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Discontinued Operations | 12 Months Ended
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Dec. 31, 2021
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations Disclosure | 3 . DISCONTINUED OPERATIONS Discontinued Operation of Sogou Between Sohu’s entry into the Tencent/Sohu Sogou Share Purchase Agreement on September 29, 2020 and the completion of the Tencent/Sohu Sogou Share Purchase on September 23, 2021, Sogou met the criteria for discontinued operations. Accordingly, the results of operations for Sogou’s business prior to the completion of the Tencent/Sohu Sogou Share Purchase are excluded from Sohu’s results from continuing operations in the Sogou Group’s consolidated statements of comprehensive income and are presented in separate line items as discontinued operations. Retrospective adjustments to the historical statements have been made in order to provide a consistent basis of comparison. Additionally, as of December 31, 2020, the related assets and liabilities associated with the discontinued operations with respect to Sogou were classified as assets held for sale and liabilities held for sale associated with discontinued operations in the consolidated balance sheets to provide comparable financial information. Long-lived assets have not been depreciated or amortized after they were classified as held for sale. As a result, for the year ended December 31, 2020 and the period ended September 23, 2021, depreciation and amortization expenses of $17.0 million and $46.7 million were not recognized for long-lived assets accordingly. On September 23, 2021, the Tencent/Sohu Sogou Share Purchase and the Sogou Merger were completed, and Sohu recognized gain of approximately $855 million, net of transaction and other costs, which is included in income from discontinued operations. After September 23, 2021, Sohu no longer had any ownership interest in Sogou. The following tables set forth the assets, liabilities, results of operations and cash flows of discontinued operations with respect to Sogou, that were included in the Sohu Group’s consolidated financial statements (in thousands):
|  | As of December 31, 2020 |
ASSETS |  |  |  |
Cash and cash equivalents |  | $ | 287,185 |
Restricted cash |  |  | 23,018 |
Short-term investments |  |  | 774,618 |
Account and financing receivables, net |  |  | 73,656 |
Prepaid and other current assets |  |  | 28,946 |
Long-term investments, net |  |  | 74,004 |
Fixed assets, net |  |  | 89,089 |
Goodwill |  |  | 6,527 |
Intangible assets, net |  |  | 1,446 |
Other assets |  |  | 53,679 |
Total assets associated with discontinued operations |  | $ | 1,412,168 |
LIABILITIES |  |  |  |
Accounts payable |  | $ | 122,695 |
Accrued liabilities |  |  | 68,582 |
Receipts in advance |  |  | 64,414 |
Accrued salary and benefits |  |  | 25,350 |
Taxes payable |  |  | 64,082 |
Other short-term liabilities |  |  | 61,154 |
Long-term liabilities |  |  | 10,721 |
Total liabilities associated with discontinued operations |  | $ | 416,998 |
|  | Year Ended December 31, |
|  | 2019 |  |  | 2020 |  |  | 2021 (1) |
Revenues |  | $ | 1,172,252 |  |  | $ | 924,664 |  |  | $ | 407,607 |
Cost of revenues |  |  | 738,454 |  |  |  | 722,614 |  |  |  | 274,408 |
Gross profit |  |  | 433,798 |  |  |  | 202,050 |  |  |  | 133,199 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |
Research and development (2) |  |  | 190,402 |  |  |  | 193,376 |  |  |  | 141,506 |
Sales and marketing (2) |  |  | 138,291 |  |  |  | 102,523 |  |  |  | 53,481 |
General and administrative (2) |  |  | 40,670 |  |  |  | 29,271 |  |  |  | 11,854 |
Total operating expenses |  |  | 369,363 |  |  |  | 325,170 |  |  |  | 206,841 |
Operating profit/(loss) |  |  | 64,435 |  |  |  | (123,120 | ) |  |  | (73,642 | )
Interest income |  |  | 4,443 |  |  |  | 2,807 |  |  |  | 2,377 |
Interest expense |  |  | 0 |  |  |  | 0 |  |  |  | (761 | )
Foreign currency exchange gain/(loss) |  |  | 1,849 |  |  |  | (7,767 | ) |  |  | (848 | )
Other income, net |  |  | 21,127 |  |  |  | 38,633 |  |  |  | 81,655 |
Income/(loss) from discontinued operations before income tax expense |  |  | 91,854 |  |  |  | (89,447 | ) |  |  | 8,781 |
Income tax expense/(benefit) |  |  | 2,748 |  |  |  | 2,346 |  |  |  | (1,112 | )
Results of operations from discontinued operations, net of tax |  |  | 89,106 |  |  |  | (91,793 | ) |  |  | 9,893 |
Gain on disposal of discontinued operations |  |  | 0 |  |  |  | 0 |  |  |  | 855,009 |
Net income/(loss) from discontinued operations, net of tax |  |  | 89,106 |  |  |  | (91,793 | ) |  |  | 864,902 |
Effective Tax Rate
|  | Year Ended December 31, |
|  | 2019 |  |  | 2020 |  |  | 2021 (1)(3) |
