##### Table of Contents









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 March 31, 2005                                               
|  
|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





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)

111 Eighth Avenue, 10th Floor


New York, New York 10011


(212) 683-0001


(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,


INCLUDING AREA CODE OF REGISTRANTS PRINCIPAL EXECUTIVE
OFFICES)


þ o


þ o












---










DOUBLECLICK INC.


INDEX TO FORM 10-Q


|                                   |  |                                                                                              |  |  |    | 
|---------------------------------- |  | -------------------------------------------------------------------------------------------- |  |  | -- | 
|PART I:  FINANCIAL INFORMATION    
|Item 1:                            |  | Financial Statements (unaudited)                                                             |  |  |    | 
|                                   |  | Consolidated Balance Sheets as of
    March 31, 2005 and December 31, 2004                   |  |  | 2  | 
|                                   |  | Consolidated Statements of Operations for
    the three months ended March 31, 2005 and 2004 |  |  | 3  | 
|                                   |  | Consolidated Statements of Cash Flows for
    the three months ended March 31, 2005 and 2004 |  |  | 4  | 
|                                   |  | Notes to the Consolidated Financial
    Statements                                           |  |  | 5  | 
|Item 2:                            |  | Managements Discussion and Analysis of
    Financial Condition and Results of Operations     |  |  | 21 | 
|Item 3:                            |  | Quantitative and Qualitative Disclosures
    about Market Risk                               |  |  | 32 | 
|Item 4:                            |  | Controls and Procedures                                                                      |  |  | 48 | 
|                                  
|PART II:  OTHER
    INFORMATION   
|Item 1:                            |  | Legal Proceedings                                                                            |  |  | 48 | 
|Item 6:                            |  | Exhibits                                                                                     |  |  | 49 | 
|EX-10.1: 2005 CORPORATE BONUS PLAN
|EX-10.2: FIRST AMENDMENT TO LEASE 
|EX-31.1: CERTIFICATION            
|EX-31.2: CERTIFICATION            
|EX-32.1: CERTIFICATION            
|EX-32.2: CERTIFICATION            



1



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##### Table of Contents



PART 1:     FINANCIAL
INFORMATION


Item 1:     Financial
Statements (unaudited)


DOUBLECLICK INC.





CONSOLIDATED BALANCE SHEETS


|                                                                                                                               |                                            |                           |           |         |              |   |           |         | 
|------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ------------------------- | --------- | ------- | ------------ | - | --------- | ------- | 
|                                                                                                                               |                                            | March 31,                 |           |         | December 31, |  
|                                                                                                                               |                                            | 2005                      |           |         | 2004         |  
|                                                                                                                               |                                            |                           |           |         |              |  
|                                                                                                                               |                                            | (Unaudited, in thousands, |          
|                                                                                                                               |                                            | except share amounts)     |          
|ASSETS                                                                                                                        
|CURRENT ASSETS:                                                                                                                |                                            |                           |           |         |              |   |           |        
|Cash and cash equivalents                                                                                                      |                                            | $                         | 120,016   |         |              | $ | 126,135   |        
|Investments in marketable securities                                                                                           |                                            |                           | 295,515   |         |              |   | 264,332   |        
|Restricted cash                                                                                                                |                                            |                           | 1,635     |         |              |   | 3,635     |        
|Accounts receivable, net of allowances of $8,670 and $10,051,
    respectively                                                 |                                            |                           | 79,746    |         |              |   | 84,165    |        
|Prepaid expenses and other current assets                                                                                      |                                            |                           | 14,409    |         |              |   | 12,257    |        
|                                                                                                                               |                                            |                           |           |         |              |  
|                                                                                                                               | Total current assets                       |                           |           | 511,321 |              |   |           | 490,524 | 
|Investment in marketable securities                                                                                            |                                            |                           | 108,509   |         |              |   | 146,552   |        
|Restricted cash                                                                                                                |                                            |                           | 11,668    |         |              |   | 11,668    |        
|Property and equipment, net                                                                                                    |                                            |                           | 80,391    |         |              |   | 77,821    |        
|Goodwill                                                                                                                       |                                            |                           | 72,727    |         |              |   | 72,948    |        
|Intangible assets, net                                                                                                         |                                            |                           | 19,513    |         |              |   | 22,395    |        
|Investment in affiliates                                                                                                       |                                            |                           | 5,673     |         |              |   | 5,772     |        
|Other assets                                                                                                                   |                                            |                           | 13,645    |         |              |   | 13,749    |        
|                                                                                                                               |                                            |                           |           |         |              |  
|                                                                                                                               | Total assets                               |                           | $         | 823,447 |              |   | $         | 841,429 | 
|                                                                                                                               |                                            |                           |           |         |              |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                          
|CURRENT LIABILITIES:                                                                                                           |                                            |                           |           |         |              |   |           |        
|Accounts payable                                                                                                               |                                            |                           | 26,614    |         |              |   | 34,964    |        
|Accrued expenses and other current liabilities                                                                                 |                                            |                           | 48,431    |         |              |   | 56,844    |        
|Deferred revenue                                                                                                               |                                            |                           | 13,563    |         |              |   | 13,687    |        
|                                                                                                                               |                                            |                           |           |         |              |  
|                                                                                                                               | Total current liabilities                  |                           |           | 88,608  |              |   |           | 105,495 | 
|Convertible subordinated notes  Zero Coupon, due 2023                                                                         |                                            |                           | 135,000   |         |              |   | 135,000   |        
|Other long term liabilities                                                                                                    |                                            |                           | 20,377    |         |              |   | 20,570    |        
|                                                                                                                               |                                            |                           |           |         |              |  
|                                                                                                                               | Total liabilities                          |                           |           | 243,985 |              |   |           | 261,065 | 
|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, 140,942,901 and 140,564,907 shares issued,
    respectively |                                            |                           | 141       |         |              |   | 141       |        
|Treasury stock, 14,864,925 shares                                                                                              |                                            |                           | (109,223  | )       |              |   | (109,223  | )      
|Additional paid-in capital                                                                                                     |                                            |                           | 1,296,807 |         |              |   | 1,294,510 |        
|Accumulated deficit                                                                                                            |                                            |                           | (612,930  | )       |              |   | (612,013  | )      
|Other accumulated comprehensive income                                                                                         |                                            |                           | 4,667     |         |              |   | 6,949     |        
|                                                                                                                               |                                            |                           |           |         |              |  
|                                                                                                                               | Total stockholders equity                 |                           |           | 579,462 |              |   |           | 580,364 | 
|                                                                                                                               |                                            |                           |           |         |              |  
|                                                                                                                               | Total liabilities and stockholders equity |                           | $         | 823,447 |              |   | $         | 841,429 | 
|                                                                                                                               |                                            |                           |           |         |              |  



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DOUBLECLICK INC.





CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                                        |                                     |                          |         |        |        |   |         |        |        | 
|----------------------------------------------------------------------- | ----------------------------------- | ------------------------ | ------- | ------ | ------ | - | ------- | ------ | ------ | 
|                                                                        |                                     | Three Months Ended       |        
|                                                                        |                                     | March 31,                |        
|                                                                        |                                     |                          |        
|                                                                        |                                     | 2005                     |         |        | 2004   |  
|                                                                        |                                     |                          |         |        |        |  
|                                                                        |                                     | (Unaudited, in           |        
|                                                                        |                                     | thousands,               |        
|                                                                        |                                     | except per share         |        
|                                                                        |                                     | amounts)                 |        
|Revenue                                                                 |                                     | $                        | 76,346  |        |        | $ | 68,047  |       
|Cost of revenue                                                         |                                     |                          | 23,380  |        |        |   | 22,565  |       
|                                                                        |                                     |                          |         |        |        |  
|                                                                        | Gross profit                        |                          |         | 52,966 |        |   |         | 45,482 |       
|Operating expenses:                                                     |                                     |                          |         |        |        |   |         |       
|                                                                        | Sales and marketing                 |                          |         | 29,053 |        |   |         | 25,650 |       
|                                                                        | General and administrative          |                          |         | 11,507 |        |   |         | 8,074  |       
|                                                                        | Product development                 |                          |         | 14,503 |        |   |         | 8,491  |       
|                                                                        | Amortization of intangibles         |                          |         | 1,640  |        |   |         | 637    |       
|                                                                        |                                     |                          |         |        |        |  
|                                                                        |                                     | Total operating expenses |         |        | 56,703 |   |         |        | 42,852 | 
|Income (loss) from operations                                           |                                     |                          | (3,737  | )      |        |   | 2,630   |       
|Other income (expense)                                                  |                                     |                          |         |        |        |   |         |       
|                                                                        | Equity in losses of affiliates      |                          |         | (88    | )      |   |         | (186   | )     
|                                                                        | Gain on distribution from affiliate |                          |         |       |        |   |         | 2,400  |       
|                                                                        | Interest and other, net             |                          |         | 3,291  |        |   |         | 3,474  |       
|                                                                        |                                     |                          |         |        |        |  
|                                                                        |                                     | Total other income       |         |        | 3,203  |   |         |        | 5,688  | 
|Income (loss) before income taxes                                       |                                     |                          | (534    | )      |        |   | 8,318   |       
|Provision for income taxes                                              |                                     |                          | 383     |        |        |   | 625     |       
|                                                                        |                                     |                          |         |        |        |  
|Net income (loss)                                                       |                                     | $                        | (917    | )      |        | $ | 7,693   |       
|                                                                        |                                     |                          |         |        |        |  
|Basic net income (loss) per share                                       |                                     | $                        | (0.01   | )      |        | $ | 0.06    |       
|                                                                        |                                     |                          |         |        |        |  
|Weighted average shares used in basic net income (loss) per share       |                                     |                          | 125,914 |        |        |   | 137,099 |       
|                                                                        |                                     |                          |         |        |        |  
|Diluted net income (loss) per share                                     |                                     | $                        | (0.01   | )      |        | $ | 0.05    |       
|                                                                        |                                     |                          |         |        |        |  
|Weighted average shares used in diluted net income (loss) per
    share |                                     |                          | 125,914 |        |        |   | 151,384 |       
|                                                                        |                                     |                          |         |        |        |  



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DOUBLECLICK INC.





CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                             |                                                                                         |                                                                                     |                                        |         |        |        |         |         |         |         |  
|------------------------------------------------------------ | --------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | -------------------------------------- | ------- | ------ | ------ | ------- | ------- | ------- | ------- | -
|                                                             |                                                                                         | Three Months Ended                                                                  |                                       
|                                                             |                                                                                         | March 31,                                                                           |                                       
|                                                             |                                                                                         |                                                                                     |                                       
|                                                             |                                                                                         | 2005                                                                                |                                        |         | 2004   |       
|                                                             |                                                                                         |                                                                                     |                                        |         |        |       
|                                                             |                                                                                         | (Unaudited, in                                                                      |                                       
|                                                             |                                                                                         | thousands)                                                                          |                                       
|CASH FLOWS FROM OPERATING ACTIVITIES                         |                                                                                         |                                                                                     |                                        |         |        |        |         |        
|                                                             | Net income (loss)                                                                       |                                                                                     | $                                      | (917    | )      |        | $       | 7,693   |        
|                                                             | Adjustments to reconcile net income (loss) to net cash used in
    operating activities |                                                                                     |                                        |         |        |        |         |         |        
|                                                             |                                                                                         | Depreciation and leasehold amortization                                             |                                        |         | 5,598  |        |         |         | 7,445   |        
|                                                             |                                                                                         | Amortization of intangible assets                                                   |                                        |         | 2,854  |        |         |         | 1,512   |        
|                                                             |                                                                                         | Equity in losses of affiliates                                                      |                                        |         | 88     |        |         |         | 186     |        
|                                                             |                                                                                         | Gain on distribution from affiliate                                                 |                                        |         |       |        |         |         | (2,400  | )      
|                                                             |                                                                                         | Other non-cash items                                                                |                                        |         | 1,046  |        |         |         | 897     |        
|                                                             |                                                                                         | Provisions for bad debts and advertiser discounts                                   |                                        |         | 1,164  |        |         |         | 2,574   |        
|                                                             |                                                                                         | Changes in operating assets and liabilities, net of the effect
    of acquisitions: |                                        |         |        |        |         |         |         |        
|                                                             |                                                                                         |                                                                                     | Accounts receivable                    |         |        | 2,900  |         |         |         | (5,434  | )
|                                                             |                                                                                         |                                                                                     | Prepaid expenses and other assets      |         |        | (2,168 | )       |         |         | (1,884  | )
|                                                             |                                                                                         |                                                                                     | Accounts payable                       |         |        | (8,350 | )       |         |         | 1,210   |  
|                                                             |                                                                                         |                                                                                     | Lease termination and related payments |         |        |       |         |         |         | (7,625  | )
|                                                             |                                                                                         |                                                                                     | Accrued expenses and other liabilities |         |        | (3,772 | )       |         |         | (13,007 | )
|                                                             |                                                                                         |                                                                                     | Deferred revenue                       |         |        | (124   | )       |         |         | 1,482   |  
|                                                             |                                                                                         |                                                                                     |                                        |         |        |       
|                                                             |                                                                                         | Net cash used in operating activities                                               |                                        |         | (1,681 | )      |         |         | (7,351  | )      
|CASH FLOWS FROM INVESTING ACTIVITIES                         |                                                                                         |                                                                                     |                                        |         |        |        |         |        
|                                                             | Purchases of investments in marketable securities                                       |                                                                                     |                                        | (29,115 | )      |        |         | (74,400 | )      
|                                                             | Maturities of investments in marketable securities                                      |                                                                                     |                                        | 35,208  |        |        |         | 51,520  |        
|                                                             | Restricted cash                                                                         |                                                                                     |                                        | 2,000   |        |        |         | 12,100  |        
|                                                             | Purchases of property and equipment                                                     |                                                                                     |                                        | (6,290  | )      |        |         | (6,069  | )      
|                                                             | Acquisition of businesses, net of cash acquired                                         |                                                                                     |                                        | (6,575  | )      |        |         | (22,445 | )      
|                                                             | Proceeds from distribution from affiliate                                               |                                                                                     |                                        |        |        |        |         | 2,400   |        
|                                                             | Investment in Abacus Deutschland                                                        |                                                                                     |                                        |        |        |        |         | (471    | )      
|                                                             |                                                                                         |                                                                                     |                                        |         |        |       
|                                                             |                                                                                         | Net cash used in investing activities                                               |                                        |         | (4,772 | )      |         |         | (37,365 | )      
|CASH FLOWS FROM FINANCING ACTIVITIES                         |                                                                                         |                                                                                     |                                        |         |        |        |         |        
|                                                             | Proceeds from the issuance of common stock                                              |                                                                                     |                                        | 1,251   |        |        |         | 2,443   |        
|                                                             | Purchases of treasury stock                                                             |                                                                                     |                                        |        |        |        |         | (20,439 | )      
|                                                             | Payments under capital lease obligations                                                |                                                                                     |                                        |        |        |        |         | (179    | )      
|                                                             |                                                                                         |                                                                                     |                                        |         |        |       
|                                                             |                                                                                         | Net cash provided by (used in) financing activities                                 |                                        |         | 1,251  |        |         |         | (18,175 | )      
|Effect of exchange rate changes on cash and cash equivalents |                                                                                         |                                                                                     | (917                                   | )       |        |        | 662     |        
|                                                             |                                                                                         |                                                                                     |                                        |         |        |       
|Net decrease in cash and cash equivalents                    |                                                                                         |                                                                                     | (6,119                                 | )       |        |        | (62,229 | )      
|Cash and cash equivalents at beginning of period             |                                                                                         | $                                                                                   | 126,135                                |         |        | $      | 183,484 |        
|                                                             |                                                                                         |                                                                                     |                                        |         |        |       
|Cash and cash equivalents at end of period                   |                                                                                         | $                                                                                   | 120,016                                |         |        | $      | 121,255 |        
|                                                             |                                                                                         |                                                                                     |                                        |         |        |       



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DOUBLECLICK INC.





NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


March 31, 2005


(unaudited)




|         |                                                                
|-------- | ---------------------------------------------------------------
|Note 1  | Description of Business and Significant Accounting
    Policies



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











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







5



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


March 31, 2005


(unaudited)






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











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

Accounting for Costs of Computer Software Developed or
Obtained for Internal Use




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







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



6



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


March 31, 2005


(unaudited)




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



TechSolutions.








Data.




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



7



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


March 31, 2005


(unaudited)




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





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





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





| |                          
| | -------------------------
| | Equity-based Compensation





8



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


March 31, 2005


(unaudited)




|                                     |                        |                       |   |        |      |  |   |       | 
|------------------------------------ | ---------------------- | --------------------- | - | ------ | ---- |  | - | ----- | 
|                                     |                        | Three Months Ended    |  
|                                     |                        | March 31,             |  
|                                     |                        |                       |  
|                                     |                        | 2005                  |   |        | 2004 | 
|                                     |                        |                       |   |        |      | 
|                                     |                        | (In thousands, except |  
|                                     |                        | per share amounts)    |  
|Net income (loss)                    |                        |                       |   |        |      |  |   |      
|                                     | As reported            |                       | $ | (917   | )    |  | $ | 7,693 | 
|                                     | Pro forma per SFAS 123 |                       | $ | (4,822 | )    |  | $ | 403   | 
|Basic net income (loss) per share:   |                        |                       |   |        |      |  |   |      
|                                     | As reported            |                       | $ | (0.01  | )    |  | $ | 0.06  | 
|                                     | Pro forma per SFAS 123 |                       | $ | (0.04  | )    |  | $ | 0.00  | 
|Diluted net income (loss) per share: |                        |                       |   |        |      |  |   |      
|                                     | As reported            |                       | $ | (0.01  | )    |  | $ | 0.05  | 
|                                     | Pro forma per SFAS 123 |                       | $ | (0.04  | )    |  | $ | 0.00  | 



|                        |  |                    |           |  |      |  |           | 
|----------------------- |  | ------------------ | --------- |  | ---- |  | --------- | 
|                        |  | Three Months Ended |          
|                        |  | March 31,          |          
|                        |  |                    |          
|                        |  | 2005               |           |  | 2004 | 
|                        |  |                    |           |  |      | 
|Expected dividend yield |  |                    | 0%        |  |      |  | 0%        | 
|Risk-free interest rate |  |                    | 3.72%     |  |      |  | 2.99%     | 
|Expected life           |  |                    | 5.0 years |  |      |  | 4.5 years | 
|Volatility              |  |                    | 55%       |  |      |  | 65%       | 



9



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


March 31, 2005


(unaudited)




