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Three months ended March 31, 2012 | ||||||||||||
($000) | Previously Reported | Correction | As Corrected | |||||||||
Investing Activities | ||||||||||||
Purchases of investments | $ | (344,391 | ) | $ | 257,595 | $ | (86,796 | ) | ||||
Proceeds from maturities and sales of investments | $ | 338,146 | $ | (257,595 | ) | $ | 80,551 | |||||
Cash used for investing activities | $ | (21,980 | ) | $ | — | $ | (21,980 | ) |
|
($000) | |||
Balance as of December 31, 2012 | $ | 320,845 | |
Net change, currency translation | (5,061 | ) | |
Balance as of March 31, 2013 | $ | 315,784 |
As of March 31, 2013 | As of December 31, 2012 | |||||||||||||||||||||||||||
($000) | Gross | Accumulated Amortization | Net | Weighted Average Useful Life (years) | Gross | Accumulated Amortization | Net | Weighted Average Useful Life (years) | ||||||||||||||||||||
Intellectual property | $ | 30,572 | $ | (22,132 | ) | $ | 8,440 | 9 | $ | 30,621 | $ | (21,527 | ) | $ | 9,094 | 9 | ||||||||||||
Customer-related assets | 130,833 | (65,110 | ) | 65,723 | 12 | 132,798 | (63,005 | ) | 69,793 | 12 | ||||||||||||||||||
Supplier relationships | 240 | (99 | ) | 141 | 20 | 240 | (96 | ) | 144 | 20 | ||||||||||||||||||
Technology-based assets | 80,644 | (45,341 | ) | 35,303 | 9 | 81,333 | (43,809 | ) | 37,524 | 9 | ||||||||||||||||||
Non-competition agreement | 1,768 | (1,658 | ) | 110 | 4 | 1,765 | (1,588 | ) | 177 | 4 | ||||||||||||||||||
Total intangible assets | $ | 244,057 | $ | (134,340 | ) | $ | 109,717 | 10 | $ | 246,757 | $ | (130,025 | ) | $ | 116,732 | 10 |
Three months ended March 31 | ||||||||
($000) | 2013 | 2012 | ||||||
Amortization expense | $ | 5,625 | $ | 6,055 |
($000) | ||||
2013 | $ | 20,977 | ||
2014 | 19,759 | |||
2015 | 18,951 | |||
2016 | 14,360 | |||
2017 | 9,828 | |||
2018 | 7,875 |
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• | Investment Information. The Investment Information segment includes all of our data, software, and research products and services. These products are typically sold through subscriptions or license agreements. |
• | Investment Management. The Investment Management segment includes all of our asset management operations, which earn the majority of their revenue from asset-based fees. |
Three months ended March 31, 2013 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
External revenue | $ | 136,187 | $ | 32,669 | $ | — | $ | 168,856 | ||||||||
Operating expense, excluding stock-based compensation expense, depreciation, and amortization | 89,869 | 15,619 | 7,686 | 113,174 | ||||||||||||
Stock-based compensation expense | 2,499 | 592 | 692 | 3,783 | ||||||||||||
Depreciation and amortization | 2,352 | 24 | 8,963 | 11,339 | ||||||||||||
Operating income (loss) | $ | 41,467 | $ | 16,434 | $ | (17,341 | ) | $ | 40,560 | |||||||
U.S. capital expenditures | $ | 8,009 | ||||||||||||||
Non-U.S. capital expenditures | $ | 1,109 | ||||||||||||||
Three months ended March 31, 2012 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
External revenue | $ | 126,925 | $ | 33,834 | $ | — | $ | 160,759 | ||||||||
Operating expense, excluding stock-based compensation expense, depreciation, and amortization | 93,438 | 15,953 | 6,928 | 116,319 | ||||||||||||
Stock-based compensation expense | 2,559 | 551 | 756 | 3,866 | ||||||||||||
Depreciation and amortization | 2,244 | 39 | 7,892 | 10,175 | ||||||||||||
Operating income (loss) | $ | 28,684 | $ | 17,291 | $ | (15,576 | ) | $ | 30,399 | |||||||
U.S. capital expenditures | $ | 7,397 | ||||||||||||||
Non-U.S. capital expenditures | $ | 1,597 | ||||||||||||||
