MORNINGSTAR, INC., 10-K filed on 2/24/2012
Annual Report
Document and Entity Information (USD $)
12 Months Ended
Dec. 31, 2011
Feb. 20, 2012
Jun. 30, 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-K 
 
 
Document Period End Date
Dec. 31, 2011 
 
 
Document Fiscal Year Focus
2011 
 
 
Document Fiscal Period Focus
FY 
 
 
Amendment Flag
false 
 
 
Entity Common Stock, Shares Outstanding
 
50,134,439 
 
Entity Well-known Seasoned Issuer
No 
 
 
Entity Voluntary Filers
No 
 
 
Entity Current Reporting Status
Yes 
 
 
Entity Public Float
 
 
$ 1,498,106,979 
Condensed Consolidated Statements of Income (USD $)
In Thousands, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Revenue
$ 631,400 
$ 555,351 
$ 478,996 
Operating expense (1):
 
 
 
Cost of goods sold
182,132 1
157,068 1
128,616 1
Development
53,157 1
49,244 1
38,378 1
Sales and marketing
106,699 1
95,473 1
71,772 1
General and administrative
108,084 1
92,843 1
83,596 1
Depreciation and amortization
42,913 1
39,664 1
31,961 1
Total operating expense
492,985 1
434,292 1
354,323 1
Operating income
138,415 
121,059 
124,673 
Non-operating income (expense):
 
 
 
Interest income, net
2,361 
2,437 
3,016 
Other income (expense), net
(652)
4,295 
(82)
Non-operating income (expense), net
1,709 
6,732 
2,934 
Income before income taxes and equity in net income of unconsolidated entities
140,124 
127,791 
127,607 
Income tax expense
43,658 
42,756 
46,775 
Equity in net income of unconsolidated entities
1,848 
1,422 
1,165 
Consolidated net income
98,314 
86,457 
81,997 
Net (income) loss attributable to the noncontrolling interest
43 
(87)
132 
Net income attributable to Morningstar, Inc.
$ 98,357 
$ 86,370 
$ 82,129 
Net income per share attributable to Morningstar, Inc.:
 
 
 
Basic (in dollars per share)
$ 1.96 
$ 1.75 
$ 1.71 
Diluted (in dollars per share)
$ 1.92 
$ 1.70 
$ 1.65 
Dividends per common share:
 
 
 
Dividends declared per common share
$ 0.25 
$ 0.05 
$ 0.00 
Dividends paid per common share
$ 0.20 
$ 0.00 
$ 0.00 
Weighted average shares outstanding:
 
 
 
Basic (in shares)
50,032 
49,249 
48,112 
Diluted (in shares)
50,988 
50,555 
49,793 
Condensed Consolidated Statements of Income (Parenthetical) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Includes stock-based compensation expense of:
 
 
 
Allocated Share-based Compensation Expense
$ 15,303 
$ 13,793 
$ 11,593 
Cost of Sales [Member]
 
 
 
Includes stock-based compensation expense of:
 
 
 
Allocated Share-based Compensation Expense
4,150 
3,473 
2,666 
Research and Development Expense [Member]
 
 
 
Includes stock-based compensation expense of:
 
 
 
Allocated Share-based Compensation Expense
2,086 
1,840 
1,570 
Selling and Marketing Expense [Member]
 
 
 
Includes stock-based compensation expense of:
 
 
 
Allocated Share-based Compensation Expense
1,871 
1,786 
1,587 
General and Administrative Expense [Member]
 
 
 
Includes stock-based compensation expense of:
 
 
 
Allocated Share-based Compensation Expense
$ 7,196 
$ 6,694 
$ 5,770 
Consolidated Consolidated Statements of Comprehensive Income (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Consolidated net income
$ 98,314 
$ 86,457 
$ 81,997 
Other comprehensive income (loss), net of tax:
 
 
 
Foreign currency translation adjustment
(2,345)
4,909 
16,000 
Unrealized gains (losses) on securities:
 
 
 
Unrealized holding gains (losses) arising during period
(773)
417 
(111)
Reclasification of (gains) losses included in net income
(166)
(172)
0 
Other comprehensive income (loss)
(3,284)
5,154 
15,889 
Comprehensive income
95,030 
91,611 
97,886 
Comprehensive (income) loss attributable to noncontrolling interest
(179)
(156)
161 
Comprehensive income attributable to Morningstar, Inc.
$ 94,851 
$ 91,455 
$ 98,047 
Condensed Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Current assets:
 
 
Cash and cash equivalents
$ 200,437 
$ 180,176 
Investments
269,755 
185,240 
Accounts receivable, less allowance of $835 and $1,056, respectively
113,312 
110,891 
Deferred tax asset, net
5,104 
2,860 
Income tax receivable, net
7,445 
10,459 
Other
15,980 
17,654 
Total current assets
612,033 
507,280 
Property, equipment, and capitalized software, net
68,196 
62,105 
Investments in unconsolidated entities
27,642 
24,262 
Goodwill
318,492 
317,661 
Intangible assets, net
139,809 
169,023 
Other assets
5,912 
5,971 
Total assets
1,172,084 
1,086,302 
Current liabilities:
 
 
Accounts payable and accrued liabilities
41,403 
42,680 
Accrued compensation
73,124 
62,404 
Deferred revenue
155,494 
146,267 
Other
612 
1,373 
Total current liabilities
270,633 
252,724 
Accrued compensation
5,724 
4,965 
Deferred tax liability, net
15,940 
19,975 
Other long-term liabilities
22,771 
27,213 
Total liabilities
315,068 
304,877 
Morningstar, Inc. shareholders' equity:
 
 
Common stock, no par value, 200,000,000 shares authorized, of which 50,083,940 and 49,874,392 shares were outstanding as of December 31, 2011 and December 31, 2010, respectively
5 
5 
Treasury stock at cost, 980,177 shares as of December 31, 2011 and 279,456 shares as of December 31, 2010
(46,701)
(6,641)
Additional paid-in capital
491,432 
458,426 
Retained earnings
409,022 
323,408 
Accumulated other comprehensive income (loss):
 
 
Currency translation adjustment
1,936 
4,503 
Unrealized gain (loss) on available-for-sale investments
(324)
615 
Total accumulated other comprehensive income
1,612 
5,118 
Total Morningstar, Inc. shareholders' equity
855,370 
780,316 
Noncontrolling interest
1,646 
1,109 
Total equity
857,016 
781,425 
Total liabilities and equity
$ 1,172,084 
$ 1,086,302 
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Statement of Financial Position [Abstract]
 
 
Accounts receivable, allowance (in dollars)
$ 835 
$ 1,056 
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
50,083,940 
49,874,392 
Treasury stock, shares
980,177 
279,456 
Condensed Consolidated Statement of Equity (USD $)
In Thousands, except Share data, unless otherwise specified
Total
Common Stock
Treasury Stock
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Non Controlling Interests
Balance at Dec. 31, 2008
$ 530,245 
$ 4 
$ (3,280)
$ 391,565 
$ 157,444 
$ (15,885)
$ 397 
Balance (in shares) at Dec. 31, 2008
 
47,282,958 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
 
 
Net income (loss)
81,997 
0 
0 
0 
82,129 
0 
(132)
Other Comprehensive Income (loss)
 
 
 
 
 
 
 
Unrealized gain on available-for-sale investments, net of income tax
(111)
0 
0 
0 
0 
(111)
0 
Reclassification of adjustments for gains included in net income, net of income tax
0 
0 
0 
0 
0 
0 
0 
Foreign currency translation adjustment, net
16,000 
0 
0 
0 
0 
16,029 
(29)
Other comprehensive income (loss)
15,889 
0 
0 
0 
0 
15,918 
(29)
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net
16,439 
1 
150 
16,288 
0 
0 
0 
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net (in shares)
 
1,485,583 
 
 
 
 
 
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition [Abstract]
 
 
 
 
 
 
 
Stock-based compensation - restricted stock units
10,591 
0 
0 
10,591 
0 
0 
0 
Stock-based compensation - stock options
1,002 
0 
0 
1,002 
0 
0 
0 
Excess tax benefit derived from stock-option exercises and vesting of restricted stock units
8,693 
0 
0 
8,693 
0 
0 
0 
Non-controlling interest in Morningstar Korea
933 
0 
0 
0 
0 
0 
933 
Balance at Dec. 31, 2009
665,789 
5 
(3,130)
428,139 
239,573 
33 
1,169 
Balance (in shares) at Dec. 31, 2009
 
48,768,541 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
 
 
Net income (loss)
86,457 
0 
0 
0 
86,370 
0 
87 
Other Comprehensive Income (loss)
 
 
 
 
 
 
 
Unrealized gain on available-for-sale investments, net of income tax
417 
0 
0 
0 
0 
417 
0 
Reclassification of adjustments for gains included in net income, net of income tax
(172)
0 
0 
0 
0 
(172)
0 
Foreign currency translation adjustment, net
4,909 
0 
0 
0 
0 
4,840 
69 
Other comprehensive income (loss)
5,154 
0 
0 
0 
0 
5,085 
69 
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net
9,220 
0 
274 
8,946 
0 
0 
0 
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net (in shares)
 
1,182,069 
 
 
 
 
 
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition [Abstract]
 
 
 
 
 
 
 
Stock-based compensation - restricted stock units
12,545 
0 
0 
12,545 
0 
0 
0 
Stock-based compensation - restricted stock
1,248 
0 
0 
1,248 
0 
0 
0 
Excess tax benefit derived from stock-option exercises and vesting of restricted stock units
7,507 
0 
0 
7,507 
0 
0 
0 
Dividends declared - common shares outstanding
(2,494)
0 
0 
0 
(2,494)
0 
0 
Dividends declared - restricted stock units
 
0 
0 
41 
(41)
0 
0 
Adjustments to noncontrolling interest
(216)
0 
0 
0 
0 
0 
(216)
Common share repurchased
(3,785)
0 
(3,785)
0 
0 
0 
0 
Common share repurchased (in shares)
 
(76,218)
 
 
 
 
 
Balance at Dec. 31, 2010
781,425 
5 
(6,641)
458,426 
323,408 
5,118 
1,109 
Balance (in shares) at Dec. 31, 2010
 
49,874,392 
 
 
 
 
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
 
 
Net income (loss)
98,314 
0 
0 
0 
98,357 
0 
(43)
Other Comprehensive Income (loss)
 
 
 
 
 
 
 
