DOUBLECLICK INC - 10-Q Quarterly Report

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U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER: 000-23709

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

DELAWARE 13-3870996
(STATE OR OTHER JURISDICTION OF (I.R.S. 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)

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

As of October 31, 2002 there were 136,081,893 outstanding shares of the
registrant's Common Stock, including 175 shares exchangeable into shares of the
registrant's common stock, which were issued in connection with the registrant's
acquisition of FloNetwork Inc.
________________________________________________________________________________

DOUBLECLICK INC.
INDEX TO FORM 10-Q

PART I: FINANCIAL INFORMATION

Item 1: Financial Statements (unaudited)
Consolidated Balance Sheets as of September 30, 2002 and
December 31, 2001......................................... 1
Consolidated Statements of Operations for the three and nine
months ended September 30, 2002 and 2001.................. 2
Consolidated Statements of Cash Flows for the nine months
ended September 30, 2002 and 2001......................... 3
Notes to Consolidated Financial Statements.................. 4
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 17
Item 3: Quantitative and Qualitative Disclosures about Market
Risk...................................................... 32
Item 4: Controls and Procedures..................................... 46

PART II: OTHER INFORMATION

Item 1: Legal Proceedings........................................... 47
Item 6: Exhibits and Reports on Form 8-K............................ 48

ii

PART I: FINANCIAL INFORMATION

DOUBLECLICK INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS EXCEPT SHARE AMOUNTS)

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

1

DOUBLECLICK INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

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

2

DOUBLECLICK INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)

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

3

DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1 -- DESCRIPTION OF BUSINESS AND OTHER

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. Combining technology and data
expertise, DoubleClick's products and services help its customers optimize their
advertising and marketing campaigns on the web and through email as well as
direct mail and other media. DoubleClick offers a broad range of technology and
data products and services to its customers to allow them to address many
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 based on the
types of services provided: Technology (or 'TechSolutions'), Data and Media.
DoubleClick TechSolutions includes 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
DoubleClick's DARTmail Service. 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 effective for Abacus
Alliance members and other clients. DoubleClick Media includes revenues from our
consolidated subsidiary, DoubleClick Japan. Through July 10, 2002, DoubleClick
Media also included its North American Media business, which included the
DoubleClick network that provided fully outsourced and effective ad sales and
related services to a worldwide group of advertisers and publishers. On
July 10, 2002, DoubleClick sold its North American Media business to L90, Inc.,
which upon completion of the transaction was renamed MaxWorldwide, Inc.

BASIS OF PRESENTATION

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

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

The accompanying consolidated financial statements should be read in
conjunction with the audited consolidated financial statements of DoubleClick
for the year ended December 31, 2001. Certain reclassifications have been made
to the prior period's financial statements to conform to the current period's
presentation.

BASIC AND DILUTED NET LOSS PER COMMON 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.

4

DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

At September 30, 2002 and 2001, outstanding options of approximately
17.9 million and 22.4 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 at September 30, 2002 and 2001
excludes the effect of 3,752,724 and 5,568,479 shares, respectively, issuable
upon the conversion of 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.

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 investments carried under the
cost method or any transactions that must be recorded directly to equity in
accordance with the provisions of Staff Accounting Bulletin ('SAB') No. 51.

NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, 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 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
Nos. 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 apply to acquisitions
concluded subsequent to June 30, 2001. DoubleClick has completed its initial
impairment testing and no changes to the carrying value of goodwill and other
intangible assets were made as a result of the adoption of SFAS No. 142.
Subsequent impairment testing will take place annually, as well as when a
triggering event indicating impairment may have occurred.

In August 2001, the FASB issued SFAS No. 144, 'Accounting for the Impairment
or Disposal of Long-Lived Assets' ('SFAS No. 144'), which supersedes FASB
Statement No. 121, 'Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of.' This new statement also supercedes certain
aspects of APB 30, 'Reporting the Results of Operations-Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual, and
Infrequently Occurring Events and Transactions', with regard to reporting the
effects of a disposal of a segment of a business. SFAS No. 144 will require
expected future operating losses from discontinued operations to be reported in
discontinued operations in the period incurred rather than as of the measurement
date as presently required by APB 30. In addition, more dispositions may qualify
for discontinued operations treatment. The provisions of this statement are
required to be applied for fiscal years beginning after December 15, 2001, and
interim periods within those fiscal years. The adoption of SFAS No. 144 did not
have a material impact on DoubleClick's results of operations or financial
position.

In April 2002, the FASB issued SFAS No. 145, 'Rescission of FASB Statements
Nos. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections' ('SFAS No. 145'). SFAS No. 145, among other things, rescinds SFAS
No. 4, which required all gains and losses from the extinguishment of debt to be
classified as an extraordinary item and amends SFAS No. 13 to require that
certain lease modifications that have economic effects similar to sale-leaseback
transactions be accounted for in the same manner as sale-leaseback transactions.
SFAS No. 145 is effective for fiscal years beginning after

5

DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

May 15, 2002 but earlier adoption is encouraged. DoubleClick has repurchased and
may in the future continue to repurchase a portion of its outstanding
Convertible Subordinated Notes. DoubleClick adopted SFAS No. 145 effective
July 1, 2002 and no longer records gains or losses from the retirement of its
Convertible Subordinated Notes as extraordinary items, net of taxes but as a
component of other income/(expense) in the Consolidated Statements of
Operations. As required under SFAS No. 145, prior periods have been restated to
conform to the current period's presentation.

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

CHANGE IN ACCOUNTING ESTIMATE

Effective January 1, 2002, DoubleClick changed its estimate of the useful
lives of its production equipment and software. The estimated useful life for
these assets was extended from three years to four years in order to recognize
depreciation expense over the remaining time that the assets are expected to be
in service. The change was based on an analysis performed by DoubleClick's
operations department. As a result of this change, net loss was reduced by
approximately $3.3 million, or $0.02 per basic and diluted share, for the three
months ended September 30, 2002 and approximately $9.4 million, or $0.07 per
basic and diluted share, for the nine months ended September 30, 2002.

NOTE 2 -- GOODWILL

The changes in the carrying amount of goodwill for the nine months ended
September 30, 2002 are as follows:

Upon the adoption of SFAS No. 142, DoubleClick ceased amortizing goodwill.
Had SFAS No. 142 been in effect in the first nine months of 2001, DoubleClick
would not have recorded goodwill amortization expense of $14.6 million and
$37.0 million for the three and nine months ended September 30, 2001,
respectively. The following adjusts reported net loss and basic and diluted net
loss per share as if the adoption of SFAS No. 142 occurred as of January 1,
2001.

6

DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

NOTE 3 -- INTANGIBLE ASSETS

Intangible assets consist of the following:

Amortization expense for the three and nine months ended September 30, 2002
was $3.8 million and $10.8 million, respectively. For the three and nine months
ended September 30, 2002, $0.7 million and $1.5 million, respectively, of
amortization expense has been included as a component of cost of revenue in the
Consolidated Statements of Operations.

Amortization expense for the three and nine months ended September 30, 2001
was $2.5 million and $6.5 million, respectively. For the three and nine months
ended September 30, 2001, $0.4 million of amortization expense has been included
as a component of cost of revenue in the Consolidated Statements of Operations.

Based on the balance of intangible assets at September 30, 2002, the annual
amortization expense for each of the succeeding five years is estimated to be
$10.0 million, $1.5 million, $0.8 million, $0.8 million, and $0.4 million in
2003, 2004, 2005, 2006 and 2007, respectively.

NOTE 4 -- BUSINESS TRANSACTIONS

MESSAGEMEDIA

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

DoubleClick acquired all the outstanding shares, options and warrants of
MessageMedia in exchange for approximately one million shares of DoubleClick
common stock valued at approximately $7.5 million, and stock options and
warrants to acquire DoubleClick common stock valued at approximately $0.2
million. In connection with the acquisition, DoubleClick loaned $2.0 million to

7

DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

MessageMedia to satisfy MessageMedia's operating requirements. The loan was
extinguished upon the closing of the acquisition and included as a component of
the purchase price. The purchase price, inclusive of approximately $1.6 million
of direct acquisition costs, was approximately $11.3 million. The value of the
approximately one million 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 due to MessageMedia
shareholders became irrevocably fixed pursuant to the agreement under which
MessageMedia was acquired. The MessageMedia options and warrants assumed by
DoubleClick as the result of this merger converted into options and warrants to
acquire approximately 120,000 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..................................... 3.7%
Expected life (in years).................................... 3.6
Volatility.................................................. 100%

The aggregate purchase price of $11.3 million 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.............................................. $ 4.6
Other intangible assets..................................... 1.9
Goodwill.................................................... 29.9
Other non-current assets.................................... 4.1
------
Total assets acquired................................... $ 40.5
Total liabilities assumed............................... $(29.2)
------
Net assets acquired......................................... $ 11.3
------
------

Approximately $1.9 million of the purchase price has been allocated to
customer lists and is being amortized on a straight-line basis over two years.
DoubleClick recorded approximately $29.9 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, in accordance with
SFAS No. 142, will be and has been periodically tested for impairment. (See
Note 6.)

The results of operations for MessageMedia have been included in
DoubleClick's Consolidated Statements of Operations from the date of
acquisition.

EUROPEAN MEDIA BUSINESS

On January 28, 2002, DoubleClick completed the sale of its European Media
business to AdLINK Internet Media AG ('AdLINK'), a German provider of Internet
advertising solutions, in exchange for $26.3 million and the assumption by
AdLINK of liabilities associated with DoubleClick's European Media business.
Intercompany liabilities in an amount equal to $4.3 million were settled through
a cash payment by AdLINK to DoubleClick at the closing of the transaction.
Following the closing of the transaction described above, United Internet AG
('United Internet'), AdLINK's largest shareholder, exercised its right to sell
to DoubleClick 15% of the outstanding common shares of AdLINK in exchange for
$30.6 million. Pursuant to its agreement with United Internet, the exercise of
this right caused DoubleClick's option to acquire an additional 21% of AdLINK
common shares 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. EBITDA, as defined in
the option agreement, is earnings before interest, taxes, depreciation,
amortization, and one-time charges such as restructuring costs, mergers and
acquisition related costs, and other extraordinary items, determined in
accordance with generally accepted accounting principles

8

DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

in the United States. Should AdLINK fail to achieve these results, the option
will expire unexerciseable in December 2003. During the three months ended
June 30, 2002 and March 31, 2002, AdLINK did not achieve EBITDA-positive
results. AdLINK's results for the three months ended September 30, 2002 were not
publicly available as of the date of this filing.