As of March 31, 2013 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
Goodwill | $ | 274,631 | $ | 41,153 | $ | — | $ | 315,784 |
As of December 31, 2012 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
Goodwill | $ | 279,164 | $ | 41,681 | $ | — | $ | 320,845 |
External revenue by geographical area | ||||||||
Three months ended March 31 | ||||||||
($000) | 2013 | 2012 | ||||||
United States | $ | 121,413 | $ | 114,469 | ||||
United Kingdom | 13,153 | 13,736 | ||||||
Europe, excluding the United Kingdom | 13,167 | 12,055 | ||||||
Australia | 9,352 | 9,348 | ||||||
Canada | 7,736 | 7,350 | ||||||
Asia, excluding Japan | 2,595 | 2,369 | ||||||
Japan | 829 | 979 | ||||||
Other | 611 | 453 | ||||||
Total Non-U.S. | 47,443 | 46,290 | ||||||
Total | $ | 168,856 | $ | 160,759 |
Long-lived assets by geographical area | ||||||||
As of March 31 | As of December 31 | |||||||
($000) | 2013 | 2012 | ||||||
United States | $ | 69,664 | $ | 60,371 | ||||
United Kingdom | 6,517 | 7,435 | ||||||
Europe, excluding the United Kingdom | 2,116 | 2,356 | ||||||
Australia | 1,374 | 1,402 | ||||||
Canada | 1,641 | 1,773 | ||||||
Asia, excluding Japan | 10,291 | 10,445 | ||||||
Japan | 58 | 84 | ||||||
Other | 154 | 156 | ||||||
Total Non-U.S. | 22,151 | 23,651 | ||||||
Total | $ | 91,815 | $ | 84,022 |
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As of March 31 | As of December 31 | |||||||
($000) | 2013 | 2012 | ||||||
Available-for-sale | $ | 70,193 | $ | 125,786 | ||||
Held-to-maturity | 26,408 | 26,357 | ||||||
Trading securities | 6,835 | 5,386 | ||||||
Total | $ | 103,436 | $ | 157,529 |
As of March 31, 2013 | As of December 31, 2012 | |||||||||||||||||||||||||||||||
($000) | Cost | Unrealized Gain | Unrealized Loss | Fair Value | Cost | Unrealized Gain | Unrealized Loss | Fair Value | ||||||||||||||||||||||||
Available-for-sale: | ||||||||||||||||||||||||||||||||
Government obligations | $ | 17,384 | $ | 27 | $ | (108 | ) | $ | 17,303 | $ | 40,669 | $ | 29 | $ | (608 | ) | $ | 40,090 | ||||||||||||||
Corporate bonds | 30,171 | 18 | (186 | ) | 30,003 | 49,339 | 36 | (292 | ) | 49,083 | ||||||||||||||||||||||
Foreign obligations | 2,433 | 1 | (30 | ) | 2,404 | 2,437 | 1 | (19 | ) | 2,419 | ||||||||||||||||||||||
Commercial paper | — | — | — | — | 2,000 | — | — | 2,000 | ||||||||||||||||||||||||
Equity securities and exchange-traded funds | 7,351 | 943 | (164 | ) | 8,130 | 19,613 | 1,359 | (323 | ) | 20,649 | ||||||||||||||||||||||
Mutual funds | 10,523 | 1,956 | (126 | ) | 12,353 | 10,499 | 1,092 | (46 | ) | 11,545 | ||||||||||||||||||||||
Total | $ | 67,862 | $ | 2,945 | $ | (614 | ) | $ | 70,193 | $ | 124,557 | $ | 2,517 | $ | (1,288 | ) | $ | 125,786 | ||||||||||||||
Held-to-maturity: | ||||||||||||||||||||||||||||||||
Certificates of deposit | $ | 26,408 | $ | — | $ | — | $ | 26,408 | $ | 26,357 | $ | — | $ | — | $ | 26,357 |
As of March 31, 2013 | As of December 31, 2012 | |||||||||||||||
($000) | Cost | Fair Value | Cost | Fair Value | ||||||||||||
Available-for-sale: | ||||||||||||||||
Due in one year or less | $ | 49,988 | $ | 49,710 | $ | 87,599 | $ | 86,784 | ||||||||
Due in one to two years | — | — | 6,846 | 6,808 | ||||||||||||
Equity securities, exchange-traded funds, and mutual funds | 17,874 | 20,483 | 30,112 | 32,194 | ||||||||||||
Total | $ | 67,862 | $ | 70,193 | $ | 124,557 | $ | 125,786 | ||||||||
Held-to-maturity: | ||||||||||||||||
Due in one year or less | $ | 26,403 | $ | 26,403 | $ | 26,352 | $ | 26,352 | ||||||||
Due in one to three years | 5 | 5 | 5 | 5 | ||||||||||||
