LONG Elong ADS Representing 2 Ordinary Shares (MM)

BEIJING, Nov. 9 /Xinhua-PRNewswire/ -- eLong, Inc. (NASDAQ:LONG), a leading online travel service provider in China, today reported unaudited financial results for the third quarter ended September 30, 2006. (Logo: http://www.newscom.com/cgi-bin/prnh/20041118/ELONGLOGO ) Business Highlights -- Highlights for the third quarter of 2006: -- Travel revenues increased 45% year-over-year and 11% sequentially to RMB72.3 million (US$9.1 million), and total revenues improved 40% year- over-year and 12% sequentially to RMB74.6 million (US$9.4 million); -- Hotel commissions increased 38% year-over-year and 7% sequentially to RMB57.4 million (US$7.3 million); -- Air ticketing commissions increased 47% year-over-year and 15% sequentially to RMB11.0 million (US$1.4 million); -- The Company recorded an operating income of RMB1.7 million (US$215,000), which included non cash related stock-based compensation expense and amortization of intangibles of RMB2.6 million (US$330,000), as compared to an operating loss of RMB7.0 million (US$857,000) in the same period one year ago and an operating loss of RMB1.2 million (US$143,000) in the second quarter of 2006; -- The Company recorded a net income of RMB2.7 million (US$337,000) for the third quarter of 2006, compared to a net loss of RMB40.5 million (US$5.0 million) in the same period a year ago, and a net income of RMB10.2 million (US$1.3 million) in the second quarter of 2006; -- The Company recorded an adjusted income (a non-GAAP measure) of RMB16.6 million (US$2.1 million) as compared to an adjusted income of RMB4.9 million (US$609,000) in the same period a year ago and an adjusted income of RMB13.1 million (US$1.6 million) in the second quarter of 2006; and -- As of September 30, 2006, the Company's cash and cash equivalents balance was US$142.1 million, which included a prepayment from a related party purchaser of US$2.9 million. "We are extremely pleased that eLong has delivered another record quarter with healthy growth in both hotel booking and air ticketing, which resulted from our relentless focus on execution and improving customer experience. Given the strong long-term growth prospects of the China travel market, we will continue to invest in our business and our brand to build a solid foundation for long-term sustainable growth and profitability," said Tom SooHoo, Chief Executive Officer of eLong. Business Results Total revenues for the third quarter of 2006 were RMB74.6 million (US$9.4 million), an increase of 40% from RMB53.4 million (US$6.6 million) reported in the same period in 2005, and an increase of 12% from RMB66.8 million (US$8.4 million) reported in the second quarter of 2006. Revenue from hotel commissions for the third quarter of 2006 totaled RMB57.4 million (US$7.3 million), an increase of 38% from RMB41.5 million (US$5.1 million) year-over-year, and an increase of 7% from RMB53.8 million (US$6.7 million) sequentially. The year-over-year increase in revenue from hotel commissions was primarily due to higher room volumes accompanied by higher hotel commissions per room night. Hotel commissions per room night were RMB64 in the third quarter of 2006, up 5% from RMB61 in the corresponding period a year ago, and down 2% from RMB65 in the second quarter. Hotel room nights booked through eLong increased 31% to 893,000 in the third quarter from 684,000 room nights in the corresponding period a year ago which included bookings made through FortuneTrip, a company we acquired in July 2005, and were up 7% sequentially from 832,000 in the second quarter of 2006. As of September 30, 2006, eLong offered customers a choice of hotel rooms at discounted rates at 3,666 hotels in 291 cities across China as compared to slightly fewer than 3,000 hotels in 280 cities at the end of the third quarter of 2005. "eLong has built one of the most extensive networks with hotel partners in this region. And our consistently strong hotel revenue growth reflects the increasing leverage that we have with suppliers as we drive more business to them," said Frank Zheng, Vice President of Travel Services. Revenue