Unrealized gain on available-for-sale investments, net of income tax
(773)
0 
0 
0 
0 
(773)
0 
Reclassification of adjustments for gains included in net income, net of income tax
(166)
0 
0 
0 
0 
(166)
0 
Foreign currency translation adjustment, net
(2,345)
0 
0 
0 
0 
(2,567)
222 
Other comprehensive income (loss)
(3,284)
0 
0 
0 
0 
(3,506)
222 
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net
8,702 
0 
612 
8,090 
0 
0 
0 
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net (in shares)
 
931,667 
 
 
 
 
 
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition [Abstract]
 
 
 
 
 
 
 
Stock-based compensation - restricted stock units
12,765 
0 
0 
12,765 
0 
0 
0 
Stock-based compensation - restricted stock
2,196 
0 
0 
2,196 
0 
0 
0 
Stock-based compensation - stock options
342 
0 
0 
342 
0 
0 
0 
Excess tax benefit derived from stock-option exercises and vesting of restricted stock units
9,525 
0 
0 
9,525 
0 
0 
0 
Dividends declared - common shares outstanding
(12,550)
0 
0 
0 
(12,550)
0 
0 
Dividends declared - restricted stock units
(9)
0 
0 
184 
(193)
0 
0 
Adjustments to noncontrolling interest
262 
0 
0 
(96)
0 
0 
358 
Common share repurchased
(40,672)
0 
(40,672)
0 
0 
0 
0 
Common share repurchased (in shares)
 
(722,119)
 
 
 
 
 
Balance at Dec. 31, 2011
$ 857,016 
$ 5 
$ (46,701)
$ 491,432 
$ 409,022 
$ 1,612 
$ 1,646 
Balance (in shares) at Dec. 31, 2011
 
50,083,940 
 
 
 
 
 
Condensed Consolidated Statement of Equity (Parenthetical) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Statement of Stockholders' Equity [Abstract]
 
 
 
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Tax
$ 447 
$ 0 
$ 0 
Other Comprehensive Income (Loss), Reclassification Adjustment for Sale of Securities Included in Net Income, Tax
$ 94 
$ 0 
$ 0 
Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Operating activities
 
 
 
Consolidated net income
$ 98,314 
$ 86,457 
$ 81,997 
Adjustments to reconcile consolidated net income to net cash flows from operating activities:
 
 
 
Depreciation and amortization
42,913 1
39,664 1
31,961 1
Deferred income taxes
(4,436)
211 
(2,207)
Stock-based compensation expense
15,303 
13,793 
11,593 
Provision for bad debt
1,237 
413 
1,292 
Equity in net income of unconsolidated entities
(1,848)
(1,422)
(1,165)
Excess tax benefits from stock-option exercises and vesting of restricted stock units
(9,525)
(7,507)
(8,693)
Holding gain upon acquisition of additional ownership of equity
0 
(4,564)
(352)
Other, net
592 
(90)
575 
Changes in operating assets and liabilities, net of effects of acquisitions:
 
 
 
Accounts receivable
(3,858)
(23,652)
12,364 
Other assets
2,728 
(2,341)
2,521 
Accounts payable and accrued liabilities
(4,821)
(759)
(9,476)
Accrued compensation
10,176 
12,166 
(26,729)
Income taxes—current
10,751 
4,569 
11,676 
Deferred revenue
9,578 
5,752 
(8,704)
Deferred rent
(1,030)
1,364 
5,679 
Other liabilities
(1,098)
(638)
(1,076)
Cash provided by operating activities
164,976 
123,416 
101,256 
Investing activities
 
 
 
Purchases of investments
(320,193)
(186,283)
(176,770)
Proceeds from maturities and sales of investments
234,868 
214,929 
92,851 
Capital expenditures
(23,322)
(14,771)
(12,372)
Acquisitions, net of cash acquired
300 
(102,324)
(74,175)
Other, net
(2,420)
500 
(4,209)
Cash used for investing activities
(110,767)
(87,949)
(174,675)
Financing activities
 
 
 
Proceeds from stock-option exercises, net
8,702 
9,220 
16,439 
Excess tax benefits from stock-option exercises and vesting of restricted stock units
9,525 
7,507 
8,693 
Common shares repurchased
(40,672)
(3,785)
0 
Dividends paid
(10,041)
0 
0 
Other, net
(110)
(417)
188 
Cash provided by (used for) financing activities
(32,596)
12,525 
25,320 
Effect of exchange rate changes on cash and cash equivalents
(1,352)
1,688 
4,704 
Net increase (decrease) in cash and cash equivalents
20,261 
49,680 
(43,395)
Cash and cash equivalents - beginning of period
180,176 
130,496 
173,891 
Cash and cash equivalents - end of period
200,437 
180,176 
130,496 
Supplemental disclosure of cash flow information:
 
 
 
Cash paid for income taxes
38,054 
37,624 
38,009 
Supplemental information of non-cash investing and financing activities:
 
 
 
Unrealized gain (loss) on available-for-sale investments
$ (1,480)
$ 394 
$ (177)
Description of Business
Description of Business
Description of Business
 
Morningstar, Inc. and its subsidiaries (Morningstar, we, our), is a provider of independent investment research to investors around the world. We offer an extensive line of data, software, and research products for individual investors, financial advisors, and institutional clients. We also offer asset management services for advisors, institutions, and retirement plan participants. We have operations in 27 countries.
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

The acronyms that appear in these Notes to our 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
SEC
Securities and Exchange Commission

Principles of Consolidation. We conduct our business operations through wholly owned or majority-owned operating subsidiaries. The accompanying consolidated financial statements include the accounts of Morningstar, Inc. and our subsidiaries. The assets, liabilities, and results of operations of subsidiaries in which we have a controlling interest have been consolidated. All significant intercompany accounts and transactions have been eliminated.

We account and report the noncontrolling (minority) interests in our Consolidated Financial Statements in accordance with FASB ASC 810, Consolidation. A noncontrolling interest is the portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to the parent company. We report the noncontrolling interest in our Consolidated Balance Sheet within equity separate from the shareholders' equity attributable to Morningstar, Inc. In addition, we present the net income (loss) and comprehensive income (loss) attributed to Morningstar, Inc.'s shareholders and the noncontrolling interest in our Consolidated Statements of Income, Consolidated Statements of Comprehensive Income, and Consolidated Statements of Equity.

We account for investments in entities in which we exercise significant influence, but do not control, using the equity method.

Comprehensive Income. 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 Statements of Income and separately, our Consolidated Statements of Comprehensive Income. We no longer present total comprehensive income in our Consolidated Statement of Equity.

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses during the reporting period. Actual results may differ from these estimates.

Reclassifications. Certain amounts reported in previous years have been reclassified to conform to the 2011 presentation.

Cash and Cash Equivalents. Cash and cash equivalents consist of cash and investments with original maturities of three months or less. We state them at cost, which approximates fair value. We state at fair value the portion of our cash equivalents that are invested in money market funds, which are actively traded and have quoted market prices.

Investments. We account for our investments in accordance with FASB ASC 320, Investments-Debt and Equity Securities. We classify our investments into three categories: held-to-maturity, trading, and available-for-sale.

•
Held-to-maturity:  We classify certain investments, primarily certificates of deposit, as held-to-maturity securities, based on our intent and ability to hold these securities to maturity. We record held-to-maturity investments at amortized cost in our Consolidated Balance Sheets.

•
Trading:  We classify certain other investments, primarily equity securities, as trading securities, primarily to satisfy the requirements of one of our wholly owned subsidiaries, which is a registered broker-dealer. We include realized and unrealized gains and losses associated with these investments as a component of our operating income in our Consolidated Statements of Income. We record these securities at their fair value in our Consolidated Balance Sheets.

•
Available-for-sale:  Investments not considered held-to-maturity or trading securities are classified as available-for-sale securities. Available-for-sale securities primarily consist of fixed-income securities. We report unrealized gains and losses for available-for-sale securities as other comprehensive income (loss), net of related income taxes. We record these securities at their fair value in our Consolidated Balance Sheets.

Fair Value Measurements. We follow FASB ASC 820, Fair Value Measurements and Disclosures. FASB ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Under FASB ASC 820, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in any new circumstances and does not require any new fair value measurements.

FASB ASC 820 uses a fair value hierarchy based on three broad levels of valuation inputs as described below:

•
Level 1:  Valuations based on quoted prices in active markets for identical assets or liabilities that the company has 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.

We provide additional information about our cash equivalents and investments that are subject to valuation under FASB ASC 820 in Note 5 in these Notes to our Consolidated Financial Statements.

The Fair Value Option for Financial Assets and Financial Liabilities. FASB ASC 825, Financial Instruments, permits entities the option to measure many financial instruments and certain other items at fair value with changes in fair value recognized in earnings each period. FASB ASC 825 allows the fair value option to be elected on an instrument-by-instrument basis when the asset or liability is initially recognized or when there's an event that gives rise to a new basis of accounting for that instrument. We do not apply this fair value option to any of our eligible assets.

Concentration of Credit Risk. No single customer is large enough to pose a significant credit risk to our operations or financial condition. For the years ended December 31, 2011, 2010, and 2009, no single customer represented 5% or more of our consolidated revenue. If receivables from our customers become delinquent, we begin a collections process. We maintain an allowance for doubtful accounts based on our estimate of the probable losses of accounts receivable.

Property, Equipment, and Depreciation. We state property and equipment at historical cost, net of accumulated depreciation. We depreciate property and equipment primarily using the straight-line method based on the useful life of the asset, which ranges from three to seven years. We amortize leasehold improvements over the lease term or their useful lives, whichever is shorter.

Computer Software and Internal Product Development Costs. We capitalize certain costs in accordance with FASB ASC 350-40, Internal-Use Software, FASB ASC 350-50, Website Development Costs, and FASB ASC 985, Software. Internal product development costs mainly consist of employee costs for developing new web-based products and certain major enhancements of existing products. We amortize these costs on a straight-line basis over the estimated economic life, which is generally three years. Capitalized software development costs related to projects that have not been placed into service yet are included in our construction in progress balance.

Business Combinations. Over the past several years, we have acquired companies that complement our business operations. For each acquisition, we allocate the purchase price to the assets acquired, liabilities assumed, and goodwill. We follow FASB ASC 805, Business Combinations. We recognize and measure the fair value of the acquired operation as a whole, and the assets acquired and liabilities assumed at their full fair values as of the date control is obtained, regardless of the percentage ownership in the acquired operation or how the acquisition was achieved. We expense direct costs related to the business combination, such as advisory, accounting, legal, valuation, and other professional fees, as incurred. We recognize restructuring costs, including severance and relocation for employees of the acquired entity, as post-combination expenses unless the target entity meets the criteria of FASB ASC 420, Exit or Disposal Cost Obligations on the acquisition date.