Total | $ | 26,408 | $ | 26,408 | $ | 26,357 | $ | 26,357 |
Three months ended March 31 | ||||||||
($000) | 2013 | 2012 | ||||||
Realized gains | $ | 1,564 | $ | 212 | ||||
Realized losses | (839 | ) | (298 | ) | ||||
Realized gains (losses), net | $ | 725 | $ | (86 | ) |
Three months ended March 31 | ||||||||
($000) | 2013 | 2012 | ||||||
Unrealized gains, net | $ | 318 | $ | 428 |
Fair Value | Fair Value Measurements as of March 31, 2013 | |||||||||||||||
as of | Using Fair Value Hierarchy | |||||||||||||||
($000) | March 31, 2013 | Level 1 | Level 2 | Level 3 | ||||||||||||
Available-for-sale investments: | ||||||||||||||||
Government obligations | $ | 17,303 | $ | — | $ | 17,303 | $ | — | ||||||||
Corporate bonds | 30,003 | — | 30,003 | — | ||||||||||||
Foreign obligations | 2,404 | — | 2,404 | — | ||||||||||||
Equity securities and exchange-traded funds | 8,130 | 8,130 | — | — | ||||||||||||
Mutual funds | 12,353 | 12,353 | — | — | ||||||||||||
Trading securities | 6,835 | 6,835 | — | — | ||||||||||||
Cash equivalents | 9,285 | 9,285 | — | — | ||||||||||||
Total | $ | 86,313 | $ | 36,603 | $ | 49,710 | $ | — |
Fair Value | Fair Value Measurements as of December 31, 2012 | |||||||||||||||
as of | Using Fair Value Hierarchy | |||||||||||||||
($000) | December 31, 2012 | Level 1 | Level 2 | Level 3 | ||||||||||||
Available-for-sale investments: | ||||||||||||||||
Government obligations | $ | 40,090 | $ | — | $ | 40,090 | $ | — | ||||||||
Corporate bonds | 49,083 | — | 49,083 | — | ||||||||||||
Foreign obligations | 2,419 | — | 2,419 | — | ||||||||||||
Commercial paper | 2,000 | — | 2,000 | — | ||||||||||||
Equity securities and exchange-traded funds | 20,649 | 20,649 | — | — | ||||||||||||
Mutual funds | 11,545 | 11,545 | — | — | ||||||||||||
Trading securities | 5,386 | 5,386 | — | — | ||||||||||||
Cash equivalents | 398 | 398 | — | — | ||||||||||||
Total | $ | 131,570 | $ | 37,978 | $ | 93,592 | $ | — |
Level 1: | Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. |
Level 2: | Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. |
Level 3: | Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
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As of March 31 | As of December 31 | |||||||
($000) | 2013 | 2012 | ||||||
Investment in MJKK | $ | 21,152 | $ | 20,540 | ||||
Other equity method investments | 6,019 | 6,288 | ||||||
Investments accounted for using the cost method | 8,464 | 8,477 | ||||||
Total investments in unconsolidated entities | $ | 35,635 | $ | 35,305 |
As of March 31 | As of December 31 | |||||||
2013 | 2012 | |||||||
Morningstar’s approximate ownership of MJKK | 34 | % | 34 | % | ||||
Approximate market value of Morningstar’s ownership in MJKK: | ||||||||
Japanese yen (¥000) | ¥ | 5,054,213 | ¥ | 3,109,579 | ||||
Equivalent U.S. dollars ($000) | $ | 53,676 | $ | 36,227 |
|
As of March 31 | |||
(000) | 2013 | ||
Shares available for future grants | 4,741 |
Three months ended March 31 | ||||||||
($000) | 2013 | 2012 | ||||||
Restricted stock units | $ | 3,563 | $ | 3,278 | ||||
Restricted stock | 97 | 444 | ||||||
Stock options | 123 | 144 | ||||||
Total stock-based compensation expense | $ | 3,783 | $ | 3,866 | ||||
Income tax benefit related to the stock-based compensation expense | $ | 1,030 | $ | 930 |
Unrecognized stock-based compensation expense ($000) | Expected amortization period (months) | |||||
Restricted stock units | $ | 26,014 | 31 | |||
Restricted stock | 808 | 25 | ||||
Stock options | 955 | 25 | ||||
Total unrecognized stock-based compensation expense | $ | 27,777 | 30 |
