SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES AND EXCHANGE ACT OF 1934

Commission file number 000-23709

DoubleClick Inc.

(Exact name of registrant as specified in its charter)

111 Eighth Avenue, 10th Floor

New York, New York 10011

(212) 683-0001

(Address, including Zip Code and Telephone Number,

including Area Code of Registrant’s Principal Executive Offices)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock $.001 par value

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

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

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

      The aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, 2004 was approximately $944,701,203 (based on the last reported sale price on the NASDAQ National Market on that date). As of March 14, 2005 there were 126,047,183 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the Registrant’s Proxy Statement for the 2005 Annual Meeting of Stockholders, which is to be filed subsequent to the date hereof, are incorporated by reference into Part III.

DOUBLECLICK INC.

2004 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

      This report contains forward-looking statements relating to future events and our future performance within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Stockholders are cautioned that such statements involve risks and uncertainties. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which we operate and management’s beliefs and assumptions. Any statements contained herein, including without limitation, statements to the effect that we or our management “believes”, “expects”, “could”, “may”, “estimates”, “will”, “anticipates”, “plans”, or similar expressions that are not statements of historical fact should be considered forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Our actual results and timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under “Risk Factors” and elsewhere in this report and in our other public filings with the Securities and Exchange Commission. It is routine for internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which we base our expectations are made as of the date of this Annual Report on Form 10-K and may change prior to the end of each quarter or the year. While we may elect to update forward-looking statements at some point in the future, we do not undertake any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. The forward-looking statements and risk factors discussed herein do not reflect the potential impact of any mergers, acquisitions or dispositions.

PART I

      Overview: We are a leading provider of products and services used by advertising agencies, marketers and Web publishers to plan, execute and analyze their marketing programs. Combining technology and data expertise, our solutions help our customers optimize their advertising and marketing campaigns online and through direct mail. We offer a broad array of technology and data products and services to our customers to allow them to address the full range of the marketing processes, from pre-campaign planning and testing, to execution, measurement and campaign refinements.

      In 2004, we derived our revenues from two business units: TechSolutions and Data. Our TechSolutions business unit consists of our Ad Management, Marketing Automation and Performics divisions and our Data business unit consists of our Abacus and Data Management divisions.

      DoubleClick TechSolutions: DoubleClick TechSolutions offers advertising agencies, marketers and Web publishers industry-leading technology solutions for their marketing needs in an increasingly multi-channel world. In 2004, DoubleClick TechSolutions reported revenues of $196.3 million, an increase of 11.9% from 2003.

      Since the successful launch of our first technology product in 1997, DoubleClick TechSolutions has established a track record of innovation and reliability. Solutions offered by our Ad Management division primarily consist of the DART for Publishers Service, the DART for Advertisers Service and the DART Enterprise ad serving software product. Our Marketing Automation products and services consist of our email products and services based on our DARTmail Service and our Enterprise Marketing Solutions, or EMS, business consisting of our campaign management and marketing resource management products and services. Our Perfomics division offers search engine marketing and affiliate marketing solutions.

      During 2004, we introduced several new enhancements and features for our Ad Management and email products and services. In particular, we released a new version of our reporting systems for our Web-based Ad Management products and services to measure the performance of online campaigns, a new inventory management solution that gives Web publishers a more comprehensive picture of ad inventory across their network, and a new version of our media planning solution, MediaVisor. With respect to our email business,

we introduced real time messaging that is designed to automatically deploy and deliver email messages in response to consumer action. In addition, we combined our campaign management and marketing resource management businesses into our Enterprise Marketing Solutions business to provide customers with a single platform to plan and manage their marketing activity across all channels.

      Our patented DART (Dynamic, Advertising, Reporting and Targeting) ad management technology is the platform for many of our TechSolutions products and services. The DART ad management technology is a sophisticated targeting, reporting and delivery tool, relied upon by our customers to measure campaign performance and provide dynamic ad space inventory management.

      Our TechSolutions offerings are backed worldwide by our Global Technical Services team, which offers service 24 hours a day, seven days a week. Through our Global Technical Services team, we provide our customers with a full range of support, from pre-sale technical design and architecture to post-sale implementation. We also provide comprehensive education and consulting services that help our customers maximize the value of our TechSolutions products and services. These consulting services include providing strategic guidance and recommendations, customizing and extending existing TechSolutions products and services, integrating our products and services into existing infrastructure and data assets and training employees to use our products and services more effectively.

      DoubleClick Data: DoubleClick Data, which consists of our Abacus and Data Management divisions, generated revenues of $105.3 million in 2004, an increase of 9.8% from 2003. Abacus revenues were up 2.5% over 2003 to $92.7 million. Revenues in 2004 include $12.6 million of revenue from our Data Management division, which we formed in June 2003 upon our acquisition of Computer Strategy Coordinators, Inc., a data management company.

      Abacus is a leading provider of information products and services to the direct marketing industry. Abacus services help direct marketers, merchants and businesses to increase response rates and profits from their direct mail marketing campaigns. Abacus applies advanced statistical modeling techniques to cooperative databases of consumer and business purchasing behavior to help the Alliance members acquire and retain customers. Based on this data modeling, Abacus identifies those consumers or businesses most likely to purchase merchandise or services from specific catalogs. Alliance members use this data to reach identified consumers and businesses by direct mail. Abacus is a blind cooperative alliance and only those members of the Abacus Alliance that contribute transaction information into the Abacus Alliance database are entitled to the full range of Abacus services.

      Core Abacus Products. Abacus has been primarily a U.S. based merchant to consumer business. The Abacus Alliance databases offer a combination of transactional, geographic, demographic and behavioral profile data, enabling marketers to gain a better understanding of consumer behaviors and conduct more effective marketing campaigns. The key products and services offered to Abacus Alliance members in the U.S. include:

      Business-to-Business Alliance. Abacus also maintains a Business-to-Business Alliance in the U.S. which has over one billion transactions and helps its members to improve their direct mail targeting and customer segmentation. The U.S. Business-to-Business Alliance allows its participants to leverage the combined breadth of member transactional data managed through a cooperative database. Unlike the Abacus core business-to-consumer Alliance, which focuses on consumer catalog purchase data, the Business-to-

Business Alliance is designed for directly marketed business-to-business products and services. In addition, in November 2004, we launched a Business-to-Business Alliance in the United Kingdom.

      Abacus International. Abacus maintains Alliance databases for direct marketers in the United Kingdom, Australia and Japan and recently launched Alliances in France and Canada. In addition, Abacus also maintains an Alliance database in Germany through a joint venture with AZ Direct GmbH, a subsidiary of Bertelsmann AG. Abacus international clients are provided products and services similar to those offered in the U.S.

      Our Data Management division was formed in June 2003 following our acquisition of Computer Strategy Coordinators, Inc. This division offers direct marketers solutions for building and managing customer marketing databases, tools to plan, execute and measure multi-channel marketing campaigns, as well as list processing and data hygiene products and services. Our Data Management products and services enable clients to analyze their customer’s purchasing behavior and preferences to make better merchandising decisions and improve target marketing communications. These products and services can help direct marketers improve response rates to marketing campaigns, increase frequency with which customers make purchases, enhance the value of each order and improve customer loyalty over time. Data Management also offers a multi-channel measurement tool as well as strategic and analytical services.

      See Note 16 to the Consolidated Financial Statements for revenues and operating income (loss) attributable to our segments and revenues and long-lived asset information by geographic region.

Technology Infrastructure

      Our technology infrastructure and operations are built to deliver high availability, performance, security and scalability. We built our systems environment with multiple layers of redundancy to help us meet or exceed any service level agreements with our customers. We utilize multiple hosting and Internet service provider partners to maximize redundancy and diversity.

      Our systems management tools are designed to switch traffic from one server to another, one data center to another and from one Internet service provider to another seamlessly and efficiently. We have built in horizontal scaling capabilities where appropriate to help achieve increased scalability of our systems. At the same time, the design helps us to minimize the impact of the problems if they occur.

      We have implemented tight change management processes to help ensure the integrity of the production environment. We emphasize the quality of service to our customers by employing internal as well as external monitoring capabilities. We also provide 24 hour, seven days a week monitoring for our internal technology environment and a problem resolution process and escalation steps to handle problems we may encounter while monitoring.

Sales and Marketing

      We sell our products and services in the United States through a sales and marketing organization that consisted of 506 employees as of December 31, 2004. These employees are located at our headquarters in New York and also are based in other North American cities, primarily in Broomfield, Colorado, Chicago, Illinois, Thornton, Colorado, Toronto, Canada and San Mateo, California. We generally organize the sales force for our Ad Management and Marketing Automation products and services into two teams, one focused on agency and Web publisher customer products and services and one focused on our marketer customer products and services. In addition, our Performics division has a separate sales force primarily focused on selling its products and services.

      Our sales force for our Abacus products and services is generally organized into four teams, one dedicated to the multi-channel retail, or business-to-consumer, segment, another dedicated to the business-to-business segment and a third dedicated to the retail segment, each of which focuses on selling Abacus and other

DoubleClick products and services to existing customers. A fourth team is dedicated to business development with new customers. Our Data Management division is generally organized into two teams. One team is focused on selling its products and services to new and existing customers as well as other DoubleClick products and services, in particular our Marketing Automation products and services. Another team is dedicated to the not-for-profit/publishing vertical that focuses on new business development and account management for new and existing customers.

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

      Our European operations are based out of our Irish subsidiary located in Dublin, Ireland. Our Asian operations are run through our branch office in Hong Kong. We sell most of our TechSolutions products and services through our directly and indirectly owned subsidiaries primarily located in Australia, China, France, Germany, Hong Kong, Ireland, Spain and the United Kingdom. In Japan, our technology products and services are sold through DoubleClick Japan, of which we own approximately 15% of the outstanding shares. We operate the international DoubleClick Data business through indirect wholly owned subsidiaries located in the United Kingdom, Japan, Australia and France and through a joint venture located in Germany of which we have a 50% interest. Our international sales and marketing organization consisted of 118 employees as of December 31, 2004. Please see our discussion of the risks relating to our international operations under “Risk Factors” beginning on page 9.

      See Note 16 to the Consolidated Financial Statements for revenues and long-lived asset information by geographic region.

Corporate History

      We were incorporated in Delaware on January 23, 1996 as DoubleClick Incorporated, and changed our name to DoubleClick Inc. on May 14, 1996.

      We are subject to the informational requirements of the Exchange Act, and, accordingly, file reports, proxy statements and other information with the Securities and Exchange Commission. Such reports, proxy statements and other information can be read and copied at the public reference facilities maintained by the Securities and Exchange Commission at the Public Reference Room, 450 Fifth Street, NW, Washington, D.C. 20549. Information regarding the operation of the Public Reference Room may be obtained by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains a web site (http://www.sec.gov) that contains material regarding issuers that file electronically with the Securities and Exchange Commission.

      Our Internet address is www.doubleclick.com. We make available free of charge on our Internet Web Site our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Competition

      The market for marketing technology and data products and services is very competitive. We expect this competitive environment to continue in several of our businesses due to low barriers to entry. Competition may also increase as a result of industry consolidation or the establishment of cooperative relationships among parties.

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

      TechSolutions’ Ad Management products and services compete with providers of outsourced ad management services, ad serving software and related services for the delivery of Web ads for advertising agencies, marketers and Web publishers as well as inhouse solutions. We also compete indirectly with providers of other solutions for online advertising, such as providers of paid search services.

      Within Marketing Automation, our email delivery products and services compete with other providers of email delivery and inhouse solutions, including providers of email delivery software and related services. We also face competition from providers of enterprise software solutions for online and offline campaign management as well as companies that facilitate marketing automation. In addition, our Perfomics division competes with companies that provide either performance based marketing services or other technology solutions.

      Data, through the Abacus division, competes with a broad range of companies that provide information products and marketing research services to the direct marketing industry. Data also competes with direct marketing list providers, data aggregation companies and providers of database marketing services.

      We also face competition from large marketing services providers, including service bureau solutions, that may offer competing products and services as an extension of their other offerings and, therefore, may provide customers with a more integrated enterprise solution set. In addition, we compete with point solution providers that may offer expertise in a particular segment or solutions within a specialized market, including providers of online advertising and email products and services.

