MORNINGSTAR, INC., 10-Q filed on 11/1/2011
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2011
Oct. 28, 2011
Document and Entity Information Abstract
 
 
Entity Registrant Name
MORNINGSTAR, INC. 
 
Entity Central Index Key
0001289419 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Large Accelerated Filer 
 
Document Type
10-Q 
 
Document Period End Date
Sep. 30, 2011 
 
Document Fiscal Year Focus
2011 
 
Document Fiscal Period Focus
Q3 
 
Amendment Flag
FALSE 
 
Entity Common Stock, Shares Outstanding
 
50,010,222 
Condensed Consolidated Statements of Income (USD $)
In Thousands, except Per Share data
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Revenue
$ 160,051 
$ 139,817 
$ 472,829 
$ 404,198 
Operating expense (1):
 
 
 
 
Cost of goods sold
48,074 
40,713 
133,929 
114,767 
Development
13,482 
12,703 
39,151 
35,491 
Sales and marketing
27,253 
22,881 
80,502 
69,877 
General and administrative
26,431 
23,462 
83,255 
67,211 
Depreciation and amortization
10,947 
9,897 
31,712 
28,082 
Total operating expense
126,187 
109,656 
368,549 
315,428 
Operating income
33,864 
30,161 
104,280 
88,770 
Non-operating income (expense):
 
 
 
 
Interest income (expense), net
797 
512 
1,142 
1,692 
Gain (loss) on sale of investments reclassified from other comprehensive income
(127)
5 
270 
14 
Other income (expense), net
(1,249)
5,689 
(1,208)
4,342 
Non-operating income (expense), net
(579)
6,206 
204 
6,048 
Income before income taxes and equity in net income of unconsolidated entities
33,285 
36,367 
104,484 
94,818 
Income tax expense
12,343 
11,917 
35,585 
33,137 
Equity in net income of unconsolidated entities
428 
333 
1,397 
1,176 
Consolidated net income
21,370 
24,783 
70,296 
62,857 
Net (income) loss attributable to the noncontrolling interest
10 
(106)
106 
10 
Net income attributable to Morningstar, Inc.
21,380 
24,677 
70,402 
62,867 
Net income per share attributable to:
 
 
 
 
Basic (in dollars per share)
$ 0.42 
$ 0.50 
$ 1.40 
$ 1.27 
Diluted (in dollars per share)
$ 0.42 
$ 0.49 
$ 1.37 
$ 1.24 
Dividends declared per common share
$ 0.05 
$ 0 
$ 0.15 
$ 0 
Weighted average shares outstanding:
 
 
 
 
Basic (in shares)
50,278 
49,401 
50,082 
49,157 
Diluted (in shares)
51,123 
50,544 
51,071 
50,453 
(1) Includes stock-based compensation expense of:
 
 
 
 
Allocated Share-based Compensation Expense
3,951 
3,745 
11,443 
10,337 
Cost of Sales [Member]
 
 
 
 
(1) Includes stock-based compensation expense of:
 
 
 
 
Allocated Share-based Compensation Expense
1,117 
960 
3,068 
2,582 
Research and Development Expense [Member]
 
 
 
 
(1) Includes stock-based compensation expense of:
 
 
 
 
Allocated Share-based Compensation Expense
545 
517 
1,588 
1,359 
Selling and Marketing Expense [Member]
 
 
 
 
(1) Includes stock-based compensation expense of:
 
 
 
 
Allocated Share-based Compensation Expense
489 
469 
1,392 
1,358 
General and Administrative Expense [Member]
 
 
 
 
(1) Includes stock-based compensation expense of:
 
 
 
 
Allocated Share-based Compensation Expense
$ 1,800 
$ 1,799 
$ 5,395 
$ 5,038 
Consolidated Statements of Comprehensive Income Consolidated Statements of Comprehensive Income (USD $)
In Thousands
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Consolidated net income
$ 21,370 
$ 24,783 
$ 70,296 
$ 62,857 
Other comprehensive income (loss), net of tax:
 
 
 
 
Foreign currency translation adjustment
(12,570)
18,375 
(6)
5,634 
Unrealized gains (losses) on securities:
 
 
 
 
Unrealized holding gains (losses) arising during period
(1,871)
634 
(1,472)
52 
Less: Reclassification of adjustments for (gains) losses included in net income
81 
(3)
(171)
(9)
Other Comprehensive income
(14,360)
19,006 
(1,649)
5,677 
Other comprehensive income (loss), net
7,010 
43,789 
68,647 
68,534 
Comprehensive (income) loss attributable to noncontrolling interest
(47)
(250)
52 
(47)
Comprehensive income attributable to Morningstar, Inc.
$ 6,963 
$ 43,539 
$ 68,699 
$ 68,487 
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
Sep. 30, 2011
Dec. 31, 2010
Statement of Financial Position [Abstract]
 
 
Accounts receivable, allowance (in dollars)
$ 843,000 
$ 1,056,000 
Common stock, no par value (in dollars per share)
$ 0 
$ 0 
Common stock, shares authorized
200,000,000 
200,000,000 
Common stock, shares outstanding
50,096,106 
49,874,392 
Treasury stock, shares
832,820 
279,456 
Condensed Consolidated Balance Sheets (USD $)
In Thousands
Sep. 30, 2011
Dec. 31, 2010
Current assets:
 
 
Cash and cash equivalents
$ 174,270 
$ 180,176 
Investments
258,749 
185,240 
Accounts receivable, less allowance of $843 and $1,056, respectively
110,444 
110,891 
Deferred tax asset, net
3,814 
2,860 
Income tax receivable, net
10,045 
10,459 
Other
16,076 
17,654 
Total current assets
573,398 
507,280 
Property, equipment, and capitalized software, net
63,703 
62,105 
Investments in unconsolidated entities
24,761 
24,262 
Goodwill
319,367 
317,661 
Intangible assets, net
147,311 
169,023 
Other assets
5,726 
5,971 
Total assets
1,134,266 
1,086,302 
Current liabilities:
 
 
Accounts payable and accrued liabilities
42,184 
42,680 
Accrued compensation
59,908 
62,404 
Deferred revenue
146,877 
146,267 
Other
322 
1,373 
Total current liabilities
249,291 
252,724 
Accrued compensation
5,427 
4,965 
Deferred tax liability, net
17,490 
19,975 
Other long-term liabilities
25,930 
27,213 
Total liabilities
298,138 
304,877 
Morningstar, Inc. shareholders' equity:
 
 
Common stock, no par value, 200,000,000 shares authorized, of which 50,096,106 and 49,874,392 shares were outstanding as of September 30, 2011 and December 31, 2010, respectively
5 
5 
Treasury stock at cost, 832,820 shares as of September 30, 2011 and 279,456 shares as of December 31, 2010
(38,319)
(6,641)
Additional paid-in capital
483,822 
458,426 
Retained earnings
386,148 
323,408 
Accumulated other comprehensive income:
 
 
Currency translation adjustment
4,431 
4,503 
Unrealized gain on available-for-sale securities
(1,016)
615 
Total accumulated other comprehensive income
3,415 
5,118 
Total Morningstar, Inc. shareholders' equity
835,071 
780,316 
Noncontrolling interest
1,057 
1,109 
Total equity
836,128 
781,425 
Total liabilities and equity
$ 1,134,266 
$ 1,086,302 
Condensed Consolidated Statement of Equity and Comprehensive Income (Loss) Parentheticals (USD $)
In Thousands
9 Months Ended
Sep. 30, 2011
Statement of Stockholders' Equity [Abstract]
 
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Tax
$ 584 
Other Comprehensive Income (Loss), Reclassification Adjustment for Sale of Securities Included in Net Income, Tax
$ 98 
Condensed Consolidated Statement of Equity and Comprehensive Income (Loss) (USD $)
In Thousands, except Share data
Total
Common Stock [Member]
Treasury Stock
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Non Controlling Interests
Morningstar, Inc. Shareholders' Equity
Balance at Dec. 31, 2010
$ 781,425 
$ 5 
$ (6,641)
$ 458,426 
$ 323,408 
$ 5,118 
$ 1,109 
$ 781,425 
Balance (in shares) at Dec. 31, 2010
 
49,874,392 
 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
 
 
 
Net Income (Loss)
70,296 
0 
0 
0 
70,402 
0 
(106)
70,296 
Other Comprehensive Income (loss)
 
 
 
 
 
 
 
 
Unrealized gain on available-for-sale investments, net of income tax of $584
(1,472)
0 
0 
0 
0 
(1,472)
0 
(1,472)
Reclassification of adjustments for gains included in net income, net of income tax of $98
(171)
0 
0 
0 
0 
(171)
0 
(171)
Foreign currency translation adjustment, net
 
0 
0 
0 
0 
(60)
54 
(6)
Other comprehensive income (loss), net
68,647 
0 
0 
0 
0 
(1,703)
54 
(1,649)
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net
 
0 
410 
6,220 
0 
0 
0 
6,630 
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net (in shares)
 
792,178 
 
 
 
 
 
 
Stock-based compensation - restricted stock units
 
0 
0 
9,489 
0 
0 
0 
9,489 
Stock-based compensation - restricted stock
 
0 
0 
1,752 
0 
0 
0 
1,752 
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures
 
0 
0 
202 
0 
0 
0 
202 
Excess tax benefit derived from stock-option exercises and vesting of restricted stock units
 
0 
0 
7,621 
0 
0 
0 
7,621 
Dividends declared - common shares outstanding
 
0 
0 
0 
(7,546)
0 
0 
(7,546)
Dividends declared - restricted stock units
 
0 
0 
112 
(116)
0 
0 
(4)
Common share repurchased
 
0 
(32,088)
0 
0 
0 
0 
(32,088)
Common share repurchased (in shares)
 
(570,464)
 
 
 
 
 
 
Balance at Sep. 30, 2011
$ 836,128 
$ 5 
$ (38,319)
$ 483,822 
$ 386,148 
$ 3,415 
$ 1,057 
$ 836,128 
Balance (in shares) at Sep. 30, 2011
 
50,096,106 
 
 
 
 
 
 
Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands
9 Months Ended
Sep. 30,
2011
2010
Operating activities
 
 
Consolidated net income
$ 70,296 
$ 62,857 
Adjustments to reconcile consolidated net income to net cash flows from operating activities:
 
 
Depreciation and amortization
31,712 
28,082 
Deferred income tax expense (benefit)
(1,559)
1,769 
Stock-based compensation expense
11,443 
10,337 
Provision for bad debt
1,076 
253 
Equity in net income of unconsolidated entities
(1,397)
(1,176)
Excess tax benefits from stock-option exercises and vesting of restricted stock units
(7,621)
(4,885)
Holding gain upon acquisition of additional ownership of equity method investments
0 
(5,073)
Other, net
1,607 
724 
Changes in operating assets and liabilities, net of effects of acquisitions:
 
 
Accounts receivable
(403)
(7,254)
Other assets
1,996 
(2,508)
Accounts payable and accrued liabilities
(5,275)
2,025 
Accrued compensation
(3,242)
(2,270)
Income taxes payable
9,442 
309 
Deferred revenue
618 
(1,938)
Deferred rent
(984)
442 
Other liabilities
(1,393)
(1,384)
Cash provided by operating activities
106,316 
80,310 
Investing activities
 
 
Purchases of investments
(281,698)
(128,043)
Proceeds from maturities and sales of investments
205,421 
177,197 
Capital expenditures
(14,689)
(7,701)
Acquisitions, net of cash acquired
300 
(88,697)
Other, net
875 
830 
Cash used for investing activities
(89,791)
(46,414)
Financing activities
 
 
Proceeds from stock-option exercises, net
6,630 
5,207 
Excess tax benefits from stock-option exercises and vesting of restricted stock units
7,621 
4,885 
Common shares repurchased
(28,526)
0 
Dividends paid
(7,539)
0 
Other, net
(363)
(529)
Cash provided by financing activities
(22,177)
9,563 
Effect of exchange rate changes on cash and cash equivalents
(254)
1,917 
Net increase in cash and cash equivalents
(5,906)
45,376 
Cash and cash equivalents-beginning of period
180,176 
130,496 
Cash and cash equivalents-end of period
174,270 
175,872 
Supplemental disclosure of cash flow information:
 
 
Cash paid for income taxes
28,437 
29,594 
Supplemental information of non-cash investing and financing activities:
 
 
Unrealized Gain (Loss) on Available For Sale Investments
$ (2,598)
$ 71 
Basis of Presentation of Interim Financial Information
Basis of Presentation of Interim Financial Information
Basis of Presentation of Interim Financial Information
 
The accompanying condensed consolidated financial statements of Morningstar, Inc. and subsidiaries (Morningstar, we, our, the Company) have been prepared to conform to the rules and regulations of the Securities and Exchange Commission (SEC). The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue, and expenses. Actual results could differ from those estimates. In the opinion of management, the statements reflect all adjustments, which are of a normal recurring nature, necessary to present fairly our financial position, results of operations, equity, and cash flows. These financial statements and notes should be read in conjunction with our Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 28, 2011.
 
The acronyms that appear in the Notes to our Unaudited Condensed Consolidated Financial Statements refer to the following:
 
ASC: Accounting Standards Codification
ASU: Accounting Standards Update
EITF: Emerging Issues Task Force
FASB: Financial Accounting Standards Board
SAB: Staff Accounting Bulletin
SEC: Securities and Exchange Commission
 
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

We discuss our significant accounting policies in Note 3 of our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on February 28, 2011.

In June 2011, the FASB issued ASU No. 2011-05, Presentation of Comprehensive Income. In accordance with ASU No. 2011-05, we present the total of comprehensive income, the components of net income, and the components of other comprehensive income (OCI) in two separate but consecutive statements, our Consolidated Statement of Income and separately, a Consolidated Statement of Comprehensive Income. We no longer present total comprehensive income in our Consolidated Statement of Equity. In addition, we now show the effects of items reclassified from OCI to net income on the face of our Consolidated Statement of Income.

Also, effective January 1, 2011, we adopted FASB ASU No. 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements. ASU 2009-13 supersedes EITF Issue 00-21, Revenue Arrangements with Multiple Deliverables and establishes the accounting and reporting guidance for arrangements when a vendor performs multiple revenue-generating activities, addresses how to separate deliverables, and specifies how to measure and allocate arrangement consideration. We are applying this guidance for revenue arrangements entered into or materially modified from January 1, 2011. The adoption of ASU 2009-13 does not significantly affect either the timing or amount of our revenue recognition.

In conjunction with the adoption of ASU 2009-13, we have updated our disclosures concerning revenue recognition, as follows:

Revenue recognition:  We recognize revenue in accordance with SEC SAB Topic 13, Revenue Recognition, ASC 605-25, Revenue Recognition:  Multiple Element Arrangements, and ASC 985-605, Software: Revenue Recognition.

We recognize revenue when all of the following conditions are met:

•
There is persuasive evidence of an arrangement, as evidenced by a signed contract;
•
Delivery of our products and services is a prerequisite for recognition of revenue. If arrangements include an acceptance provision, we generally begin recognizing revenue upon the receipt of customer acceptance;
•
The amount of fees to be paid by the customer is fixed or determinable; and
•
The collectibility of the fees is reasonably assured.

We generate revenue through sales of Licensed Data, Morningstar Advisor Workstation (including Morningstar Office), Morningstar Direct, Morningstar Equity Research, Premium Membership fees for Morningstar.com, and a variety of other investment-related products and services. We generally structure the revenue agreements for these offerings as licenses or subscriptions. We recognize revenue from licenses and subscription sales ratably as we deliver the product or service and over the service obligation period defined by the terms of the customer contract.

We also generate revenue from Internet advertising, primarily from “impression-based” contracts. For advertisers who use our cost-per-impression pricing, we charge fees each time we display their ads on our site.

