DOUBLECLICK INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
COMMISSION FILE NUMBER 000-23709

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DOUBLECLICK INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 13-3870996
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)

450 WEST 33RD STREET, 16TH FLOOR
NEW YORK, NEW YORK 10001
(212) 683-0001
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,
INCLUDING AREA CODE OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

COMMON STOCK $.001 PAR VALUE
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Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

[x] Yes [ ] No

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

The aggregate market value of voting stock held by non-affiliates of the
registrant as of March 27, 2002 was approximately $1,511,490,408 (based on the
last reported sale price on the NASDAQ National Market on that date). As of
March 27, 2002 there were 135,994,741 shares of the registrant's common stock
outstanding, including 207,325 shares exchangeable into shares of the
registrant's common stock, which were issued in connection with the registrant's
acquisition of FloNetwork Inc.

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DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Proxy Statement for the 2002 Annual Meeting of
Stockholders, which is to be filed subsequent to the date hereof, are
incorporated by reference into Part III.

________________________________________________________________________________

DOUBLECLICK INC.
2001 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

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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. 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 MAY CHANGE PRIOR TO THE END OF EACH
QUARTER OR THE YEAR. ALTHOUGH THESE EXPECTATIONS MAY CHANGE, WE MAY NOT INFORM
YOU IF THEY DO. OUR COMPANY POLICY IS GENERALLY TO PROVIDE OUR EXPECTATIONS ONLY
ONCE PER QUARTER, BUT WE MAY CHOOSE NOT TO UPDATE THAT INFORMATION UNTIL THE
NEXT QUARTER EVEN IF CIRCUMSTANCES CHANGE.

PART I

ITEM 1. BUSINESS OVERVIEW

We are a leading provider of products and services that enable direct
marketers, publishers, advertisers and agencies to market to consumers in the
digital world. Combining technology, media and data expertise, our products and
services help our customers optimize their advertising and marketing campaigns
on the Internet and through other media. We offer a broad range of technology,
media, data and research products and services to our customers to allow them to
address all facets of the digital marketing process, from pre-campaign planning
and testing to execution, measurement and campaign refinements.

In 2001, we derived our revenues from three business units: TechSolutions,
Media and Data (consisting of our Abacus and Research divisions). These business
units share the knowledge and experience gained through working with thousands
of publishers, advertisers and direct marketers every day. It is this sharing of
ideas that allows us to develop innovative tools to help marketers and
publishers grow their businesses, both online and offline.

Our three business units are summarized below. A more detailed description
of the products and services offered by these business units follows this
summary.

DOUBLECLICK TECHSOLUTIONS. DoubleClick TechSolutions offers publishers,
advertisers and direct marketers worldwide the industry's leading
technology solutions for their digital marketing needs. Our patented DART
(Dynamic, Advertising, Reporting and Targeting) ad management technology is
the platform for many of these products and services. The DART ad
management technology is a sophisticated targeting, reporting and delivery
tool, relied upon by our customers to measure campaign performance and
provide dynamic ad space inventory management.

The key products offered by DoubleClick TechSolutions include our Ad
Management products consisting of the DART for Publishers Service, the DART
Enterprise ad serving software product, the DART for Advertisers Service
and a suite of email products based on our DARTmail Service. Our ad
management products enable Web sites to generate advertising revenue with a
choice of our DART for Publishers Service, a Web-based application, and
DART Enterprise, our licensed ad serving software product formerly known as
AdServer. The DART for Publishers Service provides seamless ad delivery and
inventory management services for Web sites and allows Web publishers to
offer their advertisers sophisticated targeting and reporting capabilities.
The DART for Advertisers Service, which also uses the DART ad management
technology, is a Web-based application that enables advertisers and their
agencies to increase their return on investment and to streamline the ad
management process through analytical reporting.

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Our suite of email technology products includes both the DARTmail Service,
which is a Web-based application, and with the acquisition of MessageMedia,
Inc. in January 2002, a licensed software product. These products and
services allow publishers and direct marketers to manage and deliver their
email marketing campaigns. We have also introduced several new products
that provide our customers with additional capabilities to enhance the
campaign planning process.

DOUBLECLICK MEDIA. DoubleClick Media offers to advertisers worldwide a
broad range of online media purchasing opportunities to satisfy a variety
of marketing objectives. DoubleClick Media also enables Web publishers
worldwide to outsource ad sales for their Web sites to DoubleClick's ad
sales force and to leverage the revenue generating potential of their media
by joining DoubleClick's Web site network. The DoubleClick network
established the standard for the network model of advertising on the
Internet. The DoubleClick network allows advertisers to target a premium
collection of high-profile branded sites and to achieve scale
cost-efficiently with targeting and optimization tools. Direct marketers,
publishers and advertisers buy advertising on DoubleClick's Web site
network for sales, brand building and lead generation. DoubleClick Media
uses the DART ad management and DARTmail email delivery technologies to
deliver, target and report on our customers' campaigns.

DOUBLECLICK DATA. DoubleClick Data is comprised of two components:

ABACUS. Abacus is a leading provider of information products to direct
marketers. Abacus applies advanced statistical modeling techniques to
the Abacus Alliance database of consumer purchasing behavior to help
the Alliance members acquire and retain customers. Based on this data
modeling, Abacus identifies those consumers most likely to purchase a
particular product or service and enables the Alliance members to reach
identified consumers by direct mail. Abacus' Business-to Business
Alliance now has over one billion transactions, helping its members to
improve their direct mail targeting and customer segmentation.

DOUBLECLICK RESEARCH. DoubleClick Research offers to advertisers,
agencies and publishers sophisticated research about the online market
and advanced campaign measurement tools and planning systems. Our
research products are designed to help customers with planning and
implementation of media strategies and to provide them with fundamental
demographic and online buying information so customers can fully
understand site traffic and sales planning. Our research division
includes the products and services of @plan.inc, which we acquired in
February 2001.

DOUBLECLICK TECHSOLUTIONS

Since the successful launch of DoubleClick's first technology product in
1997, DoubleClick, through our DoubleClick TechSolutions unit, has established a
track record of growth and innovation. In 2001, DoubleClick TechSolutions
reported revenues of $207.0 million. Our DART ad management technology served
682 billion ads worldwide in 2001. We currently serve ads for over 1,600 clients
worldwide, and in December 2001 delivered approximately 56 billion targeted
advertisements to Internet users worldwide. As of December 31, 2001, DoubleClick
TechSolutions had also signed up over 280 customers to the DARTmail email
delivery technology, which scaled to deliver over 1.5 billion emails in the
fourth quarter of 2001. With the acquisition of MessageMedia, Inc. in January
2002, DoubleClick TechSolutions will now be able to provide a more comprehensive
suite of email products and services.

DoubleClick TechSolutions addresses the rapidly-evolving needs of our
advertiser, Web publisher and direct marketing customers with sophisticated
technology offerings that include:

AD MANAGEMENT PRODUCTS.

PUBLISHER PRODUCTS. Our publisher products include our DART for
Publishers Service and DART Enterprise, our licensed ad serving
software product.

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DART FOR PUBLISHERS SERVICE. Since January 1997, our DART for
Publishers Service has provided Web publishers with a comprehensive
solution for ad inventory management and ad targeting, delivery and
reporting. Deploying the DART ad management technology in data
centers all over the world, the DART for Publishers Service offers
the scalability, reliability and design needed to deliver large
volumes of ads. During 2001, we added integrated rich media
and other advanced capabilities to our DART ad management technology
for enhanced reach and more powerful brand impact, providing
marketers with opportunities to generate more revenue and to more
easily traffic, target, serve and report on ad campaigns. We
also provide our customers with an API (application programming
interface) for the DART ad management technology to enable them to
integrate their legacy systems and meet all of their ad management
needs.

DART ENTERPRISE SOFTWARE. DART Enterprise is an online advertising
and marketing management licensed software product for Web
publishers and merchants. This ad serving software automates
critical processes needed to run a successful digital marketing
business, including sophisticated inventory and order management,
precision targeting, dynamic delivery, tracking and detailed
campaign reporting. DART Enterprise enables our clients to customize
and integrate this product with other key back-end systems. DART
Enterprise was previously known as AdServer and was rebranded in
March 2002.

ADVERTISER PRODUCTS. The DART for Advertisers Service offers
effective campaign planning, management and optimization to allow
advertisers and their agencies to streamline and control their
online ad campaigns, understand their customers and act quickly on
knowledge gained. The DART for Advertisers Service uses the same
DART ad management technology and globally-distributed
infrastructure that support the DART for Publishers Service.

EMAIL PRODUCTS. Our DARTmail Service enables advertisers and merchants to
deliver personalized email communications to their customers for the
purposes of building long-term, profitable relationships with their
existing customers and acquiring new customers. Since the acquisition of
FloNetwork in April 2001, we have fully migrated the former FloNetwork and
DARTmail customers onto one platform. With the acquisition of MessageMedia
in January 2002, we are now able to expand our email product and services
offerings, which will provide a wider range of choices for our customers.

EMERGING PRODUCTS.

SITE DIRECTORY. In November 2001, we launched Site Directory, a new
product currently in beta testing, that is designed to bring
advertisers and publishers together. This product is a Web-based
searchable database containing in-depth media planning information from
thousands of Web sites. It is used by advertisers to streamline their
online campaign planning processes and provides publishers with
exceptional exposure to our global advertiser and agency clients.

MEDIA PLANNING TOOL. In February 2002, we launched a charter program
for a media planning tool, MediaVisor, designed to reduce the time and
expense of advertising online. This tool is a Web-based service that
streamlines the planning, buying and trafficking process for agencies
and advertisers.

DoubleClick TechSolutions' offerings are backed worldwide by support teams
offering service 24 hours a day, seven days a week. Through our professional
services group, we provide comprehensive education and consulting services that
help our customers maximize the value of our DoubleClick TechSolutions products
and services. These consulting services include customizing and extending
existing DoubleClick TechSolutions products and services in order to help our
customers capitalize on additional revenue opportunities, integrating
DoubleClick TechSolutions into existing infrastructure and data assets and
training employees on maximizing online advertising effectiveness.

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DOUBLECLICK MEDIA

DoubleClick Media offers direct marketers, publishers and advertisers a
broad range of media buying solutions to provide them with opportunities to
generate revenue. The DoubleClick network, which is a collection of highly
trafficked and branded Web sites, is the core infrastructure from which our
media products and services are derived. The DoubleClick network is comprised of
Web sites directed toward users in the United States and Canada.

During 2001, DoubleClick Media restructured its business to more effectively
and efficiently meet the needs of its customers and the marketplace. As part of
the restructuring, DoubleClick Media reduced its headcount by approximately 50%
in 2001 and also implemented other cost saving initiatives. DoubleClick Media
generated revenues of $129.3 million in 2001. The proportion of revenues from
traditional advertisers grew to over 70% in the fourth quarter of 2001 compared
to approximately 44% in the fourth quarter of 2000. In January 2002, we sold our
European media business to AdLINK Internet Media AG, a leading provider of
digital marketing solutions in Europe, of which we currently hold 15% of the
outstanding shares. DoubleClick Media operates the Gravity Direct Web site,
which features offers from direct marketers and allows consumers to opt in to
receive direct marketing offers via email.

To take advantage of the global reach of the Internet, DoubleClick Media
operates in Japan and Asia (Hong Kong, Taiwan, Korea, China and Singapore)
through business partners. We maintain an interest in the online media business
in Europe through our 15% ownership of AdLINK Internet Media AG. We have also
entered into cross selling arrangements with our business partners and with
AdLINK under which we have the opportunity to sell the advertising inventory of
each other's ad networks.

DOUBLECLICK MEDIA PRODUCTS FOR DIRECT MARKETERS. DoubleClick Media offers
outsourced ad sales products to direct marketers to enable them to build
brand awareness, sell their products and services to customers and to
realize their revenue generating opportunities. DoubleClick Media provides
direct marketers with a full complement of services from development and
execution of media plans to campaign management, monitoring and reporting.
By outsourcing these functions to DoubleClick Media, direct marketers can
avoid the need to develop an internal ad sales force and are relieved of
many ad management responsibilities. DoubleClick Media works with
publishers on an exclusive and non-exclusive basis. The compilation of both
exclusive and non-exclusive inventory into one media offering provides our
customers with strong branding opportunities and mass scale across popular
content categories.

DOUBLECLICK MEDIA PRODUCTS FOR ADVERTISERS. DoubleClick Media provides
advertisers and agencies with the ability to reach their desired audience
online. DoubleClick Media maintains relationships with, and focuses part of
its sales and marketing efforts on, advertisers and advertising agencies.
By building a strong network of publishers, DoubleClick Media can offer
advertisers multiple products and services that work in concert, or stand
alone, to increase the value of our media offerings. The DoubleClick
network is divided into content categories and offers special programs for
mass reach, run-of-category and site-specific targeting, advertising
placements on Web sites that can be customized to meet the needs of any
advertiser.

DOUBLECLICK DATA

DoubleClick Data consists of our Abacus and Research divisions. DoubleClick
Data generated revenues of $81.3 million in 2001, an increase of 12.4% from
2000.

ABACUS

Abacus is a leading provider of information products and services to the
direct marketing industry, helping merchants to reach their customers through
direct mail and email.

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ABACUS PRODUCTS FOR DIRECT MARKETING. Abacus helps direct marketers and
merchants to increase response rates and profits from their direct mail
marketing campaigns by applying advanced statistical modeling techniques to the
Abacus Alliance database of consumer purchasing behavior, containing information
contributed by its direct marketing members. The Abacus Alliance is a
cooperative arrangement that helps merchants, retailers and publishers market
directly to consumers. Only those members of the Abacus Alliance that contribute
transaction information into the Abacus Alliance database are entitled to
purchase the full range of Abacus direct mail modeling, prospect list and list
optimization services. In addition, Abacus, through a joint venture with VNU,
maintains the Abacus Alliance for direct marketers in the United Kingdom.

The Abacus Alliance offers a combination of transactional, geographic,
demographic and behavioral profile data, enabling marketers to gain a better
understanding of consumer behaviors and conduct more effective marketing
campaigns. The key products and services we offer to our Abacus Alliance members
include the following:

PROSPECT LISTS. Our prospect lists service provides a client with new
prospect names ranked according to the likelihood that the consumer will
respond to a particular direct marketing offer. The criteria for ranking
include recency, frequency, time of year and dollar amount of catalog
purchases. This service enables catalog companies to expand their business
base and offset consumer attrition.

HOUSEFILE MODELING. Abacus' housefile modeling services allows customers to
match Abacus Alliance data to their existing customer information. This
service offers our clients a ranking of the customers contained in a
client's housefile list according to their propensity to respond. This
service also allows clients to select only optimal customers to mail, to
reactivate older buyers, activate inquiries, suppress low performing names,
cross-sell and replace marginal prospect lists at a lower cost.

DIRECT MAIL LIST OPTIMIZATION. Like our prospect lists service, our list
optimization service ranks names on a direct mail list according to
likelihood of response. This optimization service enables the client to
identify and target the most likely buyers. This process not only increases
the potential profitability of the lists a client currently uses, whether a
house list or acquired from another source, but also permits the client to
use lists that were previously considered unprofitable by selecting names
most likely to generate sales.

ABACUS EMERGING PRODUCTS. Abacus introduced new products in 2001 and early
2002 to extend the Abacus modeling techniques, alliance relationships and tools.
These new products include the following:

BUSINESS-TO-BUSINESS ALLIANCE. The Business-to-Business Alliance allows its
participants to leverage the combined breadth of member transactional data
managed through a cooperative database. Unlike the Abacus Alliance, which
focuses on consumer catalog purchases transactional data, the
Business-to-Business Alliance is designed for directly marketed business to
business products and services.

CHANNELVIEW. In January 2002, Abacus introduced ChannelView, a new tool
designed for the multi-channel marketer to identify which campaigns are
driving customers to purchase across multiple channels through access to
daily analysis of marketing programs. ChannelView is a web-based
application that allows individual clients to see the results of their
direct mail campaigns across multiple order channels, such as from Web
sites, catalogs and retail stores.

DOUBLECLICK RESEARCH

DoubleClick Research offers to advertisers and Web publishers sophisticated
research about the online market and advanced campaign measurement tools and
planning systems. DoubleClick Research includes products and services of
@plan.inc, which we acquired in February 2001. In December 2001, we sold our ad
effectiveness research practice to DynamicLogic Inc., a leading independent
research company that analyzes the marketing effectiveness of online branding,
in exchange for a minority interest in the company.

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DoubleClick Research's tools include @plan Advertising and @plan E-commerce,
which offer publishers, advertising agencies, e-retailers and consumer brand
marketers detailed demographics, lifestyle, product preference and media
consumption information to help them implement successful online marketing and
media strategies. DoubleClick Research also offers audience measurement tools
that provide the fundamental demographic and online buying information that Web
advertisers need to fully understand site traffic and sales planning.

SALES AND MARKETING

NORTH AMERICA

We sell our products and services in the United States through a sales and
marketing organization that consisted of 426 employees as of December 31, 2001.
These employees are primarily located at our headquarters in New York and also
in our offices in other North American cities, including Atlanta, Broomfield
(CO), Chicago, Los Angeles, San Francisco and Toronto, Canada. In early 2002, we
began reorganizing the sales force for our TechSolutions products into three
teams, each one dedicated to one of our three customer groups: publishers,
marketers and agencies. Our sales force for our media products and services is
divided into two teams, one dedicated to direct marketers and the other to brand
advertisers and agencies.

We conduct comprehensive marketing programs and support our direct sales
efforts to actively promote the DoubleClick brand. These programs include public
relations, online advertisements, print advertisements, Web advertising
seminars, trade shows and ongoing customer communications programs.

INTERNATIONAL

Our European operations are based out of our Irish subsidiary located in
Dublin, Ireland and our Asian operations are run through our branch office in
Hong Kong. We sell our technology products and services through our directly and
indirectly owned subsidiaries primarily located in Australia, Canada, France,
Germany, Ireland, Spain, the United Kingdom, Hong Kong and Japan. We operate our
media business through business partners in Japan and Asia (Hong Kong, Taiwan,
Korea, China and Singapore) and we maintain an interest in the media business in
Europe through our 15% ownership interest in AdLINK Internet Media AG. Our
international sales and marketing organization consisted of 230 employees as of
December 31, 2001. Please see our discussion of the risks attendant to our
international operations under 'Risk Factors' beginning on page 12.

CORPORATE HISTORY; RECENT SIGNIFICANT TRANSACTIONS

We were incorporated in Delaware on January 23, 1996 as DoubleClick
Incorporated, and changed our name to DoubleClick Inc. on May 14, 1996. On
February 25, 1998, we completed our initial public offering of common stock,
receiving net proceeds of approximately $62.5 million. On December 10, 1998, we
received net proceeds of approximately $93.7 million in connection with our
first follow-on offering of common stock. On March 16, 1999, we completed the
sale of our 4.75% Convertible Subordinated Notes due 2006 through a private
offering under Rule 144A, and received approximately $244.7 million in net
proceeds. On April 2, 1999, we paid to stockholders of record on March 22, 1999
a stock dividend of one share of common stock for each share held. On January
10, 2000, we paid to stockholders of record as of December 31, 1999 a stock
dividend of one share of common stock for each share held. On February 24, 2000,
we received net proceeds of approximately $502.9 million in connection with a
follow-on offering of common stock. Our service and product offerings are
grouped into three segments for financial reporting: DoubleClick TechSolutions,
DoubleClick Media and DoubleClick Data.

On February 2, 2001, we acquired @plan.inc, a leading provider of online
market research planning systems. On April 23, 2001, we acquired FloNetwork
Inc., an email marketing technology provider. On January 18, 2002, we acquired
MessageMedia, Inc., a provider of permission-based,

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email marketing and messaging products and services. On January 28, 2002, we
sold our European media business to AdLINK Internet Media AG, a leading provider
of digital marketing solutions in Europe.

See Note 18 to the Consolidated Financial Statements for revenues and gross
profit attributable to each of our lines of business and revenues and long-lived
asset information by geographic area.

COMPETITION

The market for digital marketing products and services is very competitive.
We expect this competitive environment to continue in many of our businesses due
to low barriers to entry. Competition may also increase as a result of industry
consolidation.

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

the timing and acceptance of new products and services and enhancements to
existing products and services developed either by us or our competitors;

customer service and support efforts;

our ability to adapt and scale our technology, and develop and introduce
new technologies, as customer needs change and grow;

sales and marketing efforts;

the features, ease of use, performance, price and reliability of products
and services developed either by us or our competitors; and

the relative impact of general economic and industry conditions on either
us or our competitors.

DoubleClick TechSolutions' ad management products and services compete with
providers of outsourced ad management services and ad serving software and
related services as well as inhouse solutions. TechSolutions' email delivery
products and services compete with other providers of email delivery and inhouse
solutions as well as providers of email delivery software and related services.

DoubleClick Media competes for Internet advertising revenues with large Web
publishers and Web portals. We also compete with the traditional advertising
media of television, radio, cable and print for a share of advertisers' total
advertising budgets. DoubleClick Media also competes with a variety of Internet
advertising networks. We encounter competition from a number of other sources,
including content aggregation companies, advertising agencies and other
companies that facilitate Internet advertising.

DoubleClick Data, through the Abacus division, competes with a broad range
of companies that provide information products and marketing research services
to the direct marketing industry. Our Abacus division also competes with data
aggregation companies for a share of our customers' marketing data budgets.
DoubleClick Research competes with other providers of research and planning
tools for the online market.

In addition, customer relationship management companies offer products and
services that compete functionally with those offered by several of
DoubleClick's business units, in particular DoubleClick TechSolutions and
DoubleClick Data.