Privacy and Data Protection

      We continue to be a leader in promoting consumers’ privacy and understanding the technologies that our clients, marketers, advertising agencies and data companies use to communicate with their existing customers and to acquire new customers. Our Chief Privacy Officer leads our privacy and data protection efforts. Our privacy team focuses on ensuring that we are effectively implementing our privacy policies and procedures and works with our clients to institute and improve their privacy procedures, while helping them to educate their customers about the privacy issues applicable to them. In addition, our privacy team actively participates in a number of industry privacy organizations.

Seasonality and Cyclicality

      We believe that our business is subject to seasonal fluctuations. Advertisers generally place fewer advertisements during the first and third calendar quarters of each year, which directly affects our Ad Management business. We believe that our email technology business may experience seasonal patterns similar to those of the traditional direct marketing industry, which typically generates lower revenues earlier in the calendar year and higher revenues later in the year. Further, Internet user traffic typically drops during the summer months, which reduces the amount of online advertising. Online advertising as well as the demand for performance based marketing services has, in the past, peaked during the fourth quarter holiday season, which affects our Performics and other TechSolutions businesses. The direct marketing industry generally compiles more customer data in the third calendar quarter, which directly affects our Abacus business. Expenditures by direct marketers and advertisers tend to vary in cycles that reflect overall economic conditions as well as

budgeting and buying patterns. If these patterns continue our revenue may be affected by these fluctuations. Our revenue has in the past and may in the future be materially affected by a decline in the economic prospects of our customers or in the economy or our industry in general, which could alter our current or prospective customers’ spending priorities or budget cycles or extend our sales cycle.

Proprietary Rights

      Our success and ability to effectively compete are substantially dependent on the protection of our proprietary technologies and our other intellectual property, which we protect through a combination of patent, trademark, copyright, trade secret, unfair competition and contract law. In September 1999, the

U.S. Patent and Trademark Office issued to us a patent that covers our DART ad management technology. The term for this patent expires in October 2016. We own other patents, and have patent applications pending, for some of our technology and related products and services.

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

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

      Third parties have asserted, and may in the future assert, infringement claims against us, which could adversely affect the value of our proprietary rights, our intellectual property and our reputation. Such claims could subject us to significant liability for damages, and we could be restricted from using our intellectual property. Any claims asserted by third parties or litigation instituted by third parties may also result in limitations on our ability to use our intellectual property, unless we enter into arrangements with third parties asserting such claims, which may not be available on commercially reasonable terms, if at all.

Product Development

      During the years ended December 31, 2004, 2003 and 2002, product development expenses were $46.5 million, $39.2 million and $39.8 million, respectively. Those amounts represented 15.4%, 14.4%, and 13.3%, respectively, of revenue in each of those years.

EMPLOYEES

      As of December 31, 2004, we employed 1,541 persons, including 624 in sales and marketing, 339 in engineering and product development, 405 in technology operations, customer support and consulting, and 173 in general administration. We are not subject to any collective bargaining agreements and believe that our relationships with our employees are good.

RISK FACTORS

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

Risks Relating to our Company and our Business

      On October 31, 2004, we announced that we had retained Lazard Frères & Co. to explore strategic options for the business in order to achieve greater shareholder value, including a sale of part or all of our businesses, recapitalization, extraordinary dividend, share repurchase or a spin-off. We are uncertain as to what impact any particular strategic option may have on our operating results or stock price if accomplished or whether any transaction will even occur as a result of this review. Other uncertainties and risks relating to our review of strategic options include:

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

      We also depend on the use of the Internet and direct mail for advertising and marketing and as communications media, the demand for advertising and marketing 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 fall short of our own expectations or of the expectations of market analysts and investors, which could negatively affect the price of our stock.

      Prior to 2003, we incurred net losses each year since inception, including net losses of $117.9 million and $265.8 million for the years ended December 31, 2002 and 2001, respectively. As of December 31, 2004 our accumulated deficit was $612 million. Prior to 2003, we did not achieve profitability on an annual basis and we may incur operating losses at times in the future. We expect to continue to incur significant operating and capital expenditures, which may include 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, in particular with respect to our facility in London, England where the office space is currently sublet for only a portion of the remaining lease term. As a result of our expenditures, we will need to generate significant revenue to achieve profitability. Even if we do continue to 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.

      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 marketers, Web publishers and advertising agencies. Expenditures by marketers and advertisers tend to be cyclical, reflecting overall economic conditions as well as budgeting and buying patterns. In addition, the market for online advertising has been characterized by declining prices for advertisements and advertising spending across traditional media, as well as the Internet, has fluctuated over the past few years. In addition, from time to time, we have experienced an increased risk of uncollectible receivables from customers and the reduction of marketing and advertising budgets, especially for online advertising and our contracts have been, at times, subject to reduction, renegotiation and cancellation. We cannot assure you that expenditures by direct marketers and advertisers will not decline in any given period.

      The number of ad impressions and emails delivered by DoubleClick TechSolutions has, at times in the past, declined and may in the future decline or fail to grow, which would adversely affect our revenues. In addition, the prices that DoubleClick TechSolutions can charge for its Ad Management products and services has declined in recent years, and if these declines continue, it may adversely affect our revenues. In addition, a decline in the economic prospects of marketers or the economy in general would also adversely impact the revenue outlook for our Marketing Automation business and our search engine marketing and affiliate marketing businesses. DoubleClick Data, which provides products and services to direct marketers, may face similar pressures. Some direct marketers may respond to economic downturns by reducing the number of catalogs mailed, thereby possibly reducing the demand for DoubleClick Data’s services, or by seeking price reductions for our products and services. If direct marketing activities fail to grow or decline, our revenues could be adversely affected.

      We cannot assure you that reductions in marketing spending will not occur or that marketing spending will not be diverted to more traditional media or other online marketing products and services. We cannot assure you that marketing budgets and advertising spending in general or with respect to our offerings in particular will increase, or not decrease, from current levels. A decline in the economic prospects of marketers or the economy in general could alter current or prospective marketers’ spending priorities or increase the time it takes to close a sale with a customer. As a result, our revenues from marketing and advertising services may not increase or may decline significantly in any given period.

      Some of our TechSolutions and Data technologies reside in our data centers in multiple locations in the United States and abroad. Continued and uninterrupted performance of our technology is critical to our success. Customers may become dissatisfied by any system failure that interrupts our ability to provide our services to them, including failures affecting our ability to deliver advertisements without significant delay to the viewer or our ability to deliver a customer’s online marketing campaign. Sustained or repeated system failures would reduce the attractiveness of our products and services to our customers and could result in contract terminations or fee rebates or credits, thereby reducing revenue, or could result in damages from claims or litigation. 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 or emails delivered through our servers. To the

extent that we do not effectively address any capacity constraints or system failures, our business, results of operations and financial condition could be materially and adversely affected.

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

      Many of our contracts with our customers are short-term and do not contain minimum usage commitments. 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.

      In recent years, we have had to respond to significant changes in our industry. As a result, we have experienced industry shifts, continuing evolution of product and service offerings and other changes that have increased the complexity of our business and placed considerable demands on our managerial, operational and financial resources. We continue to increase and change the scope of our product and service offerings both domestically and internationally and to deploy our resources in accordance with changing business conditions and opportunities. We have also grown through geographic expansion and as a result have dispersed offices and operation centers that make it more challenging to manage, operate and monitor our business and operations. 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 information and reporting systems and procedures and will need to continue to train and manage our workforce. Our inability to effectively respond to these challenges could materially and adversely affect our business, financial condition and results of operations.

      A significant part of our business model involves generating revenue by providing marketing technology and data products and services to marketers, Web publishers and advertising agencies. The long term profit potential for our business model has not yet been proven. The profitability of our business model is subject to external and internal factors and our revenue outlook is sensitive to downturns in the economy, including declines in advertising and marketing budgets. The profit potential of our business model is also subject to the acceptance of our products and services by marketers, Web publishers and advertising agencies. Intensive marketing and sales efforts may be necessary to educate prospective customers regarding the uses and benefits of, and to generate demand for, our products and services. Enterprises may be reluctant or slow to adopt a new approach that may replace existing techniques, or may feel that our offerings fall short of their needs. If these outcomes occur, it could have an adverse effect on the profit potential of our business model.

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

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

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

      Some of our existing and potential competitors have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical and marketing resources than do we. These factors could allow them to compete more effectively than we can, including devoting greater resources to the development, promotion and sale of their products and services, engaging in more extensive research and development, undertaking more far-reaching marketing campaigns, adopting more aggressive pricing policies and making more attractive offers to existing and potential employees, strategic partners, marketers, Web publishers and advertising agencies.

      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 or may merge or 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 marketer, Web publisher and advertising agency customers. As a result, it is possible that new competitors may emerge and rapidly acquire significant market share. We also face competition from point solution providers that may offer expertise in a particular segment or solutions within a specialized market, including providers of online advertising and email products and services. 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 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:

      We may not be able to adjust spending quickly enough to offset any unexpected revenue shortfall. Our expenses primarily 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 our expectations, then our business, results of operations and financial condition could be materially and adversely affected.

      Our business is subject to seasonal fluctuations. Advertisers generally place fewer advertisements during the first and third calendar quarters of each year, which directly affects our Ad Management business. Further, Internet traffic typically drops during the summer months, which reduces the amount of online advertising. The direct marketing industry generally uses our Abacus services more in the third calendar quarter based on plans for holiday season mailings, which directly affects our 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 later in the year. In addition, online advertising and the demand for performance based marketing services provided by our Performics division has, in the past, peaked during the fourth quarter holiday season. As a result, we believe that period-to-period comparisons of our results of operations may not be indicators of future performance.

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

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

      Our business has expanded in part as a result of acquisitions or investments in other companies, including our recent acquisitions of SmartPath and Performics. We have recorded goodwill in connection with a number of our acquired businesses, including MessageMedia, FloNetwork, SmartPath and Performics. We have in the past recognized impairment charges with respect to the goodwill of some acquired businesses as a result of significantly lower-than-expected revenues generated with respect to acquired businesses and considerably reduced estimates of future performance. If market conditions require, we may in the future record additional impairments in the value of our acquired businesses.

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

      We are also minority investors in a few technology companies, including DoubleClick Japan. Our investments have decreased in value in the past, and may decrease in the future, as a result of market volatility, and periodically, we have recorded charges to earnings for all or a portion of the unrealized loss due

to declines in market value considered to be other than temporary. The market value of these investments may decline in future periods due to the continued volatility in the stock market in general or the market prices of securities of technology companies in particular and we may be required to record further charges to earnings as a result. Further, we cannot assure you that we will be able to sell these securities at or above our cost basis.

      We depend heavily on several third-party providers of Internet and related telecommunication services, including hosting and co-location facilities, as well as providers of technology solutions, including software developed by third party vendors, in delivering our products and services. In addition, we use third party vendors to assist with product development, campaign deployment and support services for some of our products and services. These companies may not continue to provide services or software to us without disruptions in service, at the current cost or at all. Our Abacus division depends on data modeling software licensed from SAS Institute Inc. We do not maintain a long term agreement with this vendor and rely, in large measure, upon our relationship with them.

      If the products and services provided by these third-party vendors are disrupted or not properly supported, our ability to provide our products and services would be adversely impacted. In addition, any financial or other difficulties our third party providers face may have negative effects on our business, the nature and extent of which we cannot predict. While we believe our business relationships with our key vendors are good, a material adverse impact on our business would occur if a supply or license agreement with a key vendor is materially revised, is not renewed or is terminated, or the supply of products or services were insufficient or interrupted. The costs associated with any transition to a new service provider could be substantial, require us to reengineer our computer systems and telecommunications infrastructure to accommodate a new service provider and disrupt the services we provide to our customers. This process could be both expensive and time consuming and could damage our relationships with customers.

      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.

      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 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. While we entered into retention agreements with our key employees, including each of our named executive officers, in late 2004, there can be no assurances that the retention agreements will provide adequate incentives to retain these employees. 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, including as a result of our review of strategic options.

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

      We prepare our financial statements to conform with GAAP in the United States of America. These accounting principles are subject to interpretation by the Public Company Accounting Oversight Board, the SEC and various other bodies. A change in those policies could have a significant effect on our reported results and may affect our reporting of transactions completed before a change is announced. For example, we have used stock options as a component of our employee compensation packages. We believe that stock options directly motivate our employees to maximize long-term stockholder value and, through the use of vesting, encourage employees to remain with us. In December 2004, the Financial Accounting Standards Board issued a final standard that requires us to record a charge to earnings for the fair value of employee stock option grants. This standard will be effective for interim and annual periods beginning after June 15, 2005. We could adopt the standard in one of two ways — the modified prospective transition method or the modified retrospective transition method, and we have not concluded how we will adopt the new standard. In addition, regulations implemented by The Nasdaq National Market generally require stockholder approval for all stock option plans, which could make it more difficult or expensive for us to grant stock options to employees. We will, as a result of these changes, incur increased compensation costs, which could be material and we may change our equity compensation strategy or find it difficult to attract, retain and motivate employees.