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



|                                                       |  |                       |         |   |      |   |         | 
|------------------------------------------------------ |  | --------------------- | ------- | - | ---- | - | ------- | 
|                                                       |  | Three Months Ended    |        
|                                                       |  | March 31,             |        
|                                                       |  |                       |        
|                                                       |  | 2005                  |         |   | 2004 |  
|                                                       |  |                       |         |   |      |  
|                                                       |  | (In thousands, except |        
|                                                       |  | per share amounts)    |        
|Net income (loss)                                      |  | $                     | (917    | ) |      | $ | 7,693   | 
|                                                       |  |                       |         |   |      |  
|Weighted average basic shares outstanding              |  |                       | 125,914 |   |      |   | 137,099 | 
|Effect of dilutive securities: stock options           |  |                       |        |   |      |   | 3,985   | 
|Convertible subordinated notes  Zero Coupon, due 2023 |  |                       |        |   |      |   | 10,300  | 
|                                                       |  |                       |         |   |      |  
|Weighted average diluted shares outstanding            |  |                       | 125,914 |   |      |   | 151,384 | 
|                                                       |  |                       |         |   |      |  
|Basic net income (loss) per share                      |  | $                     | (0.01   | ) |      | $ | 0.06    | 
|                                                       |  |                       |         |   |      |  
|Diluted net income (loss) per share                    |  | $                     | (0.01   | ) |      | $ | 0.05    | 
|                                                       |  |                       |         |   |      |  





| |                              
| | -----------------------------
| | Concentrations of Credit Risk









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



10



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


March 31, 2005


(unaudited)




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





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







11



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DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


March 31, 2005


(unaudited)








|         |                      
|-------- | ---------------------
|Note 2  | Business Transactions



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



| |     
| | ----
| | 2004



| |                
| | ---------------
| | Performics Inc.



12



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DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


March 31, 2005


(unaudited)




|                          |  |   |       |  
|------------------------- |  | - | ----- | -
|Current assets            |  | $ | 24.9  |  
|Property and equipment    |  | $ | 1.4   |  
|Other intangible assets   |  | $ | 18.7  |  
|Goodwill                  |  | $ | 41.6  |  
|                          |  |   |      
|Total assets acquired     |  | $ | 86.6  |  
|Total liabilities assumed |  | $ | (21.8 | )
|                          |  |   |      
|Net assets acquired       |  | $ | 64.8  |  
|                          |  |   |      







| |                
| | ---------------
| | SmartPath, Inc.





|                          |  |   |      |  
|------------------------- |  | - | ---- | -
|Current assets            |  | $ | 3.2  |  
|Property and equipment    |  |   | 0.1  |  
|Other intangible assets   |  |   | 7.1  |  
|Goodwill                  |  |   | 15.7 |  
|                          |  |   |     
|Total assets acquired     |  |   | 26.1 |  
|Total liabilities assumed |  | $ | (2.0 | )
|                          |  |   |     
|Net assets acquired       |  | $ | 24.1 |  
|                          |  |   |     



13



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


March 31, 2005


(unaudited)








|                                    |  |                       |        |   |      |   |        | 
|----------------------------------- |  | --------------------- | ------ | - | ---- | - | ------ | 
|                                    |  | Three Months Ended    |       
|                                    |  | March 31,             |       
|                                    |  |                       |       
|                                    |  | 2005                  |        |   | 2004 |  
|                                    |  |                       |        |   |      |  
|                                    |  | (In thousands, except |       
|                                    |  | per share data)       |       
|Revenues                            |  | $                     | 76,346 |   |      | $ | 73,382 | 
|Net income (loss)                   |  | $                     | (917   | ) |      | $ | 5,668  | 
|Basic net income (loss) per share   |  | $                     | (0.01  | ) |      | $ | 0.04   | 
|Diluted net income (loss) per share |  | $                     | (0.01  | ) |      | $ | 0.04   | 



|         |                         
|-------- | ------------------------
|Note 3  | Investment in Affiliates



|                   |  |                |       |  |      |   |       | 
|------------------ |  | -------------- | ----- |  | ---- | - | ----- | 
|                   |  | 2005           |       |  | 2004 |  
|                   |  |                |       |  |      |  
|                   |  | (In thousands) |      
|DoubleClick Japan  |  | $              | 5,554 |  |      | $ | 5,492 | 
|Abacus Deutschland |  |                | 119   |  |      |   | 280   | 
|MaxWorldwide, Inc. |  |                |      |  |      |   |      | 
|                   |  |                |       |  |      |  
|                   |  | $              | 5,673 |  |      | $ | 5,772 | 
|                   |  |                |       |  |      |  



|                   |  |                |        |  |      |   |        | 
|------------------ |  | -------------- | ------ |  | ---- | - | ------ | 
|                   |  | 2005           |        |  | 2004 |  
|                   |  |                |        |  |      |  
|                   |  | (In thousands) |       
|MaxWorldwide, Inc. |  | $              | 2,160  |  |      | $ | 2,112  | 
|DoubleClick Japan  |  | $              | 12,956 |  |      | $ | 11,378 | 



14



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DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


March 31, 2005


(unaudited)








|         |         
|-------- | --------
|Note 4  | Goodwill



|                                             |  |   |        |  
|-------------------------------------------- |  | - | ------ | -
|Balance at December 31, 2004                 |  | $ | 72,948 |  
|Tax adjustment related to prior acquisitions |  |   | (221   | )
|                                             |  |   |       
|Balance at March 31, 2005                    |  | $ | 72,727 |  
|                                             |  |   |       



|           |  |                |        |  |      |   |        | 
|---------- |  | -------------- | ------ |  | ---- | - | ------ | 
|           |  | 2005           |        |  | 2004 |  
|           |  |                |        |  |      |  
|           |  | (In thousands) |       
|Email      |  | $              | 16,887 |  |      | $ | 17,108 | 
|Performics |  |                | 41,627 |  |      |   | 41,627 | 
|EMS        |  |                | 14,213 |  |      |   | 14,213 | 
|           |  |                |        |  |      |  
|           |  | $              | 72,727 |  |      | $ | 72,948 | 
|           |  |                |        |  |      |  





|         |                  
|-------- | -----------------
|Note 5  | Intangible Assets