PRIVACY AND DATA PROTECTION

We have been a leader in promoting consumer privacy and are committed to
enhancing consumer understanding of the technologies that are used to provide
information to digital marketing companies like DoubleClick. Our consumer
privacy and data protection efforts are led by a full complement of experts
devoted to consumer privacy and data protection issues. Our Chief Privacy
Officer leads our privacy and data protection efforts. Our privacy team ensures
that

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we are effectively implementing our privacy policies and procedures, works with
our clients to institute and improve their privacy procedures and educates the
public about our leadership with regard to privacy.

In 2000, we created a Privacy Advisory Board consisting of consumer
advocates, security experts and authorities in the field of online privacy. The
Privacy Advisory Board makes recommendations about how we can improve privacy
procedures through the adoption of policies aimed at protecting the privacy
interests of consumers online. In addition, we conduct periodic audits of our
data protection practices.

We are a defendant in several pending lawsuits alleging, among other things,
that we unlawfully obtain and use Internet users' personal information, and that
our use of cookies violates certain federal and state laws. In March 2001, all
federal actions against us were dismissed by the federal district court and the
plaintiffs have recently withdrawn their appeal to the Second Circuit Court of
Appeals. We believe these claims are without merit and vigorously contest them.
We are the subject of an inquiry involving the attorneys general of several
states relating to our practices in the collection, maintenance and use of
information and disclosure of these information practices to Internet users.

SEASONALITY AND CYCLICALITY

We believe that our business is subject to seasonal fluctuations.
Advertisers generally place fewer advertisements during the first and third
calendar quarters of each year, which directly affects our DoubleClick
TechSolutions and DoubleClick Media businesses, and the direct marketing
industry generally compiles more customer data in the third calendar quarter,
which directly affects our DoubleClick Data business. Further, Internet user
traffic typically drops during the summer months, which reduces the amount of
advertising to sell and deliver. Expenditures by advertisers and direct
marketers tend to vary in cycles that reflect overall economic conditions as
well as budgeting and buying patterns. Recent evidence suggests that our email
technology business may experience seasonal patterns similar to those of the
traditional direct marketing industry, which typically generates lower revenues
earlier in the calendar year and higher revenues during the calendar year-end
months. If these patterns continue our revenue may be affected by these
fluctuations. Our revenue has in the past and may in the future be materially
affected by a decline in the economic prospects of our customers or in the
economy in general, which could alter our current or prospective customers'
spending priorities or budget cycles or extend our sales cycle.

PROPRIETARY RIGHTS

Our success and ability to effectively compete are substantially dependent
on the protection of our proprietary technologies and our other intellectual
property, which we protect through a combination of patent, trademark,
copyright, trade secret, unfair competition and contract law. In September 1999,
the U.S. Patent and Trademark Office issued to us a patent that covers our DART
ad management technology and service. We own other patents, and have patent
applications pending, for our technology and related products and services.

We also have rights in the trademarks that we use to market our products and
services. These trademarks include, among others, DOUBLECLICK'r', DART'r',
DARTMAIL'TM' and ABACUS'TM'. We have applied to register our trademarks in the
United States and internationally. We have received registrations for the marks
DOUBLECLICK, DART and the ABACUS Abacus logo and have applied for registrations
of others. We cannot assure you that any of our current or future patent
applications or trademark applications will be approved. In addition, we have
licensed, and may license in the future, our trademarks, trade dress and similar
proprietary rights to third parties.

In order to secure and protect our proprietary rights, we generally enter
into confidentiality, proprietary rights and license agreements, as appropriate,
with our employees, consultants and business partners, and generally control
access to and distribution of our technologies,

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documentation and other proprietary information. Despite these efforts, we
cannot be certain that the steps we take to prevent unauthorized use of our
proprietary rights are sufficient to prevent misappropriation of our products
and services, technologies or intellectual property, particularly in foreign
countries where laws or law enforcement practices may not protect our
proprietary or intellectual property rights as fully as in the United States. In
addition, we cannot assure you that we will be able to adequately enforce the
contractual arrangements that we have entered into to protect our proprietary
technologies and intellectual property.

Third parties may assert infringement claims against us, which could
adversely affect the value of our proprietary rights, our intellectual property
and our reputation. Such claims could subject us to significant liability for
damages, and we could be restricted from using our intellectual property. Any
claims or litigation from third parties may also result in limitations on our
ability to use our intellectual property, unless we enter into arrangements with
third parties responsible for such claims, which may be unavailable on
commercially reasonable terms, if at all.

EMPLOYEES

As of December 31, 2001, we employed 1,450 persons, including 656 in sales
and marketing, 230 in engineering and product development, 317 in business
operations, consulting and customer support, and 247 in general administration.
We are not subject to any collective bargaining agreements and believe that our
relationships with our employees are good.

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RISK FACTORS

An investment in our company involves a high degree of risk. You should
carefully consider the risks below, together with the other information
contained in this report, before you decide to invest in our company. If any of
the following risks actually occur, our business, results of operations and
financial condition could be harmed, the trading price of our common stock could
decline, and you could lose all or part of your investment.

RISKS RELATING TO OUR COMPANY AND OUR BUSINESS

WE HAVE A LIMITED OPERATING HISTORY AND OUR FUTURE FINANCIAL RESULTS MAY
FLUCTUATE, WHICH MAY CAUSE OUR STOCK PRICE TO DECLINE.

We were incorporated in January 1996 and have a limited operating history.
An investor in our common stock must consider the risks and difficulties
frequently encountered by companies in new and rapidly evolving industries,
including the digital marketing industry. Our risks include:

ability to achieve historical revenue growth rates;

ability to manage our operations;

competition;

attracting, retaining and motivating qualified personnel;

maintaining our current and developing new, strategic relationships with
Web publishers, advertisers, ad agencies and direct marketers;

ability to anticipate and adapt to the changing Internet advertising and
direct marketing industries; and

ability to develop and introduce new products and services, and continue to
develop and upgrade technology.

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

WE HAVE A HISTORY OF LOSSES AND ANTICIPATE CONTINUED LOSSES.

We have incurred net losses each year since inception, including net losses
of $265.8 million, $156.0 million and $55.8 million for the years ended
December 31, 2001, 2000 and 1999, respectively. As of December 31, 2001, our
accumulated deficit was $548.6 million. We have not achieved profitability on an
annual basis and expect to incur operating losses in the future. We expect to
continue to incur significant operating and capital expenditures and, as a
result, we will need to generate significant revenue to achieve and maintain
profitability. We cannot assure you that we will generate sufficient revenue to
achieve or sustain profitability. Even if we do achieve profitability, we cannot
assure you that we can sustain or increase profitability on a quarterly or
annual basis in the future. If revenue does not meet our expectations, or if
operating expenses exceed what we anticipate or cannot be reduced accordingly,
our business, results of operations and financial condition will be materially
and adversely affected.

12

WE DERIVE A SIGNIFICANT PORTION OF OUR REVENUE FROM ADVERTISEMENTS AND
ADVERTISING SERVICES, WHICH REVENUES TEND TO BE CYCLICAL AND DEPENDENT ON THE
ECONOMIC PROSPECTS OF ADVERTISERS AND DIRECT MARKETERS AND THE ECONOMY IN
GENERAL. A CONTINUED DECREASE IN EXPENDITURES BY ADVERTISERS AND DIRECT
MARKETERS OR A CONTINUED DOWNTURN IN THE ECONOMY COULD CAUSE OUR REVENUES TO
DECLINE SIGNIFICANTLY IN ANY GIVEN PERIOD.

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

The revenue outlook for DoubleClick TechSolutions and DoubleClick Media are
adversely affected by an environment where the supply of advertising inventory
exceeds advertisers' demand. Under these circumstances, Web publishers tend to
remove ad space from their Web sites in an effort to correct the supply-demand
imbalance; other publishers may cut back on their Web presence or go out of
business. Faced with smaller budgets, advertisers and ad agencies purchase less
advertising inventory and tend not to experiment with newer advertising media,
like the Internet. As a consequence of these factors, the number of ad
impressions delivered by DoubleClick TechSolutions may not grow or decline.
Since revenues for DoubleClick TechSolutions are generated from the number of ad
impressions delivered, a slowdown in growth or a decline would adversely affect
our revenues. Similar pressures are faced by DoubleClick Data.

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

WE DO NOT ALWAYS MAINTAIN LONG-TERM AGREEMENTS WITH OUR CUSTOMERS AND MAY BE
UNABLE TO RETAIN CUSTOMERS, ATTRACT NEW CUSTOMERS OR REPLACE DEPARTING CUSTOMERS
WITH CUSTOMERS THAT CAN PROVIDE COMPARABLE REVENUES.

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

OUR CUSTOMERS CONTINUE TO EXPERIENCE BUSINESS CONDITIONS THAT COULD ADVERSELY
AFFECT OUR BUSINESS.

Our customers, in particular Internet-related companies, have experienced
and may continue to experience difficulty raising capital and supporting their
current operations and implementing their business plans, or may be anticipating
such difficulties and, therefore, may elect to scale back the resources they
devote to advertising in general and our offerings in particular. Many other
companies in the Internet industry have depleted their available capital and
could cease operations or file for bankruptcy protection. These customers may
not be able to discharge their payment and other obligations to us. The
non-payment or late payment of amounts due to us from our customers could
negatively impact our financial condition. If the current environment for

13

advertising and for Internet-related companies does not improve, our business,
results of operations and financial condition could be materially adversely
affected.

INDUSTRY SHIFTS, RAPID EXPANSION OF OUR PRODUCTS AND SERVICES AND OTHER CHANGES
HAVE STRAINED OUR MANAGERIAL, OPERATIONAL, FINANCIAL AND INFORMATION SYSTEM
RESOURCES.

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

OUR BUSINESS MODEL IS UNPROVEN, AND WE MAY NOT BE ABLE TO GENERATE PROFITS FROM
MANY OF OUR PRODUCTS AND SERVICES.

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

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

Internal factors also influence the profit potential of our business model.
In order to be profitable, our revenue must exceed the expense incurred by us to
run our technology infrastructure, research and development, sales and
marketing, and all other operations. However, we cannot assure you that the
expenses associated with even the most efficient operation of our business will
yield profits, or that we will be able to manage our business for optimal
efficiency and cost containment. Our failure to achieve these results would
adversely affect the profit potential of our business model.

DISRUPTION OF OUR SERVICES DUE TO UNANTICIPATED PROBLEMS OR FAILURES COULD HARM
OUR BUSINESS.

Our DART ad management technology resides in our data centers in New York
City, Virginia, California and Colorado, and in Europe, Asia and Latin America.
Continuing and uninterrupted performance of our technology is critical to our
success. Customers may become dissatisfied by any system failure that interrupts
our ability to provide our services to them, including failures

14

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

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

MISAPPROPRIATION OF CONFIDENTIAL INFORMATION COULD CAUSE US TO LOSE CUSTOMERS.

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

COMPETITION IN INTERNET ADVERTISING, DIRECT MARKETING AND RELATED PRODUCTS AND
SERVICES IS INTENSE, AND WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY.

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

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

the features, performance, price and reliability of products and services
offered either by us or our competitors;

the launch timing and market success of products and services developed
either by us or our competitors;

our ability to adapt and scale our products and services, and to develop
and introduce new products and services that respond to market needs;

our ability to adapt to evolving technology and industry standards;

our customer service and support efforts;

our sales and marketing efforts; and

the relative impact of general economic and industry conditions on either
us or our competitors.

Our divisions face competition from a variety of sources. DoubleClick
TechSolutions competes with providers of software and service bureau solutions
for the delivery of Web ads and email for direct marketers, Web publishers and
advertisers as well as with inhouse solutions. DoubleClick Media competes with
large Web publishers, Web portals and Internet advertising networks.

15

Abacus competes with data aggregation companies and providers of information
products and marketing research services to the direct marketing industry.
DoubleClick Research competes with Web ratings companies, providers of Web
advertising management, online research and consulting services and providers of
syndicated market research in traditional publishing. We also compete indirectly
with others, such as providers of customer relationship management services,
content aggregation companies, companies engaged in advertising sales networks,
advertising agencies and other companies that facilitate digital marketing.

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

OUR QUARTERLY OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS AND YOU
SHOULD NOT RELY ON THEM AS AN INDICATION OF FUTURE OPERATING PERFORMANCE.

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

advertiser, Web publisher and direct marketer demand for our products and
services;

Internet user traffic levels;

number and size of ad units per page on our customers' Web sites;

the introduction of new products or services by us or our competitors;

variations in the levels of capital, operating expenditures and other costs
relating to our operations;

pricing trends for advertising inventory on the DoubleClick network, and
for the portion payable to the Web publishers in the DoubleClick network;

general seasonal and cyclical fluctuations; and

general industry and economic conditions.

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

Our business is subject to seasonal fluctuations. Advertisers generally
place fewer advertisements during the first and third calendar quarters of each
year, which directly affects the DoubleClick TechSolutions and DoubleClick Media
businesses. The direct marketing industry generally mails substantially more
marketing materials in the third calendar quarter, which directly

16

affects the DoubleClick Data business. Further, Internet user traffic typically
drops during the summer months, which reduces the amount of advertising to sell
and deliver.

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

WE MAY NOT BE ABLE TO CONTINUE TO GROW THROUGH ACQUISITIONS OF OR INVESTMENTS IN
OTHER COMPANIES.

Our business has expanded rapidly in part as a result of acquisitions or
investments in other companies, including the acquisitions of Abacus Direct,
NetGravity, @plan, FloNetwork and MessageMedia. We may seek to acquire or make
investments in other complementary businesses, products, services or
technologies as a means to grow our business. From time to time we have had
discussions with other companies regarding our acquiring, or investing in, their
businesses, products, services or technologies. We cannot assure you that we
will be able to identify other suitable acquisition or investment candidates.
Even if we do identify suitable candidates, we cannot assure you that we will be
able to make other acquisitions or investments on commercially acceptable terms,
if at all. Even if we agree to buy a company, we cannot assure you that we will
be successful in consummating the purchase. If we are unable to continue to
expand through acquisitions, our revenue may decline or fail to grow.

WE MAY NOT MANAGE THE INTEGRATION OF ACQUIRED COMPANIES SUCCESSFULLY OR ACHIEVE
DESIRED RESULTS.

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

the difficulty of assimilating the operations and personnel of the acquired
companies;

the potential disruption of the ongoing businesses and distraction of our
management and the management of acquired companies;

the difficulty of incorporating acquired technology and rights into our
products and services;

unanticipated expenses related to technology and other integration;

difficulties in maintaining uniform standards, controls, procedures and
policies;

the impairment of relationships with employees and customers as a result of
any integration of new management personnel;

the inability to develop new products and services that combine our
knowledge and resources and our acquired businesses or the failure for a
demand to develop for the combined companies' new products and services;

potential failure to achieve additional sales and enhance our customer base
through cross-marketing of the combined company's products to new and
existing customers; and

potential unknown liabilities associated with acquired businesses.

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

17

WE DEPEND ON THIRD-PARTY INTERNET AND TELECOMMUNICATIONS PROVIDERS, OVER WHOM WE
HAVE NO CONTROL, TO OPERATE OUR SERVICES. INTERRUPTIONS IN OUR SERVICES CAUSED
BY ONE OF THESE PROVIDERS COULD HAVE AN ADVERSE EFFECT ON REVENUE AND SECURING
ALTERNATE SOURCES OF THESE SERVICES COULD SIGNIFICANTLY INCREASE EXPENSES.

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

WE ARE DEPENDENT ON KEY PERSONNEL AND ON KEY EMPLOYEE RETENTION AND RECRUITING
FOR OUR FUTURE SUCCESS.

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

IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY, WE COULD LOSE OUR
INTELLECTUAL PROPERTY RIGHTS.

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

In September 1999, the U.S. Patent and Trademark Office issued to us a
patent that covers our DART ad management technology. We own other patents, and
have patent applications pending for our technology. We cannot assure you that
patents applied for will be issued or that patents issued or acquired by us now
or in the future will be valid and enforceable or provide us with any meaningful
protection.

We also have rights in the trademarks that we use to market our products and
services. These trademarks include DOUBLECLICK'r', DART'r', DARTMAIL'TM' and
ABACUS'TM'. We have applied to register our trademarks in the United States and
internationally. We cannot assure you that any of our current or future
trademark applications will be approved. Even if they are approved, these
trademarks may be successfully challenged by others or invalidated. If our
trademark registrations are not approved because third parties own these
trademarks, our use of these trademarks will be restricted unless we enter into
arrangements with these parties which may be unavailable on commercially
reasonable terms, if at all.

We also enter into confidentiality, proprietary rights and license
agreements, as appropriate, with our employees, consultants and business
partners, and generally control access to and

18

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

IF WE FACE A CLAIM OF INTELLECTUAL PROPERTY INFRINGEMENT BY A THIRD PARTY, WE
MAY BE LIABLE FOR DAMAGES AND BE REQUIRED TO MAKE CHANGES TO OUR TECHNOLOGY OR
BUSINESS.

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

Third party infringement claims and any resultant litigation, should it
occur, could subject us to significant liability for damages, restrict us from
using our technology or operating our business generally, or require changes to
be made to our technology. Even if we prevail, litigation is time consuming and
expensive to defend and would result in the diversion of management's time and
attention. Any claims from third parties may also result in limitations on our
ability to use the intellectual property subject to these claims unless we are
able to enter into royalty, licensing or other similar agreements with the third
parties asserting these claims. Such agreements, if required, may be unavailable
on terms acceptable to us, or at all. If we are unable to enter into these types
of agreements, we would be required to either cease offering the subject product
or change the technology underlying the applicable product. If a successful
claim of infringement is brought against us and we fail to develop
non-infringing technology or to license the infringed or similar technology on a
timely basis, it could materially adversely affect our business, financial
condition and results of operations.

OUR BUSINESS MAY BE MATERIALLY ADVERSELY AFFECTED BY LAWSUITS RELATED TO PRIVACY
AND OUR BUSINESS PRACTICES.

We are a defendant in several pending lawsuits alleging, among other things,
that we unlawfully obtain and use Internet users' personal information and that
our use of cookies violates various laws. We are the subject of an inquiry
involving the attorneys general of several states relating to our practices in
the collection, maintenance and use of information about, and our disclosure of
these information practices to, Internet users. We may in the future receive
additional regulatory inquiries and we intend to cooperate fully. Class action
litigation and regulatory inquiries of these types are often expensive and time
consuming and their outcome is uncertain.

We cannot quantify the amount of monetary or human resources that we will be
required to use to defend ourselves in these proceedings. We may need to spend
significant amounts on our legal defense, senior management may be required to
divert their attention from other portions of our business, new product launches
may be deferred or canceled as a result of these proceedings, and we may be
required to make changes to our present and planned products or services, any of
which could materially and adversely affect our business, financial condition
and results of operations. If, as a result of any of these proceedings, a
judgment is rendered or a decree is entered against us, it may materially and
adversely affect our business, financial condition and results of operations.

19

OUR BUSINESS DEPENDS IN PART ON SUCCESSFUL ADAPTATION OF OUR BUSINESS TO
INTERNATIONAL MARKETS, IN WHICH WE HAVE LIMITED EXPERIENCE. FAILURE TO
SUCCESSFULLY MANAGE THE RISKS OF INTERNATIONAL OPERATIONS AND SALES AND
MARKETING EFFORTS WOULD HARM OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

We have operations in a number of countries and have limited experience in
developing localized versions of our products and services and in marketing,
selling and distributing our products and services internationally. We sell our
technology products and services through our directly and indirectly owned
subsidiaries primarily located in Australia, Canada, France, Germany, Spain,
Ireland, the United Kingdom, Hong Kong and Japan. We operate our media business
through business partners in Japan and Asia (Hong Kong, Taiwan, Korea, China and
Singapore). A great deal of our success in these markets is directly dependent
on the success of our business partners and their dedication of sufficient
resources to our relationship.

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

the high cost of maintaining international operations;

uncertain demand for our products and services;

the impact of recessions in economies outside the United States;

changes in regulatory requirements;

more restrictive data protection regulation;

reduced protection for intellectual property rights in some countries;

potentially adverse tax consequences;

difficulties and costs of staffing and managing foreign operations;

political and economic instability;

fluctuations in currency exchange rates; and

seasonal fluctuations in Internet usage.

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

ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW MAY MAKE IT
DIFFICULT FOR A THIRD PARTY TO ACQUIRE US.

Some of the provisions of our certificate of incorporation, our bylaws and
Delaware law could, together or separately:

discourage potential acquisition proposals;

delay or prevent a change in control; or

impede the ability of our stockholders to change the composition of our
board of directors in any one year.

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

20

OUR STOCK PRICE MAY EXPERIENCE EXTREME PRICE AND VOLUME FLUCTUATIONS, AND THIS
VOLATILITY COULD RESULT IN US BECOMING SUBJECT TO SECURITIES LITIGATION, WHICH
IS EXPENSIVE AND COULD RESULT IN A DIVERSION OF RESOURCES.

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

Additionally, in the past, following periods of volatility in the market
price of a particular company's securities, securities class action litigation
has often been brought against that company. Many companies in our industry have
been subject to this type of litigation in the past. We may also become involved
in this type of litigation. Litigation is often expensive and diverts
management's attention and resources, which could materially and adversely
affect our business, financial condition and results of operations.

FUTURE SALES OF OUR COMMON STOCK MAY AFFECT THE MARKET PRICE OF OUR COMMON
STOCK.

As of December 31, 2001, we had 134,033,965 shares of common stock
outstanding, excluding 23,949,461 shares subject to options outstanding as of
such date under our stock option plans that are exercisable at prices ranging
from $0.01 to $124.56 per share. We cannot predict the effect, if any, that
future sales of common stock or the availability of shares of common stock for
future sale, will have on the market price of our common stock prevailing from
time to time. Sales of substantial amounts of common stock, including shares
issued upon the exercise of stock options, or the perception that such sales
could occur, may materially reduce prevailing market prices for our common
stock.

