the
second quarter of 2003. As a result of this redemption,
DoubleClicks interest expense will be reduced by
approximately $7.4 million on an annual basis.

In the third quarter of 2002, DoubleClick
repurchased $64.9 million of its outstanding 4.75%
Convertible Subordinated Notes for approximately
$53.6 million in cash. DoubleClick wrote off approximately
$0.7 million in deferred issuance costs and recognized a
gain of approximately $11.9 million as a result of the
early retirement of this debt.



| |                           
| | --------------------------
| | Provision for Income Taxes

The provision for income taxes of
$1.4 million recorded for the nine months ended
September 30, 2003 consists principally of income taxes of
$1.8 million on the earnings of some of DoubleClicks
foreign subsidiaries reduced by a benefit of approximately
$0.4 million related to certain state and local tax refunds
and settlements. The provision for income taxes recorded for the
nine months ended September 30, 2002 of $6.0 million
consists principally of income taxes of $4.4 million on the
earnings of certain of DoubleClicks foreign subsidiaries
and gain on the sale of DoubleClicks European Media
business. In addition, DoubleClick recorded federal alternative
minimum tax of $0.6 million related to gains on the sales
of DoubleClicks North American Media business and @plan
research product line, and gain on early extinguishment of debt.
DoubleClick also recorded approximately $1.0 million of
state and local taxes. The provision for income taxes for the
nine months ended September 30, 2003 and 2002 does not
reflect tax benefits attributable to DoubleClicks net
operating loss and other tax carryforwards due to limitations
and uncertainty surrounding DoubleClicks prospective
realization of such benefit.



| |                                                              
| | -------------------------------------------------------------
| | Minority Interest in Results of Consolidated
    Subsidiaries

Minority interest in results of consolidated
subsidiaries was $1.4 million for the nine months ended
September 30, 2002. This amount consists wholly of our
consolidated subsidiary, DoubleClick Japan, of which DoubleClick
held a 38.2% ownership interest. On December 26, 2002,
DoubleClick sold 45,049 shares of common stock in
DoubleClick Japan, reducing its ownership interest to 15.6%.
DoubleClick accounts for its remaining 31,271 shares in
DoubleClick Japan under the equity method of accounting. As a
result, we no longer record minority interest.

37



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Liquidity and Capital Resources

Since inception, we have financed our operations
primarily through private placements of equity securities, and
public offerings of our common stock and Convertible
Subordinated Notes.

Operating activities used $39.0 million in
net cash for the nine months ended September 30, 2003 and
provided $29.9 million for the nine months ended
September 30, 2002. Cash used by operating activities for
the nine months ended September 30, 2003 resulted primarily
from total cash payments of approximately $70.9 million
relating to the termination of our New York and San Francisco
lease, increases in accounts receivable and decreases in accrued
expenses and other liabilities, offset by our net income,
excluding non-cash items, increases in depreciation expense and
a one-time loss for early retirement of debt. Cash provided by
operating activities for the nine months ended
September 30, 2002 resulted from our net loss, excluding
non-cash items, and decreases in accounts receivable, prepaid
expenses and other assets, and increases in accrued expenses and
other current liabilities, offset by decreases in accounts
payable. We expect cash flow from operating activities during
the fourth quarter of 2003 to improve versus each of the
previous quarters during the year due to a reduction in
restructuring related payments as a result of the New York and
San Francisco lease termination agreements.

Investing activities provided $69.2 million
in net cash for the nine months ended September 30, 2003
and $35.6 million the nine months ended September 30,
2002. Cash provided by investing activities for the nine months
ended September 30, 2003 resulted primarily from the
maturities of our investments in marketable securities, offset
by the purchases of equipment, and the net outlay of cash for
the acquisition of businesses offset by the decrease in the
amounts held in restricted cash. Cash provided by investing
activities for the nine months ended September 30, 2002
resulted principally from the net maturity of some of our
investments in marketable securities, cash paid for the purchase
of equipment, proceeds placed in escrow in connection with our
acquisition of Protagona, restricted cash and the acquisition of
businesses and intangible assets, which were partially offset by
proceeds received from the sale of businesses. We expect capital
expenditures to increase during the fourth quarter of 2003 due
to the relocation of our New York headquarters and the
replacement of furniture and fixtures and necessary leasehold
improvements.

Financing activities used $29.8 million and
$68.6 million in net cash for the nine months ended
September 30, 2003 and September 30, 2002,
respectively. Cash provided by financing activities for the nine
months ended September 30, 2003 resulted primarily from the
issuance of the Zero Coupon Convertible Subordinated Notes
offset by the redemption of the 4.75% Convertible Subordinated
Notes and payments under our capital lease obligations. Cash
used in financing activities for the nine months ended
September 30, 2002 resulted primarily from the repurchase
of a portion of the 4.75% Convertible Subordinated Notes,
purchases of treasury stock, and payments of capital lease
obligations offset by proceeds from issuance of common stock in
connection with our employee stock purchase and stock option
plans. We expect cash flows from financing activities to be
minimal during the fourth quarter of 2003 and consist of
proceeds from the exercise of stock options offset by payments
for capital lease obligations.

As of September 30, 2003, we had
$126.7 million of cash and cash equivalents,
$507.6 million in investments in marketable securities
consisting of government and corporate debt securities and
$27.7 million in restricted cash. As of September 30,
2003, our principal commitments consisted of $135 million
of our Zero Coupon Convertible Subordinated Notes due 2023 and
our obligations under operating and capital leases.

Although we have no material commitments for
capital expenditures, we continue to anticipate that our capital
expenditures and lease commitments will be a material use of our
cash resources consistent with the levels of our operations,
infrastructure and personnel.

We believe that our existing cash and cash
equivalents and investments in marketable securities will be
sufficient to meet our anticipated cash needs for working
capital and capital expenditures for at least the next
12 months.

38



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##### 



Related Party Transactions

DoubleClick maintains a 15% interest in AdLINK.
This interest was acquired in January 2002 as a result of the
sale of DoubleClicks European Media business. DoubleClick
recognized revenue of approximately $2.0 million during the
nine months ended September 30, 2003 relating to services
provided to AdLINK. Revenue recognized during the nine months
ended September 30, 2002 was not material.

In addition, DoubleClick holds a 19.8% interest
in MaxWorldwide. This interest was acquired in July 2002 as a
result of the sale of DoubleClicks North American Media
business. DoubleClick recognized revenue of approximately
$1.7 million and $1.2 million during the nine months
ended September 30, 2003 and September 30, 2002,
respectively, relating to services provided to MaxWorldwide.

Additionally, DoubleClick maintains a minority
interest in DoubleClick Japan. On December 26, 2002,
DoubleClick sold 45,049 shares of common stock in DoubleClick
Japan and reduced its ownership interest to 15.6%. As a result
of this transaction, DoubleClick accounts for its remaining
31,271 shares in DoubleClick Japan under the equity method of
accounting. DoubleClick also retains one seat on DoubleClick
Japans board of directors. DoubleClick Japan continues to
sell DoubleClicks suite of DART technology products as
part of a long-term technology reseller agreement. DoubleClick
recognized revenue through sales to DoubleClick Japan of
approximately $2.4 million during the nine months ended
September 30, 2003.

39



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##### 





|        |                                                               
|------- | --------------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosures
    about Market Risk

Interest
Rate Risk

The primary objective of our investment
activities is to preserve principal while at the same time
maximizing yields without significantly increasing risk. To
achieve this objective, we maintain our portfolio of cash
equivalents and marketable securities in a variety of government
and corporate debt obligations and money market funds. As of
September 30, 2003, our investments in marketable
securities had a weighted average time to maturity of
401 days.

