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GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2011

NOTE 4—GOODWILL AND INTANGIBLE ASSETS

The balance of goodwill and intangible assets, net is as follows (in thousands):

	December 31, 2011		December 31, 2010

Goodwill	$	3,632	$	3,632

Intangible assets with indefinite lives	$	10,142	$	39,142
Intangible assets with definite lives, net		1,047		2,177

Total intangible assets, net	$	11,189	$	41,319

Intangible assets with indefinite lives relate principally to our trademarks. At December 31, 2011, intangible assets with definite lives relate to the following ($ in thousands):

	Cost		Accumulated Amortization			Net

Purchase agreements	$	50,411	$	(50,293	)	$	118	5.0
Technology		25,194		(25,034	)		160	3.0
Customer lists		6,682		(6,045	)		637	4.2
Other		1,516		(1,384	)		132	2.5

Total	$	83,803	$	(82,756	)	$	1,047

At December 31, 2010, intangible assets with definite lives relate to the following ($ in thousands):

	Cost		Accumulated Amortization			Net

Purchase agreements	$	50,436	$	(50,271	)	$	165	5.0
Technology		26,091		(25,438	)		653	3.0
Customer lists		6,682		(5,986	)		696	4.1
Other		1,609		(946	)		663	2.5

Total	$	84,818	$	(82,641	)	$	2,177

Amortization of intangible assets with definite lives is computed on a straight-line basis and, based on balances as of December 31, 2011, such amortization is estimated to be as follows (in thousands):

	Amount

Year ending December 31, 2012	$	358
Year ending December 31, 2013		147
Year ending December 31, 2014		86
Year ending December 31, 2015		60
Year ending December 31, 2016		60
Thereafter		336

Total	$	1,047

The following table presents the balance of goodwill, including changes in the carrying amount of goodwill, for the years ended December 31, 2011 and 2010 (in thousands):

	Total

Balance as of January 1, 2010
Goodwill	$	485,955
Accumulated impairment losses		(483,088	)

		2,867

Goodwill acquired during the year		765
Impairment losses		—
Other deductions		—

Balance as of December 31, 2010
Goodwill		486,720
Accumulated impairment losses		(483,088	)

		3,632

Goodwill acquired during the year		—
Impairment losses		—
Other deductions		—

Balance as of December 31, 2011
Goodwill		486,720
Accumulated impairment losses		(483,088	)

	$	3,632

Additions principally relate to business combinations. See Note 1.

We performed an interim impairment test in the second quarter of 2011 and our annual test as of October 1, 2011, and recorded impairment charges related to trade names and trademarks of $29.0 million and definite-lived intangible assets of $0.3 million. These impairments resulted from a lower observed market value of our common stock at June 30, 2011 and lower anticipated revenues related to our trade names and trademarks as a result of the anticipated sale of substantially all of the operating assets of LendingTree Loans. The impairment of definite-lived assets was recorded in the second quarter of 2011, and we determined in connection with preparation of our annual financial statements that the impairment of the indefinite-lived assets should have also been recorded in the second quarter of 2011. No additional impairments are recorded as of October 1, 2011.

Impairments related to trademarks were $0.5 million in 2010, and there were no impairments of definite-lived intangible assets in 2010.

We perform our annual goodwill impairment testing during the fourth quarter in conjunction with our annual financial planning process, with such testing based primarily on events and circumstances existing as of October 1. We determine the fair value of our single reporting unit using a market approach and a discounted cash flow ("DCF") analyses. Determining fair value requires the exercise of significant judgment, including judgment about the amount and timing of expected future cash flows and appropriate discount rates. The expected cash flows used in the DCF analyses are based on our most recent budget and, for years beyond the budget, our estimates, which are based, in part, on forecasted growth rates. The discount rates used in the DCF analyses reflect the risks inherent in the expected future cash flows of the respective reporting units.

We determine the fair values of our indefinite-lived intangible assets using a relief-from royalty DCF valuation analyses. Significant judgments inherent in these analyses include the selection of appropriate royalty and discount rates and estimating the amount and timing of expected future revenue. The discount rates used in the DCF analyses reflect the risks inherent in the expected future revenue to be generated by the respective intangible assets. The royalty rates used in the DCF analyses are based upon an estimate of the royalty rates that a market participant would pay to license our trade names and trademarks.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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