Document and Entity Information	9 Months Ended
Document and Entity Information	Sep. 30, 2012	Nov. 07, 2012
Document and Entity Information
Entity Registrant Name	Tree.com, Inc.
Entity Central Index Key	0001434621
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		11,366,504
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenue	$ 23,296	$ 13,101	$ 53,501	$ 43,951
Costs and expenses
Cost of revenue	1,231	1,001	2,830	3,529
Selling and marketing expense	13,376	8,475	34,997	39,246
General and administrative expense	5,532	4,388	16,166	15,059
Product development	853	681	2,383	2,677
Litigation settlements and contingencies	510	212	948	5,206
Restructuring expense (gain)	(48)	498	(109)	990
Amortization of intangibles	101	213	314	787
Depreciation	934	1,393	3,204	3,677
Asset impairments				29,250
Total costs and expenses	22,489	16,861	60,733	100,421
Operating income (loss)	807	(3,760)	(7,232)	(56,470)
Other expense
Interest expense	(349)	(110)	(606)	(266)
Total other expense, net	(349)	(110)	(606)	(266)
Income (loss) before income taxes	458	(3,870)	(7,838)	(56,736)
Income tax benefit (provision)	(188)	464	3,086	12,128
Net income (loss) from continuing operations	270	(3,406)	(4,752)	(44,608)
Gain from sale of discontinued operations, net of tax		7,752	24,313	7,752
Income (loss) from operations of discontinued operations, net of tax	4,112	8,969	24,745	(23,829)
Income (loss) from discontinued operations	4,112	16,721	49,058	(16,077)
Net income (loss) attributable to common shareholders	$ 4,382	$ 13,315	$ 44,306	$ (60,685)
Weighted average common shares outstanding (in shares)	11,389	11,037	11,293	10,978
Weighted average diluted shares outstanding (in shares)	12,003	11,037	11,293	10,978
Net income (loss) per share from continuing operations
Basic (in dollars per share)	$ 0.02	$ (0.31)	$ (0.42)	$ (4.06)
Diluted (in dollars per share)	$ 0.02	$ (0.31)	$ (0.42)	$ (4.06)
Net income (loss) per share from discontinued operations
Basic (in dollars per share)	$ 0.36	$ 1.52	$ 4.34	$ (1.47)
Diluted (in dollars per share)	$ 0.35	$ 1.52	$ 4.34	$ (1.47)
Net income (loss) per share attributable to common shareholders
Basic (in dollars per share)	$ 0.38	$ 1.21	$ 3.92	$ (5.53)
Diluted (in dollars per share)	$ 0.37	$ 1.21	$ 3.92	$ (5.53)

CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
ASSETS:
Cash and cash equivalents	$ 89,780	$ 45,541
Restricted cash and cash equivalents	29,425	12,451
Accounts receivable, net of allowance of $94 and $86, respectively	10,415	5,474
Prepaid and other current assets	1,524	1,060
Current assets of discontinued operations	479	232,425
Total current assets	131,623	296,951
Property and equipment, net	6,924	8,375
Goodwill	3,632	3,632
Intangible assets, net	10,874	11,189
Other non-current assets	166	246
Non-current assets of discontinued operations	236	10,947
Total assets	153,455	331,340
LIABILITIES:
Accounts payable, trade	3,963	9,072
Deferred revenue	1,162	176
Deferred income taxes	4,335	4,335
Accrued expenses and other current liabilities	17,367	16,712
Current liabilities of discontinued operations	31,784	250,030
Total current liabilities	58,611	280,325
Income taxes payable		7
Other long-term liabilities	1,094	4,070
Deferred income taxes	568	435
Non-current liabilities of discontinued operations	331	1,032
Total liabilities	60,604	285,869
Commitments and contingencies (Note 9)
SHAREHOLDERS' EQUITY:
Preferred stock $.01 par value; authorized 5,000,000 shares; none issued or outstanding
Common stock $.01 par value; authorized 50,000,000 shares; issued 12,546,501 and 12,169,226 shares, respectively, and outstanding 11,393,804 and 11,045,965 shares, respectively	125	121
Additional paid-in capital	915,417	911,987
Accumulated deficit	(813,799)	(858,105)
Treasury stock of 1,152,697 and 1,123,261 shares, respectively	(8,892)	(8,532)
Total shareholders' equity	92,851	45,471
Total liabilities and shareholders' equity	$ 153,455	$ 331,340