Statutory Rate: |  |  | 25 | % |  |  | 25 | % |  |  | 25 | %
Effect of tax holidays applicable to subsidiaries and consolidated VIEs |  |  | (2 | %) |  |  | (18 | %) |  |  | 127 | %
Tax differential from statutory rate applicable to subsidiaries and consolidated VIEs |  |  | 3 | % |  |  | (3 | %) |  |  | (90 | %)
Changes in valuation allowance for deferred tax assets |  |  | 7 | % |  |  | (43 | %) |  |  | 349 | %
Research and development super-deduction and other permanent book-tax differences |  |  | (25 | %) |  |  | 35 | % |  |  | (249 | %)
Capital gains from equity investments |  |  | (5 | %) |  |  | 1 | % |  |  | (175 | %)
|  |  | 3 | % |  |  | (3 | %) |  |  | (13 | %)
|  | Year Ended December 31, |
|  | 2019 |  |  | 2020 |  |  | 2021 (1) |
Net cash provided by/(used in) discontinued operating activities |  | $ | 219,516 |  |  | $ | (68,187 | ) |  | $ | (175,888 | )
Net cash provided by/(used in) discontinued investing activities |  |  | (217,598 | ) |  |  | 235,374 |  |  |  | 1,054,148 |
Net cash used in discontinued financing activities |  |  | (33,415 | ) |  |  | (8,209 | ) |  |  | (9,132 | )
Note | (1): Includes the financial results of the discontinued operations from January 1, 2021 to September 23, 2021.
Note (2): Expenses generated from marketing services between the Sohu Group and Sogou Group, and leasing expenses generated from a building that Sohu leases to Sogou are not eliminated because those expenses are considered to continue after the disposal of the discontinued operations. Note (3): The changes in the effective tax rate for the period ended September 23, 2021 resulted from the lower income from discontinued operations before income tax expense. Discontinued Operation of Shanghai Jingmao In May 2010, Changyou acquired 50% of the equity interests in Shanghai Jingmao Culture Communication Co., Ltd. (“Shanghai Jingmao”) and an affiliate of Shanghai Jingmao, which were primarily engaged in the cinema advertising business. In January 2011, Changyou acquired the remaining 50% of the equity interests in Shanghai Jingmao and its affiliate for total consideration of approximately $3.0 million. In the fourth quarter of 2011, a full impairment loss of $5.2 million on goodwill was recognized for the cinema advertising business. In the second quarter of 2019, after assessing the collectability of the assets of the cinema advertising business, including receivables and prepayments, Changyou recognized a $17.0 million asset impairment charge for the cinema advertising business. Changyou ceased operating the cinema advertising business and wound down the business in August 2019 as a result of a Chinese court in Shanghai having granted a petition by Shanghai Jingmao for bankruptcy relief on August 12 , 2019 . Accordingly, the results of operations for Changyou’s cinema advertising business have been excluded from Changyou’s results from continuing operations in the consolidated statements of comprehensive income and are presented in separate line items as discontinued operations. Retrospective adjustments to the historical statements have been made in order to provide a consistent basis of comparison. Changyou recognized nil disposal gain/loss for the years ended December 31 , 2019 and 2020 . However, Changyou may recognize disposal gain/loss in the future, depending on developments in the bankruptcy proceedings in the Chinese court . See Note 8 - Balance Sheet Components. The following tables set forth the results of operations and cash flows of discontinued operations with respect to Changyou’s cinema advertising business, that were included in the Group’s consolidated financial statements (in thousands):
|  | Year Ended December 31, |
|  | 2019 (1) |
Revenues |  | $ | 37,323 |
Cost of revenues |  |  | 43,857 |
Gross loss |  |  | (6,534 | )
Operating expenses: |  |  |  |
Sales and marketing |  |  | 8,807 |
General and administrative |  |  | 18,583 |
Total operating expenses |  |  | 27,390 |
Operating loss |  |  | (33,924 | )
Interest income |  |  | 7 |
Other income/(expense), net |  |  | 61 |
Loss from discontinued operations before income tax expense |  |  | (33,856 | )
Income tax expense |  |  | 142 |
Net loss from discontinued operations, net of tax |  |  | (33,998 | )
|  | Year Ended December 31, |
|  | 2019 (1) |
Net cash provided by discontinued operating activities |  | $ | 9,341 |
Net cash used in discontinued investing activities |  |  | (10,808 | )
Net cash provided by discontinued financing activities |  |  | 0 |
Note (1): Includes the financial results of the discontinued operations from January 1, 2019 to August 12, 2019.​​​​​​​

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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