The following table presents the amounts of our
financial instruments that are subject to interest rate risk by
expected maturity and average interest rates as of
September 30, 2003.

|                                                |  |                  |         |            |  |             |         |            |  |            |        |   |  |   |         |   |  |   |         | 
|----------------------------------------------- |  | ---------------- | ------- | ---------- |  | ----------- | ------- | ---------- |  | ---------- | ------ | - |  | - | ------- | - |  | - | ------- | 
|                                                |  |                  |         |           
|                                                |  | Time to Maturity |         |           
|                                                |  |                  |         |           
|                                                |  | One Year         |         | One to Two |  | Two to Five |         | Five and   |  |           
|                                                |  | or Less          |         | Years      |  | Years       |         | Thereafter |  | Fair Value
|                                                |  |                  |         |            |  |             |         |            |  |           
|                                                |  |                 
|                                                |  | (In thousands)  
|Assets:                                         |  |                  |         |            |  |             |         |            |  |            |        |   |  |   |         |   |  |   |         | 
|Cash and cash equivalents                       |  | $                | 126,692 |            |  |             |        |            |  |            |       |   |  |   |        |   |  | $ | 126,692 | 
|Average interest rate                           |  |                  | 0.35    | %          |  |             |         |            |  |            |        |   |  |   |         |   |  |   |         | 
|Fixed-rate investments in marketable securities |  | $                | 191,741 |            |  | $           | 304,813 |            |  | $          | 11,011 |   |  |   |        |   |  | $ | 507,565 | 
|Average interest rate                           |  |                  | 3.03    | %          |  |             | 1.82    | %          |  |            | 1.85   | % |  |   |         |   |  |   |         | 
|Liabilities:                                    |  |                  |         |            |  |             |         |            |  |            |        |   |  |   |         |   |  |   |         | 
|Convertible subordinated notes                  |  |                  |        |            |  |             |        |            |  |            |       |   |  | $ | 135,000 |   |  | $ | 138,881 | 
|Average interest rate                           |  |                  |         |            |  |             |         |            |  |            |        |   |  |   | 0.00    | % |  |   |         | 

As of September 30, 2003, the current
portion of restricted cash was $13.8 million and the
average interest rate associated with this cash was 1.35% and
the non-current portion of restricted cash was
$14.0 million with an average interest rate of 1.45%.
Restricted cash primarily represents amounts placed in escrow
relating to funds to cover office lease security deposits and
our automated clearinghouse payment function.

DoubleClick may redeem for cash some or all of
the Zero Coupon Notes at any time on or after July 15,
2008. Holders of the Zero Coupon Notes also have the right to
require DoubleClick to purchase some or all of their notes for
cash on July 15, 2008, July 15, 2013 and July 15,
2018, at a price equal to 100% of the principal amount of the
Zero Coupon Notes being redeemed plus accrued and unpaid
liquidated damages, if any.

The Zero Coupon Notes contain an embedded
derivative, the value of which as of September 30, 2003 has
been determined by a third party valuation to be immaterial to
our consolidated financial position. For financial accounting
purposes, the ability of the holder to convert upon the
satisfaction of a trading price condition constitutes an
embedded derivative. Any changes in its value will be reflected
in our future income statements, in accordance with Statement of
Financial Accounting Standards No. 133, Accounting
for Derivative Instruments and Hedging Activities. As of
September 30, 2003, we did not hold any other derivative
financial instruments.



| |                      
| | ---------------------
| | 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 denominated in
European and Asian currencies, as well as cash balances held in
currencies other than the functional currency of DoubleClick and
its subsidiaries. The effect of foreign exchange rate
fluctuations on operations was not material for the nine months
ended September 30, 2003 and September 30, 2002,
respectively.

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To date we have not used financial instruments to
hedge operating activities denominated in foreign currencies. We
assess the need to utilize financial instruments to hedge
currency exposures on an ongoing basis. As of September 30,
2003, we had $49.3 million in cash and cash equivalents
denominated in foreign currencies.

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 exchange rate volatility. Accordingly, our future
results could be materially and adversely affected by changes in
these or other factors.



| |            
| | -----------
| | Equity Risk

We hold investments in equity instruments of
public companies received as a result of certain business
transactions, including shares held in DoubleClick Japan, AdLINK
and MaxWorldwide. These investments, which are in the Internet
industry, are subject to significant fluctuations in fair market
value due to the volatility of the stock market. On
July 31, 2003, MaxWorldwide completed the sale of its
MaxOnline division to Focus Interactive, Inc. for approximately
$3.0 million in cash paid at closing, $2.0 million in
cash to be paid upon the first anniversary of the closing, or
nine months thereafter plus additional amounts contingent upon
the satisfaction of specified conditions. On July 22, 2003,
MaxWorldwide stockholders approved a proposal to adopt a plan of
liquidation and dissolution, pursuant to which it would dissolve
and liquidate MaxWorldwide and its subsidiaries upon
consummation of the sale of its MaxOnline division. In its
quarterly report on Form 10-Q for the quarter ended
June 30, 2003 MaxWorldwide stated that it intended to
significantly curtail administrative expenses, discharge its
outstanding liabilities and initiate an orderly distribution of
its remaining assets to its stockholders. Based on
MaxWorldwides pro forma balance sheet disclosed in this
quarterly report, DoubleClick currently estimates that it may
receive liquidation proceeds of up to approximately
$5.0 million. The following represents the cost basis and
fair market value of these investments, which is included in as
Investment in affiliates on the accompanying
Consolidated Balance Sheets.

|                         |  |                          |       |             |  |   |        | 
|------------------------ |  | ------------------------ | ----- | ----------- |  | - | ------ | 
|                         |  |                         
|                         |  | As of September 30, 2003
|                         |  |                         
|                         |  |                          |       | Fair Market
|                         |  | Cost Basis               |       | Value      
|                         |  |                          |       |            
|                         |  |                         
|                         |  | (In thousands)          
|AdLINK Internet Media AG |  | $                        | 1,855 |             |  | $ | 6,700  | 
|DoubleClick Japan        |  | $                        | 5,956 |             |  | $ | 12,179 | 
|MaxWorldwide, Inc.       |  | $                        |      |             |  | $ | 3,504  | 

Some of DoubleClicks investments have
suffered a decrease in value in the past as a result of market
volatility. As a consequence, DoubleClick wrote-down these
investments to their estimated fair value in 2002. We will
continue to evaluate our investments in marketable securities
for impairment due to declines in market value considered to be
other than temporary. That evaluation includes, in addition to
persistent, declining stock prices, general economic and
company-specific assessments. In the event of a determination
that a further decline in market value is other than temporary,
a charge to earnings will be recorded for all or a portion of
the unrealized loss and a new cost basis in the investment will
be established.

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RISK FACTORS

The following important factors, among others,
could cause our actual operating results to differ materially
from those indicated or suggested by forward-looking statements
made in this Form 10-Q or presented elsewhere by management
from time to time.

Risks Relating to Our Company and Our
Business

We have a limited operating history and our
future financial results may fluctuate, which may cause our
stock price to decline.

We have a limited operating history. An investor
in our common stock must consider the risks and difficulties
frequently encountered by companies in new and rapidly evolving
industries, including companies that provide marketing
technology and data products and services. Our risks include:



| |   |                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------
| |  | ability to achieve anticipated revenue growth
    rates;                                                                                           
|
| |  | ability to manage our operations;                                                                                                                  
|
| |  | competition;                                                                                                                                       
|
| |  | ability to develop and introduce new products and
    services and continue to develop, upgrade and integrate
    technology;                      
|
| |  | attracting, retaining and motivating qualified
    personnel;                                                                                      
|
| |  | maintaining our current, and developing, new
    relationships with direct marketers, Web publishers, advertisers
    and advertising agencies; and
|
| |  | ability to anticipate and adapt to changing
    industry conditions.                                                                               

We also depend on the use of the Internet for
advertising and as a communications medium, the demand for
advertising services in general, and on general economic and
industry conditions. We cannot assure you that our business
strategy will be successful or that we will successfully address
these risks. If we are unsuccessful in addressing these risks,
our revenues may decline or may not grow in accordance with our
business model and may fall short of expectations of market
analysts and investors, which could negatively affect the price
of our stock.