As the result of the transactions described above, DoubleClick sold its
European Media business and received a 15% interest in AdLINK. 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. DoubleClick was partially reimbursed
$2.0 million for its cash outlays related to the acquisitions of, and payments
with respect to, the minority interests in certain of its European subsidiaries
pursuant to its agreement to sell its European Media business. DoubleClick's
investment in AdLINK is included in 'Investments in affiliates' in the
Consolidated Balance Sheets.

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

@PLAN

On May 6, 2002, DoubleClick sold its @plan research product line to
NetRatings Inc. ('NetRatings'), a provider of technology-driven Internet
audience information solutions for media and commerce, in exchange for
$12.0 million in cash and 505,739 shares of NetRatings common stock. The
approximately $6.1 million value of the shares of NetRatings common stock has
been determined based on these shares' average market prices, as quoted on the
Nasdaq National Market, for the day before and the day the number of shares due
to DoubleClick became irrevocably fixed pursuant to its agreements with
NetRatings. DoubleClick recognized a gain of $12.3 million on the sale of the
@plan research product line during the three months ended June 30, 2002, which
has been included in 'Gain on sale of businesses, net' in the Consolidated
Statements of Operations. DoubleClick's investment in NetRatings is included in
'Investments in affiliates' in the Consolidated Balance Sheets.

ABACUS DIRECT EUROPE

On June 26, 2002, DoubleClick acquired the remaining 50% of the Abacus
Direct Europe B.V. ('Abacus Direct Europe') joint venture that it did not
previously own from VNU Marketing Information Europe & Asia B.V., an affiliate
of Claritas (UK) Limited. The joint venture was formed in November 1998 and
provides database-marketing services to the direct marketing industry, primarily
in the United Kingdom. The results of operations for Abacus Direct Europe have
been included in DoubleClick's Consolidated Statements of Operations from the
date of acquisition. DoubleClick's investment in the joint venture was
previously accounted for under the equity method of accounting. DoubleClick
acquired all the outstanding shares of Abacus Direct Europe held by VNU in
exchange for approximately $3.7 million in cash and direct acquisition costs.
The purchase price has been allocated to the assets acquired and the liabilities
assumed according to their fair value at the date of acquisition as follows (in
millions):

9

DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

Current assets.............................................. $ 3.1
Property and equipment...................................... 0.3
Other intangibles assets.................................... 4.6
-----
Total assets acquired................................... $ 8.0
Total liabilities assumed............................... (3.2)
-----
$ 4.8
Less: proportionate share of net assets held through equity
investment................................................ (1.1)
-----
Net assets acquired......................................... $ 3.7
-----
-----

Approximately $4.6 million of the purchase price has been allocated to
customer lists, the Abacus Alliance and customer database. These intangibles are
being amortized on a straight-line basis over two to five years based on each
intangibles estimated useful life.

NORTH AMERICAN MEDIA BUSINESS

On July 10, 2002, DoubleClick sold its North American Media business to L90,
Inc. Upon completion of the transaction, L90, Inc. was renamed MaxWorldwide,
Inc. ('MaxWorldwide'). In exchange for the North American Media business,
DoubleClick received 4.8 million shares in MaxWorldwide and $5 million in cash.
The 4.8 million shares represented 16.1% of outstanding MaxWorldwide common
stock and were valued at approximately $3.1 million. DoubleClick may also
receive an additional $6 million if, during the three-year period subsequent to
consummation of the transaction, MaxWorldwide has achieved EBITDA-positive
results for two out of three consecutive quarters. EBITDA, as defined in the
merger agreement, is earnings before interest, taxes, depreciation and
amortization, excluding certain non-recurring items. As a result of this
transaction, DoubleClick recognized a gain of $8.1 million during the third
quarter of 2002, which has been included in 'Gain on sale of businesses, net' in
the Consolidated Statements of Operations.

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

DoubleClick accounts for this investment under the equity method of
accounting. The investment is included in 'Investments in affiliates' in the
Consolidated Balance Sheets. MaxWorldwide's results for the three months ended
September 30, 2002 were not publicly available as of the date of this filing.
DoubleClick will report its share of MaxWorldwide's results on a 90-day lag.

The following unaudited pro forma results of operations have been prepared
assuming that the acquisitions of MessageMedia and Abacus Direct Europe
described above, the FloNetwork Inc. acquisition consummated during 2001, and
the dispositions of the European and North American Media businesses and @plan
research product line completed during 2002, occurred at the beginning of the
respective periods presented. This pro forma financial information should not be
considered indicative of the actual results that would have been achieved had
the acquisitions and disposals been completed on the dates indicated and does
not purport to indicate results of operations as of any future date or any
future period.

10

DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

NOTE 5 -- INVESTMENT IN VALUECLICK, INC.

In the first quarter of 2001, DoubleClick recorded the effects of the
issuance by ValueClick, Inc. ('ValueClick') of approximately 5.7 million shares
to complete a purchase acquisition of Bach Systems, Inc. ('Bach Systems') and to
consummate ValueClick's pooling of interests merger with ClickAgents.com, Inc.
('ClickAgents'). DoubleClick has treated 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 and
recognized a loss of approximately $3.8 million. This loss has been included in
'Loss on equity transactions of affiliate' in the Consolidated Statements of
Operations.

In the third quarter of 2001, DoubleClick wrote down its investment in
ValueClick and recognized an impairment charge of approximately $11.7 million.
(See Note 7).

For the three and nine month periods ended September 30, 2001, DoubleClick
recognized approximately $0.2 million and $0.7 million, respectively of goodwill
amortization associated with its investment in ValueClick. As the result of the
impairment charge incurred in the third quarter of 2001, all of the remaining
goodwill associated with DoubleClick's investment in ValueClick has been written
off.

As a result of the cumulative dilutive effects of ValueClick's issuance of
stock in connection with the Bach Systems, ClickAgents and other business
combinations consummated during 2001, DoubleClick's ownership interest in
ValueClick was reduced to 15.2% as of December 31, 2001. DoubleClick does not
believe that it was able to exercise significant influence over its investment
in ValueClick as of December 31, 2001. Accordingly, DoubleClick no longer
records its proportionate share of ValueClick's results but instead carries this
investment at fair value, with unrealized gains and losses, net of tax, reported
as a separate component of stockholders' equity. DoubleClick's investment in
ValueClick is included in 'Investments in affiliates' in the Consolidated
Balance Sheets.

As of September 30, 2002, DoubleClick's ownership interest in ValueClick was
reduced to approximately 9% as the result of ValueClick's issuance of stock in
connection with another business combination, offset by its repurchases of
outstanding shares.

NOTE 6 -- IMPAIRMENT OF GOODWILL AND OTHER INTANGIBLE ASSETS

The persistence of unfavorable economic conditions 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.inc ('@plan') and Flashbase, Inc. ('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.

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 on-line 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

11

DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

2.5 years, which represented the estimated 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.

In the third quarter of 2002, based upon the prolonged softness in the
economy and the lower than anticipated revenues generated to date and decline in
estimates of future performance of DoubleClick's email reporting unit,
DoubleClick initiated a third-party valuation of its email reporting unit to
determine whether the recorded balance of goodwill related to this reporting
unit was recoverable. The outcome of this valuation resulted in an impairment
charge of approximately $45.2 million being recorded during the quarter. The
fair market value of the email reporting unit was determined based on revenue
projections, recent transactions involving similar businesses and price/revenue
multiples at which they were bought and sold, and price/revenue multiples of our
competitors in the email marketplace. As a result of the third party valuation
of its email reporting unit, it was also determined that the fair value of
certain intangibles assets were considered impaired. DoubleClick recorded an
impairment charge of $1.0 million based on the difference between the carrying
value and estimated fair value of the intangible assets.

NOTE 7 -- IMPAIRMENT OF INVESTMENTS IN AFFILIATES

As a result of the significant decline in the market value of Internet-based
companies and the declining access of these companies to public and private
financing, management performed an assessment of the carrying values of its
investments in affiliates. In the course of its analysis, DoubleClick determined
that the carrying value of its cost-method investment in Return Path, Inc.
('Return 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 during the second quarter of 2001.

In the third quarter of 2001, DoubleClick determined that the carrying value
of its equity method 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 third quarter of 2002, DoubleClick determined that the carrying value
of certain of its investments, principally its cost-method investments in AdLINK
Internet Media AG ('AdLINK') and NetRatings Inc. ('NetRatings') and its
equity-method investment in MaxWorldwide, Inc. ('MaxWorldwide') were impaired
based on the continued decline in the fair market value of these investments. As
a result, DoubleClick recorded an impairment charge of $11.7 million, which
represented the difference between DoubleClick's carrying value and the
estimated fair value of these investments. The estimated fair values of
DoubleClick's investments in AdLINK, NetRatings and MaxWorldwide were determined
based on the closing market price of their stock on September 30, 2002.
Additionally, DoubleClick's cost method investment in the joint venture,
DoubleClick Asia, will be liquidated and has no continuing value. As a
consequence, DoubleClick wrote-off its entire investment in DoubleClick Asia and
recognized an impairment charge of $2.4 million.

NOTE 8 -- INITIAL PUBLIC OFFERING OF DOUBLECLICK JAPAN

On April 25, 2001, DoubleClick's consolidated subsidiary, DoubleClick Japan
Inc. ('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

12

DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

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. This gain has been included in 'Gain on
equity transactions of affiliates, net' in the Consolidated Statements of
Operations.

NOTE 9 -- NON-CASH COMPENSATION

Non-cash compensation primarily represents the consideration paid to certain
former shareholders of DoubleClick Scandinavia AB ('DoubleClick Scandinavia').
Shares of DoubleClick common stock were issued based upon the continued
employment of the former shareholders and the attainment of specific revenue
objectives for the year ended December 31, 2001. In May 2001, 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 of this
accelerated payment.

