8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

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

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
FEBRUARY 3, 2005 (FEBRUARY 3, 2005)

DOUBLECLICK INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE

(STATE OR OTHER JURISDICTION OF INCORPORATION)

000-23709
(COMMISSION FILE NUMBER) 13-3870996
(I.R.S. EMPLOYER IDENTIFICATION NO.)

111 EIGHTH AVENUE, 10TH FLOOR
NEW YORK, NEW YORK 10011
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

(212) 683-0001
(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

N.A.
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
	ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
SIGNATURE
PRESS RELEASE

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

     On February 3, 2005, DoubleClick Inc. (“DoubleClick” or the “Company”) announced its financial results for the fourth quarter and year ended December 31, 2004. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

     The information in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

     The attached press release contains non-GAAP financial measures. The non-GAAP financial measures included in the press release should be considered in addition to, not as a substitute for, or superior to other measures of the Company’s financial position prepared in accordance with generally accepted accounting principles.

     The attached press release discloses the Company’s net cash position as of December 31, 2004, which may be considered to be a non-GAAP financial measure, and reconciles the Company’s net cash position to its cash, cash equivalents, restricted cash and investments in marketable securities as of December 31, 2004, as determined in accordance with GAAP. Net cash is considered a liquidity measure and provides useful information to management and investors about the amount of cash available to the Company after taking into account the principal amount of outstanding debt. Management uses this financial measure in making operating decisions, for budget planning purposes and in considering strategic opportunities.

     The attached press release also discloses EBITDA, a non-GAAP financial measure which represents net income as presented in the statement of operations under GAAP before interest, taxes, depreciation and amortization, and reconciles EBITDA to GAAP net income. EBITDA, as defined above, may not be similar to EBITDA measures used by other companies. We believe that EBITDA provides useful information to investors about the Company’s performance because it eliminates the effects of period to period changes in taxes, costs associated with capital investments and income from interest on our cash and marketable securities that are not directly attributable to the underlying performance of the Company’s business operations. Management uses EBITDA in evaluating the overall performance of the Company’s business operations.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

     (c) Exhibits

     The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:

     99.1 Press Release issued by the Company on February 3, 2005.

SIGNATURE

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

	DOUBLECLICK INC.
	By: /s/ Bruce Dalziel
	Name: Bruce Dalziel
	Title: Chief Financial Officer
Dated: February 3, 2005

EXHIBIT		EXHIBIT INDEX
	99.1	Press Release dated February 3, 2005.

EX-99.1

For Immediate Release

INVESTOR CONTACT:	Jason McGruder
	Manager, Investor Relations
	212-381-5182
PRESS CONTACT:	Jennifer Miller
	VP, Corporate Communications
	212-381-5705

DOUBLECLICK REPORTS FOURTH QUARTER AND FULL YEAR 2004 RESULTS
Company records significant increase in Cash Flow from Operations

NEW YORK, NY, February 3, 2005 – DoubleClick Inc. (NASDAQ: DCLK), the leading provider of data and technology solutions for marketers, advertising agencies and web publishers, today announced financial results for the fourth quarter and full year ended December 31, 2004, and gave its business outlook for the first quarter of 2005.

	4Q04		4Q03		FY04		FY03
Revenue (000’s)	$	83,469	$	72,937	$	301,623	$	271,337
GAAP Net Income (000’s)1	$	10,572	$	3,841	$	37,510	$	16,918
GAAP EPS2	$	0.08	$	0.03	$	0.26	$	0.11

“We benefited from significant margin improvements in Ad Management and Email compared to the fourth quarter of 2003, and had stronger than expected results from our Performics division,” said Kevin Ryan, Chief Executive Officer, DoubleClick. “In addition, we had our best quarter of cash flow from operations generation in over four years.”

Fourth Quarter Accomplishments
Highlights of the Company’s performance follow:

4   Margin improvements in its Ad Management and Email products and better than expected revenue from DoubleClick’s Search Engine and Affiliate Marketing products led to record gross and operating margins in the Company’s TechSolutions segment;

4   The Company recorded an over 40% increase in quarterly cash flow from operations versus 4Q03;

4   The Performics division saw a quarterly revenue increase of over 60% year on year;

4   The Company’s Data Management quarterly revenue grew over 40% against 4Q03; and

4   The Company took steps to improve its Marketing Automation business, including forming a partnership with Omniture to market their site analytics product.