We have a history of losses and may have
losses at times in the future.

We have incurred net losses each year since
inception, including net losses of $117.9 million,
$265.8 million and $156.0 million for the years ended
December 31, 2002, 2001 and 2000, respectively. We earned
net income of approximately $6.3 million for the three
months ended September 30, 2003 and as of
September 30, 2003 our accumulated deficit was
$653.4 million. We have not achieved profitability on an
annual basis and expect to incur operating losses at times in
the future. We expect to continue to incur significant operating
and capital expenditures. We also have lease obligations for
facilities that currently constitute excess or idle facilities.
Periodically, we evaluate the expenses likely to be incurred for
these facilities, and where appropriate, have taken
restructuring charges with respect to these expenses. We cannot
assure you that there will not be additional restructuring
charges recognized with respect to our excess or idle
facilities. As a result of these factors, we will need to
generate significant revenue to achieve and maintain
profitability. We cannot assure you that we will generate
sufficient revenue to achieve or sustain profitability. Even if
we do achieve profitability, we cannot assure you that we can
sustain or increase profitability on a quarterly or annual basis
in the future. If revenue does not meet our expectations, or if
operating expenses exceed what we anticipate or cannot be
reduced accordingly, our business, results of operations and
financial condition will be materially and adversely affected.

42



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##### 



We derive a significant portion of our revenue
from advertising services. A continued decrease in expenditures
by direct marketers and advertisers or a continued downturn in
the economy could cause our revenues to decline significantly in
any given period.

We derive, and expect to continue to derive for
the foreseeable future, a large portion of our revenue from
products and services we provide to direct marketers, Web
publishers, advertisers and advertising agencies. Expenditures
by direct marketers and advertisers tend to be cyclical,
reflecting overall economic conditions as well as budgeting and
buying patterns. The overall market for advertising, including
online advertising, has been characterized in the last couple of
years by increasing softness of demand, lower prices for
advertisements, the reduction or cancellation of advertising
contracts, an increased risk of uncollectible receivables from
customers and the reduction of marketing and advertising
budgets, especially for online advertising. As a result of these
reductions, advertising spending across traditional media, as
well as the Internet, has decreased. We cannot assure you that
further reductions will not occur.

The revenue outlook for DoubleClick TechSolutions
is adversely affected by an environment where the supply of
advertising inventory exceeds advertisers demand. Under
these circumstances, Web publishers tend to remove ad space from
their Web sites in an effort to correct the supply-demand
imbalance; other Web publishers may cut back on their Web
presence or go out of business. Faced with smaller budgets,
advertisers and advertising agencies purchase less advertising
inventory and tend not to invest as much in online advertising.
Consequently, the number of ad impressions delivered by
DoubleClick TechSolutions have in the past declined and may in
the future decline or fail to grow or the price that we can
charge for our services may decline, which in either case would
adversely affect our revenues. A decline in the economic
prospects of direct marketers or the economy in general would
also adversely impact the revenue outlook for our email business.

DoubleClick Data, which provides products and
services to direct marketers, may face similar pressures. Some
direct marketers may respond to economic downturns by reducing
the number of catalogs mailed, thereby possibly reducing the
demand for DoubleClick Datas services. If direct marketing
activities fail to grow or decline, our revenues could be
adversely affected.

We cannot assure you that further reductions in
marketing spending will not occur. We also cannot assure you
that if economic conditions improve, marketing budgets and
advertising spending will increase, or not decrease, from
current levels. A continued decline in the economic prospects of
marketers or the economy in general could alter current or
prospective marketers spending priorities or increase the
time it takes to close a sale with a customer. As a result, our
revenues from marketing and advertising services may decline
significantly in any given period.

We do not often maintain long-term agreements
with our customers and may be unable to retain customers,
attract new customers or replace departing customers with
customers that can provide comparable revenues.

Many of our contracts with our customers are
short-term. We cannot assure you that our customers will
continue to use our products and services or that we will be
able to replace, in a timely or effective manner, departing
customers with new customers that generate comparable revenues.
Further, we cannot assure you that our customers will continue
to generate consistent amounts of revenues over time. Our
failure to develop and sustain long-term relationships with our
customers would materially and adversely affect our results of
operations.

Many of our customers continue to experience
business conditions that could adversely affect our
business.

Some of our customers have experienced, and may
continue to experience, difficulty raising capital and
supporting their current operations and implementing their
business plans, or may be anticipating such difficulties and,
therefore, may elect to scale back the resources they devote to
marketing in general and our offerings in particular. These
customers may not be able to discharge their payment and other
obligations to us. The non-payment or late payment of amounts
due to us from our customers could negatively impact our

43



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financial condition. If the current business
environment for our customers does not improve, our business,
results of operations and financial condition could be
materially adversely affected. In addition, failure of our
customers to comply with federal, state or local laws or our
policies could damage our reputation and adversely affect our
business, results of operations or financial condition.


Industry shifts, continuing expansion of our
products and services and other changes may strain our
managerial, operational, financial and information system
resources.

In recent years, we have had to respond to
significant changes in our industry. As a result, we have
experienced industry shifts, continuing expansion of product and
service offerings and other changes that have increased the
complexity of our business and placed considerable demands on
our managerial, operational and financial resources. We continue
to increase and change the scope of our product and service
offerings both domestically and internationally and to deploy
our resources in accordance with changing business conditions
and opportunities. To continue to successfully implement our
business plan in our changing industry requires effective
planning and management processes. We expect that we will need
to continue to improve our financial and managerial controls and
reporting systems and procedures and will need to continue to
train and manage our workforce. We cannot assure you that
management will be effective in attracting and retaining
qualified personnel, integrating acquired businesses or
otherwise responding to new business conditions. We also cannot
assure you that our information systems, procedures or policies
will be adequate to support our operations or that our
management will be able to achieve the execution necessary to
offer our products and services and implement our business plan
successfully. Our inability to effectively respond to these
challenges could materially and adversely affect our business,
financial condition and results of operations.

We may not be able to generate profits from
many of our products and services.

A significant part of our business model involves
generating revenue by providing marketing technology and data
products and services to direct marketers, Web publishers and
advertisers. The long term profit potential for our business
model has not yet been proven, and we have not yet achieved
full-year profitability. The profitability of our business model
is subject to external and internal factors. Any single factor
or combination of factors could limit the profit potential,
long-term and short-term, of our business model.

Like other businesses in the marketing and
advertising sectors, our revenue outlook is sensitive to
downturns in the economy, including declines in advertising and
marketing budgets. The profit potential of our business model is
also subject to the acceptance of our products and services by
direct marketers, Web publishers and advertisers. Intensive
marketing and sales efforts may be necessary to educate
prospective customers regarding the uses and benefits of, and to
generate demand for, our products and services. Enterprises may
be reluctant or slow to adopt a new approach that may replace
existing techniques, or may feel that our offerings fall short
of their needs. If these outcomes occur, it could have an
adverse effect on the profit potential of our business model.

Internal factors also influence the profit
potential of our business model. In order to be profitable, our
revenue must exceed the expense incurred by us to run our
technology infrastructure, research and development, sales and
marketing and all other operations. Our failure to achieve these
results could adversely affect the profit potential of our
business model.

Misappropriation of confidential information
could cause us to lose customers or incur liability.

We currently retain highly confidential
information of our customers in secure database servers.
Although we observe security measures throughout our operations,
we cannot assure you that we will be able to prevent
unauthorized individuals from gaining access to these database
servers. Any unauthorized access to our servers, or abuse by our
employees, could result in the theft of confidential customer
information. If confidential customer information is
compromised, we could lose customers or become subject to
liability or litigation and our reputation could be harmed, any
of which could materially and adversely affect our business and
results of operations.