As part of the purchase price allocation, we follow the requirements of FASB ASC 740, Income Taxes. This includes establishing deferred tax assets or liabilities reflecting the difference between the values assigned for financial statement purposes and values applicable for income tax purposes. In certain acquisitions, the goodwill resulting from the purchase price allocation may not be deductible for income tax purposes. FASB ASC 740 prohibits recognition of a deferred tax asset or liability for temporary differences in goodwill if goodwill is not amortizable and deductible for tax purposes.

Goodwill. Changes in the carrying amount of our recorded goodwill are mainly the result of business acquisitions. In accordance with FASB ASC 350, Intangibles - Goodwill and Other, we do not amortize goodwill; instead, goodwill is subject to an impairment test annually, or whenever indicators of impairment exist. An impairment would occur if the carrying amount of a reporting unit exceeded the fair value of that reporting unit. In 2011, we altered the definition of our reporting units to align with the definition of our operating segments. This realignment occurred because of our successful efforts to integrate acquired businesses and leverage proprietary content across multiple products. As a result, the businesses that previously represented components of our operating segments no longer met the criteria for recognition as reporting units. Our reporting units constitute businesses for which discrete financial information, which is regularly reviewed by management, is available. We performed annual impairment reviews in the fourth quarter of 2011, 2010, and 2009. We did not record any impairment losses in 2011, 2010, or 2009.

Intangible Assets. We amortize intangible assets using the straight-line method over their estimated economic useful lives, which range from one to 25 years. In accordance with FASB ASC 360-10-35, Subsequent Measurement-Impairment or Disposal of Long Lived Assets, we review intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the value of future undiscounted cash flows is less than the carrying amount of an asset, we record an impairment loss based on the excess of the carrying amount over the fair value of the asset. We recorded an impairment loss of approximately $800,000 in 2011. We did not record any impairment losses in 2010 or 2009. The impairment charge is included in our amortization expense on our Consolidated Statements of Income.

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.

Effective January 1, 2011, we adopted FASB ASU No. 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements. ASU 2009-13 superseded 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 applied this guidance for revenue arrangements entered into or materially modified from January 1, 2011. The adoption of ASU 2009-13 did not significantly affect either the timing or amount of our 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, our structured credit research and ratings offerings, 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. For new-issue ratings and analysis for CMBS, we charge asset-based fees that are paid by the issuer on the rated balance of the transaction and recognize the revenue immediately upon issuance of the transaction.

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.

Advertising Costs. Advertising costs include expenses incurred for various print and Internet ads, search engine fees, and direct mail campaigns. We expense advertising costs as incurred. The table below summarizes our advertising expense for the past three years:
($000)
 
2011

 
2010

 
2009

Advertising expense
 
$
8,210

 
$
8,572

 
$
7,361



Stock-Based Compensation Expense. We account for our stock-based compensation expense in accordance with FASB ASC 718, Compensation—Stock Compensation. Our stock-based compensation expense reflects grants of restricted stock units, restricted stock, and stock options. We measure the fair value of our restricted stock units and restricted stock on the date of grant based on the closing market price of Morningstar's common stock on the day prior to grant. For stock options granted in 2011, we estimated the fair value of our stock options on the date of grant using a Black-Scholes option-pricing model. We amortize the fair values to stock-based compensation expense, net of estimated forfeitures, ratably over the vesting period.

We estimate expected forfeitures of all employee stock-based awards and recognize compensation cost only for those awards expected to vest. We determine forfeiture rates based on historical experience and adjust the estimated forfeitures to actual forfeiture experience as needed.

Liability for Sabbatical Leave. In certain of our operations, we offer employees a sabbatical leave. Although the sabbatical policy varies by region, in general, Morningstar's full-time employees are eligible for six weeks of paid time off after four years of continuous service. We account for our sabbatical liability in accordance with FASB ASC 710-10-25, Compensated Absences. We record a liability for employees' sabbatical benefits over the period employees earn the right for sabbatical leave.

Income Taxes. We record deferred income taxes for the temporary differences between the carrying amount of assets and liabilities for financial statement purposes and the amounts used for income tax purposes in accordance with FASB ASC 740, Income Taxes. FASB ASC 740 prescribes the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements, and also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, and disclosure for uncertain tax positions.

We recognize interest and penalties related to unrecognized tax benefits as part of income tax expense in our Consolidated Statements of Income. We classify liabilities related to unrecognized tax benefits as either current liabilities or “Other long-term liabilities” in our Consolidated Balance Sheet, depending on when we expect to make payment.

Income per Share. We compute and present income per share in accordance with FASB ASC 260, Earnings Per Share. The difference between weighted average shares outstanding and diluted shares outstanding primarily reflects the dilutive effect associated with our stock-based compensation plans. Beginning in 2010, we further compute income per share in accordance with FASB ASC 260-10-45-59A, Participating Securities and the Two Class Method.

In May 2010, we issued restricted stock in conjunction with the acquisition of Realpoint, LLC (now Morningstar Credit Ratings, LLC). Because the restricted stock contains nonforfeitable rights to dividends, it meets the criteria of a participating security. Under the two-class method, we allocate earnings 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. For purposes of calculating earnings per share, we reduce our reported net earnings by the amount allocated to participating securities to arrive at the earnings allocated to common stock shareholders.

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. 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.

Foreign Currency. We translate the financial statements of non-U.S. subsidiaries to U.S. dollars using the period-end exchange rate for assets and liabilities and an average exchange rate for revenue and expense. We use the local currency as the functional currency for all of our non-U.S. subsidiaries. We record translation adjustments for non-U.S. subsidiaries as a component of “Other comprehensive income (loss)” in our Consolidated Statements of Comprehensive Income. We include exchange gains and losses arising from transactions denominated in currencies other than the functional currency in “Other income (expense), net” in our Consolidated Statements of Income.

Income Per Share
Income Per Share
Income 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:
 
(in thousands, except per share amounts)
 
2011

 
2010

 
2009

 
 
 
 
 
 
 
Basic net income per share attributable to Morningstar, Inc.:
 
 
 
 
 
 
Net income attributable to Morningstar, Inc.:
 
$
98,357

 
$
86,370

 
$
82,129

Less: Distributed earnings available to participating securities
 
(40
)
 
(10
)
 
—

Less: Undistributed earnings available to participating securities
 
(259
)
 
(335
)
 
—

Numerator for basic net income per share — undistributed and distributed earnings available to common shareholders
 
$
98,058

 
$
86,025

 
$
82,129

 
 
 
 
 
 
 
Weighted average common shares outstanding
 
50,032

 
49,249

 
48,112

 
 
 
 
 
 
 
Basic net income per share attributable to Morningstar, Inc.
 
$
1.96

 
$
1.75

 
$
1.71

 
 
 
 
 
 
 
Diluted net income per share attributable to Morningstar, Inc.:
 
 
 
 
 
 
Numerator for basic net income per share — undistributed and distributed earnings available to common shareholders
 
$
98,058

 
$
86,025

 
$
82,129

Add: Undistributed earnings allocated to participating securities
 
259

 
335

 
—

Less: Undistributed earnings reallocated to participating securities
 
(254
)
 
(326
)
 
—

Numerator for diluted net income per share — undistributed and distributed earnings available to common shareholders
 
$
98,063

 
$
86,034

 
$
82,129

 
 


 


 
 
Weighted average common shares outstanding
 
50,032

 
49,249

 
48,112

Net effect of dilutive stock options and restricted stock units
 
956

 
1,306

 
1,681

Weighted average common shares outstanding for computing diluted income per share
 
50,988

 
50,555

 
49,793

 
 


 


 
 
Diluted net income per share attributable to Morningstar, Inc.
 
$
1.92

 
$
1.70

 
$
1.65


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.

The Investment Information also includes Morningstar Credit Research and Morningstar Structured Credit Ratings. Morningstar Structured Credit Ratings is provided by Morningstar Credit Ratings, LLC (formerly Realpoint, LLC), a Nationally Recognized Statistical Rating Organization specializing in structured finance. It offers securities ratings, research, surveillance services, and data to help institutional investors identify risk in commercial mortgage-backed securities (CMBS).

We also offer a variety of financial communications and newsletters, real-time data, and investment indexes.


•
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 present information about our operating segments:
 
2011 Segment Information
 
 
 
 
 
 
 
 
 
 
Year ended December 31, 2011
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

External revenue
 
$
500,909

 
$
130,491

 
$
—

 
$
631,400

Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
351,194

 
58,596

 
24,979

 
434,769

Stock-based compensation expense
 
10,113

 
2,080

 
3,110

 
15,303

Depreciation and amortization
 
8,088

 
166

 
34,659

 
42,913

Operating income (loss)
 
$
131,514

 
$
69,649

 
$
(62,748
)
 
$
138,415

 
 
 
 
 
 
 
 
 
U.S. capital expenditures
 
 
 
 

 
 

 
$
13,816

Non-U.S. capital expenditures
 
 

 
 

 
 

 
$
9,506

 
 
 
 
 
 
 
 
 
U.S. revenue
 
 

 
 

 
 

 
$
446,470

Non-U.S. revenue
 
 

 
 

 
 

 
$
184,930

 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2011
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

Goodwill
 
$
277,059

 
$
41,433

 
$
—

 
$
318,492

 
 
 
 
 
 
 
 
 
U.S. long-lived assets
 
 
 
 
 
 
 
$
44,572

Non-U.S. long-lived assets
 
 
 
 
 
 
 
$
23,624

 
2010 Segment Information
 
 
 
 
 
 
 
 
 
 
Year ended December 31, 2010
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

External revenue
 
$
444,957

 
$
110,394

 
$
—

 
$
555,351

Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
301,722

 
51,361

 
27,752

 
380,835

Stock-based compensation expense
 
8,110

 
2,032

 
3,651

 
13,793

Depreciation and amortization
 
7,385

 
185

 
32,094

 
39,664

Operating income (loss)
 
$
127,740

 
$
56,816

 
$
(63,497
)
 
$
121,059

 
 
 
 
 
 
 
 
 
U.S. capital expenditures
 
 

 
 

 
 

 
$
5,067

Non-U.S. capital expenditures
 
 

 
 

 
 

 
$
9,704

 
 
 
 
 
 
 
 
 
U.S. revenue
 
 

 
 

 
 

 
$
398,215

Non-U.S. revenue
 
 

 
 

 
 

 
$
157,136

 
 
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

 
2009 Segment Information
 
 
 
 
 
 
 
 
 
 
Year ended December 31, 2009
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items
 
Total

External revenue
 
$
386,642

 
$
92,354

 
$
—

 
$
478,996

Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
237,101

 
37,296

 
36,372

 
310,769

Stock-based compensation expense
 
5,704

 
1,965

 
3,924

 
11,593

Depreciation and amortization
 
5,408

 
204

 
26,349

 
31,961

Operating income (loss)
 