from air ticketing commissions during the third quarter of 2006 totaled RMB11.0 million (US$1.4 million), an increase of 47% from RMB7.5 million (US$927,000) year-over-year, and an increase of 15% from RMB9.6 million (US$1.2 million) sequentially. Volume in air segment sales continued to grow with 273,000 air segments sold in the third quarter of 2006, an increase of 38% from 198,000 in the corresponding period a year ago and 11% higher than the 247,000 sold in the second quarter. Revenue per air ticket was RMB41 in the third quarter of 2006 as compared to RMB38 in the corresponding period a year ago and RMB39 in the second quarter. The sequential increase of revenue per air ticket was primarily due to an increase in the average air ticket price. "Year-over-year growth in air ticketing revenues was primarily driven by the acquisition of new air customers, increased sales of air tickets to eLong's existing hotel customer base and better product offerings. We will continue to focus on building a scalable and efficient air infrastructure in the medium term, which is a critical component in eLong's business strategy," explained Andy Clayton, Vice President of Air. Other travel revenue in the third quarter of 2006 was RMB3.9 million (US$488,000), an increase of 338% from RMB881,000 (US$109,000) year-over-year, and an increase of 137% from RMB1.6 million (US$204,000) sequentially. The year-over-year and sequential increases were mainly attributable to RMB2.6 million revenue for inventory procurement services provided to Expedia by eLong for the period from January 2005 through September 2006. The inventory procurement agreement with Expedia was agreed and finalized during this quarter. During the third quarter, the Company entered into a definitive agreement to sell the assets of one of its divisions operating an interactive online dating community, to a related party purchaser for a sale price of US$14.6 million. Disposal of the division qualifies as discontinued operations in the third quarter of 2006. Hence, the results of the operations of the division for current and prior periods have been aggregated into a separate line item as "Discontinued operations" in the statement of operations. The non-travel business is not a focus for eLong going forward. Gross margins in the third quarter of 2006 were 77%, as compared to 81% in the corresponding period a year ago and were consistent with the second quarter. The year-over-year reduction in gross margin was a result of reduction in higher-margin non-travel revenue, additional compensation and benefit for call center employees and slightly increased proportion of revenue contributed by the air ticketing business. Service development, sales and marketing and general and administrative expenses for the third quarter of 2006 totaled RMB51.4 million (US$6.5 million), an increase of 10% from RMB46.8 million (US$5.8 million) year-over- year, and an increase of 5% from RMB48.8 million (US$6.1 million) sequentially. Service development expenses were RMB10.7 million (US$1.4 million) in the third quarter of 2006, an increase of 18% from RMB9.1 million (US$1.1 million) year-over-year, and an increase of 6% from RMB10.0 million (US$1.3 million) sequentially. The year-over-year and sequential increases reflected ramped-up investments to support the eLong.com website and the Company's air, hotel and vacation package businesses. Sales and marketing expenses were RMB25.3 million (US$3.2 million) in the third quarter of 2006, an increase of 8% from RMB23.4 million (US$2.9 million) year-over-year, and unchanged from RMB25.3 million (US$3.2 million) in the second quarter. The year-over-year increase was due to increases in business volume and customer acquisition. Sales and marketing expenses in the third quarter of 2006 were 34% of revenues as compared to 44% in the corresponding period a year ago and 38% in the second quarter. General and administrative expenses were RMB15.4 million (US$1.9 million) in the third quarter of 2006, an increase of 8% from RMB14.3 million (US$1.8 million) year-over-year, and an increase of 15% from RMB13.4 million (US$1.7 million) sequentially. The year-over-year and sequential increases were primarily due to additional professional fees, headcount expenses, and other expenditures associated with the expansion of our business. Operating income in the third quarter of 2006 was RMB1.7 million (US$215,000), as compared to an operating loss of RMB7.0 million (US$857,000) in the corresponding period of 2005 and RMB1.2 million (US$143,000) in the second quarter. The third quarter operating income included non-cash related stock-based compensation expense and amortization of intangibles of RMB2.6 million (US$330,000) and the comparable non-cash related stock-based compensation expense and amortization amount for the corresponding period of 2005 was RMB3.9 million (US$480,000) and the second quarter of 2006 was RMB2.8 million (US$348,000). Other income, which represents interest income, unrealized exchange gains/losses and other income/expenses, was RMB3.4 million (US$424,000) for the third quarter of 2006, compared to other loss of RMB15.2 million (US$1.9 million) in the corresponding period a year ago, and other income of RMB8.5 million (US$1.1 million) in the second quarter of 2006. The sequential decrease in other income was primarily due to a higher unrealized exchange loss on the translation for financial reporting purposes of eLong's US dollar denominated cash deposits into Renminbi. The unrealized exchange loss was RMB11.4 million (US$1.4 million) in the third quarter as compared to an unrealized exchange loss of RMB2.8 million (US$347,000) in the second quarter. The Company recorded a net income of RMB2.7 million (US$337,000) for the third quarter of 2006, compared to a net loss of RMB40.5 million (US$5.0 million) in the corresponding period a year ago, and a net income of RMB10.2 million (US$1.3 million) in the second quarter. The US GAAP diluted income per ADS for the third quarter of 2006 was RMB0.10 (US$0.013), compared to US GAAP diluted loss per ADS of RMB1.62 (US$0.200) in the corresponding period a year ago and US GAAP diluted income per ADS of RMB0.38 (US$0.048) in the second quarter. Adjusted income for the third quarter of 2006 (a non-GAAP measure) was RMB16.6 million (US$2.1 million), compared to adjusted income of RMB4.9 million (US$609,000) in the corresponding period a year ago and adjusted income of RMB13.1 million (US$1.6 million) in the second quarter. Diluted adjusted income per ADS for the third quarter (also a non-GAAP measure) was RMB0.62 (US$0.078), compared to diluted adjusted income per ADS of RMB0.18 (US$0.022) in the corresponding period a year ago and diluted adjusted income per ADS of RMB0.48 (US$0.062) in the second quarter. Please refer to the attached table for a reconciliation of net income/loss and basic and diluted income/loss per ADS under US GAAP to adjusted income/loss and basic and diluted adjusted income/loss per ADS. As of September 30, 2006, the Company's cash and cash equivalents balance was US$142.1 million, which included a prepayment from the related party purchaser of US$2.9 million for the sales of certain assets. "In the third quarter, eLong achieved positive growth in revenues and an operating profit for the first time, which indicates that our operating leverage has improved even as we continue to focus on investing in the business for long-term sustainable profitability," said Tony Shen, interim Chief Financial Officer of eLong. Management Announcements Richard Xu was appointed as Chief Marketing Officer effective August 15, 2006, with responsibility for all of eLong's sales and marketing activities. Prior to joining eLong, Mr. Xu served as Executive Vice President at Linktone Ltd, leading the marketing and business development teams. Armstrong Wang was appointed as Vice President of Marketing effective September 26, 2006. Mr. Wang will report to Mr. Xu, the Chief Marketing Officer. Prior to joining eLong, Mr. Wang worked as Director of Marketing and Sales at Aoyou, an online travel distribution company in China, leading sales, marketing, web site and business development. Business Outlook eLong expects travel revenues for the fourth