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance (in dollars)	$ 94	$ 86
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized shares	5,000,000	5,000,000
Preferred stock, issued shares	0	0
Preferred stock, outstanding shares	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized shares	50,000,000	50,000,000
Common stock, issued shares	12,546,501	12,169,226
Common stock, outstanding shares	11,393,804	11,045,965
Treasury stock, shares	1,152,697	1,123,261

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (USD $) In Thousands, unless otherwise specified	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Treasury Stock
Balance at Dec. 31, 2011	$ 45,471	$ 121	$ 911,987	$ (858,105)	$ (8,532)
Balance (in shares) at Dec. 31, 2011		12,169			1,123
Comprehensive income:
Net income for the nine months ended September 30, 2012	44,306			44,306
Non-cash compensation	3,735		3,735
Issuance of common stock upon exercise of stock options and vesting of restricted stock units, net of withholding taxes	(301)	4	(305)
Issuance of common stock upon exercise of stock options and vesting of restricted stock units, net of withholding taxes (in shares)		377
Purchase of treasury stock	(360)				(360)
Purchase of treasury stock (in shares)					30
Balance at Sep. 30, 2012	$ 92,851	$ 125	$ 915,417	$ (813,799)	$ (8,892)
Balance (in shares) at Sep. 30, 2012		12,546			1,153

- Definition

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

+ References+ Details

- Definition

Equity impact of the cost of common and preferred stock that were repurchased during the period. Recorded using the cost method.

+ References+ Details

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities attributable to continuing operations:
Net income (loss)	$ 44,306	$ (60,685)
Less (income) loss from discontinued operations, net of tax	(49,058)	16,077
Net income (loss) from continuing operations	(4,752)	(44,608)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities attributable to continuing operations:
Loss on disposal of fixed assets	344	210
Amortization of intangibles	314	787
Depreciation	3,204	3,677
Intangible impairment		29,250
Non-cash compensation expense	3,565	2,731
Deferred income taxes	134	(12,144)
Bad debt expense (recovery)	(4)	32
Changes in current assets and liabilities:
Accounts receivable	(4,938)	(1,911)
Prepaid and other current assets	401	(122)
Accounts payable and other current liabilities	(2,492)	385
Income taxes payable	(658)	(58)
Deferred revenue	986	(96)
Other, net	(410)	988
Net cash used in operating activities attributable to continuing operations	(4,306)	(20,879)
Cash flows from investing activities attributable to continuing operations:
Capital expenditures	(2,046)	(5,480)
Increase in restricted cash	(4,047)	(1,488)
Net cash used in investing activities attributable to continuing operations	(6,093)	(6,968)
Cash flows from financing activities attributable to continuing operations:
Vesting and issuance of common stock, net of withholding taxes	(301)	(950)
Purchase of treasury stock	(360)
(Increase) decrease in restricted cash	4,150	(3,325)
Net cash provided by (used in) financing activities attributable to continuing operations	3,489	(4,275)
Total cash used in continuing operations	(6,910)	(32,122)
Net cash provided by (used in) operating activities attributable to discontinued operations	222,885	(58,317)
Net cash provided by (used in) investing activities attributable to discontinued operations	25,923	(9,310)
Net cash provided by (used in) financing activities attributable to discontinued operations	(197,659)	41,261
Total cash provided by (used in) discontinued operations	51,149	(26,366)
Net increase (decrease) in cash and cash equivalents	44,239	(58,488)
Cash and cash equivalents at beginning of period	45,541	68,819
Cash and cash equivalents at end of period	$ 89,780	$ 10,331

ORGANIZATION

9 Months Ended

Sep. 30, 2012

ORGANIZATION

ORGANIZATION

NOTE 1—ORGANIZATION

Company Overview

Tree.com, Inc. (“we”, “Tree.com” or the “Company”) is the parent of LendingTree, LLC, which owns several brands and businesses that provide information, tools, advice, products and services for critical transactions in consumers’ lives. Our family of brands includes: LendingTree.com®, GetSmart®, DegreeTree®, LendingTreeAutos, DoneRight®, ServiceTreeSM, InsuranceTree® and HealthTree. Together, these brands serve as an ally for consumers who are looking to comparison shop for loans and other services from multiple businesses and professionals who will compete for their business. We refer to the collection of these brands and businesses as our Exchanges business, which comprises our continuing operations, as detailed herein.