RISKS RELATED TO OUR INDUSTRY

ADVERTISERS MAY BE RELUCTANT TO DEVOTE A PORTION OF THEIR BUDGETS TO INTERNET
ADVERTISING AND DIGITAL MARKETING PRODUCTS AND SERVICES.

Companies doing business on the Internet, including DoubleClick, must
compete with traditional advertising media, including television, radio, cable
and print, for a share of advertisers' total marketing budgets. Potential
customers may be reluctant to devote a significant portion of their marketing
budget to Internet advertising or digital marketing products and services if
they perceive the Internet to be a limited or ineffective marketing medium. Any
shift in marketing budgets away from Internet advertising spending or digital
marketing products and services could materially and adversely affect our
business, results of operations or financial condition.

THE LACK OF APPROPRIATE ADVERTISING MEASUREMENT STANDARDS OR TOOLS MAY CAUSE US
TO LOSE CUSTOMERS OR PREVENT US FROM CHARGING A SUFFICIENT AMOUNT FOR OUR
PRODUCTS AND SERVICES.

Because digital marketing remains a new discipline, there are currently no
generally accepted methods or tools for measuring the efficacy of digital
marketing, as there are for advertising in television, radio, cable and print.
Many traditional advertisers may be reluctant to spend sizable portions of their
budget on digital marketing until there exist widely accepted methods and tools
that measure the efficacy of their campaigns.

Our customers may also challenge or refuse to accept our research and
reporting offerings. A competitor's research and reporting offerings may gain
broader acceptance. We could lose customers or fail to gain customers if our
products and services do not utilize the measuring methods and tools that may
become generally accepted. Further, new measurement standards and tools could
require us to change our business and the means used to charge our customers,
which could result in a loss of customer revenues. Even if our products and
services become widely accepted, we may find that the profit potential of our
research and reporting offerings is limited, and that spending by traditional
advertisers does not appreciably increase as a result.

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NEW LAWS IN THE UNITED STATES AND INTERNATIONALLY COULD HARM OUR BUSINESS.

Laws applicable to Internet communications, e-commerce, Internet
advertising, data protection and direct marketing are becoming more prevalent in
the United States and worldwide. For example, various U.S. state and foreign
governments may attempt to regulate our ad delivery or levy sales or other taxes
on our activities.

In addition, the laws governing the Internet remain largely unsettled, even
in areas where there has been some legislative action. It is difficult to
determine whether and how existing laws such as those governing intellectual
property, data protection, libel and taxation apply to the Internet, Internet
advertising and our business.

The growth and development of Internet commerce may prompt calls for more
stringent consumer protection laws, both in the United States and abroad. These
proposals may seek to impose additional burdens on companies conducting business
over the Internet. In particular, new limitations on the collection and use of
information relating to Internet users are currently being considered by
legislatures and regulatory agencies in the United States and internationally.
We are unable to predict whether any particular proposal will pass, or the
nature of the limitations in those proposals. Since many of the proposals are in
their development stage, we cannot yet determine the impact these may have on
our business. In addition, it is possible that changes to existing law,
including both amendments to existing law and new interpretations of existing
law, could have a material and adverse impact on our business, financial
condition and results of operations.

The following are examples of proposals currently being considered in the
United States and internationally:

Legislation has been proposed in the United States and Europe to regulate
the use of cookie technology. Our technology uses cookies for ad targeting
and reporting, among other things. It is possible that the changes required
for compliance are commercially unfeasible, or that we are simply unable to
comply and, therefore, may be required to discontinue the relevant business
practice.

Data protection officials in certain European countries have voiced the
opinion that an Internet protocol address is personally-identifiable
information. In those countries in which this opinion prevails, the
applicable national data protection law could be interpreted to subject us
to a more restrictive regulatory regime. We cannot assure you that our
current policies and procedures would meet more restrictive standards. The
cost of such compliance could be material and we may not be able to comply
with the applicable national regulations in a timely or cost-effective
manner.

Legislation has been proposed to prohibit the sending of 'unsolicited
commercial email.' Although our email delivery is consent-based, it is
possible that legislation will be passed that requires us to change our
current practices or subjects us to increased liabilities.

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

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

22

DEMAND FOR OUR PRODUCTS AND SERVICES MAY DECLINE DUE TO THE PROLIFERATION OF
SOFTWARE DESIGNED TO PREVENT THE DELIVERY OF INTERNET ADVERTISING OR BLOCK THE
USE OF COOKIES.

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

OUR BUSINESS MAY SUFFER IF THE WEB INFRASTRUCTURE IS UNABLE TO EFFECTIVELY
SUPPORT THE GROWTH IN DEMAND PLACED ON US.

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

DOUBLECLICK DATA IS DEPENDENT ON THE SUCCESS OF THE DIRECT MARKETING INDUSTRY
FOR OUR FUTURE SUCCESS.

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

INCREASES IN POSTAL RATES AND PAPER PRICES COULD HARM DOUBLECLICK DATA.

The direct marketing activities of our Abacus Alliance customers are
adversely affected by postal rate increases, especially increases that are
imposed without sufficient advance notice to allow adjustments to be made to
marketing budgets. Higher postal rates may result in fewer mailings of direct
marketing materials, with a corresponding decline in the need for some of the
direct marketing services offered by us. Increased postal rates can also lead to
pressure from our customers to reduce our prices for our services in order to
offset any postal rate increase. Higher paper prices may also cause catalog
companies to conduct fewer or smaller mailings which could cause a corresponding
decline in the need for our services. Our customers may aggressively seek price
reductions for our services to offset any increased materials cost. Any of these
occurrences

23

could materially and adversely affect the business, financial condition and
results of operations of our Abacus business.

ITEM 2. PROPERTIES

Our principal executive offices are currently located in a facility in New
York, New York consisting of an aggregate of approximately 240,000 square feet.
Our three business units operate from this facility. On January 26, 1999, we
entered into a lease agreement with an initial term of eleven years with an
option to renew for an additional five years. We lease approximately 100,000
square feet of office space in Broomfield, Colorado, under a lease that
terminates in April 2006 and is renewable for two consecutive five year terms.
This facility was the headquarters for Abacus before our merger and is now
primarily used by our Abacus operations. We lease approximately 26,500 square
feet of office space in San Mateo, California under a lease that expires in
October 2005. This facility was the headquarters for NetGravity before our
merger and now is primarily used for technology development of our TechSolutions
products. We own property in Thornton, Colorado consisting of approximately
115,000 square feet which is primarily used by our DoubleClick TechSolutions and
DoubleClick Data business units. We lease space for our domestic branch offices
in other U.S. states, including California, Colorado, Georgia, Illinois,
Massachusetts and Michigan. We lease space for our international offices in a
number of countries, including Canada, France, Germany, Hong Kong, Ireland,
Japan and the United Kingdom. We are continually evaluating our facilities
requirements.

ITEM 3. LEGAL PROCEEDINGS.

Following the announcement of our proposed merger with NetGravity on
July 27, 1999, a complaint, styled as a class action, was filed in the San Mateo
County, California, Superior Court against NetGravity and several of its
directors. The complaint alleges that the directors of NetGravity breached their
fiduciary duties to NetGravity's stockholders in connection with the negotiation
of the proposed merger. The complaint asked the court to enjoin the consummation
of the merger, or, alternatively, sought to rescind the merger or an award of
unspecified damages from the defendants in the event the merger was consummated.

We are a defendant in 20 lawsuits concerning Internet user privacy and our
data collection and other business practices. These lawsuits were filed
throughout 2000. Eighteen of these actions are styled as class actions, one
action is brought on behalf of the general public of the State of California and
one is brought against us and ClearStation, Inc. on behalf of the State of
Illinois by the State's Attorney of Cook County, Illinois. The actions seek,
among other things, injunctive relief, civil penalties and unspecified damages.

Five of the actions were filed in California state court, 13 in federal
court, one in Texas state court and one in Illinois state court. On March 31,
2000, the plaintiff in one of the California state court proceedings filed a
petition, ordered by the court on May 11, 2000, to coordinate the four actions
then pending in the California state courts. The Judicial Panel on Multidistrict
Litigation granted our motions to transfer, coordinate and consolidate all
thirteen federal actions before Judge Buchwald in the Southern District of New
York. On March 28, 2001, Judge Buchwald dismissed all federal lawsuits against
us. The plaintiffs have withdrawn their appeal to the Second Circuit Court of
Appeals. Our ad serving and data collection practices are also the subject of
inquiries by the attorneys general of several states. We are cooperating fully
with all such inquiries.

Beginning in May 2001, a number of substantially identical class action
complaints alleging violations of the federal securities laws were filed in the
United States District Court for the Southern District of New York naming us and
certain of our officers and directors and certain underwriters of our initial
public offering as defendants. The complaints allege, among other things, that
certain alleged compensation arrangements entered into by the underwriters (such
as commission payments or stock stabilization practices) were not properly
disclosed in the registration statement for the initial public offering. We and
some of our officers and directors are named in the suit pursuant to Section 11
of the Securities Act of 1933. Additionally, a single complaint includes a claim
against us and some of our officers and directors under Section 10(b)

24

of the Securities Exchange Act of 1934. The actions described above, and any
additional related complaints that may be filed, were consolidated into a single
action. In addition, these actions were coordinated for pretrial purposes with a
number of lawsuits alleging similar claims filed against other companies and
underwriters. These consolidated actions have been dismissed against us and the
other defendants without prejudice. However, the plaintiffs have recently filed
a new complaint against us, certain of our officers and directors and the
underwriters of the Company's secondary and tertiary offerings alleging
substantially similar disclosure violations as in the initial complaint. The
Section 11 claims against these defendants in the new complaint relate to the
tertiary offering only. These actions seek, among other things, unspecified
damages and costs, including attorneys fees.

We believe that all claims that have been asserted are without merit. We
intend to defend these actions vigorously, however, due to the inherent
uncertainties of litigation, we cannot accurately predict the ultimate outcome
of the litigation. An unfavorable outcome in litigation could materially and
adversely affect our business, financial condition and results of operations.

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

No matter was submitted to a vote of the security holders during the fourth
quarter of 2001.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock has been quoted on the Nasdaq National Market under the
symbol DCLK since our initial public offering on February 20, 1998. The
following table sets forth, for the periods indicated, the high and low sales
prices per share of the common stock as reported on the Nasdaq National Market.
All prices have been restated to reflect our two-for-one stock splits effected
as stock dividends on April 5, 1999 and January 10, 2000.

On December 31, 2001, the last sale price of our common stock reported by
the Nasdaq National Market was $11.34 per share. On March 27, 2002, the last
sale price of our common stock reported by the Nasdaq National Market was $12.16
per share. As of March 27, 2002, we had approximately 991 holders of record of
our common stock.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our capital stock. We
currently intend to retain future earnings, if any, to finance the expansion of
our business and do not expect to pay any cash dividends for the foreseeable
future.

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ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data set forth below with respect to
DoubleClick's consolidated statement of operations for each of the years ended
December 31, 2001, 2000 and 1999 and with respect to DoubleClick's consolidated
balance sheet as of December 31, 2001 and 2000 have been derived from the
audited financial statements of DoubleClick which are included elsewhere herein.
The selected consolidated financial data set forth with respect to DoubleClick's
consolidated statement of operations for each of the periods ended December 31,
1998 and 1997 and with respect to DoubleClick's consolidated balance sheet as of
December 31, 1999, 1998 and 1997 are derived from the audited financial
statements of DoubleClick which are not included herein. The selected
consolidated financial data set forth below is qualified in its entirety by, and
should be read in conjunction with, 'Management's Discussion and Analysis of
Financial Condition and Results of Operations' and the consolidated financial
statements and the notes to those statements included elsewhere herein.

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QUARTERLY RESULTS OF OPERATIONS

The following table sets forth certain unaudited consolidated quarterly
statement of operations data for the eight quarters ended December 31, 2001.
This information is unaudited, but in the opinion of management, it has been
prepared substantially on the same basis as the audited consolidated financial
statements appearing elsewhere in this report, and all necessary adjustments,
consisting only of normal recurring adjustments, have been included in the
amounts stated below to present fairly the unaudited consolidated quarterly
results of operations. The consolidated quarterly data should be read in
conjunction with our audited consolidated financial statements and the notes to
such statements appearing elsewhere in this report. The results of operations
for any quarter are not necessarily indicative of the results of operations for
any future period.

In the fourth quarter of 2001, DoubleClick recorded a restructuring charge
of $48.2 million. These events included the involuntary terminations of
approximately 190 employees, primarily from DoubleClick's TechSolutions and
Media operations, as well as the consolidation of its leased office space in San
Francisco. (See Note 13 to the Consolidated Financial Statements.) Also in the
fourth quarter of 2001, in connection with DoubleClick's agreement with AdLINK,
management determined that the sale of its European Media operations would
generate a loss. Accordingly, DoubleClick recorded a charge of approximately
$8.8 million, which represents the difference between the consideration to be
paid and the net assets to be sold. (See Note 8 to the Consolidated Financial
Statements.) In addition, DoubleClick repurchased $10.0 million of its
outstanding 4.75% Convertible Subordinated Notes for approximately $8.3 million
in cash. DoubleClick recognized an extraordinary gain of approximately $1.0
million, net of taxes of approximately $0.8 million, as the result of the early
retirement of this debt. (See Note 10 to the Consolidated Financial Statements.)

In the third quarter of 2001, DoubleClick recorded an impairment charge of
approximately $63.3 million equal to the difference between its investments in
@plan and Flashbase and the estimated fair value of these entities in the third
quarter of 2001. (See Note 8 to the Consolidated Financial Statements.) Also in
the third quarter, DoubleClick wrote down its investment in ValueClick and
recognized an impairment charge of approximately $11.7 million, which
represented the difference between DoubleClick's carrying value and the
estimated fair value of its investment in ValueClick. (See Note 3 to the
Consolidated Financial Statements.) In addition, DoubleClick repurchased $20.3
million of its outstanding 4.75% Convertible Subordinated Notes for
approximately $13.6 million in cash. DoubleClick recognized an extraordinary
gain of approximately $3.6 million, net of taxes of approximately $2.8 million,
as the result of the early retirement of this debt. (See Note 10 to the
Consolidated Financial Statements.) DoubleClick recorded restructuring
provisions totaling $5.3 million in the third quarter of 2001. These measures
included the involuntary terminations of approximately 170 employees, primarily
from DoubleClick's TechSolutions division. This charge included severance costs
associated with this additional work force reduction and future lease costs.
(See Note 13 to the Consolidated Financial Statements.)

27

In the second quarter of 2001, DoubleClick recognized expense of
approximately $10.5 million due to issuance of additional shares of common stock
to the former shareholders of DoubleClick Scandinavia based upon their continued
employment and the attainment of specific revenue objectives following the
company's merger with DoubleClick in December 1999. (See Note 2 to the
Consolidated Financial Statements.) In April 2001, DoubleClick recognized a gain
of approximately $7.2 million from the initial public offering of our
consolidated subsidiary, DoubleClick Japan. (See Note 6 to the Consolidated
Financial Statements.)

In the first quarter of 2001, DoubleClick recorded restructuring provisions
of approximately $29.0 million. These measures included the involuntary
terminations of approximately 230 employees, primarily from DoubleClick's media
operations. This charge included severance costs associated with this work force
reduction, accruals of future lease costs and the writeoff of fixed assets. (See
Note 13 to the Consolidated Financial Statements).

In the fourth quarter of 2000, DoubleClick recognized approximately $49.4
million in impairments associated with the write down of the goodwill generated
in its acquisitions of DoubleClick Scandinavia and DoubleClick Iberoamerica.
(See Note 8 to the Consolidated Financial Statements.) Also in the fourth
quarter of 2000, DoubleClick recorded an approximately $24.1 million impairment
charge related to the write down of its investment in ValueClick. (See Note 3 to
the Consolidated Financial Statements.) Additionally, DoubleClick incurred
approximately $2.4 million in restructuring charges associated with the
involuntary terminations of approximately 180 employees in December 2000. (See
Note 13 to the Consolidated Financial Statements.) In December 2000, DoubleClick
wrote off the remaining balance of its advance to a Web publisher. The
approximately $18.5 million charge has been included in cost of revenues in the
consolidated statements of operations.

In the third quarter of 2000, DoubleClick recognized an approximately $3.9
million gain as the result of the initial public offering of ValueClick Japan, a
consolidated subsidiary of its equity method investee ValueClick. Also in the
third quarter of 2000, DoubleClick recognized an approximately $18.7 million
impairment charge related to the write down of its warrant to purchase
additional shares of ValueClick. (See Note 3 to the Consolidated Financial
Statements.) In July 2000, DoubleClick recognized an approximately $20.7 million
gain as the result of the partial sale of its interest in NetGravity Japan to
DoubleClick Japan. (See Note 2 to the Consolidated Financial Statements.)

In the first quarter of 2000, DoubleClick recognized an approximately $8.9
million gain related to the increase in its proportionate share of the net
assets of its equity method investee ValueClick as the result of ValueClick's
initial public offering in March 2000. (See Note 3 to the Consolidated Financial
Statements.)

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

DOUBLECLICK INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

OVERVIEW

We are a leading provider of products and services that enable direct
marketers, publishers and advertisers to market to consumers in the digital
world. Combining technology, media and data expertise, our products and services
help our customers optimize their advertising and marketing campaigns on the
Internet and through other media. We offer a broad range of technology, media,
data and research products and services to our customers to allow them to
address all facets of the digital marketing process, from pre-campaign planning
and testing, to execution, measurement and campaign refinements. Our service and
product offerings are grouped into three segments:

DoubleClick Technology Solutions ('Technology' or 'TechSolutions');

DoubleClick Media ('Media'); and

DoubleClick Data ('Data').

RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board (the 'FASB') issued
Statement of Financial Accounting Standards ('SFAS') No. 141 'Business
Combinations' and SFAS No. 142 'Goodwill and Other Intangible Assets.' SFAS No.
141 established new standards for accounting and reporting requirements for
business combinations and requires that the purchase method of accounting be
used for all business combinations initiated after June 30, 2001. Use of the
pooling of interests method is prohibited. SFAS No. 142 established new
standards for goodwill acquired in a business combination, eliminated the
amortization of goodwill and set forth methods to periodically evaluate goodwill
for impairment. Intangible assets with a determinable useful life will continue
to be amortized over that life. SFAS No. 141 and SFAS No. 142 are effective for
business combinations completed after June 30, 2001. DoubleClick adopted these
statements on January 1, 2002; however, as noted above, certain provisions of
these new standards may also apply to any acquisitions concluded subsequent to
June 30, 2001. Management is in the process of evaluating the effect that the
adoption of the provisions of SFAS No. 142 will have on DoubleClick's results of
operations and financial position.

CRITICAL ACCOUNTING POLICIES

DoubleClick's discussion and analysis of its financial condition and results
of operations are based upon DoubleClick's consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of consolidated financial
statements requires DoubleClick to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent liabilities. On an on-going basis, DoubleClick
evaluates its estimates, including those related to advertiser credits, bad
debts, the recoverability of investments and intangible assets, income taxes,
depreciable lives, restructuring and contingencies and litigation. DoubleClick
bases its estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.

DoubleClick believes the following critical accounting policies affect its
more significant judgments and estimates used in the preparation of consolidated
financial statements. DoubleClick

29

records reductions to revenue for the estimated future credits issuable to its
customers in the event that delivered advertisements do not meet contractual
specifications. DoubleClick follows this method since reasonably dependable
estimates of such credits can be made based on historical experience. Should the
actual amount of customer credits differ from DoubleClick's estimates, revisions
to the associated allowance may be required in subsequent periods. DoubleClick
maintains an allowance for doubtful accounts for estimated losses resulting from
the inability of its customers to make required payments. If the financial
condition of DoubleClick's customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be
required in subsequent periods. DoubleClick recognizes depreciation expense on
its fixed assets based on estimates of these assets' expected useful lives.
These estimates are based on management's assessment of the expected periods
over which services are anticipated to be rendered by such assets. Should events
or circumstances change management's estimates of the longevity of its
depreciable assets, depreciation expense would correspondingly increase or
decrease in future periods in relation to the revised expected useful lives.

DoubleClick invests in companies, technologies and intangible assets in
areas within its strategic focus, some of which have highly volatile fair values
and uncertain profit potentials. DoubleClick evaluates its investments for
impairment on a periodic basis and reduces the carrying values of such assets to
their estimated fair value when it believes an investment has experienced a
decline in value that is other than temporary. Such fair values are determined
through quoted market prices where available or estimated using valuation
techniques. Future adverse changes in market conditions or poor operating
results of strategic investments could indicate an inability to recover the
carrying value of an investment which may not be reflected in its current
carrying value, thereby possibly requiring impairment charges in the future.
DoubleClick records a valuation allowance to reduce its deferred tax assets to
the amount that is more likely than not to be realized. For the year ended
December 31, 2001 and 2000, DoubleClick has recorded a full valuation allowance
against its net deferred tax assets since management believes that after
considering all the available objective evidence, both positive and negative,
historical and prospective, with greater weight given to historical evidence, it
is not more likely that not that these assets will be realized. In the event
that DoubleClick were to determine that it would be able to realize some or all
of its deferred tax assets, an adjustment to the net deferred tax asset would
increase income in the period such determination was made.