quarter of 2006 within the range of RMB70.0 million (US$8.9 million) to RMB73.0 million (US$9.2 million), an increase of 30% to 35% from the fourth quarter of 2005, and total revenues of RMB73.0 million (US$9.2 million) to RMB76.0 million (US$9.6 million), an increase of 26% to 31% from the fourth quarter of 2005. Note to the Financial Statements During the third quarter, the Company entered into a definitive agreement to sell the assets of one of its divisions operating an interactive online dating community, to a related party purchaser for a sale price of US$14.6 million. Disposal of the division qualifies as discontinued operations in the third quarter of 2006. Hence, the results of the operations of the division for current and prior periods have been aggregated into a separate line item as "Discontinued operations" in the statement of operations. Safe Harbor Statement It is currently expected that the Business Outlook will not be updated until the release of eLong's next quarterly earnings announcement; however, eLong reserves the right to update its Business Outlook at any time for any reason. Statements in this press release concerning eLong's future business, operating results and financial condition are "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "project," "predict," "should" and "will" and similar expressions as they related to the Company are intended to identify such forward-looking statements. These forward looking statements are based upon management's current views and expectations with respect to future events and are not a guarantee of future performance. Furthermore, these statements are, by their nature, subject to a number of risks and uncertainties that could cause actual performance and results to differ materially from those discussed in the forward-looking statements as a result of a number of factors. Factors that could affect the Company's actual results and cause actual results to differ materially from those included in any forward-looking statement include, but are not limited to, eLong's historical operating losses, its limited operating history, declines or disruptions in the travel industry, the recurrence of SARS, an outbreak of bird flu, eLong's reliance on having good relationships with hotel suppliers and airline ticket suppliers, our reliance on the Travelsky GDS system for our air business, the possibility that eLong will be unable to timely comply with Section 404 of the Sarbanes-Oxley Act of 2002, the risk that eLong will not be successful in competing against new and existing competitors, risks associated with Expedia, Inc.'s (NASDAQ:EXPE) majority ownership interest in eLong and the integration of eLong's business with that of Expedia's, subsequent revaluations of the Chinese currency, changes in eLong's management team and other key personnel and other risks outlined in eLong's filings with the U.S. Securities and Exchange Commission (or SEC), including eLong's Form 20-F filed with the SEC in connection with the Company's fiscal year 2005 results. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of their dates. Conference Call eLong will host a conference call to discuss the third quarter 2006 earnings at 7:00 p.m. Eastern Time, Nov 9, 2006 (Beijing/Hong Kong time: Nov 10, 2006 at 8:00 a.m.). The management team will be on the call to discuss quarterly results and highlights and to answer questions. The toll-free number for U.S. participants is +1 800 365 8460. The dial-in number for Hong Kong participants is +852 2258 4000. The toll number for international participants is +1 210 795 0492. The pass code for all participants is eLong. A replay of the call will be available for 1 day between 8:15 p.m. Eastern Time on Nov 9, 2006 and 8:15 p.m. Eastern Time on Nov 10, 2006. The toll-free number for U.S. callers is +1 800 839 3143. The dial-in number for international callers is +1 203 369 4605. The pass code for the replay is 798750. Additionally, a live and archived web cast of this call will be available on the Investor Relations section of the eLong web site at http://ir.elong.net/ for three months. About