Segment Reporting

Through the quarter ended March 31, 2011, we operated in two reportable business segments: LendingTree Loans and Exchanges. Until the completion on June 6, 2012 of the sale of substantially all of the operating assets of our LendingTree Loans business to a wholly-owned subsidiary of Discover Financial Services, discussed below and in Note 6, the LendingTree Loans segment originated, processed, approved and funded various residential real estate loans through Home Loan Center, Inc. dba LendingTree Loans (“HLC”). The business operated by HLC under the HLC and LendingTree Loans brand names is referred to in this report as “LendingTree Loans.” Discover Financial Services and/or any of its affiliates are collectively referred to in this report as “Discover.”

The Exchanges segment consists of online lead generation networks and call centers that connect consumers and service providers principally in the lending, higher education, automobile, home services and insurance marketplaces.

In connection with entering into the agreement in the second quarter of 2011 that provided for the sale of substantially all of the operating assets of our LendingTree Loans business, management re-evaluated its reporting segments based on our continuing operations and determined that our continuing operations were one reportable segment, which represents the previous “Exchanges” segment. Prior period results have been reclassified to conform with discontinued operations presentation and the change in reportable segments.

We maintain operations solely in the United States.

Discontinued Operations

The businesses of RealEstate.com and RealEstate.com, REALTORS® (which together represent the former Real Estate segment) and LendingTree Loans are presented as discontinued operations in the accompanying consolidated balance sheets and consolidated statements of operations and cash flows for all periods presented. The notes accompanying these consolidated financial statements reflect our continuing operations and, unless otherwise noted, exclude information related to the discontinued operations.

Real Estate

LendingTree Loans

On May 12, 2011, we entered into an asset purchase agreement, as amended by an amendment to the asset purchase agreement dated as of February 7, 2012, for the sale of substantially all of the operating assets of our LendingTree Loans business. We completed the sale on June 6, 2012.

The asset purchase agreement as amended provided for a purchase price of approximately $55.9 million in cash for the assets, subject to certain conditions. Of this total purchase price, $8.0 million was paid prior to the closing, $37.9 million was paid upon the closing and $10.0 million is due on the first anniversary of the closing, subject to us meeting certain conditions.

Discover generally did not assume liabilities of the LendingTree Loans business that arose before the closing date, except for certain liabilities directly related to assets Discover acquired. Approximately $17.1 million of the initial purchase price payment is being held in escrow pending resolution of certain actual and/or contingent liabilities that remain with us following the sale. The escrowed amount is recorded as restricted cash at September 30, 2012.

Separate from the asset purchase agreement, we agreed to provide certain marketing-related services to Discover in connection with its mortgage origination business for approximately seventeen months following the closing, or such earlier point as the agreed-upon services are satisfactorily completed. Discover is also now a participating lender on our lending network.

The unaudited pro forma financial information in the table below summarizes our results as if the sale of substantially all of the operating assets of LendingTree Loans had occurred as of January 1, 2011. The unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of what the results would have been had the sale occurred as of January 1, 2011.

	Nine Months Ended September 30, 2012			Nine Months Ended September 30, 2011
Revenue	$	53,501		$	43,951
Net loss from continuing operations	(4,752		)	(44,608		)
Net loss attributable to common shareholders	(4,752		)	(44,608		)
Basic earnings per share attributable to common shareholders	(0.42		)	(4.06		)
Diluted earnings per share attributable to common shareholders	(0.42		)	(4.06		)

Business Combinations

On March 15, 2011, our wholly-owned subsidiary, HLC, completed its acquisition of certain assets of First Residential Mortgage Network, Inc. dba SurePoint Lending, pursuant to an asset purchase agreement dated November 15, 2010. SurePoint, a LendingTree network lender for eleven years, was a full-service residential mortgage provider licensed in 45 states and employed over 500 people, including more than 300 licensed loan officers. HLC purchased certain specified assets and assumed certain liabilities of SurePoint related to its business of originating, refinancing, processing, underwriting, funding and closing residential mortgage loans; providing title and escrow services; and providing other mortgage-related services. The acquired assets also included the equity interests of Real Estate Title Services, LLC. HLC paid $8.0 million in cash upon the closing of the transaction, subject to certain adjustments as described in the asset purchase agreement, and $0.2 million in cash for contingent consideration subsequent to the close. HLC used available cash to fund the acquisition.