      Our future success depends in part upon our ability to enhance and integrate our existing products and to introduce new, competitively priced products and solutions with features that meet evolving customer requirements, all in a timely and cost-effective manner. A number of factors, including the following, could have a negative impact on the success of our products and services:

      If we are unable to introduce new and enhanced products and services effectively, our revenues may decline or may not grow in accordance with our business model.

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

      In September 1999, the U.S. Patent and Trademark Office issued to us a patent that covers our DART ad serving and ad management technology. We are currently seeking reissue of this patent, which would limit the scope of the existing patent, and this reissue proceeding is pending before the U.S. Patent and Trademark Office. The patent examiner has rejected our reissue application and we are currently appealing this rejection. We cannot assure you that this patent will be reissued. If our patent is not reissued it could have a material and adverse effect on our business, financial condition and results of operations. We own other patents, and have patent applications pending for some of our other technology. We cannot assure you that the patent

applications that we have filed in the United States and internationally will be issued or that patents issued or acquired by us now or in the future will be valid and enforceable or provide us with any meaningful protection.

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

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

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

      Third party infringement claims and any resultant litigation against us or our technology partners or providers, should it occur, could subject us to significant liability for damages, restrict us from using our or their technology or operating our business generally, or require changes to be made to our technology. Even if we prevail, litigation is time consuming and expensive to defend and would result in the diversion of management’s time and attention.

      Claims from third parties may also result in limitations on our ability to use the intellectual property subject to these claims unless we are able to enter into royalty, licensing or other similar agreements with the third parties asserting these claims. Such agreements, if required, may not be available on terms acceptable to us, or at all. If we are unable to enter into these types of agreements, we would be required to either cease using the subject product or change the technology underlying the applicable product. If a successful claim of infringement is brought against us and we fail to develop non-infringing technology as an alternative or to license the infringed or similar technology on a timely and cost effective basis, it could materially adversely affect our business, financial condition and results of operations.

      We have been a defendant in several lawsuits and governmental inquiries by the Federal Trade Commission and the attorneys general of several states alleging, among other things, that we unlawfully obtain

and use Internet users’ personal information and that our use of ad serving “cookies” violates various laws. Cookies are small pieces of data that are recorded on the computers of Internet users. Although the last of these particular matters was resolved in 2002, we may in the future be subject to additional claims or regulatory inquiries with respect to our business practices. Class action litigation and regulatory inquiries of these types are often expensive and time consuming and their outcome may be uncertain.

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

      Our clients’ promotion of their products and services may not comply with federal, state and local laws, including but not limited to laws and regulations relating to the Internet. Failure of our customers to comply with federal, state or local laws or our policies could damage our reputation and adversely affect our business, results of operations or financial condition. We cannot predict whether our role in facilitating our customers’ marketing activities would expose us to liability under these laws. Any claims made against us could be costly and time-consuming to defend. If we are exposed to this kind of liability, we could be required to pay substantial fines or penalties, redesign our business methods, discontinue some of our services or otherwise expend resources to avoid liability.

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

      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 most of our TechSolutions products and services through our directly and indirectly owned subsidiaries primarily located in Australia, Canada, China, France, Germany, Hong Kong, Ireland, Spain and the United Kingdom. In Japan, we sell our technology products and services through DoubleClick Japan, of which we own approximately 15%. In addition, we develop and provide support for some of our technology products and services in Canada, Europe and Asia. We also operate the DoubleClick Data business in the United Kingdom, Japan, Australia, Canada, France and, through a joint venture, in Germany.

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

      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.

      Some of our customers have experienced, from time to time, 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 business environment for our customers worsens, our business, results of operations and financial condition could be materially adversely affected.

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

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

      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 significant price and volume fluctuations. Investors may be unable to resell their shares of our common stock at or above their purchase price.

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

      As of December 31, 2004, we had 125,699,982 shares of common stock outstanding, excluding 20,297,263 shares subject to options outstanding as of such date under our stock option plans that are exercisable at prices ranging from $0.01 to $1,134.80 per share. We cannot predict the effect, if any, that future sales of common stock or the availability of shares of common stock for future sale will have on the market price of our common stock prevailing from time to time. Sales of substantial amounts of common stock, including shares issued upon the exercise of stock options, or the perception that such sales could occur, may materially reduce the market value for our common stock.

Risks Related to Our Industry

      Governments in the U.S. and other countries have adopted laws and regulations affecting important aspects of our business, Internet commerce, such as Internet communications, electronic contracting, privacy and data protection, taxation, advertising and direct marketing.

      Many countries, including the countries of the European Union, have implemented more stringent data protection regulations than those in the U.S. Our current policies and procedures may not meet these more restrictive standards. The cost of such compliance could be material, and we may not be able to comply with the applicable regulations in a timely or cost-effective manner.

      Some countries, including the countries of the European Union, require that Internet users be allowed to refuse to accept cookies or other online tracking technologies. In addition, new technologies may make it easier or less inconvenient for Internet users to reject cookies or other online tracking technologies. If a high percentage of Internet users refuse to accept cookies or other online tracking technologies, or if future laws require express consent for the use of cookies or otherwise restrict our use of related Internet technologies, Internet advertising and direct marketing may become more costly and less effective, and the demand for our services may decrease.

      In addition, the U.S. and many foreign countries have adopted laws that restrict the transmission of unsolicited commercial email. U.S. law requires senders of commercial electronic mail messages to, among other things, identify their messages as advertisements or solicitations and provide recipients a mechanism to decline (opt out of) future commercial email from the sender. The Federal Trade Commission is authorized to regulate commercial email and may impose additional measures such as labeling requirements or a national “Do Not E-Mail” registry. The Federal Communications Commission is authorized to regulate commercial messages sent specifically to wireless devices and has adopted rules requiring senders to obtain the express prior authorization of the addressee before sending such messages. Other countries, including the countries of the European Union, either require, or may in the future require, senders to obtain recipients’ direct affirmative consent before sending commercial email messages. Although our email delivery is consent-based, we may be subjected to increased liabilities and may be required to change our current email practices in ways that make email communications less effective or more costly.

      Meanwhile, many areas of the law affecting the Internet remain unsettled, and it can be difficult to determine whether and how existing laws, such as those governing data protection, privacy, intellectual property, financial services, content standards, libel, data security and taxation, may be applied to Internet-based businesses. Our business could be negatively impacted by new applications or interpretations of existing laws and regulations to direct marketing, the Internet or our other lines of business.

      Future laws and regulations could also have a material adverse effect on our business. In particular, new consumer protection requirements could impose significant, unanticipated compliance costs and could make it inefficient or infeasible to operate certain parts of our business. Governments in the U.S. and other countries are considering new limitations and/ or requirements with respect to the collection, use, storage and disclosure of personal information for marketing purposes. The U.S. Congress and several U.S. states are presently considering legislation that, if enacted into law, could impose substantial restrictions, including consumer

notice and consent requirements, on our use of ad serving cookies and other online tracking technologies and our client’s use of marketing data. Any legislation enacted or regulation issued could dampen the growth and acceptance of our industry in general and of our offerings in particular and could have a material adverse effect on our business, financial condition and results of operations. We are unable to predict whether any particular proposal will pass, or the nature of the limitations that may be imposed.

      Any changes in applicable legal requirements may cause us to change or discontinue an existing offering, business or business model; cancel a proposed offering or new business; or incur significant expenses or liability that materially and adversely affect our business, financial condition and results of operations.

      We are a member of the Network Advertising Initiative, including its Email Service Provider Coalition, the Privacy Alliance, and the Direct Marketing Association, all industry self-regulatory organizations. These organizations or similar organizations might adopt additional, more burdensome guidelines, compliance with which could materially and adversely affect our business, financial condition and results of operations.

      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 emails or Internet advertising, including pop-up and pop-under advertisements; block, disable or remove cookies used by our ad serving technologies; prevent or impair the operation of other online tracking technologies; or misrepresent measurements of ad penetration and effectiveness. We cannot assure you that the proportion of computer users who employ these or other similar technologies will not increase, thereby diminishing the efficacy of our products and services. In the event that one or more of these technologies became more widely adopted by computer users, demand for our products and services would decline.

      We also depend on our ability to deliver emails over the Internet through Internet service providers and private networks. Internet service providers are able to block messages from reaching their users and we do not have agreements with any Internet service providers to deliver emails to their customers. As a result, we could experience temporary or permanent blockages of our delivery of emails to their customers, which would limit the effectiveness of email marketing. Some Internet service providers also use proprietary technologies to handle and deliver email. If Internet service providers or private networks materially limit or block the delivery of our emails, or if our technology fails to be compatible with their email technologies, then our business, results of operations or financial condition could be materially and adversely affected. In addition, the effectiveness of email marketing may decrease as a result of increased consumer resistance to email marketing in general.

      Companies doing business on the Internet, including us, must compete with traditional advertising media, including television, radio, cable and print, for a share of advertisers’ total marketing budgets. Potential customers may be reluctant to devote a significant portion of their marketing budget to online advertising or marketing technology and data products and services if they perceive the Internet or direct marketing to be a limited or ineffective marketing medium. Any shift in marketing budgets away from marketing technology and data products or services or online advertising spending, or our offerings in particular, could materially and adversely affect our business, results of operations or financial condition. In addition, online advertising could lose its appeal to those direct marketers and advertisers using the Internet as a result of its ad performance relative to other media.

      Our success depends, 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. We cannot assure you that the Web infrastructure will effectively support the demands placed on it as the Web continues to experience increased numbers of users, frequency of use or increased bandwidth requirements of users. Furthermore, the Web has experienced unexpected interruptions and delays caused by system failures and computer viruses and attacks. These interruptions and delays could impact user traffic and the advertising agencies, marketers and Web publishers using our products and services. In addition, a lack of security over the Internet may cause Internet usage to decline and could adversely impact our business, financial condition and results of operations.

      Because many online marketing technology and data products and services remain relatively new disciplines, there is often no generally accepted methods or tools for measuring the efficacy of online marketing and advertising as there are for advertising in television, radio, cable and print. Therefore, many advertisers may be reluctant to spend sizable portions of their budget on online marketing and advertising until there exist more widely accepted methods and tools that measure the efficacy of their campaigns. In addition, direct marketers are often unable to accurately measure campaign performance across all response channels or identify which of their marketing methodologies are driving customers to make purchases. Therefore, our Data customers may not be able to assess the effectiveness of our products and services and as a result, we could lose customers, fail to attract new customers or existing customer could reduce their use of our Data products and services.

      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 and adversely impact our business, financial condition and results of operation.

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

      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 products and services. Our customers may aggressively seek price reductions for our products and services to offset any increased materials cost.

      Our principal executive offices are currently located in a leased facility in New York, New York. We lease office space in Broomfield, Colorado, which was the headquarters for Abacus before it was acquired by us and is now primarily used by DoubleClick Data. We also lease office space in Louisville, Colorado, which space was the headquarters of MessageMedia, Inc. before it was acquired by us, and in London, England, which space was used by our TechSolutions and Media businesses until we fully vacated the space in 2002.

      We own property in Thornton, Colorado consisting of approximately 110,000 square feet, which is primarily used by our DoubleClick TechSolutions and DoubleClick Data business units and serves as our primary data center.

      A summary of our significant leased office facilities is as follows:

      Periodically, we evaluate the expenses likely to be incurred for our facilities, and where appropriate, have taken restructuring charges with respect to these expenses. Our restructuring reserves as of December 31, 2004 include the excess of future lease commitments over the estimated sublease income associated with our facilities in London and Louisville. Our London reserve is based on our estimate of future sublease income relative to the total remaining obligation and was determined based on the weighted probability of various sublease scenarios. We cannot assure you that there will not be additional restructuring charges recognized with respect to our excess or idle facilities. For future minimum lease payments and sub rental income see Note 15 to the Consolidated Financial Statements.

      We also lease space for our domestic branch offices throughout the United States and for our international offices throughout Europe, Asia and Australia. We are continually evaluating our facilities requirements.