|                               |  |              |           |                |          |                |        |              |  |      |         |   |  |     |        |  |  |   |        | 
|------------------------------ |  | ------------ | --------- | -------------- | -------- | -------------- | ------ | ------------ |  | ---- | ------- | - |  | --- | ------ |  |  | - | ------ | 
|                               |  |              |           | March 31, 2005 |          |                |       
|                               |  | Weighted     |           |                |          |                |        | December 31, | 
|                               |  | Average      |           |                | Gross    |                |        |              |  | 2004 |        
|                               |  | Amortization |           |                | Carrying |                |        | Accumulated  |  |      |         |   |  |    
|                               |  | Period       |           |                | Amount   |                |        | Amortization |  |      | Net     |   |  | Net |       
|                               |  |              |           |                |          |                |        |              |  |      |         |   |  |     |       
|                               |  |              |           |                |          | (In thousands) |        |              |  |      |        
|Patents and trademarks         |  |              | 36 months |                |          | $              | 2,285  |              |  | $    | (2,285  | ) |  | $   |       |  |  | $ |       | 
|Customer relationships         |  |              | 31 months |                |          |                | 34,494 |              |  |      | (25,950 | ) |  | $   | 8,544  |  |  |   | 9,717  | 
|Purchased technology and other |  |              | 37 months |                |          |                | 22,001 |              |  |      | (11,512 | ) |  | $   | 10,489 |  |  |   | 11,718 | 
|Covenant not to compete        |  |              | 15 months |                |          |                | 2,400  |              |  |      | (1,920  | ) |  | $   | 480    |  |  |   | 960    | 
|                               |  |              |           |                |          |                |        |              |  |      |         |   |  |     |       
|                               |  |              | 33 months |                |          | $              | 61,180 |              |  | $    | (41,667 | ) |  | $   | 19,513 |  |  | $ | 22,395 | 
|                               |  |              |           |                |          |                |        |              |  |      |         |   |  |     |       



15



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


March 31, 2005


(unaudited)






|         |                 
|-------- | ----------------
|Note 6  | Accounts Payable



|                                 |  |                |        |  |      |   |        | 
|-------------------------------- |  | -------------- | ------ |  | ---- | - | ------ | 
|                                 |  | 2005           |        |  | 2004 |  
|                                 |  |                |        |  |      |  
|                                 |  | (In thousands) |       
|Accounts payable  trade         |  | $              | 5,445  |  |      | $ | 6,606  | 
|Accounts payable  site payments |  |                | 21,169 |  |      |   | 28,358 | 
|                                 |  |                |        |  |      |  
|                                 |  | $              | 26,614 |  |      | $ | 34,964 | 
|                                 |  |                |        |  |      |  





|         |                              
|-------- | -----------------------------
|Note 7  | Convertible Subordinated Debt





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DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


March 31, 2005


(unaudited)








|         |              
|-------- | -------------
|Note 8  | Restructuring









|                             |                                        |       |        |        |  
|---------------------------- | -------------------------------------- | ----- | ------ | ------ | -
|                             |                                        | Total |       
|                             |                                        |       |       
|Balance at December 31, 2004 |                                        | $     | 17,374 |       
|                             | Cash expenditures                      |       |        | (1,052 | )
|                             | Effect of foreign currency translation |       |        | (91    | )
|                             |                                        |       |       
|Balance at March 31, 2005    |                                        | $     | 16,231 |       
|                             |                                        |       |       



|         |              
|-------- | -------------
|Note 9  | Contingencies



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DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


March 31, 2005


(unaudited)














|          |                  
|--------- | -----------------
|Note 10  | Segment Reporting



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


March 31, 2005


(unaudited)




|                                  |  |                    |        |  |                    |   |        |           |  |   |         |   |  |               |        |   |      |   |        |           |  |   |        |  |  |   |        |   |  |   |        | 
|--------------------------------- |  | ------------------ | ------ |  | ------------------ | - | ------ | --------- |  | - | ------- | - |  | ------------- | ------ | - | ---- | - | ------ | --------- |  | - | ------ |  |  | - | ------ | - |  | - | ------ | 
|                                  |  | Three Months Ended |        |  | Three Months Ended |  
|                                  |  | March 31, 2005     |        |  | March 31, 2004     |  
|                                  |  |                    |        |  |                    |  
|                                  |  | TechSolutions      |        |  | Data               |   |        | Corporate |  |   | Total   |   |  | TechSolutions |        |   | Data |   |        | Corporate |  |   | Total  | 
|                                  |  |                    |        |  |                    |   |        |           |  |   |         |   |  |               |        |   |      |   |        |           |  |   |        | 
|Revenue from external customers   |  | $                  | 51,512 |  |                    | $ | 24,834 |           |  | $ |        |   |  | $             | 76,346 |   |      | $ | 45,297 |           |  | $ | 22,750 |  |  | $ |       |   |  | $ | 68,047 | 
|                                  |  |                    |        |  |                    |   |        |           |  |   |         |   |  |               |        |   |      |   |        |           |  |   |        | 
|Depreciation and amortization     |  | $                  | 5,689  |  |                    | $ | 2,236  |           |  | $ | 528     |   |  | $             | 8,453  |   |      | $ | 6,179  |           |  | $ | 2,164  |  |  | $ | 614    |   |  | $ | 8,957  | 
|                                  |  |                    |        |  |                    |   |        |           |  |   |         |   |  |               |        |   |      |   |        |           |  |   |        | 
|Operating income (loss)           |  | $                  | 6,634  |  |                    | $ | 1,531  |           |  | $ | (11,902 | ) |  | $             | (3,737 | ) |      | $ | 8,496  |           |  | $ | 2,533  |  |  | $ | (8,399 | ) |  | $ | 2,630  | 
|                                  |  |                    |        |  |                    |   |        |           |  |   |         |   |  |               |        |   |      |   |        |           |  |   |        | 
|Total other income                |  |                    |        |  |                    |   |        |           |  |   |         |   |  | $             | 3,203  |   |      |   |        |           |  |   |        |  |  |   |        |   |  | $ | 5,688  | 
|                                  |  |                    |        |  |                    |   |        |           |  |   |         |   |  |               |        |   |      |   |        |           |  |   |        | 
|Income (loss) before income taxes |  |                    |        |  |                    |   |        |           |  |   |         |   |  | $             | (534   | ) |      |   |        |           |  |   |        |  |  |   |        |   |  | $ | 8,318  | 
|                                  |  |                    |        |  |                    |   |        |           |  |   |         |   |  |               |        |   |      |   |        |           |  |   |        | 



