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Sohu.com Reports Third Quarter 2013 Unaudited Financial Results

       Sohu.com Reports Third Quarter 2013 Unaudited Financial Results

PR Newswire

BEIJING, Oct. 28, 2013

BEIJING, Oct. 28, 2013 /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, 2013.

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

Third  Quarter Highlights

  oTotal revenues were US$368 million, up 29% year-over-year and 9%
    quarter-over-quarter.
  oBrand advertising revenues were US$125 million, up 60% year-over-year and
    25% quarter-over-quarter.
  oSogou[1] revenues were US$57 million, up 53% year-over-year and 14%
    quarter-over-quarter.
  oOnline game revenues were US$161 million, up 7% year-over-year and down 4%
    quarter-over-quarter.

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

Dr. Charles Zhang, Chairman and CEO of Sohu.com Inc. commented, "The third
quarter of 2013 sets a strategic milestone for the Sohu Group. On September
16, we formed a partnership with Tencent whereby Tencent invested in our
search subsidiary Sogou. This partnership does not only bring New Sogou to be
a credible, fastest growing contender in both PC and mobile search, secures a
solid top 3 market position, but also enables Sogou to bring even more users,
traffic and other synergies to our various businesses and enhances the overall
competitiveness of the Sohu Group."

Dr. Zhang added, "As for the financial performance of the third quarter, I am
glad to report our total revenues were up 29% year-on-year to $368 million.
Notably, brand advertising revenues grew 60% from a year ago, which is the
highest growth rate since the third quarter of 2008. In particular, Sohu Video
advertising revenues tripled from last year. Sogou demonstrated another
quarter of healthy growth with revenues increasing 53% year-on-year. Changyou
made steady progress in core gaming business and on other initiatives, and
delivered financial results in line with its expectation."

Ms. Belinda Wang, Co-President and COO added, "For the third quarter, our
brand advertising revenues demonstrated strong momentum, with revenues up 60%
year-on-year to $125 million. Online video ad revenue contributed most to this
significant growth, whereas our auto and real estate verticals as well as
17173 also showed strength."

Mr. Xiaochuan Wang, CEO of Sogou commented, "During the past 40 days, we have
been devoting a considerable amount of our efforts on the integration with
Soso, which is well on track in every aspect. The New Sogou team, consisting
of employees from Sogou and Soso, are very upbeat about the vast opportunities
ahead. We will also be migrating Soso's traffic, service and business over the
next two months, and expect to complete the transition by the end of the
year."

Third  Quarter Financial Results

Revenues

Total revenues for the third quarter of 2013 were US$368 million, up 29%
year-over-year and 9% quarter-over-quarter.

Total online advertising revenues, which include revenues from brand
advertising and search and others businesses for the third quarter of 2013,
were US$177 million, up 56% year-over-year and 21% quarter-over-quarter.

Brand advertising revenues for the third quarter of 2013 totaled US$125
million, up 60% year-over-year and 25% quarter-over-quarter. The
year-over-year increase was mainly due to the revenue increase in online video
and real estate businesses. The quarter-over-quarter increase was mainly due
to the revenue increase in online video business.

Search and others revenues for the third quarter of 2013 were US$52 million,
up 48% year-over-year and 13% quarter-over-quarter. This was primarily due to
the continued growth of Sogou's search and web directory businesses, driven by
improved pricing.

Online game revenues for the third quarter of 2013 were US$161 million, up 7%
year-over-year and down 4% quarter-over-quarter. The year-over-year increase
was mainly due to the growth momentum of Wartune in the third quarter of 2013,
and revenues from the new MMO game Dou Po Cang Qiong. The quarter-over-quarter
decrease was mainly a result of Changyou's decision to not release new game
features in TLBB's third quarter expansion pack that are typically popular
with players, such as maps, virtual items or new gameplay, in light of the
imminent release of the major expansion pack "New TLBB" in October. The
decrease was partially offset by higher revenues from the launch of a new PC
game, Xuan Yuan Jian 6, and higher revenues from DDTank and Wartune due to
higher seasonal spending by their players in the third quarter of 2013.

Mobile revenues for the third quarter of 2013 were US$15 million, up 1%
year-over-year and down 5% quarter-over-quarter.

Gross Margin

Both GAAP and non-GAAP gross margin was 66% for the third quarter of 2013,
flattish with last quarter and the third quarter of 2012.