      In April 2002, a consolidated amended class action complaint alleging violations of the federal securities laws in connection with our follow-on offerings was filed in the United States District Court for the Southern

District of New York naming us, some of our officers and directors and certain underwriters of our follow-on offerings as defendants. We and some of our officers and directors are named in the suit pursuant to Section 11 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 on the basis of the alleged failure to disclose the underwriters’ alleged compensation and manipulative practices. This action seeks, among other things, unspecified damages and costs, including attorneys’ fees. Approximately 300 other issuers and their underwriters have had similar suits filed against them, all of which are included in a single coordinated proceeding in the Southern District of New York. In October 2002, the action was dismissed against our officers and directors without prejudice. However, claims against us remain. In July 2002, we and the other issuers in the consolidated cases filed motions to dismiss the amended complaint for failure to state a claim, which was denied as to us in February 2003.

      In June 2003, our Board of Directors conditionally approved a proposed partial settlement with the plaintiffs in this matter. In June 2004, an agreement of settlement was submitted to the court for preliminary approval. The court granted the preliminary approval motion on February 15, 2005, subject to certain modifications. If the parties are able to agree upon the required modifications, and such modifications are acceptable to the court, notice will be given to all class members of the settlement, a “fairness” hearing will be held and if the court determines that the settlement is fair to the class members, the settlement will be approved. There can be no assurance that this proposed settlement will be approved and implemented in its current form, or at all. Due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of the litigation. An unfavorable outcome in litigation could materially and adversely affect our business, financial condition and results of operations.

      We are defending a class action lawsuit filed in September 2003 in the Court of Common Pleas in Allegheny County, Pennsylvania, and had been defending another class action lawsuit filed in January 2004 in the Superior Court for the State of California in San Joaquin County, California. Both cases allege, among other things, deceptive business practices, fraud, misrepresentation, invasion of privacy and right of association relating to allegedly deceptive content of online advertisements that plaintiffs assert we delivered to consumers, and seek, among other things, injunctive relief, compensatory and punitive damages and attorneys’ fees and costs. In April 2004, the court in the California action entered an order dismissing several claims against us. The parties have since entered into a settlement agreement dismissing with prejudice the case on behalf of the named plaintiffs only and dismissing without prejudice all other class claims. Under the terms of the settlement of the California case we are not required to make any payments and no restraints are imposed on our business practices. The settlement of the California case was approved by the court on January 27, 2005. We believe the claims in the Pennsylvania case are without merit and intend to defend this action vigorously. However, due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of this litigation. An unfavorable outcome in litigation could materially and adversely affect our business, financial condition and results of operations.

      No matter was submitted to a vote of our security holders during the fourth quarter of 2004.

PART II

      Our common stock has been quoted on the Nasdaq National Market under the symbol DCLK since our initial public offering on February 20, 1998. The following table sets forth, for the periods indicated, the high and low sales prices per share of the common stock as reported on the Nasdaq National Market.

      On December 31, 2004, the last sale price of our common stock reported by the Nasdaq National Market was $7.78 per share. On March 11, 2005, the last sale price of our common stock reported by the Nasdaq National Market was $7.91 per share. As of March 11, 2005, we had approximately 978 holders of record of our common stock.

Dividend Policy

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

      The selected consolidated financial data set forth below with respect to our Consolidated Statement of Operations for each of the years ended December 31, 2004, 2003 and 2002 and with respect to our Consolidated Balance Sheets as of December 31, 2004 and 2003 has been derived from the audited financial statements which are included elsewhere herein. The selected consolidated data set forth with respect to our Consolidated Statement of Operations for each of the periods ended December 31, 2001 and 2000 and with respect to our Consolidated Balance Sheet as of December 31, 2002, 2001, and 2000 are derived from our financial statements which are not included herein. The selected financial data set forth below should be read in conjunction with, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and the notes to those statements included elsewhere herein.

Cautionary Note Regarding Forward-Looking Statements

      This report contains forward-looking statements relating to future events and our future performance within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities

Exchange Act of 1934, as amended. Stockholders are cautioned that such statements involve risks and uncertainties. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which we operate and management’s beliefs and assumptions. Any statements contained herein, including without limitation, statements to the effect that we or our management “believes”, “expects”, “could”, “may”, “estimates”, “will,” “anticipates”, “plans” or similar expressions that are not statements of historical fact should be considered forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Our actual results and timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under “Risk Factors” and elsewhere in this report and in our other public filings with the Securities and Exchange Commission. It is routine for internal projections and expectations to change as the year or each quarter in the year progresses, and therefore it should be clearly understood that the internal projections and beliefs upon which we base our expectations are made as of the date of this Annual Report on Form 10-K and may change prior to the end of each quarter or the year. While we may elect to update forward-looking statements at some point in the future, we do not undertake any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. The forward looking statements and risk factors discussed herein do not reflect the potential impact of any mergers, acquisitions or dispositions.

Overview

      We provide technology and data products and services that advertising agencies, marketers and Web publishers use to optimize their marketing programs and efficiently reach their customers. We derive revenues from two business segments: DoubleClick TechSolutions, which we refer to as our TechSolutions segment, and DoubleClick Data, which we refer to as our Data segment.

      DoubleClick TechSolutions. TechSolutions includes products and services from our Ad Management, Marketing Automation and Performics divisions. Our Ad Management products and services primarily consist of our DART for Publishers Service, DART for Advertisers Service and DART Enterprise ad serving product. Our Marketing Automation products and services primarily consist of our email products based on our DARTmail Service and our Enterprise Marketing Solutions, or EMS, business which consists of our campaign management and marketing resource management, or MRM, products. Following the acquisition of Performics Inc. in June 2004, we created a third division within TechSolutions which offers search engine marketing and affiliate marketing solutions. We generate our TechSolutions revenue primarily from the delivery of advertising impressions and emails, the sale and the installation of our licensed software products as well as when transactions are generated through the use of our Performics products.

      DoubleClick Data. Data, which consists of our Abacus and Data Management divisions, provides products and services primarily to direct marketers. Abacus maintains the Abacus Alliance database in the United States, which is a proprietary database of consumer transactions used for target marketing purposes, and maintains alliances in the United Kingdom, Australia, Japan, France and through a joint venture, in Germany. In the United States, we also offer a Business-to-Business Alliance. In addition, we offer direct marketers solutions for building and managing customer marketing databases and other related products and services as part of our Data Management division. We generate our Data revenue primarily from the sale of consumer and business prospect lists, list processing, database development and database management services.

Recent Developments

      On October 31, 2004, we announced that we retained Lazard Freres & Co. to explore strategic options for the business to achieve greater shareholder value. These options may include a sale of part or all of our businesses, recapitalization, extraordinary dividend, share repurchase or a spin-off.

Critical Accounting Policies and Significant Estimates

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

      Our restructuring reserves as of December 31, 2004 were approximately $17.4 million, and consisted primarily of reserves for our facilities in London, England and Louisville, Colorado. The restructuring accrual associated with our facilities represents the excess of future lease commitments over estimated sublease income in locations where we have excess or idle space. In most cases, subleases have been signed for the entire term of these leases and our estimate of sublease income is based on the agreed upon sublease rates. In facilities for which we do not have a sublease signed for the entire term of the lease, sublease assumptions are made with the assistance of a real estate firm and are based on the current real estate market conditions in the local markets where these facilities are located. The most material estimate is associated with our facility in London where the office space is currently sublet for only a portion of the remaining lease term. The total remaining obligation for this facility is approximately $43.6 million. Our London reserve is based on our estimate of future sublease income relative to the total remaining obligation and was determined based on the weighted probability of various future sublease scenarios. These scenarios resulted in a weighted average sublease rate where for each $1.00 change in this assumption, additional restructuring charges or credits of approximately $0.3 million would be required. If market conditions or other circumstances change, this information may be updated and additional charges or credits may be required.

      We evaluate our goodwill for impairment annually, as well as when an event triggering impairment may have occurred. We have elected to perform our annual impairment analysis during the fourth quarter of each fiscal year as of October 1st. In accordance with Statements of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”, we utilize a two-step process for impairment testing of goodwill. The first step tests for impairment, while the second step, if necessary, measures the impairment.

      When it is determined that the carrying value of goodwill may be impaired, management measures impairment based on projected discounted cash flows, recent transactions involving similar businesses and price/revenue multiples at which they were bought and sold and price/revenue multiples of competitors.

      We assess the recoverability of intangible assets held and used whenever events or changes in circumstances indicate that future cash flows, undiscounted and without interest charges, expected to be generated by an asset’s disposition or use may not be sufficient to support its carrying amount. If such undiscounted cash flows are not sufficient to support the recorded value of an intangible asset, an impairment loss is recognized to reduce the carrying value of the intangible asset to its estimated fair value. Intangible assets include patents, trademarks, customer relationships, purchased technology and a covenant not to compete.

      In the third quarter of 2004, we initiated a valuation for our Enterprise Marketing Solutions, or EMS, business which consists of our campaign management and marketing resource management products. This valuation was performed with the assistance of a third party to determine if the recorded balance of goodwill and other intangible assets relating to this reporting unit was recoverable. The recoverability of these assets was brought into question as a result of the lower than expected revenues generated to date and the reduced estimates of future performance primarily associated with our campaign management products. The outcome

of this valuation resulted in an impairment charge of $5.6 million being recorded during the quarter based on the difference between the carrying value and the fair value of this business. The impairment charge consisted of a write-down in intangible assets of $4.1 million and goodwill of $1.5 million.

      During the fourth quarter of 2004, we performed our annual impairment test on our email, Performics and EMS reporting units to determine if the goodwill associated with these reporting units was impaired. Based on the results of the projected discounted cash flows as well as price/revenue multiples of competitors, the fair value of our reporting units were determined to be in excess of their carrying values, and, accordingly, no impairment charges were required. If our forecasts and market multiples were significantly lower, impairment charges might have been required.

      We record reductions to revenue for the estimated future credits issuable to our customers in the event that solutions do not meet contractual specifications. We follow this method because we believe reasonably dependable estimates of such credits can be made based on historical experience. If the actual amounts of customer credits differ from our estimates, revisions to the associated allowance may be required. We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required in subsequent periods.

      On October 31, 2004, we announced that we retained Lazard Freres & Co. to explore strategic options for the business to achieve greater shareholder value. In connection with this initiative, we entered into retention agreements with key employees, including each of our named executive officers, as disclosed in our Current Report on Form 8-K filed with the SEC on December 13, 2004. Under the terms of the retention agreements, the employees are entitled to receive a retention bonus if they remain continuously employed through April 30, 2005 and a second retention bonus if the employee remains continuously employed through January 31, 2006. Payment of these retention bonuses will accelerate in full if we terminate the employment of the employee without cause or if the employee terminates his or her employment for good reason prior to January 31, 2006. Additionally, if, while an employee is employed by us, we complete the sale of our TechSolutions or Data business segment, payment of the first retention bonus and half of the second retention bonus will accelerate for the employees of the applicable business segment, except for the President of Data, whose retention bonuses will accelerate in full.

      We record compensation expense ratably over the service period of each retention bonus. The service period of the first and second retention bonuses are approximately five and fourteen months, respectively. If the payment of these retention bonuses accelerates, the remaining unamortized expense will be recorded in the period such termination is made and/or sale is consummated. Aggregate future payments in connection with these retention bonuses may range up to $4.3 million, excluding potential tax gross-up payments under the agreements.

      Pursuant to SFAS 109, we record a valuation allowance to the extent realization of our net deferred tax asset is not more likely than not. For the years ended December 31, 2004 and 2003, we maintained a valuation allowance of approximately $283.2 and $306.5 million, respectively, against certain deferred tax assets that we believe, after considering all the available objective evidence, both positive and negative, historical and prospective, with greater weight given to historical evidence, are not more likely than not expected to be realized. We believe that our cumulative earnings deficit during the latest three-year period coupled with uncertainty surrounding the Company’s future profitability provide substantial negative evidence regarding the eventual realizability of our deferred tax assets. In addition, the outcome of our review of strategic options could have a material impact on our financial position and future operating profit, enhancing the uncertainty surrounding the realizability of our net deferred tax assets. Continued improvement in our profitability coupled

with favorable clarity regarding our future financial position once the review of our strategic options is concluded could impact our determination as to whether a reduction, in whole or part, of the valuation allowance is necessary in the future. Such a conclusion to reverse the valuation allowance, in whole or part, could be reached during the calendar year ending December 31, 2005. Should such a reversal occur, the associated reduction to the valuation allowance would be recorded, in whole or part, as a reduction to income tax expense and/or a reduction to goodwill and/or an increase to additional paid-in capital.

