Sohu.com (SOHU)

21 East

On October 31, 2006, the Company completed the acquisition of a 70% interest in 21 East Entertainment Limited (“21 East Hong Kong”) and Beijing 21 East Culture Development Co., Ltd. (“21 East Beijing”) (collectively “21 East”) for consideration of $3.5 million in cash. The main purpose of the acquisition of the 70% interest in 21 East is to enable the Company to secure and develop attractive, high-quality music and content. The acquisition was accounted for as a purchase business combination and resulted goodwill of US$3.5 million and the results of operations from the acquisition date have been included in the Company’s consolidated financial statements in accordance with SFAS 94.

The acquisition had been accounted for as a purchase business combination and the results of operations from the acquisition date have been included in the Company’s consolidated financial statements in accordance with SFAS 94. The allocation of the purchase price is as follows (in thousands):

The excess of purchase price over tangible assets and identifiable intangible assets (mainly copyrights of song lyrics) acquired and liabilities assumed were recorded as goodwill relating to the wireless segment.

Prior to the acquisition, 21 East did not prepare its financial statements under accounting principles generally accepted in the United States of America. The Company determined that the cost of reconstructing the financial statements of 21 East for the periods prior to the acquisition outweighed its benefits. Accordingly, unaudited pro forma consolidated financial information reflecting the results of operations of 21 East has not been presented.

21 East

On October 31, 2006, the Company completed the acquisition of a 70% interest in 21 East Entertainment Limited (“21 East Hong Kong”) and
Beijing 21 East Culture Development Co., Ltd. (“21 East Beijing”) (collectively “21 East”) for consideration of $3.5 million in cash. The main purpose of the acquisition of the 70% interest in 21 East is to enable the Company to
secure and develop attractive, high-quality music and content. The acquisition was accounted for as a purchase business combination and resulted goodwill of US$3.5 million and the results of operations from the acquisition date have been included in
the Company’s consolidated financial statements in accordance with SFAS 94.

The acquisition had been accounted for as a purchase business combination
and the results of operations from the acquisition date have been included in the Company’s consolidated financial statements in accordance with SFAS 94. The allocation of the purchase price is as follows (in thousands):

(a) 21 East

On October 31, 2006, the Company completed the acquisition of a 70% interest in 21 East Entertainment Limited (“21 East Hong Kong”) and Beijing 21 East Culture Development Co., Ltd. (“21 East Beijing”) (collectively “21 East”) for consideration of $3.5 million in cash and an additional amount, not to exceed $1.4 million, which will be paid over three 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 21 East. Other estimated direct acquisition costs were $219,000. The main purpose of the acquisition of the 70% interest in 21 East is to enable the Company to secure and develop attractive, high-quality music and content. The Company considers the acquisition of 21 East to have been made in the ordinary course of its business. The purchase price was determined based on arms’ length negotiations between Sohu and 21 East.

The acquisition had been accounted for as a purchase business combination and the results of operations from the acquisition date have been included in the Company’s consolidated financial statements in accordance with SFAS 94. The allocation of the purchase price is as follows (in thousands):

The excess of purchase price over tangible assets and identifiable intangible assets (mainly copyrights of song lyrics) acquired and liabilities assumed were recorded as goodwill relating to the wireless segment. The purchase price used in the calculation of goodwill excludes contingent consideration of $1.4 million and contingent taxes obligations relating to the pre-acquisition period, which may result in recognition of an additional element of cost of the acquisition entity when the outcome of the contingencies, if any, become estimable. The identifiable intangible assets were amortized over a weighted average period of three years.

Prior to the acquisition, 21 East did not prepare its financial statements under accounting principles generally accepted in the United States of America. The Company determined that the cost of reconstructing the financial statements of 21 East for the periods prior to the acquisition outweighed its benefits. Accordingly, unaudited pro forma consolidated financial information reflecting the results of operations of 21 East has not been presented.

(a) 21 East

On October 31, 2006, the Company completed the acquisition of a 70% interest in 21 East Entertainment Limited (“21 East Hong Kong”) and Beijing 21 East Culture Development Co., Ltd. (“21 East Beijing”) (collectively “21 East”) for consideration of $3.5 million in cash and an additional amount, not to exceed $1.4 million, which will be paid over three 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 21 East. Other estimated direct acquisition costs were $219,000. The main purpose of the acquisition of the 70% interest in 21 East is to enable the Company to secure and develop attractive, high-quality music and content. The Company considers the acquisition of 21 East to have been made in the ordinary course of its business. The purchase price was determined based on arms’ length negotiations between Sohu and 21 East.

The acquisition had been accounted for as a purchase business combination and the results of operations from the acquisition date have been included in the Company’s consolidated financial statements in accordance with SFAS 94. The allocation of the purchase price is as follows (in thousands):

The excess of purchase price over tangible assets and identifiable intangible assets (mainly copyrights of song lyrics) acquired and liabilities assumed were recorded as goodwill relating to the wireless segment. The purchase price used in the calculation of goodwill excludes contingent consideration of $1.4 million and contingent taxes obligations relating to the pre-acquisition period, which may result in recognition of an additional element of cost of the acquisition entity when the outcome of the contingencies, if any, become estimable. The identifiable intangible assets were amortized over a weighted average period of three years.

Prior to the acquisition, 21 East did not prepare its financial statements under accounting principles generally accepted in the United States of America. The Company determined that the cost of reconstructing the financial statements of 21 East for the periods prior to the acquisition outweighed its benefits. Accordingly, unaudited pro forma consolidated financial information reflecting the results of operations of 21 East has not been presented.