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





|          |                  
|--------- | -----------------
|Note 12  | Subsequent Events



| |                       
| | ----------------------
| | AOL Services Agreement







| |                                    
| | -----------------------------------
| | Proposed Acquisition of DoubleClick



19



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


March 31, 2005


(unaudited)






| |                             
| | ----------------------------
| | Agreement with Kevin P. Ryan



20



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##### Table of Contents








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

Cautionary Note Regarding Forward-Looking Statements


This report contains forward-looking statements relating to
future events and our future performance within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as
amended. Stockholders are cautioned that such statements involve
risks and uncertainties. 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 we or our management believes,
expects, could, may,
estimate, will anticipates,
plans or similar expressions that are not statements
of historical fact should be considered forward-looking
statements. These statements are not guarantees of future
performance and involve certain risks, uncertainties and
assumptions that are difficult to predict. Our actual results
and timing of certain events could differ materially from those
anticipated in these forward-looking statements as a result of
certain factors, including, but not limited to, those set forth
under Risk Factors and elsewhere in this report and
in our other public filings with the Securities and Exchange
Commission. It is routine for internal projections and
expectations to change as the year or each quarter in the year
progresses, and therefore it should be clearly understood that
the internal projections and beliefs upon which we base our
expectations are made as of the date of this Quarterly Report on
Form 10-Q and may change prior to the end of each quarter
or the year. While we may elect to update forward-looking
statements at some point in the future, we may not update
publicly any forward-looking statements whether as a result of
new information, future events or otherwise. Except as expressly
otherwise provided, the forward-looking statements and risk
factors discussed herein do not reflect the potential impact of
any mergers, acquisitions or dispositions.


Overview




DoubleClick TechSolutions.


DoubleClick Data.


21



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Recent Developments




Critical Accounting Policies and Significant Estimates






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





| |                                                  
| | -------------------------------------------------
| | Valuation of Goodwill and Other Intangible Assets







22



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##### Table of Contents







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





| |                   
| | ------------------
| | Retention Payments







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



23



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##### Table of Contents





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





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









24



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##### Table of Contents







Business Transactions




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



| |     
| | ----
| | 2004



| |                
| | ---------------
| | Performics Inc.





| |                
| | ---------------
| | SmartPath, Inc.



Results of Operations






| |                                                                                        
| | ---------------------------------------------------------------------------------------
| | Three months ended March 31, 2005 compared to the
    three months ended March 31, 2004



25



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##### Table of Contents













|              |  |                      |        |  |               |   |        |        |  |   |       |  |  |  |      |  
|------------- |  | -------------------- | ------ |  | ------------- | - | ------ | ------ |  | - | ----- |  |  |  | ---- | -
|              |  | For the Three Months |        |  |              
|              |  | Ended March 31,      |        |  | 2005 vs. 2004 |  
|              |  |                      |        |  |               |  
|Revenue:      |  | 2005                 |        |  | 2004          |   |        | Change |  |   | %     | 
|              |  |                      |        |  |               |   |        |        |  |   |       | 
|TechSolutions |  | $                    | 51,512 |  |               | $ | 45,297 |        |  | $ | 6,215 |  |  |  | 13.7 | %
|Data          |  |                      | 24,834 |  |               |   | 22,750 |        |  |   | 2,084 |  |  |  | 9.2  | %
|              |  |                      |        |  |               |   |        |        |  |   |       | 
|Total         |  | $                    | 76,346 |  |               | $ | 68,047 |        |  | $ | 8,299 |  |  |  | 12.2 | %
|              |  |                      |        |  |               |   |        |        |  |   |       | 

|              |  |                      |        |  |               |   |        |        |  |   |       |  |  |  |      |  
|------------- |  | -------------------- | ------ |  | ------------- | - | ------ | ------ |  | - | ----- |  |  |  | ---- | -
|              |  | For the Three Months |        |  |              
|              |  | Ended March 31,      |        |  | 2005 vs. 2004 |  
|              |  |                      |        |  |               |  
|Gross Profit: |  | 2005                 |        |  | 2004          |   |        | Change |  |   | %     | 
|              |  |                      |        |  |               |   |        |        |  |   |       | 
|TechSolutions |  | $                    | 38,361 |  |               | $ | 31,899 |        |  | $ | 6,462 |  |  |  | 20.3 | %
|Data          |  |                      | 14,605 |  |               |   | 13,583 |        |  |   | 1,022 |  |  |  | 7.5  | %
|              |  |                      |        |  |               |   |        |        |  |   |       | 
|Total         |  | $                    | 52,966 |  |               | $ | 45,482 |        |  | $ | 7,484 |  |  |  | 16.5 | %
|              |  |                      |        |  |               |   |        |        |  |   |       | 

|                         |  |                      |         |   |               |   |        |        |  |   |        |   |  |  |       |   
|------------------------ |  | -------------------- | ------- | - | ------------- | - | ------ | ------ |  | - | ------ | - |  |  | ----- | --
|                         |  | For the Three Months |         |   |              
|                         |  | Ended March 31,      |         |   | 2005 vs. 2004 |  
|                         |  |                      |         |   |               |  
|Operating Income/(Loss): |  | 2005                 |         |   | 2004          |   |        | Change |  |   | %      |  
|                         |  |                      |         |   |               |   |        |        |  |   |        |  
|TechSolutions            |  | $                    | 6,634   |   |               | $ | 8,496  |        |  | $ | (1,862 | ) |  |  | (21.9 | )%
|Data                     |  |                      | 1,531   |   |               |   | 2,533  |        |  |   | (1,002 | ) |  |  | (39.6 | )%
|Corporate(1)             |  |                      | (11,902 | ) |               |   | (8,399 | )      |  |   | (3,503 | ) |  |  | NMF   |   
|                         |  |                      |         |   |               |   |        |        |  |   |        |  
|Total                    |  | $                    | (3,737  | ) |               | $ | 2,630  |        |  | $ | (6,367 | ) |  |  | NMF   |   
|                         |  |                      |         |   |               |   |        |        |  |   |        |  






|    |                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------
|(1) | Adjustments to reconcile segment reporting to consolidated
    results are included in Corporate.

