Sohu.com Reports Third Quarter 2012 Unaudited Financial Results

       Sohu.com Reports Third Quarter 2012 Unaudited Financial Results

Total Revenues were US$285 Million, Up 23% Year-over-Year and 12%
Quarter-over-Quarter, Exceeding the High End of Group Guidance by US$8
Million;

GAAP Fully Diluted EPS of 63 US Cents; Non-GAAP Fully Diluted EPS of 77 US
Cents, Exceeding the High End of Group Guidance by 22 US Cents

PR Newswire

BEIJING, Nov. 5, 2012

BEIJING, Nov. 5, 2012 /PRNewswire/ -- Sohu.com Inc. (NASDAQ: SOHU), China's
leading online media, search, gaming, community and mobile service group,
today reported unaudited financial results for the third quarter ended
September 30, 2012.

(Logo: http://photos.prnewswire.com/prnh/20100201/CNM013LOGO )

Third  Quarter Highlights

  oTotal revenues were US$285 million, up 23% year-over-year and 12%
    quarter-over-quarter.
  oBrand advertising revenues were US$78 million, up 2% year-over-year and
    12% quarter-over-quarter.
  oSogou[1] revenues were US$37 million, up 102% year-over-year and 23%
    quarter-over-quarter.
  oOnline game revenues reached quarterly record high of US$151 million, up
    30% year-over-year and 10% quarter-over-quarter.
  oGAAP net income attributable to Sohu.com Inc. was US$24 million, or
    US$0.63 per fully diluted share. Non-GAAP net income attributable to
    Sohu.com Inc. was US$30 million, or US$0.77 per fully diluted share.

Dr. Charles Zhang, Chairman and CEO of Sohu.com Inc. commented, "We are
pleased with the solid financial results we achieved in the third quarter.
Total revenues surpassed our expectations, rising 23% year-on-year. Brand
advertising revenues met the high end of our guidance and online gaming
revenues came in well ahead of our expectations."

Dr. Zhang added, "By business unit, for online video, our newly set-up
dedicated sales team is bringing in results and we expect fourth quarter
advertising revenue to be back on growth track. Sogou maintained triple-digit
year-on-year revenue growth which was supported by improved monetization. For
Changyou, strong performance by both MMO and web games helped post new records
for both revenues and profit."

Ms. Belinda Wang, Co-President and COO added, "In the third quarter, thanks to
solid demand from FMCG sector and the recovery of real estate sector, our
brand advertising revenues reached the high end of our prior estimate. For the
fourth quarter, although we see some weakening signals from the auto sector
where Japanese car makers cut spending as a result of sharp decline in their
sales volume, the impact is expected to be offset by the contribution from
other sectors."

Third  Quarter Financial Results

Revenues

Total revenues for the third quarter of 2012 were US$285 million, up 23%
year-over-year and 12% quarter-over-quarter.

Total online advertising revenues, which include revenues from brand
advertising and search and others businesses for the third quarter of 2012,
were US$113 million, up 19% year-over-year and 15% quarter-over-quarter.

Brand advertising revenues for the third quarter of 2012 totaled US$78
million, up 2% year-over-year and 12% quarter-over-quarter.

Search and others revenues for the third quarter of 2012 were US$35 million,
up 92% year-over-year and 23% quarter-over-quarter. The year-over-year
increase was mainly due to increased traffic and improved monetization of
traffic.

Online game revenues for the third quarter of 2012 were US$151 million, up 30%
year-over-year and 10% quarter-over-quarter.

Wireless revenues for the third quarter of 2012 were US$14 million, up 1%
year-over-year and down 8% quarter-over-quarter.

Gross Margin

Both GAAP and non-GAAP gross margin was 66% for the third quarter of 2012,
compared with 61% in the second quarter of 2012 and 71% in the third quarter
of 2011.