Investment Consulting includes a broad range of services. Pricing for the consulting services is based on the scope of work and the level of service required, and includes asset-based fees for work we perform that involves investment management or acting as a subadvisor to investment portfolios. In arrangements that involve asset-based fees, we generally invoice clients quarterly in arrears based on average assets for the quarter. We recognize asset-based fees once the fees are fixed and determinable assuming all other revenue recognition criteria are met.

Our Retirement Solutions offerings help retirement plan participants plan and invest for retirement. We offer these services both through retirement plan providers (typically third-party asset management companies that offer proprietary mutual funds) and directly to plan sponsors (employers that offer retirement plans to their employees). For our Retirement Solutions offerings, we provide both a hosted solution as well as proprietary installed software advice solution. Clients can integrate the installed customized software into their existing systems to help investors accumulate wealth, transition into retirement, and manage income during retirement. The revenue arrangements for Retirement Solutions generally extend over multiple years. Our contracts may include one-time setup fees, implementation fees, technology licensing and maintenance fees, asset-based fees for managed retirement accounts, fixed and variable fees for advice and guidance, or a combination of these fee structures. Upon customer acceptance, we recognize revenue ratably over the term of the agreement. We recognize asset-based fees and variable fees in excess of any minimum once the value is fixed and determinable.

Some of our revenue arrangements with our customers combine multiple products and services. These products and services may be provided at different points in time or over different time periods within the same arrangement. We allocate fees to the separate deliverables based on the deliverables’ relative selling price, which is generally based on the price we charge when the same deliverable is sold separately.

We record taxes imposed on revenue-producing transactions (such as sales, use, value-added, and some excise taxes) on a net basis; therefore, we exclude such taxes from revenue in our Consolidated Statements of Income.

Deferred revenue represents the portion of subscriptions billed or collected in advance of the service being provided, which we expect to recognize as revenue in future periods. Certain arrangements may have cancellation or refund provisions. If we make a refund, it typically reflects the amount collected from a customer for which we have not yet provided services. The refund therefore results in a reduction of deferred revenue.


Acquisitions, Goodwill, and Other Intangible Assets
Acquisitions, Goodwill, and Other Intangible Assets
Acquisitions, Goodwill, and Other Intangible Assets
 
2011 Acquisitions
 
We did not complete any acquisitions in the first nine months of 2011.
 
2010 Acquisitions
 
The table below summarizes the acquisitions completed during 2010. As of September 30, 2011, we did not make any significant changes to the purchase price allocations for the acquisitions that occurred in 2010. Additional information concerning these acquisitions can be found in the Notes to our Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC on February 28, 2011.
Acquisition
 
Description
 
Date of Acquisition
 
Purchase Price*
Footnoted business of Financial Fineprint Inc.
 
Footnoted is a highly regarded blog for professional money managers, analysts, and sophisticated individual investors. Footnoted Pro, a service for institutional investors, provides insight on actionable items and trends in SEC filings.
 
February 1, 2010
 
Not separately disclosed
Aegis Equities Research
 
A leading provider of independent equity research in Sydney, Australia.
 
April 1, 2010
 
$10.3 million
Old Broad Street Research Ltd.
 
A premier provider of fund research, ratings, and investment consulting services in the United Kingdom.
 
April 12, 2010
 
$16.8 million
Realpoint, LLC
 
A Nationally Recognized Statistical Rating Organization (NRSRO) that specializes in structured finance.
 
May 3, 2010
 
$38.4 million in cash and 199,174 shares of restricted stock (valued at approximately $10 million as of the date the acquisition was announced in March 2010)
Morningstar Danmark A/S (Morningstar Denmark)
 
Acquisition of the 75% ownership interest not previously owned by Morningstar, bringing our ownership to 100%.
 
July 1, 2010
 
$14.6 million
Seeds Group
 
A leading provider of investment consulting services and fund research in France.
 
July 1, 2010
 
Not separately disclosed
Annuity Intelligence business of Advanced Sales and Marketing Corporation
 
The Annuity Intelligence business provides a web-based service that leverages a proprietary database of more than 1,000 variable annuities that includes "plain-English" translations of complex but important information found in prospectuses and other public filings.
 
November 1, 2010
 
$14.1 million
____________________________________________
* Total purchase price, less cash acquired, subject to post-closing adjustments.
 
Goodwill
 
The following table shows the changes in our goodwill balances from December 31, 2010 to September 30, 2011:
 
 
($000)

Balance as of December 31, 2010
$
317,661

Adjustments to 2010 acquisitions
1,387

Other, primarily currency translation
319

Balance as of September 30, 2011
$
319,367



We did not record any impairment losses in the third quarter of 2011 and 2010, respectively. We perform our annual impairment reviews in the fourth quarter.

The following table summarizes our intangible assets: 
 
 
As of September 30, 2011
 
As of December 31, 2010
($000)
 
Gross

 
Accumulated
Amortization

 
Net

 
Weighted
Average
Useful  Life
(years)

 
Gross

 
Accumulated
Amortization

 
Net

 
Weighted
Average
Useful  Life
(years)

Intellectual property
 
$
31,979

 
$
(18,529
)
 
$
13,450

 
9

 
$
33,990

 
$
(15,970
)
 
$
18,020

 
10

Customer-related assets
 
135,025

 
(49,548
)
 
85,477

 
12

 
130,675

 
(39,951
)
 
90,724

 
11

Supplier relationships
 
240

 
(81
)
 
159

 
20

 
240

 
(72
)
 
168

 
20

Technology-based assets
 
80,597

 
(32,916
)
 
47,681

 
9

 
78,651

 
(25,682
)
 
52,969

 
9

Non-competition agreement
 
1,724

 
(1,180
)
 
544

 
4

 
1,751

 
(909
)
 
842

 
4

Intangible assets related to acquisitions with preliminary purchase price allocations
 
—

 
—

 
—

 
—

 
6,407

 
(107
)
 
6,300

 
10

Total intangible assets
 
$
249,565

 
$
(102,254
)
 
$
147,311

 
10

 
$
251,714

 
$
(82,691
)
 
$
169,023

 
10


 
The following table summarizes our amortization expense related to intangible assets:
 
 
Three months ended September 30
 
Nine months ended September 30
($000)
 
2011

 
2010

 
2011

 
2010

Amortization expense
 
$
6,894

 
$
6,219

 
$
20,039

 
$
17,535


 
We amortize intangible assets using the straight-line method over their expected economic useful lives.

We expect intangible amortization expense for 2011 and subsequent years as follows:
 
($000)

2011
$
26,287

2012
23,874

2013
21,217

2014
19,989

2015
19,118

2016
14,527


 

Our estimates of future amortization expense for intangible assets may be affected by additional acquisitions, changes in the estimated average useful life, and currency translations.
Income Per Share
Income Per Share
Income Per Share
 
We compute income per share based on the two-class method, in accordance with FASB ASC 260-10-45-59A, Participating Securities and the Two Class Method. We issued restricted shares in conjunction with the Realpoint acquisition. Because the restricted shares contain nonforfeitable rights to dividends, they meet the criteria of a participating security. Under the two-class method, earnings are allocated between common stock and participating securities. The two-class method includes an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared and undistributed earnings for the period. We reduce our reported net earnings by the amount allocated to participating securities to arrive at the earnings allocated to common stock shareholders for purposes of calculating earnings per share.
ASC 260-10-45-59A requires the dilutive effect of participating securities to be calculated using the more dilutive of the treasury stock or the two-class method. We have determined the two-class method to be the more dilutive of the two methods. As such, we adjusted the earnings allocated to common stock shareholders in the basic earnings per share calculation for the reallocation of undistributed earnings to participating securities to calculate diluted earnings per share.
The following table shows how we reconcile our net income and the number of shares used in computing basic and diluted income per share:
 
 
 
Three months ended September 30
 
Nine months ended September 30
(in thousands, except per share amounts)
 
2011

 
2010

 
2011

 
2010

 
 
 
 
 
 
 
 
 
Basic net income per share attributable to Morningstar, Inc.:
 
 

 
 

 
 
 
 
Net income attributable to Morningstar, Inc.:
 
$
21,380

 
$
24,677

 
$
70,402

 
$
62,867

Less: Distributed earnings available to participating securities
 
(8
)
 
(10
)
 
(25
)
 
(10
)
Less: Undistributed earnings available to participating securities
 
(57
)
 
(89
)
 
(189
)
 
(242
)
Numerator for basic net income per share — undistributed and distributed earnings available to common shareholders
 
$
21,315

 
$
24,578

 
$
70,188

 
$
62,615

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding
 
50,278

 
49,401

 
50,082

 
49,157

 
 
 
 
 
 
 
 
 
Basic net income per share attributable to Morningstar, Inc.
 
$
0.42

 
$
0.50

 
$
1.40

 
$
1.27

 
 
 
 
 
 
 
 
 
Diluted net income per share attributable to Morningstar, Inc.:
 
 
 
 
 
 
 
 
Numerator for basic net income per share — undistributed and distributed earnings available to common shareholders
 
$
21,315

 
$
24,578

 
$
70,188

 
$
62,615

Add: Undistributed earnings allocated to participating securities
 
57

 
89

 
189

 
242

Less: Undistributed earnings reallocated to participating securities
 
(56
)
 
(87
)
 
(186
)
 
(236
)
Numerator for diluted net income per share — undistributed and distributed earnings available to common shareholders
 
$
21,316

 
$
24,580

 
$
70,191

 
$
62,621

 
 


 


 


 


Weighted average common shares outstanding
 
50,278

 
49,401

 
50,082

 
49,157

Net effect of dilutive stock options and restricted stock units
 
845

 
1,143

 
989

 
1,296

Weighted average common shares outstanding for computing diluted income per share
 
51,123

 
50,544

 
51,071

 
50,453

 
 


 


 


 


Diluted net income per share attributable to Morningstar, Inc.
 
$
0.42

 
$
0.49

 
$
1.37

 
$
1.24


Segment and Geographical Area Information
Segment and Geographical Area Information
Segment and Geographical Area Information
 
Morningstar has two operating segments:
 
•
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.
 
The largest products in this segment based on revenue are Licensed Data, Morningstar Advisor Workstation (including Morningstar Office), Morningstar.com, Morningstar Direct, Morningstar Integrated Web Tools (formerly Morningstar Site Builder), and Morningstar Principia. Licensed Data is a set of investment data spanning all of our investment databases, including real-time pricing data, and is available through electronic data feeds. Advisor Workstation is a web-based investment planning system for advisors. Advisor Workstation is available in two editions: Morningstar Office for independent financial advisors and an enterprise edition for financial advisors affiliated with larger firms. Morningstar.com includes both Premium Memberships and Internet advertising sales. Morningstar Direct is a web-based institutional research platform. Morningstar Integrated Web Tools is a set of services that helps institutional clients build customized websites or enhance their existing sites with Morningstar’s online tools and components. Principia is our CD-ROM-based investment research and planning software for advisors.
 
The Investment Information segment also includes Morningstar Equity Research, which we sell to other companies that purchase our research for their own use or provide our research to their affiliated advisors or individual investor clients.

•
Investment Management. The Investment Management segment includes all of our asset management operations, which earn the majority of their revenue from asset-based fees.
 
The key products and services in this segment based on revenue are Investment Consulting, which focuses on investment monitoring and asset allocation for funds of funds, including mutual funds and variable annuities; Retirement Solutions, including the Morningstar Retirement Manager and Advice by Ibbotson platforms; and Morningstar Managed Portfolios, a fee-based discretionary asset management service that includes a series of mutual fund, ETF, and stock portfolios tailored to meet a range of investment time horizons, risk levels, and investment strategies that financial advisors can use for their clients’ taxable and tax-deferred accounts.
 
Our segment accounting policies are the same as those described in Note 2, except for the capitalization and amortization of internal product development costs, amortization of intangible assets, and costs related to corporate functions. We exclude these items from our operating segment results to provide our chief operating decision maker with a better indication of each segment’s ability to generate cash flow. This information is one of the criteria used by our chief operating decision maker in determining how to allocate resources to each segment. We include capitalization and amortization of internal product development costs, amortization of intangible assets, and costs related to corporate functions in the Corporate Items category. Our segment disclosures are consistent with the business segment information provided to our chief operating decision maker on a recurring basis; for that reason, we don’t present balance sheet information by segment. We disclose goodwill by segment in accordance with the requirements of FASB ASC 350-20-50, Intangibles - Goodwill - Disclosure.
 
The following tables show selected segment data for the three and nine months ended September 30, 2011 and 2010:
 
 
 
Three months ended September 30, 2011
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

External revenue
 
$
125,804

 
$
34,247

 
$
—

 
$
160,051

Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
89,652

 
15,587

 
6,050

 
111,289

Stock-based compensation expense
 
2,609

 
556

 
786

 
3,951

Depreciation and amortization
 
2,117

 
42

 
8,788

 
10,947

Operating income (loss)
 
$
31,426

 
$
18,062

 
$
(15,624
)
 
$
33,864

 
 
 
 
 
 
 
 
 
U.S. capital expenditures
 
 

 
 

 
 

 
$
4,560

Non-U.S. capital expenditures
 
 

 
 

 
 

 
$
1,711

 
 
 
 
 
 
 
 
 
U.S. revenue
 
 

 
 

 
 

 
$
112,790

Non-U.S. revenue
 
 

 
 

 
 

 
$
47,261

 
 
 
Three months ended September 30, 2010
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

External revenue
 
$
112,055

 
$
27,762

 
$
—

 
$
139,817

Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
75,129

 
13,670

 
7,215

 
96,014

Stock-based compensation expense
 
2,326

 
525

 
894

 
3,745

Depreciation and amortization
 
1,789

 
44

 
8,064

 
9,897

Operating income (loss)
 
$
32,811

 
$
13,523

 
$
(16,173
)
 
$
30,161

 
 
 
 
 
 
 
 
 
U.S. capital expenditures
 
 

 
 

 
 

 
$
1,975

Non-U.S. capital expenditures
 
 

 
 

 
 

 
$
1,887

 
 
 
 
 
 
 
 
 
U.S. revenue
 
 

 
 

 
 

 
$
99,933

Non-U.S. revenue
 
 

 
 

 
 

 
$
39,884


 
 
Nine months ended September 30, 2011
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

External revenue
 
$
374,319

 
$
98,510

 
$
—

 
$
472,829

Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
259,899

 
43,258

 
22,237

 
325,394

Stock-based compensation expense
 
7,567

 
1,529

 
2,347

 
11,443

Depreciation and amortization
 
6,023

 
124

 
25,565

 
31,712

Operating income (loss)
 
$
100,830

 
$
53,599

 
$
(50,149
)
 
$
104,280

 
 
 
 
 
 
 
 
 
U.S. capital expenditures
 
 

 
 

 
 

 
$
8,084

Non-U.S. capital expenditures
 
 

 
 

 
 

 
$
6,605

 
 
 
 
 
 
 
 
 
U.S. revenue
 
 

 
 

 
 

 
$
334,395

Non-U.S. revenue
 
 

 
 

 
 

 
$
138,434

 
 
 
Nine months ended September 30, 2010
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

External revenue
 
$
324,600

 
$
79,598

 
$
—

 
$
404,198

Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
217,559

 
36,768

 
22,682

 
277,009

Stock-based compensation expense
 
5,926

 
1,557

 
2,854

 
10,337

Depreciation and amortization
 
5,016

 
136

 
22,930

 
28,082

Operating income (loss)
 
$
96,099

 
$
41,137

 
$
(48,466
)
 
$
88,770

 
 
 
 
 
 
 
 
 
U.S. capital expenditures
 
 

 
 

 
 

 
$
3,607

Non-U.S. capital expenditures
 
 

 
 

 
 

 
$
4,094

 
 
 
 
 
 
 
 
 
U.S. revenue
 
 

 
 

 
 

 
$
291,529

Non-U.S. revenue
 
 

 
 

 
 

 
$
112,669


 
 
As of September 30, 2011
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

Goodwill
 
$
277,246

 
$
42,121

 
$
—

 
$
319,367

 
 