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Direct marketing, online advertising and
related products and services are competitive markets and we may
not be able to compete successfully.

The market for marketing technology and data
products and services is very competitive. We expect this
competition to continue because there are low barriers to entry
for several of our businesses. Also, industry consolidation may
lead to stronger, better capitalized entities against which we
must compete. We expect that we will encounter additional
competition from new sources as we expand our product and
service offerings.

We believe that our ability to compete depends on
many factors both within and beyond our control, including the
following:



| |   |                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the features, performance, price and reliability
    of products and services offered either by us or our competitors;                                
|
| |  | the launch timing and market success of products
    and services developed either by us or our competitors;                                          
|
| |  | our ability to adapt and scale our products and
    services, and to develop and introduce new products and services
    that respond to market needs;
|
| |  | our ability to adapt to evolving technology and
    industry standards;                                                                               
|
| |  | our customer service and support efforts;                                                                                                             
|
| |  | our sales and marketing efforts; and                                                                                                                  
|
| |  | the relative impact of general economic and
    industry conditions on either us or our competitors.                                                  

Our divisions face competition from a variety of
sources. DoubleClick TechSolutions competes with providers of
software, service bureau solutions and in-house solutions for
the delivery of Web ads and email for direct marketers, Web
publishers and advertisers. We also compete indirectly with
providers of other solutions for online advertising, such as
providers of paid search services.

DoubleClick Data competes with data aggregation
companies, providers of database marketing services and
providers of information products and marketing research
services to the direct marketing industry. We also compete
indirectly with others, such as providers of customer
relationship management services, companies engaged in providing
analytic services and other companies that facilitate marketing
automation.

Many of our existing and potential competitors
have longer operating histories, greater name recognition,
larger customer bases and significantly greater financial,
technical and marketing resources than do we. These factors
could allow them to compete more effectively than we can,
including devoting greater resources to the development,
promotion and sale of their products and services, engaging in
more extensive research and development, undertaking more
far-reaching marketing campaigns, adopting more aggressive
pricing policies and making more attractive offers to existing
and potential employees, strategic partners, direct marketers,
Web publishers and advertisers. We cannot assure you that our
competitors will not develop products or services that are equal
or superior to our products and services or that achieve greater
acceptance than our products and services. In addition, current
and potential competitors have established or may establish
cooperative relationships among themselves or with third parties
to increase the ability of their products or services to address
the needs of our prospective direct marketer, Web publisher,
advertising and ad agency customers. As a result, it is possible
that new competitors may emerge and rapidly acquire significant
market share. Increased competition may result in price
reductions, reduced gross profits and loss of market share. We
cannot assure you that we will be able to compete successfully
or that competitive pressures will not materially and adversely
affect our business, results of operations or financial
condition.

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Our quarterly operating results are subject to
significant fluctuations and you should not rely on them as an
indication of future operating performance.

Our revenue and results of operations may
fluctuate significantly in the future as a result of a variety
of factors, many of which are beyond our control. These factors
include:



| |   |                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | direct marketer, Web publisher and advertiser
    demand for our products and services;                                                                                                                                                 
|
| |  | Internet user traffic levels;                                                                                                                                                                                                           
|
| |  | number and size of ad units per page on our
    customers Web sites;                                                                                                                                                                   
|
| |  | downward pricing pressures from current and
    potential customers for our products and services;                                                                                                                                      
|
| |  | the introduction of new products or services by
    us or our competitors;                                                                                                                                                              
|
| |  | variations in the levels of capital, operating
    expenditures and other costs relating to our operations;                                                                                                                             
|
| |  | the size and timing of significant pre-tax
    charges, including for goodwill impairment and the write-down of
    assets and restructuring charges and credits, such as those
    relating to idle or excess facilities and severance;
|
| |  | costs related to any acquisitions or dispositions
    of technologies or businesses;                                                                                                                                                    
|
| |  | general seasonal and cyclical fluctuations; and                                                                                                                                                                                         
|
| |  | general economic and industry conditions.                                                                                                                                                                                               

We may not be able to adjust spending quickly
enough to offset any unexpected revenue shortfall. Our expenses
include upgrading and enhancing our ad management and email
delivery technology, expanding our product and service
offerings, marketing and supporting our products and services
and supporting our sales and marketing operations. If we have a
shortfall in revenue in relation to our expenses, or if our
expenses exceed revenue, then our business, results of
operations and financial condition could be materially and
adversely affected. These results would likely affect the market
price of our common stock in a manner that may be unrelated to
our long-term operating performance.

Our business is subject to seasonal fluctuations.
Advertisers generally place fewer advertisements during the
first and third calendar quarters of each year, which directly
affects the DoubleClick TechSolutions business. Further,
Internet user traffic typically drops during the summer months,
which reduces the amount of online advertising. The direct
marketing industry generally uses our data services more in the
third calendar quarter based on plans for holiday season
mailings, which directly affects the DoubleClick Data business.
The email technology business may experience seasonal patterns
similar to the traditional direct marketing industry, which
typically generates lower revenues earlier in the calendar year
and higher revenues during the calendar year-end months.

As a result, we believe that period-to-period
comparisons of our results of operations may not be indicators
of future performance. It is possible that in some future
periods our results of operations may be below the expectations
of public market analysts and investors. In this event, the
price of our common stock may fall.

We may not be able to continue to grow through
acquisitions of or investments in other companies.

Our business has expanded rapidly in part as a
result of acquisitions or investments in other companies,
including the acquisitions of Abacus Direct, NetGravity,
FloNetwork, MessageMedia, Protagona and Computer Strategy
Coordinators. We may continue to acquire or make investments in
other complementary businesses, products, services or
technologies as a means to grow our business. From time to time
we have had discussions with other companies regarding our
acquiring, or investing in, their businesses, products, services
or technologies. We cannot assure you that we will be able to
identify other suitable acquisition or investment candidates.
Even if we do identify suitable candidates, we cannot assure you
that we will be able to make other acquisitions or investments
on commercially acceptable terms, if at all. Even if we agree to
buy a

46



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company, technology or other assets, we cannot
assure you that we will be successful in consummating the
purchase. If we are unable to continue to expand through
acquisitions, our revenue may decline or fail to grow.


We are also minority investors in a few
technology companies, including AdLINK, MaxWorldwide and
DoubleClick Japan. Our investments have decreased in value in
the past, and may decrease in the future, as a result of market
volatility, and periodically, we have recorded charges to
earnings for all or a portion of the unrealized loss due to
declines in market value considered to be other than temporary.
The market value of these investments may decline in future
periods due to the continued volatility in the stock market in
general or the market prices of securities of technology
companies in particular and we may be required to record further
charges to earnings as a result. Further, we cannot assure you
that we will be able to sell these securities at or above our
cost basis. We have recorded goodwill in connection with a
number of our acquired businesses, including MessageMedia and
FloNetwork. As a result of significantly lower-than-expected
revenues generated to date and considerably reduced estimates of
future performance, we have in the past recognized impairment
charges with respect to the goodwill of some acquired
businesses. If market conditions require, we may in the future
record additional impairments in the value of our acquired
businesses.

We may not manage the integration of acquired
companies successfully or achieve desired results.

