Sohu.com (SOHU)

6. ACQUISITION

On May 31, 2005, the Company completed the acquisition of all of the outstanding capital stock of Go2Map Inc., a company incorporated in Cayman Islands, and all of the registered share capital of Beijing Tu Xing Tian Xia Information Consultancy Co., Ltd. (or Tu Xing Tian Xia), a company incorporated in the PRC which was an affiliate of Go2Map Inc. (collectively “Go2Map”) for $9.3 million in cash, and an additional amount, not to exceed $2.5 million, which will be paid over 2 years after the date of the closing of the acquisition, subject to the satisfaction and attainment of certain post closing operating and financial milestones of Go2Map. The estimated other direct acquisition costs were $454,000. Go2Map is one of the leading online mapping service providers in China. The acquisition had been accounted for using the purchase method and the results of operations from the date of the closing of the acquisition have been included in the Company’s consolidated financial statements. The Company considers the acquisition of Go2Map to have been made in the ordinary course of its business.

The allocation of the purchase price is as follows (in thousands):

The excess of purchase price over tangible and identifiable intangible assets acquired and liabilities assumed was recorded as goodwill. Purchase price used in the calculation of goodwill excludes contingent consideration of $2.5 million, which may result in recognition of an additional element of cost of the acquired entity when the outcome of the contingency is materialized. Identifiable intangible assets associated with the acquisition are amortized over their expected useful lives. The valuation and purchase price allocation were finalized during the three months ended September 30, 2005. An additional liability $214,000 with a related increase in goodwill were recognized under purchase method accounting during the three months ended September 30, 2005.

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Goodwill associated with the acquisition is related to the sponsored search segment.

3. ACQUISITION

On May 31, 2005, the Company completed the acquisition of all of the outstanding capital stock of Go2Map Inc., a company incorporated in Cayman Islands, and all of the registered share capital of Beijing Tu Xing Tian Xia Information Consultancy Co., Ltd. (or Tu Xing Tian Xia), a company incorporated in the PRC which was an affiliate of Go2Map Inc. (collectively “Go2Map”) for $9.3 million in cash, and an additional amount, not to exceed $2.5 million, which will be paid over 2 years after the date of the closing of the acquisition, subject to the satisfaction and attainment of certain post closing operating and financial milestones of Go2Map. The estimated other direct acquisition costs were $454,000. Go2Map is one of the leading online mapping service providers in China. The acquisition had been accounted for using the purchase method and the results of operations from the date of the closing of the acquisition have been included in the Company’s consolidated financial statements. The Company considers the acquisition of Go2Map to have been made in the ordinary course of its business.

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The allocation of the purchase price is as follows (in thousands):

The excess of the purchase price over tangible and identifiable intangible assets acquired net with liabilities assumed was recorded as goodwill. The purchase price used in the calculation of goodwill excludes the contingent consideration of $2.5 million, which may result in recognition of an additional element of cost of the acquired entity when the contingency is resolved. Identifiable intangible assets associated with the acquisition are amortized over their expected useful lives. The allocation of the purchase price is based on preliminary valuation amounts which are expected to be finalized in the third quarter of 2005. The goodwill associated with the acquisition is related to the sponsored search segment.