Restricted Stock Units (RSUs) | Unvested | Vested but Deferred | Total | Weighted Average Grant Date Value per RSU | |||||||||
RSUs outstanding—December 31, 2012 | 727,145 | 18,782 | 745,927 | $ | 53.37 | ||||||||
Granted | — | — | — | — | |||||||||
Dividend equivalents | — | — | — | — | |||||||||
Vested | (2,586 | ) | — | (2,586 | ) | 35.83 | |||||||
Vested but deferred | — | — | — | — | |||||||||
Issued | — | — | — | — | |||||||||
Forfeited | (9,500 | ) | — | (9,500 | ) | 53.25 | |||||||
RSUs outstanding—March 31, 2013 | 715,059 | 18,782 | 733,841 | 53.87 |
Assumptions for Black-Scholes Option Pricing Model | |||
Expected life (years): | 7.4 | ||
Volatility factor: | 35.10 | % | |
Dividend yield: | 0.35 | % | |
Interest rate: | 2.87 | % |
Options Granted At an Exercise Price Below the Fair Value Per Share on the Grant Date | Underlying Shares | Weighted Average Exercise Price | |||||
Options outstanding—December 31, 2012 | 282,695 | $ | 20.55 | ||||
Granted | — | — | |||||
Canceled | — | — | |||||
Exercised | (21,410 | ) | 20.74 | ||||
Options outstanding—March 31, 2013 | 261,285 | 20.78 | |||||
Options exercisable—March 31, 2013 | 261,285 | $ | 20.78 |
All Other Option Grants, Excluding Activity Shown Above | Underlying Shares | Weighted Average Exercise Price | |||||
Options outstanding—December 31, 2012 | 391,784 | $ | 28.98 | ||||
Granted | — | — | |||||
Canceled | (525 | ) | 17.73 | ||||
Exercised | (88,672 | ) | 17.11 | ||||
Options outstanding—March 31, 2013 | 302,587 | 32.69 | |||||
Options exercisable—March 31, 2013 | 248,487 | $ | 27.29 |
Three months ended March 31 | ||||||||
($000) | 2013 | 2012 | ||||||
Intrinsic value of options exercised | $ | 5,588 | $ | 10,905 |
Options Outstanding | Options Exercisable | |||||||||||||||||||||||||
Range of Exercise Prices | Number of Options | Weighted Average Remaining Contractual Life (years) | Weighted Average Exercise Price | Aggregate Intrinsic Value ($000) | Exercisable Shares | Weighted Average Remaining Contractual Life (years) | Weighted Average Exercise Price | Aggregate Intrinsic Value ($000) | ||||||||||||||||||
$8.57 - $14.70 | 29,582 | 0.11 | $ | 8.63 | $ | 1,813 | 29,582 | 0.11 | $ | 8.63 | $ | 1,813 | ||||||||||||||
$20.74- $47.32 | 462,615 | 1.90 | 23.66 | 21,400 | 462,615 | 1.90 | 23.66 | 21,400 | ||||||||||||||||||
$57.28 - $59.35 | 71,675 | 8.29 | 57.46 | 893 | 17,575 | 8.29 | 57.46 | 203 | ||||||||||||||||||
$8.57 - $59.35 | 563,872 | 4.29 | 27.17 | $ | 24,106 | 509,772 | 2.02 | 23.95 | $ | 23,416 | ||||||||||||||||
Vested or Expected to Vest | ||||||||||||||||||||||||||
$8.57 - $59.35 | 563,872 | 2.62 | $ | 27.17 | $ | 24,106 |
Three months ended March 31 | ||||||||
($000) | 2013 | 2012 | ||||||
Excess tax benefits related to stock-based compensation | $ | 1,587 | $ | 3,313 |
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Three months ended March 31 | ||||||||
($000) | 2013 | 2012 | ||||||
Income before income taxes and equity in net income of unconsolidated entities | $ | 41,505 | $ | 31,058 | ||||
Equity in net income of unconsolidated entities | 497 | 566 | ||||||
Net loss attributable to the noncontrolling interest | 43 | 24 | ||||||
Total | $ | 42,045 | $ | 31,648 | ||||
Income tax expense | $ | 12,427 | $ | 11,511 | ||||
Effective tax rate | 29.6 | % | 36.4 | % |
As of March 31 | As of December 31 | |||||||
($000) | 2013 | 2012 | ||||||
Gross unrecognized tax benefits | $ | 13,746 | $ | 12,699 | ||||
Gross unrecognized tax benefits that would affect income tax expense | $ | 13,746 | $ | 12,699 | ||||
Decrease in income tax expense upon recognition of gross unrecognized tax benefits | $ | 11,389 | $ | 10,446 |