NOTE 10 -- RESTRUCTURING CHARGE

During the nine months ended September 30, 2002, management took additional
steps to realign the sales organization and reduce corporate overhead. This
involved the involuntary termination of approximately 230 employees, primarily
from the TechSolutions division, as well as the closure of several offices. As a
consequence, DoubleClick recorded a $1.4 million charge to operations during the
first quarter of 2002, primarily related to payments for severance, and a charge
of $7.3 million in the second quarter of 2002, primarily associated with future
lease costs and other facility-related charges, and a charge of $23.8 million
during the third quarter of 2002 primarily related to additional future lease
costs, net of estimated sublease income.

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

13

DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

The following table sets forth a summary of the costs and related charges
for DoubleClick's 2002 restructuring and the balance of the 2002 and 2001
restructuring reserves established:

As of September 30, 2002, approximately $30.6 million and $24.6 million
remain accrued in 'Accrued expenses and other current liabilities' and 'Other
long term liabilities', respectively.

NOTE 11 -- CONVERTIBLE SUBORDINATED NOTES

In the third quarter of 2001, DoubleClick repurchased $20.3 million of its
outstanding 4.75% Convertible Subordinated Notes for approximately
$13.6 million in cash. DoubleClick wrote off approximately $0.3 million in
deferred issuance costs and recognized a gain of approximately $6.4 million.

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

NOTE 12 -- STOCKHOLDERS' EQUITY

On September 17, 2001, DoubleClick announced that its Board of Directors
authorized a stock repurchase program that permits the repurchase of up to
$100 million of outstanding DoubleClick common stock or Convertible Subordinated
Notes over a one-year period. In the third quarter of 2001, DoubleClick
purchased 765,000 shares of its common stock at an average price of $5.84 per
share. In the third quarter of 2002, DoubleClick purchased 915,500 shares of its
common stock at an average price of $4.86 per share.

NOTE 13 -- SEGMENT REPORTING

DoubleClick is organized into three segments: Technology, Data and Media.
The results of its Media segment includes revenues from its consolidated
subsidiary DoubleClick Japan, and through July 10, 2002, its North American
Media business when DoubleClick sold this business to L90, Inc. (now
MaxWorldwide, Inc.).

14

DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

Revenues and gross profit by segment are as follows:

NOTE 14 -- COMPREHENSIVE LOSS

Comprehensive loss consists of net loss, unrealized gains and losses on
marketable securities and foreign currency translation adjustments.
Comprehensive loss was $62.8 million and $98.8 million for the three months
ended September 30, 2002 and 2001, respectively. For the nine months ended
September 30, 2002 and 2001, comprehensive loss was $54.4 million and $197.7
million, respectively.

NOTE 15 -- CONTINGENCIES

DoubleClick was a defendant in class action lawsuits concerning Internet
user privacy and data collection and other business practices in both state and
federal court. On March 29, 2002, the parties issued a joint press release
outlining the terms of a settlement of these lawsuits. The court gave final
approval of the settlement at a hearing held on May 21, 2002 and the judge
signed a Final Judgment and Order of Dismissal of the actions on May 23, 2002.
One person objected to the settlement and filed a notice of appeal of the
court's order on June 19, 2002, which was dismissed pursuant to a settlement
agreement with plaintiffs. These lawsuits have all been dismissed with
prejudice. On October 16, 2002, the action brought by the State's Attorney of
Cook County, Illinois was dismissed with prejudice pursuant to a settlement
agreement between the parties.

In addition, DoubleClick's ad serving and data collection practices were
also the subject of inquiries by the attorneys general of several states. These
inquiries were resolved by an agreement between DoubleClick and the attorneys
general of ten states. The terms of the settlement are disclosed in a press
release issued by DoubleClick on August 24, 2002, and in a Current Report on
Form 8-K filed on August 30, 2002.

Separately, in April 2002, a consolidated amended class action complaint
alleging violations of the federal securities laws in connection with
DoubleClick's follow-on offerings was filed in the United States District Court
for the Southern District of New York naming as defendants DoubleClick, some of
its officers and directors and certain underwriters of DoubleClick's follow-on
offerings. In October 2002,

15

DOUBLECLICK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)

the action was dismissed against the named officers and directors without
prejudice. However, claims against the Company remain. DoubleClick intends to
dispute these allegations and defend this lawsuit vigorously.

NOTE 16 -- RECENT DEVELOPMENTS

On November 4, 2002, DoubleClick completed its acquisition of Protagona plc
('Protagona'), a UK-based marketing software company. The acquisition of
Protagona will allow DoubleClick to expand its suite of tools for direct
marketers to plan, manage, execute, measure and analyze marketing programs
across multiple channels. Under the terms of the acquisition, Protagona
shareholders will receive approximately $0.037 per Protagona share, valuing
Protagona at approximately $12.9 million.

16

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF DOUBLECLICK CONTAINS FORWARD-LOOKING STATEMENTS RELATING TO FUTURE
EVENTS AND THE FUTURE PERFORMANCE OF DOUBLECLICK 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. DOUBLECLICK'S 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 DOUBLECLICK'S OTHER PUBLIC FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION. IT IS ROUTINE FOR OUR INTERNAL PROJECTIONS AND EXPECTATIONS
TO CHANGE AS THE YEAR OR EACH QUARTER IN THE YEAR PROGRESS, 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 AND WE MAY CHOOSE TO NOT UPDATE THAT INFORMATION UNTIL THE NEXT QUARTER
EVEN IF CIRCUMSTANCES CHANGE.

OVERVIEW

We are a leading provider of products and services that enable direct
marketers, publishers and advertisers to market to consumers. Combining
technology and data expertise, our products and services help our customers
optimize their advertising and marketing campaigns on the web and through email
as well as direct mail and other media. We offer a broad range of technology and
data products and services to our customers to allow them to address many
aspects 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 Data ('Data'); and

DoubleClick Media ('Media').

BUSINESS TRANSACTIONS

MESSAGEMEDIA

On January 18, 2002, DoubleClick completed its acquisition of MessageMedia,
Inc. ('MessageMedia'), a provider of permission-based email marketing and
messaging solutions. DoubleClick acquired all the outstanding shares, options
and warrants of MessageMedia in exchange for one million shares of DoubleClick
common stock valued at approximately $7.5 million, and stock options and
warrants to acquire DoubleClick common stock valued at approximately $0.2
million. In connection with the acquisition, DoubleClick loaned $2.0 million to
MessageMedia to satisfy MessageMedia's operating requirements. The loan was
extinguished upon the closing of the acquisition and included as a component of
the purchase price. The purchase price, of approximately $11.3 million inclusive
of approximately $1.6 million of direct acquisition costs, has been allocated to
the assets acquired and the liabilities assumed based on their respective fair
values at the acquisition date. Approximately $1.9 million of the purchase price
has been allocated to customer lists and is being amortized on a straight-line
basis over two years. DoubleClick has also recorded approximately $29.9 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 in accordance with SFAS No. 42, goodwill has and will be periodically tested
for impairment.

17

The results of operations for MessageMedia have been included in
DoubleClick's Consolidated Statements of Operations from the date of
acquisition.

EUROPEAN MEDIA BUSINESS

On January 28, 2002, DoubleClick completed the sale of its European Media
business to AdLINK Internet Media AG ('AdLINK'), a German provider of Internet
advertising solutions, in exchange for $26.3 million and the assumption by
AdLINK of liabilities associated with DoubleClick's European Media business.
Intercompany liabilities in an amount equal to $4.3 million were settled through
a cash payment by AdLINK to DoubleClick at the closing of the transaction.
Following the closing of the transaction described above, United Internet AG
('United Internet'), AdLINK's largest shareholder, exercised its right to sell
to DoubleClick 15% of the outstanding common shares of AdLINK in exchange for
$30.6 million. Pursuant to its agreement with United Internet, the exercise of
this right caused DoubleClick's option to acquire an additional 21% of AdLINK
common shares 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. EBITDA, as defined in
the option agreement, is earnings before interest, taxes, depreciation,
amortization, and one-time charges such as restructuring costs, mergers and
acquisition related costs, and other extraordinary items, determined in
accordance with generally accepted accounting principles in the United States.
Should AdLINK fail to achieve these results, the option will expire
unexerciseable in December 2003. During the three months ended June 30, 2002 and
March 31, 2002, AdLINK did not achieve EBITDA-positive results. AdLINK's results
for the three months ended September 30, 2002 were not publicly available as of
the date of this filing.

As the result of the transactions described above, DoubleClick sold its
European Media business and received a 15% interest in AdLINK. 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. DoubleClick was partially reimbursed
$2.0 million for its cash outlays related to the acquisitions of, and payments
with respect to, the minority interests in certain of its European subsidiaries
pursuant to its agreement to sell its European Media business. DoubleClick's
investment in AdLINK is included in 'Investments in affiliates' in the
Consolidated Balance Sheets.

@PLAN

On May 6, 2002, DoubleClick sold its @plan research product line to
NetRatings Inc. ('NetRatings'), a provider of technology-driven Internet
audience information solutions for media and commerce, in exchange for $12.0
million in cash and 505,739 shares of NetRatings common stock. The approximately
$6.1 million value of the shares of NetRatings common stock has been determined
based on these shares' average market prices, as quoted on the Nasdaq National
Market, for the day before and the day the number of shares due to DoubleClick
became irrevocably fixed pursuant to its agreements with NetRatings. DoubleClick
recognized a gain of approximately $12.3 million on the sale of the @plan
research product line during the nine months ended September 30, 2002, which has
been included in 'Gain on sale of businesses, net' in the Consolidated
Statements of Operations. DoubleClick's investment in NetRatings is included in
'Investments in affiliates' in the Consolidated Balance Sheets.

ABACUS DIRECT EUROPE

On June 26, 2002, DoubleClick acquired the remaining 50% of the Abacus
Direct Europe B.V. ('Abacus Direct Europe') joint venture that it did not
previously own from VNU Marketing Information Europe & Asia B.V., an affiliate
of Claritas (UK) Limited. The joint venture was formed in November 1998 and
provides database-marketing services to the direct marketing industry, primarily
in

18

the United Kingdom. The results of operations for Abacus Direct Europe have been
included in DoubleClick's Consolidated Statements of Operations from the date of
acquisition. DoubleClick's investment in the joint venture was previously
accounted for under the equity method of accounting. DoubleClick acquired all
the outstanding shares of Abacus Direct Europe held by VNU in exchange for
approximately $3.7 million in cash and direct acquisition costs. The purchase
price has been allocated to the assets acquired and the liabilities assumed
according to their fair value at the date of acquisition. Approximately $4.6
million of the purchase price has been allocated to customer lists, the Abacus
Alliance and customer database. These intangibles are being amortized on a
straight-line basis over two to five years based on each intangibles' estimated
useful life.