Online advertising gross margin for the third quarter of 2012 was 49%,
compared with 32% in the second quarter of 2012 and 58% in the third quarter
of 2011. Non-GAAP online advertising gross margin for the third quarter of
2012 was 50%, compared with 31% in the second quarter of 2012 and 58% in the
third quarter of 2011.

Both GAAP and non-GAAP gross margin for brand advertising in the third quarter
of 2012 was 52%, compared with 26% in the second quarter of 2012 and 61% in
the third quarter of 2011. The year-over-year decrease in gross margin was
primarily due to increases in content and bandwidth costs. The
quarter-over-quarter increase in gross margin was primarily due to decrease in
content costs. We recognized an approximately $15 million impairment charges
of video content in the second quarter of 2012.

Both GAAP and non-GAAP gross margin for search and others business in the
third quarter of 2012 were 44%, compared with 44% in the second quarter of
2012 and 49% in the third quarter of 2011. The year-over-year decrease in
margin was mainly due to higher traffic acquisition costs.

Both GAAP and non-GAAP gross margin for online games in the third quarter of
2012 were 86%, compared with 87% in the second quarter of 2012 and 87% in the
third quarter of 2011.

Both GAAP and non-GAAP gross margin for the wireless business for the third
quarter of 2012 were 34%, compared with 35% in the second quarter of 2012 and
39% in the third quarter of 2011. The year-over-year decrease was primarily
due to increased revenue sharing costs with partners.

Operating Expenses

For the third quarter of 2012, operating expenses totaled $125 million, up 36%
year-over-year and 11% quarter-over-quarter. Non-GAAP operating expenses were
$121 million, up 38% year-over-year and 14% quarter-over-quarter. The
year-over-year increase was primarily due to an increase in the number of
employees and higher salaries and benefits expense. The quarter-over-quarter
increase was primarily due to an increase in the number of employees, higher
salaries and benefits expense and higher marketing expense.

Operating Profit

Operating profit for the third quarter of 2012 was US$64 million, down 13%
year-over-year and up 48% quarter-over-quarter. Operating margin was 22% for
the third quarter of 2012, compared with 17% in the previous quarter and 32%
in the third quarter of 2011.

Non-GAAP operating profit for the third quarter of 2012 was US$68 million,
down 13% year-over-year and up 37% quarter-over-quarter. Non-GAAP operating
margin was 24% for the third quarter of 2012, compared with 19% in the
previous quarter and 33% in the third quarter of 2011.

Income Tax Expense

For the third quarter of 2012, GAAP income tax expense was US$19 million.
Excluding a non-cash income tax expense of US$1 million recorded for the
utilization of tax benefits from excess tax deductions related to share-based
awards, non-GAAP income tax expense was US$18 million, flattish with the
previous quarter.

Net Income

Before deducting the share of net income pertaining to the Non-controlling
Interest, GAAP net income for the third quarter of 2012 was US$52 million,
down 20% year-over-year and up 53% quarter-over-quarter. Non-GAAP net income
for the third quarter of 2012 was US$59 million, down 15% year-over-year and
up 43% quarter-over-quarter.

GAAP net income attributable to Sohu.com Inc. for the third quarter of 2012
was US$24 million, or US$0.63 per fully diluted share, down 47% year-over-year
and up 123% quarter-over-quarter. Non-GAAP net income attributable to Sohu.com
Inc. for the third quarter of 2012 was US$30 million, or US$0.77 per fully
diluted share, down 40% year-over-year and up 80% quarter-over-quarter.

Cash Balance

As of September 30, 2012, Sohu Group had cash and cash equivalents of US$773
million, compared with US$733 million as of December 31, 2011.

Ms. Carol Yu, Co-President and CFO of Sohu.com Inc. commented, "Our strategic
move of setting up a dedicated video sales team from early 2012 started to
bear fruits. Our business units, including Sohu Video and Sogou, are making
solid developments as the Group consistently and carefully grooms them. The
encouraging progress validates our strategy that is to maximize long-term
shareholder value."