$
138,429

 
$
52,889

 
$
(66,645
)
 
$
124,673

 
 
 
 
 
 
 
 
 
U.S. capital expenditures
 
 
 
 
 
 
 
$
4,479

Non-U.S. capital expenditures
 
 
 
 
 
 
 
$
7,893

 
 
 
 
 
 
 
 
 
U.S. revenue
 
 
 
 
 
 
 
$
349,836

Non-U.S. revenue
 
 
 
 
 
 
 
$
129,160

 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2009
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

Goodwill
 
$
217,258

 
$
32,234

 
$
—

 
$
249,492

 
 
 
 
 
 
 
 
 
U.S. long-lived assets
 
 
 
 
 
 
 
$
42,884

Non-U.S. long-lived assets
 
 
 
 
 
 
 
$
16,944



Information by geographical region is as follows:
External revenue by geographic region
 
 
 
 
 
 
 
 
 
Year ended December 31
 
($000)
 
2011

 
2010

 
2009

 
United States
 
$
446,470

 
$
398,215

 
$
349,836

 
United Kingdom
 
53,427

 
43,797

 
36,666

 
Europe, excluding the United Kingdom
 
49,507

 
39,851

 
36,823

 
Australia
 
39,761

 
35,638

 
25,509

 
Canada
 
27,808

 
25,533

 
20,506

 
Asia, excluding Japan
 
9,240

 
7,855

 
5,725

 
Japan
 
3,948

 
3,871

 
3,726

 
Other
 
1,239

 
591

 
205

 
Total
 
$
631,400

 
$
555,351

 
$
478,996

 


Long-lived assets by geographic region
 
 
 
 
 
 
 
 
 
As of December 31
 
($000)
 
2011

 
2010

 
2009

 
United States
 
$
44,572

 
$
39,496

 
42,884

 
United Kingdom
 
7,512

 
5,960

 
5,870

 
Europe, excluding the United Kingdom
 
2,629

 
3,479

 
4,626

 
Australia
 
1,415

 
1,554

 
1,430

 
Canada
 
2,076

 
2,395

 
2,610

 
Asia, excluding Japan
 
9,656

 
8,874

 
1,988

 
Japan
 
282

 
233

 
279

 
Other
 
54

 
114

 
141

 
Total
 
$
68,196

 
$
62,105

 
59,828

 
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 December 31
 
 
($000)
 
2011

 
2010

Available-for-sale
 
$
247,917

 
$
173,072

Held-to-maturity
 
16,347

 
7,476

Trading securities
 
5,491

 
4,692

Total
 
$
269,755

 
$
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 December 31, 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
 
$
139,099

 
$
72

 
$
(402
)
 
$
138,769

 
$
113,597

 
$
36

 
$
(56
)
 
$
113,577

Corporate bonds
 
61,589

 
14

 
(280
)
 
61,323

 
42,839

 
63

 
(24
)
 
42,878

Commercial paper
 
29,964

 
2

 
(7
)
 
29,959

 
2,994

 
—

 
(3
)
 
2,991

Equity securities and exchange-traded funds
 
8,461

 
368

 
(558
)
 
8,271

 
4,510

 
418

 
(6
)
 
4,922

Mutual funds
 
9,298

 
363

 
(66
)
 
9,595

 
8,146

 
558

 
—

 
8,704

Total
 
$
248,411

 
$
819

 
$
(1,313
)
 
247,917

 
$
172,086

 
$
1,075

 
$
(89
)
 
$
173,072

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Held-to-maturity:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Certificates of deposit
 
$
16,347

 
$
—

 
$
—

 
$
16,347

 
$
7,476

 
$
—

 
$
—

 
$
7,476


 
As of December 31, 2011 and December 31, 2010, investments with unrealized losses for greater than a 12-month period were not material to the 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 December 31, 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 December 31, 2011
 
As of December 31, 2010
($000)
 
Cost

 
Fair Value

 
Cost

 
Fair Value

Available-for-sale:
 
 

 
 

 
 

 
 

Due in one year or less
 
$
155,651

 
$
155,247

 
$
85,990

 
$
85,964

Due in one to two years
 
75,001

 
74,804

 
73,440

 
73,482

Equity securities, exchange-traded funds, and mutual funds
 
17,759

 
17,866

 
12,656

 
13,626

Total
 
$
248,411

 
$
247,917

 
$
172,086

 
$
173,072

 
 
 
 
 
 
 
 
 
Held-to-maturity:
 
 

 
 

 
 

 
 

Due in one year or less
 
$
16,342

 
$
16,342

 
$
7,223

 
$
7,223

Due in one to three years
 
5

 
5

 
253

 
253

Total
 
$
16,347

 
$
16,347

 
$
7,476

 
$
7,476


 
As of December 31, 2011 and December 31, 2010, 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 Consolidated Statements of Income: 
($000)
 
2011

 
2010

 
2009

Realized gains
 
$
761

 
$
276

 
$
—

Realized losses
 
(501
)
 
(1
)
 
—

Realized gains, net
 
$
260

 
$
275

 
$
—


 
The realized gains and losses are determined using the specific identification method.

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

 
2010

 
2009

Unrealized gains (losses), net
 
$
(387
)
 
$
237

 
$
1,233



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 December 31, 2011
 
 
as of
 
Using Fair Value Hierarchy
($000)
 
December 31, 2011
 
Level 1

 
Level 2

 
Level 3

Available-for-sale investments
 
 

 
 

 
 

 
 

Government obligations
 
$
138,769

 
$
—

 
$
138,769

 
$
—

Corporate bonds
 
61,323

 
—

 
61,323

 
—

Commercial paper
 
29,959

 
—

 
29,959

 
—

Equity securities and exchange-traded funds
 
8,271

 
8,271

 
—

 
—

Mutual funds
 
9,595

 
9,595

 
—

 
—

Trading securities
 
5,491

 
5,491

 
—

 
—

Cash equivalents
 
30,818

 
30,818

 
—

 
—

Total
 
$
284,226

 
$
54,175

 
$
230,051

 
$
—

 
 
 
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

 
—

 
—

Cash equivalents
 
27,007

 
27,007

 
—

 
—

Total
 
$
204,771

 
$
45,325

 
$
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.
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 2011.
 
2010 Acquisitions
 
Aegis Equities Research

In April 2010, we acquired Aegis Equities Research, a provider of independent equity research in Australia, for $10,269,000 in cash, net of cash acquired. We began including the financial results of this acquisition in our Consolidated Financial Statements on April 1, 2010. The following table summarizes our allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:
 
 
($000)

Cash and cash equivalents
 
$
51

Investments
 
55

Accounts receivable
 
198

Other non-current assets
 
62

Intangible assets
 
5,801

Goodwill
 
5,117

Deferred revenue
 
(617
)
Other current and non-current liabilities
 
(347
)
Total purchase price
 
$
10,320



The allocation includes $5,801,000 of acquired intangible assets, as follows:
 
 
($000)

 
Weighted Average Useful Life (years)

Customer-related assets
 
$
1,879

 
10

Technology-based assets
 
3,253

 
6

Intellectual property (trademarks and trade names)
 
46

 
1

Non-competition agreement
 
623

 
3

Total intangible assets
 
$
5,801

 
7



Goodwill of $5,117,000 represents the premium we paid over the fair value of the net tangible and intangible assets acquired with this acquisition. We paid this premium for a number of reasons, including the strategic benefits of creating a larger analyst team that will enable us to expand our coverage of Australian-listed companies, provide Australian clients with more robust independent research, and give us the potential to expand our services in multiple delivery channels. Approximately $1,787,000 of the intangible assets is deductible for income tax purposes over a period of approximately three years from the acquisition date.

Old Broad Street Research Ltd

In April 2010, we acquired Old Broad Street Research Ltd. (OBSR) for $17,937,000 in cash, net of cash acquired. OBSR is a provider of fund research, ratings, and investment consulting services in the United Kingdom and offers an array of customized consulting services including model portfolios, advice on fund construction, and corporate governance services that are used by many of the leading financial advisers and fund platforms. We began including the financial results of this acquisition in our Consolidated Financial Statements on April 12, 2010.

The following table summarizes our allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:
 
 
($000)

Cash and cash equivalents
 
$
4,632

Accounts receivable and other current assets
 
986

Other non-current assets
 
1,632

Intangible assets
 
9,266

Goodwill
 
12,422

Deferred revenue
 
(2,633
)
Accounts payable and accrued and other current liabilities
 
(1,342
)
Deferred tax liability--non-current
 
(2,317
)
Other non-current liabilities
 
(77
)
Total purchase price
 
$
22,569



The allocation includes $9,266,000 of acquired intangible assets, as follows:

 
 
($000)

 
Weighted Average Useful Life (years)

Customer-related assets
 
$
7,073

 
13

Technology-based assets
 
1,424

 
5

Intellectual property (trademarks and trade names)
 
769

 
10

Total intangible assets
 
$
9,266

 
12



Goodwill of $12,422,000 represents the premium we paid over the fair value of the acquired net tangible and intangible assets. We paid this premium for a number of reasons, including the strategic benefit of adding to our existing fund research team in London and continuing to build our thought leadership in investment research. OBSR will also help us expand our investment consulting presence in the United Kingdom, where we already provide asset allocation, manager selection, and portfolio construction services to institutions and intermediaries.

The deferred tax liability of $2,317,000 is primarily because the amortization expense related to intangible assets is not deductible for income tax purposes.

Realpoint, LLC

In May 2010, we acquired Realpoint, LLC (Realpoint), a Nationally Recognized Statistical Rating Organization (NRSRO) that specializes in structured finance. Realpoint offers securities ratings, research, surveillance services, and data to help institutional investors identify credit risk in commercial mortgage-backed securities. Institutional investment firms subscribe to Realpoint's ratings and analytics, including money managers who invest in commercial mortgage-backed securities. We began including the financial results of this acquisition in our Consolidated Financial Statements on May 3, 2010. In 2011, we renamed Realpoint as Morningstar Credit Ratings, LLC.

In conjunction with this acquisition, we paid $38,327,000 in cash, net of cash acquired, and issued 199,174 shares of restricted stock to the selling employee-shareholders. Because of the terms of the restricted share agreements and in accordance with FASB ASC 805, Business Combinations, we account for these grants as stock-based compensation expense and not as part of the acquisition consideration. See Note 10 for additional information concerning the accounting for this restricted stock.