26



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##### Table of Contents





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











27



---



##### Table of Contents





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











Operating Expenses




|                           |  |                      |        |  |               |   |        |        |  |   |        |  |  |  |       |  
|-------------------------- |  | -------------------- | ------ |  | ------------- | - | ------ | ------ |  | - | ------ |  |  |  | ----- | -
|                           |  | For the Three Months |        |  |              
|                           |  | Ended March 31,      |        |  | 2005 vs. 2004 |  
|                           |  |                      |        |  |               |  
|Operating Expenses:        |  | 2005                 |        |  | 2004          |   |        | Change |  |   | %      | 
|                           |  |                      |        |  |               |   |        |        |  |   |        | 
|Sales and marketing        |  | $                    | 29,053 |  |               | $ | 25,650 |        |  | $ | 3,403  |  |  |  | 13.3  | %
|General and administrative |  |                      | 11,507 |  |               |   | 8,074  |        |  |   | 3,433  |  |  |  | 42.5  | %
|Product development        |  |                      | 14,503 |  |               |   | 8,491  |        |  |   | 6,012  |  |  |  | 70.8  | %
|Amortzation of intangibles |  |                      | 1,640  |  |               |   | 637    |        |  |   | 1,003  |  |  |  | 157.5 | %
|                           |  |                      |        |  |               |   |        |        |  |   |        | 
|Total operating expenses   |  | $                    | 56,703 |  |               | $ | 42,852 |        |  | $ | 13,851 |  |  |  | 32.3  | %
|                           |  |                      |        |  |               |   |        |        |  |   |        | 



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



28



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







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







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





29



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Non-Operating Expenses and Income Taxes




| |                               
| | ------------------------------
| | Equity in Losses of Affiliates





| |                                    
| | -----------------------------------
| | Gain on Distribution from Affiliate







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

|                 |  |                      |       |   |               |   |       |        |  |   |      |   |  |  |       |   
|---------------- |  | -------------------- | ----- | - | ------------- | - | ----- | ------ |  | - | ---- | - |  |  | ----- | --
|                 |  | For the Three Months |       |   |              
|                 |  | Ended March 31,      |       |   | 2005 vs. 2004 |  
|                 |  |                      |       |   |               |  
|                 |  | 2005                 |       |   | 2004          |   |       | Change |  |   | %    |  
|                 |  |                      |       |   |               |   |       |        |  |   |      |  
|Interest Income  |  | $                    | 2,878 |   |               | $ | 2,999 |        |  | $ | (121 | ) |  |  | (4.0  | )%
|Interest Expense |  |                      | (275  | ) |               |   | (351  | )      |  |   | 76   |   |  |  | NMF   |   
|Other            |  |                      | 688   |   |               |   | 826   |        |  |   | (138 | ) |  |  | (16.7 | )%
|                 |  |                      |       |   |               |   |       |        |  |   |      |  
|Total            |  | $                    | 3,291 |   |               | $ | 3,474 |        |  | $ | (183 | ) |  |  | (5.3  | )%
|                 |  |                      |       |   |               |   |       |        |  |   |      |  







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





| |                                
| | -------------------------------
| | Liquidity and Capital Resources

|                                                    |  |                      |        |   |               |   |         |        |  |  |        |  |  |  |     | 
|--------------------------------------------------- |  | -------------------- | ------ | - | ------------- | - | ------- | ------ |  |  | ------ |  |  |  | --- | 
|                                                    |  | For the Three Months |        |   |              
|                                                    |  | Ended March 31,      |        |   | 2005 vs. 2004 |  
|                                                    |  |                      |        |   |               |  
|                                                    |  | 2005                 |        |   | 2004          |   |         | Change |  |  | %      | 
|                                                    |  |                      |        |   |               |   |         |        |  |  |        | 
|                                                    |  | (In thousands)       |        |   |               |   |        
|Net cash used in operating activities               |  | $                    | (1,681 | ) |               | $ | (7,351  | )      |  |  | 5,670  |  |  |  | NMF | 
|Net cash used in investing activities               |  | $                    | (4,772 | ) |               | $ | (37,365 | )      |  |  | 32,593 |  |  |  | NMF | 
|Net cash provided by (used in) financing activities |  | $                    | 1,251  |   |               | $ | (18,175 | )      |  |  | 19,426 |  |  |  | NMF | 

30



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| |                     
| | --------------------
| | Operating Activities







| |                     
| | --------------------
| | Investing Activities







| |                     
| | --------------------
| | Financing Activities







| |                               
| | ------------------------------
| | Off-Balance Sheet Arrangements





| |                           
| | --------------------------
| | Related Party Transactions



31



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

Interest
Rate Risk






|                                                |  |                |         |   |            |   |         |             |  |   |            |   |            |   |   |  |  |   |         | 
|----------------------------------------------- |  | -------------- | ------- | - | ---------- | - | ------- | ----------- |  | - | ---------- | - | ---------- | - | - |  |  | - | ------- | 
|                                                |  | One Year       |         |   | One to Two |   |         | Two to Five |  |   | Five and   |   |           
|                                                |  | or Less        |         |   | Years      |   |         | Years       |  |   | Thereafter |   | Fair Value |  
|                                                |  |                |         |   |            |   |         |             |  |   |            |   |            |  
|                                                |  | (In thousands) |        
|Assets:                                         |  |                |         |   |            |   |         |             |  |   |            |   |            |   |   |  |  |   |         | 
|Cash and cash equivalents                       |  | $              | 120,016 |   |            | $ |        |             |  | $ |           |   |            | $ |  |  |  | $ | 120,016 | 
|Average interest rate                           |  |                | 1.93    | % |            |   |         |             |  |   |            |   |            |   |   |  |  |   |         | 
|Fixed-rate investments in marketable securities |  | $              | 295,515 |   |            | $ | 108,509 |             |  | $ |           |   |            | $ |  |  |  | $ | 404,024 | 
|Average interest rate                           |  |                | 1.83    | % |            |   | 2.70    | %           |  |   |            |   |            |   |   |  |  |   |         | 
|                                               
|Liabilities:                                    |  |                |         |   |            |   |         |             |  |   |            |   |            |   |   |  |  |   |         | 
|Convertible subordinated notes                  |  | $              |        |   |            | $ |        |             |  | $ | 135,000    |   |            | $ |  |  |  | $ | 123,393 | 
|Average interest rate                           |  |                |         |   |            |   |         |             |  |   | 0.00       | % |            |   |   |  |  |   |         | 







Foreign
Currency Risk




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RISK FACTORS




RISKS RELATING TO OUR COMPANY AND OUR BUSINESS


Failure to complete the recently announced acquisition of
DoubleClick could negatively impact the market price of our
common stock and our future business and operations.






| |   |                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | under circumstances described in the merger agreement, we could
    be required to pay a termination fee of up to $28 million;                                                              
|
| |  | the market price of our common stock may decline to the extent
    that the current market price of such shares reflects a market
    assumption that the transaction will be completed; and
|
| |  | the costs related to the transaction, such as legal and
    accounting fees and a portion of the investment banking fees,
    must be paid even if the transaction is not completed.        





| |   |                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | perceived uncertainties as to our future direction may result in
    the loss of, or failure to attract, customers, employees or
    business partners; and
|
| |  | the diversion of managements attention could have a
    material adverse effect on our business, financial condition or
    results of operations.        