Other development

On August 6, 2012, Changyou declared a special one-time cash dividend of $1.90
per Class A or Class B ordinary share, or $3.80 per ADS. The total amount of
the special dividend declared was approximately $201 million. On September 21,
2012, Changyou paid the dividend to its shareholders. The amount of the
dividend received by Sohu was approximately $136 million.

Supplementary Information for Online Game Results

Third Quarter 2012 Operational Results

  oAggregate registered accounts for Changyou's games[2] , excluding 7Road's
    games, increased 41% year-over-year and 12% quarter-over-quarter to 223.5
    million.
  oAggregate peak concurrent users ("PCU") for Changyou's games, excluding
    7Road's games, decreased 5% year-over-year and increased 1%
    quarter-over-quarter to 1.09 million.
  oAggregate active paying accounts ("APA") for Changyou's games, excluding
    7Road's games, decreased 20% year-over-year and 8% quarter-over-quarter to
    2.41 million. The quarter-over-quarter and year-over-year decreases
    reflected a decline in the number of low-spending active paying accounts
    that did not make a purchase in the third quarter of 2012 as Changyou
    continued last quarter's strategy of giving away virtual items and
    reducing in-game promotions in TLBB.
  oAverage revenue per active paying account ("ARPU") for Changyou's games,
    excluding 7Road's games, increased 46% year-over-year and 15%
    quarter-over-quarter to RMB319.The quarter-over-quarter and year-over-year
    increases were mainly due to the decline in TLBB's low-spending active
    paying accounts and TLBB's core players increasing their spending in the
    third quarter of 2012.

Business Outlook

For the fourth quarter of 2012, Sohu estimates:

  oTotal revenues to be between US$288 million and US$293 million.
  oBrand advertising revenues to be between $80  million and $82 million;
    this implies a sequential and annual increase of 3% to 5%.
  oSogou revenues to be around US$40 million; this implies a sequential
    increase of 7% and an annual growth of 74%.
  oOnline game revenues to be between US$152 million and US$155 million. This
    implies a sequential increase of 1% to 3% and represents an annual growth
    of 23% to 26%.
  oBefore deducting the share of non-GAAP net income pertaining to the
    Non-Controlling interest, non-GAAP net income to be between US$48 million
    and US$51 million.
  oNon-GAAP net income attributable to Sohu.com Inc. to be between US$23
    million and US$25 million, and non-GAAP fully diluted earnings per share
    to be between US$0.60 and US$0.65.
  oAssuming no new grants of share-based awards, we estimate that
    compensation expenses and income tax expenses relating to share-based
    awards to be around US$3.5 million to US$4.5 million. The estimated impact
    of this expense is expected to reduce Sohu's fully diluted earnings per
    share for the fourth quarter of 2012 under US GAAP by 9 to 11 US cents.

Non-GAAP Disclosure

Beginning in the fourth quarter of 2011, Sohu revised its non-GAAP reporting
methodology to exclude income/expense from the adjustment of contingent
consideration, goodwill impairment, impairment of intangibles via acquisitions
of businesses and the related tax impact, in addition to its historical
practice of excluding share-based awards from non-GAAP results.

To supplement the unaudited consolidated financial statements presented in
accordance with accounting principles generally accepted in the United States
of America ("GAAP"), Sohu's management uses non-GAAP measures of gross profit,
operating profit, income tax expense, net income attributable to Sohu.com.Inc.
and net income attributable to Sohu.com.Inc. per share, which are adjusted
from results based on GAAP to exclude the impact of share-based awards, which
consist mainly of share-based compensation expenses and non-cash tax benefits
from excess tax deductions related to share-based awards, income/expense from
the adjustment of contingent consideration previously recorded for
acquisitions and goodwill impairment and impairment of intangibles via
acquisitions of businesses and the related tax impacts. These measures should
be considered in addition to results prepared in accordance with GAAP, but
should not be considered a substitute for, or superior to, GAAP results.