Fourth Quarter Results
DoubleClick reported revenue for the fourth quarter of $83.5 million versus $72.9 million in the year-ago period. GAAP net income for the most recent quarter was $10.6 million, or $0.08 per share, compared with $3.8 million, or $0.03 per share, in the fourth quarter of 2003. The Company achieved a gross margin of 74.8% during the quarter compared to 66.6% in the year-ago

1 A description of certain items affecting FY04, FY03 and 4Q03 is provided in the attached schedule for reconciliation of GAAP Net income to EBITDA.

2 Under FASB EITF Issue No. 04-8, DoubleClick’s current and former Convertible Subordinated Notes are now included in the calculation of diluted EPS for their respective reporting periods. The impact of FASB EITF 04-08 resulted in a reduction of GAAP EPS of less than $0.01 for 4Q04 and 4Q03; $0.02 for FY2004; and approximately $0.01 for FY2003. The outlook DoubleClick provided in October of 2004 was exclusive of the effects of EITF Issue No. 04-8. The outlook provided in January of 2005 was inclusive of the effects of EITF Issue No. 04-8.

period. EBITDA³ was $17.4 million for the fourth quarter of 2004 compared to $16.2 million in 4Q03. Total GAAP operating expenses were $53.3 million in the quarter, versus $47.9 million in the fourth quarter of 2003. Total company headcount was 1,541 as of December 31, 2004, against 1,223 twelve months prior.

Fourth quarter 2004 results did not include any material unusual items. Fourth quarter 2003 GAAP earnings were negatively impacted by $5.4 million in charges related to the relocation of the Company’s New York headquarters. These charges were partially offset by the reversal of a $1.3 million reserve relating to the favorable resolution of certain tax matters.

DoubleClick generated $33.7 million in cash flow from operations during the fourth quarter. The year over year increase in quarterly cash flow from operations was driven primarily by higher overall company GAAP net income and stronger working capital versus 4Q03. The Company had $552.3 million in cash and marketable securities, and had a net cash⁴ position of $417.3 million, or $3.32 per share, as of December 31, 2004.

Full Year Results
DoubleClick reported revenue for the full year of $301.6 million versus $271.3 million in 2003. Full year 2004 GAAP net income was $37.5 million, or $0.26 per share, compared with $16.9 million, or $0.11 per share, in the prior year. The Company achieved a gross margin of 71.2% during the year compared to 65.3% in 2003. EBITDA was $66.7 million for 2004 compared to $67.9 million in the prior year. Total GAAP operating expenses were $192.7 million for the full year, versus $164.4 million in 2003.

DoubleClick’s full year 2004 GAAP net income and EBITDA benefited from a non-operating gain of approximately $7.1 million from the Company’s sale of its 15% interest in AdLINK Internet Media AG and from a restructuring credit relating to DoubleClick’s Louisville, Colorado facility, which lowered operating expenses by $4.5 million. In addition, 2004 GAAP net income and EBITDA benefited from a distribution from MaxWorldwide, Inc. of approximately $2.4 million in connection with its plan of liquidation and dissolution, and from the reversal of a $1.5 million reserve relating to a prior acquisition. These gains were partially offset by a write-down of DoubleClick’s Enterprise Marketing Solutions (EMS) business of approximately $5.6 million.

2003 GAAP net income was negatively impacted by $14.6 million in accelerated depreciation charges associated with the relocation of the Company’s New York headquarters and the termination of a lease for the Company’s San Francisco facility. These charges were partially offset by a $1.3 million reserve reversal relating to the resolution of certain tax matters. GAAP net income and EBITDA benefited from a net restructuring credit of $9.1 million associated with these facilities and $1.4 million received by the Company in connection with an insurance claim. These benefits were partially offset by a $4.4 million loss relating to the redemption of DoubleClick’s 4.75% Convertible Subordinated Notes.

TechSolutions
The TechSolutions segment reported fourth quarter revenue of $56.8 million versus $46.9 million in 4Q03. TechSolutions gross margin was 79.2%, versus 68.1% in the December quarter of 2003. TechSolutions operating margin was 25.0%, versus 11.0% in the fourth quarter of 2003. Margins improved primarily because of higher revenue from the Company’s Ad Management, Email, Search Engine Marketing, and Affiliate Marketing products.

For the full year, the TechSolutions segment recorded revenue of $196.3 million, a gross margin of 74.4%, and an operating margin of 15.9%. This compares to revenue of $175.4 million, a gross margin of 63.4%, and an operating margin of 5.9% for full year 2003. The year-over-year quarterly and annual improvement in revenue is primarily a result of the inclusion of the results of Performics and SmartPath, which were acquired in June and March of 2004, respectively. Full year 2004 TechSolutions expenses were adversely affected by the EMS write-down of approximately $5.6 million, and 2003 TechSolutions expenses included roughly $10.8 million in accelerated depreciation charges related to the Company’s facilities.