 
 
 
 
 
 
 
U.S. long-lived assets
 
 

 
 

 
 

 
$
41,066

Non-U.S. long-lived assets
 
 

 
 

 
 

 
$
22,637

 
 
 
As of December 31, 2010
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

Goodwill
 
$
275,611

 
$
42,050

 
$
—

 
$
317,661

 
 
 
 
 
 
 
 
 
U.S. long-lived assets
 
 

 
 

 
 

 
$
39,496

Non-U.S. long-lived assets
 
 

 
 

 
 

 
$
22,609


 
Investments and Fair Value Measurements
Investments and Fair Value Measurements
Investments and Fair Value Measurements
 
We account for our investments in accordance with FASB ASC 320, Investments—Debt and Equity Securities. We classify our investments in three categories: available-for-sale, held-to-maturity, and trading. We monitor the concentration, diversification, maturity, and liquidity of our investment portfolio, which is primarily invested in fixed-income securities, and classify our investment portfolio as shown below:
 
 
 
As of September 30
 
As of December 31
($000)
 
2011

 
2010

Available-for-sale
 
$
238,990

 
$
173,072

Held-to-maturity
 
14,813

 
7,476

Trading securities
 
4,946

 
4,692

Total
 
$
258,749

 
$
185,240


 
The following table shows the cost, unrealized gains (losses), and fair values related to investments classified as available-for-sale and held-to-maturity:
 
 
 
As of September 30, 2011
 
As of December 31, 2010
($000)
 
Cost

 
Unrealized
Gain

 
Unrealized
Loss

 
Fair
Value

 
Cost

 
Unrealized
Gain

 
Unrealized
Loss

 
Fair
Value

Available-for-sale:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Government obligations
 
$
122,991

 
$
54

 
$
(186
)
 
$
122,859

 
$
113,597

 
$
36

 
$
(56
)
 
$
113,577

Corporate bonds
 
65,079

 
27

 
(293
)
 
64,813

 
42,839

 
63

 
(24
)
 
42,878

Commercial paper
 
34,941

 
2

 
(18
)
 
34,925

 
2,994

 
—

 
(3
)
 
2,991

Equity securities and exchange-traded funds
 
8,411

 
203

 
(1,197
)
 
7,417

 
4,510

 
418

 
(6
)
 
4,922

Mutual funds
 
9,180

 
45

 
(249
)
 
8,976

 
8,146

 
558

 
—

 
8,704

Total
 
$
240,602

 
$
331

 
$
(1,943
)
 
238,990

 
$
172,086

 
$
1,075

 
$
(89
)
 
$
173,072

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Held-to-maturity:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Certificates of deposit
 
$
14,813

 
$
—

 
$
—

 
$
14,813

 
$
7,476

 
$
—

 
$
—

 
$
7,476


 
As of September 30, 2011 and December 31, 2010, investments with unrealized losses for greater than a 12-month period were not material to the Condensed Consolidated Balance Sheets and were not deemed to have other than temporary declines in value.

The table below shows the cost and fair value of investments classified as available-for-sale and held-to-maturity based on their contractual maturities as of September 30, 2011 and December 31, 2010. The expected maturities of certain fixed-income securities may differ from their contractual maturities because some of these holdings have call features that allow the issuers the right to prepay obligations without penalties.
 
 
 
As of September 30, 2011
 
As of December 31, 2010
($000)
 
Cost

 
Fair Value

 
Cost

 
Fair Value

Available-for-sale:
 
 

 
 

 
 

 
 

Due in one year or less
 
$
177,348

 
$
177,124

 
$
85,990

 
$
85,964

Due in one to three years
 
45,663

 
45,473

 
73,440

 
73,482

Equity securities, exchange-traded funds, and mutual funds
 
17,591

 
16,393

 
12,656

 
13,626

Total
 
$
240,602

 
$
238,990

 
$
172,086

 
$
173,072

 
 
 
 
 
 
 
 
 
Held-to-maturity:
 
 

 
 

 
 

 
 

Due in one year or less
 
$
14,808

 
$
14,808

 
$
7,223

 
$
7,223

Due in one to three years
 
5

 
5

 
253

 
253

Total
 
$
14,813

 
$
14,813

 
$
7,476

 
$
7,476


 
Held-to-maturity investments include a $1,600,000 certificate of deposit held as collateral against two bank guarantees for our office lease in Australia.

The following table shows the realized gains and losses arising from sales of our investments classified as available-for-sale recorded in our Condensed Consolidated Statements of Income: 
 
 
Nine months ended September 30
($000)
 
2011

 
2010

Realized gains
 
$
270

 
$
17

Realized losses
 
—

 
(3
)
Realized gains, net
 
$
270

 
$
14


 

The following table shows the net unrealized loss on trading securities as recorded in our Condensed Consolidated Statements of Income:
 
 
 
Nine months ended September 30
($000)
 
2011

 
2010

Unrealized loss, net
 
$
810

 
$
75



The fair value of our assets subject to fair value measurements and the necessary disclosures are as follows:
 
 
 
Fair Value
 
Fair Value Measurements as of September 30, 2011
 
 
as of
 
Using Fair Value Hierarchy
($000)
 
September 30, 2011
 
Level 1

 
Level 2

 
Level 3

Available-for-sale investments
 
 

 
 

 
 

 
 

Government obligations
 
$
122,859

 
$
—

 
$
122,859

 
$
—

Corporate bonds
 
64,813

 
—

 
64,813

 
—

Commercial paper
 
34,925

 
—

 
34,925

 
—

Equity securities and exchange-traded funds
 
7,417

 
7,417

 
—

 
—

Mutual funds
 
8,976

 
8,976

 
—

 
—

Trading securities
 
4,946

 
4,946

 
—

 
—

Total
 
$
243,936

 
$
21,339

 
$
222,597

 
$
—

 
 
 
Fair Value
 
Fair Value Measurements as of December 31, 2010
 
 
as of
 
Using Fair Value Hierarchy
($000)
 
December 31, 2010
 
Level 1

 
Level 2

 
Level 3

Available-for-sale investments
 
 

 
 

 
 

 
 

Government obligations
 
$
113,577

 
$
—

 
$
113,577

 
$
—

Corporate bonds
 
42,878

 
—

 
42,878

 
—

Commercial paper
 
2,991

 
—

 
2,991

 
—

Equity securities and exchange-traded funds
 
4,922

 
4,922

 
—

 
—

Mutual funds
 
8,704

 
8,704

 
—

 
—

Trading securities
 
4,692

 
4,692

 
—

 
—

Total
 
$
177,764

 
$
18,318

 
$
159,446

 
$
—


 
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.

Based on our analysis of the nature and risks of our investments in equity securities and mutual funds, we have determined that presenting these investment categories each in the aggregate is appropriate.
Investments in Unconsolidated Entities
Investments in Unconsolidated Entities
Investments in Unconsolidated Entities
 
Our investments in unconsolidated entities consist primarily of the following:
 
 
 
As of September 30


As of December 31

($000)
 
2011


2010

Investment in MJKK
 
$
19,311

 
$
19,036

Other equity method investments
 
269

 
109

Investments accounted for using the cost method
 
5,181

 
5,117

Total investments in unconsolidated entities
 
$
24,761

 
$
24,262


 
Morningstar Japan K.K. Morningstar Japan K.K. (MJKK) develops and markets products and services customized for the Japanese market. MJKK’s shares are traded on the Osaka Stock Exchange, “Hercules Market,” using the ticker 4765. We account for our investment in MJKK using the equity method. The following table summarizes our ownership percentage in MJKK and the market value of this investment based on MJKK’s publicly quoted share price: 
 
 
As of September 30

 
As of December 31

 
 
2011

 
2010

Morningstar’s approximate ownership of MJKK
 
33
%
 
34
%
 
 
 
 
 
Approximate market value of Morningstar’s ownership in MJKK:
 
 

 
 

Japanese yen (¥000)
 
¥
2,507,844

 
¥
3,197,000

Equivalent U.S. dollars ($000)
 
$
32,727

 
$
38,361



Other Equity Method Investments. As of September 30, 2011 and December 31, 2010, other equity method investments consists of our investment in Morningstar Sweden AB (Morningstar Sweden). Morningstar Sweden develops and markets products and services customized for its respective market. Our ownership interest in Morningstar Sweden was approximately 24% as of September 30, 2011 and December 31, 2010.
 
Cost Method Investments. As of September 30, 2011 and December 31, 2010, our cost method investments consist mainly of minority investments in Pitchbook Data, Inc. (Pitchbook) and Bundle Corporation (Bundle). Pitchbook offers detailed data and information about private equity transactions, investors, companies, limited partners, and service providers. Bundle is a social media company dedicated to helping people make smarter spending and saving choices. Its website, Bundle.com, features a money comparison tool that shows spending trends across the United States, along with a range of information on saving, investing, and budgeting. We did not record any impairment losses on our cost method investments in the first nine months of 2011 and 2010, respectively.
 
Liability for Vacant Office Space
Liability for Vacant Office Space
Liability for Vacant Office Space
 
We include our liability for vacant office space in "Accounts payable and accrued liabilities" and "Other long-term liabilities", as appropriate, on our Consolidated Balance Sheets. The following table shows the change in our liability for vacant office space from December 31, 2010 to September 30, 2011:

Liability for vacant office space
 
($000)

Balance as of December 31, 2010
 
$
2,429

Reduction of liability for lease and other related payments
 
(1,182
)
Balance as of September 30, 2011
 
$
1,247



Stock-Based Compensation
Stock-Based Compensation
Stock-Based Compensation
 
Stock-Based Compensation Plans
 
In November 2004, we adopted the 2004 Stock Incentive Plan. The 2004 Stock Incentive Plan provides for grants of options, stock appreciation rights, restricted stock units, and performance shares. All of our employees and our non-employee directors are eligible for awards under the 2004 Stock Incentive Plan. Since the adoption of the 2004 Stock Incentive Plan, we have granted stock options, restricted stock units, and restricted stock.

Prior to November 2004, we granted stock options under various plans, including the 1993 Stock Option Plan, the 2000 Morningstar Stock Option Plan, and the 2001 Morningstar Stock Option Plan (collectively, the Prior Plans). The 2004 Stock Incentive Plan amends and restates the Prior Plans. Under the 2004 Stock Incentive Plan, we will not grant any additional options under any of the Prior Plans, and any shares subject to an award under any of the Prior Plans that are forfeited, canceled, settled, or otherwise terminated without a distribution of shares, or withheld by us in connection with the exercise of options or in payment of any required income tax withholding, were not available for awards under the 2004 Stock Incentive Plan.
  
In May 2011, we adopted the 2011 Stock Incentive Plan (the 2011 Plan). With the adoption of the 2011 Plan, we will not grant any additional awards under the 2004 Stock Incentive Plan. The 2011 Plan provides for grants of options, stock appreciation rights, restricted stock units, and performance shares. All of our employees and our non-employee directors are eligible for awards under the 2011 Plan. Grants awarded under the 2011 Plan or the 2004 Stock Incentive Plan that are forfeited, canceled, settled, or otherwise terminated without a distribution of shares, or shares withheld by us in connection with the exercise of options will be available for awards under the 2011 Plan. Any shares subject to awards under the 2011 Plan, but not under the 2004 Stock Incentive Plan, that are withheld by us in connection with the payment of any required income tax withholding will be available for awards under the 2011 Plan.

The following table summarizes the number of shares available for future grants under our 2011 Plan:
 
 
 
As of September 30

(000)
 
2011

Shares available for future grants
 
5,004


 

Accounting for Stock-Based Compensation Awards
 
The following table summarizes our stock-based compensation expense and the related income tax benefit we recorded in the three and nine months ended September 30, 2011 and September 30, 2010:
 
 
 
Three months ended September 30
 
Nine months ended September 30
($000)
 
2011

 
2010

 
2011

 
2010

Restricted stock units
 
$
3,372

 
$
3,277

 
$
9,489

 
$
9,557

Restricted stock
 
444

 
468

 
1,752

 
780

Stock options
 
135

 
—

 
202

 
—

Total stock-based compensation expense
 
$
3,951

 
$
3,745

 
$
11,443

 
$
10,337

 
 
 
 
 
 
 
 
 
Income tax benefit related to the stock-based compensation expense
 
$
967

 
$
973

 
$
2,636

 
$
2,874


 
The following table summarizes the amount of unrecognized stock-based compensation expense as of September 30, 2011 and the expected number of months over which the expense will be recognized:
 
 
Unrecognized stock-based compensation expense ($000)

 
Expected amortization period (months)

Restricted stock units
 
$
30,520

 
34

Restricted stock
 
6,363

 
43

Stock options
 
1,843

 
42

Total unrecognized stock-based compensation expense
 
$
38,726

 
36



In accordance with FASB ASC 718, Compensation—Stock Compensation, we estimate forfeitures of employee stock-based awards and recognize compensation cost only for those awards expected to vest. Because our largest annual equity grants typically have vesting dates in the second quarter, we adjust the stock-based compensation expense at that time to reflect those awards that ultimately vested and update our estimate of the forfeiture rate that will be applied to awards not yet vested.
 
Restricted Stock Units
 
Restricted stock units represent the right to receive a share of Morningstar common stock when that unit vests. Restricted stock units granted under the 2004 Stock Incentive Plan to employees vest ratably over a four-year period. Restricted stock units granted to non-employee directors vest ratably over a three-year period. For restricted stock units granted through December 31, 2008, employees could elect to defer receipt of the Morningstar common stock issued upon vesting of the restricted stock unit.

We measure the fair value of our restricted stock units on the date of grant based on the closing market price of the underlying common stock on the day prior to grant. We amortize that value to stock-based compensation expense, net of estimated forfeitures, ratably over the vesting period.

The following table summarizes restricted stock unit activity during the first nine months of 2011:
Restricted Stock Units (RSUs)
 
Unvested

 
Vested but
Deferred

 
Total

 
Weighted
Average
Grant Date Value
per RSU

RSUs outstanding—December 31, 2010
 
777,666

 
45,189

 
822,855

 
$
47.14

Granted
 
271,821

 
—

 
271,821

 
57.14

Dividend equivalents
 
1,988

 
52

 
2,040

 
48.06

Vested
 
(236,328
)
 
—

 
(236,328
)
 
48.64

Vested but deferred
 
(1,691
)
 
1,691

 
—

 
—

Issued
 
—

 
(26,866
)
 
(26,866
)
 
46.69

Forfeited
 
(68,180
)
 
—

 
(68,180
)
 
47.61

RSUs outstanding—September 30, 2011
 
745,276

 
20,066

 
765,342

 
50.23


 

Restricted Stock
 
In conjunction with the Realpoint acquisition in May 2010, we issued 199,174 shares of restricted stock to the selling employee-shareholders under the 2004 Stock Incentive Plan. The restricted stock vests ratably over a five-year period from the acquisition date and may be subject to forfeiture if the holder terminates his or her employment during the vesting period.

Because of the terms of the restricted share agreements prepared in conjunction with the Realpoint acquisition, we account for the grant of restricted shares as stock-based compensation expense and not as part of the acquisition consideration. See Note 3, in the Notes to our Condensed Consolidated Financial Statements, for additional information concerning the Realpoint acquisition.
 
We measured the fair value of the restricted stock on the date of grant based on the closing market price of our common stock on the day prior to the grant. We amortize the fair value of $9,363,000 to stock-based compensation expense over the vesting period. The stock-based compensation expense recorded in the first nine months of 2011 includes approximately $396,000 of expense recognized upon the accelerated vesting of a restricted stock grant. We have assumed that all of the remaining restricted stock will ultimately vest, and therefore we have not incorporated a forfeiture rate for purposes of determining the stock-based compensation expense.
 