Sohu's management believes excluding the impact of share-based awards,
non-cash tax benefits from excess tax deductions related to share-based
awards, income/expense from the adjustment of contingent consideration,
goodwill impairment, impairment of intangibles via acquisitions of businesses
and the related tax impact from its non-GAAP financial measure is useful for
itself and investors. Further, the impact of share-based awards, utilization
of non-cash tax benefits from excess tax deductions related to share-based
awards, income/expense from the adjustment of contingent consideration,
goodwill impairment, impairment of intangibles via acquisitions of businesses
and the related tax impact cannot be anticipated by management and business
line leaders and these expenses were not built into the annual budgets and
quarterly forecasts, which have been the basis for information Sohu provides
to analysts and investors as guidance for future operating performance. As the
impact of share-based awards, non-cash tax benefits from excess tax deductions
related to share-based awards, income/expense from the adjustment of
contingent consideration, goodwill impairment, impairment of intangibles via
acquisitions of businesses and the related tax impact does not involve
subsequent cash outflow, Sohu does not factor this in when evaluating and
approving expenditures or when determining the allocation of its resources to
its business segments. As a result, in general, the monthly financial results
for internal reporting and any performance measure for commissions and bonuses
are based on non-GAAP financial measures that exclude the impact of
share-based awards, non-cash tax benefits from excess tax deductions related
to share-based awards,income/expense from the adjustment of contingent
consideration, goodwill impairment, impairment of intangibles via acquisitions
of businesses and the related tax impact.

The non-GAAP financial measures are provided to enhance investors' overall
understanding of Sohu's current financial performance and prospects for the
future. A limitation of using non-GAAP gross profit, operating profit, income
tax expense, net income attributable to Sohu.com Inc. and net income
attributable to Sohu.com Inc. per share, excluding the impact of share-based
awards, non-cash tax benefits from excess tax deductions related to
share-based awards, income/expense from the adjustment of contingent
consideration, goodwill impairment, impairment of intangibles via acquisitions
of businesses and the related tax impact is that the impact of share-based
awards and non-cash tax benefits from excess tax deductions related to
share-based awards have been and will continue to be a significant recurring
expense in Sohu's business for the foreseeable future, income/expense from the
adjustment of contingent consideration, goodwill impairment, impairment of
intangibles via acquisitions of businesses and the related tax impact may
recur in the future. In order to mitigate these limitations Sohu has provided
specific information regarding the GAAP amounts excluded from each non-GAAP
measure. The accompanying tables include details on the reconciliation between
the GAAP financial measures that are most directly comparable to the non-GAAP
financial measures that have been presented.

Notes to Financial Information

Financial information in this press release other than the information
indicated as being non-GAAP is derived from Sohu's unaudited interim financial
statements prepared in accordance with GAAP.

Mezzanine equity consists of non-controlling interests in 7Road and a put
option that gives the non-controlling shareholders the right to put their
shares to Changyou at a pre-determined price if 7Road achieves specified
performance milestones before the expiry of the put option and 7Road does not
complete an initial public offering on NASDAQ, the New York Stock Exchange or
The Stock Exchange of Hong Kong by 2014. The put option will expire in 2014.
Non-controlling interests of 7Road and the put option are classified as
mezzanine equity in Changyou's consolidated balance sheets, as redemption of
the non-controlling interests is not solely within the control of Changyou.

In accordance with ASC subtopic 480-10, Changyou accretes the balance of
non-controlling interests to its redemption value over the period from the
date of the 7Road acquisition to the earliest exercise date of the put right.
Any subsequent changes in the redemption value are considered to be changes in
accounting estimates and are also recognized over the same period as net
income attributable to mezzanine classified non-controlling interests.