eLong, Inc. eLong, Inc. (NASDAQ:LONG) is a leading online travel company in China. Headquartered in Beijing, eLong has a national presence across China. eLong uses web-based distribution technologies and a 24-hour call center to provide consumers with access to travel reservation services. Aiming to enrich people's lives through the freedom of independent travel, eLong empowers consumers to make informed choices by providing a one-stop travel solution and consolidated travel tools and information such as maps, virtual tours and user ratings. eLong has the capacity to fulfill air ticket reservations in over 58 major cities across China. In addition to choice of a wide hotel selection in the Greater China region, eLong offers Chinese consumers the ability to make bookings at international hotels in over 140 destinations worldwide. eLong operates the websites http://www.elong.com/ and http://www.elong.net/. Investor Contact: Raymond Huang eLong, Inc. Investor Relations Manager 86-10-5860-2288 ext. 6633 eLong, Inc. CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) IN LOCAL CURRENCY Three Months Ended Nine Months Ended Sep. Jun. Sep. Sep. Sep. 30, 30, 30, 30, 30, 2006 2006 2005 2006 2005 RMB RMB RMB RMB RMB Revenues Hotel commissions 57,412 53,753 41,483 153,250 106,410 Airticketing commissions 11,045 9,641 7,504 28,694 16,222 Other travel revenue 3,860 1,629 881 6,945 1,883 Total travel revenue 72,317 65,023 49,868 188,889 124,515 Non travel 2,263 1,770 3,531 5,936 7,880 Total revenues 74,580 66,793 53,399 194,825 132,395 Cost of services 17,124 15,285 10,272 45,581 29,008 Gross profit 57,456 51,508 43,127 149,244 103,387 Operating expenses Service development 10,718 10,094 9,058 31,286 24,025 Sales and marketing 25,331 25,302 23,446 72,483 64,317 General and administrative 15,376 13,355 14,250 48,917 38,611 Amortization of intangibles 265 265 325 795 445 Business tax and surcharges 4,064 3,643 2,981 10,720 7,163 Total operating expenses 55,754 52,659 50,060 164,201 134,561 Income/(loss) from operations 1,702 (1,151) (6,933) (14,957) (31,174) Other income/(loss) 3,353 8,497 (15,165) 16,114 (1,951) Income/(loss) before income tax expense 5,055 7,346 (22,098) 1,157 (33,125) Income tax expense 2,199 250 672 2,986 655 Income/(loss) from continuing operations 2,856 7,096 (22,770) (1,829) (33,780) Discontinued operations Income/(loss) from discontinued operations (204) 526 (17,656) (90) (19,724) Income tax expense/(benefit) of discontinued operations (15) 48 29 27 54 Gain on sale of discontinued operations - 2,650 - 2,650 - Total discontinued operations (189) 3,128 (17,685) 2,533 (19,778) Net income/(loss) 2,667 10,224 (40,455) 704 (53,558) Basic income/(loss) per share Continuing operations 0.06 0.14 (0.45) (0.04) (0.68) Discontinued operations - 0.06 (0.35) 0.05 (0.40) Basic income/(loss) per share 0.06 0.20 (0.81) 0.01 (1.08) Diluted income/(loss) per share Continuing operations 0.05 0.13 (0.45) (0.03) (0.68) Discontinued operations - 0.06 (0.35) 0.05 (0.40) Diluted income/(loss) per share 0.05 0.19 (0.81) 0.02 (1.08) Basic income/(loss) per ADS Continuing operations 0.12 0.28 (0.91) (0.08) (1.37) Discontinued operations - 0.12 (0.70) 0.10 (0.79) Basic income/(loss) per ADS 0.12 0.40 (1.62) 0.02 (2.16) Diluted income/(loss) per ADS Continuing operations 0.10 0.26 (0.91) (0.06) (1.37) Discontinued operations - 0.12 (0.70) 0.10 (0.79) Diluted income/(loss) per ADS 0.10 0.38 (1.62) 0.04 (2.16) Shares used in computing basic net income/(loss) per share 50,374 50,374 50,244 50,368 49,411 Shares used in computing diluted net income/(loss) per share 53,878 53,870 50,244 53,837 49,411 eLong, Inc. CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) IN U.S. DOLLARS Three Months Ended Nine Months Ended Sep. Jun. Sep. Sep. Sep. 30, 30, 30, 30, 30, 2006 2006 2005 2006 2005 US$ US$ US$ US$ US$ Revenues Hotel commissions 7,264 6,724 5,126 19,389 13,150 Airticketing commissions 1,397 1,206 927 3,630 2,005 Other travel revenue 488 204 109 879 233 Total travel revenue 9,149 8,134 6,162 23,898 15,388 Non travel 286 221 436 751 974 Total revenues 9,435 8,355 6,598 24,649 16,362 Cost of services 2,166 