BUSINESS COMBINATIONS

On April 23, 2001, DoubleClick completed its acquisition of FloNetwork Inc.
('FloNetwork'), a privately-held provider of email technology services. In the
transaction, which has been accounted for as a purchase, DoubleClick acquired
all of the outstanding shares, options and warrants of FloNetwork in exchange
for $17.1 million in cash, approximately 2,800,000 shares of DoubleClick common
stock valued at $30.7 million and stock options and warrants to acquire
DoubleClick common stock valued at $3.8 million. The aggregate purchase price of
$52.7 million, which includes approximately $1.1 million of direct acquisition
costs, has been allocated to the assets acquired and the liabilities assumed
according to their fair values at the date of acquisition. On the basis of fair
value appraisals, approximately $4.3 million of the purchase price has been
allocated to acquired technology, $2.2 million to customer lists and $1.3
million to purchased in-process research and development. The amounts allocated
to customer lists and acquired technology is being amortized on a straight-line
basis over 2 and 3 years, respectively. The amounts attributed to in-process
research and development projects have been charged to operations as they had
not reached technological feasibility as of the date of acquisition and were
determined to have no alternative future uses. DoubleClick has also recorded
approximately $45.0 million in goodwill, which represents the remainder of the
excess of the purchase price over the fair value of net assets acquired. This
goodwill was being amortized on a straight-line basis over three years. In
accordance with SFAS No. 142, DoubleClick will cease to amortize this goodwill
when the statement is applied in its entirety in 2002.

30

On February 2, 2001, DoubleClick completed its acquisition of @plan.inc
('@plan'), a leading provider of online market research planning systems. In the
transaction, which has been accounted for as a purchase, DoubleClick acquired
all of the outstanding shares, options and warrants of @plan in exchange for
$39.1 million in cash, approximately 3,200,000 shares of DoubleClick common
stock valued at $48.7 million, and stock options and warrants to acquire
DoubleClick common stock valued at approximately $15.7 million. The aggregate
purchase price of $104.3 million, which includes approximately $0.8 million of
direct acquisition costs, has been allocated to the assets acquired and the
liabilities assumed based on their respective fair values at the date of
acquisition. DoubleClick has recorded approximately $79.1 million in goodwill,
which represents the excess of the purchase price over the fair value of net
assets acquired. This goodwill was being amortized on a straight-line basis over
three years. In accordance with SFAS No. 142, DoubleClick will cease to amortize
this goodwill when the statement is applied in its entirety in 2002.

On January 18, 2002, DoubleClick completed its acquisition of MessageMedia,
Inc., a provider of permission-based, email marketing and messaging solutions.
Under the final terms of the acquisition, DoubleClick issued one million shares
of common stock or .01454 shares of DoubleClick common stock for each share of
MessageMedia common stock. The purchase price, inclusive of approximately $1.9
million of direct acquisition costs, was approximately $11.1 million. The excess
of the purchase price over the fair value of MessageMedia's net assets acquired
will be allocated to intangible assets, which includes goodwill. In accordance
with SFAS No. 142, goodwill will not be amortized but will be periodically
reviewed for impairment. In connection with the acquisition, DoubleClick loaned
$1.0 million to MessageMedia on October 29, 2001 and an additional $0.5 million
on November 12, 2001 to satisfy MessageMedia's operating requirements. The loan
was forgiven upon the closing of the acquisition and included as a component of
the purchase price.

On January 28, 2002, DoubleClick completed the sale of its European Media
operations to AdLINK, a German provider of Internet advertising solutions in
exchange for EUR 30.5 million ($26.3 million) and the assumption by AdLINK of
liabilities associated with DoubleClick's European Media operations.
Intercompany liabilities in an amount equal to EUR 5.0 million ($4.3 million)
were settled through a cash payment by AdLINK to DoubleClick at the closing of
the transaction. Following the closing of the transaction described above,
United Internet AG, or United Internet, AdLINK's largest shareholder, exercised
its right to sell to DoubleClick 15% of the outstanding common shares of AdLINK
in exchange for EUR 35.5 million ($30.6 million). Pursuant to its agreement with
United Internet, the exercise of this right caused DoubleClick's option to
acquire an additional 21% of AdLINK common shares from United Internet to vest.
This option is only exercisable over a two-year period if AdLINK has achieved
EBITDA-positive results for two out of three consecutive fiscal quarters before
December 2003. Should AdLINK fail to achieve these results, the option will
expire unexerciseable in December 2003. As the result of the transactions
described above, DoubleClick sold its European Media operations and received a
15% interest in AdLINK. DoubleClick's option to acquire an additional 21% of the
outstanding common shares of AdLINK from United Internet also vested. The
approximately $8.3 million value of the 15% of the outstanding common stock of
AdLINK, approximately 3.9 million shares, has been determined based on these
shares' average market prices, as quoted on the Neuer Markt, for the day before,
the day of, and the day immediately after the number of shares due to
DoubleClick became irrevocably fixed pursuant to its agreements with AdLINK and
United Internet.

31

RESULTS OF OPERATIONS

Revenues and gross profit by segment are as follows:

2001 COMPARED TO 2000

2001 revenues and gross profits decreased from 2000 primarily as the result
of the decline in overall online advertising spending, partially offset by
growth in our email delivery business. In response to the continued
deterioration of general economic conditions, many companies, particularly
Internet-related companies, have significantly scaled back their advertising and
marketing budgets, which has had a correspondingly negative impact on aggregate
online advertising spending. Operating expenses increased to $511.7 million in
2001 from $448.2 million in 2000, and included $52.2 million in amortization of
intangibles, $72.1 million in goodwill and other impairments, $15.5 million in
non-cash compensation charges, $1.3 million in purchased in-process research and
development costs, and $84.2 million in restructuring charges in 2001. Operating
expenses for 2000 included $41.2 million in amortization of intangibles, $49.4
million in goodwill impairments, $24.4 million in non-cash compensation charges,
and $2.4 million in restructuring charges. Net loss including these charges was
$265.8 million in 2001 as compared to $156.0 in 2000. We expect operating
expenses to decline both in absolute dollars and as a percentage of revenue in
future periods due to the reduction of non-cash compensation expense, the
elimination of goodwill amortization due to the adoption of SFAS 142, and the
implementation of cost savings initiatives.

No one Web publisher, advertiser or other customer accounted for more than
10% of revenue in 2001 or 2000.

DOUBLECLICK TECHSOLUTIONS

DoubleClick TechSolutions revenue is derived primarily from sales of our ad
management products and services, including our DART for Publishers Service,
DART Enterprise, our licensed ad serving software solution, DART for Advertisers
and our email technology products and services. DoubleClick TechSolutions cost
of revenue includes costs associated with the delivery of advertisements,
including Internet access costs, depreciation of the ad and email delivery
systems, facilities, and personnel-related costs incurred to operate and support
our ad and email delivery products.

DoubleClick TechSolutions revenue increased 1.8% to $207.0 million for the
year ended December 31, 2001 from $203.4 million for the year ended December 31,
2000. DoubleClick TechSolutions gross margin was 63.9% for the year ended
December 31, 2001 and 71.6% for the year ended December 31, 2000. The increase
in TechSolutions revenue was primarily attributable to an increased volume of
impressions delivered to existing clients coupled with volume increases
associated with its email delivery services. However, as described below, the
general economic concerns and the continuing weakness of aggregate online
advertising spending that affected DoubleClick Media results exerted increasing
downward pressure on TechSolutions ad management revenues. We expect those
factors to have a similar, but less severe, impact on TechSolutions revenue for
2002. The decline in gross margin resulted primarily from higher fixed

32

costs associated with ad and email delivery hardware and a decrease in the fee
charged to DoubleClick Media for the provision of technology support.

DOUBLECLICK MEDIA

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

Revenue for DoubleClick Media decreased 49.1% to $129.3 million for the year
ended December 31, 2001 from $253.8 million for the year ended December 31,
2000. DoubleClick Media gross margin was 31.9% for the year ended December 31,
2001 and 25.3% for the year ended December 31, 2000. The decrease in DoubleClick
Media revenue reflected in large part the decline in overall online advertising
spending. In response to the continued deterioration of general economic
conditions, many companies, particularly Internet-related companies, have
significantly scaled back their advertising and marketing budgets, which has had
a correspondingly negative impact on aggregate online advertising spending.
While it is impossible to determine the duration or severity of this downturn,
we do not expect substantive growth in DoubleClick Media revenue to occur until
economic concerns subside and the Internet advertising industry achieves a more
meaningful balance between supply and demand for advertising inventory.
DoubleClick Media revenue also decreased due to a reduction in the number of
advertising impressions delivered to users of the AltaVista Web site. Gross
margin was lower in 2000 primarily due to the $18.5 million write-off of our
advance to a Web publisher in December 2000. Excluding this one-time charge,
gross margin would have been 32.6% for the year ended December 31, 2000. The
decrease in gross margin, exclusive of this one-time charge, is primarily the
result of increased levels of price competition and increases in the amount of
unsold inventory, which diluted the effective price of delivered advertising
impressions. This decrease was partially offset by lower average site fees
remitted to publishers and a reduction in the cost of technology support
provided by DoubleClick TechSolutions.

DoubleClick Media revenue derived from advertising impressions delivered to
users of the AltaVista Web site was $8.8 million, or 6.8% of DoubleClick Media
revenue for the year ended December 31, 2001, compared to $28.4 million, or
11.2% of revenue for the year ended December 31, 2000. Because of specific
contractual terms unique to AltaVista, we recognize revenue from sales
commissions, billing and collection fees and DART service fees derived from the
sale and delivery of ads on the AltaVista Web site and associated services.

On August 7, 2000, we announced a restructuring of our Advertising Services
Agreement with AltaVista ('New Agreement'). Pursuant to the New Agreement,
AltaVista assumed lead ad sales responsibility for domestic and international
advertisers in 2001. DoubleClick has the right to sell ads on the AltaVista Web
sites, on a non-exclusive basis, as part of DoubleClick's ad network, through
December 31, 2004. In addition, under the New Agreement, the DART for Publishers
Service will serve ads on AltaVista's Web sites through December 31, 2004 with
the ads required to be served through the DART for Publishers Service declining
in each year of the agreement, subject to certain minimums. The DART for
Advertisers Service will serve the majority of AltaVista'a online advertising
campaigns through December 2004. As a result of the New Agreement, DoubleClick
Media expects that its revenues and related cash flows derived from advertising
impressions delivered to users of the AltaVista Web site will continue to
decline as the agreement's provisions are implemented.

On January 28, 2002, DoubleClick completed the sale of its European media
operations to AdLINK, a German provider of internet advertising solutions.
Excluding its European media sales division, Media revenues would have been
approximately $100 million and $201 million for the year ended December 31, 2001
and 2000, respectively. On a similar basis, DoubleClick's gross profit would
have been approximately $29 million and $41 million for the year ended
December 31, 2001 and 2000, respectively. DoubleClick Media anticipates
decreases in the

33

absolute dollar amounts of both revenues and gross profits subsequent to the
consummation of this transaction in the first quarter of 2002.

DOUBLECLICK DATA

DoubleClick Data revenue has historically been derived primarily from its
Abacus division, which provides services such as prospecting lists, housefile
scoring and list optimization to the direct marketing industries. Following the
acquisition of @plan in February 2001, we created a separate research division
within DoubleClick Data designed to offer market research analysis tools that
provide advertisers, brand marketers and e-businesses with analyses of online
advertising campaigns, consumer behavior and purchasing patterns. Research
revenue is derived primarily from the sale of annual subscriptions to its market
research systems. DoubleClick Data cost of revenue includes expenses associated
with creating, maintaining and updating the Abacus and Research databases as
well as the technical infrastructure to produce our products and services.

DoubleClick Data revenue increased 12.3% to $81.3 million for the year ended
December 31, 2001 compared with $72.4 million for the year ended December 31,
2000. Gross margin declined from 68.0% for the year ended December 31, 2000 to
67.4% for the year ended December 31, 2001. These results reflected a slight
decrease in revenues generated by our Abacus division, which was more than
offset by the impact of the acquisition of @plan. The decline in gross margin
was due primarily to higher fixed costs associated with DoubleClick Data's data
collection as well as the amortization of acquired email lists. The continued
deterioration of general economic conditions could cause a decrease in overall
consumer spending and have a correspondingly negative impact on DoubleClick Data
results.

OPERATING EXPENSES

Sales and Marketing

Sales and marketing expenses consist primarily of compensation and related
benefits, sales commissions, general marketing costs, advertising, bad debt
expense and other operating expenses associated with the sales and marketing
departments. Sales and marketing expenses were $182.8 million, or 45.1% of
revenue for the year ended December 31, 2001 and $227.2 million, or 44.9% of
revenue for the year ended December 31, 2000. The $44.4 million decrease in
sales and marketing expense was primarily attributable to a $17.1 million
decrease in compensation and related benefits due to reductions in headcount
associated with our restructuring activities. Reductions in other
personnel-related costs lowered sales and marketing expenses by $7.1 million.
Non-cash compensation expense decreased approximately $8.5 million due to the
elimination of the non-cash compensation due to the former shareholders of
DoubleClick Scandinavia as the result of the accelerated payment of their
remaining contingent consideration in the second quarter of 2001. In addition,
marketing and bad debt expenses decreased $7.1 million and $4.4 million,
respectively, in 2001. These decreases are commensurate with the decline in our
revenues and the level of business activity. We expect sales and marketing
expenses to continue to decrease, as a percentage of revenue, as the result of
this reduction in non-cash compensation expense and the realization of increased
operational efficiencies from the ongoing headcount rationalizations undertaken
as part of our restructuring activities in 2001.

General and Administrative

General and administrative expenses consist primarily of compensation and
related benefits, professional services fees and facility-related costs. General
and administrative expenses were $65.7 million, or 16.2% of revenue for the year
ended December 31, 2001, and $83.2 million, or 16.5% of revenue for the year
ended December 31, 2000. The $17.5 million decrease in general and
administrative expense was primarily the result of overall reductions in
professional services fees of $8.0 million and decreases in personnel-related
costs of $6.5 million. Decreased professional services fees resulted in part
from a reduction in consulting fees associated with

34

system conversion and integration and personnel-related costs declined
commensurate with the headcount reductions undertaken as part of our
restructuring activities. We expect general and administrative fees to continue
to decline in absolute dollars due to restructuring-related cost savings and
decreases in other general operating costs.

Product Development

Product development expenses consist primarily of compensation and related
benefits, consulting fees and other operating expenses associated with the
product development departments. To date, all product development costs have
been expensed as incurred. Product development expenses were $53.4 million, or
13.2% of revenue for the year ended December 31, 2001 and $44.8 million, or 8.9%
of revenue for the year ended December 31, 2000. The $8.6 million increase in
product development expenses was primarily the result of increases in
compensation and related benefits for product development personnel of $10.9
million, which were partially offset by an approximately $2.0 million reduction
in professional services fees and recruiting costs. Although we will continue to
concentrate on the efficient allocation of our personnel resources and reduce
our reliance on external consultants, we believe that on-going investment in
product development is critical to the attainment of our strategic objectives
and, as a result, we do not expect product development expenses to decline in
absolute dollars.

Amortization of Intangible Assets

Amortization of intangible assets consists primarily of goodwill
amortization. Amortization expense was $52.2 million for the year ended December
31, 2001 and $41.2 million for the year ended December 31, 2000. The $11.0
million increase arose primarily due to the amortization of goodwill associated
with our acquisitions of @plan, DoubleClick Japan and FloNetwork, partially
offset by reductions in amortization expense related to DoubleClick Scandinavia
and DoubleClick Iberoamerica as the result of their impairment write-downs in
the fourth quarter of 2000.

In accordance with SFAS No. 142, DoubleClick will cease to amortize goodwill
when the statement is applied in its entirety in 2002. DoubleClick estimates
that the adoption of SFAS No. 142 would have reduced its amortization expense by
approximately $44.2 million and $35.9 million for the years ended December 31,
2001 and 2000, respectively.

Goodwill and Other Impairments

In connection with DoubleClick's decision to sell its European Media
operations, management determined that the estimated fair value of the
consideration it would receive pursuant to the sale agreement would be less than
the carrying value of its European Media operations. As a result, management
concluded that its investment in its European Media operations was impaired.
DoubleClick recorded a charge of approximately $8.8 million in the fourth
quarter of 2001, which represented the difference between the estimated fair
value of the consideration to be received and the carrying value of the net
assets to be sold.

The persistence of the unfavorable economic conditions that began in 2000
led DoubleClick management to undertake a review of the recoverability of
certain of its investments in the third quarter of 2001. As a result of
significantly lower-than-expected revenues generated to date and considerably
reduced estimates of future performance, management concluded that its
investments in @plan and Flashbase were impaired. Accordingly, DoubleClick
recognized an approximately $63.3 million impairment charge equal to the
difference between its investments and the estimated fair value of these
entities in the third quarter of 2001. Of this amount, approximately $53.3
million related to @plan and $10.0 million related to Flashbase.

In the second quarter of 2001, management reviewed the recoverability of its
investments in @plan and Flashbase. As @plan had only been acquired in February
of 2001, management believed that it did not, at that time, have enough
operational experience with this investment to determine that it was impaired.

In connection with the restructuring activities undertaken in the beginning
of 2001, DoubleClick reorganized its sweepstakes offering with the expectation
that Flashbase would,

35

through the improved visibility of its product line and a streamlined cost
structure, continue to represent a viable component of its business despite
lower-than-expected revenues generated to date. As of the end of the second
quarter of 2001, management did not believe, given the reorganization and
Flashbase's budgeted forecasts, that this investment was impaired. At the end of
the third quarter, as this investment's results mirrored general economic trends
and fell well short of projections, the decision was ultimately made to devote
resources away from the sweepstakes offering and towards more profitable lines
of business. It was at this time that management concluded its investment in
Flashbase was impaired.

The amount of the goodwill impairment was calculated based on discounted
analyses of these entities' expected future cash flows, which were no longer
deemed adequate to support the value of the goodwill associated with these
investments. In both cases, sharply-reduced estimates of anticipated revenue
growth and operating results, triggered primarily by the continued softness in
aggregate online advertising spending, generated correspondingly lowered
expectations of future cash flows and formed the basis for the recording of the
charge in the third quarter of 2001. These entities' expected future cash flows
and terminal values are based on management's budgeted forecasts and estimates.
To the extent that these entities' results fall short of DoubleClick's revised
projections, additional impairment charges could be incurred.

As a result of the significant decline in its stock price in 2000,
DoubleClick reviewed the recoverability of the goodwill associated with its
acquisitions of DoubleClick Scandinavia and DoubleClick Iberoamerica in
accordance with its accounting policy. In the course of its analysis,
DoubleClick determined that the goodwill attributable to DoubleClick Scandinavia
and DoubleClick Iberoamerica was in excess of its estimates of these entities'
future cash flows. Accordingly, DoubleClick recognized $49.4 million in
impairment charges equal to the difference between its investment in and the
estimated fair value of these entities in the fourth quarter of 2000. Of this
amount, $48.2 million related to DoubleClick Scandinavia and $1.2 million
related to DoubleClick Iberoamerica.

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

Purchased In-process Research and Development

In connection with our acquisition of FloNetwork in April, 2001, $1.3
million of the purchase price was allocated to in-process research and
development projects and charged to operations as the projects had not reached
technological feasibility as of the date of acquisition and were determined to
have no alternative future uses.

DoubleClick incurred no such charges for the year ended December 31, 2000.

Restructuring and Other Charges

Throughout 2001, our management took certain actions to increase operational
efficiencies and bring costs in line with revenues. These measures included the
involuntary terminations of approximately 605 employees, primarily from our
Media and TechSolutions divisions, as well as the consolidation of some of our
leased office space and the closure of several of our offices. As a consequence,
we recorded a $84.2 million charge to operations during the year of 2001. This
charge included approximately $10.4 million for severance-related payments to
terminated employees, approximately $51.7 million for the accrual of future
lease costs, net of estimated sublease income and deferred rent liabilities
previously recorded, approximately $19.5 million for the write-off of fixed
assets situated in office locations that were closed or consolidated, and
approximately $2.6 million in other exit costs, which included consulting and
professional services fees related to the restructuring activities and expenses
associated with the decision to move the TechSolutions customer support
department from New York to Colorado.

DoubleClick expects to achieve annualized savings of approximately $45
million in personnel-and facility-related expenses as a result of the
restructuring initiatives undertaken in 2001. A majority of these reductions
will be realized in cash savings and are expected to primarily impact

36

sales and marketing and general and administrative expenses. DoubleClick began
to recognize the full effect of these cost savings in the third and fourth
quarter of 2001. Of the remaining $49.6 million in cash outlays related to the
2001 restructuring activities, we expect to pay approximately $13.1 million in
2002, and approximately $36.5 million in 2003 and the years thereafter. We
anticipate that these outlays will be funded from available sources of
liquidity. However, there can be no assurance that such cost reductions can be
sustained or that the estimated costs of such actions will not change.

In December 2000, management took certain actions to reduce employee
headcount in order to better align its sales, development and administrative
organization and to position DoubleClick for growth in the future consistent
with management's long-term objectives. This involved the involuntary
terminations of approximately 180 employees. As a consequence, we recorded a
$2.4 million charge to operations during the fourth quarter of 2000 related to
payments for severance as well as the costs of outplacement services and the
provision of continued benefits to terminated personnel. DoubleClick expects to
achieve annualized cost savings of approximately $12 million in personnel
related expenses as result of the restructuring activities undertaken in 2000.
These reductions will be realized in cash savings and are expected to primarily
impact sales and marketing and general and administrative expenses. As of
December 31, 2001, all of the $2.4 million charge had been paid.

We are continuing to review our operational performance and anticipate
incurring additional restructuring charges in the first quarter of 2002,
principally related to further headcount reductions and facility closures.

Loss from Operations

Our operating loss was $283.4 million for the year ended December 31, 2001
and $189.1 million for the year ended December 31, 2000. The increase in
operating loss of $94.3 million was primarily attributable to the decrease in
revenues, the incurrence of certain non-recurring charges, including goodwill
impairment and restructuring charges, and the increase in the amortization of
intangible assets discussed above. We expect to incur future losses from
operations but believe these losses will begin to decline based on reductions in
operating expenses and the elimination of goodwill amortization pursuant to SFAS
142. We continue to focus on productivity and will manage our headcount
accordingly as our business conditions require.