In the third quarter of 2012, Changyou estimated that based on 7Road's
performance in the first three quarters of 2012, 7Road will likely exceed its
originally estimated performance for year 2012 and 2013, which will be the
basis to determine the exercise price of the put option. As a result, the
Company has increased the estimated redemption value of the mezzanine
classified non-controlling interests in 7Road. The increase in the redemption
value was recognized prospectively over the period from the date of the change
in estimate to the earliest exercise date of the put right as an increase in
net income attributable to mezzanine classified non-controlling interests.

Safe Harbor Statement

This announcement contains forward-looking statements. It is currently
expected that the Business Outlook will not be updated until release of Sohu's
next quarterly earnings announcement; however, Sohu reserves right to update
its Business Outlook at any time for any reason. Statements that are not
historical facts, including statements about Sohu's beliefs and expectations,
are forward-looking statements. These statements are based on current plans,
estimates and projections, and therefore you should not place undue reliance
on them. Forward-looking statements involve inherent risks and uncertainties.
We caution you that a number of important factors could cause actual results
to differ materially from those contained in any forward-looking statement.
Potential risks and uncertainties include, but are not limited to, the current
global financial and credit markets crisis and its potential impact on the
Chinese economy, the uncertain regulatory landscape in the People's Republic
of China, fluctuations in Sohu's quarterly operating results, and Sohu's
reliance on online advertising sales, online games and wireless services (most
wireless revenues are collected from a few mobile network operators) for its
revenues. Further information regarding these and other risks is included in
Sohu's annual report on Form 10-K for the year ended December 31, 2011, and
other filings with the Securities and Exchange Commission.

Conference Call and Webcast

Sohu's management team will host a conference call on the same day at 8:30
a.m. U.S. Eastern Time, November 5, 2012 (9:30 p.m. Beijing/Hong Kong time,
November 5, 2012) following the quarterly results announcement.

The dial-in details for the live conference call are:

US Toll-Free:  +1-866-519-4004
International: +1-718-354-1231
Hong Kong:     +852-2475-0994
China Mainland +86-800-819-0121 / +86-400-620-8038
Passcode:      SOHU

Please dial in 10 minutes before the call is scheduled to begin and provide
the passcode to join the call.

A telephone replay of the call will be available after the conclusion of the
conference call at 11:30 a.m. Eastern Time on November 5 through November 13,
2012. The dial-in details for the telephone replay are:

International: +61-2-8235-5000
Passcode:      47409010

The live webcast and archive of the conference call will be available on the
Investor Relations section of Sohu's website at http://corp.sohu.com/.

About Sohu.com

Sohu.com Inc. (NASDAQ: SOHU) is China's premier online brand and indispensable
to the daily life of millions of Chinese, providing a network of web
properties and community based/web 2.0 products which offer the vast Sohu user
community a broad array of choices regarding information, entertainment and
communication. Sohu has built one of the most comprehensive matrices of
Chinese language web properties and proprietary search engines, consisting of
the mass portal and leading online media destination www.sohu.com; interactive
search engine www.sogou.com; #1 games information portal www.17173.com; the
top real estate website www.focus.cn; #1 online alumni club www.chinaren.com;
wireless value-added services provider www.goodfeel.com.cn; leading online
mapping service provider www.go2map.com; and developer and operator of online
games www.changyou.com/en/.

Sohu corporate services consist of online brand advertising on its matrix of
websites as well as bid listing and home page on its in-house developed search
directory and engine. Sohu also offers wireless value-added services such as
news, information, music, ringtone and picture content sent over mobile
phones. Sohu's online game subsidiary, Changyou.com (NASDAQ: CYOU) has a
diverse portfolio of online games that includes Tian Long Ba Bu, one of the
most popular massively multi-player online ("MMO") games in China, and DDTank
and Wartune (also known as Shen Qu), which are two popular web games in China.
Sohu.com, established by Dr. Charles Zhang, one of China's internet pioneers,
is in its sixteen year of operation.