As of March 31 | As of December 31 | |||||||
Liabilities for Unrecognized Tax Benefits ($000) | 2013 | 2012 | ||||||
Current liability | $ | 6,576 | $ | 6,568 | ||||
Non-current liability | 6,799 | 5,659 | ||||||
Total liability for unrecognized tax benefits | $ | 13,375 | $ | 12,227 |
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Three months ended March 31, 2012 | ||||||||||||
($000) | Previously Reported | Correction | As Corrected | |||||||||
Investing Activities | ||||||||||||
Purchases of investments | $ | (344,391 | ) | $ | 257,595 | $ | (86,796 | ) | ||||
Proceeds from maturities and sales of investments | $ | 338,146 | $ | (257,595 | ) | $ | 80,551 | |||||
Cash used for investing activities | $ | (21,980 | ) | $ | — | $ | (21,980 | ) |
|
($000) | |||
Balance as of December 31, 2012 | $ | 320,845 | |
Net change, currency translation | (5,061 | ) | |
Balance as of March 31, 2013 | $ | 315,784 |
As of March 31, 2013 | As of December 31, 2012 | |||||||||||||||||||||||||||
($000) | Gross | Accumulated Amortization | Net | Weighted Average Useful Life (years) | Gross | Accumulated Amortization | Net | Weighted Average Useful Life (years) | ||||||||||||||||||||
Intellectual property | $ | 30,572 | $ | (22,132 | ) | $ | 8,440 | 9 | $ | 30,621 | $ | (21,527 | ) | $ | 9,094 | 9 | ||||||||||||
Customer-related assets | 130,833 | (65,110 | ) | 65,723 | 12 | 132,798 | (63,005 | ) | 69,793 | 12 | ||||||||||||||||||
Supplier relationships | 240 | (99 | ) | 141 | 20 | 240 | (96 | ) | 144 | 20 | ||||||||||||||||||
Technology-based assets | 80,644 | (45,341 | ) | 35,303 | 9 | 81,333 | (43,809 | ) | 37,524 | 9 | ||||||||||||||||||
Non-competition agreement | 1,768 | (1,658 | ) | 110 | 4 | 1,765 | (1,588 | ) | 177 | 4 | ||||||||||||||||||
Total intangible assets | $ | 244,057 | $ | (134,340 | ) | $ | 109,717 | 10 | $ | 246,757 | $ | (130,025 | ) | $ | 116,732 | 10 |
Three months ended March 31 | ||||||||
($000) | 2013 | 2012 | ||||||
Amortization expense | $ | 5,625 | $ | 6,055 |
($000) | ||||
2013 | $ | 20,977 | ||
2014 | 19,759 | |||
2015 | 18,951 | |||
2016 | 14,360 | |||
2017 | 9,828 | |||
2018 | 7,875 |
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Three months ended March 31, 2013 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
External revenue | $ | 136,187 | $ | 32,669 | $ | — | $ | 168,856 | ||||||||
Operating expense, excluding stock-based compensation expense, depreciation, and amortization | 89,869 | 15,619 | 7,686 | 113,174 | ||||||||||||
Stock-based compensation expense | 2,499 | 592 | 692 | 3,783 | ||||||||||||
Depreciation and amortization | 2,352 | 24 | 8,963 | 11,339 | ||||||||||||
Operating income (loss) | $ | 41,467 | $ | 16,434 | $ | (17,341 | ) | $ | 40,560 | |||||||
U.S. capital expenditures | $ | 8,009 | ||||||||||||||
Non-U.S. capital expenditures | $ | 1,109 | ||||||||||||||
Three months ended March 31, 2012 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
External revenue | $ | 126,925 | $ | 33,834 | $ | — | $ | 160,759 | ||||||||
Operating expense, excluding stock-based compensation expense, depreciation, and amortization | 93,438 | 15,953 | 6,928 | 116,319 | ||||||||||||
Stock-based compensation expense | 2,559 | 551 | 756 | 3,866 | ||||||||||||
Depreciation and amortization | 2,244 | 39 | 7,892 | 10,175 | ||||||||||||
Operating income (loss) | $ | 28,684 | $ | 17,291 | $ | (15,576 | ) | $ | 30,399 | |||||||
U.S. capital expenditures | $ | 7,397 | ||||||||||||||
Non-U.S. capital expenditures | $ | 1,597 | ||||||||||||||
As of March 31, 2013 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