Equity in Losses of Affiliates

Equity in losses of affiliates was $2.5 million for the year December 31,
2001 and $6.8 million for the year ended December 31, 2000. Included in Equity
in losses of affiliates for the year ended December 31, 2000 was $3.9 million of
non-recurring income related to DoubleClick's proportionate share of the gain
recognized by ValueClick following the initial public offering of its
consolidated subsidiary, ValueClick Japan. The decrease in equity in losses of
affiliates was primarily the result of a reduction in the amount of amortization
expense associated with our investment in ValueClick. Following our impairment
write-down of the goodwill related to our investment in ValueClick in the fourth
quarter of 2000, amortization expense associated with this investment decreased
from $9.1 million for the year ended December 31, 2000 to $0.7 million for the
year ended December 31, 2001.

As a result of the cumulative dilutive effects of the transactions described
in Gain on equity transactions of affiliates, net, DoubleClick does not believe
that it is able to exercise significant influence over its investment in
ValueClick as of December 31, 2001. Accordingly, DoubleClick will no longer
record its proportionate share of ValueClick's results but instead carry this
investment at fair value, with unrealized gains and losses, net of tax, reported
as a separate component of stockholders' equity. At December 31, 2001,
DoubleClick has recorded approximately $5.9 million in unrealized gains
associated with its investment in ValueClick.

37

Gain on the Equity Transactions of Affiliates, Net

For the year ended December 31, 2001, we recognized a gain of approximately
$7.2 million from the initial public offering of our consolidated subsidiary
DoubleClick Japan, which was partially offset by a loss of approximately $5.7
million related to the decrease in value of our proportionate share of the net
assets of our equity-method investee ValueClick following its consummation of
business combinations with ClickAgents.com, Zmedia and Mediaplex, and its
issuance of common stock to the former shareholders of Bach Systems, Inc., upon
the achievement of certain performance objectives. For the year ended December
31, 2000, we recognized an approximately $8.9 million gain related to the
increase in the value of our investment as the result of ValueClick's initial
public offering and an approximately $20.7 million gain through partial sale our
interest in NetGravity to the minority shareholders of DoubleClick Japan.

Impairment of Equity Investment

In response to the prolonged downturn of the economy in general, and the
continued weakness in aggregate online advertising spending in particular,
DoubleClick management undertook a review of the recoverability of certain of
its investments in the third quarter of 2001. Noting the continued fall in the
price of ValueClick stock, management determined that its investment in
ValueClick was impaired. Consequently, DoubleClick wrote down its investment in
ValueClick and recognized an impairment charge of approximately $11.7 million,
which represented the difference between DoubleClick's carrying value and the
estimated fair value of its investment in ValueClick.

DoubleClick recognized approximately $24.1 million in impairment charges
related to its investment in ValueClick for the year ended December 31, 2000.

Write-down of Warrant

In the third quarter of 2000, DoubleClick management determined that the
remaining exercise period of its warrant to purchase approximately 10.8 million
additional common shares of ValueClick was not a sufficient period to allow for
the price of ValueClick common stock to move above the warrant's strike price.
The application of an option-pricing model confirmed that the estimated fair
value of the ValueClick warrant was negligible. As a result, DoubleClick wrote
off the entire value of the warrant and recognized an impairment charge of
approximately $18.7 million.

There were no such charges incurred for the year ended December 31, 2001.

Interest and Other, Net

Interest and other, net was $24.8 million for the year ended December 31,
2001 and $53.8 million for the year ended December 31, 2000. Interest and other,
net included $43.0 million of interest income for the year ended December 31,
2001, partially offset by $12.8 million in interest expense and a $4.5 million
impairment charge related to the write-off of our investment in our cost-method
investee Return Path. For the year ended December 31, 2000, Interest and other,
net included $54.4 million in interest income, income of approximately $5.0
million related to contract termination fees associated with the restructuring
of our Advertising Services Agreement with AltaVista, and $8.6 million relating
to merger termination fees paid by NetCreations following the termination of our
merger agreement. These amounts were partially offset by interest expense of
$12.1 million. The decrease in interest income was primarily attributable to
decreases in the average quarterly balances of our investments in marketable
securities and decreases in average investment yields due to declines in
interest rates. Interest and other, net in future periods may fluctuate in
correlation with the average cash, investment and debt balances we maintain and
as a result of changes in the market rate of our investments.

38

Income Taxes

The provision for income taxes does not reflect the benefit of our
historical losses due to limitations and uncertainty surrounding our prospective
realization of the benefit. The provision for income taxes recorded for the year
ended December 31, 2001 relates to taxes on the earnings of certain of our
foreign subsidiaries. For the year ended December 31, 2000, the provision for
income taxes primarily relates to taxes on the earnings of certain of our
foreign subsidiaries and a change in estimated tax refunds receivable.

Extraordinary Gain on the Extinguishment of Debt

In 2001, DoubleClick repurchased $30.3 million of its outstanding 4.75%
Convertible Subordinated Notes for approximately $21.9 million in cash.
DoubleClick wrote off approximately $0.2 million in deferred issuance costs and
recognized an extraordinary gain of approximately $4.6 million, net of taxes of
approximately $3.6 million, as the result of the early retirement of this debt.

There were no such extraordinary items for the year ended December 31, 2000.

2000 COMPARED TO 1999

2000 revenues and gross profits increased over 1999 primarily as the result
of volume increases both domestically and internationally and a more favorable
product mix, partially offset by declines associated with the decrease in
revenue derived from advertising impressions delivered to users of the AltaVista
Web site as the result of the restructuring of our Advertising Services
Agreement, which is described above. Operating expenses increased to $448.2
million from $209.9 million in 1999, and included $49.4 million in goodwill
impairments, $41.2 million in intangible asset amortization, $24.4 million in
non-cash compensation charges, and $2.4 million in restructuring charges in
2000. Operating expenses for the year ended December 31, 1999 included
intangible asset amortization of $1.3 million, non-cash compensation charges of
$2.2 million and direct transaction, integration and relocation charges of $41.6
million in 1999. Net loss including these charges was $156.0 million in 2000 as
compared to $55.8 million in 1999.

Revenues derived from advertising impressions delivered to users of the
AltaVista Web site were $37.9 million, or 7.5% of total revenue for the year
ended December 31, 2000 compared to $27.9 million, or 10.8% of total revenues
for the year ended December 31, 1999. No one Web publisher or advertiser
accounted for more than 10% of revenue for the year ended December 31, 2000.

DOUBLECLICK TECHSOLUTIONS

DoubleClick TechSolutions revenue increased 172.3% to $203.4 million for the
year ended December 31, 2000 from $74.7 million for the year ended December 31,
1999. DoubleClick TechSolutions gross margin was 71.6% for the year ended
December 31, 2000 and 67.0% for the year ended December 31, 1999. The increase
in DoubleClick TechSolutions revenue was due to an increase in the number of
DART Service and licensed ad serving software clients coupled with an increased
volume of advertising impressions delivered for new and existing clients. The
increase in gross margin is due to increased efficiencies from the growth of the
DART Services and our consulting and support of DART Enterprise, our licensed ad
serving software product.

39

DOUBLECLICK MEDIA

Revenue for DoubleClick Media increased 102.2% to $253.8 million for the
year ended December 31, 2000 from $125.5 million for the year ended December 31,
1999. DoubleClick Media gross margin was 25.3% for the year ended December 31,
2000 and 39.8% for the year ended December 31, 1999. The increase in DoubleClick
Media revenue was due to an increase in online ad spending on the DoubleClick
network. Gross margin decreased primarily due to the write-off of our advance to
a Web publisher in December 2000. Excluding this one-time charge, gross margin
would have been 32.6% for the year ended December 31, 2000. Gross margin also
declined due to increases in the amounts of unsold inventory, which diluted the
effective price of delivered advertising impressions. Gross margin further
decreased due to a reduction in the proportion of revenue derived from
advertising impressions delivered to users of the AltaVista Web site.

DoubleClick Media revenue derived from advertising impressions delivered to
the users of the AltaVista Web site was $28.4 million, or 11.2% of DoubleClick
Media revenue for the year ended December 31, 2000, compared to $22.4 million,
or 17.8% of DoubleClick Media revenue for the year ended December 31, 1999.
Because of specific contractual terms unique to AltaVista, we recognize revenue
from sales commissions, billing and collection fees and DART service fees
derived from the sale and delivery of ads on the AltaVista Web site and
associated services. AltaVista DART services fees recognized by TechSolutions
were $9.5 million and $5.5 million for the year ended December 31, 2000 and
1999, respectively.

DOUBLECLICK DATA

DoubleClick Data revenue increased 9.7% to $72.4 million for the year ended
December 31, 2000 from $66.0 million for the year ended December 31, 1999. Gross
margin declined from 77.4% for the year ended December 31, 1999 to 68.0% for the
year ended December 31, 2000. The increase in revenue was due an increase in
sales to new and existing clients. The decline in gross margin was primarily
attributable to increases in personnel-related costs resulting from higher
employment levels and, to a lesser extent, facilities, depreciation and
processing costs associated with supporting new product initiatives.

OPERATING EXPENSES

Sales and Marketing

Sales and marketing expenses consist primarily of compensation and related
benefits, sales commissions, general marketing costs, advertising, bad debt
expense and other operating expenses associated with the sales and marketing
departments. Sales and marketing expenses were $227.2 million, or 44.9% of
revenue for the year ended December 31, 2000 and $103.6 million, or 40.1% of
revenue for the year ended December 31, 1999. The increase in sales and
marketing expense as a percentage of revenue was related primarily to the
recognition of approximately $23.7 million in non-cash compensation and
approximately $1.7 million in deal related charges associated with our
acquisitions of DoubleClick Scandinavia and Flashbase. Additional shares of
DoubleClick common stock are contingently issuable based on the continued
employment of former shareholders of DoubleClick Scandinavia and Flashbase and
the attainment of specific performance objectives. Excluding these non-cash and
deal-related charges, sales and marketing expenses would have been 39.9% of
revenues for the year ending December 31, 2000.

In addition to the $25.4 million of non-cash and deal-related charges
described above, the $123.6 million increase in sales and marketing expense was
attributable to an approximately $44.1 million increase in compensation and
related benefits expenses associated with the growth in our sales force, coupled
with increases in other costs related to our personnel growth. Commissions
related to the increase in revenues grew by $14.0 million, costs associated with
the continued development and implementation of our marketing and branding
campaigns increased by $14.7 million, and our provision for doubtful accounts
increased by approximately $10.2 million.

40

This increase in the provision for doubtful accounts is commensurate with the
increases in our revenues and level of business activity.

General and Administrative

General and administrative expenses consist primarily of compensation and
related benefits, professional services fees and facility related costs. General
and administrative expenses were $83.2 million, or 16.5% of revenue for the year
ended December 31, 2000 and $35.0 million, or 13.6% of revenue for the year
ended December 31, 1999. The increase of $48.2 million was primarily the result
of an approximate $17.4 million increase in compensation and related benefits
expenses associated with the growth in our personnel, business and operations,
coupled with increases in other costs related to our personnel growth.
Professional services fees increased by approximately $13.9 million from
consulting fees incurred to integrate, convert and develop our systems and from
legal fees incurred addressing privacy concerns and patent infringement
lawsuits.

Product Development

Product development expenses consist primarily of compensation and related
benefits, consulting fees, and other operating expenses associated with the
product development departments. To date, all product development costs have
been expensed as incurred. Product development expenses were $44.8 million, or
8.9% of revenues for year ended December 31, 2000 and $28.4 million, or 11.0% of
revenues for the year ended December 31, 1999. The $16.4 million increase in
product development expense was primarily the result of an approximate $9.1
million increase in compensation and related benefits expenses associated with
the increases in our personnel. In addition to increases in other costs related
to our personnel growth, professional services fees increased by approximately
$2.3 million related to consulting fees for enhancements to our DART ad
management technology and our licensed ad serving software product, as well as
our new email suite of products. The decrease in product development costs as a
percentage of revenue is due to the growth in revenue generated from a
significant number of new clients, renewals and extended contracts of existing
clients, and an increase in services and products being offered.

Amortization of Intangible Assets

Amortization of intangible assets consists primarily of goodwill
amortization. Amortization expense was $41.2 million for the year ended December
31, 2000 and $1.3 million for the year ended December 31, 1999. The increase was
primarily the result of the amortization of goodwill related to our acquisitions
of DoubleClick Japan, DoubleClick Scandinavia, Flashbase and DoubleClick
Iberoamerica.

Goodwill Impairment

As a result of the significant decline in market value of Internet-based
companies, as well as operating losses incurred by our subsidiaries, we reviewed
the recoverability of the goodwill associated with our acquisitions of
DoubleClick Scandinavia and DoubleClick Iberoamerica in accordance with our
accounting policy. In the course of our analysis, we determined that the
goodwill attributable to DoubleClick Scandinavia and DoubleClick Iberoamerica
was in excess of our estimates of these entities' future cash flows.
Accordingly, we recognized $49.4 million in impairment charges equal to the
difference between our investment in and the estimated fair value of these
entities in the fourth quarter of 2000. Of this amount, $48.2 million related to
DoubleClick Scandinavia and $1.2 million related to DoubleClick Iberoamerica.

Direct Transaction, Integration and Relocation Charges

For the year ended December 31, 1999 we incurred direct transaction and
integration costs of approximately $38.7 million and approximately $2.9 million
in costs associated with the relocation of our corporate headquarters. We
incurred no such costs in 2000.

41

Restructuring Costs

In December 2000 management took certain actions to reduce employee
headcount in order to better align its sales, development and administrative
organization and to position DoubleClick for growth in the future consistent
with management's long-term objectives. This involved the involuntary
terminations of approximately 180 employees. As a consequence, we recorded a
$2.4 million charge to operations during the fourth quarter of 2000 related to
payments for severance as well as the costs of outplacement services and the
provision of continued benefits to terminated personnel.

Loss from Operations

Our operating loss was $189.1 million for the year ended December 31, 2000
and $58.7 million for the year ended December 31, 1999. The increase in
operating loss is primarily attributable to the amortization of intangible
assets, non-cash compensation, and goodwill impairment as well as the building
of our personnel infrastructure as discussed above.

Equity in Losses of Affiliates

Equity in losses of affiliates was $6.8 million for the year ended December
31, 2000 and $0.8 million for the year ended December 31, 1999. In addition to
our $1.5 million share of our investees' losses, Equity in losses of affiliates
for the year ended December 31, 2000 included approximately $9.1 million in
expense related to the amortization of goodwill associated with our investment
in ValueClick. These amounts were partially offset by a $3.9 million gain
related to the recognition of our proportionate share of the gain arising from
the initial public offerings of a consolidated subsidiary of an equity method
investee.

Gain on Equity Transactions of Affiliates, Net

Gain on equity transactions of affiliates, net was $11.0 million for the
year ended December 31, 2000. Gain on equity transactions of affiliates, net
included credits of approximately $8.9 million and $20.7 million related to
gains arising as the result of the initial public offering of our equity-method
investee ValueClick and the partial sale of our interest in NetGravity Japan to
DoubleClick Japan. These gains were partially offset by an $18.7 million
impairment charge associated with the write down of our warrant to purchase
additional shares of ValueClick.

Impairment of Equity Investment

In the fourth quarter of fiscal 2000, management made an assessment of the
carrying value of our investment in ValueClick and determined that it was in
excess of its estimated fair value. Consequently, we wrote down our investment
in ValueClick and recognized an impairment charge of approximately $24.1
million, which represents the difference between the carrying value and the
estimated fair value of our investment in ValueClick.

There were no such charges incurred for the year ended December 31, 1999.

Write-Down of Warrant

In the third quarter of 2000, DoubleClick management determined that the
remaining exercise price of its warrant to purchase approximately 10.8 million
additional common shares of ValueClick was not a sufficient period to allow for
the price of ValueClick common stock to move above the warrant's strike price.
The application of an option-pricing model confirmed that the fair value of the
ValueClick warrant was negligible. As a result, DoubleClick wrote off the entire
value of the warrant and recognized an impairment charge of approximately $18.7
million.

There were no such charges incurred for the year ended December 31, 1999.

Interest and Other, Net

Interest and other, net was $53.8 million for the year ended December 31,
2000 and $12.3 million for the year ended December 31, 1999. Interest and other,
net included $54.4 million in

42

interest income for the year ended December 31, 2000 partially offset by $12.1
million of interest expense, and $22.6 million of interest income for the year
ended December 31, 1999, partially offset by $9.4 million of interest expense.
For the year ended December 31, 2000, Interest and other, net also includes
one-time credits of approximately $5.0 million related to contract termination
fees associated with the restructuring of our Advertising Services Agreement
with AltaVista in fiscal 2000 and $8.6 million related to merger termination
fees paid by NetCreations upon the termination of our merger agreement in
December 2000. The increase in interest income was attributable to interest
earned on cash and cash equivalents and investments in marketable securities
funded primarily from the net cash proceeds from our common stock offering in
February 2000. Additionally, our average yield increased due to increases in
interest rates.

Income Taxes

The provision for income taxes does not reflect the benefit of our
historical losses due to limitations and uncertainty surrounding our prospective
realization of the benefit. The provision for income taxes recorded for the year
ended December 31, 1999 relates to the standalone results of Abacus prior to our
merger on November 23, 1999. The provision for the year ended December 31, 2000
principally relates to corporate income taxes on the earnings of some of our
foreign subsidiaries, partially offset by a refund for taxes paid by Abacus in
fiscal 1999.

LIQUIDITY AND CAPITAL RESOURCES

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

Operating activities used $7.6 million for the year ended December 31, 2001,
generated $41.6 million for the year ended December 31, 2000 and used $38.9
million for the year ended December 31, 1999. The decrease in cash provided by
operating activities in 2001 resulted from an increase in net loss, excluding
non-cash items, and decreases in accounts payable and deferred revenue,
partially offset by a decrease in accounts receivable and an increase in accrued
expenses. The increase in cash provided by operating activities in 2000 resulted
primarily from a decrease in net loss, excluding non-cash items, and increases
in accounts payable and accrued expenses, which were partially offset by
increases in accounts receivable and prepaid expenses. Net cash used in
investing activities was $85.6 million, $525.5 million and $367.3 million for
the years ended December 31, 2001, 2000 and 1999, respectively. Cash used in
investing activities for the year ended December 31, 2001 resulted primarily
from the purchases of equipment and the net cash outlays for acquisitions of
businesses and intangible assets, which was partially offset by the maturities
of some of our investments in marketable securities. Cash used in investing
activities for the year ended December 31, 2000 resulted principally from the
investment of the proceeds of our common stock issuance in marketable
securities, as well as purchases of equipment and the net cash outlays for the
acquisition of businesses and intangible assets. Cash used in investing
activities for the year ended December 31, 1999 resulted chiefly from the
investment of the net proceeds from our public offering of Convertible
Subordinated Notes and purchases of equipment. Net cash provided by financing
activities was $4.3 million, $559.6 million and $364.4 million for the years
ended December 31, 2001, 2000 and 1999, respectively. Cash generated by
financing activities for the year ended December 31, 2001 resulted primarily
from the initial public offering of our consolidated subsidiary DoubleClick
Japan and the proceeds from the exercise of stock options, mostly offset by cash
payments for debt and stock repurchases. Cash provided by financing activities
consisted primarily of the net proceeds from our public offerings of common
stock in 2000 and 1999 and the net proceeds of our public offering of
Convertible Subordinated Notes in 1999.

As of December 31, 2001, we had $99.5 million in cash and cash equivalents
and $652.7 million in investments in marketable securities. As of December 31,
2001, our principal commitments consisted of $219.7 million principal amount of
our Convertible Subordinated Notes and our obligations under operating and
capital leases.

43

If the closing sales price of DoubleClick common stock exceeds 140% of the
$41.25 per share conversion price for at least 20 trading days in any
consecutive 30 trading day period, or at anytime after March 15, 2003, the
Convertible Notes may be redeemed at the option of DoubleClick, in whole or in
part, at the redemption prices set forth in the Convertible Notes indenture.
Upon occurrence of a change of control of DoubleClick or if DoubleClick's common
stock is no longer listed for trading on the Nasdaq Stock Market's National
Market, a United States national securities exchange or an established automated
over the counter trading market in the United States prior to the maturity of
the Convertible Notes, each holder of the Convertible Notes has the right to
require DoubleClick to redeem all or any part of the holder's Convertible Notes
at a price equal to 100% of the principal amount, plus accrued interest, of the
Convertible Notes being redeemed.

The future minimum lease payments under capital and operating leases are as
follows (in thousands):

We continue to anticipate that our capital expenditures and lease
commitments will be a material use of our cash resources consistent with the
levels of our operations, infrastructure and personnel.

In September 2001, our Board of Directors authorized a repurchase plan that
permits the purchase of up to an aggregate of $100 million of DoubleClick common
stock or DoubleClick's Convertible Notes over a one-year period. DoubleClick
purchased 765,000 shares of its common stock at an average price of $5.84 per
share during the quarter ended September 30, 2001. In the third and fourth
quarters of 2001, DoubleClick repurchased approximately $30.3 million of its
outstanding Convertible Notes for approximately $21.9 million in cash.

At December 31, 2001, DoubleClick had outstanding standby letters of credit
of $17.6 million. These letters of credit collateralize DoubleClick's
obligations to third parties under certain operating leases. In connection with
these letters of credit, $17.6 million of DoubleClick's cash and cash
equivalents are restricted as to its use at December 31, 2001.

Pursuant to an underwriting agreement dated February 17, 2000, we completed
a public offering of 7,500,000 shares of our common stock, of which we sold
5,733,411 shares and certain stockholders sold 1,766,589 shares. Our net
proceeds were approximately $502.9 million after deducting underwriting
discounts, commissions and offering expenses.

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

ITEM 7A. QUANTITATIVE AND QUALITIATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

The primary objective of our investment activities is to preserve capital
while at the same time maximizing yields without significantly increasing risk.
To achieve this objective, we maintain our portfolio of cash equivalents and
marketable securities in a variety of government and corporate obligations and
money market funds. As of December 31, 2001, our investments in marketable
securities had a weighted-average time to maturity of approximately 344 days.