For investor and media inquiries, please contact:

In China:

Mr. Eric Yuan
Sohu.com Inc.
Tel:    +86 (10) 6272-6593
E-mail: ir@contact.sohu.com

In the United States:

Mr. Jeff Bloker
Christensen
Tel:    +1 (480) 614-3003
E-mail: jbloker@ChristensenIR.com 

[1] Sogou operates search and others business and offers Internet value-added
services ("IVAS") with respect to Web games developed by third-party
developers. Search and others business include search and Sogou Web
Directory. In statements of operations, revenues from search and Sogou Web
Directory are recorded as "search and others" revenue, and revenue from IVAS
is recorded as "others" revenue.

[2] Excludes 7Road's games and comprises the following games operated in
China: Tian Long Ba Bu ("TLBB"), Duke of Mount Deer ("DMD"), Blade Online,
Blade Hero 2, Tao Yuan, Da Hua Shui Hu, Zhong Hua Ying Xiong, Immortal Faith,
and Legend of Ancient World.

SOHU.COM INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                                                                                          Three Months Ended
                                                                                          Sep.30,2012   Jun.30,2012   Sep.30,2011
Revenues:
Online advertising
 Brand advertising                                                               $ 77,874        $ 69,312        $ 76,572
 Search and others                                                                 35,284          28,763          18,410
 Subtotal                                                                     113,158         98,075          94,982
Online games                                                                              151,093         137,172         115,798
Wireless                                                                                  14,312          15,598          14,210
Others                                                                                    6,815           4,882           7,870
 Total revenues                                                         285,378         255,727         232,860
Cost of revenues:
Onlineadvertising
 Brand advertising (includes stock-based compensation                               37,476          50,963          30,221
 expense of $150, $-175 and $232, respectively)
Search and others (includes stock-based compensation                                      19,736          16,192          9,478
 expense of $21, $38 and $0, respectively)
Subtotal                                                                                  57,212          67,155          39,699
Online games (includes stock-based compensation expense                                   21,026          18,301          14,578
 of $61, $61 and $21, respectively)
Wireless (includes stock-based compensation expense of                                    9,474           10,208          8,727
 $0, $0, and $0, respectively)
Others (includes stock-based compensation expense of $0,                                 9,037           4,180           4,469
$0 and $0, respectively)
 Total cost of revenues                                                            96,749          99,844          67,473
Gross profit                                                                              188,629         155,883         165,387
Operating expenses:
Product development (includes stock-based compensation                                   46,994          43,340          28,943
 expense of $1,316, $1,531 and $1,633, respectively)
Sales and marketing (includes stock-based compensation                                    58,250          48,999          47,150
 expense of $582, $497 and $874, respectively)
General and administrative (includes stock-based
 compensation expense of $1,713, $1,477 and $1,617,                               19,666          17,508          15,686
 respectively)
Impairment of acquired intangibles via acquisition of                                     -               2,906           -
 businesses
 Total operating expenses                                                           124,910         112,753         91,779
Operating profit                                                                          63,719          43,130          73,608
Other income/(expense)                                                                    (111)           1,818           3,249
Interest income                                                                           5,974           7,223           4,314
Exchange difference                                                                       667             45              (2,420)
Income before income tax expenses                                                         70,249          52,216          78,751

                                                                                          18,727          18,467          14,441
Income tax expense
Net Income                                                                                51,522          33,749          64,310
Less: Net income attributable to the mezzanine classified                                 4,495           1,095           1,092
 noncontrolling interest shareholders
 Net income attributable to the noncontrolling interest                         21,146          19,872          16,406
shareholders
Net income attributable to Sohu.com Inc.                                                  25,881          12,782          46,812
Basic net income per share attributable to Sohu.com Inc.                                $ 0.68          $ 0.34          $ 1.22
Shares used in computing basic net income per share                                       38,022          38,002          38,298
 attributable to Sohu.com Inc.
Diluted net income per share attributable to Sohu.com Inc.                              $ 0.63          $ 0.28          $ 1.17
Shares used in computing diluted net income per share                                     38,344          38,347          38,844
 attributable to Sohu.com Inc.
Note:

(a) The classification of certain comparative figures of online advertising expenses has been changed to conform to the current
period presentation.