Stock Options

Stock options granted under the 2004 Stock Incentive Plan to employees vest ratably over a four-year period. Grants to our non-employee directors vest ratably over a three-year period. All grants expire 10 years after the date of grant. Almost all of the options granted under this plan have a premium feature in which the exercise price increases over the term of the option at a rate equal to the 10-year Treasury bond yield as of the date of grant.

In May 2011, we granted 86,106 stock options under the 2004 Stock Incentive Plan. We estimated the fair value of the options on the date of grant using a Black-Scholes option-pricing model. The fair value of these options using this model was $23.75 per share, based on the following assumptions:

Assumptions for Black-Scholes Option Pricing Model
 
 
Expected life (years):
 
7.4

Volatility factor:
 
35.1
%
Dividend yield:
 
0.35
%
Interest rate:
 
2.87
%
Expected exercise price:
 
$57.28


The following tables summarize stock option activity in the first nine months of 2011 for our various stock option grants. The first table includes activity for options granted at an exercise price below the fair value per share of our common stock on the grant date; the second table includes activity for all other option grants. 
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, 2010
 
648,885

 
$
18.91

Granted
 
—

 
—

Canceled
 
—

 
—

Exercised
 
(188,775
)
 
19.13

Options outstanding—September 30, 2011
 
460,110

 
19.52

 
 
 
 
 
Options exercisable—September 30, 2011
 
460,110

 
$
19.52


 
All Other Option Grants, Excluding Activity Shown Above
 
Underlying
Shares

 
Weighted
Average
Exercise
Price

Options outstanding—December 31, 2010
 
1,207,540

 
$
18.91

Granted
 
86,106

 
57.28

Canceled
 
(1,910
)
 
15.56

Exercised
 
(415,959
)
 
15.37

Options outstanding—September 30, 2011
 
875,777

 
22.28

 
 
 
 
 
Options exercisable—September 30, 2011
 
789,671

 
$
18.47


 
The following table summarizes the total intrinsic value (difference between the market value of our stock on the date of exercise and the exercise price of the option) of options exercised:
 
 
 
Nine months ended September 30
($000)
 
2011

 
2010

Intrinsic value of options exercised
 
$
25,061

 
$
17,094


 

The table below shows additional information for options outstanding and exercisable as of September 30, 2011:
 
 
 
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
 
371,323

 
1.15

 
$
9.59

 
$
17,396

 
371,323

 
1.15

 
$
9.59

 
$
17,396

$19.47 - $44.35
 
878,458

 
3.23

 
22.77

 
29,578

 
878,458

 
3.23

 
22.77

 
29,578

$57.28
 
86,106

 
9.76

 
57.28

 
—

 
—

 
—

 
—

 
—


 


 


 


 


 


 


 


 


$8.57 - $57.28
 
1,335,887

 
3.07

 
21.33

 
$
46,974

 
1,249,781

 
2.61

 
18.86

 
$
46,974

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vested or Expected to Vest
 
 
 
 
 
 
 
 
 
 
 
 
 
$8.57 - $57.28
 
1,335,887

 
3.07

 
$
21.33

 
$
46,974

 
 
 
 
 
 
 
 

 
The aggregate intrinsic value in the table above represents the total pretax intrinsic value all option holders would have received if they had exercised all outstanding options on September 30, 2011. The intrinsic value is based on our closing stock price of $56.44 on that date.

Excess Tax Benefits Related to Stock-Based Compensation
 
FASB ASC 718, Compensation—Stock Compensation, requires that we classify the cash flows that result from excess tax benefits as financing cash flows. Excess tax benefits correspond to the portion of the tax deduction taken on our income tax return that exceeds the amount of tax benefit related to the compensation cost recognized in our Statement of Income. The following table summarizes our excess tax benefits for the three and nine months ended September 30, 2011 and September 30, 2010:
 
 
Three months ended September 30
 
Nine months ended September 30
($000)
 
2011

 
2010

 
2011

 
2010

Excess tax benefits related to stock-based compensation
 
$
1,450

 
$
680

 
$
7,621

 
$
4,885

Income Taxes
Income Taxes
Income Taxes
 
Effective Tax Rate

The following table shows our effective income tax rate for the three and nine months ended September 30, 2011 and September 30, 2010:
 
 
 
Three months ended September 30
 
Nine months ended September 30
($000)
 
2011

 
2010

 
2011

 
2010

Income before income taxes and equity in net income of unconsolidated entities
 
$
33,285

 
$
36,367

 
$
104,484

 
$
94,818

Equity in net income of unconsolidated entities
 
428

 
333

 
1,397

 
1,176

Net (income) loss attributable to the noncontrolling interest
 
10

 
(106
)
 
106

 
10

Total
 
$
33,723

 
$
36,594

 
$
105,987

 
$
96,004

Income tax expense
 
$
12,343

 
$
11,917

 
$
35,585

 
$
33,137

Effective tax rate
 
36.6
%
 
32.6
%
 
33.6
%
 
34.5
%

 
Our effective tax rate in the third quarter of 2011 was 36.6%, an increase of 4.0 percentage points compared with the prior-year period. The effective tax rate of 32.6% in the third quarter of 2010 includes a benefit related to non-U.S. income taxes.

Year to date, our effective tax rate was 33.6%, a decrease of 0.9 percentage points, compared with 34.5% in the first nine months of 2010. The year-to-date effective tax rate primarily reflects the positive effect of higher estimated tax benefits for domestic production activities (Internal Revenue Code Section 199) and tax incentives for research and development, most of which relate to prior years.  These benefits were largely offset by an increase in unrecognized tax benefits.

Unrecognized Tax Benefits

The table below provides information concerning our gross unrecognized tax benefits as of September 30, 2011 and December 31, 2010. The table also provides the effect these gross unrecognized tax benefits would have on our income tax expense, if they were recognized.


 
 
As of September 30
 
As of December 31
($000)
 
2011

 
2010

Gross unrecognized tax benefits
 
$
11,781

 
$
9,089

 
 
 
 
 
Gross unrecognized tax benefits which would affect income tax expense
 
$
11,431

 
$
8,482

 
 
 
 
 
Decrease in income tax expense upon recognition of gross unrecognized tax benefits
 
$
(9,680
)
 
$
(6,895
)


In the first nine months of 2011, we recorded a net increase of $2,692,000 of gross unrecognized tax benefits, which increased our income tax expense. The majority of this increase relates to the estimated tax benefits and incentives, discussed above.

Our Condensed Consolidated Balance Sheets include the following liabilities for unrecognized tax benefits. These amounts include interest and penalties, less any associated tax benefits.
 
 
As of September 30
 
As of December 31
Liabilities for Unrecognized Tax Benefits ($000)
 
2011

 
2010

Current liability
 
$
1,985

 
$
654

Non-current liability
 
9,533

 
8,173

Total liability for unrecognized tax benefits
 
$
11,518

 
$
8,827



We conduct business globally and as a result, we file income tax returns in U.S. federal, state, local, and foreign jurisdictions. In the normal course of business we are subject to examination by tax authorities throughout the world. The open tax years for our U.S. federal tax returns and most state tax returns include the years 2007 to the present. In non-U.S. jurisdictions, the statute of limitations generally extends to years prior to 2004.

We are currently under audit by the U.S. federal and various state and local tax authorities in the United States, as well as tax authorities in certain non-U.S. jurisdictions. It is not likely that the examination phase of some of these audits will conclude in 2011. It is not possible to estimate the effect of current audits on previously recorded unrecognized tax benefits.
 
Our effective tax rate reflects the fact that we are not recording an income tax benefit related to losses recorded by certain of our non-U.S. operations. The net operating losses (NOLs) may become deductible in certain non-U.S. tax jurisdictions to the extent these non-U.S. operations become profitable. In the year certain non-U.S. entities record a loss, we do not record a corresponding tax benefit, thus increasing our effective tax rate. For each of our operations, we evaluate whether it is more likely than not that the tax benefits related to NOLs will be realized. As part of this evaluation, we consider evidence such as tax planning strategies, historical operating results, forecasted taxable income, and recent financial performance. Upon determining that it is more likely than not that the NOLs will be realized, we reduce the tax valuation allowances related to these NOLs, which results in a reduction to our income tax expense and our effective tax rate in the period.

Contingencies
Contingencies
Contingencies
 
Life's Good S.T.A.B.L. Hedge Fund

In September 2011, Marta Klass, Gregory Martin, and Richard Roellig filed a complaint in the United States District Court for the Eastern District of Pennsylvania against Morningstar, Inc. and several other parties relating to Life's Good S.T.A.B.L. hedge fund. The plaintiffs allege that Morningstar committed fraud and aided and abetted the other defendants' breach of fiduciary duty in assigning a 5-star rating to the hedge fund. Morningstar believes the allegations against it have no legal or factual basis but cannot predict the outcome of this matter at this time.

InvestPic, LLC
 
In November 2010, InvestPic, LLC filed a complaint in the United States District Court for the District of Delaware against Morningstar, Inc. and several other companies alleging that each defendant infringes U.S. Patent No. 6,349,291, which relates to methods for performing statistical analysis on investment data and displaying the analyzed data in graphical form. InvestPic seeks, among other things, unspecified damages because of defendants' alleged infringing activities and costs. While Morningstar is vigorously contesting the claims asserted, we cannot predict the outcome of the proceeding.

Egan-Jones Rating Co.
 
In June 2010, Egan-Jones Rating Co. filed a complaint in the Court of Common Pleas of Montgomery County, Pennsylvania against Realpoint, LLC (now known as Morningstar Credit Ratings, LLC) and Morningstar, Inc. in connection with a December 2007 agreement between Egan-Jones and Morningstar Credit Ratings for certain data-sharing and other services. In addition to damages, Egan-Jones filed a petition seeking an injunction to temporarily prevent Morningstar from offering corporate credit ratings through December 31, 2010. In September 2010, the court denied Egan-Jones's request for a preliminary injunction against Morningstar's corporate credit ratings business. Morningstar Credit Ratings and Morningstar continue to vigorously contest liability on all of Egan-Jones' claims for damages. We cannot predict the outcome of the proceeding.
 


Business Logic Holding Corporation
 
In November 2009, Business Logic Holding Corporation filed a complaint in the Circuit Court of Cook County, Illinois against Ibbotson Associates, Inc. and Morningstar, Inc. relating to Ibbotson's prior commercial relationship with Business Logic. Business Logic is alleging that Ibbotson Associates and Morningstar violated Business Logic's rights by using its trade secrets to develop a proprietary web-service software and user interface that connects plan participant data with the Ibbotson Wealth Forecasting Engine. Business Logic seeks, among other things, injunctive relief and unspecified damages. Ibbotson and Morningstar answered the complaint, and Ibbotson asserted a counterclaim against Business Logic alleging trade secret misappropriation and breach of contract, seeking damages and injunctive relief. While Morningstar and Ibbotson Associates are vigorously contesting the claims against them, we cannot predict the outcome of the proceeding.
 
Morningstar Associates, LLC Subpoena from the New York Attorney General's Office
 
In December 2004, Morningstar Associates, LLC, a wholly owned subsidiary of Morningstar, Inc., received a subpoena from the New York Attorney General's office seeking information and documents related to an investigation the New York Attorney General's office is conducting. The subpoena asked for documents relating to the investment consulting services the company offers to retirement plan providers, including fund lineup recommendations for retirement plan sponsors. Morningstar Associates has provided the requested information and documents.
 
In 2005, Morningstar Associates received subpoenas seeking information and documents related to investigations being conducted by the SEC and United States Department of Labor. The subpoenas were similar in scope to the New York Attorney General subpoena. In January 2007 and September 2009, respectively, the SEC and Department of Labor each notified Morningstar Associates that it had ended its investigation, with no enforcement action, fines, or penalties.
 
In January 2007, Morningstar Associates received a Notice of Proposed Litigation from the New York Attorney General's office. The Notice centers on disclosure relating to an optional service offered to retirement plan sponsors (employers) that select 401(k) plan services from ING, one of Morningstar Associates' clients. The Notice gave Morningstar Associates the opportunity to explain why the New York Attorney General's office should not institute proceedings. Morningstar Associates promptly submitted its explanation and has cooperated fully with the New York Attorney General's office.
 
We cannot predict the scope, timing, or outcome of this matter, which may include the institution of administrative, civil, injunctive, or criminal proceedings, the imposition of fines and penalties, and other remedies and sanctions, any of which could lead to an adverse impact on our stock price, the inability to attract or retain key employees, and the loss of customers. We also cannot predict what impact, if any, this matter may have on our business, operating results, or financial condition.
 
Other Matters
 
In addition to these proceedings, we are involved in legal proceedings and litigation that have arisen in the normal course of our business. Although the outcome of a particular proceeding can never be predicted, we do not believe that the result of any of these other matters will have a material adverse effect on our business, operating results, or financial position.

Quarterly Dividend and Share Repurchase Programs
Quarterly Dividend and Share Repurchase Programs
Quarterly Dividend and Share Repurchase Programs
 
On September 23, 2011, our board of directors declared a quarterly dividend of 5 cents per share, payable on October 31, 2011 to shareholders of record as of October 14, 2011. As of September 30, 2011, we recorded a liability for dividends payable of $2,505,000.
 
In September 2010, the board of directors approved a share repurchase program that authorizes the repurchase of up to $100 million in shares of our outstanding common stock. We may repurchase shares from time to time at prevailing market prices on the open market or in private transactions in amounts that we deem appropriate. As of September 30, 2011, we had repurchased a total of 646,682 shares for $35,873,000 under this authorization.
Recently Issued Accounting Pronouncements
Description of New Accounting Pronouncements Not yet Adopted [Text Block]
Recently Issued Accounting Pronouncements

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. ASU No. 2011-04 clarifies existing fair value measurement and disclosure requirements, amends certain fair value measurement principles and requires additional disclosures about fair value measurements. For Morningstar, ASU No. 2011-04 will be applied prospectively beginning on January 1, 2012. We do not expect the provisions of ASU No. 2011-04 will have a material impact on our consolidated financial statements.

In September 2011, the FASB issued ASU No. 2011-08, Intangibles—Goodwill and Other (Topic 350): Testing Goodwill for Impairment. The objective of this Update is to simplify how entities test goodwill for impairment. An entity may first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. The more-likely-than-not threshold is defined as having a likelihood of more than 50%. For Morningstar, the amendments are effective for annual and interim goodwill impairment tests performed in 2012. Early adoption will be permitted. We do not expect the provisions of ASU No. 2011-08 will have a material impact on our consolidated financial statements.

Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Policies)
Comprehensive Income, Policy [Policy Text Block] 

In June 2011, the FASB issued ASU No. 2011-05, Presentation of Comprehensive Income. In accordance with ASU No. 2011-05, we present the total of comprehensive income, the components of net income, and the components of other comprehensive income (OCI) in two separate but consecutive statements, our Consolidated Statement of Income and separately, a Consolidated Statement of Comprehensive Income. We no longer present total comprehensive income in our Consolidated Statement of Equity. In addition, we now show the effects of items reclassified from OCI to net income on the face of our Consolidated Statement of Income.
Revenue Recognition, Software [Policy Text Block] 
, effective January 1, 2011, we adopted FASB ASU No. 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements. ASU 2009-13 supersedes EITF Issue 00-21, Revenue Arrangements with Multiple Deliverables and establishes the accounting and reporting guidance for arrangements when a vendor performs multiple revenue-generating activities, addresses how to separate deliverables, and specifies how to measure and allocate arrangement consideration. We are applying this guidance for revenue arrangements entered into or materially modified from January 1, 2011. The adoption of ASU 2009-13 does not significantly affect either the timing or amount of our revenue recognition.

In conjunction with the adoption of ASU 2009-13, we have updated our disclosures concerning revenue recognition, as follows:

Revenue recognition:  We recognize revenue in accordance with SEC SAB Topic 13, Revenue Recognition, ASC 605-25, Revenue Recognition:  Multiple Element Arrangements, and ASC 985-605, Software: Revenue Recognition.