      Property and equipment is stated at cost and depreciated using the straight-line method over the shorter of the estimated life of the asset or the lease term. We periodically review the useful lives of our assets to confirm that such useful life determination is appropriate. If we determine that the estimated useful life of our assets needs to be adjusted to reflect depreciation expense over the remaining time that the assets are expected to remain in service, future income or losses will be impacted in the subsequent periods after such a determination is made.

Recent Accounting Pronouncements

      In December 2004, the Financial Accounting Standards Board, referred to as FASB, issued SFAS No. 123R, “Share-Based Payment”, known as SFAS 123R, which replaces SFAS No. 123, and supercedes APB Opinion No. 25. SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The pro forma disclosures previously permitted under SFAS 123 will no longer be an alternative to financial statement recognition. SFAS 123R is effective for periods beginning after June 15, 2005. Early application of SFAS 123R is encouraged, but not required. SFAS 123R permits companies to adopt its requirements using either a “modified prospective” method, or a “modified retrospective” method. Under the “modified prospective” method, compensation cost is recognized in the financial statements beginning with the effective date, based on the requirements of SFAS 123R for all share-based payments granted after that date, and based on the requirements of SFAS 123 for all unvested awards granted prior to the effective date of SFAS 123R. Under the “modified retrospective” method, the requirements are the same as under the “modified prospective” method, but also permits entities to restate financial statements of previous periods based on proforma disclosures made in accordance with SFAS 123. We will adopt SFAS 123R as of July 1, 2005; however, we have not yet determined which of the adoption methods we will use. Based on stock options granted to employees through December 31, 2004, we expect that the adoption of SFAS 123R on July 1, 2005 will reduce both third quarter 2005 and fourth quarter 2005 net income by approximately $4.0 million or $0.03 per diluted share.

      In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29”. SFAS No. 153 requires that exchanges of productive assets be accounted for at fair value unless fair value cannot be reasonably determined or the transaction lacks commercial substance. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in the fiscal year beginning January 1, 2006 and is not expected to have a material effect on our Consolidated Financial Statements.

      In November 2004, the Emerging Issues Task Force, referred to as EITF, reached a consensus on EITF Issue No. 03-13, “Applying the Conditions in Paragraph 42 of FAS 144 in Determining Whether to Report Discontinued Operations”, known as EITF 03-13. EITF 03-13 provides guidance for evaluating whether the criteria in paragraph 42 of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, have been met for classifying as a discontinued operation a component of an entity that either has been disposed of or is classified as held for sale. To qualify as a discontinued operation, paragraph 42 of SFAS No. 144 requires that cash flows of the disposed component be eliminated from the operations of the ongoing entity and that the ongoing entity not have any significant continuing involvement in the operations of the disposed component after the disposal transaction. EITF 03-13 defines which cash flows are relevant for assessing whether cash flows have been eliminated and it provides a framework for evaluating what types of ongoing involvement constitute significant continuing involvement. The guidance contained in EITF 03-13 is

effective for components of an enterprise that are either disposed of or classified as held for sale in fiscal periods beginning after December 15, 2004. EITF 03-13 may have a material impact on our financial position or results of operations in 2005 depending on the outcome of our review of strategic options.

      In October 2004, the FASB ratified the consensus reached by the EITF with respect to EITF Issue No. 04-10, “Determining Whether to Aggregate Operating Segments That Do Not Meet the Quantitative Thresholds”, known as EITF 04-10. EITF 04-10 clarifies the guidance in paragraph 19 of SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”. According to EITF 04-10, operating segments that do not meet the quantitative thresholds can be aggregated under paragraph 19 only if aggregation is consistent with the objective and basic principle of SFAS No. 131, the segments have similar economic characteristics, and the segments share a majority of the aggregation criteria listed in items (a)-(e) in paragraph 17 of SFAS No. 131. The FASB staff is currently working on a FASB Staff Position, known as FSP, to provide guidance in determining whether two or more operating segments have similar economic characteristics. The effective date of EITF 04-10 has been delayed in order to coincide with the effective date of the anticipated FSP. We do not foresee any significant changes in the reporting practices used to report our segment information.

      On September 30, 2004, the EITF confirmed their tentative conclusion on EITF Issue No. 04-8, “The Effect of Contingently Convertible Debt on Diluted Earnings per Share”, known as EITF 04-8. EITF 04-8 requires contingently convertible debt instruments to be included in diluted earnings per share, if dilutive, regardless of whether a market price contingency for the conversion of the debt into common shares or any other contingent factor has been met. Prior to this consensus, such instruments were excluded from the calculation until one or more of the contingencies were met. EITF 04-8 is effective for reporting periods ending after December 15, 2004, and requires restatement of prior period earnings per share amounts. We adopted EITF 04-8 during the fourth quarter of 2004 and have restated prior period earnings per share amounts and presented 2004 earnings per share amounts based on the requirements of EITF 04-8. In 2004 and 2003, diluted earnings per share amounts reflect our Zero Coupon Convertible Subordinated Notes due 2023, which represented 10.3 million potential shares of common stock. In addition, 2003 dilutive earnings per share amounts include our 4.75% Coupon Convertible Subordinated Notes due 2006, which represent 3.8 million potential shares of common stock. These notes were redeemed in July 2003. In 2002, diluted earnings per share amounts excluded our 4.75% Coupon Convertible Subordinated Notes due 2006 since their inclusion would have had an antidilutive effect. Due to the adoption of this pronouncement, full year 2004 and 2003 diluted earnings per share were reduced by $0.02 and $0.01, respectively.

Business Transactions

Acquisitions

      On June 22, 2004, we completed our acquisition of Performics Inc., a privately-held search engine marketing and affiliate marketing company based in Chicago, Illinois for approximately $58.2 million in cash. In addition, we will pay the former shareholders of Performics an additional $6.6 million during 2005 based on their attainment of certain 2004 revenue objectives. Performics’ search engine marketing solutions are designed to help clients automate their paid placement, paid inclusion and comparison shopping listings across multiple search providers and publishers. Performics also provides the infrastructure for affiliate marketing, through which marketers manage, track, and report on their offers across multiple affiliate sites.

      On March 19, 2004, we completed our acquisition of SmartPath, Inc, a privately held marketing resource management, or MRM, software company, based in Raleigh, North Carolina, for approximately $24.1 million in cash.

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

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

      On June 26, 2002, we acquired the remaining 50% of the Abacus Direct Europe B.V. joint venture that we 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. Our investment in the joint venture was previously accounted for under the equity method of accounting. We 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.

      On January 18, 2002, we completed our acquisition of MessageMedia, Inc., a provider of permission-based, email marketing and messaging solutions. We acquired all the outstanding shares, options and warrants of MessageMedia in exchange for approximately one million shares of our common stock valued at approximately $7.5 million, and stock options and warrants to acquire our common stock valued at approximately $0.2 million. In connection with the acquisition, we 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, inclusive of approximately $1.6 million of direct acquisition costs, was approximately $11.3 million.

Divestitures

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

      On July 10, 2002, we sold our North American Media business to L90, Inc., which was renamed MaxWorldwide, Inc., in exchange for 4.8 million shares in MaxWorldwide and $5.0 million in cash. The 4.8 million shares represented 16.1% of outstanding MaxWorldwide common stock and were valued at approximately $3.1 million. Pursuant to the merger agreement, we have the right to receive an additional $6.0 million if, prior to July 10, 2005, MaxWorldwide achieves EBITDA-positive results for two out of three consecutive quarters. As a result of MaxWorldwide’s repurchase of its common stock in 2002, our ownership percentage in MaxWorldwide increased to 19.8%.

      On July 22, 2003, MaxWorldwide stockholders approved a proposal to adopt a plan of liquidation and dissolution pursuant to which it would dissolve and liquidate MaxWorldwide and its subsidiaries. On July 31, 2003, MaxWorldwide completed the sale of its MaxOnline division and the plan of liquidation and dissolution became effective. As of August 1, 2003, MaxWorldwide had adopted the liquidation basis of accounting and therefore will not be reporting a statement of operations for periods subsequent to July 31, 2003. As a result of these events it is unlikely that MaxWorldwide will achieve the financial milestones that would trigger our right to receive the $6.0 million in contingent cash consideration discussed above.

      In its quarterly report on Form 10-Q for the quarter ended September 30, 2003, MaxWorldwide reported net assets in liquidation of approximately $25.7 million. In the first quarter of 2004, we recognized a gain of $2.4 million relating to a distribution from MaxWorldwide of $0.50 per share in connection with its plan of liquidation and dissolution.

      On May 6, 2002, we sold our @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. We sold these shares in the fourth quarter of 2002 and the first quarter 2003.

      On January 28, 2002, we completed the sale of our European Media business to AdLINK Internet Media AG, a German provider of Internet advertising solutions, in exchange for $26.3 million and the assumption by AdLINK of liabilities associated with our European Media business. Intercompany liabilities in an amount equal to $4.3 million were settled through a cash payment by AdLINK to us at the closing of the transaction. Following the closing of the transaction described above, United Internet AG, AdLINK’s largest shareholder, exercised its right to sell us 15% of the outstanding common shares of AdLINK in exchange for $30.6 million. Pursuant to our agreement with United Internet, the exercise of this right caused our option to acquire an additional 21% of AdLINK common shares from United Internet to vest. This option was only exercisable if AdLINK achieved EBITDA-positive results for two out of three consecutive fiscal quarters before December 31, 2003. AdLINK did not achieve EBITDA positive results during these periods, therefore the option expired unexercised.

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

      On September 22, 2004, we sold our 15% interest in AdLINK for $9.5 million to United Internet. As a result of the sale, we recorded a gain of approximately $7.1 million and no longer hold an equity interest in AdLINK.

Results of Operations

      A summary of our financial results is as follows:

2004 compared to 2003

      Revenue in 2004 was $301.6 million, an increase of 11.2% compared to 2003. This increase was primarily due to the acquisitions of Performics in June 2004, SmartPath in March 2004, CSC in June 2003, and organic growth from within our Data segment and our email products and services. Revenues associated with our

Performics and SmartPath acquisitions were $17.7 million in aggregate for 2004. Revenues associated with the former CSC were $12.6 million compared to $5.5 million in 2003 as we began recognizing revenue for this business in the third quarter of 2003. Gross profit increased by 21.1% to $214.7 million compared to 2003. Gross margin improved by almost 600 basis points to 71.2%. These increases were driven primarily by the addition of Performics and by margin expansion in our Ad Management and email products and services.

      Operating income was $22.0 million compared to $12.9 million in 2003. Operating income improved due to the increase in gross profit, partially offset by an increase in operating expenses of $28.3 million or 17.2%. The increase in operating expenses was primarily the result of the assumption of headcount associated with our acquisitions of Performics, SmartPath and CSC and the hiring of additional employees in our TechSolutions and Data segments. These personnel-related increases primarily occurred in our sales and marketing and product development departments. The increase in operating expenses was partially offset by reductions in depreciation expense due to accelerated depreciation charges associated with the relocation of our New York headquarters and the termination of the lease for our facility in San Francisco in 2003. In addition, operating expenses in 2004 included a $5.6 million impairment charge associated with our Enterprise Marketing Solutions, or EMS, business and a restructuring credit of $4.5 million relating to our Louisville, Colorado facility while the prior year period included a net restructuring credit of $9.1 million.

      Net income in 2004 was $37.5 million, or $0.26 per diluted share, as compared to net income of $16.9 million, or $0.11 per diluted share, in 2003. Net income in 2004 benefited from a $7.1 million gain in connection with the sale of our investment in AdLINK and a distribution from MaxWorldwide of approximately $2.4 million in connection with its plan of liquidation and dissolution. Net income in 2003 included a $4.4 million loss in connection with the redemption of our 4.75% Convertible Subordinated Notes.

      We expect revenue to increase in 2005 as a result of our acquisition of Performics and organic growth in each of our products. In addition, we expect operating income to increase in 2005 primarily due to operational improvements in our EMS and Data Management businesses.