44

The following table presents the amounts of our financial instruments that
are subject to interest rate risk by expected maturity and average interest
rates as of December 31, 2001.

We did not hold any material derivative financial instruments as of
December 31, 2001.

FOREIGN CURRENCY RISK

We transact business in a variety of foreign countries and are thus subject
to exposure from adverse movements in foreign currency exchange rates. This
exposure is primarily related to revenue and operating expenses denominated in
European and Asian currencies. The effect of foreign exchange fluctuations on
our operations for the year ended December 31, 2001 was not material. We do not
use derivative financial instruments to hedge operating activities denominated
in foreign currencies. We assess the need to utilize such instruments to hedge
currency exposures on an ongoing basis. As of December 31, 2001, we had $36.5
million in cash and cash equivalents denominated in foreign currencies.

The introduction of the euro has not had a material impact on how we conduct
business and we do not anticipate any changes in how we conduct business as the
result of increased price transparency.

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

45

DOUBLECLICK INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

46

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of DoubleClick Inc.:

In our opinion the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of DoubleClick Inc. and its subsidiaries at December 31, 2001 and 2000,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 2001 in conformity with accounting
principles generally accepted in the United States of America. In addition, in
our opinion, the financial statement schedule listed in the accompanying index
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related financial statements. These financial
statements and financial statement schedule are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.

/s/ PricewaterhouseCoopers LLP

PRICEWATERHOUSECOOPERS LLP
NEW YORK, NEW YORK
JANUARY 15, 2002, EXCEPT AS TO NOTE 19 WHICH IS AS OF JANUARY 28, 2002

47

DOUBLECLICK INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

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

48

DOUBLECLICK INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

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

49

DOUBLECLICK INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
(IN THOUSANDS)

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

50

DOUBLECLICK INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

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

51

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001

NOTE 1 -- DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

DoubleClick Inc., together with its subsidiaries ('DoubleClick'), is a
leading provider of products and services that enable direct marketers,
publishers and advertisers to market to consumers in the digital world.
Combining technology, media, and data expertise, DoubleClick's products and
services help its customers optimize their advertising and marketing campaigns
on the Internet and through other media. DoubleClick offers a broad range of
technology, media, data and research products and services to its customers to
allow its customers to address all aspects of the digital marketing process,
from pre-campaign planning and testing, to execution, measurement and campaign
refinements.

DoubleClick derives its revenues from three business units: Technology (or
'TechSolutions'), Media and Data based on the types of services provided.
DoubleClick TechSolutions includes our ad management products consisting of our
DART for Publishers Service, the DART Enterprise ad serving software product,
the DART for Advertisers Service and a suite of email products based on
DoubleClick's DARTmail Service. DoubleClick Media consists of the DoubleClick
network, which provide fully outsourced and effective ad sales and related
services to a worldwide group of advertisers and publishers. DoubleClick Data
includes its Abacus division which utilizes the information contributed to the
proprietary Abacus database by Abacus Alliance members to make direct marketing
more efficient for Abacus Alliance members and other clients. DoubleClick Data
also includes DoubleClick's research division, which offers Web publishers
sophisticated research about online market and advanced campaign tools and
planning systems.

BASIS OF PRESENTATION

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

CASH, CASH EQUIVALENTS AND INVESTMENTS IN MARKETABLE SECURITIES

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

Marketable securities are classified as current or long-term assets
depending on their dates of maturity. As of December 31, 2001, all marketable
securities included in long-term assets mature in the calendar year 2003.

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

At December 31, 2001 cash and cash equivalents and investments in marketable
securities consisted of the following:

52

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

At December 31, 2000, cash and cash equivalents and investments in
marketable securities consisted of the following:

PROPERTY AND EQUIPMENT

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

GOODWILL AND INTANGIBLE ASSETS

DoubleClick records as goodwill the excess of purchase price over the fair
value of the identifiable net assets acquired. Until December 31, 2001, goodwill
was amortized on a straight-line basis over its estimated useful life, which was
generally three years. Intangible assets include patents, trademarks, and
customer lists. Such intangible assets are amortized on a straight-line basis
over their estimated useful lives, which are generally two to three years.

In July 2001, the Financial Accounting Standards Board (the 'FASB') issued
Statement of Financial Accounting Standards ('SFAS') No. 142 'Goodwill and Other
Intangible Assets.' See 'New accounting pronouncements.'

53

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

IMPAIRMENT OF LONG-LIVED ASSETS

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

REVENUE RECOGNITION

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

TECHNOLOGY. Revenues include fees earned from email products and services
and the use of DART ad management products and services, DoubleClick's Web-based
ad management solution. Revenues derived from email services and the use of the
DART email delivery technology are recognized in the period the advertising
impressions or emails are delivered provided collection of the resulting
receivable is reasonably assured. DART Services activation fees are deferred and
recognized ratably over the expected term of the customer relationship.

For DoubleClick's licensed ad serving software solution, revenues are
recognized upon completion of product installation, which is generally when
customers begin utilizing the product, there is pervasive evidence of an
arrangement, collection is reasonably assured, the fee is fixed or determinable,
and vendor-specific objective evidence exists to allocate the total fees to all
elements of the arrangement.

A portion of the initial ad serving software license fee is attributed to
the customer's right to receive, at no additional charge, software upgrades
released during the subsequent twelve months. Revenues attributable to software
upgrades are deferred and recognized ratably over the period covered by the
software license agreement, which is generally one year. Revenues from
consulting services are recognized as the services are performed and
customer-support revenues are deferred and recognized ratably over the period
covered by the customer support agreement, generally one year.

MEDIA. Revenues are derived primarily from the sale and delivery of
advertising impressions through third-party Web sites within the DoubleClick
network (the 'network'). Revenues are recognized in the period the advertising
impressions are delivered provided collection of the resulting receivable is
reasonably assured. Deferred revenue consists primarily of payments received in
advance of revenue being earned for the delivery of such advertising
impressions.

DoubleClick becomes obligated to make payments to third-party Web sites,
which have contracted with DoubleClick to be part of the network, in the period
the advertising impressions are delivered. Such expenses are classified as costs
of revenues in the consolidated statement of operations.

DATA. DoubleClick provides services to its clients that result in a
deliverable product in the form of marketing data or customized written reports.
DoubleClick recognizes revenues when the product is shipped to the client
provided collection of the resulting receivable is reasonably assured. In
certain cases, DoubleClick provides subscriptions to unlimited products for a
fixed fee and over a fixed period of time, over which revenue is recognized
ratably.

In December 1999, the Securities and Exchange Commission ('SEC') issued
Staff Accounting Bulletin ('SAB') No. 101, Revenue Recognition in Financial
Statements. SAB 101 summarizes

54

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

certain of the SEC's views on the application of generally accepted accounting
principles to revenue recognition in financial statements. The adoption of SAB
101 did not have a material effect on DoubleClick's financial position or
results of operations.

PRODUCT DEVELOPMENT

Product development costs and enhancements to existing products are charged
to operations as incurred. Software development costs are required to be
capitalized when a product's technological feasibility has been established by
completion of a working model of the product and ending when a product is
available for general release to customers. To date, completion of a working
model of DoubleClick's products and general release have substantially
coincided. As a result, DoubleClick has not capitalized any software development
costs.

ISSUANCE OF STOCK BY AFFILIATES

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

ADVERTISING EXPENSES

DoubleClick expenses the cost of advertising and promoting its services as
incurred. Such costs are included in sales and marketing in the consolidated
statements of operations and totaled $12.8 million, $22.5 million, and $7.6
million for the years ended December 31, 2001, 2000, and 1999, respectively.

INCOME TAXES

DoubleClick uses the asset and liability method of accounting for income
taxes. Under this method, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to the differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and to operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in results of
operations in the period that includes the enactment date. A valuation allowance
is provided to reduce the deferred tax assets reported if, based on the weight
of the available evidence, it is more likely than not some portion or all of the
deferred tax assets will not be realized.

FOREIGN CURRENCY

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

55

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

EQUITY-BASED COMPENSATION

DoubleClick accounts for its employee stock option plans in accordance with
the provisions of Accounting Principles Board ('APB') Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations. As such,
compensation expense related to the granting of employee stock options is
recorded over the vesting period only if, on the date of grant, the fair value
of the underlying stock exceeds the option's exercise price. DoubleClick has
adopted the disclosure-only requirements of SFAS No. 123 Accounting for
Stock-Based Compensation, which allows entities to continue to apply the
provisions of APB No. 25 for transactions with employees and provide pro forma
net income and pro forma earnings per share disclosures for employee stock
grants made as if the fair value based method of accounting in SFAS No. 123 had
been applied to these transactions.

BASIC AND DILUTED NET LOSS PER SHARE

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

At December 31, 2001, 2000 and 1999, outstanding options of approximately
23.9 million and 22.2 million and 23.1 million, respectively, to purchase shares
of common stock were not included in the computation of diluted net loss per
share because to do so would have had an antidilutive effect for the periods
presented. Similarly, the computation of diluted net loss per share excludes the
effect of 5,326,055 shares issuable upon conversion of $219.7 million, 4.75%
Convertible Subordinated Notes due 2006, since their inclusion would also have
had an antidilutive effect. As a result, the basic and diluted net loss per
share amounts are equal for all periods presented.

CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject DoubleClick to concentrations
of credit risk consist primarily of cash and cash equivalents, investments in
marketable securities, and accounts receivable.

Credit is extended to customers based on an evaluation of their financial
condition, and collateral is not required. DoubleClick performs ongoing credit
assessments of its customers and maintains an allowance for doubtful accounts.

In 1999, DoubleClick advanced approximately $20 million to AllAdvantage, an
Internet advertising and sweepstakes company. In view of the weak market for
Internet advertising in general and the financial difficulties of AllAdvantage
in particular, management concluded that was no longer recoverable and the
remaining balance of approximately $18.5 million was written off in the fourth
quarter of 2000. This charge has been classified as a cost of revenue in the
consolidated statements of operations.

On August 7, 2000, DoubleClick announced the restructuring of its
Advertising Services Agreement with AltaVista ('New Agreement'). Pursuant to the
New Agreement, AltaVista assumed lead ad sales responsibility for domestic and
international advertisers in 2001. DoubleClick has the right to sell
advertisements on the AltaVista Web site, on a non-exclusive basis, as part of
DoubleClick's ad network, through December 31, 2004. In addition, under the New
Agreement, the DART for Publishers Service will serve ads on AltaVista's Web
sites through December 31, 2004 with the ads required to be served through the
DART for Publishers declining in each year of the

56

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

agreement, subject to certain minimums. The DART for Publishers service will
serve the majority of AltaVista's online advertising campaigns through December
2004. For the year ended December 31, 2000, DoubleClick recognized approximately
$5.0 million in contract termination fees associated with the restructuring of
its Advertising Services Agreement with AltaVista. This amount has been included
in 'Interest and other, net' in the consolidated statements of operations.

Revenues derived from advertising impressions delivered to users of the
AltaVista Web site represented 2.4%, 7.5%, and 10.8% of DoubleClick's revenues
for the periods ended December 31, 2001, 2000 and 1999, respectively. No other
Web site publisher and no advertiser or other customer on the network was
responsible for 10% or more of DoubleClick's total revenues during the periods
presented in the consolidated statements of operations. No other single customer
accounted for more than 10% of DoubleClick's revenues for the years ended
December 31, 2001, 2000 and 1999. No single customer accounted for more than 10%
of DoubleClick's accounts receivable at December 31, 2001 and 2000.

DoubleClick's financial instruments consist of cash and cash equivalents,
investments in marketable securities, accounts receivable, accounts payable,
accrued expenses and convertible subordinated notes. At December 31, 2001 and
2000 the fair value of these instruments approximated their financial statement
carrying amount with the exception of the convertible subordinated notes, which
had estimated fair values of $173.8 million and $146.4 million at December 31,
2001 and 2000, respectively.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

RECLASSIFICATIONS

Certain reclassifications have been made to the prior years' financial
statements to conform with the current year presentation.

NEW ACCOUNTING PRONOUNCEMENTS

In July 2001, the FASB issued SFAS No. 141, Business Combinations and SFAS
No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 established new
standards for accounting and reporting requirements for business combinations
and requires that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001. Use of the pooling-of-interests
method is prohibited. SFAS No. 142 established new standards for goodwill
acquired in a business combination, eliminated amortization of goodwill and set
forth methods to periodically evaluate goodwill for impairment. Intangible
assets with a determinable useful life will continue to be amortized over that
life. SFAS 141 and 142 are effective for business combinations completed after
June 30, 2001. DoubleClick adopted these statements on January 1, 2002; however,
as noted above, certain provisions of these new standards may also apply to any
acquisitions concluded subsequent to June 30, 2001. Management is in the process
of evaluating the effect that the adoption of the remaining provisions of SFAS
No. 142 will have on DoubleClick's results of operations and financial position.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

In June 1998 the FASB issued SFAS No. 133, Accounting for Derivative
Financial Instruments and Hedging Activities, which had an initial adoption date
of January 1, 2000. In June 1999, the FASB issued SFAS No. 137, which delayed
the effective date for implementing SFAS No. 133 until the beginning of 2001. In
June 2000, the FASB issued SFAS No. 138, which amended certain provisions of
SFAS No. 133 with the objective of easing the implementation difficulties
expected to arise on the adoption of the statement. DoubleClick adopted SFAS
No. 133 effective January 1, 2001. The adoption of SFAS No. 133 had no material
impact on DoubleClick's financial condition or results of operations.

NOTE 2 -- BUSINESS COMBINATIONS

FLONETWORK INC.

On April 23, 2001, DoubleClick completed its acquisition of FloNetwork Inc.
('FloNetwork'), a privately-held provider of email technology services. In the
transaction, which has been accounted for as a purchase, DoubleClick acquired
all of the outstanding shares, option and warrants of FloNetwork in exchange for
$17.1 million in cash, DoubleClick common stock valued at $30.7 million and
stock options and warrants to acquire DoubleClick common stock valued at $3.8
million. The value of the approximately 2,800,000 shares of DoubleClick common
stock issued was determined based on the average market price of DoubleClick
common stock, as quoted on the Nasdaq National Market, for the day immediately
prior to, the day of, and the day immediately after the number of shares and
cash consideration due to FloNetwork shareholders became irrevocably fixed
pursuant to the agreement under which FloNetwork was acquired. The FloNetwork
options and warrants assumed by DoubleClick as the result of this merger
converted into options and warrants to acquire approximately 430,000 shares of
DoubleClick common stock and have been valued using the Black-Scholes option
pricing model with the following weighted-average assumptions:

Expected dividend yield..................................... 0.0%
Risk-free interest rate..................................... 4.5%
Expected life (in years).................................... 4.1
Volatility.................................................. 115%

The aggregate purchase price of $52.7 million, which includes approximately
$1.1 million of direct acquisition costs, has been allocated to the assets
acquired and the liabilities assumed according to their fair values at the date
of acquisition as follows (in millions):

Current assets.............................................. $ 5.4
Acquired in-process research and development................ 1.3
Other intangible assets..................................... 6.5
Goodwill.................................................... 45.0
Other non-current assets.................................... 3.3
-----
Total assets acquired................................... $61.5
Current liabilities......................................... $(8.8)
-----
Total liabilities assumed............................... $(8.8)
-----
Net assets acquired......................................... $52.7
-----
-----

On the basis of fair value appraisals, approximately $4.3 million of the
purchase price has been allocated to acquired technology, $2.2 million to
customer lists and $1.3 million to purchased in-process research and
development. The amounts allocated to customer lists and acquired technology is
being amortized on a straight-line basis over 2 and 3 years, respectively. The
amounts attributed to in-process research and development projects have been
charged to

58

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

operations as they had not reached technological feasibility as of the date of
acquisition and were determined to have no alternative future uses. DoubleClick
has also recorded approximately $45.0 million in goodwill, which represents the
remainder of the excess of the purchase price over the fair value of net assets
acquired. This goodwill is not tax deductible and is being amortized on a
straight-line basis over three years. In accordance with SFAS 142, DoubleClick
will cease to amortize this goodwill when the statement is applied in its
entirety in 2002. See Note 1, 'Description of business and significant
accounting policies.'

The results of operations for FloNetwork have been included in DoubleClick's
consolidated statements of operations from the date of acquisition.

@PLAN.INC

On February 2, 2001, DoubleClick completed its acquisition of @plan.inc
('@plan'), a leading provider of online market research planning systems. In the
transaction, which has been accounted for as a purchase, DoubleClick acquired
all of the outstanding shares, options and warrants of @plan in exchange for
$39.1 million in cash, DoubleClick common stock valued at $48.7 million, and
stock options and warrants to acquire DoubleClick common stock valued at
approximately $15.7 million. The value of the approximately 3,200,000 shares of
common stock issued was determined based on the average market price of
DoubleClick common stock, as quoted on the Nasdaq national market, for the day
immediately prior to and the day of the final determination of the number of
shares and cash consideration due to @plan shareholders became irrevocably fixed
pursuant to the agreement under which @plan was acquired. The @plan options and
warrants assumed by DoubleClick as the result of the merger converted into
options and warrants to acquire approximately 1,200,000 shares of DoubleClick
common stock and have been valued using the Black-Scholes option pricing model
with the following weighted-average assumptions:

Expected dividend yield..................................... 0.0%
Risk-free interest rate..................................... 6.1%
Expected life (in years).................................... 4.3
Volatility.................................................. 107%

The aggregate purchase price of $104.3 million, which includes approximately
$0.8 million of direct acquisition costs, has been allocated to the assets
acquired and the liabilities assumed based on their respective fair values at
the date of acquisition as follows (in millions):

Cash....................................................... $ 26.6
Other current assets....................................... 3.5
Goodwill................................................... 79.1
Other non-current assets................................... 0.8
------
Total assets acquired.................................. $110.0
Current liabilities........................................ $ (5.7)
------
Total liabilities assumed.............................. $ (5.7)
------
Net assets acquired........................................ $104.3
------
------

DoubleClick has recorded approximately $79.1 million in goodwill, which
represents the excess of the purchase price over the fair value of net assets
acquired. This goodwill is not tax-deductible and is being amortized on a
straight-line basis over three years. In accordance with SFAS 142, DoubleClick
will cease to amortize this goodwill when the statement is applied in its
entirety in 2002. See Note 1, 'Description of business and significant
accounting policies.'

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DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

The results of operations for @plan have been included in DoubleClick's
consolidated statements of operations from the date of acquisition.

The following unaudited pro forma results of operations have been prepared
assuming that the acquisition of FloNetwork and @plan occurred at the beginning
of the respective periods presented. This pro forma financial information should
not be considered indicative of the actual results that would have been achieved
had the acquisitions been consummated on the dates indicated and does not
purport to indicate results of operations as of any future date or any future
period.

DOUBLECLICK JAPAN

In July 2000, DoubleClick contributed its wholly-owned subsidiary,
NetGravity Japan, to its affiliate DoubleClick Japan in return for an additional
27% ownership interest in DoubleClick Japan. In addition to increasing
DoubleClick's equity interest to approximately 37%, the agreement with
DoubleClick Japan enables it to elect a majority of the seats on DoubleClick
Japan's Board of Directors and exercise a controlling financial interest over
its operations. Accordingly, DoubleClick has consolidated the net assets and
results of operations of DoubleClick Japan as of the date of the transfer. As
DoubleClick Japan's net assets and results and operations had not previously
been consolidated in DoubleClick's financial statements, this simultaneous
transfer and acquisition was treated as a partial sale of DoubleClick's interest
in NetGravity and a step acquisition of an additional equity interest in
DoubleClick Japan. Full reverse acquisition accounting was applied and a $20.7
million gain recognized to the extent that NetGravity Japan was deemed sold to
the minority shareholders of DoubleClick Japan. This gain has been included in
'Gain on equity transactions of affiliates, net' in the consolidated statements
of operations. Goodwill of $21.3 million was recorded to reflect the
proportionate step-up in DoubleClick Japan's net assets as the result of the
reverse acquisition.

Subsequent to the transfer of NetGravity Japan described above, DoubleClick
made an additional investment of $5.4 million in DoubleClick Japan, which
increased its interest to approximately 43%. This transaction has been accounted
for as a step acquisition and DoubleClick has recorded approximately $0.7
million of goodwill, which represents the excess of its additional investment
over the fair value of the incremental assets acquired.

On April 25, 2001, DoubleClick Japan completed its initial public offering
of common stock on the Nasdaq Japan market. This diluted DoubleClick's ownership
percentage to 38.2%. See Note 6, 'Initial Public Offering of DoubleClick Japan.'

FLASHBASE, INC.

Effective May 26, 2000, DoubleClick acquired Flashbase, Inc. ('Flashbase')
for approximately $19.6 million. In connection with the acquisition, which has
been accounted for under the purchase method, DoubleClick recorded approximately
$19.5 million in goodwill. Additional payments of approximately $4.2 million
were made in March 2001 based on the continued

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DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

employment of the former shareholders and the attainment of specific performance
objectives for the year ended December 31, 2000. Of this amount, approximately
$1.7 million was paid in cash and the remaining $2.5 million was paid in
DoubleClick common stock. Such amounts were included in 'Sales and marketing' in
the 2000 consolidated statement of operations.