1,912 1,269 5,767 3,585 Gross profit 7,269 6,443 5,329 18,882 12,777 Operating expenses Service development 1,356 1,262 1,119 3,958 2,969 Sales and marketing 3,205 3,164 2,897 9,170 7,948 General and administrative 1,945 1,671 1,762 6,189 4,772 Amortization of intangibles 34 33 40 101 55 Business tax and surcharges 514 456 368 1,356 885 Total operating expenses 7,054 6,586 6,186 20,774 16,629 Income/(loss) from operations 215 (143) (857) (1,892) (3,852) Other income/(loss) 424 1,063 (1,874) 2,039 (241) Income/(loss) before income tax expense 639 920 (2,731) 147 (4,093) Income tax expense 278 31 83 378 81 Income/(loss) from continuing operations 361 889 (2,814) (231) (4,174) Discontinued operations Income/(loss) from discontinued operations (26) 66 (2,182) (11) (2,437) Income tax expense/(benefit) of discontinued operations (2) 6 4 3 7 Gain on sale of discontinued operations - 331 - 335 - Total discontinued operations (24) 391 (2,186) 321 (2,444) Net income/(loss) 337 1,280 (5,000) 90 (6,618) Basic income/(loss) per share Continuing operations 0.008 0.018 (0.056) (0.005) (0.084) Discontinued operations - 0.008 (0.044) 0.006 (0.049) Basic income/(loss) per share 0.008 0.025 (0.100) 0.001 (0.133) Diluted income/(loss) per share Continuing operations 0.006 0.016 (0.056) (0.004) (0.084) Discontinued operations - 0.008 (0.044) 0.006 (0.049) Diluted income/(loss) per share 0.006 0.024 (0.100) 0.002 (0.133) Basic income/(loss) per ADS Continuing operations 0.015 0.036 (0.112) (0.010) (0.169) Discontinued operations - 0.015 (0.087) 0.013 (0.098) Basic income/(loss) per ADS 0.015 0.051 (0.200) 0.003 (0.267) Diluted income/(loss) per ADS Continuing operations 0.013 0.033 (0.112) (0.008) (0.169) Discontinued operations - 0.015 (0.087) 0.013 (0.098) Diluted income/(loss) per ADS 0.013 0.048 (0.200) 0.005 (0.267) Shares used in computing basic net income/(loss) per share 50,374 50,374 50,244 50,368 49,411 Shares used in computing diluted net income/(loss) per share 53,878 53,870 50,244 53,837 49,411 Note 1: The conversions of Renminbi (RMB) into United States dollars (USD) as at the reporting dates are based on the noon buying rate of USD1.00 = RMB7.904 on September 30,2006, USD1.00 = RMB7.9943 on June 30, 2006 and USD1.00 = RMB8.092 on September 30, 2005 in The City of New York for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve. No representation is intended to imply that the RMB amounts could have been, or could be, converted, realized or settled into U.S. dollars at that rate on the reporting dates. eLong, Inc. CONSOLIDATED SUMMARY BALANCE SHEET DATA (UNAUDITED, IN THOUSANDS) Sep. 30, Dec. 31, Sep. 30, Dec. 31, 2006 2005 2006 2005 ASSETS RMB RMB US$ US$ Current assets Cash and cash equivalents 1,123,368 988,560 142,127 122,495 Restricted cash equivalents - 76,177 - 9,439 Total Accounts receivable, net 41,501 34,655 5,251 4,294 Investment securities 222 260 28 32 Prepaid expenses and other current assets 21,174 9,982 2,679 1,237 Total current assets 1,186,265 1,109,634 150,085 137,498 Equipment and software, net 38,306 33,306 4,846 4,127 Goodwill 32,789 34,083 4,148 4,223 Intangibles 4,011 4,806 507 596 Other non-current assets 7,841 6,508 992 806 Assets held for sale 1,301 - 165 - Deferred tax assets 84 84 11 10 Total assets 1,270,597 1,188,421 160,754 147,260 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable, accrued expenses and other payables 162,173 88,013 20,518 10,906 Advances from customers 1,804 736 228 91 Short term loans - 6,000 - 743 Business and other taxes payable 4,140 3,004 524 372 Total current liabilities 168,117 97,753 21,270 12,112 Other long term liabilities 1,432 - 181 - Deferred Tax Liabilities 132 132 17 16 Total liabilities 169,681 97,885 21,468 12,128 Minority interest - 1,628 - 202 Shareholders' equity Ordinary shares 4,177 4,167 528 516 Additional paid-in capital 1,200,593 1,216,879 151,897 150,787 Other equity items 1,177 (26,441) 149 (3,276) Accumulated deficit and other comprehensive income (105,031) (105,697) (13,288) (13,097) Total shareholders' equity 1,100,916 1,088,908 139,286 134,930 Total liabilities and shareholders' equity 