The following table summarizes our allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:

 
 
($000)

Cash and cash equivalents
 
$
5,489

Accounts receivable and other current assets
 
3,567

Other non-current assets
 
738

Deferred tax asset--non-current
 
195

Intangible assets
 
19,120

Goodwill
 
24,903

Deferred revenue
 
(7,316
)
Accounts payable and accrued and other current liabilities
 
(2,785
)
Other non-current liabilities
 
(95
)
Total purchase price
 
$
43,816



The allocation includes $19,120,000 of acquired intangible assets, as follows:

 
 
($000)

 
Weighted Average Useful Life (years)

Customer-related assets
 
$
5,000

 
10

Technology-based assets
 
13,610

 
10

Intellectual property (trademarks and trade names)
 
300

 
1

Non-competition agreement
 
210

 
6

Total intangible assets
 
$
19,120

 
10



Goodwill of $24,903,000 represents the premium we paid over the fair value of the acquired net tangible and intangible assets. We paid this premium for a number of reasons, including the opportunity for Morningstar to enter the structured finance ratings and analysis business.

The value assigned to goodwill, intangible assets, and restricted stock at the date of grant are deductible for income tax purposes over a period of approximately 15 years from the acquisition date.

Increased Ownership Interest in Morningstar Danmark A/S

In July 2010, we acquired an additional 75% interest in Morningstar Danmark A/S (Morningstar Denmark), increasing our ownership to 100% from 25%. Morningstar Denmark's main offering is the investment information website for individual investors, Morningstar.dk, which provides fund and ETF data, portfolio tools, and market analysis. We began consolidating the financial results of this acquisition in our Consolidated Financial Statements on July 1, 2010.

Morningstar Denmark's total estimated fair value of $20,192,000 includes $15,467,000 in cash paid to acquire the remaining 75% interest in Morningstar Denmark and $4,725,000 related to the 25% of Morningstar Denmark we previously held. We determined the fair value of the previously held 25% investment independent of the acquired controlling interest and recorded a non-cash holding gain of $4,564,000. The following table summarizes our allocation of the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:
 
 
($000)

Cash and cash equivalents
 
$
915

Accounts receivable and other current assets
 
632

Other non-current assets
 
65

Intangible assets
 
9,854

Goodwill
 
12,342

Deferred revenue
 
(496
)
Deferred tax liability
 
(2,504
)
Other current and non-current liabilities
 
(616
)
Total fair value of Morningstar Denmark
 
$
20,192



The allocation includes $9,854,000 of acquired intangible assets, as follows:
 
 
($000)

 
Weighted Average Useful Life (years)

Customer-related assets
 
$
9,130

 
14

Technology-based assets
 
724

 
6

Total intangible assets
 
$
9,854

 
13



We recognized a deferred tax liability of $2,504,000 mainly because the amortization expense related to certain intangible assets is not deductible for income tax purposes.

Goodwill of $12,342,000 represents the premium over the fair value of the net tangible and intangible assets acquired with this acquisition. We paid this premium for a number of reasons, including the opportunity to offer Morningstar's full suite of products and services to investors in Denmark and further leveraging Morningstar's global reach, investment databases, and technology expertise.

Annuity intelligence business of Advanced Sales and Marketing Corporation (ASMC)

In November 2010, we acquired the annuity intelligence business of Advanced Sales and Marketing Corporation (ASMC) for $14,113,000 in cash. The acquisition includes the Annuity Intelligence Report (AI Report), a web-based service that helps broker-dealers, insurers, and the financial professionals they support better understand and more effectively present variable annuity products to their clients. The AI Report service 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. We began including the financial results of this acquisition in our Consolidated Financial Statements on November 1, 2010.

The following table summarizes our allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:
 
 
($000)

Accounts receivable and other current assets
 
$
163

Other non-current assets
 
9

Intangible assets
 
6,300

Goodwill
 
9,028

Deferred revenue
 
(1,364
)
Accounts payable and accrued and other current liabilities
 
(23
)
Total purchase price
 
$
14,113



The allocation includes $6,300,000 of acquired intangible assets, as follows:
 
 
($000)

 
Weighted Average Useful Life (years)

Customer-related assets
 
$
4,100

 
20

Technology-based assets
 
2,100

 
9

Intellectual property (trademarks and trade names)
 
100

 
10

Total intangible assets
 
$
6,300

 
16



The goodwill value of $9,028,000 represents the premium we paid over the fair value of the acquired net tangible and intangible assets. We paid this premium for a number of reasons, including the opportunity to combine Morningstar's strength in variable annuity subaccount data and modeling tools with AI Report's product-level data and proprietary methodologies.

The value assigned to goodwill and intangible assets are deductible for income tax purposes over a period of approximately 15 years from the acquisition date.

Other Acquisitions in 2010

We also completed two other acquisitions in 2010:

•
Footnoted business of Financial Fineprint Inc.: In February 2010, we acquired the Footnoted business of Financial Fineprint Inc. (Footnoted), a blog for professional money managers, analysts, and individual investors. Footnoted Pro, a service for institutional investors, provides insight on actionable items and trends in SEC filings. The acquisition includes the Footnoted.org website and the Footnoted Pro service. We began including the financial results of this acquisition in our Consolidated Financial Statements on February 1, 2010.

•
Seeds Group: In July 2010, we acquired Seeds Group (Seeds), a leading provider of investment consulting services and fund research in France. Through its subsidiary Seeds Finance, Seeds provides investment consulting services and specializes in asset liability management, manager selection, plan construction, risk, and portfolio management in alternative investments and active strategies. Its subsidiary, Multiratings.com, provides a fund research and investment education website for advisor groups and institutions. We began including the financial results of this acquisition in our Consolidated Financial Statements on July 1, 2010.

The combined purchase price for these two acquisitions was $6,113,000 less acquired cash.

For these two acquisitions, the following table summarizes our allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at the dates of acquisition:
 
 
($000)

Cash
 
$
1,442

Accounts receivable and other current assets
 
939

Other non-current assets
 
179

Intangible assets
 
2,661

Goodwill
 
3,869

Deferred revenue
 
(159
)
Accounts payable and accrued and other current liabilities
 
(576
)
Deferred tax liability--non-current
 
(800
)
Total purchase price
 
$
7,555



The allocation includes $2,661,000 of acquired intangible assets, as follows:

 
 
($000)

 
Weighted Average Useful Life (years)

Customer-related assets
 
$
1,835

 
10

Technology-based assets
 
447

 
4

Intellectual property (trademarks and trade names)
 
379

 
10

Total intangible assets
 
$
2,661

 
9



2009 Acquisitions

Equity research and data business of C.P.M.S. Computerized Portfolio Management Services Inc.

In May 2009, we acquired the equity research and data business of C.P.M.S. Computerized Portfolio Management Services Inc. (CPMS) for $13,885,000 in cash. CPMS tracks fundamental equity data for approximately 4,000 securities in the United States and Canada and provides earnings estimates for Canadian stocks. In addition, CPMS' flagship software platform, the Equity Market Service, fully integrates fundamental and expected earnings data to generate a wide range of applications such as stock, industry, and market analysis; construction of long and short strategies with its proprietary ranking and screening system; stock and portfolio sensitivity analysis; and portfolio analytics. CPMS' equity research and data business also includes eight distinct quantitatively driven model portfolios covering value, growth, income generating, momentum, and short-selling investment styles for the U.S. and Canadian equity markets. We began including the financial results of this acquisition in our Consolidated Financial Statements on May 1, 2009.

The following table summarizes our allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:
 
 
($000)

Accounts receivable
 
$
352

Other current assets
 
54

Deferred tax asset--non-current
 
228

Intangible assets
 
8,588

Goodwill
 
5,727

Deferred revenue
 
(237
)
Accounts payable and accrued liabilities
 
(145
)
Other liabilities--non-current
 
(682
)
Total purchase price
 
$
13,885



The allocation includes $8,588,000 of acquired intangible assets, as follows:
 
 
($000)

 
Weighted Average Useful Life (years)

Customer-related assets
 
$
5,118

 
13

Technology-based assets
 
3,210

 
8

Intellectual property (trademarks and trade names)
 
260

 
10

Total intangible assets
 
$
8,588

 
11



Goodwill of $5,727,000 represents the premium we paid over the fair value of the acquired net tangible and intangible assets. We paid this premium for a number of reasons, including the strategic benefit of expanding our Canadian equity research and data offerings.

The goodwill and intangible assets are amortizable for tax purposes for a period of approximately 15 years from the date of acquisition.

Logical Information Machines, Inc.

In December 2009, we acquired Logical Information Machines, Inc. (LIM), a leading provider of data and analytics for the energy, financial, and agriculture sectors, for $54,262,000 in cash including post-closing adjustments. LIM is a pioneer in providing market pricing data, securities reference data, historical event data, predictive analytics, and advanced data management solutions that help customers manage large sets of time-series data. LIM collects, unifies, and conducts quality assurance on data from more than 200 data sources in the energy, financial, and agriculture sectors and provides clients with one central source for data intelligence and analysis. LIM's clients can also use LIM's tools to analyze their own proprietary data. In 2011, we renamed LIM as Morningstar Commodity Data, Inc.

The following table summarizes our allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at December 31, 2009, the date of acquisition, for LIM:
 
 
($000)

Investments
 
$
2,233

Accounts receivable
 
1,551

Other current assets
 
391

Property and equipment
 
477

Other assets--non-current
 
4,473

Intangible assets
 
23,800

Goodwill
 
34,298

Deferred revenue
 
(511
)
Accounts payable and accrued liabilities
 
(2,124
)
Other current liabilities
 
(411
)
Other liabilities--non-current
 
(1,078
)
Deferred tax liability--non-current
 
(8,837
)
Total purchase price
 
$
54,262



The allocation includes $23,800,000 of acquired intangible assets, as follows:
 
 
($000)

 
Weighted Average Useful Life (years)

Customer-related assets
 
$
13,800

 
15

Technology-based assets
 
9,000

 
10

Intellectual property (trademarks and trade names)
 
1,000

 
10

Total intangible assets
 
$
23,800

 
13



The deferred tax liability of $8,837,000 is primarily because the amortization expense related to certain intangible assets is not deductible for income tax purposes.

Goodwill of $34,298,000 represents the premium we paid over the fair value of the net tangible and intangible assets we acquired for LIM. We paid this premium for a number of reasons, including the strategic benefit of expanding our core data and software businesses and gaining access to several new industries via a new distribution channel for Morningstar. LIM currently serves about 130 clients including some of the world's largest asset managers, banks, oil companies, power and natural gas trading firms, utilities, risk managers, and agriculture and commodities trading firms. The goodwill we recorded is not considered deductible for income tax purposes.

Other Acquisitions in 2009

We completed four other acquisitions in 2009, as follows:

•
Global financial filings database business of Global Reports LLC (Global Reports) provides timely online access to full-color financial filings from more than 37,000 publicly traded companies in approximately 130 countries and offers more than 500,000 current and historical filings and reports, such as annual and interim reports, initial public offerings, and Corporate and Social Responsibility reports, in their native languages and in English when available. We began including the financial results of this acquisition in our Consolidated Financial Statements on April 20, 2009.

•
Andex Associates, Inc. (Andex) is known for its Andex Charts, which illustrate historical market returns, stock index growth, inflation rates, currency rates, and general economic conditions for the United States dating back to 1926, and for Canada dating back to 1950. We began including the financial results of this acquisition in our Consolidated Financial Statements on May 1, 2009.

•
Intech Pty Ltd (Intech) is a provider of multimanager and investment portfolio solutions in Sydney, Australia. Intech also manages a range of single sector, alternative strategy, and diversified investment portfolios, has one of the leading separately managed account databases in Australia, and offers the Intech Desktop Consultant, a research software product for institutions. We began including the financial results of this acquisition in our Consolidated Financial Statements on June 30, 2009. In 2010, we renamed Intech as Ibbotson Associates, Australia.

•
Canadian Investment Awards and Gala is Canada's marquee investment awards program, recognizing excellence in products and firms within the financial services industry. We began including the financial results of this acquisition in our Consolidated Financial Statements on December 17, 2009.

The total purchase price of these four acquisitions was $5,686,000, net of cash acquired. This entire amount was substantially paid in 2009. The following table summarizes our allocation of the purchase prices to the estimated fair values of the assets acquired and liabilities assumed at the dates of acquisition for these four acquisitions:
 
 
($000)

Cash and cash equivalents
 
$
1,295

Accounts receivable
 
2,342

Other current assets
 
515

Other non-current assets
 
135

Intangible assets
 
4,306

Goodwill
 
3,225

Accounts payable and accrued liabilities
 
(4,026
)
Deferred tax liability--non-current
 
(511
)
Other non-current liabilities
 
(300
)
Total purchase price
 
$
6,981



The allocation includes $4,306,000 of acquired intangible assets, as follows:
 
 
($000)

 
Weighted Average Useful Life (years)

Customer-related assets
 
$
3,135

 
10

Technology-based assets
 
971

 
9

Intellectual property (trademarks and trade names)
 
173

 
8

Non-competition agreement
 
27

 
4

Total intangible assets
 
$
4,306

 
10



The deferred tax liability of $511,000 is primarily because the amortization expense related to certain intangible assets is not deductible for income tax purposes. Approximately $1,344,000 of the intangible assets is deductible for income tax purposes over a period of approximately 15 years from the acquisition date.

Goodwill of $3,225,000 represents the premium we paid over the fair value of the net tangible and intangible assets we acquired with these acquisitions. We paid this premium for a number of reasons, including the strategic benefit of broadening our database to include a global financial filings database, expanding our library of communications materials to include financial charts and communication materials for financial advisors in Canada, expanding our international presence in fund-of-funds investment management to Australia, and continuing to build our brand name by acquiring and rebranding Canada's marquee investment awards program, which recognizes excellence in products and firms within the financial services industry.

Approximately $1,099,000 of the goodwill is deductible for income tax purposes over a period of approximately 15 years from the acquisition date.



Increased Investment in Morningstar Korea Co., Ltd.

In 2009, we acquired an additional 40% ownership in Morningstar Korea Co., Ltd. (Morningstar Korea), increasing our ownership interest to 80%. Morningstar Korea provides financial information and services for investors in South Korea and offers consulting and advisory services through its subsidiary, Morningstar Associates Korea.

Upon acquiring the majority ownership, we increased our investment to reflect the fair value of the assets and liabilities acquired and recorded a non-cash holding gain of $352,000. The fair value allocation includes $1,027,000 of goodwill and $609,000 of acquired intangible assets. We recognized a deferred tax liability of $229,000 mainly because the amortization expense related to certain intangible assets is not deductible for income tax purposes. We also recognized the fair value of the non-controlling interest in Morningstar Korea. The amount of $550,000, representing the non-controlling interest in Morningstar Korea, is included in our Consolidated Balance Sheet as of December 31, 2010.

Goodwill
 
The following table shows the changes in our goodwill balances from January 1, 2010 to December 31, 2011:
 
 
($000)

Balance as of January 1, 2010
$
249,492

Adjustments to 2009 Acquisitions:
 
Acquisition of the equity research and data business of CPMS
(249
)
Acquisition of Logical Information Machines, Inc.
(252
)
Goodwill for four other acquisitions completed in 2009
(492
)
Goodwill for Morningstar Korea
(121
)
2010 Acquisitions:
 
Acquisition of Aegis Equities Research
5,534

Acquisition of Old Broad Street Research, Ltd.
12,422

Acquisition of Realpoint, LLC
23,103

Acquisition of remaining ownership in Morningstar Denmark
12,342

Acquisition of annuity intelligence business of Advanced Sales and Marketing Corp.
8,921

Acquisition of Footnoted business of Financial Fineprint Inc. and Seeds Group
3,972

Other, primarily currency translation
2,989

Balance as of December 31, 2010
$
317,661

Adjustments to 2010 Acquisitions:
 
Acquisition of Aegis Equities Research
(417
)
Acquisition of Realpoint, LLC
1,800

Acquisition of annuity intelligence business of Advanced Sales and Marketing Corp.
107

Acquisition of Footnoted business of Financial Fineprint Inc. and Seeds Group
(103
)
Other, primarily currency translation
(556
)
Balance as of December 31, 2011
$
318,492

 
 


We did not record any impairment losses in 2011, 2010, or 2009, respectively as the estimated fair values exceeded the carrying values of the reporting units.

Intangible Assets

The following table summarizes our intangible assets: 
 
 
As of December 31, 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
 
$
32,293

 
$
(20,455
)
 
$
11,838

 
9

 
$
33,990

 
$
(15,970
)
 
$
18,020

 
10

Customer-related assets
 
134,396

 
(52,611
)
 
81,785

 
12

 
130,675

 
(39,951
)
 
90,724

 
11

Supplier relationships
 
240

 
(84
)
 
156

 
20

 
240

 
(72
)
 
168

 
20

Technology-based assets
 
80,694

 
(35,130
)
 
45,564

 
9

 
78,651

 
(25,682
)
 
52,969

 
9

Non-competition agreement
 
1,751

 
(1,285
)
 
466

 
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
 
$
249,374

 
$
(109,565
)
 
$
139,809

 
10

 
$
251,714

 
$
(82,691
)
 
$
169,023

 
10


 
In 2011, we recorded an impairment loss of approximately $800,000 for the masthead related to one of the magazines we acquired from Aspect Huntley in 2006. We did not record any impairment losses in 2010 or 2009, respectively.

The following table summarizes our amortization expense related to intangible assets:
($000)
 
2011

 
2010

 
2009

Amortization expense
 
$
27,267

 
$
24,850

 
$
18,963


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

Based on acquisitions completed through December 31, 2011, we expect intangible amortization expense for 2012 and subsequent years as follows:
 
($000)

2012
23,803

2013
21,131

2014
19,907

2015
19,042

2016
14,441


 
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.
Investments in Unconsolidated Entities
Investments in Unconsolidated Entities
Investments in Unconsolidated Entities
 
Our investments in unconsolidated entities consist primarily of the following:
 
 
 
As of December 31
 
 
($000)
 
2011

 
2010

Investment in MJKK
 
$
19,662

 
$
19,036

Other equity method investments
 
2,807

 
109

Investments accounted for using the cost method
 
5,173

 
5,117

Total investments in unconsolidated entities
 
$
27,642

 
$
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 December 31
 
 
 
 
2011

 
2010

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

 
 

Japanese yen (¥000)
 
¥
2,797,704

 
¥
3,197,000

Equivalent U.S. dollars ($000)
 
$
36,146

 
$
38,361



Other Equity Method Investments. As of December 31, 2011 and 2010, other equity method investments includes 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 December 31, 2011 and 2010. As of December 31, 2011, other equity method investments also includes our investment in YCharts, Inc. (YCharts). In November 2011, we acquired a minority equity stake in YCharts for $2,450,000. YCharts is a technology company that provides stock research and analysis. Our ownership interest in YCharts was approximately 20% as of December 31, 2011.
 
Cost Method Investments. As of December 31, 2011 and 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, uses data from third party sources to derive personalized recommendations on restaurants, bars, and shops. Bundle also has a spend tracking tool that helps individuals track how much they spend, where, and on what across all of their credit and debit card accounts. We did not record any impairment losses on our cost method investments in 2011 and 2010, respectively.
 
Property, Equipment, and Capitalized Software
Property, Equipment, and Capitalized Software
8. Property, Equipment, and Capitalized Software

The following table shows our property, equipment, and capitalized software summarized by major category:

 
 
As of December 31
 
 
($000)
 
2011

 
2010

Computer equipment
 
$
35,269

 
$
36,274

Capitalized software
 
25,918

 
27,308

Furniture and fixtures
 
19,918

 
18,816

Leasehold improvements
 
47,042

 
44,131

Telephone equipment
 
1,805

 
2,599

Construction in progress
 
8,993

 
1,545

Property, equipment, and capitalized software, at cost
 
138,945

 
130,673

Less accumulated depreciation
 
(70,749
)
 
(68,568
)
Property, equipment, and capitalized software, net
 
$
68,196

 
$
62,105


The following table shows the amount of capitalized software development costs included in construction in progress:
 
 
As of December 31
 
 
($000)
 
2011

 
2010

Capitalized software development costs not yet placed into service
 
$
6,122

 
$
807



The following table summarizes our depreciation expense:
($000)
 
2011

 
2010

 
2009

Depreciation expense
 
$
15,646

 
$
14,814

 
$
12,998



Operating Leases
Operating Leases
Operating Leases

The following table shows our minimum future rental commitments due in each of the next five years and thereafter for all non-cancelable operating leases, consisting primarily of leases for office space:
Minimum Future Rental Commitments
 
($000)

2012
 
$
16,856

2013
 
15,624

2014
 
15,975

2015
 
15,722

2016
 
15,413

Thereafter
 
67,036

Total
 
$
146,626


The following table summarizes our rent expense including taxes, insurance, and other operating costs:

($000)
 
2011

 
2010

 
2009

Rent expense
 
$
20,122

 
$
18,638

 
$
19,489



Deferred rent includes build-out and rent abatement allowances received, which are amortized over the remaining portion of the original term of the lease as a reduction in office lease expense. We include deferred rent, as appropriate, in “Accounts payable and accrued liabilities” and “Other long-term liabilities” on our Consolidated Balance Sheets.
 
 
As of December 31
 
 
($000)
 
2011

 
2010

Deferred rent
 
$
27,282

 
$
28,293



Liability for Vacant Office Space

In 2010, we recorded changes to our liability for vacant office space, primarily for the former Ibbotson headquarters. We increased the liability related to this vacant office space because we anticipated receiving lower sublease income and expected it would take more time than previously estimated to identify a tenant. In addition, we increased our liability for vacant office space related to the equity research and data business acquired from CPMS.

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, 2009 to December 31, 2011:

Liability for Vacant Office Space
 
($000)

Balance as of December 31, 2009
 
$
3,371

Increase liability for vacant office space
 
1,005

Reduction of liability for lease and other related payments
 
(1,880
)
Other, net
 
(67
)
Balance as of December 31, 2010
 
2,429

Reduction of liability for lease and other related payments
 
(1,510
)
Balance as of December 31, 2011
 
$
919



Stock-Based Compensation
Stock-Based Compensation
Stock-Based Compensation

Stock-Based Compensation Plans
 
Our shareholders approved the Morningstar 2011 Stock Incentive Plan (the 2011 Plan) on May 17, 2011. As of that date we stopped granting awards under the Morningstar 2004 Stock Incentive Plan (the 2004 Plan). The 2004 Plan amended and restated the Morningstar 1993 Stock Option Plan, the Morningstar 2000 Stock Option Plan, and the Morningstar 2001 Stock Option Plan.
The 2011 Plan provides for a variety of stock-based awards, including, among other things, stock options, restricted stock units and restricted stock. We granted stock options, restricted stock units and restricted stock under the 2004 Plan.
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 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 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 December 31
(000)
 
2011

Shares available for future grants
 
4,981


 
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 past three years:

($000)
 
2011

 
2010

 
2009

Restricted stock units
 
$
12,765

 
$
12,545

 
$
10,591

Restricted stock
 
2,196

 
1,248

 
—

Stock options
 
342

 
—

 
1,002

Total stock-based compensation expense
 
$
15,303

 
$
13,793

 
$
11,593

 
 
 
 
 
 
 
Income tax benefit related to the stock-based compensation expense
 
$
3,535

 
$
3,500

 
$
3,625



The following table summarizes the amount of unrecognized stock-based compensation expense as of December 31, 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
 
$
27,111

 
32

Restricted stock
 
5,919

 
40

Stock options
 
1,849

 
39

Total unrecognized stock-based compensation expense
 
$
34,879

 
34



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 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 past three years:
Restricted Stock Units (RSUs)
 
Unvested

 
Vested but
Deferred

 
Total

 
Weighted
Average
Grant Date Value
per RSU

RSUs Outstanding - January 1, 2009
 
494,500

 
22,024

 
516,524

 
$
55.17

Granted
 
373,829

 
—

 
373,829

 
38.89

Vested
 
(150,031
)
 
—

 
(150,031
)
 
53.27

Vested but deferred
 
(17,570
)
 
17,570

 
—

 
—

Forfeited
 
(19,303
)
 
—

 
(19,303
)
 
50.05

RSUs Outstanding - December 31, 2009
 
681,425

 
39,594

 
721,019

 
46.99

Granted
 
399,349

 
—

 
399,349

 
47.76

Vested
 
(232,292
)
 
—

 
(232,292
)
 
47.77

Vested but deferred
 
(16,748
)
 
16,748

 
—

 
—

Issued
 
—

 
(11,153
)
 
(11,153
)
 
49.29

Forfeited
 
(54,068
)
 
—

 
(54,068
)
 
46.70

RSUs Outstanding - December 31, 2010
 
777,666

 
45,189

 
822,855

 
47.14

Granted
 
292,398

 
—

 
292,398

 
57.36

Dividend equivalents
 
2,673

 
—

 
2,673

 
48.57

Vested
 
(256,623
)
 
—

 
(256,623
)
 
48.28

Vested but deferred
 
(1,753
)
 
1,753

 
—

 
—

Issued
 
—

 
(26,866
)
 
(26,866
)
 
46.69

Forfeited
 
(73,318
)
 
—

 
(73,318
)
 
47.59

RSUs Outstanding - December 31, 2011
 
741,043

 
20,076

 
761,119

 
50.66



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 6, in the Notes to our 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 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 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 the 2004 Stock Incentive 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. Options granted under the 2011 Plan have an exercise price equal to the fair market value on the grant date.

In May 2011, we granted 86,106 stock options under the 2004 Stock Incentive Plan. In November 2011, we granted 6,095 stock options under the 2011 Plan. We estimated the fair value of the options on the grant date using a Black-Scholes option-pricing model. The weighted average fair value of options granted during 2011 was $23.81 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
%


The following tables summarize stock option activity in the past three years 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.

 
 
2011
 
 
 
2010
 
 
 
2009
 
 
Options Granted At an Exercise Price Below the Fair Value Per Share on the Grant Date
 
Underlying
Shares

 
Weighted
Average
Exercise
Price

 
Underlying
Shares

 
Weighted
Average
Exercise
Price

 
Underlying
Shares

 
Weighted
Average
Exercise
Price

Options outstanding—beginning of year
 
648,885

 
$
18.91

 
809,169

 
$
17.75

 
1,110,652

 
$
15.33

Granted
 
—

 
—

 
—

 
—

 
—

 
—

Canceled
 
—

 
—

 
(1,250
)
 
14.21

 
(175
)
 
15.14

Exercised
 
(250,026
)
 
19.25

 
(159,034
)
 
16.62

 
(301,308
)
 
10.75

Options outstanding—end of year
 
398,859

 
19.72

 
648,885

 
18.91

 
809,169

 
17.75

 
 
 
 
 
 
 
 
 
 
 
 
 
Options exercisable—end of year
 
398,859

 
$
19.72

 
648,885

 
$
18.91

 
809,169

 
$
17.75



 
 
2011
 
 
 
2010
 
 
 
2009
 
 
All Other Option Grants, Excluding Activity Shown Above
 
Underlying
Shares

 
Weighted
Average
Exercise
Price

 
Underlying
Shares

 
Weighted
Average
Exercise
Price

 
Underlying
Shares

 
Weighted
Average
Exercise
Price

Options outstanding—beginning of year
 
1,207,540

 
$
17.09

 
1,868,408

 
$
16.15

 
2,942,706

 
$
15.14

Granted
 
92,201

 
57.42

 
—

 
—

 
—

 
—

Canceled
 
(1,960
)
 
16.04

 
(15,524
)
 
13.72

 
(3,127
)
 
21.99

Exercised
 
(479,229
)
 
16.17

 
(645,344
)
 
19.73

 
(1,071,171
)
 
13.95

Options outstanding—end of year
 
818,552

 
22.76

 
1,207,540

 
17.09

 
1,868,408

 
16.15

 
 
 
 
 
 
 
 
 
 
 
 
 
Options exercisable—end of year
 
726,351

 
$
18.36

 
1,207,540

 
$
17.09

 
1,858,865

 
$
16.02



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:
($000)
 
2011

 
2010

 
2009

Intrinsic value of options exercised
 
$
29,899

 
$
31,410

 
$
37,356


 

The table below shows additional information for options outstanding and exercisable as of December 31, 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
 
353,498

 
0.92

 
$
9.52

 
$
17,649

 
353,498

 
0.92

 
$
9.52

 
$
17,649

$19.47 - $44.35
 
771,712

 
3.13

 
23.11

 
28,046

 
771,712

 
3.13

 
23.11

 
28,046

57.28 - $59.35
 
92,201

 
9.53

 
57.42

 
187

 
—

 
—

 
—

 
—


 


 


 


 


 


 


 


 


$8.57 - $59.35
 
1,217,411

 
2.97

 
21.76

 
$
45,882

 
1,125,210

 
2.43

 
18.84

 
$
45,695

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vested or Expected to Vest
 
 
 
 
 
 
 
 
 
 
 
 
 
$8.57 - $59.35
 
1,217,411

 
2.97

 
$
21.76

 


 
 
 
 
 
 
 
 

 
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 December 31, 2011. The intrinsic value is based on our closing stock price of $59.45 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 past three years:

($000)
 
2011

 
2010

 
2009

Excess tax benefits related to stock-based compensation
 
$
9,525

 
$
7,507

 
$
8,693

Related Party Transactions
Related Party Transactions
Related Party Transactions

In 2009, we determined that certain incentive stock options (ISOs) granted to three executives, including Tao Huang, our former chief operating officer, should have been treated as non-qualified stock options for the executives' and our income tax purposes. In the fourth quarter of 2009, we recorded an operating expense of $4,887,000 related to adjusting the tax treatment of these stock options that were originally considered ISOs. In the first quarter of 2010, we paid these individuals $4,887,000 to compensate for the difference in tax treatment.
Defined Contribution Plan
Defined Contribution Plan
Defined Contribution Plan

We sponsor a defined contribution 401(k) plan, which allows our U.S.-based employees to voluntarily contribute pre-tax dollars up to a maximum amount allowable by the U.S. Internal Revenue Service. In 2011, we made matching contributions to our 401(k) plan in the United States in an amount equal to 75 cents for every dollar of an employee's contribution, up to a maximum of 7% of the employee's compensation in the pay period. In 2010, we made matching contributions to our 401(k) plan in the United States in an amount equal to 50 cents for every dollar of an employee's contribution, up to a maximum of 7% of the employee's compensation in the pay period. In 2009, we suspended matching contributions to our 401(k) program in the United States.

The following table summarizes our matching contributions:

($000)
 
2011

 
2010

 
2009

401(k) matching contributions
 
$
5,601

 
$
3,321

 
$
—

Non-Operating Income
Non-Operating Income
Non-Operating Income

The following table presents the components of our net non-operating income:

($000)
 
2011

 
2010

 
2009

Interest income
 
$
3,679

 
$
2,718

 
$
3,364

Interest expense
 
(1,318
)
 
(281
)
 
(348
)
Other income (expense), net
 
(652
)
 
4,295

 
(82
)
Non-operating income, net
 
$
1,709

 
$
6,732

 
$
2,934



Interest income primarily reflects interest from our investment portfolio. Interest expense in 2011 of $1,318,000 includes approximately $900,000 related to the $1,400,000 of business tax expense for prior years recorded in the second quarter of 2011, as discussed above in the section, Consolidated Results.