DOUBLECLICK SCANDINAVIA AB

On December 29, 1999, DoubleClick acquired the 90.7% of the outstanding
shares of DoubleClick Scandinavia AB that it did not previously own in a
business combination accounted for using the purchase method. In the
transaction, the shares of DoubleClick Scandinavia AB not owned by DoubleClick
were exchanged for an aggregate of approximately 862,000 shares of DoubleClick
common stock. DoubleClick acquired the outstanding shares of DoubleClick
Scandinavia AB in exchange for DoubleClick common stock valued at $87.9 million,
assumed a working capital deficiency of $3.1 million and incurred costs of $1.4
million. In connection with the acquisition, DoubleClick recorded approximately
$92.4 million of goodwill. Under the terms of DoubleClick's purchase agreement
with DoubleClick Scandinavia, additional shares of DoubleClick common stock were
to be contingently issuable in March 2001 and 2002 based upon the continued
employment of the former shareholders and the attainment of specific revenue
objectives for the years ended December 31, 2001 and 2000. In May 2001, after
issuing the shares related to the 2000 fiscal year, DoubleClick agreed to pay
the former shareholders the minimum consideration they were entitled to receive
for the 2001 fiscal year under the terms of the original agreement. As a result,
DoubleClick recognized approximately $15.2 million in non-cash compensation
expense, which represented the remaining unaccrued portion this accelerated
payment. For the year ended December 31, 2000, DoubleClick recognized
approximately $19.8 million in non-cash compensation expense related to shares
contingently issuable to the former shareholders of DoubleClick Scandinavia for
the 2000 fiscal year. These amounts have been included in 'Sales and marketing'
in the consolidated statements of operations.

On December 27, 2001, DoubleClick acquired the remaining outstanding shares
that it did not own of DoubleClick Denmark, a consolidated subsidiary of
DoubleClick Scandinavia, for approximately $3.6 million.

OPT-IN EMAIL.COM

On November 30, 1999 DoubleClick consummated its merger with Opt-In, a
leader in Internet email marketing, publishing and list management. Under the
terms of the merger, which has been accounted for under the pooling of interests
method, 200,000 shares of DoubleClick common stock were issued in exchange for
100% of the outstanding common shares of Opt-In.

ABACUS DIRECT CORPORATION

On November 23, 1999, DoubleClick consummated its merger with Abacus, a
leading provider of specialized consumer information and analysis for the direct
marketing industry. Under the terms of the merger, which has been accounted for
under the pooling of interests method, each share of Abacus common stock was
converted to 1.05 shares of DoubleClick common stock, totaling approximately 21
million shares.

DOUBLECLICK IBEROAMERICA S.L.

On November 4, 1999, DoubleClick acquired the 90% of the outstanding shares
of DoubleClick Iberoamerica it did not previously own in exchange for cash of
$1.3 million, assumed

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DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

a working capital deficiency of $800,000 and incurred costs of $400,000. In
connection with the acquisition, which has been accounted for as a purchase,
DoubleClick recorded approximately $2.5 million of goodwill.

NETGRAVITY, INC.

On October 26, 1999, DoubleClick consummated its merger with NetGravity, a
leading provider of interactive online advertising and direct marketing software
solutions. Under the terms of the merger, which has been accounted for under the
pooling of interests method, each share of NetGravity common stock was converted
to 0.28 shares of DoubleClick common stock, totaling approximately 10.2 million
shares.

NOTE 3 -- INVESTMENT IN VALUECLICK, INC.

Effective February 28, 2000, DoubleClick acquired an approximately 33%
interest in ValueClick, Inc. ('ValueClick') as well as a warrant to purchase
ValueClick common stock for 732,860 shares of DoubleClick common stock and $10.0
million in cash. DoubleClick's investment in ValueClick was recorded based on
the fair value of the consideration paid (approximately $94.2 million) less
approximately $27.7 million of treasury stock that represented its proportionate
share of the DoubleClick stock held by ValueClick. In addition to approximately
$41.3 million of goodwill, DoubleClick's investment in ValueClick also included
an amount of approximately $18.7 million which represented the estimated fair
value of the warrant on February 28, 2000. DoubleClick's investment in
ValueClick has been accounted for under the equity method, with a 90-day lag in
reporting DoubleClick's share of the results of ValueClick. DoubleClick has
recorded its proportionate share of ValueClick's net income or loss and the
amortization of goodwill associated with this investment in 'Equity in losses of
affiliates' in the consolidated statements of operations. This goodwill was
amortized on a straight-line basis using a three-year estimated useful life.

In the first quarter of 2000, DoubleClick recorded the effects of
ValueClick's initial public offering of 4.0 million shares of common stock at
$19.00 per share. ValueClick's net proceeds, after deducting underwriting
discounts, commissions and direct offering costs, were approximately $68.6
million. As a result of this offering, DoubleClick's ownership interest was
reduced from 33.0% to 28.1% and the value of its proportionate share of
ValueClick's net assets increased. DoubleClick recorded an increase in the value
of its investment in ValueClick of $12.9 million, reduced the carrying amount of
treasury stock to approximately $23.8 million and recognized a gain of
approximately $8.9 million. This gain has been included in 'Gain on equity
transactions of affiliates, net' in the consolidated statements of operations.

In the third quarter of 2000, DoubleClick management determined that the
remaining exercise period of its warrant to purchase approximately 10.8 million
additional common shares of ValueClick was not a sufficient period to allow for
the price of ValueClick common stock to move above the warrant's strike price.
The application of an option-pricing model confirmed that the estimated fair
value of the ValueClick warrant was negligible. As a result, DoubleClick wrote
off the entire value of the warrant and recognized an impairment charge of
approximately $18.7 million. This charge has been reflected as 'Write-down of
warrant' in the consolidated statements of operations.

In the third quarter of 2000, DoubleClick recognized its proportionate share
of the gain resulting from the initial public offering of ValueClick Japan, a
consolidated subsidiary of ValueClick. Pursuant to SAB 51, ValueClick recognized
a gain to the extent that a portion of its interest was deemed sold through the
offering at a price higher than its original basis. DoubleClick's proportionate
share of this gain, approximately $3.9 million, has been included in 'Equity in
losses of affiliates' in the consolidated statements of operations.

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DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

In light of the steady decline in the market price of ValueClick's common
stock since its initial public offering, DoubleClick management made an
assessment of the carrying value of its investment in ValueClick in the fourth
quarter of 2000 and determined that it was in excess of its estimated fair
value. Consequently, DoubleClick wrote down its investment in ValueClick and
recognized an impairment charge of approximately $24.1 million, which
represented the difference between the carrying value and the estimated fair
value of its investment in ValueClick. This impairment has been recorded as
'Goodwill impairment of equity investment' in the consolidated statements of
operations. The estimated fair value of DoubleClick's investment in ValueClick
was determined based on the closing market price of ValueClick common stock on
December 1, 2000.

In the first quarter of 2001, DoubleClick recorded the effects of
ValueClick's issuance of approximately 5.7 million shares to complete a purchase
acquisition of Bach Systems, Inc. ('Bach Systems') and to consummate a pooling
of interests merger with ClickAgents.com, Inc. ('ClickAgents'). DoubleClick has
treated the ValueClick's pooling with ClickAgents as a book value purchase of
ClickAgents by ValueClick. As a result of these transactions, DoubleClick's
ownership interest was reduced from 28.1% to 23.5% and the value of its
proportionate share of ValueClick's net assets decreased. DoubleClick recorded a
decrease in the value of its investment in ValueClick of $3.8 million, reduced
the carrying value of treasury stock to approximately $15.3 million and
recognized a loss of approximately $3.8 million. This loss has been included in
'Gain on equity transactions of affiliates, net' in the consolidated statements
of operations. Under the terms of the purchase agreement, ValueClick may issue
additional shares of common stock to the former shareholders of Bach Systems if
certain performance objectives are achieved over the eight quarters following
the closing date.

In the second quarter of 2001, DoubleClick recorded the effects of
ValueClick's issuance of approximately 2.7 million shares to complete its
pooling of interest merger with Z Media, Inc. As a result of the merger,
DoubleClick's ownership interest in ValueClick was reduced from 23.5% to 21.7%
and the value of its proportionate share of ValueClick's net assets decreased.
Pursuant to its accounting policy, DoubleClick recorded a decrease in the value
of its investment in ValueClick of $1.8 million, reduced the carrying amount of
treasury stock to $14.2 million and recognized a loss of approximately $1.5
million. This loss has been included in 'Gain on equity transactions of
affiliates, net' in the consolidated statements of operations.

In the second quarter of 2001, ValueClick sold the remaining 567,860 shares
of DoubleClick common stock it owned to third parties. DoubleClick recorded an
increase in the value of its investment in ValueClick of approximately $1.5
million, which was equal to its proportionate share of the cash proceeds from
the sale. Also as a result of this transaction, DoubleClick reduced the carrying
amount of treasury stock to zero and recognized a charge to retained earnings of
approximately $12.7 million, which represented the difference between the
treasury shares' original basis and the cash proceeds from the sale.

In response to the prolonged downturn of the economy in general, and the
continued weakness in aggregate online advertising spending in particular,
DoubleClick management undertook a review of the recoverability of certain of
its investments in the third quarter of 2001. Noting the continued fall in the
price of ValueClick stock, management determined that its investment in
ValueClick was impaired. Consequently, DoubleClick wrote down its investment in
ValueClick and recognized an impairment charge of approximately $11.7 million,
which represented the difference between DoubleClick's carrying value and the
estimated fair value of its investment in ValueClick. The estimated fair value
of DoubleClick's investment in ValueClick was determined based on the closing
market price of ValueClick stock on September 30, 2001.

In the fourth quarter of 2001, DoubleClick recorded the effects of
ValueClick's issuance of approximately 0.6 million shares to the former
shareholders of Bach Systems upon the

63

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

achievement of certain performance objectives. As a result of this issuance,
DoubleClick's ownership interest was reduced from 21.7% to 21.3% and the value
of its proportionate share of ValueClick's net assets decreased. DoubleClick
recorded a decrease in the value of its investment in ValueClick of $0.3 million
and recognized a loss of approximately $0.3 million. This loss has been included
in Gain on equity transactions of affiliates, net in the consolidated statements
of operations.

Also in the fourth quarter of 2001, DoubleClick recorded the effects of
ValueClick's issuance of approximately 14.9 million shares to complete its
purchase acquisition of Mediaplex, Inc. As a result of the merger, DoubleClick's
ownership interest was reduced from 21.3% to 15.2% and the value of its
proportionate share of ValueClick's net assets decreased. DoubleClick recorded a
decrease in the value of its investment in ValueClick of $0.1 million and
recognized a loss of approximately $0.1 million. This loss has been included in
'Gain on equity transactions of affiliates, net' in the consolidated statements
of operations.

For the years ended December 31, 2001 and 2000, DoubleClick recognized
approximately $0.7 million and $9.1 million, respectively, of goodwill
amortization associated with its investment in ValueClick.

As a result of the cumulative dilutive effects of the transactions described
above, DoubleClick does not believe that it is able to exercise significant
influence over its investment in ValueClick as of December 31, 2001.
Accordingly, DoubleClick will no longer record its proportionate share of
ValueClick's results but instead carry this investment at fair value, with
unrealized gains and losses, net of tax, reported as a separate component of
stockholders' equity. At December 31, 2001, DoubleClick's investment in
ValueClick consisted of the following (in millions):

Cost basis.................................................. $16.6
Unrealized gain............................................. 5.9
-----
Estimated fair value........................................ $22.5

DoubleClick's investment in ValueClick is included in 'Investments in
affiliates' in the Consolidated Balance Sheets.

DoubleClick has recorded a full valuation allowance against the net deferred
tax asset associated with its investment in ValueClick.

NOTE 4 -- INVESTMENTS

DoubleClick has a 50% interest in Abacus Direct Europe B.V., which was
formed in 1998 to provide services to the European Community. This investment is
accounted for under the equity method. DoubleClick contributed approximately
$481,000 and $435,000 to Abacus Direct Europe B.V. during the years ended
December 31, 2000 and 1999, respectively. DoubleClick recognized approximately
$100,000 as its equity in the net income of Abacus Direct Europe B.V. for the
year ended December 31, 2001. For the years ended December 31, 2000 and 1999,
DoubleClick recognized approximately $492,000 and $783,000, respectively, as its
equity in the losses of Abacus Direct Europe B.V. These amounts have been
included in 'Equity in losses of affiliates' in the consolidated statements of
operations.

NOTE 5 -- WRITE-DOWN OF INVESTMENT IN AFFILIATE

As a result of the significant decline in the market value of Internet-based
companies and the decreasing access of these companies to public and private
financing, management initiated an assessment of the carrying values of certain
of its investments in affiliates in 2001. In the course of its analysis,
DoubleClick determined that the carrying value of its cost-method investee
Return

64

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

Path was no longer recoverable. As a consequence, DoubleClick wrote off its
entire investment in Return Path and recognized an impairment charge of $4.5
million in the second quarter of 2001. This charge has been included in
'Interest and other, net' in the consolidated statements of operations.

NOTE 6 -- INITIAL PUBLIC OFFERING OF DOUBLECLICK JAPAN

On April 25, 2001, DoubleClick's consolidated subsidiary, DoubleClick Japan,
completed its initial public offering of common stock on the Nasdaq Japan
Market, issuing 23,456 shares at approximately $1,236 per share. DoubleClick
Japan's net proceeds, after deducting underwriting discounts, commissions and
direct offering costs, were approximately $25.4 million. As a result of this
offering, DoubleClick's ownership interest in DoubleClick Japan decreased from
43.2% to 38.2%. DoubleClick recorded a $16.6 million increase in minority
interest, reduced the carrying amount of the goodwill associated with its
acquisition of DoubleClick Japan by $1.6 million and recognized a gain of
approximately $7.2 million, which represented the incremental increase in
consolidated net equity related to its proportionate share of the proceeds from
DoubleClick Japan's stock offering. Pursuant to Accounting Principles Board
Opinion No. 23, no deferred taxes have been recorded related to this gain as it
is considered permanently reinvested in DoubleClick Japan. This gain has been
included in 'Gain on equity transactions of affiliates, net' in the consolidated
statements of operations.

NOTE 7 -- GOODWILL AND INTANGIBLE ASSETS

Goodwill, net consists of the following:

Intangible assets, net consists of the following:

For the year ended December 31, 2001, DoubleClick purchased customer lists
for approximately $12.6 million in cash.

Amortization expense related to goodwill and intangible assets was
approximately $53.0 million, $41.2 million and $1.3 million for the years ended
December 31, 2001, 2000 and 1999, respectively. For the year ended December 31,
2001, approximately $829,000 of this expense relates to the amortization of
acquired technology assets and has been included as a component of cost of
revenue in the consolidated statement of operations.

NOTE 8 -- GOODWILL AND OTHER IMPAIRMENTS

In connection with DoubleClick's decision to sell its European Media
operations, management determined that the estimated fair value of the
consideration it would receive pursuant to the sale

65

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

agreement would be less than the carrying value of its European Media
operations. As a result, management concluded that its investment in its
European Media operations was impaired. DoubleClick recorded a charge of
approximately $8.8 million in the fourth quarter of 2001, which represented the
difference between the estimated fair value of the consideration to be received
and the carrying value of the net assets to be sold. See Note 20, 'Subsequent
Events.'

The persistence of the unfavorable economic conditions that began in 2000
led DoubleClick management to undertake a review of the recoverability of
certain of its investments in 2001. As a result of significantly
lower-than-expected revenues generated to date and considerably reduced
estimates of future performance, management concluded that its investments in
@plan and Flashbase were impaired. Accordingly, DoubleClick recognized an
approximately $63.3 million impairment charge equal to the difference between
its investments in and the estimated fair value of these entities in the third
quarter of 2001. Of this amount, approximately $53.3 million related to @plan
and $10.0 million related to Flashbase.

In the second quarter of 2001, management reviewed the recoverability of its
investments in @plan and Flashbase. As @plan had only been acquired in February
of 2001, management believed that it did not, at that time, have enough
operational experience with this investment to determine that it was impaired.

In connection with the restructuring activities undertaken in the beginning
of 2001, DoubleClick reorganized its sweepstakes offering with the expectation
that Flashbase would, through the improved visibility of its product line and a
streamlined cost structure, continue to represent a viable component of its
business despite lower-than-expected revenues generated to date. As of the end
of the second quarter of 2001, management did not believe, given the
reorganization and Flashbase's budgeted forecasts, that this investment was
impaired. At the end of the third quarter, as this investment's results mirrored
general economic trends and fell well short of projections, the decision was
ultimately made to devote resources away from the sweepstakes offering and
towards more profitable lines of business. It was at this time that management
concluded its investment in Flashbase was impaired.

The amount of the goodwill impairment was calculated based on discounted
analyses of these entities' expected future cash flows, which were no longer
deemed adequate to support the value of the goodwill associated with these
investments. In both cases, sharply-reduced estimates of anticipated revenue
growth and operating results, triggered primarily by the continued softness in
aggregate online advertising spending, generated correspondingly lowered
expectations of future cash flows and formed the basis for the recording of the
charge in the third quarter of 2001. These entities' expected future cash flows
and terminal values are based on management's budgeted forecasts and estimates.
In its calculation to determine the impairment charge for its investment in
@plan, DoubleClick used a discount rate of 15% and assumed a remaining useful
life of 2.5 years, which represented the remaining useful life of the goodwill
associated with this investment. In its calculation to determine the impairment
charge for Flashbase, DoubleClick used a discount rate of 15% and a useful life
of 1.75 years, which represented the remaining useful life of the goodwill
associated with this investment.

As a result of the significant decline in its stock price in 2000,
DoubleClick reviewed the recoverability of the goodwill associated with its
acquisitions of DoubleClick Scandinavia and DoubleClick Iberoamerica in
accordance with its accounting policy. In the course of its analysis,
DoubleClick determined that the goodwill attributable to DoubleClick Scandinavia
and DoubleClick Iberoamerica was in excess of its estimates of these entities'
future cash flows. Accordingly, DoubleClick recognized $49.4 million in
impairment charges equal to the difference between its investment in and the
estimated fair value of these entities in the fourth quarter of 2000. Of this
amount, $48.2 million related to DoubleClick Scandinavia and $1.2 million
related to DoubleClick Iberoamerica.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

NOTE 9 -- PROPERTY AND EQUIPMENT

Depreciation and amortization expense related to property and equipment was
approximately $53.4 million, $33.4 million and $13.3 million in 2001, 2000 and
1999, respectively.

NOTE 10 -- CONVERTIBLE SUBORDINATED NOTES

On March 17, 1999, DoubleClick issued 4.75% Convertible Subordinated Notes
due 2006 with a principal amount of $250 million (the 'Convertible Notes'). The
Convertible Notes are convertible into DoubleClick common stock at a conversion
price of $41.25 per share, subject to adjustment at the occurrence of certain
events and at the holder's option. Interest on the Convertible Notes is payable
semiannually on March 15 and September 15 of each year. The Convertible Notes
are unsecured and are subordinated to all existing and future Senior
Indebtedness (as defined in the Convertible Notes indenture) of DoubleClick. If
the closing sales price of DoubleClick common stock exceeds 140% of the
conversion price for at least 20 trading days in any consecutive 30 trading day
period, or at anytime after March 15, 2003, the Convertible Notes may be
redeemed at the option of DoubleClick, in whole or in part, at the redemption
prices set forth in the Convertible Notes indenture.

Upon occurrence of a change of control of DoubleClick or if DoubleClick's
common stock is no longer listed for trading on the Nasdaq Stock Market's
National Market, a United States national securities exchange or an established
automated over the counter trading market in the United States prior to the
maturity of the Convertible Notes, each holder of the Convertible Notes has the
right to require DoubleClick to redeem all or any part of the holder's
Convertible Notes at a price equal to 100% of the principal amount, plus accrued
interest, of the Convertible Notes being redeemed.

DoubleClick has used and may use the net proceeds from the offering of the
Convertible Notes for general corporate purposes, including working capital to
fund anticipated operating losses, the expansion of DoubleClick's product
offerings, investments in new business products, technologies and markets,
capital expenditures, and acquisitions or investments in complementary
businesses, products and technologies.

DoubleClick incurred approximately $5.3 million in issuance costs, which are
included in other assets on the consolidated balance sheet, net of accumulated
amortization of approximately $2.1 million and $1.3 million at December 31, 2001
and 2000, respectively. The issuance costs are being amortized over the term of
the Convertible Notes and are included in intangible asset amortization on the
consolidated statement of operations. For the years ended December 31, 2001,
2000 and 1999, DoubleClick recognized approximately $751,000, $768,000 and
$525,000, respectively, in expense related to the amortization of these deferred
issuance costs. Interest

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

expense relating to the Convertible Notes was approximately $11.6 million, $11.9
million and $9.3 million for the years ended December 31, 2001, 2000 and 1999,
respectively.

In the second half of 2001, DoubleClick repurchased approximately $30.3
million of its outstanding 4.75% Convertible Subordinated Notes for
approximately $21.9 million in cash. DoubleClick wrote off approximately $0.2
million in deferred issuance costs and recognized an extraordinary gain of
approximately $4.6 million, net of taxes of approximately $3.6 million, as the
result of the early retirement of this debt.

NOTE 11 -- STOCKHOLDERS' EQUITY

DoubleClick's Certificate of Incorporation authorizes 400,000,000 shares of
$0.001 par value common stock and authorizes 5,000,000 shares of preferred
stock.

In 1998, DoubleClick completed public offerings of 29,369,040 shares of
common stock generating proceeds of $182.1 million, net of offering costs. In
1999, DoubleClick completed public offerings of 2,145,046 shares of common
stock, generating proceeds of $113.1 million, net of offering costs.

Pursuant to an underwriting agreement dated February 17, 2000, DoubleClick
completed a public offering of 7,500,000 shares of its common stock, of which
DoubleClick sold 5,733,411 shares and certain stockholders sold 1,766,589
shares. DoubleClick's net proceeds were approximately $502.9 million, after
deducting underwriting discounts, commissions and offering expenses.

STOCK SPLITS

In April 1999 and January 2000, DoubleClick effected two-for-one stock
splits in the form of 100 percent stock dividends. The splits were approved for
shareholders of record as of March 22, 1999 and December 31, 1999, respectively.
Accordingly, all share and per share amounts presented in these consolidated
financial statements and related notes have been restated to reflect these stock
splits.