SOHU.COM INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED, IN THOUSANDS)
                                                                           AsofSep.30,2012   AsofDec.31,2011
ASSETS
Current assets:
 Cash and cash equivalents                                     $ 773,469             $ 732,607
Restricted time deposits                                                   115,124               -
Short term investments                                                     41,930                17,560
Investment in debt securities                                              78,852                79,354
 Accounts receivable, net                                        98,090                87,066
 Prepaid and other current assets                                44,969                53,894
 Total current assets                                  1,152,434             970,481
Fixed assets, net                                                          170,415               152,652
Goodwill                                                                   158,104               158,905
Intangible assets, net                                                     79,774                69,762
Restricted time deposits                                                   110,633               -
Prepaid non-current assets                                                 268,002               270,282
Other assets                                                               11,323                11,212
 Total assets                                    $ 1,950,685           $ 1,633,294
LIABILITIES
Current liabilities:
 Accounts payable                                              $ 58,918              $ 31,179
 Accrued liabilities                                             103,076               95,409
 Receipts in advance and deferred revenue                        80,177                75,809
 Accrued salary and benefits                                     55,738                45,300
 Taxes payable                                                   34,768                47,213
 Deferred tax liability                                          8,701                 -
 Short-term bank loans                                           113,000               -
 Other short-term liabilities                                    56,176                35,816
 Contingent consideration                                        76                    476
 Total current liabilities                           $ 510,630             $ 331,202
Long-term accounts payable                                                 15,042                3,612
Long-term bank loans                                                       109,353               -
Deferred tax liabilities                                                   8,096                 5,146
Contingent consideration                                                   -                     17,009
Total long-term liabilities                                              $ 132,491             $ 25,767
 Total liabilities                               $ 643,121             $ 356,969
MEZZANINE                                                                  56,895                57,254
EQUITY


SHAREHOLDERS' EQUITY:
 Sohu.com Inc. shareholders' equity                               1,045,339             1,008,425
 Noncontrolling Interest                                          205,330               210,646
 Total shareholders' equity                          $ 1,250,669           $ 1,219,071
Total liabilities, mezzanine equity and shareholders'equity             $ 1,950,685           $ 1,633,294



SOHU.COM INC.