Online advertising gross margin for the third quarter of 2013 was 49%,
compared with 48% in the second quarter of 2013 and 49% in the third quarter
of 2012. Non-GAAP online advertising gross margin for the third quarter of
2013 was 49%, compared with 48% in the second quarter of 2013 and 50% in the
third quarter of 2012.

Both GAAP and non-GAAP gross margin for brand advertising business in the
third quarter of 2013 were 49%, compared with 49% in the second quarter of
2013 and 52% in the third quarter of 2012.

Both GAAP and non-GAAP gross margin for search and others business in the
third quarter of 2013 were 49%, compared with 47% in the second quarter of
2013 and 44% in the third quarter of 2012.

Both GAAP and non-GAAP gross margin for online games in the third quarter of
2013 were 87%, compared with 86% in the second quarter of 2013 and 86% in the
third quarter of 2012.

Both GAAP and non-GAAP gross margin for the mobile business for the third
quarter of 2013 were 44%, compared with 41% in the second quarter of 2013 and
34% in the third quarter of 2012.

Operating Expenses

For the third quarter of 2013, operating expenses totaled US$191 million, up
53% year-over-year and 19% quarter-over-quarter. Non-GAAP operating expenses
were US$188 million, up 55% year-over-year and 17% quarter-over-quarter. The
year-over-year and quarter-over-quarter increases were primarily due to an
increase in the number of employees and higher expenses associated with
marketing and promotion activities, particularly for the mobile products of
our brand advertising and online games businesses.

Operating Profit

Operating profit for the third quarter of 2013 was US$52 million, down 18%
year-over-year and 19% quarter-over-quarter. Operating margin was 14% for the
third quarter of 2013, compared with 19% in the previous quarter and 22% in
the third quarter of 2012.

Non-GAAP operating profit for the third quarter of 2013 was US$55 million,
down 18% year-over-year and 16% quarter-over-quarter. Non-GAAP operating
margin was 15% for the third quarter of 2013, compared with 19% in the
previous quarter and 24% in the third quarter of 2012.

Income Tax Expense

For the third quarter of 2013, both GAAP and non-GAAP income tax expenses were
US$19 million.

Net Income

Before deducting the share of net income pertaining to the Non-controlling
Interest, GAAP net income for the third quarter of 2013 was US$41 million,
down 20% year-over-year and 23% quarter-over-quarter. Non-GAAP net income for
the third quarter of 2013 was US$44 million, down 24% year-over-year and 19%
quarter-over-quarter.

GAAP net loss attributable to Sohu.com Inc. for the third quarter of 2013 was
US$65 million, or US$1.69 fully diluted loss per share. The net loss includes
Sohu.com Inc.'s proportionate share, as the controlling shareholder of Sogou,
of a charge of approximately US$82 million relating to the amount of a special
dividend paid by Sogou to noncontrolling preferred shareholders of Sogou on
September 17, 2013. Non-GAAP net income attributable to Sohu.com Inc. for the
third quarter of 2013 was US$20 million, or US$0.51 per fully diluted share,
down 33% year-over-year and 12% quarter-over-quarter.

Cash Balance

As of September 30, 2013, Sohu Group had cash and cash equivalents of US$1,241
million, compared with US$834 million as of December 31, 2012.

Ms. Carol Yu, Co-President and CFO of Sohu.com Inc. commented, "Sogou's
strategic partnership with Tencent will help elevate the overall
competitiveness of Sohu Group in China's internet industry. With that and
taking advantage of our strong balance sheet with net cash of over $1 billion,
we are able to step up investments and execute aggressive expansion."

Other developments

On September 16, 2013, Sohu.com Inc., Sogou Inc. and Tencent Holdings Limited
jointly announced the establishment of a strategic cooperation. Tencent
invested a net amount of $448 million in cash in Sogou and transferred its
Soso search-related businesses and certain other assets to Sogou. Using a
portion of the proceeds invested by Tencent, Sogou paid to the holders of
Series A Preferred Shares of Sogou a special dividend in the aggregate amount
of approximately US$301 million. Of the amount, Sohu's wholly-owned subsidiary
Sohu.com (Search) Limited received approximately US$161 million. Sogou's
noncontrolling shareholders, Photon and China Web Search (HK) Limited received
approximately $43 million and $97 million, respectively.