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






| |   |                                            
| | - | -------------------------------------------
| |  | achieve expected revenue rates or earnings;
|
| |  | manage our operations;                     
|
| |  | compete effectively in the marketplace;    

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| |   |                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------
| |  | develop and introduce new products and services;                                                                     
|
| |  | continue to develop, upgrade and integrate our products and
    services;                                            
|
| |  | attract, retain and motivate qualified personnel;                                                                    
|
| |  | maintain our current, and develop new, relationships with
    marketers, Web publishers and advertising agencies; and
|
| |  | anticipate and adapt to changing industry conditions.                                                                



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




A decrease in expenditures by marketers, Web publishers and
advertising agencies or a downturn in the economy could cause
our revenues to decline significantly in any given period.






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






We do not have multi-year agreements or minimum usage
requirements with many of our customers and may be unable to
retain customers, attract new customers or replace departing
customers with customers that can provide comparable
revenues.




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




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




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




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








| |   |                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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, integrate and scale our products and
    services, and to develop and introduce new products and services
    and enhancements to existing products and services that respond
    to market needs;
|
| |  | our ability to adapt to evolving technology and industry
    standards;                                                                                                                                                 
|
| |  | our customer service and support efforts;                                                                                                                                                                               

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| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | our sales and marketing efforts; and                                                                
|
| |  | the relative impact of general economic and industry conditions
    on either us or our competitors.





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






| |   |                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | marketer, Web publisher and advertising agency demand for our
    products and services;                                                                                                                                                
|
| |  | spending decisions by our customers and prospective customers;                                                                                                                                                                          
|
| |  | downward pricing pressures from current and potential customers
    and competitors for our products and services;                                                                                                                      
|
| |  | Internet traffic levels;                                                                                                                                                                                                                
|
| |  | number and size of ad units per page on our customers Web
    sites;                                                                                                                                                                   
|
| |  | the timing and cost 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, political and industry conditions.                                                                                                                                                                                    

We may not be able to manage our operational spending
properly which could adversely impact our business, results of
operations and financial condition.




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Seasonal trends may cause our operating results to
fluctuate.




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






| |   |                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 companys
    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 be able to continue to grow through acquisitions
of, or investments in, other companies.




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We depend on third-party Internet, telecommunications and
technology providers for key aspects in the provision of our
products and services and any failure or interruption in the
products and services that third parties provide could disrupt
our business.








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






Changes to financial accounting standards and new exchange
rules could make it more expensive to issue stock options to
employees, which will increase our compensation costs and may
cause us to change our business practices.




We may be unable to introduce new or enhanced products and
services that meet our customers requirements.






| |   |                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------
| |  | delays or difficulties in product acquisition, integration,
    customization or development;                                          
|
| |  | our competitors introduction of new products ahead of our
    new products, or their introduction of superior or cheaper
    products;
|
| |  | our customers development of inhouse solutions that could
    eliminate the need for our products and services; and                   
|
| |  | our failure to anticipate changes in customers
    requirements.                                                                      



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If we fail to adequately protect our intellectual property,
we could lose our intellectual property rights or be liable for
damages to third parties.






SM




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.






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






Activities of our clients could damage our reputation or give
rise to legal claims against us.






Our business may suffer if we are unable to effectively
manage our international operations.




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| |   |                                                                                    
| | - | -----------------------------------------------------------------------------------
| |  | 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, which may vary by
    country;        
|
| |  | reduced protection for intellectual property rights in some
    countries;         
|
| |  | potentially adverse tax consequences;                                              
|
| |  | difficulties and costs of staffing, monitoring and managing
    foreign operations;
|
| |  | 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.



Our customers could experience unfavorable business
conditions that could adversely affect our business.




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






| |   |                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------
| |  | 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.



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Our stock price may experience 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.






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




Risks Related to Our Industry


New laws and regulations or changing interpretations of
existing laws and regulations could harm our business.










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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.






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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.




Our business may suffer if the Web experiences unexpected
interruptions or delays that may be caused by system
failures.




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






Our data business segment is dependent on the success of the
direct marketing industry for our future success.




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Increases in postal rates and paper prices could harm our
data business segment.









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








PART II: OTHER INFORMATION







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



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Adele
Brody v. Hellman & Friedman LLC et al







|        |         
|------- | --------
|Item 6. | Exhibits

|       |    |             |  |                                                                                                               
|------ | -- | ----------- |  | --------------------------------------------------------------------------------------------------------------
|Number |    | Description
|       |    |            
|       | 10 | .1*         |  | 2005 Corporate Bonus Plan                                                                                     
|       | 10 | .2*         |  | First Amendment of Lease, dated as of March 30, 2005,
    between 111 Chelsea Commerce LP and DoubleClick Inc.
|      
|       | 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.       






|  |               
|- | --------------
|* | filed herewith

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SIGNATURE






| |                 
| | ----------------
| | Doubleclick Inc.



| |     |                    
| | --- | -------------------
| | By: | /s/ Cory A. Douglas

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



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EXHIBIT INDEX


|       |    |             |  |                                                                                                               
|------ | -- | ----------- |  | --------------------------------------------------------------------------------------------------------------
|Number |    | Description
|       |    |            
|       | 10 | .1*         |  | 2005 Corporate Bonus Plan                                                                                     
|      
|       | 10 | .2*         |  | First Amendment of Lease, dated as of March 30, 2005,
    between 111 Chelsea Commerce LP and DoubleClick Inc.
|      
|       | 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.       






|  |               
|- | --------------
|* | filed herewith