Ad Management
The Company’s Ad Management revenue was $33.2 million in 4Q04 versus $34.1 million in the year-ago period. For the year, Ad Management revenue was $128.1 million against $128.8 million in 2003. These declines were principally due to pricing declines outweighing volume increases in the Company’s Publisher business. These declines were partially offset by an increase in revenues from DoubleClick’s Advertiser products, where volume increases continued to outweigh price declines.

3 EBITDA (or Earnings Before Interest, Tax, Depreciation, and Amortization) is a non-GAAP financial measure. Please see the attached schedule for a reconciliation of GAAP net income to EBITDA. Please see the Form 8-K filed on February 3, 2005 by the Company with the SEC for a discussion of why the Company believes EBITDA is a useful financial measure to investors and of how and when management uses EBITDA.

4 Net cash may be considered a non-GAAP financial measure and is defined as gross cash and cash equivalents of $126.1 million, restricted cash of $15.3 million, and investments in marketable securities of $410.9 million minus zero coupon convertible subordinated notes of $135 million. Please see the Form 8-K filed on February 3, 2005 by the Company with the SEC for a discussion of why the Company believes net cash is a useful financial measure to investors and of how and when management uses this measure.

2

DoubleClick has recently signed several new contracts for use of its Ad Management solutions. These wins include Ant Farm Interactive, Friendster, I-level, IMHO Scandinavia, and Luxury Link.

Marketing Automation
The Company’s Marketing Automation products had revenue of $14.5 million in the most recent quarter, against $12.8 million in 4Q03. For 2004, the division recorded revenue of $54.0 million versus $46.6 million in the prior year. The year-over-year revenue increase for the quarter and year was due to the acquisition of SmartPath and organic growth from the Company’s Email business.

DoubleClick has struck new Marketing Automation deals with clients including AOL France, AirAsia, and bonprix.

“We were pleased to see that gross and operating margins continued to improve in our TechSolutions segment,” said David Rosenblatt, President of DoubleClick. “However, we plan to focus on making sure that all of our products are achieving their optimal level of growth in terms of both revenue and profitability.”

Performics
The Company’s Search Engine and Affiliate Marketing products recorded revenue of $9.1 million in 4Q04, and $14.1 million for the two quarters of 2004 in which Performics was a division of DoubleClick. These figures were higher than DoubleClick’s previous outlook due largely to stronger than expected growth in overall e-commerce and search advertising spending.

Agreements to use the division’s solutions have recently been reached with ADT Security Services, Armani Exchange, CountryWide Financial, World Savings Bank, Yves Rocher, and Walt Disney World’s search program.

Data
DoubleClick reported Data segment revenue of $26.7 million in 4Q04, compared to $26.0 million in 4Q03. For the year, Data segment revenue was $105.3 million, compared to $95.9 million in 2003. Overall Data gross margin was 65.3% for the quarter and 65.2% for the year, against 64.0% and 68.8% in the relevant prior periods. Data operating margins were 21.3% and 22.3% for the quarter and year, versus 22.6% and 28.4% in the comparable year ago timeframes. Data segment margins declined versus the previous year’s periods primarily because a higher percentage of the segment’s sales were generated by the lower margin Data Management Solutions (DMS) division.

Abacus
Abacus quarterly revenue was $22.4 million versus $23.1 million in the year-ago period. Abacus annual revenue was $92.7 million against $90.4 million in 2003. Abacus quarterly revenue fell primarily because increases in U.S. Business to Business Alliance revenue did not make up for lower spending by Business to Consumer cataloguers. During the quarter, DoubleClick announced the formation of a U.K Business to Business Alliance, and added 77 net new members across all wholly owned Abacus Alliances globally, bringing the total to over 2,500.

DMS
DMS generated $4.2 million in revenue for 4Q04 against the year-ago quarter’s $3.0 million. For full year 2004, DMS revenue was $12.6 million versus $5.5 million in 2003. DoubleClick’s DMS business was acquired June 30, 2003, and its results were consolidated beginning in 3Q03. Since the beginning of 4Q04, the Company has signed over 20 new deals for the use of its DMS solutions and its other smaller Data products.