This asset purchase was accounted for under the acquisition method of accounting. Accordingly, the purchase price was allocated to the acquired assets and liabilities based on their estimated fair values at the acquisition date. The purchase price was allocated as $5.6 million to goodwill, $0.7 million to intangible assets with useful lives of three months to five years, and $1.7 million to equipment and other assets. The pro forma effect of this purchase was not material to our results of operations.

Correction of an Error

As disclosed in our Form 10-K for the year ended December 31, 2011, during the process of preparing our financial statements for the year ended December 31, 2011, we determined that a $29.0 million impairment charge related to trade names and trademarks that we determined to exist as of October 1, 2011, as determined in our annual impairment testing, should have been recorded in the second quarter of 2011 pursuant to the impairment test we performed as a result of our entry into the asset purchase agreement for the sale of substantially all of the assets of our LendingTree Loans business. As a result of this error, certain previously reported amounts in the condensed consolidated financial statements for the quarter ended September 30, 2011 were materially misstated; accordingly we have restated the prior period financial statements.

The restated condensed consolidated statement of operations for the three months ended September 30, 2011 is as follows:

	As Previously Presented			Impairment Correction		As Restated
Income tax benefit	$	185		$	279	$	464
Net loss from continuing operations	(3,685		)	279		(3,406		)
Income from operations of discontinued operations, net of tax	8,531			438		8,969
Income from discontinued operations	16,283			438		16,721
Net income attributable to common shareholders	12,598			717		13,315
Basic and diluted net loss per share from continuing operations	(0.33		)	0.02		(0.31		)
Basic and diluted net income per share from discontinued operations	1.47			0.05		1.52
Basic and diluted net income per share attributable to common shareholders	1.14			0.07		1.21

The restated condensed consolidated statement of operations for the nine months ended September 30, 2011 is as follows:

	As Previously Presented			Impairment Correction			As Restated
Asset impairments	$	250		$	29,000		$	29,250
Total costs and expenses	71,421			29,000			100,421
Operating loss	(27,470		)	(29,000		)	(56,470		)
Loss before income taxes	(27,736		)	(29,000		)	(56,736		)
Income tax benefit (provision)	(117		)	12,245			12,128
Net loss from continuing operations	(27,853		)	(16,755		)	(44,608		)
Loss from operations of discontinued operations, net of tax	(24,615		)	786			(23,829		)
Loss from discontinued operations	(16,863		)	786			(16,077		)
Net loss attributable to common shareholders	(44,716		)	(15,969		)	(60,685		)
Basic and diluted net loss per share from continuing operations	(2.54		)	(1.52		)	(4.06		)
Basic and diluted net loss per share from discontinued operations	(1.53		)	0.06			(1.47		)
Basic and diluted net loss per share from attributable to common shareholders	(4.07		)	(1.46		)	(5.53		)

The restated cash flows from operating activities section of the condensed consolidated statement of cash flows for the nine months ended September 30, 2011 is as follows:

	As Previously Presented			Impairment Correction			As Restated
Cash Flows from Operating Activities:
Net loss	$	(44,716	)	$	(15,969	)	$	(60,685	)
Less loss from discontinued operations, net of tax	16,863			(786		)	16,077
Net loss from continuing operations	(27,853		)	(16,755		)	(44,608		)
Intangible impairment	250			29,000			29,250
Deferred income taxes	101			(12,245		)	(12,144		)

Out of Period Adjustment

Our results of operations for the three and nine months ended September 30, 2012 include a reduction to net income of approximately $0.3 million resulting from additional interest expense related to our shares of Series A Redeemable Preferred Stock of a wholly-owned subsidiary of Tree.com that should have been recorded as a reduction to net income or increase to net loss from the third quarter of 2008 through the third quarter of 2012. Because the amounts are not material to our consolidated financial statements in any prior period, and the cumulative amount is not expected to be material to the results of operations for the full year 2012, we recorded the cumulative effect of correcting these items during the three months ended September 30, 2012.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements as of September 30, 2012 and 2011 and for the three and nine months then ended have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for annual financial statements. In the opinion of management, the unaudited interim consolidated financial statements have been prepared on the same basis as the audited financial statements, and include all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of our financial position for the periods presented. The results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results to be expected for the year ending December 31, 2012, or any other period. These financial statements and notes should be read in conjunction with the audited financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2011.

- Definition

The entire disclosure for organization, consolidation and basis of presentation of financial statements disclosure.