NORTH AMERICAN MEDIA BUSINESS

On July 10, 2002, DoubleClick sold its North American Media business to L90,
Inc. ('L90'). Upon completion of the transaction, L90 was renamed MaxWorldwide,
Inc. ('MaxWorldwide'). In exchange for the North American Media business,
DoubleClick received 4.8 million shares in MaxWorldwide and $5 million in cash.
The 4.8 million shares represented 16.1% of outstanding MaxWorldwide common
stock and were valued at approximately $3.1 million. DoubleClick may also
receive an additional $6 million if, during the three-year period subsequent to
consummation of the transaction, MaxWorldwide has achieved EBITDA-positive
results, for two out of three consecutive quarters. EBITDA, as defined in the
merger agreement, is earnings before interest, taxes, depreciation and
amortization, excluding certain non-recurring items. As a result of this
transaction, DoubleClick recognized a gain of $8.1 million during the third
quarter of 2002 which has been included in 'Gain on sale of businesses, net' in
the Consolidated Statements of Operations.

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

DoubleClick accounts for this investment under the equity method of
accounting. The investment is included in 'Investments in affiliates' in the
Consolidated Balance Sheets. MaxWorldwide's results for the three months ended
September 30, 2002 were not publicly available as of the date of this filing.
DoubleClick will report its share of MaxWorldwide's results on a 90-day lag.

THREE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THE THREE MONTHS
ENDED SEPTEMBER 30, 2001

RESULTS OF OPERATIONS

Revenues and gross profit by segment are as follows:

DOUBLECLICK TECHSOLUTIONS

DoubleClick TechSolutions revenue is derived primarily from sales of our ad
management products and services, including our DART for Publishers Service, our
DART Enterprise ad serving software solution, our DART for Advertisers Service
and our email technology products and services. DoubleClick TechSolutions cost
of revenue includes costs associated with the delivery of our

19

advertisements and our email product offerings, including Internet access costs,
depreciation of the ad and email delivery systems, facility- and
personnel-related costs incurred to operate and support our ad and email
delivery products.

DoubleClick TechSolutions revenue decreased 7.1% to $45.1 million for the
three months ended September 30, 2002 from $48.5 million for the three months
ended September 30, 2001. DoubleClick TechSolutions gross margin was 62.3% for
the three months ended September 30, 2002 and 60.4% for the three months ended
September 30, 2001. The decrease in DoubleClick TechSolutions revenues was
primarily the result of overall decreases in the volume of impressions delivered
to customers, partially offset by a favorable shift in product mix and
acquisition-related growth in our email business associated with our purchases
of FloNetwork and MessageMedia. The increase in gross margin was primarily
attributable to the reduction in depreciation expense resulting from our
extension of the useful life of our ad delivery hardware and software from three
to four years to recognize depreciation expense over the remaining time that the
assets will be in service. In addition, we renegotiated many of our contracts
with our Internet service providers, which also contributed to the increase in
gross margin.

In response to general economic conditions, many companies have
significantly scaled back their advertising and marketing budgets, which has had
a correspondingly negative impact on aggregate online advertising spending and
increased the overall level of pricing pressure we face. As a result of these
trends of decreases in online advertising spending among our customers, we
anticipate slight decreases in both the absolute dollar amount of TechSolutions
revenues and gross profit during the fourth 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.inc 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 was derived primarily from the sale of annual subscriptions to
its market research systems. DoubleClick Data cost of revenue includes expenses
associated with maintaining and updating the Abacus database, the technical
infrastructure to produce our products and services, facility and personnel
related expenses to operate and support our production environment, and
subscriptions to third party providers of lifestyle and demographic data that is
used to supplement our transaction-based database.

On May 6, 2002, DoubleClick sold its @plan research product line to
NetRatings Inc., a provider of technology-driven Internet audience information
solutions for media and commerce, in exchange for $12.0 million in cash and
505,739 shares of NetRatings common stock, valued at approximately $6.1 million.
Revenue and gross profits recognized by the @plan research product line were
approximately $2.0 million and $0.4 million, respectively, for the three months
ended September 30, 2001.

On June 26, 2002, DoubleClick acquired the remaining 50% of the Abacus
Direct Europe B.V. joint venture that it did not previously own from VNU
Marketing Information Europe & Asia B.V., an affiliate of Claritas (UK) Limited.
The joint venture was formed in November 1998 and provides database-marketing
services to the direct marketing catalog industry, primarily in the United
Kingdom. The results of operations for Abacus Direct Europe have been included
in DoubleClick's Consolidated Statements of Operations from the date of
acquisition.

DoubleClick Data revenue increased 11.1% to $26.8 million during the three
months ended September 30, 2002 from $24.1 million for the three months ended
September 30, 2001. Gross margin increased from 71.8% for the three months ended
September 30, 2001 to 73.3% for the three months ended September 30, 2002.

DoubleClick Data's results represent an increase in revenues generated from
the Abacus U.S. business of $2.3 million and revenues generated from Abacus
Direct Europe of $2.4 million, offset by the sale of the @plan research product
line in May 2002.

20

The increase in gross margin was primarily attributable to the reduction in
data costs and depreciation expense on production equipment and a decrease in
consulting and survey fees, in addition to growing revenues from the Abacus
division. DoubleClick expects fourth quarter revenue and gross profit for
DoubleClick Data to decrease compared to the three months ended September 30,
2002 as the third quarter is normally Abacus' busiest season as mailers commence
their fall campaigns.

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, and the
costs of ad delivery and technology support provided by DoubleClick
TechSolutions.

Revenue for DoubleClick Media decreased 85.9% to $3.1 million for the three
months ended September 30, 2002 from $22.2 million for the three months ended
September 30, 2001. DoubleClick Media gross margin was 24.5% for the three
months ended September 30, 2002 and 28.3% for the three months ended
September 30, 2001. The decrease in DoubleClick Media revenue is a result of the
sale of its European and North American Media businesses.

On January 28, 2002, DoubleClick completed the sale of its European Media
business to AdLINK, a German provider of Internet advertising solutions. Revenue
and gross profit recognized by the European Media business prior to its sale was
$4.5 million and $1.6 million, respectively, for the three months ended
September 30, 2001.

On July 10, 2002, DoubleClick completed the sale of the North American Media
business to L90 (subsequently renamed MaxWorldwide). Revenue recognized by the
North American Media business was approximately $0.7 million and $12.5 million
for the three months ended September 30, 2002 and 2001, respectively. Gross
profits recognized by the North American Media business was approximately $0.3
million and $4.1 million for the three months ended September 30, 2002 and 2001,
respectively.

On March 11, 2002, DoubleClick completed the sale of its email List Services
division to infoUSA, Inc. Revenue recognized for the Email List Services
division during the three months ended September 30, 2001 was approximately $1.8
million.

Excluding its European and North American Media businesses, DoubleClick
Media revenues and gross profits would have been approximately $5.3 million and
$0.7 million, respectively, for the three months ended September 30, 2001.

As a result of the sale of the North American Media business, DoubleClick
anticipates a decrease in absolute dollar amounts of both revenues and gross
profits for its Media segment in the fourth quarter of 2002 and for the
foreseeable future. Future revenues and gross profits of DoubleClick Media will
only consist of the media operations of our consolidated subsidiary, DoubleClick
Japan.

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 $23.2 million or 31.1% of revenue
for the three months ended September 30, 2002, and $40.8 million or 44.0% of
revenue for the three months ended September 30, 2001. The $17.6 million
decrease in sales and marketing expense was primarily attributable to an $8.3
million decrease in compensation and related benefits associated with
restructuring related headcount reductions. In addition, sales and marketing
expenses were reduced by $2.5 million as a result of lower marketing
expenditures, a decline in bad debt expense of $2.4 million, and a reduction in
travel and entertainment expenses of $0.8 million. These decreases are
commensurate with the decline in our revenues and the level of business
activity. We expect the absolute dollar amount of sales and marketing expenses
to remain relatively consistent, but to increase as a percentage of revenues in
fourth quarter of 2002 due to anticipated lower revenues.

21

GENERAL AND ADMINISTRATIVE

General and administrative expenses consist primarily of compensation and
related benefits, professional services, and other operating expenses associated
with our executive, finance, human resources, legal, facilities, and
administrative departments. General and administrative expenses were $12.2
million or 16.4% of revenue for the three months ended September 30, 2002, and
$16.4 million or 17.7% of revenue for the three months ended September 30, 2001.
The $4.1 million decrease in general and administrative expense was primarily
the result of overall reductions in professional services fees of $2.8 million
and decreases in personnel-related costs of $0.8 million. Decreased professional
services fees resulted from a decrease in legal fees and a reduction in
consulting fees associated with system conversion and integration.
Personnel-related costs declined commensurate with the headcount reductions
undertaken as part of our restructuring activities. We expect the absolute
dollar amount of general and administrative expenses to decrease significantly
as a result of corporate headcount reductions but to only decrease slightly as a
percentage of revenues in the fourth quarter of 2002 due to anticipated lower
revenues.

PRODUCT DEVELOPMENT

Product development expenses consist primarily of compensation and related
benefits, consulting fees and other operating expenses associated with the
product development departments. The product development departments perform
research and development, enhance and maintain existing products, and provide
quality assurance. Product development expenses were $9.4 million or 12.5% of
revenue for the three months ended September 30, 2002, and $14.0 million or
15.1% of revenue for the three months ended September 30, 2001. The $4.7 million
decrease in product development expenses was primarily the result of decreases
in compensation and related benefits for product development personnel of $2.6
million and decreases in outside services fees of $1.0 million and professional
fees of $0.6 million. Compensation and related benefits declined as the result
of headcount reductions associated with our restructuring activities. The
decrease in outside service costs and professional fees were associated with the
implementation of tighter cost controls. Although we will continue to
concentrate on the efficient allocation of our personnel resources and reduce
our reliance on external consultants, we believe that ongoing investment in
product development is critical to the attainment of our strategic objectives
and, as a result, we expect the absolute dollar amount of product development
expenses to remain relatively consistent but to increase as a percentage of
revenues during the fourth quarter of 2002 due to anticipated lower revenues.