Business Outlook

For the fourth quarter of 2013, Sohu estimates:

  oTotal revenues to be between US$378 million and US$390 million.
  oBrand advertising revenues to be between $120  million and $125 million;
    this implies a sequential decrease of 4% to flat and an annual increase of
    46% to 52%.
  oSogou revenues to be between $68  million and $70 million; this implies a
    sequential increase of 19% to 23% and an annual growth of 66% to 71%.
  oOnline game revenues to be between US$171 million and US$176 million.
  oBefore deducting the share of non-GAAP net income pertaining to the
    Non-Controlling interest, non-GAAP net loss to be between US$6 million and
    US$10 million.
  oNon-GAAP net loss attributable to Sohu.com Inc. to be between US$11
    million and US$13 million, and non-GAAP fully diluted loss per share to be
    between US$0.30 and US$0.35.
  oAssuming no new grants of share-based awards, we estimate that
    compensation expenses relating to share-based awards to be around US$4
    million to US$5 million. The estimated impact of this expense is expected
    to reduce Sohu's fully diluted earnings per share for the fourth quarter
    of 2013 under US GAAP by 12 to 14 US cents. This figure should not be used
    to calculate Sohu's projected GAAP fully diluted earnings per share, as
    there are other factors impacting such a calculation, for which no
    reconciliation is provided.

Non-GAAP Disclosure

Sohu discloses its non-GAAP operating results by excluding income/expense from
share-based awards and the related tax impact, adjustment of contingent
consideration, goodwill impairment, impairment of intangibles via acquisitions
of businesses and the related tax impact, as well as the dividend and deemed
dividend to non-controlling preferred shareholders.

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, as well as the
dividend and deemed dividend to non-controlling preferred shareholders. 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, and the dividend and deemed dividend to
non-controlling preferred shareholders 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, and the dividend and deemed dividend
to non-controlling preferred shareholders 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, and the
dividend and deemed dividend to non-controlling preferred shareholders does
not involve subsequent cash outflow or is reflected in the cash flow at the
equity transaction level, 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, and the dividend and deemed dividend
to non-controlling preferred shareholders.

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, and the dividend and deemed dividend
to non-controlling preferred shareholders 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, and the dividend and deemed dividend to non-controlling
preferred shareholders may recur when Sohu and its affiliates enter into any
equity transactions. 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. 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.

On May 1, 2013, Changyou entered into an agreement to acquire all of the
ordinary shares of 7Road held by the non-controlling shareholders. The
acquisition was completed on June 5, 2013. Under ASC 810-10, changes in a
parent's ownership interest while the parent retains control of its subsidiary
are accounted for as equity transactions, and do not impact net income or
comprehensive income in the consolidated financial statements. Following the
closing of the acquisition, US$2.4 million, representing the excess of the
amount of the mezzanine-classified non-controlling interests in 7Road over the
purchase price as of the closing date, was recorded in Changyou's equity
accounts.

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 mobile services (most
mobile 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, 2012, 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, October 28, 2013 (8:30 p.m. Beijing / Hong Kong time,
October 28, 2013) following the quarterly results announcement..

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

US Toll-Free:  +1-866-519-4004
International: +65-6723-9381
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 10:30 a.m. Eastern Time on October 28 through 11:59 a.m.
Eastern Time on November 5, 2013. The dial-in details for the telephone replay
are:

International: +1-855-452-5696
Passcode:      82163269

The live webcast and archive of the conference call will be available on the
Investor Relations section of Sohu's website at http://investors.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; developer and operator of online games
www.changyou.com/en/and leading online video website tv.sohu.com.

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 provides multiple news and information
services on mobile platforms, including Sohu News App and mobile news portal
WAP.Sohu.com. 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 seventeenth 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



SOHU.COM INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                                                                                                      Three Months Ended
                                                                                                      Sep.30,2013   Jun.30,2013   Sep.30,2012
Revenues:

Online advertising
 Brand advertising                                                                                 $ 124,780       $ 100,191       $ 77,874
 Search and others                                                                                   52,305          46,171          35,284
 Subtotal                                                                                            177,085         146,362         113,158
Online games                                                                                          161,494         168,295         150,263
Mobile                                                                                                14,524          15,313          14,312
Others                                                                                                15,220          8,934           7,645
 Total revenues                                                                                     368,323         338,904         285,378
Cost of revenues:
Online advertising
 Brand advertising (includes stock-based compensation expense of $66, $67 and $150, respectively)    63,780          51,556          37,476
Search and others (includes stock-based compensation expense of $24, $3 and $21, respectively)        26,785          24,498          19,736
Subtotal                                                                                              90,565          76,054          57,212
Online games (includes stock-based compensation expense of $38, $28 and $61, respectively)            21,750          22,981          20,753
Mobile (includes stock-based compensation expense of $0, $0, and $0, respectively)                    8,108           8,963           9,474
Others (includes stock-based compensation expense of $0, $0 and $0, respectively)                     5,067           5,647           9,310
 Total cost of revenues                                                                              125,490         113,645         96,749
Gross profit                                                                                          242,833         225,259         188,629
Operating expenses:
Product development (includes stock-based compensation expense of $912, $408 and $1,316,              70,551          63,361          46,994
respectively)
Sales and marketing (includes stock-based compensation expense of $359, $201 and $582,                90,728          71,678          58,250
respectively)
General and administrative (includes stock-based compensation expense of $1,799, $532 and $1,713,     29,365          25,772          19,666
respectively)
 Total operating expenses                                                                            190,644         160,811         124,910
Operating profit                                                                                      52,189          64,448          63,719
Other income/(expense)                                                                                1,533           1,532           (111)
Interest income                                                                                       7,595           5,498           5,974
Exchange difference                                                                                   (1,305)         (1,984)         667
Income before income tax expense                                                                      60,012          69,494          70,249

                                                                                                      18,923          16,251          18,727
Income tax expense
Net Income                                                                                            41,089          53,243          51,522
Less: Net income attributable to the mezzanine classified noncontrolling interest shareholders        -               7,112           4,495
 Net income attributable to the noncontrolling interest shareholders                                 22,855          24,505          21,146
Dividend to non-controlling Sogou series A preferred shareholders (a)                                 82,423          -               -
                                                                                                      211             111
Net income (loss) attributable to Sohu.com Inc.                                                       (64,189)        21,626          25,881
Basic net income (loss) per share attributable to Sohu.com Inc.                                     $ (1.68)        $ 0.57          $ 0.68
Shares used in computing basic net income per share attributable to Sohu.com Inc.                     38,288          38,259          38,022
Diluted net income (loss) per share attributable to Sohu.com Inc.                                   $ (1.69)        $ 0.56          $ 0.63
Shares used in computing diluted net income (loss) per share attributable to Sohu.com Inc.            38,522          38,492          38,344


Note:

(a) On September 17, 2013, Sogou paid a special dividend to the three holders of Series A Preferred Shares of Sogou in an aggregate amount of $301
million, of which Sohu received $161 million, Photon received $43 million, and China Web received $97 million. The portion of the special dividend
paid to noncontrolling Sogou series A Preferred Shareholders (Photon and China Web) proportionately contributed by Sohu (as the controlling
shareholder of Sogou), consisting of $82.4 million out of the US$140 million paid to Photon and China Web, was charged to Retained Earnings, and
subtracted from the Net income attributable to Sohu.com Inc. in the calculation of EPS, causing GAAP fully diluted EPS to decrease by US$2.14.



SOHU.COM INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED, IN THOUSANDS)
                                     As of Sep. 30, 2013   As of Dec. 31, 2012
ASSETS
Current assets:
 Cash and cash equivalents        $ 1,240,842           $ 833,535
Restricted time deposits             314,836               116,140
Short term investments               24,369                54,901
Investment in debt securities        81,327                79,548
 Accounts receivable, net           153,284               98,398
 Prepaid and other current assets   95,501                49,256
 Total current assets               1,910,159             1,231,778
Fixed assets, net                    546,228               178,951
Goodwill                             164,461               159,215
Intangible assets, net               81,255                70,054
Restricted time deposits             60,151                130,699
Prepaid non-current assets           9,844                 291,643
Other assets                         16,249                13,792
 Total assets                     $ 2,788,347           $ 2,076,132
LIABILITIES
Current liabilities:
 Accounts payable                 $ 96,171              $ 61,429
 Accrued liabilities                209,463               117,029
 Receipts in advance and deferred   112,805               89,687
revenue
 Accrued salary and benefits        76,108                61,722
 Taxes payable                      56,672                33,897
 Deferred tax liability             16,806                11,878
 Short-term bank loans              354,002               113,000
 Other short-term liabilities       63,298                63,352
 Contingent consideration           -                     76
 Total current liabilities        $ 985,325             $ 552,070
Long-term accounts payable           7,333                 12,684
Long-term bank loans                 -                     126,353
Deferred tax liabilities             7,350                 7,998
Contingent consideration             -                     -
Total long-term liabilities        $ 14,683              $ 147,035
 Total liabilities                $ 1,000,008           $ 699,105
MEZZANINE EQUITY                     -                     61,810