2003 compared to 2002

      Revenue in 2003 was $271.3 million, which was a decline of $28.9 million compared to 2002. This decrease was attributable to the divestitures of our Media and Research businesses in 2002 and weakness in our TechSolutions business during the first half of the year, partially offset by acquisition related growth from our then new Data Management business and continued growth in our core Abacus business. Operating income improved by $167.6 million, as operating expenses declined over 50% due to the absence of goodwill impairment and restructuring charges recorded in 2002 and our continued focus on cost control. Net income was $16.9 million, or $0.11 per diluted share, compared to a net loss of $117.9 million, or $0.87 per diluted share, in 2002. Net income in 2003 was negatively impacted by $14.6 million in accelerated amortization of leasehold improvements and furniture and fixtures associated with the change in useful life of these assets relating to the relocation of our New York headquarters and the termination of the lease for our facility in San Francisco. These costs were partially offset by a net restructuring credit of $9.1 million relating to the reversal of a portion of our real estate reserves.

      Revenues, gross profit, and operating income (loss) by segment are as follows (in thousands):

      TechSolutions revenue is derived from our Ad Management, Marketing Automation, and Performics divisions. Our Ad Management division derives its revenue primarily from the DART for Publishers Service, the DART for Advertisers Service and the DART Enterprise ad serving software product. Our Marketing Automation division derives its revenue primarily from our DARTmail service and related email products, and from our Enterprise Marketing Solutions, or EMS, business which consists of our campaign management and marketing resource management, or MRM, products. Following the acquisition of Performics Inc. in June 2004, we created a third division within TechSolutions, which offers search engine marketing and affiliate marketing solutions. TechSolutions cost of revenue includes costs associated with the delivery of advertisements and emails, including Internet access costs, depreciation of the ad and email delivery systems, the amortization of purchased technology and facility- and personnel-related costs incurred to operate and support our Ad Management, Marketing Automation and Performics products and services.

2004 Compared to 2003

      TechSolutions revenue increased by 11.9% to $196.3 million for the year ended December 31, 2004 from $175.4 million for the year ended December 31, 2003. The increase in TechSolutions revenue was primarily attributable to the acquisitions of Performics and SmartPath, as well as organic growth from our email products and services. Ad Management revenue declined slightly to $128.1 million compared to the prior year’s $128.8 million. For the year ended December 31, 2004, the increase in volumes for our DART for Advertisers Service outpaced the decline in effective price for this product. However, the increase in revenue from our DART for Advertisers Service was slightly outweighed by the declines in revenue from our DART for Publishers Service, where volume increases did not compensate for pricing declines. The blended effective price of both products continued to decline as a result of aggressive client retention practices and sustained competitive pressure. Marketing Automation revenue increased 15.8% to $54.0 million in 2004 compared to $46.6 million in 2003. This increase was primarily due to the acquisition of SmartPath and volume-driven

growth in our email products and services. Performics revenues were $14.1 million for the year ended December 31, 2004 as we began recognizing revenue for this division in July 2004.

      TechSolutions gross profit was $146.0 million, or 74.4% of revenue for the year ended December 31, 2004, an increase of $34.7 million compared to $111.3 million or 63.4% of revenue for the year ended December 31, 2003. Gross profits increased by 31.2% or by approximately 1100 basis points as a percentage of revenue, primarily due to gross profits associated with our acquisitions of Performics and SmartPath and a decrease in cost of revenue associated with depreciation, software maintenance, utility and rent expenses and intangible amortization. Performics and SmartPath gross profits were $14.1 million in aggregate for 2004 and included intangible amortization relating to purchased technology of $2.3 million. Excluding costs of $3.6 million associated with Performics and SmartPath, cost of revenue decreased $17.4 million. Depreciation expense fell by approximately $10.1 million due to accelerated depreciation charges associated with the relocation of our New York headquarters and the termination of the lease for our facility in San Francisco in 2003. In addition, depreciation expense also benefited from the continued efficient use of our existing hardware. Software maintenance costs declined approximately $2.3 million due to the renegotiation of software vendor contracts. Utility and rent expenses decreased by approximately $1.5 million primarily due to lower utility expenses resulting from the completion of our data center relocation in June 2003 and the discontinuation of redundant lease payments resulting from our New York office move in November 2003. Intangible amortization declined as some of our intangible assets reached the end of their amortizable lives.

      TechSolutions operating income was $31.3 million for the year ended December 31, 2004, an increase of 204.7% from the $10.3 million in the year ended December 31, 2003. This improvement was primarily the result of the increase in gross profit, partially offset by an increase in operating expenses of approximately $13.7 million. Personnel-related costs increased by approximately $16.0 million mainly in relation to the assumption of headcount associated with our acquisitions of Performics and SmartPath as well as the hiring of additional employees in our sales and marketing and product development departments. This change in personnel-related costs was net of a $1.5 million reserve reversal recorded in the first quarter of 2004 relating to a prior acquisition. Operating expenses in 2004 included an impairment charge for $5.6 million relating to goodwill and other intangible assets of our EMS business. In addition, professional fees, marketing expenses and bad debt increased by $3.0 million, $1.4 million and $1.3 million, respectively. These costs were offset by a decline in depreciation expense of $11.5 million related to the relocation of our New York headquarters and the termination of the lease for our facility in San Francisco in 2003. In addition, amortization expense decreased $1.4 million driven by certain of our other intangible assets reaching the end of their amortizable lives partially offset by the addition of acquired intangibles associated with our acquisitions of Performics and SmartPath.

2003 Compared to 2002

      TechSolutions revenue decreased by 6.3% to $175.4 million for the year ended December 31, 2003 from $187.2 million for the year ended December 31, 2002. The decrease in TechSolutions revenue was primarily attributable to declines in our Ad Management products and services, partially offset by growth in our Marketing Automation products and services. Ad Management revenue decreased by 12.5% to $128.8 million in 2003 compared to 2002. The effective price of our hosted Ad Management products decreased by approximately 15.0%, net of aggregate beneficial foreign currency fluctuations of $5.0 million. For the period, volumes increased by approximately 6.1%. The decline in effective price was primarily due to a change in product and client mix as well as lower pricing for some renewals. The change in client mix was driven by the acquisition of higher-volume, lower-priced customers. Marketing Automation revenue increased 16.8% to $46.6 million in 2003 compared to 2002. These revenues consisted primarily of our email products and services, which were $39.4 million in 2003, up marginally compared to 2002. Effective prices within email increased approximately 5.1% offset by declines in volume of approximately 5.3%. The remainder of our revenue was generated by campaign management, which was the result of an acquisition in November 2002.

      TechSolutions gross profit was $111.3 million or 63.4% of revenue for the year ended December 31, 2003 compared to $117.3 million or 62.7% for the year ended December 31, 2002. Gross profits declined primarily due to the decline in revenues and an increase in depreciation expense of $2.2 million, which was principally

due to the relocation of our New York headquarters and the termination of the lease for our facility in San Francisco. These items were partially offset by a reduction in Internet access costs of $4.1 million due to the renegotiation of many of our contracts with our Internet service providers and the absence of the restructuring charge of $4.4 million that was incurred in 2002 relating to the relocation of our data center from New York to Thornton, Colorado.

      TechSolutions operating income was $10.3 million for the year ended December 31, 2003, an increase of $55.8 million compared to the year ended December 31, 2002. This increase was a result of a reduction in operating expenses of $61.8 million, partially offset by the $6.0 million decline in gross profit. 2003 operating expenses declined due to the absence of the $56.6 million of goodwill impairment and restructuring charges incurred in 2002 as well as reductions in bad debt expense of approximately $7.2 million. The reduction in bad debt reflects our improved collection results. These costs were partially offset by increases in depreciation expense of $5.2 million due to the relocation of our New York headquarters and the termination of the lease for our facility in San Francisco. Overall, TechSolutions incurred $7.4 million in additional depreciation expense associated with our real estate transactions in 2003, of which $2.2 million was included as a component of cost of revenue and $5.2 million as a component of operating expenses.

      We expect TechSolutions revenue to increase in 2005 as a result of our acquisition of Performics and organic growth within each of our products. In addition, we expect operating income to increase in 2005 primarily due to operational improvements in our EMS business.

      DoubleClick Data revenue has historically been derived primarily from our Abacus division, which provides acquisition solutions, retention solutions and list optimization, as well as other products and services to direct marketers in the Abacus Alliances. As a result of our acquisition of CSC in June 2003, we offer direct marketers solutions for building and managing customer marketing databases and other related products and services as part of our Data Management division. Data cost of revenue includes expenses associated with maintaining and updating the Abacus databases, facility- and personnel-related expenses to operate and support our production equipment, the amortization of purchased intangible assets, and subscriptions to third party providers of lifestyle and demographic data that are used to supplement our transactions based marketing solutions.

2004 Compared to 2003

      Data revenue increased 9.8% to $105.3 million for the year ended December 31, 2004 from $95.9 million for the year ended December 31, 2003. The increase in revenue was attributable to the acquisition of CSC and organic growth from our Abacus division. Abacus revenues increased 2.5% to $92.7 million for the year ended December 31, 2004 compared to $90.4 million for the year ended December 31, 2003. The year-over-year increase in Abacus revenues was driven from continued growth in our U.S. Business-to-Business and international Alliances, which more than offset a slight year over year decline in revenue from our U.S. Business-to-Consumer Alliance. Data Management revenues were $12.6 million for the year ended December 31, 2004 compared to $5.5 million for the year ended December 31, 2003. We began recognizing revenue for this business in the third quarter of 2003.

      Data gross profit increased by 4.2% to $68.7 million, which represented 65.2% of revenues for the year ended December 31, 2004, compared to $66.0 million or 68.8% of revenues in the prior year. The increase in gross profit was primarily due to revenue growth in our Data Management division and our international Alliances. Gross margin in 2004 was negatively impacted primarily due to a higher percentage of the segments sales being generated by our lower margin Data Management division.

      Data operating income decreased by 13.7% to $23.5 million for the year ended December 31, 2004 from $27.3 million for the year ended December 31, 2003. This change was due to an increase in operating expenses of $6.5 million partially offset by the increase in gross profit of $2.7 million. Operating expenses included an increase in personnel-related costs of approximately $5.6 million primarily resulting from the assumption of headcount as the result of our acquisition of CSC and the hiring of additional employees to support both our

Data Management division and our international Alliances. In addition, amortization expense included as a component of operating expenses increased by approximately $0.9 million. These expenses are associated with intangible assets acquired in connection with the CSC acquisition.

      Data revenue increased 15.1% to $95.9 million for the year ended December 31, 2003 compared to $83.3 million for the year ended December 31, 2002. The increase is primarily attributable to the acquisitions of the 50% of the Abacus Direct Europe joint venture we did not previously own and CSC, and to continued growth from our U.S. Business-to-Consumer Alliance. Abacus revenues increased 12.8% to $90.4 million in 2003 compared to $80.2 million in 2002. The increase in revenue from our core Abacus products in the United States was primarily due to increases in both the number of clients and revenues per client. In addition, revenue increased as a result of the introduction of new products.

      Data gross profit increased $6.2 million to $66.0 million or 68.8% of revenues compared to $59.8 million or 71.7% of revenues for the year ended December 31, 2002. Gross profits were driven by the improvement in sales, partially offset by an increase in the amortization of purchased technology associated with our acquisition of CSC and production costs associated with this lower margin business.

      Data operating income increased marginally to $27.3 million for the year ended December 31, 2003. This change was due to an increase in gross profits of $6.2 million offset by an increase in operating expenses of $5.8 million. Operating expenses increased primarily due to additional headcount assumed as a result of the Abacus Direct Europe and CSC acquisitions. Average Data headcount increased 27.3% in 2003 compared to 2002. In addition, amortization expense associated with intangible assets acquired in connection with these acquisitions increased.

      We anticipate Data revenue to increase in 2005 primarily as a result of new product offerings and customer acquisition in the Data Management division, growth from our Abacus Alliances in the United States and United Kingdom, and our other international businesses. We anticipate operating income to increase in 2005 primarily due to operational improvements in our Data Management division.

DoubleClick Media

      Through a series of transactions in 2002, we sold our Media businesses and therefore did not report a Media segment during 2003 and 2004. Our Media segment revenue was derived primarily from the sale and delivery of advertising impressions through third-party Web sites that comprised the DoubleClick Media network. Media cost of revenue consisted primarily of service fees paid to Web publishers for impressions delivered on our network, and the costs of ad delivery and technology support provided by TechSolutions.

      Revenues recognized by the European, North American and DoubleClick Japan Media businesses was approximately $1.1 million, $20.8 million and $10.8 million, respectively, for the year ended December 31, 2002.