RECONCILIATIONS OF NON-GAAP RESULTS OF OPERATION MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES

(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                                                      Three Months Ended Sep. 30, 2012     Three Months Ended Jun. 30, 2012     Three Months Ended Sep. 30, 2011
                                                      GAAP      Non-GAAP        Non-GAAP   GAAP      Non-GAAP        Non-GAAP   GAAP      Non-GAAP        Non-GAAP
                                                                Adjustments                          Adjustments                          Adjustments
                                                                150         (a)                      (175)       (a)                      232         (a)
Brandadvertisinggrossprofit $ 40,398  $ 150         $   40,548   $ 18,349  $ (175)       $   18,174   $ 46,351  $ 232         $   46,583
Brand advertising gross margin                        52%                       52%        26%                       26%        61%                       61%
                                                                21          (a)                      38          (a)
Search and others gross profit                      $ 15,548  $ 21          $   15,569   $ 12,571  $ 38          $   12,609   $ 8,932   $ -           $   8,932
Search and others gross margin                        44%                       44%        44%                       44%        49%                       49%
                                                                171         (a)                      (137)       (a)                      232         (a)
Online advertising gross profit                     $ 55,946  $ 171         $   56,117   $ 30,920  $ (137)       $   30,783   $ 55,283  $ 232         $   55,515
Online advertising gross margin                       49%                       50%        32%                       31%        58%                       58%
                                                                61          (a)                      61          (a)                      21          (a)
Online games gross profit                           $ 130,067 $ 61          $   130,128  $ 118,871 $ 61          $   118,932  $ 101,220 $ 21          $   101,241
Online games gross margin                             86%                       86%        87%                       87%        87%                       87%
Wireless gross profit                               $ 4,838   $ -           $   4,838    $ 5,390   $ -           $   5,390    $ 5,483   $ -           $   5,483
Wireless gross margin                                 34%                       34%        35%                       35%        39%                       39%
Others gross profit                                 $ -2,222  $ -           $   -2,222   $ 702     $ -           $   702      $ 3,401   $ -           $   3,401
Others gross margin                                   -33%                      -33%       14%                       14%        43%                       43%
                                                                232         (a)                      (76)        (a)                      253         (a)
Gross profit                                        $ 188,629 $ 232         $   188,861  $ 155,883 $ (76 )       $   155,807  $ 165,387 $ 253         $   165,640
Gross margin                                          66%                       66%        61%                       61%        71%                       71%
                                                                                                     3,429       (a)
                                                                3,843       (a)                      2,906       (b)                      4,377       (a)
Operating profit                                    $ 63,719  $ 3,843       $   67,562   $ 43,130  $ 6,335       $   49,465   $ 73,608  $ 4,377       $   77,985
Operating margin                                      22%                       24%        17%                       19%        32%                       33%
                                                                3,843       (a)                      3,429       (a)
                                                                973         (c)                      2,268       (b)                      4,377       (a)
                                                                2,195       (d)                      1,471       (c)                      294         (c)
Net income before Non-Controlling Interest          $ 51,522  $ 7,011       $   58,533   $ 33,749  $ 7,168       $   40,917   $ 64,310  $ 4,671       $   68,981
                                                                3,043       (a)                      2,610       (a)
                                                                973         (c)                      1,520       (b)                      3,483       (a)
                                                                1,471       (d)                      1,471       (c)                      294         (c)
Net income attributable to Sohu.com Inc for         $ 24,015  $ 5,487       $   29,502   $ 10,755  $ 5,601       $   16,356   $ 45,254  $ 3,777       $   49,031
 diluted net income per share (e)
Diluted net income per share attributable           $ 0.63                  $   0.77     $ 0.28                  $   0.42     $ 1.17                  $   1.26
 to Sohu.com Inc.

                                                                                          
Shares used in computing diluted net                $                           38,480                               38,504     38,844                    39,068
 income per share attributable to                  38,344                               38,347
 Sohu.com Inc.


Note:

(a) To eliminate the impact of share-based awards as measured using the fair value method.

(b) Beginning in the fourth quarter of 2011, the Company revised its non-GAAP reporting methodology to exclude goodwill impairment, impairment of intangibles
via acquisitions of businesses and the related tax impact, non-cash tax benefits from excess tax deductions related to share-based awards and income/expense from
the adjustment of contingent consideration previously recorded for acquisitions, in addition to its historical practice of excluding share-based compensation
expense from non-GAAP results. For the three months ended June 30, 2012, there were $2.9 million of impairment of intangibles via acquisitions of businesses. For
the three months ended March 31, 2012, there were no goodwill impairment, impairment of intangibles via acquisitions of businesses and the related tax impact,
non-cash tax benefits from excess tax deductions related to share-based awards and income/expense from the adjustment of contingent consideration previously
recorded for acquisitions."

(c) To adjust non-cash tax benefits from excess tax deductions related to share-based awards.

(d) To adjust income/expense from the adjustment of contingent consideration previously recorded for acquisitions.

(e) To adjust Sohu's economic interest in Changyou and Sogou under the treasury stock method and if-converted method, respectively.

(f) The classification of certain comparative figures of online advertising expenses has been changed to conform to the current period presentation.

SOURCE Sohu.com Inc.

Website: http://corp.sohu.com