Goodwill | $ | 274,631 | $ | 41,153 | $ | — | $ | 315,784 |
As of December 31, 2012 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
Goodwill | $ | 279,164 | $ | 41,681 | $ | — | $ | 320,845 |
External revenue by geographical area | ||||||||
Three months ended March 31 | ||||||||
($000) | 2013 | 2012 | ||||||
United States | $ | 121,413 | $ | 114,469 | ||||
United Kingdom | 13,153 | 13,736 | ||||||
Europe, excluding the United Kingdom | 13,167 | 12,055 | ||||||
Australia | 9,352 | 9,348 | ||||||
Canada | 7,736 | 7,350 | ||||||
Asia, excluding Japan | 2,595 | 2,369 | ||||||
Japan | 829 | 979 | ||||||
Other | 611 | 453 | ||||||
Total Non-U.S. | 47,443 | 46,290 | ||||||
Total | $ | 168,856 | $ | 160,759 |
Long-lived assets by geographical area | ||||||||
As of March 31 | As of December 31 | |||||||
($000) | 2013 | 2012 | ||||||
United States | $ | 69,664 | $ | 60,371 | ||||
United Kingdom | 6,517 | 7,435 | ||||||
Europe, excluding the United Kingdom | 2,116 | 2,356 | ||||||
Australia | 1,374 | 1,402 | ||||||
Canada | 1,641 | 1,773 | ||||||
Asia, excluding Japan | 10,291 | 10,445 | ||||||
Japan | 58 | 84 | ||||||
Other | 154 | 156 | ||||||
Total Non-U.S. | 22,151 | 23,651 | ||||||
Total | $ | 91,815 | $ | 84,022 |
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As of March 31 | As of December 31 | |||||||
($000) | 2013 | 2012 | ||||||
Available-for-sale | $ | 70,193 | $ | 125,786 | ||||
Held-to-maturity | 26,408 | 26,357 | ||||||
Trading securities | 6,835 | 5,386 | ||||||
Total | $ | 103,436 | $ | 157,529 |
As of March 31, 2013 | As of December 31, 2012 | |||||||||||||||||||||||||||||||
($000) | Cost | Unrealized Gain | Unrealized Loss | Fair Value | Cost | Unrealized Gain | Unrealized Loss | Fair Value | ||||||||||||||||||||||||
Available-for-sale: | ||||||||||||||||||||||||||||||||
Government obligations | $ | 17,384 | $ | 27 | $ | (108 | ) | $ | 17,303 | $ | 40,669 | $ | 29 | $ | (608 | ) | $ | 40,090 | ||||||||||||||
Corporate bonds | 30,171 | 18 | (186 | ) | 30,003 | 49,339 | 36 | (292 | ) | 49,083 | ||||||||||||||||||||||
Foreign obligations | 2,433 | 1 | (30 | ) | 2,404 | 2,437 | 1 | (19 | ) | 2,419 | ||||||||||||||||||||||
Commercial paper | — | — | — | — | 2,000 | — | — | 2,000 | ||||||||||||||||||||||||
Equity securities and exchange-traded funds | 7,351 | 943 | (164 | ) | 8,130 | 19,613 | 1,359 | (323 | ) | 20,649 | ||||||||||||||||||||||
Mutual funds | 10,523 | 1,956 | (126 | ) | 12,353 | 10,499 | 1,092 | (46 | ) | 11,545 | ||||||||||||||||||||||
Total | $ | 67,862 | $ | 2,945 | $ | (614 | ) | $ | 70,193 | $ | 124,557 | $ | 2,517 | $ | (1,288 | ) | $ | 125,786 | ||||||||||||||
Held-to-maturity: | ||||||||||||||||||||||||||||||||
Certificates of deposit | $ | 26,408 | $ | — | $ | — | $ | 26,408 | $ | 26,357 | $ | — | $ | — | $ | 26,357 |
As of March 31, 2013 | As of December 31, 2012 | |||||||||||||||
($000) | Cost | Fair Value | Cost | Fair Value | ||||||||||||
Available-for-sale: | ||||||||||||||||
Due in one year or less | $ | 49,988 | $ | 49,710 | $ | 87,599 | $ | 86,784 | ||||||||
Due in one to two years | — | — | 6,846 | 6,808 | ||||||||||||
Equity securities, exchange-traded funds, and mutual funds | 17,874 | 20,483 | 30,112 | 32,194 | ||||||||||||
Total | $ | 67,862 | $ | 70,193 | $ | 124,557 | $ | 125,786 | ||||||||
Held-to-maturity: | ||||||||||||||||
Due in one year or less | $ | 26,403 | $ | 26,403 | $ | 26,352 | $ | 26,352 | ||||||||
Due in one to three years | 5 | 5 | 5 | 5 | ||||||||||||
Total | $ | 26,408 | $ | 26,408 | $ | 26,357 | $ | 26,357 |
Three months ended March 31 | ||||||||
($000) | 2013 | 2012 | ||||||