      Operating losses recognized by the European, North American and DoubleClick Japan Media businesses was approximately $0.7 million, $2.4 million and $0.7 million, respectively, for the year ended December 31, 2002.

Operating Expenses

      Operating costs and expenses were as follows (in thousands):

      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 our sales and marketing departments. Sales and marketing expenses increased by $11.7 million in 2004 compared to 2003 and increased as a percentage of revenue to 34.5% from 34.0%. The increase was primarily attributable to increases in personnel-related costs of $13.1 million, marketing expenses of $3.5 million and bad debt expense of $0.9 million, partially offset by decreases in depreciation expense of approximately $6.9 million. Personnel-related costs increased due to the assumption of headcount as a result of our acquisitions of CSC, SmartPath and Performics and the hiring of additional employees in our other businesses. The change in personnel-related costs was net of a $1.5 million reserve reversal recorded in the first quarter of 2004 relating to a prior acquisition. Marketing expenses increased due to the previously mentioned acquisitions and additional investment in our core products. The increase in bad debt expense was consistent with our year over year increase in revenues. The decrease in depreciation expense was due to accelerated depreciation charges associated with the relocation of our New York headquarters and the termination of the lease for our facility in San Francisco in 2003.

      Sales and marketing expenses declined $9.2 million in 2003 compared to 2002, but remained flat at 34% as a percentage of revenue. The decrease was primarily attributable to a reduction of $7.6 million in bad debt expense due to improved collection results and reductions in personnel-related costs of $4.0 million as average sales and marketing headcount decreased 8.5% in 2003 compared to 2002. Additionally, marketing expenses decreased by $1.1 million. These decreases were offset by a $4.7 million increase in depreciation expense relating to the termination of real estate leases.

      In 2005, we expect the absolute dollar amount of sales and marketing expenses to increase due to the hiring of additional employees, but to remain relatively flat as a percentage of revenues due to anticipated higher revenues.

      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 decreased slightly to $35.9 million or 11.9% of revenue in 2004 compared to 13.3% of revenue in 2003. The decrease was primarily attributable to increases in professional and outside service fees of $3.3 million and personnel-related costs of $3.0 million being more than offset by a decrease in depreciation, utility costs and other miscellaneous costs of $6.5 million. The increase in professional and outside service fees is mainly related to strategic initiatives and the requirements of the Sarbanes-Oxley Act of 2002. This increase was inclusive of a $1.4 million insurance claim settlement received during the third quarter of 2003. Personnel-related costs increased due to the assumption of headcount as a result of our acquisitions of CSC, SmartPath, and Performics. The decrease in depreciation expense was due to accelerated depreciation charges associated with the relocation of our New York headquarters in 2003. In addition, we achieved utility cost savings this year as a result of the reconfiguration of our disaster recovery operations.

      General and administrative expenses decreased $10.3 million to 13.3% of revenue in 2003 compared to 15.5% in 2002. The decrease was due to the decline in average general and administrative headcount of 30.1% in 2003 compared to 2002, resulting in a decrease of $5.6 million in personnel-related costs. Cost savings initiatives during the year resulted in reductions of $0.7 million in telephone expenses and $0.7 million in outside service fees. Professional fees decreased by $3.1 million in part due to the receipt of an approximately $1.4 million insurance claim settlement during the third quarter of 2003. These decreases were offset by a $1.2 million increase in depreciation expense relating to the termination of real estate leases.

      In 2005, we expect general and administrative expenses to increase in absolute dollars due to retention payments and professional fees relating to the strategic review announced on October 31, 2004. However, we expect these costs to remain flat as a percentage of revenues due to anticipated higher revenues.

      Product development expenses consist primarily of compensation and related benefits, consulting fees, and other operating expenses associated with our product development departments. Our product development departments perform research and development, enhance and maintain existing products, and provide quality assurance. Product development expenses increased by $7.3 million to 15.4% of revenue for 2004 compared to 14.4% of revenue in 2003. The increase was primarily due to increases in personnel-related costs of $8.7 million that was attributable to additional headcount assumed from our acquisitions of CSC, SmartPath and Performics and the impact of hiring additional employees in our TechSolutions segment. In addition, professional and outside fees increased by approximately $2.8 million due to consulting fees for new product initiatives. These increases were partially offset by decreases of $4.7 million in depreciation expense due to accelerated depreciation charges associated with the relocation of our New York headquarters in 2003.

      Product development expenses were flat in 2003 compared to 2002, but increased as a percentage of revenue to 14.4% from 13.3% in 2002. Product development expenses were impacted in 2003 by an increase of $1.0 million in personnel-related expenses and $0.5 million in depreciation expense relating to the termination of real estate leases. These expenses were offset by cost saving initiatives we employed during the year, which resulted in reductions in computer expenses of $1.1 million and outside services fees of $0.5 million.

      We believe that ongoing investment in product development is critical to the attainment of our strategic objectives. As such, we expect product development expenses in 2005 to increase in absolute dollars and as a percentage of revenues due to the allocation of additional resources.

      Amortization expense consists of the amortization of customer relationships and a covenant not to compete. Amortization expense was $5.2 million, $5.9 million and $12.4 million for the years ended December 31, 2004, 2003 and 2002, respectively. Amortization expense declined from 2002 to 2004 primarily due to certain intangible assets becoming fully amortized. In 2004, these fully amortized assets were partially offset by acquired intangible assets with respect to the acquisitions of Performics and SmartPath.

      We expect amortization of intangible assets to remain relatively flat in 2005.

      During the year ended December 31, 2004, we initiated a valuation for our Enterprise Marketing Solutions, or EMS, business, which consists of our campaign management and marketing resource management products. This valuation was performed with the assistance of a third party to determine if the recorded balance of goodwill and other intangible assets relating to this reporting unit was recoverable. The recoverability of these assets was brought into question as a result of the lower than expected revenues generated to date and the reduced estimates of future performance primarily associated with our campaign management products. The fair market value of the EMS reporting unit was determined based on projected discounted cash flows and price/revenue multiples of competitors in the EMS marketplace. The outcome of this valuation resulted in an impairment charge of $5.6 million being recorded during the third quarter of 2004 based on the difference between the carrying value and the fair value of this business. The impairment charge consisted of a write-down in intangible assets of $4.1 million and goodwill of $1.5 million.

      For the year ended December 31, 2003, we did not record any impairment charges for our goodwill or intangible assets.

      Goodwill and other impairments was $47.1 million for the year ended December 31, 2002. In 2002 based on the prolonged softness in the economy and the then current and operational performance of our email reporting unit, we initiated a third-party valuation of our 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 $43.8 million being recorded during the year. The fair market value of the email reporting unit was determined based on revenue projections, the then recent transactions involving similar businesses and the price/revenue multiples at which they were bought and sold,

and the price/revenue multiples of our competitors in the email marketplace at that time. In addition, we also determined that the fair values of certain intangibles assets were considered impaired. We recorded an impairment charge of $3.3 million based on the difference between the carrying value and estimated fair value of certain intangible assets associated with the email reporting unit.

      During the year ended December 31, 2004, we recorded a restructuring credit of $4.5 million. This credit was due to the reversal of a portion of our real estate reserve relating to our facility in Louisville, Colorado. The reversal of the reserve was due to the sublease of this property at rates in excess of our previous estimate of sublease income. Of the remaining $17.4 million in cash outlays relating to our restructuring activities, we estimate we will pay approximately $3.9 million in 2005 and $13.5 million in 2006 and thereafter.

      During the year ended December 31, 2003, we recorded restructuring credits of approximately $16.5 million, partially offset by restructuring charges of approximately $7.4 million. This resulted in a net restructuring credit of $9.1 million. This credit was due to the reversal of a portion of our real estate reserve relating to our previous New York headquarters and our San Francisco facility. The reversal of the reserve was a result of final lease terminations with respect to our New York headquarters and San Francisco facility for which our reserve was in excess of our expected payments. Total costs to terminate the lease associated with these facilities were approximately $44.5 million and $26.4 million, respectively, inclusive of broker commissions and related costs. We anticipate average annual cash rent savings of approximately $14 million during the period that commenced in January 2004 and extending through January 2015 as a result of the New York and San Francisco lease terminations.

      During the year ended December 31, 2002, we took steps to realign our sales, development, and administrative organization and reduce corporate overhead to position us for profitable growth in the future consistent with management’s long-term objectives. This involved the involuntary termination of approximately 250 employees, primarily from our TechSolutions division, as well as the closure of several offices and charges for excess real estate space. As a consequence, we recorded a charge of $98.4 million to operations during the year, of which $94.0 million and $4.4 million have been classified in operating expenses and cost of revenue, respectively. The charge primarily related to the accrual of future lease costs (net of estimated sublease income and deferred rent liabilities previously accrued) of approximately $77.0 million, the write-off of fixed assets situated in closed or abandoned offices of approximately $15.7 million and payments for severance of approximately $5.7 million. The accrual for future lease costs and the write-off of fixed assets were primarily related to our previous New York office. These charges were driven by the abandonment of additional space, reductions in the estimates of future sublease income, as well as the lengthening of the time required to find a sublease tenant. In addition, we moved our data center operations from New York to our Thornton, Colorado facility. As a result, we recorded a charge of $4.4 million to cost of revenue relating to the write-off of certain fixed assets.

      We will continue to review our sublease assumptions surrounding our excess real estate, principally in London, England and may incur additional restructuring credits or charges in 2005.

Non-Operating Expenses and Income Taxes

      Equity in losses of affiliates was $1.3 million and $2.5 million for the years ended December 31, 2004 and 2003, respectively. In 2004, we recognized equity losses of approximately $0.9 million from the equity investment in our Abacus Deutschland joint venture and approximately $0.4 million from our equity investment in DoubleClick Japan. In 2003, we recognized equity losses of $2.0 million from our equity investment in MaxWorldwide and $0.5 million from our equity investment in DoubleClick Japan.

      Equity in losses of affiliates was $0.3 million for the year ended December 31, 2002. In 2002, we recognized equity income of $0.2 million relating to our 50% interest in the Abacus Direct Europe joint venture and an equity loss of approximately $0.5 million from our equity investment in MaxWorldwide. Since

the June 26, 2002 acquisition of the remaining 50% interest of Abacus Direct Europe that we did not previously own, the results of operations of Abacus Direct Europe have been consolidated into our operations.

      We did not record impairment charges for any of our investments in affiliates for the years ended December 31, 2004 and 2003.

      Impairment of investments in affiliates was $14.1 million for the year ended December 31, 2002. During the year ended December 31, 2002, we determined that the carrying value of certain of our investments, principally our cost-method investments in AdLINK Internet Media AG and NetRatings, Inc. and our equity-method investment in MaxWorldwide, Inc. were impaired based on the continued decline in the fair market value of these investments. As a result, we recorded impairment charges of $11.7 million during the third quarter of 2002, which represented the difference between our carrying value and the estimated fair value of these investments. The estimated fair values of our investments in AdLINK, NetRatings and MaxWorldwide were determined based on the closing market price of their stock on September 30, 2002. Additionally, it was determined that DoubleClick Asia, a joint venture and a cost method investment, would be liquidated and therefore had no continuing value. As a consequence, we wrote-off our entire investment in DoubleClick Asia and recognized an impairment charge of $2.4 million during the third quarter of 2002.

      In the year ended December 31, 2004, we sold our 3,862,500 shares of AdLINK for an aggregate purchase price of $9.5 million to United Internet AG, the majority shareholder of AdLINK. As a result of the transaction, we recorded a gain of $7.1 million and no longer hold an equity interest in AdLINK.

      We did not recognize any gains or losses on sales of investments in affiliates during the year ended December 31, 2003.

      Our gain on sale of investments in affiliates was $7.9 million for the year ended December 31, 2002. The gain was associated with the sale of our investment in ValueClick and partial sales of our ownership interests in DoubleClick Japan and NetRatings. In the fourth quarter of 2002, we entered into a repurchase agreement with ValueClick whereby ValueClick repurchased all of our remaining 7.9 million shares for $21.3 million or approximately $2.70 per share. We recognized a gain of $4.7 million from the sale of the investment. In addition, in December 2002 we sold 45,049 shares of common stock in DoubleClick Japan, which reduced our ownership interest at the time to 15.6%. We received proceeds of $14.3 million and recognized a gain of $3.1 million. Additionally, in the fourth quarter of 2002 we sold 402,011 shares of NetRatings and received proceeds of approximately $2.5 million. We recognized an immaterial gain on the sale of this investment.