SHAREHOLDERS' EQUITY:
 Sohu.com Inc. shareholders'        1,306,514             1,084,223
equity
 Noncontrolling Interest            481,825               230,994
 Total shareholders' equity       $ 1,788,339           $ 1,315,217
Total liabilities, mezzanine
equity and shareholders'          $ 2,788,347           $ 2,076,132

equity



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, 2013      Three Months Ended Jun. 30, 2013     Three Months Ended Sep. 30, 2012
                  GAAP       Non-GAAP        Non-GAAP   GAAP      Non-GAAP        Non-GAAP   GAAP      Non-GAAP        Non-GAAP
                             Adjustments                          Adjustments                          Adjustments
                             66          (a)                      67          (a)                      150         (a)
Brand
advertising     $ 61,000   $ 66          $   61,066   $ 48,635  $ 67          $   48,702   $ 40,398  $ 150         $   40,548
gross profit
Brand
advertising       49%                        49%        49%                       49%        52%                       52%
gross margin
                             24          (a)                      3           (a)                      21          (a)
Search and
others gross    $ 25,520   $ 24          $   25,544   $ 21,673  $ 3           $   21,676   $ 15,548  $ 21          $   15,569
profit
Search and
others gross      49%                        49%        47%                       47%        44%                       44%
margin
                             90          (a)                      70          (a)                      171         (a)
Online
advertising     $ 86,520   $ 90          $   86,610   $ 70,308  $ 70          $   70,378   $ 55,946  $ 171         $   56,117
gross profit
Online
advertising       49%                        49%        48%                       48%        49%                       50%
gross margin
                             38          (a)                      28          (a)                      61          (a)
Online games
gross profit    $ 139,744  $ 38          $   139,782  $ 145,314 $ 28          $   145,342  $ 129,510 $ 61          $   129,571
(f)
Online games      87%                        87%        86%                       86%        86%                       86%
gross margin
Mobile gross    $ 6,416    $ -           $   6,416    $ 6,350   $ -           $   6,350    $ 4,838   $ -           $   4,838
profit
Mobile gross      44%                        44%        41%                       41%        34%                       34%
margin
Others gross    $ 10,153   $ -           $   10,153   $ 3,287   $ -           $   3,287    $ (1,665) $ -           $   (1,665)
profit (f)
Others gross      67%                        67%        37%                       37%        -22%                      -22%
margin
                             128         (a)                      98          (a)                      232         (a)
Gross profit    $ 242,833  $ 128         $   242,961  $ 225,259 $ 98          $   225,357  $ 188,629 $ 232         $   188,861
Gross margin      66%                        66%        66%                       66%        66%                       66%
                             3,198       (a)                      1,239       (a)                      3,843       (a)
Operating       $ 52,189   $ 3,198       $   55,387   $ 64,448  $ 1,239       $   65,687   $ 63,719  $ 3,843       $   67,562
profit
Operating         14%                        15%        19%                       19%        22%                       24%
margin
                                                                                                       3,843       (a)
                                                                                                       973         (b)
                             3,198       (a)                      1,239       (a)                      2,195       (c)
Net income
before          $ 41,089   $ 3,198       $   44,287   $ 53,243  $ 1,239       $   54,482   $ 51,522  $ 7,011       $   58,533
Non-Controlling
Interest
                                                                                                       3,043       (a)
                             2,440       (a)                                                           973         (b)
                             82,423      (d)                      998         (a)                      1,471       (c)
Net income
(loss)
attributable to
Sohu.com Inc.   $ (65,021) $ 84,864      $   19,843   $ 21,503  $ 998         $   22,501   $ 24,015  $ 5,487       $   29,502
for diluted net
income (loss)
per share (e)
Diluted net
income (loss)
per share       $ (1.69)                 $   0.51     $ 0.56                  $   0.58     $ 0.63                  $   0.77
attributable to
Sohu.com Inc.
Shares used in
computing
diluted net
income (loss)     38,522                     38,559     38,492                    38,540     38,344                    38,480
per share
attributable to
Sohu.com Inc.
Note:
(a) To eliminate the impact of share-based awards as measured using the fair value method.
(b) To adjust non-cash tax benefits from excess tax deductions related to share-based awards.
(c) To adjust income/expense from the adjustment of contingent consideration previously recorded for acquisitions.
(d) Deemed dividend to noncontrolling Sogou series A preferred shareholders.
(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 revenues and cost of revenues for online games and others has been
changed to conform to the current period presentation.

SOURCE Sohu.com

Website: http://investors.sohu.com
Website: http://www.sohu.com
Website: http://www.sogou.com
Website: http://www.changyou.com/en