Realized gains | $ | 1,564 | $ | 212 | ||||
Realized losses | (839 | ) | (298 | ) | ||||
Realized gains (losses), net | $ | 725 | $ | (86 | ) |
Three months ended March 31 | ||||||||
($000) | 2013 | 2012 | ||||||
Unrealized gains, net | $ | 318 | $ | 428 |
Fair Value | Fair Value Measurements as of March 31, 2013 | |||||||||||||||
as of | Using Fair Value Hierarchy | |||||||||||||||
($000) | March 31, 2013 | Level 1 | Level 2 | Level 3 | ||||||||||||
Available-for-sale investments: | ||||||||||||||||
Government obligations | $ | 17,303 | $ | — | $ | 17,303 | $ | — | ||||||||
Corporate bonds | 30,003 | — | 30,003 | — | ||||||||||||
Foreign obligations | 2,404 | — | 2,404 | — | ||||||||||||
Equity securities and exchange-traded funds | 8,130 | 8,130 | — | — | ||||||||||||
Mutual funds | 12,353 | 12,353 | — | — | ||||||||||||
Trading securities | 6,835 | 6,835 | — | — | ||||||||||||
Cash equivalents | 9,285 | 9,285 | — | — | ||||||||||||
Total | $ | 86,313 | $ | 36,603 | $ | 49,710 | $ | — |
Fair Value | Fair Value Measurements as of December 31, 2012 | |||||||||||||||
as of | Using Fair Value Hierarchy | |||||||||||||||
($000) | December 31, 2012 | Level 1 | Level 2 | Level 3 | ||||||||||||
Available-for-sale investments: | ||||||||||||||||
Government obligations | $ | 40,090 | $ | — | $ | 40,090 | $ | — | ||||||||
Corporate bonds | 49,083 | — | 49,083 | — | ||||||||||||
Foreign obligations | 2,419 | — | 2,419 | — | ||||||||||||
Commercial paper | 2,000 | — | 2,000 | — | ||||||||||||
Equity securities and exchange-traded funds | 20,649 | 20,649 | — | — | ||||||||||||
Mutual funds | 11,545 | 11,545 | — | — | ||||||||||||
Trading securities | 5,386 | 5,386 | — | — | ||||||||||||
Cash equivalents | 398 | 398 | — | — | ||||||||||||
Total | $ | 131,570 | $ | 37,978 | $ | 93,592 | $ | — |
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As of March 31 | As of December 31 | |||||||
($000) | 2013 | 2012 | ||||||
Investment in MJKK | $ | 21,152 | $ | 20,540 | ||||
Other equity method investments | 6,019 | 6,288 | ||||||
Investments accounted for using the cost method | 8,464 | 8,477 | ||||||
Total investments in unconsolidated entities | $ | 35,635 | $ | 35,305 |
As of March 31 | As of December 31 | |||||||
2013 | 2012 | |||||||
Morningstar’s approximate ownership of MJKK | 34 | % | 34 | % | ||||
Approximate market value of Morningstar’s ownership in MJKK: | ||||||||
Japanese yen (¥000) | ¥ | 5,054,213 | ¥ | 3,109,579 | ||||
Equivalent U.S. dollars ($000) | $ | 53,676 | $ | 36,227 |
|
As of March 31 | |||
(000) | 2013 | ||
Shares available for future grants | 4,741 |
Three months ended March 31 | ||||||||
($000) | 2013 | 2012 | ||||||
Restricted stock units | $ | 3,563 | $ | 3,278 | ||||
Restricted stock | 97 | 444 | ||||||
Stock options | 123 | 144 | ||||||
Total stock-based compensation expense | $ | 3,783 | $ | 3,866 | ||||
Income tax benefit related to the stock-based compensation expense | $ | 1,030 | $ | 930 |
Unrecognized stock-based compensation expense ($000) | Expected amortization period (months) | |||||
Restricted stock units | $ | 26,014 | 31 | |||
Restricted stock | 808 | 25 | ||||
Stock options | 955 | 25 | ||||
Total unrecognized stock-based compensation expense | $ | 27,777 | 30 |
Restricted Stock Units (RSUs) | Unvested | Vested but Deferred | Total | Weighted Average Grant Date Value per RSU | |||||||||
RSUs outstanding—December 31, 2012 | 727,145 | 18,782 | 745,927 | $ | 53.37 | ||||||||
Granted | — | — | — | — | |||||||||
Dividend equivalents | — | — | — | — | |||||||||
Vested | (2,586 | ) | — | (2,586 | ) | 35.83 | |||||||