As a part of our business strategy, we have in
the past entered into, and could in the future enter into, a
number of business combinations and acquisitions. Acquisitions
are accompanied by a number of risks, including:



| |   |                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the difficulty of assimilating the operations and
    personnel of the acquired companies;                                                                                                                                       
|
| |  | the potential disruption of the ongoing
    businesses and distraction of our management and the management
    of acquired companies;                                                                                           
|
| |  | the difficulty of incorporating acquired
    technology and rights into our products and services;                                                                                                                               
|
| |  | unanticipated expenses related to technology and
    other integration;                                                                                                                                                          
|
| |  | difficulties in disposing of the excess or idle
    facilities of an acquired company or business;                                                                                                                               
|
| |  | difficulties in maintaining uniform standards,
    controls, procedures and policies;                                                                                                                                            
|
| |  | the impairment of relationships with employees
    and customers as a result of the integration of new management
    personnel;                                                                                                 
|
| |  | the inability to develop new products and
    services that combine our knowledge and resources and our
    acquired businesses or the failure for a demand to develop for
    the combined companies new products and services;
|
| |  | potential failure to achieve additional sales and
    enhance our customer base through cross-marketing of the
    combined companys products to new and existing customers;                                                    
|
| |  | potential litigation resulting from our business
    combinations or acquisition activities; and                                                                                                                                 
|
| |  | potential unknown liabilities associated with the
    acquired businesses.                                                                                                                                                       

We may not succeed in addressing these risks or
other problems encountered in connection with these business
combinations and acquisitions. If so, these risks and problems
could disrupt our ongoing business, distract our management and
employees, increase our expenses and adversely affect our
results of operations. Furthermore, we may incur debt or issue
equity securities to pay for any future acquisitions. The
issuance of equity securities could be dilutive to our existing
stockholders.

Disruption of our services due to
unanticipated problems or failures could harm our
business.

Our DART ad management and DARTmail technologies
reside in our data centers in multiple locations in the United
States and abroad. Continued and uninterrupted performance of
our technology is critical to our success. Customers may become
dissatisfied by any system failure that interrupts our ability
to provide our

47



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services to them, including failures affecting
our ability to deliver advertisements without significant delay
to the viewer or our ability to deliver a customers online
marketing campaign. Sustained or repeated system failures would
reduce the attractiveness of our products and services to our
customers and could result in contract terminations, fee rebates
or credits, for damages resulting from claims or litigation,
thereby reducing revenue. Slower response time or system
failures may also result from straining the capacity of our
technology due to an increase in the volume of advertising
delivered through our servers. To the extent that we do not
effectively address any capacity constraints or system failures,
our business, results of operations and financial condition
could be materially and adversely affected.


Our operations are dependent on our ability to
protect our computer systems against damage from natural
disasters, fire, power loss, water damage, telecommunications
failures, vandalism and other malicious acts, and similar
unexpected adverse events. In addition, interruptions in our
products or services could result from the failure of our
telecommunications providers to provide the necessary data
communications capacity in the time frame we require.
Unanticipated problems affecting our systems have from time to
time in the past caused, and in the future could cause,
interruptions in the delivery of our products and services. Our
business, results of operations and financial condition could be
materially and adversely affected by any damage or failure that
interrupts, delays or destroys our operations. Some of our data
centers are located at facilities provided by a third party and
if these parties are unable to adequately protect our data
centers, our business, results of operations and financial
conditions could be materially and adversely affected.

We depend on third-party Internet and
telecommunications providers, over whom we have no control, to
operate our services. Interruptions in our services caused by
one of these providers could have an adverse effect on revenue
and securing alternate sources of these services could
significantly increase expenses.

We depend heavily on several third-party
providers of Internet and related telecommunication services,
including hosting and co-location facilities, in delivering our
products and services. These companies may not continue to
provide services to us without disruptions in service, at the
current cost or at all. The costs associated with any transition
to a new service provider could be substantial and require us to
reengineer our computer systems and telecommunications
infrastructure to accommodate a new service provider. This
process could be both expensive and time consuming. In addition,
failure of our Internet and related telecommunications providers
to provide the data communications capacity in the time frame we
require could cause interruptions in the services we provide.
Unanticipated problems affecting our computer and
telecommunications systems in the future could cause
interruptions in the delivery of our services, causing a loss of
revenue and potential loss of customers.

We are dependent on key personnel and on key
employee retention and recruiting for our future
success.

Our future success depends to a significant
extent on the continued service of our key technical, sales and
senior management personnel. We do not have employment
agreements with most of these executives and do not maintain key
person life insurance on any of these executives. The loss of
the services of one or more of our key employees could
significantly delay or prevent the achievement of our product
development and other business objectives and could harm our
business. Our future success also depends on our continuing
ability to attract, retain and motivate highly skilled employees
for key positions. There is competition for qualified employees
in our industry. We may not be able to retain our key employees
or attract, assimilate and retain other highly qualified
employees in the future.

We have from time to time in the past
experienced, and we expect to continue to experience in the
future, difficulty in hiring and retaining highly skilled
employees with appropriate qualifications for certain positions.

If we fail to adequately protect our
intellectual property, we could lose our intellectual property
rights.

Our success and ability to effectively compete
are substantially dependent on the protection of our proprietary
technologies, patents, trademarks, service marks, copyrights and
trade secrets, which we protect through a combination of patent,
trademark, copyright, trade secret, unfair competition and
contract law. We cannot assure you that any of our intellectual
property rights will be viable or of value in the future.

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In September 1999, the U.S. Patent and
Trademark Office issued to us a patent that covers our DART ad
serving and ad management technology. We are currently seeking
reissue of this patent, which would limit the scope of the
existing patent, and this reissue proceeding is pending before
the U.S. Patent and Trademark Office. The patent examiner
has raised some objections to our reissue application. Although
we are contesting these objections, we cannot assure you that
this patent will be reissued. We own other patents, and have
patent applications pending for some of our other technology. We
cannot assure you that the patent applications that we have
filed in the United States and internationally will be issued or
that patents issued or acquired by us now or in the future will
be valid and enforceable or provide us with any meaningful
protection.

We also have rights in the trademarks and service
marks that we use to market our products and services. These
marks include DOUBLECLICK®, DART®, DARTMAIL®,
ABACUS, DOUBLECLICK ENSEMBLE, SITEADVANCE,
CHANNELVIEW® and MOTIF. We have applied to register
certain of our trademarks and service marks in the United States
and internationally. We cannot assure you that any of these
current or future applications will be approved. Even if these
marks are registered, these marks may be invalidated or
successfully challenged by others. If our trademarks or service
marks are not registered because third parties own these marks,
our use of these marks will be restricted unless we are able to
enter into arrangements with these parties, which may not be
available on commercially reasonable terms, if at all.

We also enter into confidentiality, assignments
of proprietary rights and license agreements, as appropriate,
with our employees, consultants and business and technology
partners, and generally control access to and distribution of
our technologies, documentation and other proprietary
information. Despite these efforts, we cannot be certain that
the steps we take to prevent unauthorized use of our
intellectual property rights are sufficient to prevent
misappropriation of our products and services or technologies,
particularly in foreign countries where laws or law enforcement
practices may not protect our intellectual property rights as
fully as in the United States. In addition, we cannot assure you
that we will be able to adequately enforce the contractual
arrangements that we have entered into to protect our
proprietary technologies and intellectual property. If we lose
our intellectual property rights, this could have a material and
adverse impact on our business, financial condition and results
of operations.

If we face a claim of intellectual property
infringement, we may be liable for damages and be required to
make changes to our technology or business.

Infringement claims may be asserted against us,
which could adversely affect our reputation and the value of our
intellectual property rights. From time to time we have been,
and we expect to continue to be, subject to claims or notices in
the ordinary course of our business, including assertions of
alleged infringement of the patents, trademarks and other
intellectual property rights of third parties by us or our
customers. We do not conduct exhaustive patent searches to
determine whether our technology infringes patents held by
others. In addition, the protection of proprietary rights in
Internet-related industries is inherently uncertain due to the
rapidly evolving technological environment. As such, there may
be numerous patent applications pending, many of which are
confidential during a large part of their prosecution, that
provide for technologies similar to ours.