AMORTIZATION OF INTANGIBLE ASSETS

Amortization of intangible assets consists primarily of the amortization of
customer lists and patents. Amortization expense was $3.1 million for the three
months ended September 30, 2002 and $2.1 million for the three months ended
September 30, 2001. The increase was primarily the result of the amortization of
customer lists acquired in various business combinations.

AMORTIZATION OF GOODWILL

In accordance with SFAS No. 142, goodwill is no longer amortized as of
January 1, 2002 but is periodically tested for impairment. Goodwill amortization
was approximately $14.4 million for the three months ended September 30, 2001
and primarily related to the goodwill associated with our acquisitions of @plan,
Flashbase, Inc. ('Flashbase'), FloNetwork Inc., DoubleClick Scandinavia AB
('DoubleClick Scandinavia') and DoubleClick Japan.

GOODWILL IMPAIRMENT

The persistence of unfavorable economic conditions 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 that its investments
in @plan and Flashbase were impaired. Accordingly, DoubleClick recognized an
approximately $63.3 million impairment charge

22

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.

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 on-line 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 the third quarter of 2002, based upon the prolonged softness in the
economy and the lower than anticipated revenues generated to date and decline in
estimates of future performance of DoubleClick's email reporting unit,
DoubleClick initiated a third-party valuation of its email reporting unit to
determine whether the recorded balance of goodwill related to this reporting
unit was recoverable. The outcome of this valuation resulted in an impairment
charge of approximately $45.2 million being recorded during the quarter. The
fair market value of the email reporting unit was determined based on revenue
projections, recent transactions involving similar businesses and price/revenue
multiples at which they were bought and sold, and price/revenue multiples of our
competitors in the email marketplace.

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

IMPAIRMENT OF INTANGIBLE ASSETS

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

RESTRUCTURING CHARGE

During the three months ended September 30, 2002, DoubleClick recorded
restructuring provisions totaling approximately $23.8 million. This charge
included estimated costs of approximately $21.2 million for the accrual of
future lease costs, net of estimated sublease income and deferred rent, as well
as approximately $2.6 million in severance charges.

In determining the restructuring charge associated with its future lease
commitments, DoubleClick engaged a third party real estate firm to provide it
with estimates of the future sublease income for its excess and idle space,
which also includes an estimate of the time period required to identify new
sublessees. This analysis was performed based on the current real estate market
conditions in the local markets where DoubleClick's facilities are located. This
real estate firm also provided estimates of lease termination/buyout fees
landlords might charge to terminate existing leases rather than subleasing idle
and excess space. DoubleClick's restructuring charge relating to future lease
commitments is based on its review of this information. Should market conditions
change, this information may be updated.

DoubleClick will eliminate certain operating expenses totaling approximately
$7.0 million on an annualized basis, primarily relating to personnel- and
facility-related expenses, as a result of the restructuring initiatives
undertaken during the three months ended September 30, 2002. A majority of these
reductions are expected to primarily impact sales and marketing and general and
administrative expenses. DoubleClick will begin to recognize the full effect of
these cost savings in the fourth quarter of 2002.

23

DoubleClick is continuing to review its operational performance and may
incur additional restructuring charges in the fourth quarter of 2002,
principally related to additional facility consolidations.

As part of its ongoing restructuring activities, DoubleClick recorded
additional provisions totaling approximately $5.3 million in the third quarter
of 2001. These measures included the involuntary terminations of approximately
170 employees, primarily from the TechSolutions division. This charge included
estimated costs of approximately $3.1 million for severance costs associated
with this additional work force reduction, approximately $1.6 million in future
lease costs, and approximately $0.6 million in other exit costs.

LOSS FROM OPERATIONS

DoubleClick's operating loss was $69.6 million for the three months ended
September 30, 2002 and $103.4 million for the three months ended September 30,
2001. The decrease in its operating loss of $33.8 million is primarily
attributable to the decrease in our sales and marketing expenses of $17.6
million, a decrease in goodwill impairment of $18.1 million, and a decrease in
goodwill amortization of approximately $14.4 million. This was offset by a
increase in restructuring charges of $18.6 million and a decrease in gross
profits of approximately $4.4 million. DoubleClick continues to manage its
operations with a focus on productivity and manage its headcount accordingly,
but due to the general economic and industry trends it may incur future losses
from operations.

EQUITY IN INCOME (LOSSES) OF AFFILIATES

Equity in income (losses) of affiliates was approximately $(0.6) million for
the three months ended September 30, 2001. Since the June 26, 2002 acquisition
of the remaining 50% interest that DoubleClick did not previously own, the
results of operations of Abacus UK have been consolidated into DoubleClick's
operations.

IMPAIRMENT OF INVESTMENTS IN AFFILIATES

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
during the three months ended September 30, 2001, which represented the
difference between DoubleClick's carrying value and the estimated fair value of
its investment in ValueClick.

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

GAIN ON THE EXTINGUISHMENT OF DEBT

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

24

In the third quarter of 2001, DoubleClick repurchased $20.3 million of its
outstanding 4.75% Convertible Subordinated Notes for approximately $13.6 million
in cash. DoubleClick wrote off approximately $0.3 million in deferred issuance
costs and recognized a gain of approximately $6.4 million as the result of the
early retirement of this debt.

INTEREST AND OTHER, NET

Interest and other, net was $4.6 million for the three months ended
September 30, 2002 and $7.0 million for the three months ended September 30,
2001. Interest and other, net primarily included $6.2 million in interest income
and $0.6 million in contract termination fee income for the three months ended
September 30, 2002, partially offset by $2.6 million of interest expense.
Interest and other, net included $10.2 million of interest income for the three
months ended September 30, 2001, partially offset by $3.2 million in interest
expense. The decrease in interest income was primarily attributable to decreases
in average investment yields due to declines in interest rates, offset by an
increase in the average quarterly balances of our investments in marketable
securities. The decrease in interest expense is directly associated with the
repurchase of the Convertible Subordinated Notes during the quarter. 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.

PROVISION FOR 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
three months ended September 30, 2002 primarily relates to corporate income
taxes of $1.5 million on the earnings of some of our foreign subsidiaries. In
addition, DoubleClick recorded federal alternative minimum tax of $0.6 million
related to gains on the sale of DoubleClick's North American Media business and
on the early extinguishment of debt. DoubleClick also recorded approximately
$0.5 million of state and local taxes. For the three months ended September 30,
2001, the provision for income taxes primarily relates to corporate income taxes
of $1.0 million on the earnings of some of our foreign subsidiaries and state
and local taxes of $0.3 million.

NINE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THE NINE MONTHS ENDED
SEPTEMBER 30, 2001

DOUBLECLICK TECHSOLUTIONS

DoubleClick TechSolutions revenue decreased 7.5% to $143.5 million for the
nine months ended September 30, 2002 from $155.2 million for the nine months
ended September 30, 2001. DoubleClick TechSolutions gross margin was 65.3% for
the nine months ended September 30, 2002 and 63.9% for the nine months ended
September 30, 2001. The decrease in DoubleClick TechSolutions revenue was
primarily the result of increased levels of price competition and overall
decreases in the volumes of impressions delivered to customers. This was
slightly offset by a favorable shift in product mix and acquisition-related
growth in our email business associated with our purchases of FloNetwork and

25

MessageMedia. The decrease in TechSolutions revenues reflected in large part the
decline in overall online advertising spending. The increase in gross margin was
primarily attributable to the reduction in depreciation expense resulting from
our extension of the useful life of our ad delivery hardware and software from
three to four years to recognize depreciation expense over the remaining time
that the assets will be in service. In addition, we renegotiated many of our
contracts with our Internet service providers, which also contributed to the
increase in gross margin.

In response to general economic conditions, many companies have
significantly scaled back their advertising and marketing budgets, which has had
a correspondingly negative impact on aggregate online advertising spending and
increased the overall level of pricing pressure we face. As a result of these
trends of decreases in online advertising spending among our customers, we
anticipate slight decreases in both the absolute dollar amount of TechSolutions
revenues and gross profit during the fourth quarter of 2002.

DOUBLECLICK DATA

DoubleClick Data revenue increased 2.0% to $62.9 million for the nine months
ended September 30, 2002 from $61.7 million for the nine months ended
September 30, 2001. Gross margin increased from 66.3% for the nine months ended
September 30, 2001 to 71.6% for the nine months ended September 30, 2002. The
increase in DoubleClick Data revenue reflects an increase in revenues from the
Abacus U.S. business and revenues generated from Abacus Direct Europe, offset by
the sale of the @plan research product line in May 2002. The growth in the
Abacus U.S. business represented an increase in list circulation market share
and better product penetration within the business to consumer market, as well
as continued growth in the business-to-business alliance. The increase in gross
margin was due primarily to lower costs associated with DoubleClick Data's data
collection and the sale of the @plan research product line.

DOUBLECLICK MEDIA

Revenue for DoubleClick Media decreased 70.4% to $30.3 million for the nine
months ended September 30, 2002 from $102.1 million for the nine months ended
September 30, 2001. DoubleClick Media's gross margin was 30.9% for the nine
months ended September 30, 2002 and 32.3% for the nine months ended
September 30, 2001. The decrease in DoubleClick Media revenue reflected the sale
of its European and North American Media businesses. On January 28, 2002,
DoubleClick completed the sale of the European Media business to AdLINK. On
July 10, 2002, DoubleClick completed the sale of the North American Media
business to L90, which was renamed MaxWorldwide. Revenues also decreased due to
the decline in overall online advertising spending mentioned above. For the nine
months ended September 30, 2002 and 2001, revenues derived by the European Media
business were $1.1 million and $21.9 million, respectively. Revenue recognized
by the North American Media business was approximately $18.0 million and $62.8
million for the nine months ended September 30, 2002 and 2001, respectively.
Excluding the European and North American Media businesses, DoubleClick Media
revenues would have been $11.2 million and $17.4 million for the nine months
ended September 30, 2002 and 2001, respectively.

DoubleClick Media revenue also decreased due to the departure of the
AltaVista Web site from the DoubleClick network. DoubleClick Media revenue for
the nine months ended September 30, 2001 included approximately $8.0 million, or
7.8% of DoubleClick Media revenue, for advertising impressions delivered to
users of the AltaVista Web site. No such revenue was recognized in DoubleClick
Media's results during the nine months ended September 30, 2002.