We recognize revenue when all of the following conditions are met:

•
There is persuasive evidence of an arrangement, as evidenced by a signed contract;
•
Delivery of our products and services is a prerequisite for recognition of revenue. If arrangements include an acceptance provision, we generally begin recognizing revenue upon the receipt of customer acceptance;
•
The amount of fees to be paid by the customer is fixed or determinable; and
•
The collectibility of the fees is reasonably assured.

Revenue Recognition, Policy [Policy Text Block] 
We generate revenue through sales of Licensed Data, Morningstar Advisor Workstation (including Morningstar Office), Morningstar Direct, Morningstar Equity Research, Premium Membership fees for Morningstar.com, and a variety of other investment-related products and services. We generally structure the revenue agreements for these offerings as licenses or subscriptions. We recognize revenue from licenses and subscription sales ratably as we deliver the product or service and over the service obligation period defined by the terms of the customer contract.

We also generate revenue from Internet advertising, primarily from “impression-based” contracts. For advertisers who use our cost-per-impression pricing, we charge fees each time we display their ads on our site.

Investment Consulting includes a broad range of services. Pricing for the consulting services is based on the scope of work and the level of service required, and includes asset-based fees for work we perform that involves investment management or acting as a subadvisor to investment portfolios. In arrangements that involve asset-based fees, we generally invoice clients quarterly in arrears based on average assets for the quarter. We recognize asset-based fees once the fees are fixed and determinable assuming all other revenue recognition criteria are met.

Our Retirement Solutions offerings help retirement plan participants plan and invest for retirement. We offer these services both through retirement plan providers (typically third-party asset management companies that offer proprietary mutual funds) and directly to plan sponsors (employers that offer retirement plans to their employees). For our Retirement Solutions offerings, we provide both a hosted solution as well as proprietary installed software advice solution. Clients can integrate the installed customized software into their existing systems to help investors accumulate wealth, transition into retirement, and manage income during retirement. The revenue arrangements for Retirement Solutions generally extend over multiple years. Our contracts may include one-time setup fees, implementation fees, technology licensing and maintenance fees, asset-based fees for managed retirement accounts, fixed and variable fees for advice and guidance, or a combination of these fee structures. Upon customer acceptance, we recognize revenue ratably over the term of the agreement. We recognize asset-based fees and variable fees in excess of any minimum once the value is fixed and determinable.

Some of our revenue arrangements with our customers combine multiple products and services. These products and services may be provided at different points in time or over different time periods within the same arrangement. We allocate fees to the separate deliverables based on the deliverables’ relative selling price, which is generally based on the price we charge when the same deliverable is sold separately.

We record taxes imposed on revenue-producing transactions (such as sales, use, value-added, and some excise taxes) on a net basis; therefore, we exclude such taxes from revenue in our Consolidated Statements of Income.

Deferred revenue represents the portion of subscriptions billed or collected in advance of the service being provided, which we expect to recognize as revenue in future periods. Certain arrangements may have cancellation or refund provisions. If we make a refund, it typically reflects the amount collected from a customer for which we have not yet provided services. The refund therefore results in a reduction of deferred revenue.


Segment Reporting, Policy [Policy Text Block] 
Our segment accounting policies are the same as those described in Note 2, except for the capitalization and amortization of internal product development costs, amortization of intangible assets, and costs related to corporate functions. We exclude these items from our operating segment results to provide our chief operating decision maker with a better indication of each segment’s ability to generate cash flow. This information is one of the criteria used by our chief operating decision maker in determining how to allocate resources to each segment. We include capitalization and amortization of internal product development costs, amortization of intangible assets, and costs related to corporate functions in the Corporate Items category. Our segment disclosures are consistent with the business segment information provided to our chief operating decision maker on a recurring basis; for that reason, we don’t present balance sheet information by segment. We disclose goodwill by segment in accordance with the requirements of FASB ASC 350-20-50, Intangibles - Goodwill - Disclosure.
Investments and Fair value Measurements (Policies)
Fair Value of Financial Instruments, Policy [Policy Text Block]
We account for our investments in accordance with FASB ASC 320, Investments—Debt and Equity Securities. We classify our investments in three categories: available-for-sale, held-to-maturity, and trading. We monitor the concentration, diversification, maturity, and liquidity of our investment portfolio, which is primarily invested in fixed-income securities, and classify our investment portfolio as shown below:
Acquisitions, Goodwill, and Other Intangible Assets (Tables)
Schedule of Business Acquisitions, by Acquisition [Table Text Block] 
The table below summarizes the acquisitions completed during 2010. As of September 30, 2011, we did not make any significant changes to the purchase price allocations for the acquisitions that occurred in 2010. Additional information concerning these acquisitions can be found in the Notes to our Consolidated Financial Statements included in our Annual Report on Form 10-K filed with the SEC on February 28, 2011.
Acquisition
 
Description
 
Date of Acquisition
 
Purchase Price*
Footnoted business of Financial Fineprint Inc.
 
Footnoted is a highly regarded blog for professional money managers, analysts, and sophisticated individual investors. Footnoted Pro, a service for institutional investors, provides insight on actionable items and trends in SEC filings.
 
February 1, 2010
 
Not separately disclosed
Aegis Equities Research
 
A leading provider of independent equity research in Sydney, Australia.
 
April 1, 2010
 
$10.3 million
Old Broad Street Research Ltd.
 
A premier provider of fund research, ratings, and investment consulting services in the United Kingdom.
 
April 12, 2010
 
$16.8 million
Realpoint, LLC
 
A Nationally Recognized Statistical Rating Organization (NRSRO) that specializes in structured finance.
 
May 3, 2010
 
$38.4 million in cash and 199,174 shares of restricted stock (valued at approximately $10 million as of the date the acquisition was announced in March 2010)
Morningstar Danmark A/S (Morningstar Denmark)
 
Acquisition of the 75% ownership interest not previously owned by Morningstar, bringing our ownership to 100%.
 
July 1, 2010
 
$14.6 million
Seeds Group
 
A leading provider of investment consulting services and fund research in France.
 
July 1, 2010
 
Not separately disclosed
Annuity Intelligence business of Advanced Sales and Marketing Corporation
 
The Annuity Intelligence business provides a web-based service that leverages a proprietary database of more than 1,000 variable annuities that includes "plain-English" translations of complex but important information found in prospectuses and other public filings.
 
November 1, 2010
 
$14.1 million
____________________________________________
* Total purchase price, less cash acquired, subject to post-closing adjustments.
Schedule of Goodwill [Table Text Block] 
The following table shows the changes in our goodwill balances from December 31, 2010 to September 30, 2011:
 
 
($000)

Balance as of December 31, 2010
$
317,661

Adjustments to 2010 acquisitions
1,387

Other, primarily currency translation
319

Balance as of September 30, 2011
$
319,367

Schedule of Finite-Lived Intangible Assets by Major Class [Table Text Block] 
The following table summarizes our intangible assets: 
 
 
As of September 30, 2011
 
As of December 31, 2010
($000)
 
Gross

 
Accumulated
Amortization

 
Net

 
Weighted
Average
Useful  Life
(years)

 
Gross

 
Accumulated
Amortization

 
Net

 
Weighted
Average
Useful  Life
(years)

Intellectual property
 
$
31,979

 
$
(18,529
)
 
$
13,450

 
9

 
$
33,990

 
$
(15,970
)
 
$
18,020

 
10

Customer-related assets
 
135,025

 
(49,548
)
 
85,477

 
12

 
130,675

 
(39,951
)
 
90,724

 
11

Supplier relationships
 
240

 
(81
)
 
159

 
20

 
240

 
(72
)
 
168

 
20

Technology-based assets
 
80,597

 
(32,916
)
 
47,681

 
9

 
78,651

 
(25,682
)
 
52,969

 
9

Non-competition agreement
 
1,724

 
(1,180
)
 
544

 
4

 
1,751

 
(909
)
 
842

 
4

Intangible assets related to acquisitions with preliminary purchase price allocations
 
—

 
—

 
—

 
—

 
6,407

 
(107
)
 
6,300

 
10

Total intangible assets
 
$
249,565

 
$
(102,254
)
 
$
147,311

 
10

 
$
251,714

 
$
(82,691
)
 
$
169,023

 
10

Intangible Asset Amortization Expense [Table Text Block] 
 
The following table summarizes our amortization expense related to intangible assets:
 
 
Three months ended September 30
 
Nine months ended September 30
($000)
 
2011

 
2010

 
2011

 
2010

Amortization expense
 
$
6,894

 
$
6,219

 
$
20,039

 
$
17,535

Schedule of Expected Amortization Expense [Table Text Block] 
We expect intangible amortization expense for 2011 and subsequent years as follows:
 
($000)

2011
$
26,287

2012
23,874

2013
21,217

2014
19,989

2015
19,118

2016
14,527

Income Per Share (Tables)
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]
The following table shows how we reconcile our net income and the number of shares used in computing basic and diluted income per share:
 
 
 
Three months ended September 30
 
Nine months ended September 30
(in thousands, except per share amounts)
 
2011

 
2010

 
2011

 
2010

 
 
 
 
 
 
 
 
 
Basic net income per share attributable to Morningstar, Inc.:
 
 

 
 

 
 
 
 
Net income attributable to Morningstar, Inc.:
 
$
21,380

 
$
24,677

 
$
70,402

 
$
62,867

Less: Distributed earnings available to participating securities
 
(8
)
 
(10
)
 
(25
)
 
(10
)
Less: Undistributed earnings available to participating securities
 
(57
)
 
(89
)
 
(189
)
 
(242
)
Numerator for basic net income per share — undistributed and distributed earnings available to common shareholders
 
$
21,315

 
$
24,578

 
$
70,188

 
$
62,615

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding
 
50,278

 
49,401

 
50,082

 
49,157

 
 
 
 
 
 
 
 
 
Basic net income per share attributable to Morningstar, Inc.
 
$
0.42

 
$
0.50

 
$
1.40

 
$
1.27

 
 
 
 
 
 
 
 
 
Diluted net income per share attributable to Morningstar, Inc.:
 
 
 
 
 
 
 
 
Numerator for basic net income per share — undistributed and distributed earnings available to common shareholders
 
$
21,315

 
$
24,578

 
$
70,188

 
$
62,615

Add: Undistributed earnings allocated to participating securities
 
57

 
89

 
189

 
242

Less: Undistributed earnings reallocated to participating securities
 
(56
)
 
(87
)
 
(186
)
 
(236
)
Numerator for diluted net income per share — undistributed and distributed earnings available to common shareholders
 
$
21,316

 
$
24,580

 
$
70,191

 
$
62,621

 
 


 


 


 


Weighted average common shares outstanding
 
50,278

 
49,401

 
50,082

 
49,157

Net effect of dilutive stock options and restricted stock units
 
845

 
1,143

 
989

 
1,296

Weighted average common shares outstanding for computing diluted income per share
 
51,123

 
50,544

 
51,071

 
50,453

 
 


 


 


 


Diluted net income per share attributable to Morningstar, Inc.
 
$
0.42

 
$
0.49

 
$
1.37

 
$
1.24


Segment and Geographical Area Information (Tables)
Schedule of Segment Reporting Information, by Segment [Table Text Block]
The following tables show selected segment data for the three and nine months ended September 30, 2011 and 2010:
 
 
 
Three months ended September 30, 2011
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

External revenue
 
$
125,804

 
$
34,247

 
$
—

 
$
160,051

Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
89,652

 
15,587

 
6,050

 
111,289

Stock-based compensation expense
 
2,609

 
556

 
786

 
3,951

Depreciation and amortization
 
2,117

 
42

 
8,788

 
10,947

Operating income (loss)
 
$
31,426

 
$
18,062

 
$
(15,624
)
 
$
33,864

 
 
 
 
 
 
 
 
 
U.S. capital expenditures
 
 

 
 

 
 

 
$
4,560

Non-U.S. capital expenditures
 
 

 
 

 
 

 
$
1,711

 
 
 
 
 
 
 
 
 
U.S. revenue
 
 

 
 

 
 

 
$
112,790

Non-U.S. revenue
 
 

 
 

 
 

 
$
47,261

 
 
 
Three months ended September 30, 2010
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

External revenue
 
$
112,055

 
$
27,762

 
$
—

 
$
139,817

Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
75,129

 
13,670

 
7,215

 
96,014

Stock-based compensation expense
 
2,326

 
525

 
894

 
3,745

Depreciation and amortization
 
1,789

 
44

 
8,064

 
9,897

Operating income (loss)
 
$
32,811

 
$
13,523

 
$
(16,173
)
 
$
30,161

 
 
 
 
 
 
 
 
 
U.S. capital expenditures
 
 

 
 

 
 

 
$
1,975

Non-U.S. capital expenditures
 
 

 
 

 
 

 
$
1,887

 
 
 
 
 
 
 
 
 
U.S. revenue
 
 

 
 

 
 

 
$
99,933

Non-U.S. revenue
 
 

 
 

 
 

 
$
39,884


 
 
Nine months ended September 30, 2011
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

External revenue
 
$
374,319

 
$
98,510

 
$
—

 
$
472,829

Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
259,899

 
43,258

 
22,237

 
325,394

Stock-based compensation expense
 
7,567

 
1,529

 
2,347

 
11,443

Depreciation and amortization
 
6,023

 
124

 
25,565

 
31,712

Operating income (loss)
 
$
100,830

 
$
53,599

 
$
(50,149
)
 
$
104,280

 
 
 
 
 
 
 
 
 
U.S. capital expenditures
 
 

 
 

 
 

 
$
8,084

Non-U.S. capital expenditures
 
 

 
 

 
 

 
$
6,605

 
 
 
 
 
 
 
 
 
U.S. revenue
 
 

 
 

 
 

 
$
334,395

Non-U.S. revenue
 
 

 
 

 
 

 
$
138,434

 
 
 
Nine months ended September 30, 2010
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

External revenue
 
$
324,600

 
$
79,598

 
$
—

 
$
404,198

Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
217,559

 
36,768

 
22,682

 
277,009

Stock-based compensation expense
 
5,926

 
1,557

 
2,854

 
10,337

Depreciation and amortization
 
5,016

 
136

 
22,930

 
28,082

Operating income (loss)
 
$
96,099

 
$
41,137

 
$
(48,466
)
 
$
88,770

 
 
 
 
 
 
 
 
 
U.S. capital expenditures
 
 

 
 

 
 

 
$
3,607

Non-U.S. capital expenditures
 
 

 
 

 
 

 
$
4,094

 
 
 
 
 
 
 
 
 
U.S. revenue
 
 

 
 

 
 

 
$
291,529

Non-U.S. revenue
 
 

 
 

 
 

 
$
112,669


 
 
As of September 30, 2011
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

Goodwill
 
$
277,246

 
$
42,121

 
$
—

 
$
319,367

 
 
 
 
 
 
 
 
 
U.S. long-lived assets
 
 

 
 

 
 

 
$
41,066

Non-U.S. long-lived assets
 
 

 
 

 
 

 
$
22,637

 
 
 
As of December 31, 2010
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

Goodwill
 
$
275,611

 
$
42,050

 
$
—

 
$
317,661

 
 
 
 
 
 
 
 
 
U.S. long-lived assets
 
 

 
 

 
 

 
$
39,496

Non-U.S. long-lived assets
 
 

 
 

 
 

 
$
22,609

Investments and Fair Value Measurements (Tables)
Schedule of Investments [Table Text Block] 
We monitor the concentration, diversification, maturity, and liquidity of our investment portfolio, which is primarily invested in fixed-income securities, and classify our investment portfolio as shown below:
 
 
 
As of September 30
 
As of December 31
($000)
 
2011

 
2010

Available-for-sale
 
$
238,990

 
$
173,072

Held-to-maturity
 
14,813

 
7,476

Trading securities
 
4,946

 
4,692

Total
 
$
258,749

 
$
185,240

Unrealized Gain (Loss) on Investments [Table Text Block] 
The following table shows the cost, unrealized gains (losses), and fair values related to investments classified as available-for-sale and held-to-maturity:
 
 
 
As of September 30, 2011
 
As of December 31, 2010
($000)
 
Cost

 
Unrealized
Gain

 
Unrealized
Loss

 
Fair
Value

 
Cost

 
Unrealized
Gain

 
Unrealized
Loss

 
Fair
Value

Available-for-sale:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Government obligations
 
$
122,991

 
$
54

 
$
(186
)
 
$
122,859

 
$
113,597

 
$
36

 
$
(56
)
 
$
113,577

Corporate bonds
 
65,079

 
27

 
(293
)
 
64,813

 
42,839

 
63

 
(24
)
 
42,878

Commercial paper
 
34,941

 
2

 
(18
)
 
34,925

 
2,994

 
—

 
(3
)
 
2,991

Equity securities and exchange-traded funds
 
8,411

 
203

 
(1,197
)
 
7,417

 
4,510

 
418

 
(6
)
 
4,922

Mutual funds
 
9,180

 
45

 
(249
)
 
8,976

 
8,146

 
558

 
—

 
8,704

Total
 
$
240,602

 
$
331

 
$
(1,943
)
 
238,990

 
$
172,086

 
$
1,075

 
$
(89
)
 
$
173,072

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Held-to-maturity:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Certificates of deposit
 
$
14,813

 
$
—

 
$
—

 
$
14,813

 
$
7,476

 
$
—

 
$
—

 
$
7,476

Investments Classified by Contractual Maturity Date [Table Text Block] 
The table below shows the cost and fair value of investments classified as available-for-sale and held-to-maturity based on their contractual maturities as of September 30, 2011 and December 31, 2010. The expected maturities of certain fixed-income securities may differ from their contractual maturities because some of these holdings have call features that allow the issuers the right to prepay obligations without penalties.
 
 
 
As of September 30, 2011
 
As of December 31, 2010
($000)
 
Cost

 
Fair Value

 
Cost

 
Fair Value

Available-for-sale:
 
 

 
 

 
 

 
 

Due in one year or less
 
$
177,348

 
$
177,124

 
$
85,990

 
$
85,964

Due in one to three years
 
45,663

 
45,473

 
73,440

 
73,482

Equity securities, exchange-traded funds, and mutual funds
 
17,591

 
16,393

 
12,656

 
13,626

Total
 
$
240,602

 
$
238,990

 
$
172,086

 
$
173,072

 
 
 
 
 
 
 
 
 
Held-to-maturity:
 
 

 
 

 
 

 
 

Due in one year or less
 
$
14,808

 
$
14,808

 
$
7,223

 
$
7,223

Due in one to three years
 
5

 
5

 
253

 
253

Total
 
$
14,813

 
$
14,813

 
$
7,476

 
$
7,476

Schedule of Realized Gain (Loss) [Table Text Block] 
The following table shows the realized gains and losses arising from sales of our investments classified as available-for-sale recorded in our Condensed Consolidated Statements of Income: 
 
 
Nine months ended September 30
($000)
 
2011

 
2010

Realized gains
 
$
270

 
$
17

Realized losses
 
—

 
(3
)
Realized gains, net
 
$
270

 
$
14

Unrealized Gain Loss On Trading Securities [Table Text Block] 
The following table shows the net unrealized loss on trading securities as recorded in our Condensed Consolidated Statements of Income:
 
 
 
Nine months ended September 30
($000)
 
2011

 
2010

Unrealized loss, net
 
$
810

 
$
75

Fair Value, Assets Measured on Recurring Basis [Table Text Block] 
The fair value of our assets subject to fair value measurements and the necessary disclosures are as follows:
 
 
 
Fair Value
 
Fair Value Measurements as of September 30, 2011
 
 
as of
 
Using Fair Value Hierarchy
($000)
 
September 30, 2011
 
Level 1

 
Level 2

 
Level 3

Available-for-sale investments
 
 

 
 

 
 

 
 

Government obligations
 
$
122,859

 
$
—

 
$
122,859

 
$
—

Corporate bonds
 
64,813

 
—

 
64,813

 
—

Commercial paper
 
34,925

 
—

 
34,925

 
—

Equity securities and exchange-traded funds
 
7,417

 
7,417

 
—

 
—

Mutual funds
 
8,976

 
8,976

 
—

 
—

Trading securities
 
4,946

 
4,946

 
—

 
—

Total
 
$
243,936

 
$
21,339

 
$
222,597

 
$
—

 
 
 
Fair Value
 
Fair Value Measurements as of December 31, 2010
 
 
as of
 
Using Fair Value Hierarchy
($000)
 
December 31, 2010
 
Level 1

 
Level 2

 
Level 3

Available-for-sale investments
 
 

 
 

 
 

 
 

Government obligations
 
$
113,577

 
$
—

 
$
113,577

 
$
—

Corporate bonds
 
42,878

 
—

 
42,878

 
—

Commercial paper
 
2,991

 
—

 
2,991

 
—

Equity securities and exchange-traded funds
 
4,922

 
4,922

 
—

 
—

Mutual funds
 
8,704

 
8,704

 
—

 
—

Trading securities
 
4,692

 
4,692

 
—

 
—

Total
 
$
177,764

 
$
18,318

 
$
159,446

 
$
—

Investments in Unconsolidated Entities (Tables)
Schedule of Equity Method And Cost Method Investments [Table Text Block] 
Our investments in unconsolidated entities consist primarily of the following:
 
 
 
As of September 30


As of December 31

($000)
 
2011


2010

Investment in MJKK
 
$
19,311

 
$
19,036

Other equity method investments
 
269

 
109

Investments accounted for using the cost method
 
5,181

 
5,117

Total investments in unconsolidated entities
 
$
24,761

 
$
24,262

Schedule of Equity Method Investments [Table Text Block] 
The following table summarizes our ownership percentage in MJKK and the market value of this investment based on MJKK’s publicly quoted share price: 
 
 
As of September 30

 
As of December 31

 
 
2011

 
2010

Morningstar’s approximate ownership of MJKK
 
33
%
 
34
%
 
 
 
 
 
Approximate market value of Morningstar’s ownership in MJKK:
 
 

 
 

Japanese yen (¥000)
 
¥
2,507,844

 
¥
3,197,000

Equivalent U.S. dollars ($000)
 
$
32,727

 
$
38,361

Liability for Vacant Office Space (Tables)
Liability for Vacant Office Space [Table Text Block]
The following table shows the change in our liability for vacant office space from December 31, 2010 to September 30, 2011:

Liability for vacant office space
 
($000)

Balance as of December 31, 2010
 
$
2,429

Reduction of liability for lease and other related payments
 
(1,182
)
Balance as of September 30, 2011
 
$
1,247

Stock-Based Compensation (Tables)
Share Based Compensation, Shares Available for Future Grants 
The following table summarizes the number of shares available for future grants under our 2011 Plan:
 
 
 
As of September 30

(000)
 
2011

Shares available for future grants
 
5,004

Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan [Table Text Block] 
The following table summarizes our stock-based compensation expense and the related income tax benefit we recorded in the three and nine months ended September 30, 2011 and September 30, 2010:
 
 
 
Three months ended September 30
 
Nine months ended September 30
($000)
 
2011

 
2010

 
2011

 
2010

Restricted stock units
 
$
3,372

 
$
3,277

 
$
9,489

 
$
9,557

Restricted stock
 
444

 
468

 
1,752

 
780

Stock options
 
135

 
—

 
202

 
—

Total stock-based compensation expense
 
$
3,951

 
$
3,745

 
$
11,443

 
$
10,337

 
 
 
 
 
 
 
 
 
Income tax benefit related to the stock-based compensation expense
 
$
967

 
$
973

 
$
2,636

 
$
2,874

Schedule of Unrecognized Compensation Cost, Nonvested Awards [Table Text Block] 
The following table summarizes the amount of unrecognized stock-based compensation expense as of September 30, 2011 and the expected number of months over which the expense will be recognized:
 
 
Unrecognized stock-based compensation expense ($000)

 
Expected amortization period (months)

Restricted stock units
 
$
30,520

 
34

Restricted stock
 
6,363

 
43

Stock options
 
1,843

 
42

Total unrecognized stock-based compensation expense
 
$
38,726

 
36

Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block] 
The following table summarizes restricted stock unit activity during the first nine months of 2011:
Restricted Stock Units (RSUs)
 
Unvested

 
Vested but
Deferred

 
Total

 
Weighted
Average
Grant Date Value
per RSU

RSUs outstanding—December 31, 2010
 
777,666

 
45,189

 
822,855

 
$
47.14

Granted
 
271,821

 
—

 
271,821

 
57.14

Dividend equivalents
 
1,988

 
52

 
2,040

 
48.06

Vested
 
(236,328
)
 
—

 
(236,328
)
 
48.64

Vested but deferred
 
(1,691
)
 
1,691

 
—

 
—

Issued
 
—

 
(26,866
)
 
(26,866
)
 
46.69

Forfeited
 
(68,180
)
 
—

 
(68,180
)
 
47.61

RSUs outstanding—September 30, 2011
 
745,276

 
20,066

 
765,342

 
50.23

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] 
In May 2011, we granted 86,106 stock options under the 2004 Stock Incentive Plan. We estimated the fair value of the options on the date of grant using a Black-Scholes option-pricing model. The fair value of these options using this model was $23.75 per share, based on the following assumptions:

Assumptions for Black-Scholes Option Pricing Model
 
 
Expected life (years):
 
7.4

Volatility factor:
 
35.1
%
Dividend yield:
 
0.35
%
Interest rate:
 
2.87
%
Expected exercise price:
 
$57.28
Schedule of Share Based Compensation Options Granted At Exercise Price Below Fair Value Per Share On Grant Date [Table Text Block] 
The first table includes activity for options granted at an exercise price below the fair value per share of our common stock on the grant date; the second table includes activity for all other option grants. 
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, 2010
 
648,885

 
$
18.91

Granted
 
—

 
—

Canceled
 
—

 
—

Exercised
 
(188,775
)
 
19.13

Options outstanding—September 30, 2011
 
460,110

 
19.52

 
 
 
 
 
Options exercisable—September 30, 2011
 
460,110

 
$
19.52

Schedule of Share Based Compensation All Other Option Granted [Table Text Block] 
All Other Option Grants, Excluding Activity Shown Above
 
Underlying
Shares

 
Weighted
Average
Exercise
Price

Options outstanding—December 31, 2010
 
1,207,540

 
$
18.91

Granted
 
86,106

 
57.28

Canceled
 
(1,910
)
 
15.56

Exercised
 
(415,959
)
 
15.37

Options outstanding—September 30, 2011
 
875,777

 
22.28

 
 
 
 
 
Options exercisable—September 30, 2011
 
789,671

 
$
18.47

Share Based Compensation, Intrinsic Value of Stock Options Exercised During Period [Table Text Block] 
The following table summarizes the total intrinsic value (difference between the market value of our stock on the date of exercise and the exercise price of the option) of options exercised:
 
 
 
Nine months ended September 30
($000)
 
2011

 
2010

Intrinsic value of options exercised
 
$
25,061

 
$
17,094

Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding and Exercisable [Table Text Block] 
The table below shows additional information for options outstanding and exercisable as of September 30, 2011:
 
 
 
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
 
371,323

 
1.15

 
$
9.59

 
$
17,396

 
371,323

 
1.15

 
$
9.59

 
$
17,396

$19.47 - $44.35
 
878,458

 
3.23

 
22.77

 
29,578

 
878,458

 
3.23

 
22.77

 
29,578

$57.28
 
86,106

 
9.76

 
57.28

 
—

 
—

 
—

 
—

 
—


 


 


 


 


 


 


 


 


$8.57 - $57.28
 
1,335,887

 
3.07

 
21.33

 
$
46,974

 
1,249,781

 
2.61

 
18.86

 
$
46,974

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vested or Expected to Vest
 
 
 
 
 
 
 
 
 
 
 
 
 
$8.57 - $57.28
 
1,335,887

 
3.07

 
$
21.33

 
$
46,974

 
 
 
 
 
 
 
 
Tax Benefits Related To Share Based Compensation [Table Text Block] 
The following table summarizes our excess tax benefits for the three and nine months ended September 30, 2011 and September 30, 2010:
 
 
Three months ended September 30
 
Nine months ended September 30
($000)
 
2011

 
2010

 
2011

 
2010

Excess tax benefits related to stock-based compensation
 
$
1,450

 
$
680

 
$
7,621

 
$
4,885

Income Taxes (Tables)
Schedule of Effective Income Tax Rate Reconciliation [Table Text Block] 
The following table shows our effective income tax rate for the three and nine months ended September 30, 2011 and September 30, 2010:
 
 
 
Three months ended September 30
 
Nine months ended September 30
($000)
 
2011

 
2010

 
2011

 
2010

Income before income taxes and equity in net income of unconsolidated entities
 
$
33,285

 
$
36,367

 
$
104,484

 
$
94,818

Equity in net income of unconsolidated entities
 
428

 
333

 
1,397

 
1,176

Net (income) loss attributable to the noncontrolling interest
 
10

 
(106
)
 
106

 
10

Total
 
$
33,723

 
$
36,594

 
$
105,987

 
$
96,004

Income tax expense
 
$
12,343

 
$
11,917

 
$
35,585

 
$
33,137

Effective tax rate
 
36.6
%
 
32.6
%
 
33.6
%
 
34.5
%
Schedule of Gross Unrecognized Tax Benefits [Table Text Block] 
The table below provides information concerning our gross unrecognized tax benefits as of September 30, 2011 and December 31, 2010. The table also provides the effect these gross unrecognized tax benefits would have on our income tax expense, if they were recognized.


 
 
As of September 30
 
As of December 31
($000)
 
2011

 
2010

Gross unrecognized tax benefits
 
$
11,781

 
$
9,089

 
 
 
 
 
Gross unrecognized tax benefits which would affect income tax expense
 
$
11,431

 
$
8,482

 
 
 
 
 
Decrease in income tax expense upon recognition of gross unrecognized tax benefits
 
$
(9,680
)
 
$
(6,895
)
Schedule of Liabilities for Unrecognized Tax Benefits [Table Text Block] 
Our Condensed Consolidated Balance Sheets include the following liabilities for unrecognized tax benefits. These amounts include interest and penalties, less any associated tax benefits.
 
 
As of September 30
 
As of December 31
Liabilities for Unrecognized Tax Benefits ($000)
 
2011

 
2010

Current liability
 
$
1,985

 
$
654

Non-current liability
 
9,533

 
8,173

Total liability for unrecognized tax benefits
 
$
11,518

 
$
8,827

Acquisitions, Goodwill, and Other Intangible Assets - Acquisitions by Acquiree (Details) (USD $)
In Millions, except Share data
9 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
Footnoted business of Financial Fineprint Inc. [Member]
2011
Aegis Equities Research [Member]
Mar. 31, 2010
Aegis Equities Research [Member]
9 Months Ended
Sep. 30, 2011
Old Broad Street Research Ltd. [Member]
Apr. 12, 2010
Old Broad Street Research Ltd. [Member]
9 Months Ended
Sep. 30, 2011
Realpoint, LLC [Member]
May 3, 2010
Realpoint, LLC [Member]
9 Months Ended
Sep. 30, 2011
Morningstar Denmark [Member]
Sep. 30, 2010
Morningstar Denmark [Member]
2011
Seeds Group [Member]
2011
Annuity Intelligence Business of Advanced Sales and Marketing Corporation [Member]
Nov. 1, 2010
Annuity Intelligence Business of Advanced Sales and Marketing Corporation [Member]
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Business Acquisition, Name of Acquired Entity
Footnoted business of Financial Fineprint Inc. 
Aegis Equities Research 
 
Old Broad Street Research Ltd. 
 