“Fourth quarter DMS revenue grew by over 40% year over year, and our U.S. Business to Business Alliance continued to show an even faster growth rate” added Brian Rainey, President, Abacus, a division of DoubleClick Inc. “In addition, we have signed up several dozen members for our newer International Alliances.”

First Quarter 2005 Outlook
DoubleClick’s guidance presented below does not include the potential impact of any mergers, acquisitions, divestitures or business combinations that may be announced after the date hereof, but does include the impact of retention bonuses and professional fees related to the Company’s strategic review announced October 31, 2004.

3

DoubleClick expects 1Q05 revenue to be between $70 million and $75 million. The Company expects total Company gross margin to be in the high 60s to low 70s percentage range. GAAP operating expenses are expected to be between $51 million and $53 million. Items in interest and other, net and taxes are expected to be approximately $1 million, based on an assumed tax rate of approximately 15%. The Company anticipates recording GAAP earnings of between $(0.01) and $0.03 per share.

The Company’s segment projections for 1Q05 are as follows:

4	TechSolutions revenue is expected to be between $45 million and $50 million, including $28 million to $31 million from Ad Management, $11 million to $13 million from Marketing Automation, and approximately $6 million from Performics. Overall TechSolutions gross margin is expected to be in the mid 70s percentage range.
4	Data revenue is expected to be between $24 million and $26 million, including approximately $20 million to $22 from Abacus; overall Data gross margin should be in the low 60s percentage range.

“We are taking steps to ensure that we optimize our investments while maintaining tight cost controls,” said Bruce Dalziel, Chief Financial Officer, DoubleClick. “In 2005, we expect to improve upon our 2004 results.”

Conference Call Today
The DoubleClick Conference Call to discuss this earnings press release is scheduled for today at 5:00 p.m. EDT. This call will be available live via Webcast, and on a replay basis afterward on the Company’s website www.doubleclick.net under Investor Relations or at ir.doubleclick.net. The Webcast is also being distributed over CCBN’s Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call at www.fulldisclosure.com or by visiting any of the investor sites in CCBN’s Individual Investor Network. Institutional investors can access the call via www.streetevents.com.

Additional financial metrics can be found in the “Financial Reports” section of DoubleClick’s Investor Relations website, at ir.doubleclick.net.

About DoubleClick
DoubleClick is the leading provider of data and technology solutions for advertising agencies, marketers, and web publishers to plan, execute, and analyze their marketing programs. DoubleClick’s marketing solutions help clients yield the highest return on their marketing dollar. DoubleClick Inc. has global headquarters in New York City and maintains 22 offices around the world.

Note: This press release includes forward-looking statements, including earnings and revenue projections and plans set forth under the section titled “First Quarter 2005 Outlook” above, as well as sentences using the words “expects,” “plans,” “should,” or “believes” and all other statements that are not purely historical. The results or events predicted in these statements may vary materially from actual future events or results. Factors that could cause actual events or results to differ from anticipated events or results include: intense competition in DoubleClick’s industry, lack of growth or decline in online advertising or marketing, changes in government regulation, uncertainties related to DoubleClick’s decision to review strategic options, failure to manage the integration of acquired companies, failure to successfully manage the Company’s international operations and other risks that are contained in documents which the Company files from time to time with the Securities and Exchange Commission, including the Company’s most recent reports on Form 10-K and Form 10-Q. In addition, any forward-looking statements represent the Company’s estimates only as of today and should not be relied upon as representing the Company’s estimates as of any subsequent date. While the Company may elect to update forward-looking statements at some point in the future, it may choose not to do so, even if the Company’s estimates change.