Gross margin decreased due to 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.

Gross profits recognized by the North American Media business was
approximately $6.7 million and $22.7 million for the nine months ended
September 30, 2002 and 2001, respectively.

26

As a result of the sale of the North American Media business, DoubleClick
anticipates significant decreases in absolute dollar amounts of both revenues
and gross profits in its Media segment in the fourth quarter of 2002 and for the
foreseeable future. Future revenue and gross profits of DoubleClick Media will
only consist of the media operations of our consolidated subsidiary, DoubleClick
Japan.

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 $78.7 million or 33.6% of revenue
for the nine months ended September 30, 2002, and $148.2 million or 47.9% of
revenue for the nine months ended September 30, 2001. The $69.5 million decrease
in sales and marketing expense was primarily attributable to reductions in
personnel-related costs of $27.1 million, non-cash compensation paid to former
shareholders of DoubleClick Scandinavia of $15.2 million and marketing
expenditures of $7.6 million, as well as reductions of travel and entertainment
expenses of $4.3 million and rent, utilities, and other overhead costs of
$7.1 million. We expect the absolute dollar amount of sales and marketing
expenses to remain relatively consistent, but to increase as a percentage of
revenues in fourth quarter of 2002 due to anticipated lower revenues.

GENERAL AND ADMINISTRATIVE

General and administrative expenses consist primarily of compensation and
related benefits, professional services, and other operating expenses associated
with our executive, finance, human resources, legal, facilities, and
administrative departments. General and administrative expenses were $36.3
million or 15.5% of revenue for the nine months ended September 30, 2002, and
$52.8 million or 17.1% of revenue for the nine months ended September 30, 2001.
The $16.5 million decrease in general and administrative expense was primarily
the result of overall reductions in professional services fees of $8.7 million
and personnel-related costs of $4.8 million. Decreased professional services
fees resulted in part from a reduction in legal fees as well as a reduction in
consulting fees associated with tighter cost controls in place.
Personnel-related costs declined as the result of headcount reductions
associated with our restructuring activities. We expect the absolute dollar
amount of general and administrative expenses to decrease significantly as a
result of corporate headcount reductions but to only decrease slightly as a
percentage of revenues in the fourth quarter of 2002 due to anticipated lower
revenues.

PRODUCT DEVELOPMENT

Product development expenses consist primarily of compensation and related
benefits, consulting fees and other operating expenses associated with the
product development departments. The product development departments perform
research and development, enhance and maintain existing products, and provide
quality assurance. To date, all product development costs have been expensed as
incurred. Product development expenses were $30.7 million or 13.1% of revenue
for the nine months ended September 30, 2002, and $42.5 million or 13.7% of
revenues for the nine months ended September 30, 2001. The $11.8 million
decrease in product development expenses were primarily the result of reductions
in compensation and related benefits for product development personnel of $7.6
million, and professional fees of $2.2 million. Compensation and related
benefits declined as the result of headcount reductions associated with our
restructuring activities. The decrease in professional fees was associated with
the implementation of tighter cost controls. Although we will continue to
concentrate on the efficient allocation of our resources, we believe that
on-going investment in product development is critical to the attainment of our
strategic objectives. We expect the absolute dollar amount of product
development expenses to remain relatively consistent but to increase as a
percentage of revenues during the fourth quarter of 2002 due to anticipated
lower revenues.

27

AMORTIZATION OF INTANGIBLE ASSETS

Amortization of intangible assets consists primarily of customer lists and
patents. Amortization expense was $9.3 million for the nine months ended
September 30, 2002 and $6.1 million for the nine months ended September 30,
2001. The increase was primarily the result of the amortization of customer
lists acquired in various business combinations.

AMORTIZATION OF GOODWILL

In accordance with SFAS No. 142, goodwill is no longer amortized as of
January 1, 2002 but is periodically tested for impairment. Goodwill amortization
was approximately $36.3 million for the nine months ended September 30, 2001
related to the acquisitions of @plan, Flashbase, FloNetwork, DoubleClick
Scandinavia and DoubleClick Japan.

GOODWILL IMPAIRMENT

As noted above, the persistence of unfavorable economic conditions 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 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.

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 on-line 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 the third quarter of 2002, based upon the prolonged softness in the
economy and lower than anticipated revenues generated to date and decline in
estimates of future performance of DoubleClick's email reporting unit,
DoubleClick initiated a third-party valuation of its email reporting unit to
determine whether the recorded balance of goodwill related to this reporting
unit was recoverable. The outcome of this valuation resulted in an impairment
charge of approximately $45.2 million being recorded during the quarter. The
fair market value of the email reporting unit was determined based on revenue
projections, recent transactions involving similar businesses and price/revenue
multiples at which they were bought and sold, and price/revenue multiples of our
competitors in the email marketplace.

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

IMPAIRMENT OF INTANGIBLE ASSETS

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

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

28

had not reached technological feasibility as of the date of acquisition and were
determined to have no alternative future uses.

We recognized no such charges during the nine months ended September 30,
2002.

RESTRUCTURING AND OTHER CHARGES

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

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

DoubleClick expects to eliminate certain operating expenses totaling
approximately $18.0 million on an annualized basis, primarily related to
personnel- and facility-related expenses, as a result of the restructuring
initiatives undertaken during the nine months ended September 30, 2002. A
majority of these reductions are expected to primarily impact sales and
marketing expenses and general and administrative expenses. DoubleClick will
begin to recognize the full effect of these cost savings in the fourth quarter
of 2002.

DoubleClick is continuing to review its operational performance and may
incur additional restructuring charges in the fourth quarter of 2002,
principally related to facility consolidations.

During the nine months ended September 30, 2001, as part of a separate
restructuring initiative, DoubleClick management took certain actions to further
increase operational efficiencies and bring costs in line with revenues. These
measures included the involuntary terminations of approximately 415 employees,
primarily from the Media and TechSolutions divisions, as well as the
consolidation of some leased office space and the closure of several offices. As
a consequence, DoubleClick recorded a $35.9 million charge to operations during
the nine months ended September 30, 2001. This charge included approximately
$6.9 million for severance-related payments to terminated employees,
approximately $10.9 million for the accrual of future lease costs (net of
estimated sublease income and deferred rent liabilities previously recorded),
approximately $15.8 million for the write-off of fixed assets situated in office
locations that were closed or consolidated, and approximately $2.3 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.

LOSS FROM OPERATIONS

DoubleClick's operating loss was $85.9 million for the nine months ended
September 30, 2002 and $213.4 million for the nine months ended September 30,
2001. The decrease in its operating loss of $127.5 million is primarily
attributable to the decrease in our sales and marketing expenses of $69.5
million, a decrease in goodwill amortization of $36.3 million, a decrease in
goodwill impairment of $18.1 million, a decrease in general and administrative
expenses of $16.2 million, and a decrease in product development costs of $11.8
million as a result of our restructuring activities and other cost cutting

29

initiatives during 2001. This was partially offset by a decrease in gross
profits of approximately $25.1 million, and an increase in amortization of
intangibles of approximately $3.2 million. DoubleClick continues to manage its
operations with a focus on productivity and manage its headcount accordingly,
but due to the general economic or industry trends it may incur future losses
from operations.

EQUITY IN INCOME (LOSSES) OF AFFILIATES

Equity in income (losses) of affiliates was $0.2 million for the nine months
ended September 30, 2002 and $(2.6) million for the nine months ended
September 30, 2001. For the nine months ended September 30, 2002, equity in
income (losses) of affiliates was attributable entirely to DoubleClick's 50%
interest in the Abacus Direct Europe joint venture. Since the June 26, 2002
acquisition of the remaining 50% interest that DoubleClick did not previously
own, the results of operations of Abacus UK have been consolidated into
DoubleClick's operations. The increase in equity in income (losses) of
affiliates was primarily the result of our investment in ValueClick being
accounted for as a marketable security during the nine months ended
September 30, 2002. As a result of the cumulative dilutive effects of
ValueClick's issuance of stock in connection with business combinations
consummated during 2001, DoubleClick's ownership interest had been reduced to
15.2% as of December 31, 2001. Additional business combinations consummated by
ValueClick during 2002 have further reduced DoubleClick's ownership interest to
approximately 9%. DoubleClick does not believe that it is able to exercise
significant influence over its investment in ValueClick and accordingly,
DoubleClick no longer records its proportionate share of ValueClick's results
but instead carries this investment at fair value, with unrealized gains and
losses, net of tax, reported as a separate component of stockholders' equity.

GAIN ON EQUITY TRANSACTIONS OF AFFILIATES, NET

For the nine months ended September 30, 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 $5.3 million related to the decrease in value of our proportionate
share of the net assets of our equity-method investee ValueClick following the
consummation of business combinations with ClickAgents.com, Inc., Bach Systems
Inc. and Z Media, Inc.

We recognized no such gains or losses during the nine months ended
September 30, 2002.

IMPAIRMENT OF INVESTMENTS IN AFFILIATES

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

In the third quarter of 2001, DoubleClick determined that the carrying value
of its equity method 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 third quarter of 2002, DoubleClick determined that the carrying value
of certain of its investments, principally its cost-method investments in AdLINK
and NetRatings and its equity-method investment in MaxWorldwide were impaired
based on the continued decline in the fair market value of these investments. As
a result, DoubleClick recorded an impairment charge of $11.7 million, which
represented the difference between DoubleClick's carrying value and the
estimated fair value of these investments. The estimated fair values of
DoubleClick's investments in AdLINK, NetRatings and MaxWorldwide were determined
based on the closing market price of their stock on September 30, 2002.
Additionally, DoubleClick's cost method investment in the joint venture,
DoubleClick Asia, will

30

be liquidated and has no continuing value. As a consequence, DoubleClick
wrote-off its entire investment in DoubleClick Asia and recognized an impairment
charge of $2.4 million.

GAIN ON THE EXTINGUISHMENT OF DEBT

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

In the third quarter of 2001, DoubleClick repurchased $20.3 million of its
outstanding 4.75% Convertible Subordinated Notes for approximately $13.6 million
in cash. DoubleClick wrote off approximately $0.3 million in deferred issuance
costs and recognized a gain of approximately $6.4 million as the result of the
early retirement of this debt.