1,270,597 1,188,421 160,754 147,260 eLong, Inc. RECONCILIATION OF US GAAP INCOME/(LOSS) AND EPS TO NON-GAAP ADJUSTED INCOME/(LOSS) AND EPS (UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) IN LOCAL CURRENCY Three Months Ended Nine Months Ended Sep. Jun. Sep. Sep. Sep. 30, 30, 30, 30, 30, 2006 2006 2005 2006 2005 RMB RMB RMB RMB RMB Net income/(loss) 2,667 10,224 (40,455) 704 (53,558) Amortization of non-cash stock- based compensation 2,341 2,520 3,375 8,812 12,881 Amortization of intangibles 265 265 510 795 1,001 Other non-cash compensation 506 506 Unrealized foreign exchange losses on US$ net monetary assets/liabilities 11,357 2,772 23,449 14,665 23,449 Writedown of subsidiary's goodwill and intangibles 17,545 17,545 Gain on disposal of discontinued operations (2,650) - (2,650) - Adjusted income/(loss) 16,630 13,131 4,930 22,326 1,824 Basic adjusted income/(loss) per share 0.33 0.26 0.10 0.44 0.04 Diluted adjusted income/(loss) per share 0.31 0.24 0.09 0.41 0.03 Basic adjusted income/(loss) per ADS 0.66 0.52 0.20 0.88 0.08 Diluted adjusted income/(loss) per ADS 0.62 0.48 0.18 0.82 0.06 Shares used in computing adjusted basic income/(loss) per share 50,374 50,374 50,244 50,368 49,411 Shares used in computing adjusted diluted income/(loss) per share 53,878 53,870 53,075 53,837 52,750 eLong, Inc. RECONCILIATION OF US GAAP INCOME/(LOSS) AND EPS TO NON-GAAP ADJUSTED INCOME/(LOSS) AND EPS (UNAUDITED, IN THOUSANDS EXCEPT PER SHARE AMOUNTS) IN U.S. DOLLARS Three Months Ended Nine Months Ended Sep. Jun Sep. Sep. Sep. 30, 30, 30, 30, 30, 2006 2006 2005 2006 2005 US$ US$ US$ US$ US$ Net income/(loss) 337 1,280 (5,000) 90 (6,618) Amortization of non-cash stock- based compensation 296 315 417 1,115 1,592 Amortization of intangibles 34 33 63 101 124 Other non-cash compensation 63 63 Unrealized foreign exchange losses on US$ net monetary assets/liabilities 1,437 347 2,898 1,855 2,898 Writedown of subsidiary's goodwill and intangibles - 2,168 2,168 Gain on disposal of discontinued operations - (331) - (335) - Adjusted income/(income) 2,104 1,644 609 2,826 227 Basic adjusted income/(loss) per share 0.042 0.033 0.012 0.056 0.005 Diluted adjusted income/(loss) per share 0.039 0.031 0.011 0.052 0.004 Basic adjusted income/(loss) per ADS 0.084 0.066 0.024 0.112 0.009 Diluted adjusted income/(loss) per ADS 0.078 0.062 0.022 0.104 0.009 Shares used in computing adjusted basic income/(loss) per share 50,374 50,374 50,244 50,368 49,411 Shares used in computing adjusted diluted income/(loss) per share 53,878 53,870 53,075 53,837 52,750 Use of Non-GAAP Financial Information To supplement our consolidated financial statements presented herein in accordance with accounting principles generally accepted in the United States ("US GAAP"), the Company also uses non-GAAP measures of adjusted net loss and adjusted diluted loss per ADS, which are adjusted from results based on US GAAP to exclude the impact of (1) amortization of non-cash stock-based compensation expense, (2) amortization of intangible assets, (3) other non- cash compensation, (4) unrealized foreign exchange losses on the conversion of eLong's US$ denominated net monetary assets/liabilities into Renminbi and (5) gain on disposal of discontinued operations. Management believes these non- GAAP financial measures enhance the user's overall understanding of our current financial performance and our prospects for the future and, additionally, uses these non-GAAP financial measures for the general purpose of analyzing and managing the Company's business. Specifically, we believe the non-GAAP financial measures provide useful information to both management and investors by excluding certain charges that we believe are not indicative of our core operating results. The presentation of this additional information is not meant to be considered superior to, in isolation from or as a substitute for results prepared in accordance with US GAAP. http://www.newscom.com/cgi-bin/prnh/20041118/ELONGLOGODATASOURCE: eLong, Inc. CONTACT: Raymond Huang, Investor Relations Manager, eLong, Inc., +86-10- 5860-2288 ext. 6633, Web site: http://www.elong.com/

Copyright