      In the year ended December 31, 2004, we recognized a gain of $2.4 million relating to a distribution from MaxWorldwide in connection with its plan of liquidation and dissolution. We still maintain a 19.8% interest in MaxWorldwide and may receive additional distributions in future periods as a result of the finalization of its plan of liquidation and dissolution.

      We did not recognize any gain or losses from affiliate distributions during the years ended December 31, 2003 and 2002.

      We did not recognize any gains or losses on sales of businesses during the years ended December 31, 2004 and 2003.

      Our gain on sale of businesses, net was $17.9 million for the year ended December 31, 2002. The net gain primarily consisted of gains on the sale of our North American Media business and @plan research product

line of $8.1 million and $12.3 million, respectively, offset by a loss of $1.7 million recognized on sale of our European Media business.

      We did not recognize any gains or losses on early extinguishment of debt during the year ended December 31, 2004.

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

      For the year ended December 31, 2002, we repurchased $64.9 million of our then outstanding 4.75% Convertible Subordinated Notes due 2006 for approximately $53.6 million in cash, inclusive of $1.2 million of accrued interest payable. We 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.

      Interest and other, net was $10.5 million, $12.1 million and $15.9 million for the years ended December 31, 2004, 2003 and 2002, respectively. In 2004, interest income decreased by $5.2 million due to a decrease of average total cash, which includes cash and cash equivalents, investments in marketable securities and restricted cash, of $178.2 million compared to the prior year period. Average total cash decreased due to the purchases of our common stock and the acquisitions of Performics and SmartPath. Interest expense decreased due to the redemption in July 2003 of our 4.75% Convertible Subordinated Notes due 2006.

      In 2003, interest income decreased by $9.6 million due to a combination of a decrease of average total cash, which includes cash and cash equivalents, investments in marketable securities and restricted cash, of $74.1 million compared to the prior year and a decrease in the average interest rates. Average total cash decreased primarily as a result of our lease termination payments for our New York and San Francisco facilities. Interest expense decreased due the redemption of our 4.75% Convertible Subordinated Notes due 2006 in July 2003.

      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.

      The provision for income taxes recorded for the year ended December 31, 2004 of $3.2 million consists principally of income taxes of $2.2 million on the earnings of certain of our foreign subsidiaries, federal alternative minimum taxes of $0.6 million and state and local taxes of $0.4 million. The provision for income taxes recorded for the year ended December 31, 2003 of $1.0 million consists principally of income taxes of $2.7 million on the earnings of our foreign subsidiaries, a Federal tax benefit of $1.1 million related to the reversal of a reserve in connection with the favorable resolution of certain tax matters and $0.6 million of net

state and local tax benefits relating principally to the receipt of tax refunds. The provision for income taxes recorded for the year ended December 31, 2002 of $4.8 million consists principally of income taxes of $4.1 million on the earnings of some of our foreign subsidiaries and gain on the sale of our European Media business and $0.7 million of state and local taxes. Except for certain foreign jurisdictions, the provision for income taxes for all years presented does not reflect tax benefits attributable to our net operating loss and other tax carryforwards due to limitations and uncertainty surrounding our prospective realization of such benefits.

      In 2004, cash provided by operating activities was $63.5 million, an increase of $78.6 million compared to 2003. The increase was primarily a result of a decline in lease termination payments, higher overall company net income and stronger working capital. Lease termination payments were $7.6 million for the year ended December 31, 2004 compared to $70.9 million in the prior year. Accrued expenses decreased to $7.4 million in the year ended December 31, 2004 compared to $22.6 million in the prior year. The decreases in payments associated with accrued expenses were primarily a result of additional restructuring activities in 2003 compared to the same period in 2004.

      In 2003, cash used in operating activities was $15.1 million, a decrease of $59.0 million compared to 2002. The decrease was primarily due to restructuring payments of approximately $70.9 million for lease terminations for our New York and San Francisco facilities. In addition, accrued expenses and other liabilities decreased $22.6 million due to restructuring payments for abandoned and excess space and the payment of other liabilities. These items were offset by an increase in net income adjusted for non-cash items and a decrease in gross accounts receivable due to improved collections.

      In 2002, cash provided by operating activities was $43.9 million, resulting from our net loss of $117.9 million, adjusted for non cash items and increases in accrued expenses of $52.5 million partially offset by a decline in accounts payable.

      In 2005, we expect cash flow from operating activities to increase due to the anticipated reduction in restructuring payments and an anticipated increase in revenue and net income.

      In 2004, cash used in investing activities was $25.5 million, a change of $125.1 million compared to 2003. The change was primarily due to the net cash used in the acquisitions of Performics and SmartPath of $72.0 million and the decrease in the net proceeds from purchases and maturities of investments in marketable securities of $82.9 million. These cash flows were partially offset by proceeds from the sale of our investment in AdLINK of $9.5 million, a distribution from MaxWorldwide of $2.4 million. In addition, there were positive movements in restricted cash totaling $15.6 million associated with the termination of the lease for our former New York lease headquarters.

      In 2003, cash provided by investing activities was $99.6 million, an increase of $34.7 million compared to 2002. The increase is primarily due to the proceeds from investments in marketable securities of $541.4 million. These proceeds were offset by purchases of marketable securities of $409.0 million as well as capital expenditures of $28.6 million, of which one-third of the costs were for the leasehold improvements for our new headquarters in New York and the majority of the remaining costs were for the replacement of production and internal computing equipment.

      In 2002, cash provided by investing activities was $65.0 million and consisted primarily from proceeds received from the sale of businesses and investments in affiliates of $54.9 million.

      In 2005, capital expenditures are expected to be in excess of $30.0 million and relate to the replacement of obsolete equipment and to support anticipated volume expansion.

      In 2004, cash used in financing activities was $98.2 million, an increase of $66.9 million compared to 2003. The change was due to the $98.8 million in cash used for the purchase of approximately 13.0 million shares of our common stock in 2004. The prior year period included cash used of $158.0 million in the repurchase of our 4.75% Convertible Subordinated Bonds due 2006 partially offset by proceeds of $132.0 million from the issuance of our Zero Coupon Convertible Subordinated Notes due 2023

      In 2003, cash used in financing activities was $31.3 million, a decrease of $38.2 million compared to 2002. The decrease was a result of the redemption of the 4.75% Convertible Subordinated Notes due 2006 for $156.0 million partially offset by the issuance of the Zero Coupon Convertible Subordinated Notes due 2023 for $132.0 million. Additionally, we used $8.9 million in 2003 for payments of capital lease obligations.

      In 2002, cash used in financing activities was $69.5 million and consisted primarily of the repurchase of our 4.75% Convertible Subordinated Notes due 2006 for $53.6 million and payments under capital lease obligations of $16.1 million.

      In 2005, cash flow from financing activities may be impacted based on the outcome of our review of strategic options.

      Our cash and cash equivalents decreased $21.9 million as a result of the deconsolidation of our subsidiary, DoubleClick Japan. On December 26, 2002, we sold 45,049 shares of common stock in DoubleClick Japan and reduced our ownership interest to 15.6%. As a result of this transaction, we account for our remaining 31,271 shares in DoubleClick Japan under the equity method of accounting.

      We do not have transactions, arrangements or relationships with “special purpose” entities, and we do not have any off-balance sheet debt.

      DoubleClick’s contractual obligations as of December 31, 2004, are as follows:

      As of December 31, 2004, we had $126.1 million of cash and cash equivalents, $410.9 million in investments in marketable securities consisting of government and corporate debt securities and $15.3 million in restricted cash. As of December 31, 2003, our principal commitments consisted of $135.0 million principal amount of our Zero Coupon Convertible Subordinated Notes due 2023 and our obligations under operating 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.

Related Party Transactions

      We maintain a 15.5% interest in DoubleClick Japan. On December 26, 2002, we sold 45,049 shares of common stock in DoubleClick Japan. As a result of this transaction, we account for our remaining 31,271 shares in DoubleClick Japan under the equity method of accounting. DoubleClick Japan continues to sell our suite of DART technology products as part of a long-term technology reseller agreement. Revenue recognized through services provided to DoubleClick Japan was approximately $3.4 million and $3.2 million for years ended December 31, 2004 and 2003, respectively.

      In addition, we hold a 19.8% interest in MaxWorldwide. This interest was acquired in July 2002 as a result of the sale of our North American Media business. We recognized revenue of approximately $2.2 million and $2.1 million for the years ended December 31, 2003 and 2002, respectively, relating to services provided to MaxWorldwide. In 2004, we did not provide any services to MaxWorldwide as a result of the sale of its MaxOnline division and its plan of liquidation and dissolution.

      In 2004, we sold our 15% interest in AdLINK to United Internet AG, the majority shareholder of AdLINK. Prior to the sale, we recognized revenue of approximately $1.4 million, $2.7 million and $2.0 million during 2004, 2003, and 2002, respectively, relating to services provided to AdLINK.

Interest Rate Risk

      The primary objective of our investment activities is to preserve principal while at the same time maximizing yields without significantly increasing risk. To achieve this objective, we maintain our portfolio of cash equivalents and marketable securities in a variety of government and corporate debt obligations and money market funds. As of December 31, 2004, our investments in marketable securities had a weighted average time to maturity of 279 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 December 31, 2004:

      As of December 31, 2004, the current portion of restricted cash was $3.6 million and the average interest rate associated with this cash was 1.0% and the non-current portion of restricted cash was $11.7 million with an average interest rate of 1.7%. Restricted cash primarily represents amounts placed in escrow relating to funds to cover office lease security deposits and our automated clearinghouse payment function.

      We may redeem for cash some or all of the Zero Coupon Convertible Subordinated Notes due 2023, at any time on or after July 15, 2008. Holders of the Zero Coupon Convertible Subordinated Notes due 2023 also have the right to require us to purchase some or all of their notes for cash on July 15, 2008, July 15, 2013 and July 15, 2018, at a price equal to 100% of the principal amount of the Zero Coupon Convertible Subordinated Notes due 2023 being redeemed plus accrued and unpaid liquidated damages, if any.

      The Zero Coupon Convertible Subordinated Notes due 2023 contain an embedded derivative, the value of which as of December 31, 2004 has been determined to be immaterial to our consolidated financial position. For financial accounting purposes, the ability of the holder to convert upon the satisfaction of a trading price condition constitutes an embedded derivative. Any changes in its value will be reflected in our future income statements, in accordance with Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities.” As of December 31, 2004, we did not hold any other derivative financial instruments.

Foreign Currency Risk

      We transact business in various foreign countries and are thus subject to exposure from adverse movements in foreign currency exchange rates. This exposure is primarily related to revenue and operating expenses denominated in European and Asian currencies, as well as cash balances held in currencies other than our functional currency and the functional currency of our subsidiaries. For the years ended December 31, 2004, 2003 and 2002, our international revenues were approximately $55.6 million, $56.0 million and 68.9 million, respectively. Revenues for 2004 and 2003 included beneficial foreign currency movements of approximately $3.2 million and $7.4 million, respectively, primarily due to the strength of the Euro and British pound compared to the U.S. dollar. The effect of foreign exchange rate fluctuations on operations resulted in a gain of $0.3 million for each of the years ended December 31, 2004 and 2003. For the year ended December 31, 2002, we recognized a loss of $1.2 million.

      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 December 31, 2004 and 2003, we had $53.9 million and $56.5 million, respectively, 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.

DOUBLECLICK INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

DoubleClick Inc.:

      We have completed an integrated audit of DoubleClick Inc.’s 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2004 and audits of its 2003 and 2002 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements and financial statement schedule

      In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of DoubleClick Inc. and its subsidiaries at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Internal control over financial reporting

      Also, in our opinion, management’s assessment, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A, that the Company maintained effective internal control over financial reporting as of December 31, 2004 based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control – Integrated Framework issued by the COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

      A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial

statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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

      As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded Performics Inc. from its assessment of internal control over financial reporting as of December 31, 2004 because it was acquired by the Company in a purchase business combination during 2004. We have also excluded Performics Inc. from our audit of internal control over financial reporting. Performics Inc. is a wholly-owned subsidiary whose total assets and total revenues represent 13% and 5%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2004.

DOUBLECLICK INC.

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

DOUBLECLICK INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31,

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

DOUBLECLICK INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

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

DOUBLECLICK INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME