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($000) | ||||
Cash and cash equivalents | $ | 3,472 | ||
Accounts receivable and other current assets | 519 | |||
Other non-current assets | 244 | |||
Intangible assets | 9,000 | |||
Goodwill | 9,940 | |||
Deferred revenue | (1,191 | ) | ||
Deferred tax liability | (2,118 | ) | ||
Other current and non-current liabilities | (1,083 | ) | ||
Total fair value of Morningstar Sweden | $ | 18,783 |
($000) | Weighted Average Useful Life (years) | |||||
Customer-related assets | $ | 9,000 | 14 | |||
Total intangible assets | $ | 9,000 | 14 |
($000) | |||
Balance as of December 31, 2012 | $ | 320,845 | |
Acquisition of remaining ownership in Morningstar Sweden | 9,940 | ||
Other, primarily foreign currency translation | (9,360 | ) | |
Balance as of June 30, 2013 | $ | 321,425 |
As of June 30, 2013 | As of December 31, 2012 | |||||||||||||||||||||||||||
($000) | Gross | Accumulated Amortization | Net | Weighted Average Useful Life (years) | Gross | Accumulated Amortization | Net | Weighted Average Useful Life (years) | ||||||||||||||||||||
Intellectual property | $ | 29,577 | $ | (22,012 | ) | $ | 7,565 | 9 | $ | 30,621 | $ | (21,527 | ) | $ | 9,094 | 9 | ||||||||||||
Customer-related assets | 138,673 | (67,508 | ) | 71,165 | 12 | 132,798 | (63,005 | ) | 69,793 | 12 | ||||||||||||||||||
Supplier relationships | 240 | (102 | ) | 138 | 20 | 240 | (96 | ) | 144 | 20 | ||||||||||||||||||
Technology-based assets | 79,720 | (46,618 | ) | 33,102 | 9 | 81,333 | (43,809 | ) | 37,524 | 9 | ||||||||||||||||||
Non-competition agreement | 1,680 | (1,577 | ) | 103 | 4 | 1,765 | (1,588 | ) | 177 | 4 | ||||||||||||||||||
Total intangible assets | $ | 249,890 | $ | (137,817 | ) | $ | 112,073 | 10 | $ | 246,757 | $ | (130,025 | ) | $ | 116,732 | 10 |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
($000) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Amortization expense | $ | 5,337 | $ | 5,976 | $ | 10,962 | $ | 12,031 |
($000) | ||||
2013 | $ | 21,155 | ||
2014 | 20,174 | |||
2015 | 19,367 | |||
2016 | 14,821 | |||
2017 | 10,362 | |||
2018 | 8,411 |
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• | Investment Information. The Investment Information segment includes all of our data, software, and research products and services. These products are typically sold through subscriptions or license agreements. |
• | Investment Management. The Investment Management segment includes all of our asset management operations, which earn the majority of their revenue from asset-based fees. |
Three months ended June 30, 2013 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
External revenue | $ | 141,426 | $ | 34,002 | $ | — | $ | 175,428 | ||||||||
Operating expense, excluding stock-based compensation expense, depreciation, and amortization | 91,751 | 16,856 | 8,021 | 116,628 | ||||||||||||
Stock-based compensation expense | 2,483 | 611 | 860 | 3,954 | ||||||||||||
Depreciation and amortization | 2,343 | 19 | 8,900 | 11,262 | ||||||||||||
Operating income (loss) | $ | 44,849 | $ | 16,516 | $ | (17,781 | ) | $ | 43,584 | |||||||
U.S. capital expenditures | $ | 8,241 | ||||||||||||||
Non-U.S. capital expenditures | $ | 1,522 | ||||||||||||||
Three months ended June 30, 2012 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
External revenue | $ | 134,749 | $ | 31,219 | $ | — | $ | 165,968 | ||||||||
Operating expense, excluding stock-based compensation expense, depreciation, and amortization | 86,915 | 17,179 | 6,385 | 110,479 | ||||||||||||
Stock-based compensation expense | 2,531 | 529 | 674 | 3,734 | ||||||||||||
Depreciation and amortization | 2,300 | 38 | 8,281 | 10,619 | ||||||||||||
Operating income (loss) | $ | 43,003 | $ | 13,473 | $ | (15,340 | ) | $ | 41,136 | |||||||
U.S. capital expenditures | $ | 6,818 | ||||||||||||||
Non-U.S. capital expenditures | $ | 2,110 | ||||||||||||||
Six months ended June 30, 2013 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
External revenue | $ | 277,613 | $ | 66,671 | $ | — | $ | 344,284 | ||||||||
Operating expense, excluding stock-based compensation expense, depreciation, and amortization | 181,620 | 32,475 | 15,707 | 229,802 | ||||||||||||
Stock-based compensation expense | 4,982 | 1,203 | 1,552 | 7,737 | ||||||||||||
Depreciation and amortization | 4,695 | 43 | 17,863 | 22,601 | ||||||||||||
Operating income (loss) | $ | 86,316 | $ | 32,950 | $ | (35,122 | ) | $ | 84,144 | |||||||
U.S. capital expenditures | $ | 16,250 | ||||||||||||||
Non-U.S. capital expenditures | $ | 2,631 | ||||||||||||||
Six months ended June 30, 2012 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
External revenue | $ | 261,674 | $ | 65,053 | $ | — | $ | 326,727 | ||||||||
Operating expense, excluding stock-based compensation expense, depreciation, and amortization | 180,353 | 33,132 | 13,313 | 226,798 | ||||||||||||
Stock-based compensation expense | 5,090 | 1,080 | 1,430 | 7,600 | ||||||||||||
Depreciation and amortization | 4,544 | 77 | 16,173 | 20,794 | ||||||||||||
Operating income (loss) | $ | 71,687 | $ | 30,764 | $ | (30,916 | ) | $ | 71,535 | |||||||
U.S. capital expenditures | $ | 14,215 | ||||||||||||||
Non-U.S. capital expenditures | $ | 3,707 | ||||||||||||||
As of June 30, 2013 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
Goodwill | $ | 280,252 | $ | 41,173 | $ | — | $ | 321,425 |
As of December 31, 2012 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
Goodwill | $ | 279,164 | $ | 41,681 | $ | — | $ | 320,845 |
External revenue by geographical area | ||||||||||||||||
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
($000) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
United States | $ | 126,335 | $ | 117,952 | $ | 247,748 | $ | 232,421 | ||||||||
United Kingdom | 14,015 | 14,714 | 27,168 | 28,450 | ||||||||||||
Europe, excluding the United Kingdom | 13,993 | 12,281 | 27,160 | 24,336 | ||||||||||||
Australia | 9,176 | 9,791 | 18,528 | 19,139 | ||||||||||||
Canada | 7,812 | 7,397 | 15,548 | 14,747 | ||||||||||||
Asia, excluding Japan | 2,661 | 2,366 | 5,256 | 4,735 | ||||||||||||
Japan | 788 | 986 | 1,617 | 1,965 | ||||||||||||
Other | 648 | 481 | 1,259 | 934 | ||||||||||||
Total Non-U.S. | 49,093 | 48,016 | 96,536 | 94,306 | ||||||||||||
Total | $ | 175,428 | $ | 165,968 | $ | 344,284 | $ | 326,727 |
Long-lived assets by geographical area | ||||||||
As of June 30 | As of December 31 | |||||||
($000) | 2013 | 2012 | ||||||
United States | $ | 74,154 | $ | 60,371 | ||||
United Kingdom | 6,318 | 7,435 | ||||||
Europe, excluding the United Kingdom | 2,169 | 2,356 | ||||||
Australia | 1,114 | 1,402 | ||||||
Canada | 1,484 | 1,773 | ||||||
Asia, excluding Japan | 10,121 | 10,445 | ||||||
Japan | 51 | 84 | ||||||
Other | 139 | 156 | ||||||
Total Non-U.S. | 21,396 | 23,651 | ||||||
Total | $ | 95,550 | $ | 84,022 |
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As of June 30 | As of December 31 | |||||||
($000) | 2013 | 2012 | ||||||
Available-for-sale | $ | 109,687 | $ | 125,786 | ||||
Held-to-maturity | 28,343 | 26,357 | ||||||
Trading securities | 6,943 | 5,386 | ||||||
Total | $ | 144,973 | $ | 157,529 |
As of June 30, 2013 | As of December 31, 2012 | |||||||||||||||||||||||||||||||
($000) | Cost | Unrealized Gain | Unrealized Loss | Fair Value | Cost | Unrealized Gain | Unrealized Loss | Fair Value | ||||||||||||||||||||||||
Available-for-sale: | ||||||||||||||||||||||||||||||||
Government obligations | $ | 25,277 | $ | 11 | $ | (61 | ) | $ | 25,227 | $ | 40,669 | $ | 29 | $ | (608 | ) | $ | 40,090 | ||||||||||||||
Corporate bonds | 54,189 | 8 | (302 | ) | 53,895 | 49,339 | 36 | (292 | ) | 49,083 | ||||||||||||||||||||||
Foreign obligations | 2,437 | — | (41 | ) | 2,396 | 2,437 | 1 | (19 | ) | 2,419 | ||||||||||||||||||||||
Commercial paper | 7,484 | — | (2 | ) | 7,482 | 2,000 | — | — | 2,000 | |||||||||||||||||||||||
Equity securities and exchange-traded funds | 8,038 | 515 | (220 | ) | 8,333 | 19,613 | 1,359 | (323 | ) | 20,649 | ||||||||||||||||||||||
Mutual funds | 10,615 | 1,838 | (99 | ) | 12,354 | 10,499 | 1,092 | (46 | ) | 11,545 | ||||||||||||||||||||||
Total | $ | 108,040 | $ | 2,372 | $ | (725 | ) | $ | 109,687 | $ | 124,557 | $ | 2,517 | $ | (1,288 | ) | $ | 125,786 | ||||||||||||||
Held-to-maturity: | ||||||||||||||||||||||||||||||||
Certificates of deposit | $ | 28,343 | $ | — | $ | — | $ | 28,343 | $ | 26,357 | $ | — | $ | — | $ | 26,357 |
As of June 30, 2013 | As of December 31, 2012 | |||||||||||||||
($000) | Cost | Fair Value | Cost | Fair Value | ||||||||||||
Available-for-sale: | ||||||||||||||||
Due in one year or less | $ | 49,646 | $ | 49,421 | $ | 87,599 | $ | 86,784 | ||||||||
Due in one to two years | 39,741 | 39,579 | 6,846 | 6,808 | ||||||||||||
Equity securities, exchange-traded funds, and mutual funds | 18,653 | 20,687 | 30,112 | 32,194 | ||||||||||||
Total | $ | 108,040 | $ | 109,687 | $ | 124,557 | $ | 125,786 | ||||||||
Held-to-maturity: | ||||||||||||||||
Due in one year or less | $ | 28,339 | $ | 28,339 | $ | 26,352 | $ | 26,352 | ||||||||
Due in one to three years | 4 | 4 | 5 | 5 | ||||||||||||
Total | $ | 28,343 | $ | 28,343 | $ | 26,357 | $ | 26,357 |
Six months ended June 30 | ||||||||
($000) | 2013 | 2012 | ||||||
Realized gains | $ | 2,226 | $ | 470 | ||||
Realized losses | (1,078 | ) | (519 | ) | ||||
Realized gains (losses), net | $ | 1,148 | $ | (49 | ) |
Six months ended June 30 | ||||||||
($000) | 2013 | 2012 | ||||||
Unrealized gains, net | $ | 273 | $ | 156 |
Fair Value | Fair Value Measurements as of June 30, 2013 | |||||||||||||||
as of | Using Fair Value Hierarchy | |||||||||||||||
($000) | June 30, 2013 | Level 1 | Level 2 | Level 3 | ||||||||||||
Available-for-sale investments: | ||||||||||||||||
Government obligations | $ | 25,227 | $ | — | $ | 25,227 | $ | — | ||||||||
Corporate bonds | 53,895 | — | 53,895 | — | ||||||||||||
Foreign obligations | 2,396 | — | 2,396 | — | ||||||||||||
Equity securities and exchange-traded funds | 8,333 | 8,333 | — | — | ||||||||||||
Mutual funds | 12,354 | 12,354 | — | — | ||||||||||||
Trading securities | 6,943 | 6,943 | — | — | ||||||||||||
Cash equivalents | 9,489 | 9,489 | — | — | ||||||||||||
Total | $ | 118,637 | $ | 37,119 | $ | 81,518 | $ | — |
Fair Value | Fair Value Measurements as of December 31, 2012 | |||||||||||||||
as of | Using Fair Value Hierarchy | |||||||||||||||
($000) | December 31, 2012 | Level 1 | Level 2 | Level 3 | ||||||||||||
Available-for-sale investments: | ||||||||||||||||
Government obligations | $ | 40,090 | $ | — | $ | 40,090 | $ | — | ||||||||
Corporate bonds | 49,083 | — | 49,083 | — | ||||||||||||
Foreign obligations | 2,419 | — | 2,419 | — | ||||||||||||
Commercial paper | 2,000 | — | 2,000 | — | ||||||||||||
Equity securities and exchange-traded funds | 20,649 | 20,649 | — | — | ||||||||||||
Mutual funds | 11,545 | 11,545 | — | — | ||||||||||||
Trading securities | 5,386 | 5,386 | — | — | ||||||||||||
Cash equivalents | 398 | 398 | — | — | ||||||||||||
Total | $ | 131,570 | $ | 37,978 | $ | 93,592 | $ | — |
Level 1: | Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. |
Level 2: | Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. |
Level 3: | Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
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As of June 30 | As of December 31 | |||||||
($000) | 2013 | 2012 | ||||||
Investment in MJKK | $ | 20,900 | $ | 20,540 | ||||
Other equity method investments | 6,366 | 6,288 | ||||||
Investments accounted for using the cost method | 8,821 | 8,477 | ||||||
Total investments in unconsolidated entities | $ | 36,087 | $ | 35,305 |
As of June 30 | As of December 31 | |||||||
2013 | 2012 | |||||||
Morningstar’s approximate ownership of MJKK | 34 | % | 34 | % | ||||
Approximate market value of Morningstar’s ownership in MJKK: | ||||||||
Japanese yen (¥000) | ¥ | 9,218,664 | ¥ | 3,109,579 | ||||
Equivalent U.S. dollars ($000) | $ | 93,016 | $ | 36,227 |
|
As of June 30 | |||
(in thousands) | 2013 | ||
Shares available for future grants | 4,521 |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
($000) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Restricted stock units | $ | 3,734 | $ | 3,270 | $ | 7,297 | $ | 6,548 | ||||||||
Restricted stock | 97 | 444 | 194 | 888 | ||||||||||||
Stock options | 123 | 20 | 246 | 164 | ||||||||||||
Total stock-based compensation expense | $ | 3,954 | $ | 3,734 | $ | 7,737 | $ | 7,600 | ||||||||
Income tax benefit related to the stock-based compensation expense | $ | 1,068 | $ | 882 | $ | 2,098 | $ | 1,804 |
Unrecognized stock-based compensation expense ($000) | Expected amortization period (months) | |||||
Restricted stock units | $ | 38,079 | 36 | |||
Restricted stock | 711 | 22 | ||||
Stock options | 831 | 22 | ||||
Total unrecognized stock-based compensation expense | $ | 39,621 | 35 |
Restricted Stock Units (RSUs) | Unvested | Vested but Deferred | Total | Weighted Average Grant Date Value per RSU | |||||||||
RSUs outstanding—December 31, 2012 | 727,145 | 18,782 | 745,927 | $ | 53.37 | ||||||||
Granted | 244,364 | — | 244,364 | 69.99 | |||||||||
Dividend equivalents | 1,357 | 36 | 1,393 | 54.85 | |||||||||
Vested | (251,514 | ) | — | (251,514 | ) | 49.88 | |||||||
Vested but deferred | — | — | — | — | |||||||||
Issued | — | (2,257 | ) | (2,257 | ) | 49.40 | |||||||
Forfeited | (23,605 | ) | — | (23,605 | ) | 55.01 | |||||||
RSUs outstanding—June 30, 2013 | 697,747 | 16,561 | 714,308 | 60.29 |
Options Granted At an Exercise Price Below the Fair Value Per Share on the Grant Date | Underlying Shares | Weighted Average Exercise Price | |||||
Options outstanding—December 31, 2012 | 282,695 | $ | 20.55 | ||||
Granted | — | — | |||||
Canceled | (250 | ) | 21.04 | ||||
Exercised | (33,972 | ) | 20.82 | ||||
Options outstanding—June 30, 2013 | 248,473 | 21.01 | |||||
Options exercisable—June 30, 2013 | 248,473 | $ | 21.01 |
All Other Option Grants, Excluding Activity Shown Above | Underlying Shares | Weighted Average Exercise Price | |||||
Options outstanding—December 31, 2012 | 391,784 | $ | 28.98 | ||||
Granted | — | — | |||||
Canceled | (1,252 | ) | 13.71 | ||||
Exercised | (125,159 | ) | 15.89 | ||||
Options outstanding—June 30, 2013 | 265,373 | 35.69 | |||||
Options exercisable—June 30, 2013 | 229,326 | $ | 32.25 |
Six months ended June 30 | ||||||||
($000) | 2013 | 2012 | ||||||
Intrinsic value of options exercised | $ | 8,170 | $ | 14,531 |
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 | 735 | 0.78 | $ | 10.95 | $ | 49 | 735 | 0.78 | $ | 10.95 | $ | 49 | ||||||||||||||
$20.96 - $47.86 | 441,436 | 1.65 | 23.93 | 23,683 | 441,436 | 1.65 | 23.93 | 23,683 | ||||||||||||||||||
$57.28 - $59.35 | 71,675 | 8.03 | 57.46 | 1,442 | 35,628 | 8.01 | 57.37 | 692 | ||||||||||||||||||
$8.57 - $59.35 | 513,846 | 2.54 | 28.59 | $ | 25,174 | 477,799 | 2.12 | 26.40 | $ | 24,424 | ||||||||||||||||
Vested or Expected to Vest | ||||||||||||||||||||||||||
$8.57 - $59.35 | 513,846 | 2.54 | $ | 28.59 | $ | 25,174 |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
($000) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Excess tax benefits related to stock-based compensation | $ | 2,255 | $ | 1,235 | $ | 3,842 | $ | 4,548 |
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Three months ended June 30 | Six months ended June 30 | |||||||||||||||
($000) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Income before income taxes and equity in net income of unconsolidated entities | $ | 46,695 | $ | 42,131 | $ | 88,200 | $ | 73,189 | ||||||||
Equity in net income of unconsolidated entities | 360 | 497 | 857 | 1,063 | ||||||||||||
Net loss attributable to the noncontrolling interest | 21 | 4 | 64 | 28 | ||||||||||||
Total | $ | 47,076 | $ | 42,632 | $ | 89,121 | $ | 74,280 | ||||||||
Income tax expense | $ | 15,955 | $ | 14,744 | $ | 28,382 | $ | 26,255 | ||||||||
Effective tax rate | 33.9 | % | 34.6 | % | 31.8 | % | 35.3 | % |
As of June 30 | As of December 31 | |||||||
($000) | 2013 | 2012 | ||||||
Gross unrecognized tax benefits | $ | 14,332 | $ | 12,699 | ||||
Gross unrecognized tax benefits that would affect income tax expense | $ | 14,332 | $ | 12,699 | ||||
Decrease in income tax expense upon recognition of gross unrecognized tax benefits | $ | 11,877 | $ | 10,446 |
As of June 30 | As of December 31 | |||||||
Liabilities for Unrecognized Tax Benefits ($000) | 2013 | 2012 | ||||||
Current liability | $ | 6,604 | $ | 6,568 | ||||
Non-current liability | 7,367 | 5,659 | ||||||
Total liability for unrecognized tax benefits | $ | 13,971 | $ | 12,227 |
|
|
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|
($000) | ||||
Cash and cash equivalents | $ | 3,472 | ||
Accounts receivable and other current assets | 519 | |||
Other non-current assets | 244 | |||
Intangible assets | 9,000 | |||
Goodwill | 9,940 | |||
Deferred revenue | (1,191 | ) | ||
Deferred tax liability | (2,118 | ) | ||
Other current and non-current liabilities | (1,083 | ) | ||
Total fair value of Morningstar Sweden | $ | 18,783 |
($000) | Weighted Average Useful Life (years) | |||||
Customer-related assets | $ | 9,000 | 14 | |||
Total intangible assets | $ | 9,000 | 14 |
($000) | |||
Balance as of December 31, 2012 | $ | 320,845 | |
Acquisition of remaining ownership in Morningstar Sweden | 9,940 | ||
Other, primarily foreign currency translation | (9,360 | ) | |
Balance as of June 30, 2013 | $ | 321,425 |
As of June 30, 2013 | As of December 31, 2012 | |||||||||||||||||||||||||||
($000) | Gross | Accumulated Amortization | Net | Weighted Average Useful Life (years) | Gross | Accumulated Amortization | Net | Weighted Average Useful Life (years) | ||||||||||||||||||||
Intellectual property | $ | 29,577 | $ | (22,012 | ) | $ | 7,565 | 9 | $ | 30,621 | $ | (21,527 | ) | $ | 9,094 | 9 | ||||||||||||
Customer-related assets | 138,673 | (67,508 | ) | 71,165 | 12 | 132,798 | (63,005 | ) | 69,793 | 12 | ||||||||||||||||||
Supplier relationships | 240 | (102 | ) | 138 | 20 | 240 | (96 | ) | 144 | 20 | ||||||||||||||||||
Technology-based assets | 79,720 | (46,618 | ) | 33,102 | 9 | 81,333 | (43,809 | ) | 37,524 | 9 | ||||||||||||||||||
Non-competition agreement | 1,680 | (1,577 | ) | 103 | 4 | 1,765 | (1,588 | ) | 177 | 4 | ||||||||||||||||||
Total intangible assets | $ | 249,890 | $ | (137,817 | ) | $ | 112,073 | 10 | $ | 246,757 | $ | (130,025 | ) | $ | 116,732 | 10 |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
($000) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Amortization expense | $ | 5,337 | $ | 5,976 | $ | 10,962 | $ | 12,031 |
($000) | ||||
2013 | $ | 21,155 | ||
2014 | 20,174 | |||
2015 | 19,367 | |||
2016 | 14,821 | |||
2017 | 10,362 | |||
2018 | 8,411 |
|
Three months ended June 30, 2013 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
External revenue | $ | 141,426 | $ | 34,002 | $ | — | $ | 175,428 | ||||||||
Operating expense, excluding stock-based compensation expense, depreciation, and amortization | 91,751 | 16,856 | 8,021 | 116,628 | ||||||||||||
Stock-based compensation expense | 2,483 | 611 | 860 | 3,954 | ||||||||||||
Depreciation and amortization | 2,343 | 19 | 8,900 | 11,262 | ||||||||||||
Operating income (loss) | $ | 44,849 | $ | 16,516 | $ | (17,781 | ) | $ | 43,584 | |||||||
U.S. capital expenditures | $ | 8,241 | ||||||||||||||
Non-U.S. capital expenditures | $ | 1,522 | ||||||||||||||
Three months ended June 30, 2012 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
External revenue | $ | 134,749 | $ | 31,219 | $ | — | $ | 165,968 | ||||||||
Operating expense, excluding stock-based compensation expense, depreciation, and amortization | 86,915 | 17,179 | 6,385 | 110,479 | ||||||||||||
Stock-based compensation expense | 2,531 | 529 | 674 | 3,734 | ||||||||||||
Depreciation and amortization | 2,300 | 38 | 8,281 | 10,619 | ||||||||||||
Operating income (loss) | $ | 43,003 | $ | 13,473 | $ | (15,340 | ) | $ | 41,136 | |||||||
U.S. capital expenditures | $ | 6,818 | ||||||||||||||
Non-U.S. capital expenditures | $ | 2,110 | ||||||||||||||
Six months ended June 30, 2013 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
External revenue | $ | 277,613 | $ | 66,671 | $ | — | $ | 344,284 | ||||||||
Operating expense, excluding stock-based compensation expense, depreciation, and amortization | 181,620 | 32,475 | 15,707 | 229,802 | ||||||||||||
Stock-based compensation expense | 4,982 | 1,203 | 1,552 | 7,737 | ||||||||||||
Depreciation and amortization | 4,695 | 43 | 17,863 | 22,601 | ||||||||||||
Operating income (loss) | $ | 86,316 | $ | 32,950 | $ | (35,122 | ) | $ | 84,144 | |||||||
U.S. capital expenditures | $ | 16,250 | ||||||||||||||
Non-U.S. capital expenditures | $ | 2,631 | ||||||||||||||
Six months ended June 30, 2012 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
External revenue | $ | 261,674 | $ | 65,053 | $ | — | $ | 326,727 | ||||||||
Operating expense, excluding stock-based compensation expense, depreciation, and amortization | 180,353 | 33,132 | 13,313 | 226,798 | ||||||||||||
Stock-based compensation expense | 5,090 | 1,080 | 1,430 | 7,600 | ||||||||||||
Depreciation and amortization | 4,544 | 77 | 16,173 | 20,794 | ||||||||||||
Operating income (loss) | $ | 71,687 | $ | 30,764 | $ | (30,916 | ) | $ | 71,535 | |||||||
U.S. capital expenditures | $ | 14,215 | ||||||||||||||
Non-U.S. capital expenditures | $ | 3,707 | ||||||||||||||
As of June 30, 2013 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
Goodwill | $ | 280,252 | $ | 41,173 | $ | — | $ | 321,425 |
As of December 31, 2012 | ||||||||||||||||
($000) | Investment Information | Investment Management | Corporate Items | Total | ||||||||||||
Goodwill | $ | 279,164 | $ | 41,681 | $ | — | $ | 320,845 |
External revenue by geographical area | ||||||||||||||||
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
($000) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
United States | $ | 126,335 | $ | 117,952 | $ | 247,748 | $ | 232,421 | ||||||||
United Kingdom | 14,015 | 14,714 | 27,168 | 28,450 | ||||||||||||
Europe, excluding the United Kingdom | 13,993 | 12,281 | 27,160 | 24,336 | ||||||||||||
Australia | 9,176 | 9,791 | 18,528 | 19,139 | ||||||||||||
Canada | 7,812 | 7,397 | 15,548 | 14,747 | ||||||||||||
Asia, excluding Japan | 2,661 | 2,366 | 5,256 | 4,735 | ||||||||||||
Japan | 788 | 986 | 1,617 | 1,965 | ||||||||||||
Other | 648 | 481 | 1,259 | 934 | ||||||||||||
Total Non-U.S. | 49,093 | 48,016 | 96,536 | 94,306 | ||||||||||||
Total | $ | 175,428 | $ | 165,968 | $ | 344,284 | $ | 326,727 |
Long-lived assets by geographical area | ||||||||
As of June 30 | As of December 31 | |||||||
($000) | 2013 | 2012 | ||||||
United States | $ | 74,154 | $ | 60,371 | ||||
United Kingdom | 6,318 | 7,435 | ||||||
Europe, excluding the United Kingdom | 2,169 | 2,356 | ||||||
Australia | 1,114 | 1,402 | ||||||
Canada | 1,484 | 1,773 | ||||||
Asia, excluding Japan | 10,121 | 10,445 | ||||||
Japan | 51 | 84 | ||||||
Other | 139 | 156 | ||||||
Total Non-U.S. | 21,396 | 23,651 | ||||||
Total | $ | 95,550 | $ | 84,022 |
|
As of June 30 | As of December 31 | |||||||
($000) | 2013 | 2012 | ||||||
Available-for-sale | $ | 109,687 | $ | 125,786 | ||||
Held-to-maturity | 28,343 | 26,357 | ||||||
Trading securities | 6,943 | 5,386 | ||||||
Total | $ | 144,973 | $ | 157,529 |
As of June 30, 2013 | As of December 31, 2012 | |||||||||||||||||||||||||||||||
($000) | Cost | Unrealized Gain | Unrealized Loss | Fair Value | Cost | Unrealized Gain | Unrealized Loss | Fair Value | ||||||||||||||||||||||||
Available-for-sale: | ||||||||||||||||||||||||||||||||
Government obligations | $ | 25,277 | $ | 11 | $ | (61 | ) | $ | 25,227 | $ | 40,669 | $ | 29 | $ | (608 | ) | $ | 40,090 | ||||||||||||||
Corporate bonds | 54,189 | 8 | (302 | ) | 53,895 | 49,339 | 36 | (292 | ) | 49,083 | ||||||||||||||||||||||
Foreign obligations | 2,437 | — | (41 | ) | 2,396 | 2,437 | 1 | (19 | ) | 2,419 | ||||||||||||||||||||||
Commercial paper | 7,484 | — | (2 | ) | 7,482 | 2,000 | — | — | 2,000 | |||||||||||||||||||||||
Equity securities and exchange-traded funds | 8,038 | 515 | (220 | ) | 8,333 | 19,613 | 1,359 | (323 | ) | 20,649 | ||||||||||||||||||||||
Mutual funds | 10,615 | 1,838 | (99 | ) | 12,354 | 10,499 | 1,092 | (46 | ) | 11,545 | ||||||||||||||||||||||
Total | $ | 108,040 | $ | 2,372 | $ | (725 | ) | $ | 109,687 | $ | 124,557 | $ | 2,517 | $ | (1,288 | ) | $ | 125,786 | ||||||||||||||
Held-to-maturity: | ||||||||||||||||||||||||||||||||
Certificates of deposit | $ | 28,343 | $ | — | $ | — | $ | 28,343 | $ | 26,357 | $ | — | $ | — | $ | 26,357 |
As of June 30, 2013 | As of December 31, 2012 | |||||||||||||||
($000) | Cost | Fair Value | Cost | Fair Value | ||||||||||||
Available-for-sale: | ||||||||||||||||
Due in one year or less | $ | 49,646 | $ | 49,421 | $ | 87,599 | $ | 86,784 | ||||||||
Due in one to two years | 39,741 | 39,579 | 6,846 | 6,808 | ||||||||||||
Equity securities, exchange-traded funds, and mutual funds | 18,653 | 20,687 | 30,112 | 32,194 | ||||||||||||
Total | $ | 108,040 | $ | 109,687 | $ | 124,557 | $ | 125,786 | ||||||||
Held-to-maturity: | ||||||||||||||||
Due in one year or less | $ | 28,339 | $ | 28,339 | $ | 26,352 | $ | 26,352 | ||||||||
Due in one to three years | 4 | 4 | 5 | 5 | ||||||||||||
Total | $ | 28,343 | $ | 28,343 | $ | 26,357 | $ | 26,357 |
Six months ended June 30 | ||||||||
($000) | 2013 | 2012 | ||||||
Realized gains | $ | 2,226 | $ | 470 | ||||
Realized losses | (1,078 | ) | (519 | ) | ||||
Realized gains (losses), net | $ | 1,148 | $ | (49 | ) |
Six months ended June 30 | ||||||||
($000) | 2013 | 2012 | ||||||
Unrealized gains, net | $ | 273 | $ | 156 |
Fair Value | Fair Value Measurements as of June 30, 2013 | |||||||||||||||
as of | Using Fair Value Hierarchy | |||||||||||||||
($000) | June 30, 2013 | Level 1 | Level 2 | Level 3 | ||||||||||||
Available-for-sale investments: | ||||||||||||||||
Government obligations | $ | 25,227 | $ | — | $ | 25,227 | $ | — | ||||||||
Corporate bonds | 53,895 | — | 53,895 | — | ||||||||||||
Foreign obligations | 2,396 | — | 2,396 | — | ||||||||||||
Equity securities and exchange-traded funds | 8,333 | 8,333 | — | — | ||||||||||||
Mutual funds | 12,354 | 12,354 | — | — | ||||||||||||
Trading securities | 6,943 | 6,943 | — | — | ||||||||||||
Cash equivalents | 9,489 | 9,489 | — | — | ||||||||||||
Total | $ | 118,637 | $ | 37,119 | $ | 81,518 | $ | — |
Fair Value | Fair Value Measurements as of December 31, 2012 | |||||||||||||||
as of | Using Fair Value Hierarchy | |||||||||||||||
($000) | December 31, 2012 | Level 1 | Level 2 | Level 3 | ||||||||||||
Available-for-sale investments: | ||||||||||||||||
Government obligations | $ | 40,090 | $ | — | $ | 40,090 | $ | — | ||||||||
Corporate bonds | 49,083 | — | 49,083 | — | ||||||||||||
Foreign obligations | 2,419 | — | 2,419 | — | ||||||||||||
Commercial paper | 2,000 | — | 2,000 | — | ||||||||||||
Equity securities and exchange-traded funds | 20,649 | 20,649 | — | — | ||||||||||||
Mutual funds | 11,545 | 11,545 | — | — | ||||||||||||
Trading securities | 5,386 | 5,386 | — | — | ||||||||||||
Cash equivalents | 398 | 398 | — | — | ||||||||||||
Total | $ | 131,570 | $ | 37,978 | $ | 93,592 | $ | — |
|
As of June 30 | As of December 31 | |||||||
($000) | 2013 | 2012 | ||||||
Investment in MJKK | $ | 20,900 | $ | 20,540 | ||||
Other equity method investments | 6,366 | 6,288 | ||||||
Investments accounted for using the cost method | 8,821 | 8,477 | ||||||
Total investments in unconsolidated entities | $ | 36,087 | $ | 35,305 |
As of June 30 | As of December 31 | |||||||
2013 | 2012 | |||||||
Morningstar’s approximate ownership of MJKK | 34 | % | 34 | % | ||||
Approximate market value of Morningstar’s ownership in MJKK: | ||||||||
Japanese yen (¥000) | ¥ | 9,218,664 | ¥ | 3,109,579 | ||||
Equivalent U.S. dollars ($000) | $ | 93,016 | $ | 36,227 |
|
As of June 30 | |||
(in thousands) | 2013 | ||
Shares available for future grants | 4,521 |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
($000) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Restricted stock units | $ | 3,734 | $ | 3,270 | $ | 7,297 | $ | 6,548 | ||||||||
Restricted stock | 97 | 444 | 194 | 888 | ||||||||||||
Stock options | 123 | 20 | 246 | 164 | ||||||||||||
Total stock-based compensation expense | $ | 3,954 | $ | 3,734 | $ | 7,737 | $ | 7,600 | ||||||||
Income tax benefit related to the stock-based compensation expense | $ | 1,068 | $ | 882 | $ | 2,098 | $ | 1,804 |
Unrecognized stock-based compensation expense ($000) | Expected amortization period (months) | |||||
Restricted stock units | $ | 38,079 | 36 | |||
Restricted stock | 711 | 22 | ||||
Stock options | 831 | 22 | ||||
Total unrecognized stock-based compensation expense | $ | 39,621 | 35 |
Restricted Stock Units (RSUs) | Unvested | Vested but Deferred | Total | Weighted Average Grant Date Value per RSU | |||||||||
RSUs outstanding—December 31, 2012 | 727,145 | 18,782 | 745,927 | $ | 53.37 | ||||||||
Granted | 244,364 | — | 244,364 | 69.99 | |||||||||
Dividend equivalents | 1,357 | 36 | 1,393 | 54.85 | |||||||||
Vested | (251,514 | ) | — | (251,514 | ) | 49.88 | |||||||
Vested but deferred | — | — | — | — | |||||||||
Issued | — | (2,257 | ) | (2,257 | ) | 49.40 | |||||||
Forfeited | (23,605 | ) | — | (23,605 | ) | 55.01 | |||||||
RSUs outstanding—June 30, 2013 | 697,747 | 16,561 | 714,308 | 60.29 |
Options Granted At an Exercise Price Below the Fair Value Per Share on the Grant Date | Underlying Shares | Weighted Average Exercise Price | |||||
Options outstanding—December 31, 2012 | 282,695 | $ | 20.55 | ||||
Granted | — | — | |||||
Canceled | (250 | ) | 21.04 | ||||
Exercised | (33,972 | ) | 20.82 | ||||
Options outstanding—June 30, 2013 | 248,473 | 21.01 | |||||
Options exercisable—June 30, 2013 | 248,473 | $ | 21.01 |
All Other Option Grants, Excluding Activity Shown Above | Underlying Shares | Weighted Average Exercise Price | |||||
Options outstanding—December 31, 2012 | 391,784 | $ | 28.98 | ||||
Granted | — | — | |||||
Canceled | (1,252 | ) | 13.71 | ||||
Exercised | (125,159 | ) | 15.89 | ||||
Options outstanding—June 30, 2013 | 265,373 | 35.69 | |||||
Options exercisable—June 30, 2013 | 229,326 | $ | 32.25 |
Six months ended June 30 | ||||||||
($000) | 2013 | 2012 | ||||||
Intrinsic value of options exercised | $ | 8,170 | $ | 14,531 |
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 | 735 | 0.78 | $ | 10.95 | $ | 49 | 735 | 0.78 | $ | 10.95 | $ | 49 | ||||||||||||||
$20.96 - $47.86 | 441,436 | 1.65 | 23.93 | 23,683 | 441,436 | 1.65 | 23.93 | 23,683 | ||||||||||||||||||
$57.28 - $59.35 | 71,675 | 8.03 | 57.46 | 1,442 | 35,628 | 8.01 | 57.37 | 692 | ||||||||||||||||||
$8.57 - $59.35 | 513,846 | 2.54 | 28.59 | $ | 25,174 | 477,799 | 2.12 | 26.40 | $ | 24,424 | ||||||||||||||||
Vested or Expected to Vest | ||||||||||||||||||||||||||
$8.57 - $59.35 | 513,846 | 2.54 | $ | 28.59 | $ | 25,174 |
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
($000) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Excess tax benefits related to stock-based compensation | $ | 2,255 | $ | 1,235 | $ | 3,842 | $ | 4,548 |
|
Three months ended June 30 | Six months ended June 30 | |||||||||||||||
($000) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Income before income taxes and equity in net income of unconsolidated entities | $ | 46,695 | $ | 42,131 | $ | 88,200 | $ | 73,189 | ||||||||
Equity in net income of unconsolidated entities | 360 | 497 | 857 | 1,063 | ||||||||||||
Net loss attributable to the noncontrolling interest | 21 | 4 | 64 | 28 | ||||||||||||
Total | $ | 47,076 | $ | 42,632 | $ | 89,121 | $ | 74,280 | ||||||||
Income tax expense | $ | 15,955 | $ | 14,744 | $ | 28,382 | $ | 26,255 | ||||||||
Effective tax rate | 33.9 | % | 34.6 | % | 31.8 | % | 35.3 | % |
As of June 30 | As of December 31 | |||||||
($000) | 2013 | 2012 | ||||||
Gross unrecognized tax benefits | $ | 14,332 | $ | 12,699 | ||||
Gross unrecognized tax benefits that would affect income tax expense | $ | 14,332 | $ | 12,699 | ||||
Decrease in income tax expense upon recognition of gross unrecognized tax benefits | $ | 11,877 | $ | 10,446 |
As of June 30 | As of December 31 | |||||||
Liabilities for Unrecognized Tax Benefits ($000) | 2013 | 2012 | ||||||
Current liability | $ | 6,604 | $ | 6,568 | ||||
Non-current liability | 7,367 | 5,659 | ||||||
Total liability for unrecognized tax benefits | $ | 13,971 | $ | 12,227 |
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