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+ Details

SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2012

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES

Accounting Estimates

Management is required to make certain estimates and assumptions during the preparation of the consolidated financial statements in accordance with GAAP. These estimates and assumptions impact the reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net earnings during any period. Actual results could differ from those estimates.

Significant estimates underlying the accompanying consolidated financial statements, including discontinued operations, include: valuation allowance for impaired loans held for sale; loan loss obligations; the fair value of loans held for sale and related derivatives; the recoverability of long-lived assets, goodwill and intangible assets; the determination of income taxes payable and deferred income taxes, including related valuation allowances; restructuring reserves; contingent consideration related to business combinations; various other allowances, reserves and accruals; and assumptions related to the determination of stock-based compensation.

Concentrations

One customer on our networks accounted for revenue representing 22% and 11% for the three and nine months ended September 30, 2012, respectively. No customer accounted for more than 10% of revenue for the three or nine months ended September 30, 2011.

Cash and Cash Equivalents

Cash and cash equivalents include cash and short-term, highly liquid money market investments with original maturities of three months or less.

Restricted Cash

Restricted cash and cash equivalents consists of the following (in thousands):

	September 30, 2012		December 31, 2011
Cash in escrow for loan loss obligations	$	20,127	$	—
Cash in escrow for surety bonds	6,501		6,500
Cash in escrow for corporate purchasing card program	800		800
Minimum required balances for warehouse lines of credit	—		4,250
Other	1,997		901
Total restricted cash and cash equivalents	$	29,425	$	12,451

Cash in escrow for loan loss obligations includes $17.1 million held in escrow pursuant to the asset purchase agreement for the sale of substantially all of the operating assets of our LendingTree Loans business, pending the resolution of certain actual and/or contingent liabilities that remain with us following the closing of such sale, and $3.0 million is held by an investor that purchased loans from LendingTree Loans to secure potential loan loss obligations.

Revenue Recognition

Revenue principally represents match fees and closed-loan fees paid by lenders that received a transmitted loan request and/or closed a loan for a consumer that originated through one of our websites or affiliates. Revenue also includes match fees paid by institutions of higher education and businesses and professionals in the automobile, home services and insurance industries for a transmitted lead or service request. Match fees are recognized at the time qualification forms are transmitted. Closed-loan fees are recognized at the time the lender reports the closed loan to us, which may be several months after the loan request is transmitted. Revenue also includes fees paid by advertisers on our websites. In addition, during the nine months ended September 30, 2012, we recognized approximately $1.3 million of revenue from marketing-related services provided to Discover discussed above, which is recognized in the period the services are provided.

Recent Accounting Pronouncements

In May 2011, the FASB issued amendments to the fair value accounting guidance. The amendments clarify the application of the highest and best use, and valuation premise concepts, preclude the application of blockage factors in the valuation of all financial instruments and include criteria for applying the fair value measurement principles to portfolios of financial instruments. The amendments additionally prescribe enhanced financial statement disclosures for Level 3 fair value measurements. The new amendments were effective on January 1, 2012. The adoption of this guidance did not have a material impact on our consolidated financial statements. See Note 6 for further information.

In September 2011, the FASB issued the updated accounting standard on testing goodwill for impairment. The update simplifies how an entity tests goodwill for impairment. The amendments allow both public and nonpublic entities an option to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under that option, an entity no longer would be required to calculate the fair value of a reporting unit unless the entity determines, based on that qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The amendments were effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In December 2011, the FASB issued new accounting guidance that requires additional disclosures on financial instruments and derivative instruments that are either offset in accordance with existing accounting guidance or are subject to an enforceable master netting arrangement or similar agreement. The new requirements do not change the accounting guidance on netting, but rather enhance the disclosures to more clearly show the impact of netting arrangements on a company’s financial position. This new accounting guidance will be effective, on a retrospective basis for all comparative periods presented, beginning on January 1, 2013. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

In July 2012, the FASB issued new guidance which allows an entity to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. This assessment should be used as a basis for determining whether it is necessary to perform the quantitative impairment test. An entity would not be required to calculate the fair value of the intangible asset and perform the quantitative test unless the entity determines, based upon its qualitative assessment, that it is more likely than not that its fair value is less than its carrying value. The update expands previous guidance by providing more examples of events and circumstances that an entity should consider in determining whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. The update also allows an entity the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test. An entity will be able to resume performing the qualitative assessment in any subsequent period. This update is effective for annual and interim periods beginning after September 15, 2012, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

- Definition

The entire disclosure for all significant accounting policies of the reporting entity.