INTEREST AND OTHER, NET

Interest and other, net was $10.8 million for the nine months ended
September 30, 2002 and $18.9 million for the nine months ended September 30,
2001. Interest and other, net included $20.2 million of interest income for the
nine months ended September 30, 2002, partially offset by $8.7 million in
interest expense. For the nine months ended September 30, 2001, Interest and
other, net included $34.7 million of interest income, partially offset by $9.7
million in interest expense. The decrease in interest income was primarily
attributable to decreases in average investment yields due to declines in
interest rates, offset by increases in the average quarterly balances of our
investments in marketable securities. 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 rates of our investments.

PROVISION FOR 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 nine
months ended September 30, 2002 primarily relates to corporate income taxes of
$4.4 million on the earnings of some of our foreign subsidiaries and gain on the
sale of DoubleClick's European Media business. In addition, DoubleClick recorded
federal alternative minimum tax of $0.6 million related to gains on the sales of
DoubleClick's North American Media business and @plan research product line, and
gain on early extinguishment of debt. DoubleClick also recorded approximately
$1.0 million of state and local taxes. For the nine months ended September 30,
2001, the provision for income taxes primarily relates to corporate income taxes
of $2.3 million on the earnings of certain of our foreign subsidiaries and state
and local taxes of $0.7 million.

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 generated $29.9 million for the nine months ended
September 30, 2002 and used $18.0 million for the nine months ended
September 30, 2001. Cash provided by operating activities for the nine months
ended September 30, 2002 resulted primarily from our net loss, adjusted for non-
cash items, and decreases in accounts receivable, prepaid expenses and other
assets, and increases in accrued expenses and other current liabilities, offset
by decreases in accounts payable. Cash used in operating activities for the nine
months ended September 30, 2001 resulted primarily from our net loss, adjusted
for non-cash items and decreases in accounts receivable, offset by increases in
prepaid expenses and other current assets and decreases in accounts payable,
accrued expenses, other liabilities, and deferred revenue.

Investing activities generated $35.6 million for the nine months ended
September 30, 2002 and used $2.0 million for the nine months ending
September 30, 2001. Cash provided by investing activities for the nine months
ended September 30, 2002 resulted primarily from the net maturity of some of our

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investments in marketable securities, cash paid for the purchase of equipment,
proceeds placed in escrow in connection with our acquisition of Protagona,
restricted cash and the acquisition of businesses and intangible assets, which
were partially offset by proceeds received from the sale of the North American
Media business and the @plan research product line. Cash used in investing
activities for the nine months ended September 30, 2001 resulted primarily from
the purchase of equipment and the acquisition of businesses and intangible
assets, which was partially offset by the net maturity of some of our
investments in marketable securities.

Net cash used in financing activities was $68.6 million for the nine months
ended September 30, 2002 and net cash provided by financing activities was $15.3
million for the nine months ended September 30, 2001. Net cash used in financing
activities resulted primarily from repurchase of convertible bonds, purchase of
treasury stock, and payments of notes and capital lease obligations offset by
proceeds from the issuance of common stock in connection with our employee stock
purchase and stock option plans. Cash provided by financing activities for the
nine months ended September 30, 2001 resulted primarily from the initial public
offering of common stock of our consolidated subsidiary, DoubleClick Japan, and
the proceeds from the exercise of stock options and the issuance of common
stock, offset by payments of notes and under capital lease obligations, the
repurchase of our 4.75% convertible debt and the purchase of treasury stock. We
may in the future use available cash to repurchase additional outstanding
convertible bonds, although there can be no assurance that we will do so.

As of September 30, 2002, we had $100.6 million of cash and cash
equivalents, $580.4 million in investments in marketable securities and $38.0
million in restricted cash. As of September 30, 2002, our principal commitments
consisted of our Convertible Subordinated Notes and our obligations under
operating and capital leases. Although we have no material commitments for
capital expenditures, we continue to anticipate that our capital expenditures
and lease commitments will be a material use of our cash resources consistent
with the levels of our operations, infrastructure and personnel.

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

The primary objective of our investment activities is to preserve principal
while at the same time maximizing yields without significantly increasing risk.
To achieve this objective, we maintain our portfolio of cash equivalents and
marketable securities in a variety of government and corporate obligations and
money market funds. As of September 30, 2002, our investments in marketable
securities had a weighted average time to maturity of 350 days.

The following table presents the amounts of our financial instruments that
are subject to interest rate risk by expected maturity and average interest
rates as of September 30, 2002.

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As of September 30, 2002, restricted cash was $38.0 million and the average
interest rate associated with this cash was 2.32%. Restricted cash consists of
office lease security deposits, amounts held in escrow relating to our
acquisition of Protagona plc, and funds to cover our automated clearing house
payment function.

We did not hold derivative financial instruments as of September 30, 2002
and have not held these instruments in the past.

FOREIGN CURRENCY RISK

We transact business in various foreign countries and are thus subject to
exposure from adverse movements in foreign currency exchange rates. This
exposure is primarily related to revenue and operating expenses denominated in
European and Asian currencies, as well as cash balances held in currencies other
than the functional currency of DoubleClick and its subsidiaries. The effect of
foreign exchange rate fluctuations on operations resulted in net realized and
unrealized gains and (losses) of $0.1 million and $(0.9) million for the three
and nine months ended September 30, 2002, respectively. This was principally as
a result of the strengthening and weakening of the U.S. dollar and its impact
upon our U.S. dollar denominated deposits held by our international subsidiaries
for the three and nine months ended September 30, 2002, respectively.

To date we have not used financial instruments to hedge operating activities
denominated in foreign currencies. We assess the need to utilize financial
instruments to hedge currency exposures on an ongoing basis. As of
September 30, 2002, we had $43.8 million in cash and cash equivalents
denominated in foreign currencies.

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

EQUITY RISK

DoubleClick holds investments in equity instruments of public companies
received as a result of certain business transactions, including shares held in
ValueClick, NetRatings, AdLINK and MaxWorldwide. Such investments, which are in
the Internet industry, are subject to significant fluctuations in fair market
value due to the volatility of the stock market and the market value of
technology companies in particular. The following represents the cost basis and
fair market value of these investments, which are included in as 'Investment in
affiliates' on the accompanying Consolidated Balance Sheets.

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

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RISK FACTORS

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 or anticipated 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, advertising 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 and industry conditions. We cannot assure you that our business
strategy will be successful or that we will successfully address these risks. If
we are unsuccessful in addressing these risks, our revenues may decline or may
not grow in accordance with our business model and may fall short of
expectations of market analysts and investors, which could negatively affect the
price of our stock.

WE HAVE A HISTORY OF LOSSES AND 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. We incurred a net loss of
approximately $63.9 million for the nine months ended September 30, 2002 and as
of September 30, 2002, our accumulated deficit was $612.5 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. We also have lease obligations for facilities that currently
constitute excess or idle facilities. Periodically, we evaluate the expenses
likely to be incurred for these facilities, and where appropriate, have taken
restructuring charges with respect to these expenses. We cannot assure you that
there will not be additional restructuring charges recognized with respect to
our excess or idle facilities. As a result of these factors, we will need to
generate significant revenue to achieve and maintain profitability. We cannot
assure you that we will generate sufficient revenue to achieve or sustain
profitability. Even if we do achieve profitability, we cannot assure you that we
can sustain or increase profitability on a quarterly or annual basis in the
future. If revenue does not meet our expectations, or if operating expenses
exceed what we anticipate or cannot be reduced accordingly, our business,
results of operations and financial condition will be materially and adversely
affected.

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WE DERIVE A SIGNIFICANT PORTION OF OUR REVENUE FROM ADVERTISEMENTS AND
ADVERTISING SERVICES. 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 advertising agencies. 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 the last couple of
years by increasing softness of demand, lower prices for advertisements, the
reduction or cancellation of advertising contracts, an increased risk of
uncollectible receivables from customers and the reduction of marketing and
advertising budgets, especially for online advertising. As a result of these
reductions, advertising spending across traditional media, as well as the
Internet, has decreased. We cannot assure you that further reductions will not
occur.

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

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

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

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

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

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

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

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INDUSTRY SHIFTS, CONTINUING EXPANSION OF OUR PRODUCTS AND SERVICES AND OTHER
CHANGES MAY STRAIN OUR MANAGERIAL, OPERATIONAL, FINANCIAL AND INFORMATION SYSTEM
RESOURCES.

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

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 involves generating revenue by
providing digital marketing products and services to direct marketers,
publishers and advertisers. 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 marketing and advertising sector, our revenue
outlook is sensitive to downturns in the economy, including declines in
advertisers' marketing budgets. The profit potential of our business model is
also subject to the acceptance of our products and services by direct marketers,
publishers and advertisers. Intensive marketing and sales efforts may be
necessary to educate prospective customers regarding the uses and benefits of,
and to generate demand for, our products and services. Enterprises may be
reluctant or slow to adopt a new approach that may replace existing techniques,
or may feel that our offerings fall short of their needs. If these outcomes
occur, it 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. Our failure to achieve these results would
adversely affect the profit potential of our business model.

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

36

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.

Abacus competes with data aggregation companies and providers of information
products and marketing research services to the direct marketing industry. We
also compete indirectly with others, such as providers of customer relationship
management services, companies engaged in providing analytic services and other
companies that facilitate 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 we have. 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, direct marketer 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 profits and loss of market share. We cannot assure you that we
will be able to compete successfully or that competitive pressures will not
materially and adversely affect our business, results of operations or financial
condition.

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

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

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

Internet user traffic levels;

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

downward pricing pressures from current and potential customers for our
products and services;

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

37

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

general seasonal and cyclical fluctuations; and

general economic and industry conditions.

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

Our business is subject to seasonal fluctuations. Advertisers generally
place fewer advertisements during the first and third calendar quarters of each
year, which directly affects the DoubleClick TechSolutions business. The direct
marketing industry generally mails substantially more marketing materials in the
third calendar quarter, which directly affects the DoubleClick Data business.
The email technology business may experience seasonal patterns similar to the
traditional direct marketing industry, which typically generates lower revenues
earlier in the calendar year and higher revenues during the calendar year-end
months. Further, Internet user traffic typically drops during the summer months,
which reduces the amount of advertising to deliver.