Third party infringement claims and any resultant
litigation against us or our technology partners or providers,
should it occur, could subject us to significant liability for
damages, restrict us from using our or their technology or
operating our business generally, or require changes to be made
to our technology. Even if we prevail, litigation is time
consuming and expensive to defend and would result in the
diversion of managements time and attention. Claims from
third parties may also result in limitations on our ability to
use the intellectual property subject to these claims unless we
are able to enter into royalty, licensing or other similar
agreements with the third parties asserting these claims.

Such agreements, if required, may not be
available on terms acceptable to us, or at all. If we are unable
to enter into these types of agreements, we would be required to
either cease using the subject product or change the technology
underlying the applicable product. If a successful claim of
infringement is brought against us and we fail to develop
non-infringing technology as an alternative or to license the
infringed or similar technology on a timely basis, it could
materially adversely affect our business, financial condition
and results of operations.

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Our business may be materially adversely
affected by lawsuits related to privacy, data protection and our
business practices.

We have been a defendant in several lawsuits
alleging, among other things, that we unlawfully obtain and use
Internet users personal information and that our use of ad
serving cookies violates various laws. We have also been the
subject of inquiries involving the Federal Trade Commission and
the attorneys general of several states relating to our
practices in the collection, maintenance and use of information
about, and our disclosure of these information practices to,
Internet users. Although the last of these particular matters
was resolved in 2002, we may in the future be subject to
additional claims or regulatory inquiries with respect to our
business practices. Class action litigation and regulatory
inquiries of these types are often expensive and time consuming
and their outcome may be uncertain.

Any additional claims or regulatory inquiries,
whether successful or not, could require us to devote
significant amounts of monetary or human resources to defend
ourselves and could harm our reputation. We may need to spend
significant amounts on our legal defense, senior management may
be required to divert their attention from other portions of our
business, new product launches may be deferred or canceled as a
result of any proceedings, and we may be required to make
changes to our present and planned products or services, any of
which could materially and adversely affect our business,
financial condition and results of operations. If, as a result
of any proceedings, a judgment is rendered or a decree is
entered against us, it may materially and adversely affect our
business, financial condition and results of operations and harm
our reputation.

We may be held liable to third parties for the
content in the advertising and emails we deliver on behalf of
our customers. We may be held liable to third parties for
content in the advertising we serve if the music, artwork, text
or other content involved violates the copyright, trademark or
other intellectual property rights of such third parties or if
the content is defamatory. Any claims or counterclaims could be
time consuming, result in costly litigation or divert
managements attention.

Our business depends in part on successful
adaptation of our business to international markets, in which we
have limited experience. Failure to successfully manage the
risks of international operations, including sales and marketing
efforts, would harm our results of operations and financial
condition.

We have operations in a number of countries and
have limited experience in developing localized versions of our
products and services and in marketing, selling and distributing
our products and services internationally. We sell our
technology products and services through our directly and
indirectly owned subsidiaries primarily located in Australia,
Canada, France, Germany, Spain, Ireland, the United Kingdom and
Hong Kong. In Japan, we sell our technology products and
services through DoubleClick Japan, of which we own
approximately 15%. We also operate the DoubleClick Data business
in the United Kingdom and Japan.

Our international operations are subject to other
inherent risks, including:



| |   |                                                                           
| | - | --------------------------------------------------------------------------
| |  | the high cost of maintaining international
    operations;                
|
| |  | uncertain demand for our products and services;                           
|
| |  | the impact of recessions in economies outside the
    United States;      
|
| |  | changes in regulatory requirements;                                       
|
| |  | more restrictive data protection regulation;                              
|
| |  | reduced protection for intellectual property
    rights in some countries;
|
| |  | potentially adverse tax consequences;                                     
|
| |  | difficulties and costs of staffing and managing
    foreign operations;   

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| |   |                                                                                    
| | - | -----------------------------------------------------------------------------------
| |  | cultural differences in the conduct of business;                                   
|
| |  | political and economic instability;                                                
|
| |  | fluctuations in currency exchange rates; and                                       
|
| |  | seasonal fluctuations in Internet usage and
    marketing and advertising spending.

These risks may have a material and adverse
impact on the business, results of operations and financial
condition of our operations in a particular country and could
result in a decision by us to reduce or discontinue operations
in that country. The combined impact of these risks in each
country may also materially and adversely affect our business,
results of operations and financial condition as a whole.

Anti-takeover provisions in our charter,
by-laws and Delaware law may make it difficult for a third party
to acquire us.

Some of the provisions of our amended and
restated certificate of incorporation, our amended and restated
by-laws and Delaware law could, together or separately:



| |   |                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------
| |  | discourage potential acquisition proposals;                                                                    
|
| |  | delay or prevent a change in control; or                                                                       
|
| |  | impede the ability of our stockholders to change
    the composition of our board of directors in any one year.

As a result, it could be more difficult for third
parties to acquire us, even if doing so might be beneficial to
our stockholders. Difficulty in acquiring us could, in turn,
limit the price that investors might be willing to pay for
shares of our common stock.

Our stock price may experience extreme price
and volume fluctuations, and this volatility could result in us
becoming subject to securities or other litigation, which is
expensive and could result in a diversion of
resources.

The market price of our common stock has
fluctuated in the past and is likely to continue to be highly
volatile and subject to wide fluctuations. In addition, the
stock market has experienced extreme price and volume
fluctuations. Investors may be unable to resell their shares of
our common stock at or above their purchase price.

Additionally, 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. Many companies in our industry
have been subject to this type of litigation in the past. We may
also become involved in this type of litigation. Litigation is
often expensive and diverts managements attention and
resources, which could materially and adversely affect our
business, financial condition and results of operations.

Future sales of our common stock may affect
the market price of our common stock.

As of September 30, 2003, we had
137,546,011 shares of common stock outstanding, excluding
18,185,616 shares subject to options outstanding as of such
date under our stock option plans that are exercisable at prices
ranging from $0.01 to $1,134.80 per share. We cannot predict the
effect, if any, that future sales of common stock or the
availability of shares of common stock for future sale will have
on the market price of our common stock prevailing from time to
time. Sales of substantial amounts of common stock, including
shares issued upon the exercise of stock options, or the
perception that such sales could occur, may materially reduce
prevailing market prices for our common stock.

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Risks Related to Our Industry

Direct marketers and advertisers may be
reluctant to devote a portion of their budgets to marketing
technology and data products and services or online
advertising.

Companies doing business on the Internet,
including DoubleClick, must compete with traditional advertising
media, including television, radio, cable and print, for a share
of advertisers total marketing budgets. Potential
customers may be reluctant to devote a significant portion of
their marketing budget to online advertising or marketing
technology and data products and services if they perceive the
Internet or direct marketing to be a limited or ineffective
marketing medium. Any shift in marketing budgets away from
marketing technology and data products or services or online
advertising spending, including a shift to paid search services,
could materially and adversely affect our business, results of
operations or financial condition. In addition, online
advertising could lose its appeal to those direct marketers and
advertisers using the Internet as a result of excessive numbers
of banner advertisements on the Web, Internet users installing
filter software programs that allow them to block
advertisements, and the limitations of the contents of
advertisements on the Internet compared to other forms of media.

The lack of appropriate advertising
measurement standards or tools may cause us to lose customers or
prevent us from charging a sufficient amount for our products
and services.

Because online marketing technology and data
products and services remain relatively new disciplines, there
are currently no generally accepted methods or tools for
measuring the efficacy of online marketing and advertising as
there are for advertising in television, radio, cable and print.
Many traditional advertisers may be reluctant to spend sizable
portions of their budget on online marketing and advertising
until there exist widely accepted methods and tools that measure
the efficacy of their campaigns.

We could lose customers or fail to gain customers
if our products and services do not utilize the measuring
methods and tools that may become generally accepted. Further,
new measurement standards and tools could require us to change
our business and the means used to charge our customers, which
could result in a loss of customer revenues.

If the delivery of Internet advertising on the
Web, or the delivery of our email messages, is limited or
blocked, demand for our products and services may
decline.