# # #

— Continued —

4

DOUBLECLICK INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended						Year Ended
	December 31,						December 31,
	2004			2003			2004			2003
	(Unaudited, in thousands, except per share amounts)
Revenue:
Technology	$	56,810		$	46,892		$	196,295		$	175,403
Data		26,659			26,045			105,328			95,934
Revenue		83,469			72,937			301,623			271,337
Cost of revenue		21,046			24,353			86,959			94,131
Gross profit		62,423			48,584			214,664			177,206
Operating expenses:
Sales and marketing		28,554			24,625			104,029			92,308
General and administrative		9,890			10,378			35,864			36,063
Product development		13,173			11,922			46,459			39,180
Amortization of intangibles		1,639			1,016			5,228			5,896
Impairment of goodwill and intangible assets		—			—			5,592			—
Restructuring credits, net		—			—			(4,514	)		(9,092	)
Total operating expenses		53,256			47,941			192,658			164,355
Income from operations		9,167			643			22,006			12,851
Other income (expense)
Equity in losses of affiliates		(415	)		(112	)		(1,299	)		(2,551	)
Loss on early extinguishment of debt		—			—			—			(4,406	)
Gain on distribution from affiliate		—			—			2,400			—
Gain on sale of investment in affiliate								7,125
Interest and other, net		2,033			2,940			10,485			12,063
Total other income		1,618			2,828			18,711			5,106
Income before income taxes		10,785			3,471			40,717			17,957
Provision (benefit) for income taxes		213			(370	)		3,207			1,039
Net income	$	10,572		$	3,841		$	37,510		$	16,918
Basic net income per share	$	0.08		$	0.03		$	0.29		$	0.12
Weighted average shares used in basic net income per share		125,632			137,571			131,159			137,074
Diluted net income per share	$	0.08		$	0.03		$	0.26		$	0.11
Weighted average shares used in diluted net income per share		138,505			151,634			144,178			150,345

DOUBLECLICK INC.
CONSOLIDATED BALANCE SHEETS

	December 31,			December 31,
	2004			2003
	(Unaudited, in thousands, except share amounts)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	126,135		$	183,484
Investments in marketable securities		264,332			151,898
Restricted cash		3,635			16,328
Accounts receivable, net of allowances of $10,051 and $7,519, respectively		84,165			51,491
Prepaid expenses and other current assets		12,257			17,473
Total current assets		490,524			420,674
Investment in marketable securities		146,552			312,434
Restricted cash		11,668			11,668
Property and equipment, net		77,821			75,786
Goodwill		72,948			18,658
Intangible assets, net		22,395			10,847
Investment in affiliates		5,772			13,422
Other assets		13,749			14,408
Total assets	$	841,429		$	877,897
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	34,964		$	4,164
Accrued expenses and other current liabilities		56,844			63,152
Deferred revenue		13,687			8,188
Total current liabilities		105,495			75,504
Convertible subordinated notes — Zero Coupon, due 2023		135,000			135,000
Other long term liabilities		20,570			27,046
Total liabilities		261,065			237,550
STOCKHOLDERS’ EQUITY:
Preferred stock, par value $0.001; 5,000,000 shares authorized, none outstanding		—			—
Common stock, par value $0.001; 400,000,000 shares authorized, 140,564,907 and 139,329,875 shares issued, respectively		141			139
Treasury stock, 14,864,925 and 1,846,170 shares, respectively		(109,223	)		(10,396	)
Additional paid-in capital		1,294,510			1,287,775
Accumulated deficit		(612,013	)		(649,523	)
Other accumulated comprehensive income		6,949			12,352
Total stockholders’ equity		580,364			640,347
Total liabilities and stockholders’ equity	$	841,429		$	877,897

DOUBLECLICK INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended						Year Ended
	December 31,						December 31,
	2004			2003			2004			2003
	(Unaudited, in thousands)
OPERATING ACTIVITIES
Net income	$	10,572		$	3,841		$	37,510		$	16,918
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and leasehold amortization		5,908			13,787			25,413			51,252
Amortization of intangible assets		2,973			1,944			10,092			9,427
Equity in losses of affiliates		415			112			1,299			2,551
Gain on distribution from affiliate		—			—			(2,400	)		—
Gain on sale of investment in affiliate								(7,125	)
Loss on early extinguishment of debt		—			—			—			4,406
Restructuring credits, net		—			—			(4,514	)		(9,092	)
Impairment of goodwill and intangible assets		—			—			5,592			—
Other non-cash items		475			366			2,389			1,673
Provisions for bad debts and advertiser discounts		1,760			1,867			12,231			8,234
Changes in operating assets and liabilities, net of the effect of acquisitions:
Accounts receivable		(7,304	)		(112	)		(25,272	)		(9,134	)
Prepaid expenses and other assets		1,008			1,917			7,424			4,631
Accounts payable		12,995			(2,122	)		14,319			(4,218	)
Lease termination and related payments		—			—			(7,625	)		(70,874	)
Accrued expenses and other liabilities		3,301			2,037			(7,388	)		(22,619	)
Deferred revenue		1,636			314			1,539			1,763
Net cash provided by (used in) operating activities		33,739			23,951			63,484			(15,082	)
INVESTING ACTIVITIES
Purchases of investments in marketable securities		(32,622	)		(74,850	)		(127,706	)		(409,045	)
Maturities of investments in marketable securities		33,878			116,881			177,155			541,367
Restricted cash		24			(255	)		12,693			(2,905	)
Purchases of property and equipment		(7,754	)		(11,346	)		(26,295	)		(28,580	)
Proceeds from distribution from affiliate		—			—			2,400			—
Proceeds from sale of investment in affiliate		—			—			9,519			656
Proceeds from sale of intangible asset, net		—			—			—			900
Investment in Abacus Germany		(411	)		—			(1,216	)		—
Acquisition of businesses, net of cash assumed		—			—			(72,002	)		(2,757	)
Net cash (used in) provided by investing activities		(6,885	)		30,430			(25,452	)		99,636
FINANCING ACTIVITIES
Proceeds from the issuance of common stock		420			587			4,305			5,038
Proceeds from issuance of convertible subordinated notes, net		—			—			—			131,963
Proceeds used in repurchase of convertible bonds		—			—						(157,952	)
Purchases of treasury stock		—			(1,447	)		(98,827	)		(1,447	)
Payments under capital lease obligations and notes payable		—			(578	)		(3,675	)		(8,887	)
Net cash provided by (used in) financing activities		420			(1,438	)		(98,197	)		(31,285	)
Effect of exchange rate changes on cash		3,279			3,849			2,816			6,544
Net increase (decrease) in cash and cash equivalents		30,553			56,792			(57,349	)		59,813
Cash and cash equivalents at beginning of period	$	95,582		$	126,692		$	183,484		$	123,671
Cash and cash equivalents at end of period	$	126,135		$	183,484		$	126,135		$	183,484