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

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

Our business has expanded rapidly in part as a result of acquisitions or
investments in other companies, including the acquisitions of Abacus Direct,
NetGravity, FloNetwork, MessageMedia and Protagona. We may continue to acquire
or make investments in other complementary businesses, products, services or
technologies as a means to grow our business. From time to time we have had
discussions with other companies regarding our acquiring, or investing in, their
businesses, products, services or technologies. We cannot assure you that we
will be able to identify other suitable acquisition or investment candidates.
Even if we do identify suitable candidates, we cannot assure you that we will be
able to make other acquisitions or investments on commercially acceptable terms,
if at all. Even if we agree to buy a 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 are also minority investors in several technology companies, including in
ValueClick, NetRatings, AdLINK and MaxWorldwide. Our investments have suffered
decreases in value as a result of market volatility, and periodically, we have
recorded charges to earnings for all or a portion of the unrealized loss due to
declines in market value considered to be other than temporary. The market value
of these investments may decline in future periods due to the continued
volatility in the stock market in general or the market prices of securities of
technology companies in particular and we may be required to record further
charges to earnings as a result. Further, we cannot assure you that we will be
able to sell these securities at or above our cost basis. We have recorded
goodwill in connection with a number of our acquired businesses, including
MessageMedia, @plan, FloNetwork, DoubleClick Japan and Flashbase. As a result of
significantly lower-than-expected revenues generated to date and considerably
reduced estimates of future performance, we have in the past recognized
impairment charges with respect to the goodwill of some acquired businesses. If
market conditions require, we may in the future record additional impairments in
the value of our acquired businesses.

38

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 disposing of the excess or idle facilities of an acquired
company or business;

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

the impairment of relationships with employees and customers as a result of
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.

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

Our DART ad management and DARTmail technology resides in our data centers
in multiple locations in the United States and abroad. 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 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, delays or
destroys our operations.

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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 and could
harm our business. Our future success also depends on our continuing ability to
attract, retain and motivate highly skilled employees for key positions. There
is competition for qualified employees in our industry. We may not be able to
retain our key employees or attract, assimilate 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, patents, 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 intellectual property 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 not be available on commercially
reasonable terms, if at all.

We also enter into confidentiality, assignments of proprietary rights and
license agreements, as appropriate, with our employees, consultants and business
partners, and generally control access to and distribution of our technologies,
documentation and other proprietary information. Despite these efforts, we
cannot be certain that the steps we take to prevent unauthorized use of our
intellectual

40

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

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

Infringement claims may be asserted against us, which could adversely affect
our reputation and the value of our intellectual property rights. From time to
time we have been, and we expect to continue to be, subject to claims or notices
in the ordinary course of our business, including assertions of alleged
infringement of the patents, trademarks and other intellectual property rights
of third parties by us or our customers. 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 during a large part of their
prosecution, 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 as an alternative or to license the infringed or
similar technology on a timely basis, it could materially adversely affect our
business, financial condition and results of operations.

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

We have been a defendant in several lawsuits alleging, among other things,
that we unlawfully obtain and use Internet users' personal information and that
our use of cookies violates various laws. We have been 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. These situations were resolved
in 2002. However, we may in the future be subject to additional claims or
regulatory inquiries. 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.

41

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.

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.

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.

42

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

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

As of September 30, 2002, we had 135,873,394 shares of common stock
outstanding, excluding 17,921,858 shares subject to options outstanding as of
such date under our stock option plans that are exercisable at prices ranging
from $0.04 to $1,272.35 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 digital marketing products or services or
Internet advertising spending 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 relatively 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.

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.

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 has prompted calls for more
stringent consumer protection laws, both in the United States and abroad. These
proposals may seek to impose

43

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 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. 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 elsewhere in the
world 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 Internet protocol addresses and cookies are intrinsically
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 impose stricter standards and
thus 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 offerings 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.

DEMAND FOR OUR PRODUCTS AND SERVICES MAY DECLINE DUE TO THE PROLIFERATION OF
SOFTWARE DESIGNED TO PREVENT THE DELIVERY OF INTERNET ADVERTISING ON THE WEB OR
THROUGH EMAILS 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 becomes widely adopted by computer users, demand for our products
and services would decline.

44

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 advertisers, Web publishers and direct marketers using our
products and services.

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

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

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

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

45

ITEM 4. CONTROLS AND PROCEDURES

a) Evaluation of disclosure controls and procedures. Based on their
evaluation of the Company's disclosure controls and procedures (as defined in
Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934) as of a
date within 90 days of the filing date of this Quarterly Report on Form 10-Q,
the Company's Chief Executive Officer and Chief Financial Officer have concluded
that the Company's disclosure controls and procedures are designed to ensure
that information required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms and are
operating in an effective manner and when required, and are effective to ensure
that such information is accumulated and communicated to the Company's
management, including its Chief Executive Officer and its Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.

b) Changes in internal controls. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
these controls subsequent to the date of their most recent evaluation.

46

PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As previously disclosed in our Annual Report on Form 10-K for the year ended
December 31, 2001, in our Quarterly Reports on Form 10-Q for the quarter ended
June 30, 2002 and the quarter ended March 31, 2002 and in our Current Report on
Form 8-K filed on April 3, 2002, DoubleClick was a defendant in class action
lawsuits concerning Internet user privacy and data collection and other business
practices in both state and federal court. On March 29, 2002, the parties issued
a joint press release outlining the terms of a settlement of these lawsuits. The
court gave final approval of the settlement at a hearing held on May 21, 2002
and the judge signed a Final Judgment and Order of Dismissal of the actions on
May 23, 2002. One person objected to the settlement and filed a notice of appeal
of the court's order on June 19, 2002, which was dismissed pursuant to a
settlement agreement with plaintiffs. These lawsuits have all been dismissed
with prejudice. On October 16, 2002, the action brought by the State's Attorney
of Cook County, Illinois was dismissed with prejudice pursuant to a settlement
agreement between the parties.

As previously disclosed in our Annual Report on Form 10-K for the year ended
December 31, 2001, in our Quarterly Reports on Form 10-Q for the quarter ended
June 30, 2002 and the quarter ended March 31, 2002 and in our Current Report on
Form 8-K filed on August 30, 2002, DoubleClick's ad serving and data collection
practices were the subject of inquiries by the attorneys general of several
states. These inquiries were resolved by an agreement between DoubleClick and
the attorneys general of ten states. On August 26, 2002, the Company issued a
press release outlining the terms of this settlement.

As previously disclosed in our Annual Report on Form 10-K for the year ended
December 31, 2001, and in our Quarterly Reports on Form 10-Q for the quarter
ended June 30, 2002 and the quarter ended March 31, 2002, 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 alleged that the directors of NetGravity breached their fiduciary
duties to NetGravity's stockholders in connection with the negotiation of the
proposed merger. On August 16, 2002, the court gave final approval of the
settlement between the parties.

As previously disclosed in our Quarterly Reports on Form 10-Q for the
quarter ended June 30, 2002 and the quarter ended March 31, 2002, in
April 2002, a consolidated amended class action complaint alleging violations of
the federal securities laws was filed in the United States District Court for
the Southern District of New York naming DoubleClick and certain of its officers
and directors and certain underwriters of DoubleClick's follow-on offerings as
defendants. We and some of our officers and directors are named in the suit
pursuant to Section 11 of the Securities Act of 1933 and Section 10(b) of the
Securities Exchange Act of 1933 and Section 10(b) of the Securities Exchange Act
1934 on the basis of an alleged failure to disclose the underwriters' alleged
compensation and manipulative practices. This action seeks, among other things,
unspecified damages and costs, including attorneys' fees. In October 2002, the
action was dismissed against our officers and directors without prejudice.
However, claims against the Company remain. DoubleClick, along with other issuer
defendants, have filed a motion to dismiss the complaint, which is currently
pending before the court. We believe that the claims asserted by these lawsuits
are without merit, and intend to defend these actions vigorously. However, due
to the inherent uncertainties of litigation, we cannot accurately predict the
ultimate outcome of the litigation. An unfavorable outcome in litigation could
materially and adversely affect our business, financial condition and results of
operations.

47

ITEM 6. EXHIBITS AND REPORT ON FORM 8-K

(a) Exhibits

(b) Reports on Form 8-K

We filed a Current Report on Form 8-K, Items 5 and 7, on August 30, 2002,
attaching the press release we issued on August 26, 2002 announcing that
DoubleClick and the Attorneys General from 10 states had reached an agreement to
end the investigation into our ad serving practices. The Attorneys General of
New York, which led the investigation, Arizona, California, Connecticut,
Massachusetts, Michigan, New Jersey, New Mexico, Vermont and Washington signed
onto the agreement.

We filed a Current Report on Form 8-K, Items 5 and 7, on July 11, 2002,
announcing that on July 10, 2002, DoubleClick Inc. and L90, Inc. completed a
transaction whereby L90, Inc. acquired DoubleClick's North American Media
business, pursuant to an Agreement and Plan of Merger, dated as of June 29,
2002, by and among MaxWorldwide, Inc., L90, Inc., DoubleClick, DoubleClick Media
Inc., Picasso Media Acquisition, Inc. and Lion Merger Sub, Inc.

48

SIGNATURE

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

Date: November 14, 2002 DOUBLECLICK INC.

By: /s/ CORY A. DOUGLAS
..................................
CORY A. DOUGLAS
VICE PRESIDENT, FINANCE AND
CORPORATE CONTROLLER
(CHIEF ACCOUNTING OFFICER AND
DULY AUTHORIZED OFFICER)

49

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Kevin P. Ryan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of DoubleClick
Inc.;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the 'Evaluation Date'); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.

/s/ KEVIN P. RYAN
.....................................
KEVIN P. RYAN
CHIEF EXECUTIVE OFFICER

Dated: November 14, 2002

50

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Bruce Dalziel, certify that:

1. I have reviewed this quarterly report on Form 10-Q of DoubleClick
Inc.;

2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the 'Evaluation Date'); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent function):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.

/s/ BRUCE DALZIEL
.....................................
BRUCE DALZIEL
CHIEF FINANCIAL OFFICER

Dated: November 14, 2002

51

INDEX TO EXHIBITS

52

STATEMENT OF DIFFERENCES
------------------------

The trademark symbol shall be expressed as............................. 'TM'
The registered trademark symbol shall be expressed as.................. 'r'
The section symbol shall be expressed as............................... 'SS'