Our business may be adversely affected by the
adoption by computer users of technologies that harm the
performance of our products and services. For example, computer
users may use software designed to filter or prevent the
delivery of Internet advertising or Internet browsers set to
block the use of cookies. We cannot assure you that the number
of computer users who employ these or other similar technologies
will not increase, thereby diminishing the efficacy of our
products and services. In the case that one or more of these
technologies becomes widely adopted by computer users, demand
for our products and services would decline.

We also depend on our ability to deliver emails
over the Internet through Internet service providers and private
networks. Internet service providers are able to block messages
from reaching their users and we do not have, nor are we
required to have, agreements with any Internet service providers
to deliver emails to their customers. As a result, we could
experience periodic temporary or permanent blockages of our
delivery of emails to their customers, which would limit the
effectiveness of our email marketing. Some Internet service
providers also use proprietary technologies to handle and
deliver email. If Internet service providers or private networks
materially limit or block the delivery of our emails, or if our
technology fails to be compatible with their email technologies,
then our business, results of operations or financial condition
could be materially and adversely affected. In addition, the
effectiveness of email marketing may decrease as a result of
increased consumer resistance to email marketing in general.

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New laws or regulation in the United States
and internationally, and uncertainties regarding the application
or interpretation of existing laws and regulations, could harm
our business.

Laws applicable to Internet communications,
e-commerce, Internet advertising, privacy and data protection,
the collection and sharing of data, direct marketing and email
marketing are becoming more prevalent in the United States and
worldwide. For example, various U.S., state and foreign
governments may attempt to regulate our ad delivery or levy
sales or other taxes on our activities, and numerous states and
foreign countries have enacted or proposed legislation
regulating the sending of unsolicited emails.

In addition, many areas of the law affecting the
Internet remain largely unsettled, even in areas where there has
been some legislative action. It is difficult to determine
whether and how existing laws, such as those governing
intellectual property, privacy and data protection, libel, data
security and taxation apply to the Internet, online and offline
marketing and advertising and our businesses.

The growth and development of Internet commerce
has prompted calls for more stringent consumer protection laws,
both in the United States and abroad. These proposals may seek
to impose additional burdens on companies conducting business
over the Internet and may be considered through legislative
action or ballot initiatives. Potential limitations on the
collection and use of information relating to the Internet and
direct marketing, particularly relating to email marketing, are
being considered by legislatures and regulatory agencies and in
the United States and internationally. We are unable to predict
whether any particular proposal will pass, or the nature of the
limitations that may be imposed. In addition, it is possible
that changes to existing law, including both amendments to
existing laws and new interpretations of existing law, could
have a material and adverse impact on our business, financial
condition and results of operations.

The following are examples of legislation enacted
or currently being considered in the United States and
internationally:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Legislation has been enacted in some countries
    and proposed in the United States to regulate the use of cookie
    technology. Our technology uses cookies for ad targeting and
    reporting, among other things. The changes required for us to
    comply with newly imposed requirements may be commercially
    unfeasible, or simply unattainable. We may, therefore, be
    required to discontinue the relevant business practice.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Data protection officials in some European
    countries have asserted that Internet protocol addresses and
    cookies are intrinsically personally identifiable information
    thereby subject to privacy standards that may be more stringent
    than those in the U.S. We cannot assure you that our current
    policies and procedures would meet these more restrictive
    standards. The cost of such compliance could be material and we
    may not be able to comply with the applicable national
    regulations in a timely or cost-effective manner.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | Legislation has been enacted by some foreign
    governments and many states in the U.S. to prohibit or restrict
    the sending of unsolicited commercial email and
    similar U.S. federal legislation is currently pending in
    Congress. California has recently enacted a law, scheduled to
    take effect January 1, 2004, that prohibits unsolicited
    commercial email sent from California or sent to a California
    electronic mail address unless the recipient directly consents
    in advance to receive email from the advertiser or there is a
    pre-existing or current business relationship between the
    recipient and the advertiser. Although our email delivery is
    consent-based, it is possible that existing or future
    legislation in some jurisdictions may require us to change our
    current practices or may subject us to increased liabilities.                                                                                                                                    
|
| |  | The impending expiration of a provision of the
    federal Fair Credit Reporting Act, or FCRA, may lead to a wave
    of new restrictions on the collection, use and disclosure of
    information about consumers. The FCRA currently prohibits states
    in the U.S. and localities from enacting new laws affecting
    certain uses and disclosures of consumer information. This
    provision is presently set to expire on January 1, 2004.
    Congress is currently considering legislation that, if enacted
    into law, would make this provision permanent. If the provision
    is not extended, state and local governments may be permitted to
    enact new restrictions that could increase the costs of
    marketing and offering credit to consumers. Such restrictions
    could depress advertising spending and the overall demand for
    our products and services and could adversely affect our
    business, results of operations and financial condition, in
    particular the DoubleClick Data business.

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Any legislation enacted or regulation issued
could dampen the growth and acceptance of our industry in
general and of our offerings in particular. Our business could
be negatively impacted by new laws or regulations applicable to
direct marketing or the Internet, the application or
interpretation of existing laws and regulations to direct
marketing or the Internet or the application or interpretation
of new laws and regulations to our business. In response to
evolving legal requirements, we may be compelled to change or
discontinue an existing offering, business or business model, or
to cancel a proposed offering or new business. Any of these
circumstances could have a material and adverse impact on our
business, financial condition and results of operations. These
changes could also require us to incur significant expenses or
subject us to liability, and we may not find ourselves able to
replace the revenue lost as a consequence of the changes.

We are a member of the Network Advertising
Initiative, including its Email Service Provider Coalition, and
the Direct Marketing Association, both industry self-regulatory
organizations. We cannot assure you that these organizations or
similar organizations will not adopt additional, more burdensome
guidelines, compliance with which could materially and adversely
affect our business, financial condition and results of
operations.

Our business may suffer if the Web
infrastructure is unable to effectively support the growth in
demand placed on us.

Our success will depend, in large part, upon the
maintenance of the Web infrastructure, such as a reliable
network backbone with the necessary speed, data capacity and
security and timely development of enabling products, such as
high speed modems, for providing reliable Web access and
services and improved content. We cannot assure you that the Web
infrastructure will continue to effectively support the demands
placed on us as the Web continues to experience increased
numbers of users, frequency of use or increased bandwidth
requirements of users. Even if the necessary infrastructure or
technologies are developed, we may have to spend considerable
amounts to adapt our products and services accordingly.
Furthermore, the Web has experienced a variety of outages and
other delays due to damage to portions of its infrastructure.
These outages and delays could impact the direct marketers, Web
publishers and advertisers using our products and services.

DoubleClick Data is dependent on the success
of the direct marketing industry for our future
success.

The future success of DoubleClick Data is
dependent in large part on the continued demand for our services
from the direct marketing industry, including the catalog
industry, as well as the continued willingness of catalog
operators to contribute their data to us. Most of our Abacus
customers are large consumer merchandise catalog operators in
the United States, with a number of operators in the United
Kingdom. A significant downturn in the direct marketing industry
generally, including the catalog industry, or withdrawal by a
substantial number of catalog operators from the Abacus
Alliance, would have a material adverse effect on our business,
financial condition and results of operations. If email
marketing or electronic commerce, including the purchase of
merchandise and the exchange of information via the Internet or
other media, increases significantly in the future, companies
that now rely on catalogs or other direct marketing avenues to
market their products may reallocate resources toward these new
direct marketing channels and away from catalog-related
marketing or other direct marketing avenues, which could
adversely affect demand for some DoubleClick Data services. In
addition, the effectiveness of direct mail as a marketing tool
may decrease as a result of consumer saturation and increased
consumer resistance to direct mail in general.

Increases in postal rates and paper prices
could harm DoubleClick Data.