DOUBLECLICK INC.
RECONCILIATION OF EBITDA TO GAAP NET INCOME
(Unaudited, in thousands)

	Three Months Ended						Year Ended
	December 31, 2004						December 31, 2004
	2004			2003(3)			2004(2)			2003(4)
GAAP Net Income	$	10,572		$	3,841		$	37,510		$	16,918
Plus: tax provision (benefit)		213			(370	)		3,207			1,039
Less: interest income, net		(2,230	)		(2,965	)		(9,523	)		(10,702	)
Plus: amortization of intangibles (1)		2,973			1,944			10,092			9,427
Plus: depreciation and leasehold amortization		5,908			13,787			25,413			51,252
EBITDA	$	17,436		$	16,237		$	66,699		$	67,934
GAAP Diluted Net Income Per Share	$	0.08		$	0.03		$	0.26		$	0.11

⁽¹⁾ For the three months ended December 31, 2004 and December 31, 2003, $1.3 million and $0.9 million, respectively, of amortization expenses of intangible assets relating to purchased technology was included as a component of cost of revenue in the Consolidated Statement of Operations. For the years ended December 31, 2004 and December 31, 2003, $4.9 million and $3.5 million, respectively, of amortization expenses of intangible assets relating to purchased technology was included as a component of cost of revenue in the Consolidated Statement of Operations.

⁽²⁾ 2004 GAAP Net Income and EBITDA benefited from a $7.1 million non-operating gain from the sale of the Company’s 15% interest in AdLINK Internet Media AG, a $4.5 million restructuring credit relating to the Company’s Louisville, Colorado facility, a distribution from MaxWorldwide of $2.4 million in connection with its plan of liquidation and dissolution and a $1.5 million reserve reversal relating to a prior acquisition. These benefits were partially offset by a $5.6 million impairment charge resulting from the write-down of the Company’s Enterprise Marketing Solutions business. These items added a net total of approximately $0.07 per share to GAAP Net Income in 2004.

⁽³⁾ For the three months ended December 31, 2003, GAAP Net Income was negatively impacted by $5.4 million in accelerated depreciation charges associated with the relocation of the Company’s New York headquarters. This charge was partially offset by a $1.3 million reserve reversal relating to the resolution of certain tax matters. These items lowered GAAP Net Income by approximately $0.03 per share in 4Q03.

⁽⁴⁾ 2003 GAAP Net Income was negatively impacted by $14.6 million in accelerated depreciation charges associated with the relocation of the Company’s New York headquarters and the termination of a lease for the Company’s San Francisco facility. These charges were partially offset by a $1.3 million reserve reversal relating to the resolution of certain tax matters. GAAP Net Income and EBITDA benefited from a net restructuring credit of $9.1 million associated with these facilities and $1.4 million received by the Company in connection with an insurance claim. These benefits were partially offset by a $4.4 million loss relating to the redemption of the Company’s 4.75% Convertible Subordinated Notes. These items lowered GAAP Net Income by approximately $0.05 per share in 2003.