This excerpt taken from the SOHU 10-Q filed Aug 6, 2007.
Reclassification on Expenses of Online Game Operations
In previous quarters, costs and expenses associated with the Companys online game segment were related to product development and research and an insignificant amount was related to online game operations. Accordingly, the Company had recorded all such costs and expenses in product development expenses in its statements of operations. Beginning April 1, 2007, in order to better present results of operations to enhance comparability with industry peers, the Company decided to reclassify its costs and expenses associated with its online game operations, which mainly consist of salaries and benefits of game masters, from product development expenses to cost of online game revenues. To conform with current period presentations, the relevant amounts for prior periods have been reclassified accordingly. Such reclassification amounted to $275,000 and $319,000 for the three months ended March 31, 2007 and June 30, 2006, respectively, and $642,000 for the six months ended June 30, 2006.