STOCK AND NOTE REPURCHASE PLAN

In September 2001, the Board of Directors authorized a repurchase program
that permits the purchase of up to an aggregate of $100 million of outstanding
DoubleClick common stock or DoubleClick's Convertible Notes over a one-year
period. During the year ended December 31, 2001, DoubleClick purchased 765,000
shares of its common stock at an average price of $5.84 per share.

EMPLOYEE STOCK PURCHASE PLAN

Under the DoubleClick Employee Stock Purchase Plan (the 'ESPP'), which
became effective on April 3, 2000, participating employees may purchase shares
of DoubleClick common stock at 85% of its fair market value at the beginning or
end of an offering period, whichever is lower, through payroll deductions in an
amount not to exceed 10% of an employee's base compensation. For the years ended
December 31, 2001 and 2000, DoubleClick issued 243,961 and 83,615 shares
respectively, pursuant to its ESPP. An additional 1,572,424 shares were reserved
for issuance at December 31, 2001.

STOCK PURCHASE WARRANTS

In connection with its acquisition of @plan in February 2001, DoubleClick
issued 99,495 stock purchase warrants. These warrants each represent the right
to purchase, until May 26, 2006, one share of DoubleClick common stock at a
weighted-average exercise price of $28.14 per share. As of December 31, 2001,
none of these warrants have been exercised.

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DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

In connection with its acquisition of FloNetwork in April 2001, DoubleClick
issued 7,452 stock purchase warrants. These warrants each represent the right to
purchase, until September 22, 2007, one share of DoubleClick common stock at a
weighted-average exercise price of $27.13 per share. As of December 31, 2001,
none of these warrants have been exercised.

At December 31, 2001, DoubleClick had in aggregate 106,947 stock purchase
warrants outstanding with a weighted-average exercise price of $28.07. At
December 31, 2001, the weighted-average remaining contractual life of these
warrants was approximately 4.5 years.

STOCK INCENTIVE PLAN

The 1997 Stock Incentive Plan (the '1997 Plan' or the 'Plan') was adopted by
the Board of Directors on November 7, 1997 and was subsequently approved by the
stockholders.

Under the 1997 Plan, 35,148,152 shares of common stock are reserved for the
issuance of incentive and nonqualified stock options as of December 31, 2001.
The number of shares of common stock reserved for issuance under the 1997 Plan
automatically increases on the first trading day of each calendar year, by an
amount equal to three percent (3%) of the total number of shares of common stock
outstanding on the last trading day of the immediately preceding calendar year,
provided that no such increase will exceed 2,400,000 shares.

Generally, options granted under the Plan vest ratably over a period of
three to four years from the date of grant and expire 10 years from the date of
grant and terminate, to the extent unvested, on the date of termination, and to
the extent vested, generally at the end of the three-month period following the
termination of employment. To the extent that an option grant permits the
exercise of unvested shares and is subject to repurchase by DoubleClick upon an
employee's termination of service, those unvested shares of common stock that
are subsequently repurchased by DoubleClick, whether at the exercise price or
direct issue paid per share, will be added to the reserve of common stock
available for issuance under the 1997 Plan. In no event, however, may any one
participant in the 1997 Plan receive option grants or direct stock issuances for
more than 1,500,000 shares of common stock in the aggregate per calendar,
beginning with the 1998 calendar year.

In October 1999, DoubleClick implemented the 1999 Non-Officer Stock
Incentive Plan, pursuant to which 750,000 shares of common stock have been
authorized for issuance.

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DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

A summary of the stock option activity for the three years ended December
31, 2001 is as follows:

In connection with its acquisition of @plan in February 2001, DoubleClick
assumed all of the company's outstanding options. Under the terms of the merger
agreement, these options were converted into options to acquire 1,114,177 shares
of DoubleClick common stock at a weighted-average price of $9.99 per share.

In connection with its acquisition of FloNetwork in April 2001, DoubleClick
assumed all of the company's outstanding options. Under the terms merger
agreement, these options were converted into options to acquire 421,515 shares
of DoubleClick common stock at a weighted-average price of $13.00 per share.

For the years ended December 31, 2001, 2000 and 1999, DoubleClick amortized
$236,000, $637,000 and $2,175,000, respectively, of deferred compensation
related to options which were granted with exercise prices below fair market
value at the date of grant. As of December 31, 2001, all deferred compensation
has been fully amortized. All stock options granted in 2001 and 2000 were
granted with exercise prices at fair market value at the date of grant.

Had DoubleClick determined compensation expense of employee stock options
based on the estimated fair value of the stock options at the grant date,
consistent with the guidelines of SFAS 123, DoubleClick's net loss would have
been increased to the pro forma amounts indicated below:

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DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

The per share weighted average fair value of options granted for the years
ended December 31, 2001, 2000 and 1999 was $6.86, $51.12, and $38.44,
respectively, on the grant date with the following weighted average assumptions:

The following table summarizes information about stock options outstanding
at December 31, 2001:

NOTE 12 -- DIRECT TRANSACTION, INTEGRATION AND FACILITY RELOCATION CHARGES

For the year ended December 31, 1999 DoubleClick incurred direct transaction
and integration costs of approximately $31.1 million and $7.6 million,
respectively, in connection with its acquisitions accounted for as pooling of
interests. Direct transaction costs consist of approximately $26.1 million in
investment banking fees and $5.0 million in other professional fees and filing
and printing costs. Integration costs include approximately $3.9 million in
personnel related costs and $3.7 million in costs related to redundant systems,
integration consulting and asset impairments.

For the year ended December 31, 1999, DoubleClick incurred approximately
$2.9 million in costs associated with relocation of its corporate headquarters.
As a result of DoubleClick's relocation, completed in December 1999, DoubleClick
incurred a non-recurring impairment charge of approximately $1.4 million related
primarily to leasehold improvements, which were abandoned and not relocated to
DoubleClick's new headquarters building. DoubleClick's management made an
assessment of the carrying value of the assets disposed of and determined that
their carrying value was in excess of their estimated fair value. The estimated
fair value of the assets was determined based on an estimate of the
recoverability of the assets carrying amounts over their remaining useful life
to the abandonment date using their initial cost recovery rate. Depreciation and
amortization of $729,000 associated with these asset impairments is presented
outside of direct transaction, integration and facility relocation charges in
the consolidated statements of operations. In addition, duplicative equipment
and rental costs of approximately $1.5 million were incurred.

71

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

NOTE 13 -- RESTRUCTURING CHARGES

2000 RESTRUCTURING

In December 2000, management took certain actions to reduce employee
headcount in order to better align its sales, development and administrative
organization. This involved the involuntary terminations of approximately 180
employees. As a consequence, DoubleClick recorded a $2.4 million charge to
operations during the fourth quarter of 2000 related to payments for severance
as well as the costs of outplacement services and the provision of continued
benefits to terminated personnel.

As of December 31, 2000, approximately $1.2 million of the $2.4 million
charge remained accrued in 'Accrued expenses and other current liabilities'. In
2001, the remainder of the 2000 restructuring charge was paid.

2001 RESTRUCTURING

Throughout 2001, our management took certain actions to increase operational
efficiencies and bring costs in line with revenues. These measures included the
involuntary terminations of approximately 605 employees, primarily from our
Media and TechSolutions divisions, as well as the consolidation of some of our
leased office space and the closure of several of our offices. As a consequence,
we recorded an $84.2 million charge to operations during the year of 2001. This
charge included approximately $10.4 million for severance-related payments to
terminated employees, approximately $51.7 million for the accrual of future
lease costs (net of estimated sublease income and deferred rent liabilities
previously recorded), approximately $19.5 million for the write-off of fixed
assets situated in office locations that were closed or consolidated, and
approximately $2.6 million in other exit costs, which included consulting and
professional fees related to the restructuring activities and expenses
associated with the decision to move the TechSolutions customer support
department from New York to Colorado. These fixed asset impairments arose
primarily from the write-off of the carrying values of leasehold improvements in
offices in New York, San Francisco and London that were abandoned as part of the
restructuring activities.

Of the $84.2 million charge recorded in 2001, approximately $15.0 million
and $34.6 million remain accrued in 'Accrued expenses and other current
liabilities' and 'Long-term obligations and notes', respectively, as of
December 31, 2001. DoubleClick expects to pay approximately $13.1

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DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

million in 2002 and approximately $36.5 million in 2003 and the years thereafter
relating to the 2001 restructuring activities.

NOTE 14 -- INCOME TAXES

Loss before provision for income taxes consisted of:

The provision for income taxes consisted of:

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DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

Components of net taxes:

The provision for income taxes differs from the amount computed by applying
the federal statutory income tax rate as follows:

The tax effects of temporary differences and carryforwards that give rise to
significant portions of deferred tax assets and liabilities at December 31, 2001
and 2000 are as follows:

DoubleClick has recorded a full valuation allowance against its net deferred
tax assets for the years ended December 31, 2001 and 2000 since management
believes that after considering all the available objective evidence, both
positive and negative, historical and prospective, with greater weight given to
historical evidence, it is not more likely than not that these assets will be
realized.

At December 31, 2001, DoubleClick had domestic and foreign net operating
loss carryforwards of approximately $450.9 million. The federal net operating
loss carryforward was $408.6 million. Approximately $328.3 million of these net
operating loss carryforwards relate to the exercise of employee stock options
and any tax benefit derived therefrom, when realized, will be accounted for as a
credit to additional paid-in capital rather than a reduction to the income tax

74

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

provision. Approximately $17.9 million of these net operating loss carryforwards
were acquired in various corporate stock acquisitions and any tax benefit
derived therefrom, when realized, will be accounted for as a credit to goodwill
rather than a deduction from the income tax provision. In addition, the Company
had $3.4 million of research tax credit carryforwards. The federal net operating
loss and research tax credit carryforwards expire in various years beginning in
2012. The utilization of a portion of the net operating loss and research tax
credit carryforwards may be subject to limitations under U.S. federal income tax
laws.

NOTE 15 -- ADDITIONAL FINANCIAL INFORMATION

Supplementary disclosure of cash flow information:

Non-cash investing activities: During the years ended December 31, 2001,
2000 and 1999 DoubleClick recorded approximately $7.0 million, $10.3 million and
$230,000, respectively, related to capital lease obligations.

The following summarizes the components of interest and other, net:

For the year ended December 31, 2000, miscellaneous income included
non-recurring income of approximately $5.0 million related to contract
termination fees associated with the restructuring of DoubleClick's Advertising
Services Agreement with AltaVista in fiscal 2000 and $8.6 million related to
merger termination fees paid by NetCreations to DoubleClick on the termination
of their merger agreement in December 2000.

NOTE 16 -- BENEFIT PLAN

DoubleClick has a defined contribution plan offered to all eligible
employees and is qualified under section 401(k) of the Internal Revenue Code.
Participating employees may contribute a percentage of their salary to the plan.
Employee contributions are invested at the direction of the employee in one or
more funds or DoubleClick common stock. Beginning February 2000, DoubleClick has
partially matched employee contributions with DoubleClick common stock. Prior to
February 2000, DoubleClick partially matched employee contributions with cash.
DoubleClick contributed $2.0 million; $2.5 million and $0.4 million to the Plan
during the years ended December 31, 2001, 2000 and 1999, respectively.

75

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

NOTE 17 -- COMMITMENTS AND CONTINGENCIES

LEASES

DoubleClick leases facilities and equipment under capital and operating
leases expiring at various dates through 2015. DoubleClick also subleases
facilities under operating leasing expiring at various dates through 2010. The
future minimum lease payments and the sub rental income under these leases are
as follows (in thousands):

Rent expense for the years ended December 31, 2001, 2000 and 1999 was $15.6
million, $16.8 million, and $8.5 million, respectively.

LEGAL

We are a defendant in 20 lawsuits concerning Internet user privacy and data
collection and other business practices in both state and federal court. On
March 28, 2001, all federal data collection cases against DoubleClick were
dismissed by Judge Buchwald in the Southern District of New York. The plaintiffs
have recently withdrawn their appeal to the Second Circuit Court of Appeals. We
intend to defend these actions vigorously.

In addition, beginning in May 2001, a number of substantially identical
class action complaints alleging violations of the federal securities laws in
connection with DoubleClick's initial public offering were filed in the United
States District Court for the Southern District of New York naming as defendants
DoubleClick, some of its officers and directors and certain underwriters of
DoubleClick's initial public offering. These actions have been dismissed against
us and the other defendants without prejudice. However, the plaintiffs have
recently filed a new complaint against us, certain of our officers and directors
and the underwriters of the Company's secondary and tertiary offerings alleging
substantially similar disclosure violations as in the initial complaint. These
cases are in their early stages; however, DoubleClick intends to dispute these
allegations and defend these lawsuits vigorously.

Several civil litigations related to DoubleClick's online data collection
practices are currently pending against DoubleClick. These proceedings seek
remedies, including damages, of an indeterminable nature and amount, and allege
variously that DoubleClick has unlawfully obtained and used consumers' personal
information. DoubleClick vigorously contests these allegations.

There have been a number of political, legislative, regulatory and other
developments relating to online data collection that have received widespread
media attention. These developments may negatively affect the outcomes of
related legal proceedings and encourage the commencement of additional similar
proceedings. In addition, DoubleClick's ad serving and data collection practices
are also the subject of inquiries by the attorneys general of several states.
DoubleClick is

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DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

cooperating fully with all such inquiries by the various states.

It is impossible to predict the outcome of such events on pending litigation
or the results of the litigation itself, all of which may have a material
adverse effect on DoubleClick's business, financial condition and results of
operations.

Determinations of liability against other companies that are defendants in
similar actions, even if such rulings are not final, could adversely affect the
legal proceedings against DoubleClick and its affiliates and could encourage an
increase in the number of such claims.

DoubleClick believes that, notwithstanding the quality of defenses
available, it is possible that our financial condition and results of operations
could be materially adversely effected by the ultimate outcome of the pending
litigation. As of December 31, 2001, DoubleClick has recorded a provision of
approximately $1.8 million relating to the settlement of the pending privacy
lawsuits.

At December 31, 2001, DoubleClick had outstanding standby letters of credit
of $17.6 million. These letters of credit collateralize DoubleClick's
obligations to third parties under certain operating leases. In connection with
these letters of credit, $17.6 million of DoubleClick's cash and cash
equivalents are restricted as to its use at December 31, 2001. These amounts are
included in long term 'Investments in marketable securities' in the consolidated
balance sheets.

NOTE 18 -- SEGMENT REPORTING

DoubleClick is organized into three segments: Technology ('Tech' or
'TechSolutions'), Media and Data based on types of services provided.
DoubleClick TechSolutions includes our ad management products consisting of our
DART for Publishers Service, DART Enterprise, DoubleClick's ad serving licensed
software product, and the DART for Advertisers service as well as a suite of
email products based on our DARTmail Service. DoubleClick Media is represented
by the DoubleClick network, which provides fully outsourced and highly effective
advertising sale, delivery and related services to a worldwide group of
advertisers and publishers. DoubleClick Data services includes our Abacus
division, consisting primarily of a proprietary database of consumer buying
behavior used for target marketing purposes, and our Research division.

The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. Intersegment revenues, which
relate primarily to DART service fees recognized by TechSolutions, are valued at
an approximately the same rates charged to external customers.

Revenues and gross profit by segment are as follows:

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DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

The accounting policies of DoubleClick's segments are the same as those
described in the summary of significant accounting policies. Intersegment
revenues, which relate primarily to DART and Data transfer fees and the research
consulting fees charged by Diameter, are valued at approximately the same rates
charged to external customers. DART and Data transfer fees are recognized as
revenue by TechSolutions and Data, respectively, and as costs of revenue by
DoubleClick's other business units in the computation of segment gross profit.
Correspondingly, these transfer fees have no net impact on the determination of
consolidated gross profit. The revenues generated from intersegment research
consulting services are included as a component of Data's gross profit and are
classified as operating expenses of DoubleClick's other business units. All such
intersegment amounts are eliminated in the consolidated statements of
operations.

NOTE 19 -- SUBSEQUENT EVENTS

On January 18, 2002, DoubleClick completed its acquisition of MessageMedia,
Inc., a provider of permission-based, email marketing and messaging solutions.
Under the final terms of the acquisition, DoubleClick issued one million shares
of common stock or .01454 shares of DoubleClick common stock for each share of
MessageMedia common stock. The purchase price, inclusive of approximately $1.9
million of direct acquisition costs, was approximately $11.1 million. The excess
of the purchase price over the fair value of MessageMedia's net assets acquired
will be allocated to goodwill and intangible assets. In accordance with SFAS
No. 142, goodwill will not be amortized but will be periodically reviewed for
impairment. In connection with the acquisition, DoubleClick loaned $1.0 million
to MessageMedia on October 29, 2001 and an additional $0.5 million on
November 12, 2001 to satisfy MessageMedia's operating requirements. The loan was
extinguished upon the closing of the acquisition and included as a component of
the purchase price.

On January 28, 2002, DoubleClick completed the sale of its European Media
operations to AdLINK, a German provider of Internet advertising solutions in
exchange for EUR 30.5 million ($26.3 million) and the assumption by AdLINK of
liabilities associated with DoubleClick's European Media operations.
Intercompany liabilities in an amount equal to EUR 5.0 million ($4.3 million)
were settled through a cash payment by AdLINK to DoubleClick at the closing of
the transaction.

Following the closing of the transaction described above, United Internet
AG, or United Internet, AdLINK's largest shareholder, exercised its right to
sell to DoubleClick 15% of the outstanding common shares of AdLINK in exchange
for EUR 35.5 million ($30.6 million). Pursuant to its agreement with United
Internet, the exercise of this right caused DoubleClick's option to acquire an
additional 21% of AdLINK common shares from United Internet to vest. This option
is only exercisable over a two-year period if AdLINK has achieved
EBITDA-positive results for two out of three consecutive fiscal quarters before
December 2003. Should AdLINK fail to achieve these results, the option will
expire unexerciseable in December 2003.

As the result of the transactions described above, DoubleClick sold its
European Media operations and received a 15% interest in AdLINK. DoubleClick's
option to acquire an additional 21% of the outstanding common shares of AdLINK
from United Internet also vested. The approximately $8.3 million value of the
15% of the outstanding common stock of AdLINK, representing approximately 3.9
million shares, has been determined based on these shares'

78

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 2001

average market prices, as quoted on the Neuer Markt, for the day before, the day
of, and the day immediately after the number of shares due to DoubleClick became
irrevocably fixed pursuant to its agreements with AdLINK and United Internet.
DoubleClick will be partially reimbursed EUR 2.3 million ($2.0 million) for its
cash outlays related to the acquisitions of, and payments with respect to, the
minority interests in certain of its European subsidiaries pursuant to its
agreement to sell its European Media operations. See Note 2, 'Business
Combinations.'

79

SCHEDULE II

DOUBLECLICK INC

VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)

80

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

Not Applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Incorporated by reference from the information in our proxy statement for
the 2002 Annual Meeting of Stockholders which we will file with the Securities
and Exchange Commission within 120 days of the end of the fiscal year to which
this report relates.

OTHER INFORMATION

Our Chairman of the Board, Kevin O'Connor, has informed us that, in order to
diversify his investment portfolio while avoiding conflicts of interest or the
appearance of any such conflict that might arise from his position with the
company, he has established a new written plan in accordance with SEC Rule
10b5-1 for gradually liquidating a portion of his holdings of our common stock.
In particular, we have been notified that during the period that commenced on
March 8, 2002 and will end on February 28, 2003, Mr. O'Connor intends to sell a
fixed number of shares of common stock on a weekly basis. The plan provides for
the sale on specified dates during the term of 15,000 shares each week other
than four weeks during the year when 20,000 shares will be sold.

ITEM 11. EXECUTIVE COMPENSATION

Incorporated by reference from the information in our proxy statement for
the 2002 Annual Meeting of Stockholders which we will file with the Securities
and Exchange Commission within 120 days of the end of the fiscal year to which
this report relates.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Incorporated by reference from the information in our proxy statement for
the 2002 Annual Meeting of Stockholders which we will file with the Securities
and Exchange Commission within 120 days of the end of the fiscal year to which
this report relates.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Incorporated by reference from the information in our proxy statement for
the 2002 Annual Meeting of Stockholders which we will file with the Securities
and Exchange Commission within 120 days of the end of the fiscal year to which
this report relates.

81

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. Financial Statements.

The financial statements as set forth under Item 8 of this report are
incorporated by reference.

2. Financial Statement Schedules.

The financial statement schedule as set forth in Item 8 of this
report is incorporated by reference.

(b) Reports on Form 8-K

We filed a Current Report on Form 8-K, Items 5 and 7, on October 17, 2001,
announcing the Amended and Restated Agreement and Plan of Merger and
Reorganization, dated as of October 10, 2001, between DoubleClick Inc. and
MessageMedia, Inc.

We filed a Current Report on Form 8-K, Items 5 and 7, on November 21, 2001,
announcing the Business Purchase Agreement, dated as of November 12, 2001, by
and among DoubleClick Inc., several of its European subsidiaries, Channon
Management Limited, AdLINK Internet Media AG, several of its European
subsidiaries, and United Internet AG and the Option Agreement, dated as of
November 12, 2001, by and among DoubleClick Inc., Channon Management Limited,
and United Internet AG.

(c) Exhibits

- ---------

* Confidential treatment granted for certain portions of this Exhibit pursuant
to the rules and regulations of the Securities Act of 1933, as amended.

** Confidential treatment granted for certain portions of this Exhibit pursuant
to the rules and regulations of the Securities Exchange Act of 1934, as
amended.

84

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, DoubleClick Inc. has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized in the City of New
York, State of New York, on this 27th day of March, 2002.

DOUBLECLICK INC.

By: /s/ KEVIN P. RYAN
..................................
KEVIN P. RYAN
CHIEF EXECUTIVE OFFICER AND
DIRECTOR

Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 27, 2002:

EXHIBIT INDEX