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GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2012

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

NOTE 3—GOODWILL AND INTANGIBLE ASSETS

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

	September 30, 2012		December 31, 2011
Goodwill	$	3,632	$	3,632
Intangible assets with indefinite lives	$	10,142	$	10,142
Intangible assets with definite lives, net	732		1,047
Total intangible assets, net	$	10,874	$	11,189

Intangible assets with indefinite lives relate principally to the LendingTree trademark.

At September 30, 2012, intangible assets with definite lives relate to the following (in thousands):

	Cost		Accumulated Amortization			Net		Weighted Average Amortization Life (Years)
Purchase agreements	$	50,411	$	(50,329	)	$	82	5.0
Technology	25,194		(25,142		)	52		3.0
Customer lists	6,682		(6,090		)	592		4.2
Other	1,516		(1,510		)	6		2.5
Total	$	83,803	$	(83,071	)	$	732

At December 31, 2011, intangible assets with definite lives relate to the following (in thousands):

	Cost		Accumulated Amortization			Net		Weighted Average Amortization Life (Years)
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

Amortization of intangible assets with definite lives is computed on a straight-line basis and, based on September 30, 2012 balances, such amortization for the next five years is estimated to be as follows (in thousands):

	Amount
Three months ending December 31, 2012	$	43
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	$	732

- 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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PROPERTY AND EQUIPMENT

9 Months Ended

Sep. 30, 2012

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT

NOTE 4—PROPERTY AND EQUIPMENT

The balance of property and equipment, net is as follows (in thousands):

	September 30, 2012			December 31, 2011
Computer equipment and capitalized software	$	26,571		$	24,940
Leasehold improvements	2,055			2,042
Furniture and other equipment	1,488			1,450
Projects in progress	612			826
	30,726			29,258
Less: accumulated depreciation and amortization	(23,802		)	(20,883		)
Total property and equipment, net	$	6,924		$	8,375

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

9 Months Ended

Sep. 30, 2012

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

NOTE 5—ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following (in thousands):

	September 30, 2012		December 31, 2011
Litigation accruals	$	500	$	3,077
Accrued advertising expense	5,044		2,659
Accrued compensation and benefits	4,776		624
Accrued professional fees	1,019		635
Accrued restructuring costs	341		439
Customer deposits and escrows	1,941		2,211
Deferred rent	212		186
Other	3,534		6,881
Total accrued expenses and other current liabilities	$	17,367	$	16,712

Accrued compensation and benefits at September 30, 2012 includes $3.1 million of compensation that was previously classified as a long-term liability, but became a current liability in the third quarter of 2012 as the amount is payable within twelve months of September 30, 2012. See Note 10—Subsequent Event for further information. The other category above reflects franchise taxes, self-insured health claims and other miscellaneous accrued expenses.

An additional $0.6 million and $0.9 million of accrued restructuring liabilities are classified in other long term liabilities at September 30, 2012 and December 31, 2011, respectively.

DISCONTINUED OPERATIONS

9 Months Ended

Sep. 30, 2012

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

NOTE 6—DISCONTINUED OPERATIONS

On March 10, 2011, management made the decision and finalized a plan to close all of the field offices of the proprietary full-service real estate brokerage business known as RealEstate.com, REALTORS®. We exited all markets by March 31, 2011. In September 2011, we sold the remaining assets of RealEstate.com, which consisted primarily of internet domain names and trademarks. Accordingly, these Real Estate businesses are presented as discontinued operations in the accompanying consolidated balance sheets and consolidated statements of operations and cash flows for all periods presented. No significant future cash flows are anticipated from the disposition of this business.

On May 12, 2011, we entered into an asset purchase agreement that provided for the sale of substantially all of the operating assets of our LendingTree Loans business to Discover. On February 7, 2012, we entered into an amendment to the asset purchase agreement. We completed the sale on June 6, 2012. Discover is now a participating lender on our lending network. We have evaluated the facts and circumstances of the transaction and the applicable accounting guidance for discontinued operations, and have concluded that the LendingTree Loans business should be reflected as discontinued operations in the accompanying consolidated balance sheets and consolidated statements of operations and cash flows for all periods presented. The continuing cash flows related to this transaction are not significant, and accordingly, are not deemed to be direct cash flows of the divested business.