Realpoint, LLC 
 
Morningstar Danmark A/S (Morningstar Denmark) 
 
Seeds Group 
Annuity Intelligence business of Advanced Sales and Marketing Corporation 
 
Business Acquisition, Description of Acquired Entity
Footnoted is a highly regarded blog for professional money managers, analysts, and sophisticated individual investors. Footnoted Pro, a service for institutional investors, provides insight on actionable items and trends in SEC filings. 
A leading provider of independent equity research in Sydney, Australia. 
 
A premier provider of fund research, ratings, and investment consulting services in the United Kingdom. 
 
A Nationally Recognized Statistical Rating Organization (NRSRO) that specializes in structured finance. 
 
Acquisition of the 75% ownership interest not previously owned by Morningstar, bringing our ownership to 100%. 
 
A leading provider of investment consulting services and fund research in France. 
The Annuity Intelligence business provides a web-based service that leverages a proprietary database of more than 1,000 variable annuities that includes "plain-English" translations of complex but important information found in prospectuses and other public filings. 
 
Business Acquisition, Effective Date of Acquisition
February 1, 2010 
April 1, 2010 
 
April 12, 2010 
 
May 3, 2010 
 
July 1, 2010 
 
July 1, 2010 
November 1, 2010 
 
Business Acquisition, Cost of Acquired Entity, Purchase Price
 
 
$ 10.3 1
 
$ 16.8 1
 
 
 
$ 14.6 1
 
 
$ 14.1 1
Business Acquisition, Cost of Acquired Entity, Cash Paid
 
 
 
 
 
 
38.4 1
 
 
 
 
 
Business Acquisition, Cost of Acquired Entity, Shares of Restricted Stock
 
 
 
 
 
 
199,174 1
 
 
 
 
 
Business Acquisition, Cost of Acquired Entity, Equity Interests Issued and Issuable
 
 
 
 
 
 
$ 10 1
 
 
 
 
 
Acquisitions, Goodwill, and Other Intangible Assets - Schedule of Goodwill (Details) (USD $)
3 Months Ended
Sep. 30,
2011
2010
9 Months Ended
Sep. 30, 2011
Goodwill [Roll Forward]
 
 
 
Goodwill, Beginning Balance
 
 
$ 317,661,000 
Goodwill, Allocation Adjustment
 
 
1,387,000 
Goodwill, Translation Adjustments
 
 
319,000 
Goodwill, Ending Balance
319,367,000 
 
319,367,000 
Goodwill, Impairment Loss
$ 0 
$ 0 
 
Acquisitions, Goodwill, and Other Intangible Assets - Schedule of Intangible Assets (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2011
12 Months Ended
Dec. 31, 2010
Finite-Lived Intangible Assets [Line Items]
 
 
Gross
$ 249,565 
$ 251,714 
Accumulated Amortization
(102,254)
(82,691)
Intangible assets, net
147,311 
169,023 
Weighted-Average Useful Life (Years)
10 
10 
Intellectual Property [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross
31,979 
33,990 
Accumulated Amortization
(18,529)
(15,970)
Intangible assets, net
13,450 
18,020 
Weighted-Average Useful Life (Years)
9 
10 
Customer Relationships [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross
135,025 
130,675 
Accumulated Amortization
(49,548)
(39,951)
Intangible assets, net
85,477 
90,724 
Weighted-Average Useful Life (Years)
12 
11 
Supplier Relationships [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross
240 
240 
Accumulated Amortization
(81)
(72)
Intangible assets, net
159 
168 
Weighted-Average Useful Life (Years)
20 
20 
Technology Based Assets [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross
80,597 
78,651 
Accumulated Amortization
(32,916)
(25,682)
Intangible assets, net
47,681 
52,969 
Weighted-Average Useful Life (Years)
9 
9 
Noncompete Agreements [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross
1,724 
1,751 
Accumulated Amortization
(1,180)
(909)
Intangible assets, net
544 
842 
Weighted-Average Useful Life (Years)
4 
4 
Intangible Assets Related To Acquisitions With Preliminary Purchase Price Allocations [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross
0 
6,407 
Accumulated Amortization
0 
(107)
Intangible assets, net
$ 0 
$ 6,300 
Weighted-Average Useful Life (Years)
0 
10 
Acquisitions, Goodwill, and Other Intangible Assets - Amortization Expense (Details) (USD $)
In Thousands
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
 
 
Finite-Lived Intangible Assets, Amortization Expense
$ 6,894 
$ 6,219 
$ 20,039 
$ 17,535 
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]
 
 
 
 
Future Amortization Expense, Current Fiscal Year
26,287 
 
 
 
Future Amortization Expense, Year One
23,874 
 
 
 
Future Amortization Expense, Year Two
21,217 
 
 
 
Future Amortization Expense, Year Three
19,989 
 
 
 
Future Amortization Expense, Year Four
19,118 
 
 
 
Future Amortization Expense, Year Five
$ 14,527 
 
 
 
Income Per Share (Details) (USD $)
In Thousands, except Per Share data
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Earnings Per Share, Basic [Abstract]
 
 
 
 
Net income attributable to Morningstar, Inc.
$ 21,380 
$ 24,677 
$ 70,402 
$ 62,867 
Less: Distributed earnings availabline to participating securities
(8)
(10)
(25)
(10)
Less: Undistributed earnings allocated to participating securities
(57)
(89)
(189)
(242)
Numerator for basic net income per share - undistributed and distributed earnings available to common shareholders
21,315 
24,578 
70,188 
62,615 
Weighted average common shares outstanding
50,278 
49,401 
50,082 
49,157 
Basic net income per share attributable to Morningstar, Inc.
$ 0.42 
$ 0.50 
$ 1.40 
$ 1.27 
Earnings Per Share, Diluted [Abstract]
 
 
 
 
Numerator for basic net income per share - undistributed and distributed earnings available to common shareholders
21,315 
24,578 
70,188 
62,615 
Add: Undistributed earnings allocated to participating securities
57 
89 
189 
242 
Less: Undistributed earnings reallocated to participating securities
(56)
(87)
(186)
(236)
Numerator for diluted net income per share - undistributed and distributed earnings available to common shareholders
$ 21,316 
$ 24,580 
$ 70,191 
$ 62,621 
Weighted average common shares outstanding
50,278 
49,401 
50,082 
49,157 
Net effect of dilutive stock options and restricted stock units
845 
1,143 
989 
1,296 
Weighted average common shares outstanding for computing diluted income per share
51,123 
50,544 
51,071 
50,453 
Diluted net income per share attributable to Morningstar, Inc.
$ 0.42 
$ 0.49 
$ 1.37 
$ 1.24 
Segment and Geographical Area Information (Details) (USD $)
In Thousands
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Dec. 31, 2010
Segment Reporting Information, Operating Income (Loss) [Abstract]
 
 
 
 
 
External revenue
$ 160,051 
$ 139,817 
$ 472,829 
$ 404,198 
 
Operating expense excluding stock based compensation expense depreciation and amortization
111,289 
96,014 
325,394 
277,009 
 
Stock-based compensation expense
3,951 
3,745 
11,443 
10,337 
 
Depreciation and amortization
10,947 
9,897 
31,712 
28,082 
 
Operating income
33,864 
30,161 
104,280 
88,770 
 
Segment Reporting Information, Additional Information [Abstract]
 
 
 
 
 
Goodwill
319,367 
 
319,367 
 
317,661 
Long-lived Assets
63,703 
 
63,703 
 
62,105 
United States [Member]
 
 
 
 
 
Segment Reporting Information, Operating Income (Loss) [Abstract]
 
 
 
 
 
External revenue
112,790 
99,933 
334,395 
291,529 
 
Segment Reporting Information, Additional Information [Abstract]
 
 
 
 
 
Capital Expenditure
4,560 
1,975 
8,084 
3,607 
 
Long-lived Assets
41,066 
 
41,066 
 
39,496 
Non United States [Member]
 
 
 
 
 
Segment Reporting Information, Operating Income (Loss) [Abstract]
 
 
 
 
 
External revenue
47,261 
39,884 
138,434 
112,669 
 
Segment Reporting Information, Additional Information [Abstract]
 
 
 
 
 
Capital Expenditure
1,711 
1,887 
6,605 
4,094 
 
Long-lived Assets
22,637 
 
22,637 
 
22,609 
Investment Information [Member]
 
 
 
 
 
Segment Reporting Information, Operating Income (Loss) [Abstract]
 
 
 
 
 
External revenue
125,804 
112,055 
374,319 
324,600 
 
Operating expense excluding stock based compensation expense depreciation and amortization
89,652 
75,129 
259,899 
217,559 
 
Stock-based compensation expense
2,609 
2,326 
7,567 
5,926 
 
Depreciation and amortization
2,117 
1,789 
6,023 
5,016 
 
Operating income
31,426 
32,811 
100,830 
96,099 
 
Segment Reporting Information, Additional Information [Abstract]
 
 
 
 
 
Goodwill
277,246 
 
277,246 
 
275,611 
Investment Management [Member]
 
 
 
 
 
Segment Reporting Information, Operating Income (Loss) [Abstract]
 
 
 
 
 
External revenue
34,247 
27,762 
98,510 
79,598 
 
Operating expense excluding stock based compensation expense depreciation and amortization
15,587 
13,670 
43,258 
36,768 
 
Stock-based compensation expense
556 
525 
1,529 
1,557 
 
Depreciation and amortization
42 
44 
124 
136 
 
Operating income
18,062 
13,523 
53,599 
41,137 
 
Segment Reporting Information, Additional Information [Abstract]
 
 
 
 
 
Goodwill
42,121 
 
42,121 
 
42,050 
Corporate Elimination [Member]
 
 
 
 
 
Segment Reporting Information, Operating Income (Loss) [Abstract]
 
 
 
 
 
External revenue
0 
0 
0 
0 
 
Operating expense excluding stock based compensation expense depreciation and amortization
6,050 
7,215 
22,237 
22,682 
 
Stock-based compensation expense
786 
894 
2,347 
2,854 
 
Depreciation and amortization
8,788 
8,064 
25,565 
22,930 
 
Operating income
(15,624)
(16,173)
(50,149)
(48,466)
 
Segment Reporting Information, Additional Information [Abstract]
 
 
 
 
 
Goodwill
$ 0 
 
$ 0 
 
$ 0 
Investments and Fair Value Measurements - Classification of Securities (Details) (USD $)
In Thousands
Sep. 30, 2011
Dec. 31, 2010
Fair Value Disclosures [Abstract]
 
 
Available-for-sale securities
$ 238,990 
$ 173,072 
Held-to-maturity securities
14,813 
7,476 
Trading securities
4,946 
4,692 
Total investments
$ 258,749 
$ 185,240 
Investments and Fair Value Measurements - Gains (Losses) on Investments (Details) (USD $)
In Thousands
9 Months Ended
Sep. 30,
2011
2010
Dec. 31, 2010
Available-for-sale Securities, Gross Unrealized Gain (Loss) [Abstract]
 
 
 
Available-for-sale securities, amortized cost basis
$ 240,602 
 
$ 172,086 
Available-for-sale securities, unrealized gain
331 
 
1,075 
Available-for-sale securities, unrealized loss
1,943 
 
89 
Available-for-sale Securities, Current
238,990 
 
173,072 
Held-to-maturity Securities, Gross Unrealized Gain (Loss) [Abstract]
 
 
 
Held-to-maturity securities, total amortized cost
14,813 
 
7,476 
Held-to-maturity securities, unrecognized gain
0 
 
0 
Held-to-maturity securities, unrecognized loss
0 
 
0 
Held-to-maturity Securities, Current
14,813 
 
7,476 
Available-for-sale Securities, Gross Realized Gain (Loss) [Abstract]
 
 
 
Available-for-sale securities, realized gains
270 
17 
 
Available-for-sale securities, realized losses
0 
(3)
 
Available-for-sale securities, realized gains, net
270 
14 
 
Equity Securities [Member]
 
 
 
Available-for-sale Securities, Gross Unrealized Gain (Loss) [Abstract]
 
 
 
Available-for-sale securities, amortized cost basis
8,411 
 
4,510 
Available-for-sale securities, unrealized gain
203 
 
418 
Available-for-sale securities, unrealized loss
(1,197)
 
(6)
Available-for-sale securities, fair value disclosure
7,417 
 
4,922 
US Treasury and Government [Member]
 
 
 
Available-for-sale Securities, Gross Unrealized Gain (Loss) [Abstract]
 
 
 
Available-for-sale securities, amortized cost basis
122,991 
 
113,597 
Available-for-sale securities, unrealized gain
54 
 
36 
Available-for-sale securities, unrealized loss
(186)
 
(56)
Available-for-sale securities, fair value disclosure
122,859 
 
113,577 
Bonds [Member]
 
 
 
Available-for-sale Securities, Gross Unrealized Gain (Loss) [Abstract]
 
 
 
Available-for-sale securities, amortized cost basis
65,079 
 
42,839 
Available-for-sale securities, unrealized gain
27 
 
63 
Available-for-sale securities, unrealized loss
(293)
 
(24)
Available-for-sale securities, fair value disclosure
64,813 
 
42,878 
Commercial Paper [Member]
 
 
 
Available-for-sale Securities, Gross Unrealized Gain (Loss) [Abstract]
 
 
 
Available-for-sale securities, amortized cost basis
34,941 
 
2,994 
Available-for-sale securities, unrealized gain
2 
 
0 
Available-for-sale securities, unrealized loss
(18)
 
(3)
Available-for-sale securities, fair value disclosure
34,925 
 
2,991 
Equity Funds [Member]
 
 
 
Available-for-sale Securities, Gross Unrealized Gain (Loss) [Abstract]
 
 
 
Available-for-sale securities, amortized cost basis
9,180 
 
8,146 
Available-for-sale securities, unrealized gain
45 
 
558 
Available-for-sale securities, unrealized loss
(249)
 
0 
Available-for-sale securities, fair value disclosure
$ 8,976 
 
$ 8,704 
Investments and Fair Value Measurements - Cost and Fair Value of Securities (Details) (USD $)
Sep. 30, 2011
Dec. 31, 2010
Available-for-sale Securities, Debt Maturities [Abstract]
 
 
Available-for-sale securities, due in one year or less, amortized cost basis
$ 177,348,000 
$ 85,990,000 
Available-for-sale securities, due in one year or less, fair vlaue
177,124,000 
85,964,000 
Available-for-sale securities, due in one to three years, amortized cost basis
45,663,000 
73,440,000 
Available-for-sale securities, due in one to three years, fair value
45,473,000 
73,482,000 
Available-for-sale securities, equity securities and mutual funds, amortized cost basis
17,591,000 
12,656,000 
Available-for-sale securities, equity securities and mutual funds, fair value
16,393,000 
13,626,000 
Available-for-sale securities, amortized cost basis
240,602,000 
172,086,000 
Available-for-sale Securities, Current
238,990,000 
173,072,000 
Held-to-maturity Securities, Debt Maturities [Abstract]
 
 
Held-to-maturity securities, due in one year, net carrying amount
14,808,000 
7,223,000 
Held-to-maturity securities, due within one year, fair value
14,808,000 
7,223,000 
Held-to-maturity securities, due in one to three years, net carrying amount
5,000 
253,000 
Held-to-maturity securities, due in one to three years, fair value
5,000 
253,000 
Held-to-maturity securities, total amortized cost
14,813,000 
7,476,000 
Held-to-maturity Securities, Current
14,813,000 
7,476,000 
Certificate of Deposit Held as Collateral Against Australia Office Lease
$ 1,600,000 
 
Investments and Fair Value Measurements - Unrealized Gains on Trading Securities (Details) (USD $)
In Thousands
3 Months Ended
Sep. 30, 2011
9 Months Ended
Sep. 30, 2010
Schedule of Trading Securities and Other Trading Assets [Line Items]
 