Vested but deferred | — | — | — | — | |||||||||
Issued | — | — | — | — | |||||||||
Forfeited | (9,500 | ) | — | (9,500 | ) | 53.25 | |||||||
RSUs outstanding—March 31, 2013 | 715,059 | 18,782 | 733,841 | 53.87 |
Assumptions for Black-Scholes Option Pricing Model | |||
Expected life (years): | 7.4 | ||
Volatility factor: | 35.10 | % | |
Dividend yield: | 0.35 | % | |
Interest rate: | 2.87 | % |
Options Granted At an Exercise Price Below the Fair Value Per Share on the Grant Date | Underlying Shares | Weighted Average Exercise Price | |||||
Options outstanding—December 31, 2012 | 282,695 | $ | 20.55 | ||||
Granted | — | — | |||||
Canceled | — | — | |||||
Exercised | (21,410 | ) | 20.74 | ||||
Options outstanding—March 31, 2013 | 261,285 | 20.78 | |||||
Options exercisable—March 31, 2013 | 261,285 | $ | 20.78 |
All Other Option Grants, Excluding Activity Shown Above | Underlying Shares | Weighted Average Exercise Price | |||||
Options outstanding—December 31, 2012 | 391,784 | $ | 28.98 | ||||
Granted | — | — | |||||
Canceled | (525 | ) | 17.73 | ||||
Exercised | (88,672 | ) | 17.11 | ||||
Options outstanding—March 31, 2013 | 302,587 | 32.69 | |||||
Options exercisable—March 31, 2013 | 248,487 | $ | 27.29 |
Three months ended March 31 | ||||||||
($000) | 2013 | 2012 | ||||||
Intrinsic value of options exercised | $ | 5,588 | $ | 10,905 |
Options Outstanding | Options Exercisable | |||||||||||||||||||||||||
Range of Exercise Prices | Number of Options | Weighted Average Remaining Contractual Life (years) | Weighted Average Exercise Price | Aggregate Intrinsic Value ($000) | Exercisable Shares | Weighted Average Remaining Contractual Life (years) | Weighted Average Exercise Price | Aggregate Intrinsic Value ($000) | ||||||||||||||||||
$8.57 - $14.70 | 29,582 | 0.11 | $ | 8.63 | $ | 1,813 | 29,582 | 0.11 | $ | 8.63 | $ | 1,813 | ||||||||||||||
$20.74- $47.32 | 462,615 | 1.90 | 23.66 | 21,400 | 462,615 | 1.90 | 23.66 | 21,400 | ||||||||||||||||||
$57.28 - $59.35 | 71,675 | 8.29 | 57.46 | 893 | 17,575 | 8.29 | 57.46 | 203 | ||||||||||||||||||
$8.57 - $59.35 | 563,872 | 4.29 | 27.17 | $ | 24,106 | 509,772 | 2.02 | 23.95 | $ | 23,416 | ||||||||||||||||
Vested or Expected to Vest | ||||||||||||||||||||||||||
$8.57 - $59.35 | 563,872 | 2.62 | $ | 27.17 | $ | 24,106 |
Three months ended March 31 | ||||||||
($000) | 2013 | 2012 | ||||||
Excess tax benefits related to stock-based compensation | $ | 1,587 | $ | 3,313 |
|
Three months ended March 31 | ||||||||
($000) | 2013 | 2012 | ||||||
Income before income taxes and equity in net income of unconsolidated entities | $ | 41,505 | $ | 31,058 | ||||
Equity in net income of unconsolidated entities | 497 | 566 | ||||||
Net loss attributable to the noncontrolling interest | 43 | 24 | ||||||
Total | $ | 42,045 | $ | 31,648 | ||||
Income tax expense | $ | 12,427 | $ | 11,511 | ||||
Effective tax rate | 29.6 | % | 36.4 | % |
As of March 31 | As of December 31 | |||||||
($000) | 2013 | 2012 | ||||||
Gross unrecognized tax benefits | $ | 13,746 | $ | 12,699 | ||||
Gross unrecognized tax benefits that would affect income tax expense | $ | 13,746 | $ | 12,699 | ||||
Decrease in income tax expense upon recognition of gross unrecognized tax benefits | $ | 11,389 | $ | 10,446 |
As of March 31 | As of December 31 | |||||||
Liabilities for Unrecognized Tax Benefits ($000) | 2013 | 2012 | ||||||
Current liability | $ | 6,576 | $ | 6,568 | ||||
Non-current liability | 6,799 | 5,659 | ||||||
Total liability for unrecognized tax benefits | $ | 13,375 | $ | 12,227 |
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