We have agreed to indemnify Discover for a breach or inaccuracy of any representation, warranty or covenant made by us in the asset purchase agreement, for any liability of ours that was not assumed, for any claims by our stockholders against Discover and for our failure to comply with any applicable bulk sales law, subject to certain limitations. Discover has submitted a claim for indemnification relating to our sale prior to the closing of certain loans that were listed in the asset purchase agreement as to be conveyed to Discover at closing. We have evaluated this matter as a potential loss contingency, and have determined that it is probable that a loss could be incurred. We also evaluated a range of potential losses, and a reserve of $1.6 million has been established for this matter, which is reflected as a reduction in gain from sale of discontinued operations and in current liabilities of discontinued operations.

The revenue and net loss for the Real Estate businesses that are reported as discontinued operations for the applicable periods were as follows (in thousands):

	Three Months Ended September 30,
	2012			2011
Revenue	$	2		$	515
Loss before income taxes	$	(282	)	$	(637	)
Income tax provision	—			—
Gain from sale of discontinued operations	—			7,752
Net income (loss)	$	(282	)	$	7,115

	Nine Months Ended September 30,
	2012			2011
Revenue	$	77		$	3,633
Loss before income taxes	$	(442	)	$	(16,936	)
Income tax provision	—			—
Gain from sale of discontinued operations	—			7,752
Net loss	$	(442	)	$	(9,184	)

Net loss for the nine months ended September 30, 2011 includes goodwill disposal charges of $8.0 million, intangible asset impairment charges of $4.1 million and restructuring charges of $2.5 million.

The revenue and net income (loss) for LendingTree Loans that are reported as discontinued operations for the applicable periods were as follows (in thousands):

	Three Months Ended September 30,
	2012			2011
Revenue	$	5,943		$	37,094
Income before income taxes	$	4,470		$	9,606
Income tax provision	(76		)	—
Net income	$	4,394		$	9,606

	Nine Months Ended September 30,
	2012			2011
Revenue	$	87,338		$	81,726
Income (loss) before income taxes	$	27,660		$	(6,893	)
Income tax provision	(2,473		)	—
Gain from sale of discontinued operations, net of tax of $1,267 and $-0-	24,313			—
Net income (loss)	$	49,500		$	(6,893	)

Net income for the nine months ended September 30, 2012 includes intangible asset impairment charges of $1.4 million. Net loss for the nine months ended September 30, 2011 includes restructuring charges of $4.0 million.

The assets and liabilities of Real Estate that are reported as discontinued operations as of September 30, 2012 and December 31, 2011 were as follows (in thousands):

	September 30, 2012			December 31, 2011
Current assets	$	—		$	33
Current liabilities	390			702
Non-current liabilities	—			54
Net liabilities	$	(390	)	$	(723	)

The assets and liabilities of LendingTree Loans that are reported as discontinued operations as of September 30, 2012 and December 31, 2011 were as follows (in thousands):

	September 30, 2012			December 31, 2011
Loans held for sale	$	—		$	217,467
Other current assets	479			14,925
Current assets	479			232,392
Property and equipment	—			4,181
Goodwill	—			5,579
Other non-current assets	236			1,187
Non-current assets	236			10,947
Warehouse lines of credit	—			197,659
Other current liabilities	31,394			56,383
Current liabilities	31,394			254,042
Non-current liabilities	331			978
Net liabilities	$	(31,010	)	$	(11,681	)

Significant Assets and Liabilities of LendingTree Loans

Upon closing of the sale of substantially all of the operating assets of our LendingTree Loans business on June 6, 2012, LendingTree Loans ceased to originate consumer loans and no longer has additional borrowings available under warehouse lines of credit. The remaining operations are being wound down. These wind-down activities have included, among other things, selling the balance of loans held for sale to investors, which is substantially complete, and paying off and then terminating the warehouse lines of credit, which occurred on July 21, 2012. Additionally, liability for losses on previously sold loans will remain with LendingTree Loans. Below is a discussion of these significant items.

Loans Held for Sale

LendingTree Loans originated all of its residential real estate loans with the intent to sell them in the secondary market. Loans held for sale consisted primarily of residential first mortgage loans that were secured by residential real estate throughout the United States.

The following table represents the loans held for sale by type of loan as of September 30, 2012 and December 31, 2011 ($ amounts in thousands):

	September 30, 2012				December 31, 2011
	Amount		%		Amount		%
Conforming	$	—	—	%	$	171,375	79	%
FHA