 
Unrealized loss, net
$ 810 
$ 75 
Investments and Fair Value Measurements - Fair Value of Assets (Details) (Fair Value, Measurements, Recurring [Member], USD $)
In Thousands
Dec. 31, 2010
Sep. 30, 2010
Estimate of Fair Value, Fair Value Disclosure [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Trading securities, fair value disclosure
$ 4,692 
$ 4,946 
Investments, fair value disclosure
177,764 
243,936 
Estimate of Fair Value, Fair Value Disclosure [Member] |
US Treasury and Government [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
113,577 
122,859 
Estimate of Fair Value, Fair Value Disclosure [Member] |
Bonds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
42,878 
64,813 
Estimate of Fair Value, Fair Value Disclosure [Member] |
Commercial Paper [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
2,991 
34,925 
Estimate of Fair Value, Fair Value Disclosure [Member] |
Equity Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
4,922 
7,417 
Estimate of Fair Value, Fair Value Disclosure [Member] |
Equity Funds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
8,704 
8,976 
Fair Value, Inputs, Level 1 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Trading securities, fair value disclosure
4,692 
4,946 
Investments, fair value disclosure
18,318 
21,339 
Fair Value, Inputs, Level 1 [Member] |
US Treasury and Government [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
0 
0 
Fair Value, Inputs, Level 1 [Member] |
Bonds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
0 
0 
Fair Value, Inputs, Level 1 [Member] |
Commercial Paper [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
0 
0 
Fair Value, Inputs, Level 1 [Member] |
Equity Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
4,922 
7,417 
Fair Value, Inputs, Level 1 [Member] |
Equity Funds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
8,704 
8,976 
Fair Value, Inputs, Level 2 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Trading securities, fair value disclosure
0 
0 
Investments, fair value disclosure
159,446 
222,597 
Fair Value, Inputs, Level 2 [Member] |
US Treasury and Government [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
113,577 
122,859 
Fair Value, Inputs, Level 2 [Member] |
Bonds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
42,878 
64,813 
Fair Value, Inputs, Level 2 [Member] |
Commercial Paper [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
2,991 
34,925 
Fair Value, Inputs, Level 2 [Member] |
Equity Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
0 
0 
Fair Value, Inputs, Level 2 [Member] |
Equity Funds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
0 
0 
Fair Value, Inputs, Level 3 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Trading securities, fair value disclosure
0 
0 
Investments, fair value disclosure
0 
0 
Fair Value, Inputs, Level 3 [Member] |
US Treasury and Government [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
0 
0 
Fair Value, Inputs, Level 3 [Member] |
Bonds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
0 
0 
Fair Value, Inputs, Level 3 [Member] |
Commercial Paper [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
0 
0 
Fair Value, Inputs, Level 3 [Member] |
Equity Securities [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
0 
0 
Fair Value, Inputs, Level 3 [Member] |
Equity Funds [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
$ 0 
$ 0 
Investments in Unconsolidated Entities (Details)
9 Months Ended
Sep. 30,
2011
USD ($)
2010
USD ($)
Dec. 31, 2010
USD ($)
Sep. 30, 2011
Morningstar Sweden AB [Member]
Dec. 31, 2010
Morningstar Sweden AB [Member]
Sep. 30, 2011
Morningstar Japan KK [Member]
USD ($)
Sep. 30, 2011
Morningstar Japan KK [Member]
JPY (¥)
Dec. 31, 2010
Morningstar Japan KK [Member]
USD ($)
Dec. 31, 2010
Morningstar Japan KK [Member]
JPY (¥)
Sep. 30, 2011
Other Equity Method Investments [Member]
USD ($)
Dec. 31, 2010
Other Equity Method Investments [Member]
USD ($)
Schedule of Equity Method Investments [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Equity method investments
 
 
 
 
 
$ 19,311,000 
 
$ 19,036,000 
 
$ 269,000 
$ 109,000 
Cost method investments
5,181,000 
 
5,117,000 
 
 
 
 
 
 
 
 
Total investments in unconsolidated entities
24,761,000 
 
24,262,000 
 
 
 
 
 
 
 
 
Equity method investment, ownership percentage
 
 
 
24.00% 
24.00% 
33.00% 
33.00% 
34.00% 
34.00% 
 
 
Equity method investment, approximate market value
 
 
 
 
 
32,727,000 
2,507,844,000 
38,361,000 
3,197,000,000 
 
 
Cost-method investments, other than temporary impairment
$ 0 
$ 0 
 
 
 
 
 
 
 
 
 
Liability for Vacant Office Space (Details) (USD $)
In Thousands
9 Months Ended
Sep. 30, 2011
Liability for Vacant Office Space [Roll Forward]
 
Vacant office space liability, beginning balance
$ 2,429 
Reduction of liability for lease payments
(1,182)
Vacant office space liability, ending balance
$ 1,247 
Shares Available For Future Grants (Details)
In Thousands
Sep. 30, 2011
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
Number of Shares Available for Future Grants
5,004 
Allocation of Stock-Based Compensation Costs by Plan (Details) (USD $)
In Thousands
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost
$ 3,951 
$ 3,745 
$ 11,443 
$ 10,337 
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense
967 
973 
2,636 
2,874 
Restricted Stock Units (RSUs) [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost
3,372 
3,277 
9,489 
9,557 
Restricted Stock [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost
444 
468 
1,752 
780 
Stock Options [Member]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost
$ 135 
$ 0 
$ 202 
$ 0 
Schedule of Unrecognized Stock-based Compensation Expense (Details) (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized
$ 38,726 
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition (in months)
36 
Restricted Stock Units (RSUs) [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized
30,520 
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition (in months)
34 
Restricted Stock [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized
6,363 
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition (in months)
43 
Stock Options [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized
$ 1,843 
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition (in months)
42 
Restricted Stock Units Activity (Details) (Restricted Stock Units (RSUs) [Member], USD $)
9 Months Ended
Sep. 30, 2011
Dec. 31, 2010
Restricted Stock Units (RSUs) [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number
745,276 
777,666 
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Vested But Deferred Number
20,066 
45,189 
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Total Number
765,342 
822,855 
Share Based Compensation Arrangement by Share Based Payment Award Equity Instruments Other than Options Outstanding Weighted Average Grant Date Fair Value
$ 50.23 
$ 47.14 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period
271,821 
 
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Total Grants In Period
271,821 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value
$ 57.14 
 
Share Based Compensation Arrangements By Share-based Award Equity Instruments Other than Options Dividend Equivalents Unvested
1,988 
 
Share Based Compensation Arrangements By Share-based Award Equity Instruments Other than Options Dividend Equivalents Vested But Deferred
52 
 
Share Based Compensation Arrangements By Share-based Award Equity Instruments Other than Options Dividend Equivalents Total Number
2,040 
 
Share Based Compensation Arrangements By Share-based Award Equity Instruments Other than Options Dividend Equivalents, Weighted Average Grant Date Fair Value
$ 48.06 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period
(236,328)
 
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Total Vested In Period
(236,328)
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value
$ 48.64 
 
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Vested but Deferred Unvested
(1,691)
 
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Vested but Deferred
1,691 
 
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Vested but Deferred Total
0 
 
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Vested But Deferred Issued In Period
(26,866)
 
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Total Issued In Period
(26,866)
 
Share Based Compensation Arrangement by Share Based Payment Award Equity Instruments Other than Options Issued in Period Weighted Average Grant Date Fair Value
$ 46.69 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period
(68,180)
 
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Total Forfeited In Period
(68,180)
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period, Weighted Average Grant Date Fair Value
$ 47.61 
 
Assumptions for Black-Scholes Option Pricing Model (Details) (Stock Options [Member], USD $)
9 Months Ended
Sep. 30, 2011
Stock Options [Member]
 
Assumptions for Black-Scholes Option Pricing Model [Line Items]
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value
$ 23.75 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term (in years)
7.4 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate
35.10% 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate
0.35% 
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate
2.87% 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price
$ 57.28 
Stock Option Activity (Details) (USD $)
In Thousands, except Share data
9 Months Ended
Sep. 30,
2011
2010
Intrinsic Value of Options Exercised [Abstract]
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Total Intrinsic Value
$ 25,061 
$ 17,094 
Options Granted At Discount [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
 
 
Beginning Balance, Options, Outstanding, Number
648,885 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures
0 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period
0 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period
(188,775)
 
Ending Balance, Options, Outstanding, Number
460,110 
 
Options, Weighted Average Exercise Price [Abstract]
 
 
Options, Outstanding, Weighted Average Exercise Priced, Beginning of Period
$ 18.91 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value
$ 0 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price
$ 0 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price
$ 19.13 
 
Options, Outstanding, Weighted Average Exercise Price, End of Period
$ 19.52 
 
Options, Exercisable, Number of Shares and Weighted Average Exercise Price [Abstract]
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number
460,110 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price
$ 19.52 
 
Option Grants Excluding Options Granted At Discount [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
 
 
Beginning Balance, Options, Outstanding, Number
1,207,540 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures
86,106 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period
(1,910)
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period
(415,959)
 
Ending Balance, Options, Outstanding, Number
875,777 
 
Options, Weighted Average Exercise Price [Abstract]
 
 
Options, Outstanding, Weighted Average Exercise Priced, Beginning of Period
$ 18.91 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value
$ 57.28 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price
$ 15.56 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price
$ 15.37 
 
Options, Outstanding, Weighted Average Exercise Price, End of Period
$ 22.28 
 
Options, Exercisable, Number of Shares and Weighted Average Exercise Price [Abstract]
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number
789,671 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price
$ 18.47 
 
Additional Information on Options (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
9 Months Ended
Sep. 30, 2011
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Closing Stock Price Used to Calculate Intrinsic Value
$ 56.44 
Share Based Compensation Arrangement by Share Based Payment Award, Expiration Date
10 years 
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period
4 years 
Range One [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Share Based Compensation Arrangement By Share Based Payments Range Of Exercise Prices
$8.57 - $14.70 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit
$ 8.57 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit
$ 14.70 
Options, Outstanding, Number
371,323 
Options, Outstanding, Weighted Average Remaining Contractual Term (in years)
1.15 
Options, Outstanding, Weighted Average Exercise Price
$ 9.59 
Options, Outstanding, Intrinsic Value
$ 17,396 
Options, Exercisable, Number
371,323 
Options, Exercisable, Weighted Average Remaining Contractual Term (in years)
1.15 
Options, Exercisable, Weighted Average Exercise Price
$ 9.59 
Options, Exercisable, Intrinsic Value
17,396 
Range Two [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Share Based Compensation Arrangement By Share Based Payments Range Of Exercise Prices
$19.47 - $44.35 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit
$ 19.47 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit
$ 44.35 
Options, Outstanding, Number
878,458 
Options, Outstanding, Weighted Average Remaining Contractual Term (in years)
3.23 
Options, Outstanding, Weighted Average Exercise Price
$ 22.77 
Options, Outstanding, Intrinsic Value
29,578 
Options, Exercisable, Number
878,458 
Options, Exercisable, Weighted Average Remaining Contractual Term (in years)
3.23 
Options, Exercisable, Weighted Average Exercise Price
$ 22.77 
Options, Exercisable, Intrinsic Value
29,578 
Range Three [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Share Based Compensation Arrangement By Share Based Payments Range Of Exercise Prices
57.28 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit
$ 57.28 
Options, Outstanding, Number
86,106 
Options, Outstanding, Weighted Average Remaining Contractual Term (in years)
9.76 
Options, Outstanding, Weighted Average Exercise Price
$ 57.28 
Options, Outstanding, Intrinsic Value
0 
Options, Exercisable, Number
0 
Options, Exercisable, Weighted Average Remaining Contractual Term (in years)
0 
Options, Exercisable, Weighted Average Exercise Price
$ 0 
Options, Exercisable, Intrinsic Value
0 
Range Four [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Share Based Compensation Arrangement By Share Based Payments Range Of Exercise Prices
$8.57 - $57.28 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit
$ 8.57 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit
$ 57.28 
Options, Outstanding, Number
1,335,887 
Options, Outstanding, Weighted Average Remaining Contractual Term (in years)
3.07 
Options, Outstanding, Weighted Average Exercise Price
$ 21.33 
Options, Outstanding, Intrinsic Value
46,974 
Options, Exercisable, Number
1,249,781 
Options, Exercisable, Weighted Average Remaining Contractual Term (in years)
2.61 
Options, Exercisable, Weighted Average Exercise Price
$ 18.86 
Options, Exercisable, Intrinsic Value
46,974 
Vested or Expected to Vest [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Lower Range Limit
$ 8.57 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Upper Range Limit
$ 57.28 
Share Based Compensation, Arrangement By Share Based Payments, Vested or Expected to Vest, Range of Exercise Prices
$8.57 - $57.28 
Options, Vested and Expected to Vest, Outstanding, Number
1,335,887 
Options, Vested and Expected to Vest, Outstanding, Weighted Average Remaining Contractual Term (in years)
3.07 
Options, Vested and Expected to Vest, Outstanding, Weighted Average Exercise Price
$ 21.33 
Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value
$ 46,974 
Income Taxes (Details) (USD $)
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
Dec. 31, 2010
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation [Abstract]
 
 
 
 
 
Income before income taxes and equity in net income of unconsolidated entities
$ 33,285,000 
$ 36,367,000 
$ 104,484,000 
$ 94,818,000 
 
Equity in net income of unconsolidated entities
428,000 
333,000 
1,397,000 
1,176,000 
 
Net (income) loss attributable to the noncontrolling interest
10,000 
(106,000)
106,000 
10,000 
 
Income loss from continuing operations before income taxes domestic and foreign
33,723,000 
36,594,000 
105,987,000 
96,004,000 
 
Income tax expense
12,343,000 
11,917,000 
35,585,000 
33,137,000 
 
Effective income tax rate
36.60% 
32.60% 
33.60% 
34.50% 
 
Effective Income Tax Rate Reconciliation, Change in Percentage Points Compared with Prior Year Period
4.00% 
 
(0.90%)
 
 
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued [Abstract]
 
 
 
 
 
Unrecognized Tax Benefits, Period Increase (Decrease)
 
 
2,692,000 
 
 
Unrecognized tax benefits included in current liabilities
1,985,000 
 
1,985,000 
 
654,000 
Unrecognized tax benefits included in non-current liabilities
9,533,000 
 
9,533,000 
 
8,173,000 
Total Liability For Unrecognized Tax Benefits
$ 11,518,000 
 
$ 11,518,000 
 
$ 8,827,000 
Income Taxes - Income Tax Contingency (Details) (USD $)
In Thousands
Sep. 30, 2011
Dec. 31, 2010
Income Tax Contingency [Line Items]
 
 
Gross unrecognized tax benefits
$ 11,781 
$ 9,089 
Gross unrecognized tax benefits which would affect income tax expense
11,431 
8,482 
Decrease in income tax expense upon recognition of gross unrecognized tax benefits
$ (9,680)
$ (6,895)
Quarterly Dividend and Share Repurchase Programs (Details) (USD $)
3 Months Ended
Sep. 30,		 9 Months Ended
Sep. 30,
2011
2010
2011
2010
1 Months Ended
Sep. 30, 2011
Dividend Declared [Member]
9 Months Ended
Sep. 30, 2011
Dividend Declared [Member]
Dividends Payable, Date Declared, Day, Month and Year
 
 
Sep. 23, 2011 
 
 
 
Dividends payable, date to be paid
 
 
 
 
 
Oct. 31, 2011 
Dividends payable, date of record
 
 
 
 
 
Oct. 14, 2011 
Dividends payable
 
 
 
 
$ 2,505,000 
$ 2,505,000 
Common stock, dividends, per share, declared
$ 0.05 
$ 0 
$ 0.15 
$ 0 
$ 0.05 
 
Stock repurchase program, authorized amount
 
 
100,000,000 
 
 
 
Shares Repurchased, Program Life to Date, Shares
646,682 
 
646,682 
 
 
 
Shares Repurchased, Program Life to Date, Value
$ 35,873,000 
 
$ 35,873,000