The direct marketing activities of our Abacus
Alliance customers are adversely affected by postal rate
increases, especially increases that are imposed without
sufficient advance notice to allow adjustments to be made to
marketing budgets. Higher postal rates may result in fewer
mailings of direct marketing materials, with a corresponding
decline in the need for some of the direct marketing services
offered by us. Increased

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postal rates can also lead to pressure from our
customers to reduce our prices for our services in order to
offset any postal rate increase. Higher paper prices may also
cause catalog companies to conduct fewer or smaller mailings
which could cause a corresponding decline in the need for our
products and services. Our customers may aggressively seek price
reductions for our products and services to offset any increased
materials cost.




|        |                         
|------- | ------------------------
|Item 4. | Controls and Procedures.

DoubleClicks management, with the
participation of DoubleClicks chief executive officer and
chief financial officer, evaluated the effectiveness of
DoubleClicks disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange
Act) as of September 30, 2003. Based on this evaluation,
DoubleClicks chief executive officer and chief financial
officer concluded that, as of September 30, 2003,
DoubleClicks disclosure controls and procedures were
(1) designed to ensure that material information relating
to DoubleClick, including its consolidated subsidiaries, is made
known to DoubleClicks chief executive officer and chief
financial officer by others within those entities, particularly
during the period in which this report was being prepared and
(2) effective, in that they provide reasonable assurance
that information required to be disclosed by DoubleClick in the
reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms.

No change in DoubleClicks internal control
over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) occurred during the fiscal
quarter ended September 30, 2003 that has materially
affected, or is reasonably likely to materially affect,
DoubleClicks internal control over financial reporting.

PART II: OTHER INFORMATION



|        |                  
|------- | -----------------
|Item 1. | Legal Proceedings

In April 2002, a consolidated amended class
action complaint alleging violations of the federal securities
laws in connection with our follow-on offerings was filed in the
United States District Court for the Southern District of New
York naming us, some of our officers and directors and certain
underwriters of our follow-on offerings as defendants. We and
some of our officers and directors are named in the suit
pursuant to Section 11 of the Securities Act of 1933 and
Section 10(b) of the Securities Exchange Act of 1934 on the
basis of the alleged failure to disclose the underwriters
alleged compensation and manipulative practices. This action
seeks, among other things, unspecified damages and costs,
including attorneys fees. In October 2002, the action was
dismissed against our officers and directors without prejudice.
However, claims against us remain. In July 2002, we and the
other issuers in the consolidated cases filed motions to dismiss
the amended complaint for failure to state a claim, which was
denied as to us in February 2003.

In June 2003, our Board of Directors
conditionally approved a proposed partial settlement with the
plaintiffs in this matter. The settlement would provide, among
other things, a release of us and of the individual defendants
for the conduct alleged in the action to be wrongful in the
amended complaint. We would agree to undertake other
responsibilities under the partial settlement, including
agreeing to assign away, not assert, or release certain
potential claims we may have against our underwriters. Our Board
of Directors agreed to approve the settlement subject to a
number of conditions, including the participation of a
substantial number of other issuer defendants in the proposed
settlement, the consent of our insurers to the settlement, and
the completion of acceptable final settlement documentation.
Furthermore, the settlement is subject to a hearing on fairness
and approval by the court overseeing the IPO litigations. If the
settlement is not finalized, we believe that the claims asserted
by these lawsuits are without merit, and intend to defend these
actions vigorously. However, due to the inherent uncertainties
of litigation, we cannot accurately predict the ultimate outcome
of the litigation. An unfavorable outcome in litigation could
materially and adversely affect our business, financial
condition and results of operations.

We are currently defending an arbitration claim
in Sweden brought by a former shareholder of DoubleClick
Scandinavia AB. The shareholder claims that we breached our
obligation to issue and register

55



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##### 



shares of our Common Stock, which the shareholder
claims caused it to incur damages. The arbitration hearing is
currently scheduled for end of November 2003. If the shareholder
is successful, other former shareholders of DoubleClick
Scandinavia AB may make similar claims for damages. Due to the
inherent uncertainties of litigation, we cannot predict the
outcome of this matter. An unfavorable outcome in this
arbitration would not have a material adverse effect on our
business, but could materially and adversely affect our results
of operations and cash flows during the period in which we were
required to make any payments.


In October 2003, we received a grand jury
subpoena from the United States Attorneys Office for the
Southern District of New York (U.S. Attorneys
Office) seeking documents regarding certain vendors that
provided services to us during the period from 1999 through
2001. The services provided by these vendors are unrelated to
the products and services provided by us to our customers. We
are fully cooperating with the U.S. Attorneys Office. In
addition, we are conducting an internal investigation and
implementing remedial measures to improve our selection, use and
oversight of our vendors. Based on the internal investigation
completed to date, we do not believe that any overpayments made
by us or other inappropriate payments, if any, relating to these
vendors are material with respect to our financial statements
for the period in question or our current financial condition.



|        |                                     
|------- | ------------------------------------
|Item 6. | Exhibits and Reports on
    Form 8-K

(a) Exhibits

|       |      |             |  |                                                                                                                                                       
|------ | ---- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |      | Description
|       |      |            
|       | 10.1 |             |  | Lease Termination Agreement (Incorporated by
    reference to Exhibit 10.1 of the Registrants Current
    Report on Form 8-K, dated August 26, 2003).
|       | 31.1 |             |  | Certification of Chief Executive Officer pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002.                                               
|       | 31.2 |             |  | Certification of Chief Financial Officer pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002.                                               
|       | 32.1 |             |  | Certification of Chief Executive Officer pursuant
    to Section 906 of the Sarbanes-Oxley Act of 2002.                                               
|       | 32.2 |             |  | Certification of Chief Financial Officer pursuant
    to Section 906 of the Sarbanes-Oxley Act of 2002.                                               

(b) Reports on Form 8-K



| |                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On July 22, 2003, we furnished a Current
    Report on Form 8-K under Item 9, containing a copy of
    our earnings release for the period ended June 30, 2003
    (including financial statements) pursuant to Item 12.                                                                                                          
|
| | On August 26, 2003, we filed a Current
    Report on Form 8-K, under Item 5, announcing that on
    August 19, 2003, the Company had entered into a Lease
    Termination Agreement pursuant to which it agreed to terminate
    the lease and all obligations thereunder for its office located
    in San Francisco, California.

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SIGNATURE

Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly
authorized.



| |                 
| | ----------------
| | DOUBLECLICK INC.



| |     |                    
| | --- | -------------------
| | By: | /s/ CORY A. DOUGLAS

| |                                                     
| | ----------------------------------------------------
| |                                                     
| | Cory A. Douglas                                     
| | Vice President, Finance and Corporate
    Controller
| | (Chief Accounting Officer and                       
| | Duly Authorized Officer)                            

Date: November 14, 2003

57



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INDEX TO EXHIBITS

|            |      |                        |  |                                                                                                                                                       
|----------- | ---- | ---------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |      | Description of Exhibit
|            |      |                       
|            | 10.1 |                        |  | Lease Termination Agreement (Incorporated by
    reference to Exhibit 10.1 of the Registrants Current
    Report on Form 8-K, dated August 26, 2003).
|            | 31.1 |                        |  | Certification of Chief Executive Officer pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002.                                               
|            | 31.2 |                        |  | Certification of Chief Financial Officer pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002.                                               
|            | 32.1 |                        |  | Certification of Chief Executive Officer pursuant
    to Section 906 of the Sarbanes-Oxley Act of 2002.                                               
|            | 32.2 |                        |  | Certification of Chief Financial Officer pursuant
    to Section 906 of the Sarbanes-Oxley Act of 2002.                                               

Statement of Differences

|                                                          |  |     
|--------------------------------------------------------- |  | ----
|The trademark symbol shall be expressed as                |  | TM
|The registered trademark symbol shall be
    expressed as |  | r 
|The section symbol shall be expressed as                  |  | SS

58