Other income (expense), net primarily represents foreign currency exchange gains and losses arising from the ordinary course of business related to non-U.S. operations. It also includes realized gains and losses from our investment portfolio and royalty income from MJKK. In 2010, this category also includes the holding gain of $4,564,000 resulting from the difference between the estimated fair value and the book value of our investment in Morningstar Denmark; in 2009, it includes the holding gain of $352,000 resulting from the difference between the estimated fair value and the book value of our investment in Morningstar Korea. See Note 6 for additional information concerning Morningstar Denmark and Morningstar Korea.
Income Taxes
Income Taxes
Income Taxes
 
Income Tax Expense and Effective Tax Rate

The following table shows our income tax expense and our effective tax rate:

($000)
 
2011

 
2010

 
2009

Income before income taxes and equity in net income of unconsolidated entities
 
$
140,124

 
$
127,791

 
$
127,607

Equity in net income of unconsolidated entities
 
1,848

 
1,422

 
1,165

Net (income) loss attributable to the noncontrolling interest
 
43

 
(87
)
 
132

Total
 
$
142,015

 
$
129,126

 
$
128,904

Income tax expense
 
$
43,658

 
$
42,756

 
$
46,775

Effective tax rate
 
30.7
%
 
33.1
%
 
36.3
%


The following table reconciles our income tax expense at the U.S. federal income tax rate of 35% to income tax expense as recorded:

 
 
2011
 
 
 
2010
 
 
 
2009
 
 
($000, except percentages)
 
Amount

 
%

 
Amount

 
%

 
Amount

 
%

Income tax expense at U.S. federal rate
 
$
49,705

 
35.0
 %
 
$
45,194

 
35.0
 %
 
$
45,117

 
35.0
 %
State income taxes, net of federal income tax benefit
 
1,376

 
1.0

 
1,756

 
1.3

 
3,470

 
2.7

Stock-based compensation activity
 
440

 
0.3

 
97

 
0.1

 
(396
)
 
(0.3
)
Disqualifying dispositions on incentive stock options
 
—

 
—

 
—

 
—

 
(68
)
 
—

Non-U.S. withholding taxes, net of federal income tax effect, and foreign tax credits
 
346

 
0.2

 
77

 
0.1

 
(1,311
)
 
(1.0
)
Net change in valuation allowance related to non-U.S. deferred tax assets, primarily net operating losses
 
394

 
0.3

 
(1,186
)
 
(0.9
)
 
1,221

 
0.9

Impact of equity in net income of unconsolidated entities
 
—

 
—

 
79

 
0.1

 
(70
)
 
—

Difference between U.S. federal statutory and foreign tax rates
 
(2,393
)
 
(1.7
)
 
(2,567
)
 
(2.0
)
 
266

 
0.2

Non-deductible deposit penalty
 
—

 
—

 
—

 
—

 
1,384

 
1.1

Expenses related to treatment of stock options originally considered incentive stock options, subject to limitation for tax purposes
 
—

 
—

 
—

 
—

 
1,082

 
0.8

Adjustment to accruals for state taxes
 
—

 
—

 
(2,633
)
 
(2.0
)
 
—

 
—

Change in unrecognized tax benefits
 
3,126

 
2.2

 
2,869

 
2.2

 
(1,786
)
 
(1.4
)
Credits and incentives
 
(7,734
)
 
(5.4
)
 
(984
)
 
(0.8
)
 
(1,923
)
 
(1.5
)
Recognition of deferred tax assets
 
(1,778
)
 
(1.3
)
 
—

 
—

 
—

 
—

Other - net
 
176

 
0.1

 
54

 
—

 
(211
)
 
(0.2
)
Total income tax expense
 
$
43,658

 
30.7
 %
 
$
42,756

 
33.1
 %
 
$
46,775

 
36.3
 %


Income tax expense consists of the following:

($000)
 
2011

 
2010

 
2009

Current tax expense:
 
 
 
 
 
 
U.S.
 
 
 
 
 
 
Federal
 
$
41,520

 
$
38,901

 
$
41,347

State
 
1,808

 
2,445

 
4,942

Non-U.S.
 
5,756

 
4,122

 
3,856

Current tax expense
 
49,084

 
45,468

 
50,145

Deferred tax expense (benefit):
 
 
 
 
 
 
U.S.
 
 
 
 
 
 
Federal
 
(1,011
)
 
61

 
(713
)
State
 
(242
)
 
(7
)
 
(38
)
Non-U.S.
 
(4,173
)
 
(2,766
)
 
(2,619
)
Deferred tax benefit, net
 
(5,426
)
 
(2,712
)
 
(3,370
)
Income tax expense
 
$
43,658

 
$
42,756

 
$
46,775



The following table provides our income before income taxes and equity in net income of unconsolidated entities, generated by our U.S. and non-U.S. operations:

($000)
 
2011

 
2010

 
2009

U.S.
 
$
123,390

 
$
112,357

 
$
123,948

Non-U.S.
 
16,734

 
15,434

 
3,659

Income before income taxes and equity in net income of unconsolidated entities
 
$
140,124

 
$
127,791

 
$
127,607



Deferred Tax Assets and Liabilities

We recognize deferred income taxes for the temporary differences between the carrying amount of assets and liabilities for financial statement purposes and their tax basis. The tax effects of the temporary differences that give rise to the deferred income tax assets and liabilities are as follows:

 
 
As of December 31
 
 
($000)
 
2011

 
2010

Deferred tax assets:
 
 
 
 
Stock-based compensation expense
 
$
5,567

 
$
7,859

Accrued liabilities
 
7,789

 
5,728

Net operating loss carryforwards - U.S. federal and state
 
1,009

 
1,087

Net operating loss carryforwards - Non-U.S.
 
13,297

 
12,977

Research and development
 
631

 
—

Deferred royalty revenue
 
403

 
430

Allowance for doubtful accounts
 
503

 
461

Deferred rent
 
8,847

 
8,837

Unrealized exchange losses, net
 
159

 
—

Other
 
383

 
185

Total deferred tax assets
 
38,588

 
37,564

 
 
 
 
 
Deferred tax liabilities:
 
 
 
 
Acquired intangible assets
 
(17,558
)
 
(22,287
)
Property, equipment, and capitalized software
 
(8,523
)
 
(8,439
)
Unrealized exchange gains, net
 
—

 
(529
)
Prepaid expenses
 
(1,724
)
 
(1,856
)
Accrued liabilities
 
—

 
(578
)
Investments in unconsolidated entities
 
(9,580
)
 
(9,471
)
Other
 
—

 
(95
)
Total deferred tax liabilities
 
(37,385
)
 
(43,255
)
Net deferred tax liability before valuation allowance
 
1,203

 
(5,691
)
Valuation allowance
 
(12,039
)
 
(11,424
)
Net deferred tax liability
 
$
(10,836
)
 
$
(17,115
)


The deferred tax assets and liabilities are included in our Consolidated Balance Sheets as follows:

 
 
As of December 31
 
 
($000)
 
2011

 
2010

Deferred tax asset, net - current
 
$
5,104

 
$
2,860

Deferred tax liability, net - non-current
 
(15,940
)
 
(19,975
)
Net deferred tax liability
 
$
(10,836
)
 
$
(17,115
)


The following table summarizes our U.S. net operating loss (NOL) carryforwards:

 
 
As of December 31
 
 
 
($000)
 
 
2011
 
 
2010
 
 
 
Expiration Date
 
 
Expiration Date
U.S. federal NOLs subject to expiration dates
 
$
2,587

2023
 
$
2,811

2023


Our U.S. federal NOL carryforward as of December 31, 2011 of $2,587,000 is subject to limitations on the use of the NOL imposed by the U.S. Internal Revenue Code, and therefore is limited to approximately $225,000 per year.

The following table summarizes our NOL carryforwards for our non-U.S. operations:

 
 
As of December 31
 
 
($000)
 
2011

 
2010

Non-U.S. NOLs subject to expiration dates from 2012 through 2031
 
$
5,048

 
$
3,113

Non-U.S. NOLs with no expiration date
 
45,002

 
45,934

Total
 
$
50,050

 
$
49,047

 
 
 
 
 
Non-U.S. NOLs not subject to valuation allowances
 
$
5,284

 
$
5,611



The increase in non-U.S. NOL carryforwards as of December 31, 2011 compared with 2010 primarily reflects additional NOL carryforwards in our non-U.S. operations as well as the impact of currency translations.

We have not provided federal and state income taxes on accumulated undistributed earnings of certain foreign subsidiaries aggregating approximately $66,000,000 as of December 31, 2011, because these earnings have been permanently reinvested. It is not practicable to determine the amount of the unrecognized deferred tax liability related to the undistributed earnings.

In assessing the realizability of our deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. We have recorded a valuation allowance against all but approximately $5.3 million of the non-U.S. NOLs, reflecting the likelihood that the benefit of these NOLs will not be realized.

Accounting for Uncertainty in Tax Positions

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 2005.

We are currently under audit by federal, state and local tax authorities in the United States as well as tax authorities in certain non-U.S. jurisdictions. It is likely that the examination phase of some of these U.S. federal, state, local, and non-U.S. audits will conclude in 2012. It is not possible to estimate the impact of current audits on previously recorded unrecognized tax benefits.

As of December 31, 2011, our Consolidated Balance Sheet included a current liability of $5,329,000 and a non-current liability of $6,200,000 for unrecognized tax benefits. These amounts include interest and penalties, less any associated tax benefits.

The table below reconciles the beginning and ending amount of the gross unrecognized tax benefits as follows:

($000)
 
2011

 
2010

Gross unrecognized tax benefits - beginning of the year
 
$
9,089

 
$
6,069

Increases as a result of tax positions taken during a prior-year period
 
1,639

 
1,720

Decreases as a result of tax positions taken during a prior-year period
 
(876
)
 
(150
)
Increases as a result of tax positions taken during the current period
 
3,662

 
2,131

Decreases relating to settlements with tax authorities
 
(1,001
)
 
(272
)
Reductions as a result of lapse of the applicable statute of limitations
 
(324
)
 
(409
)
Gross unrecognized tax benefits - end of the year
 
$
12,189

 
$
9,089



In 2011, we recorded a net increase of $3,100,000 of gross unrecognized tax benefits, of which $4,426,000 increased our income tax expense by $3,956,000. In addition, we reduced our unrecognized tax benefits by $1,325,000 for settlements and lapses of statutes of limitations, of which $1,001,000 decreased our income tax expense by $1,001,000.

As of December 31, 2011, we had $12,189,000 of gross unrecognized tax benefits, of which $11,907,000, if recognized, would reduce our effective income tax rate and decrease our income tax expense by $9,827,000.

We record interest and penalties related to uncertain tax positions as part of our income tax expense. The following table summarizes our gross liability for interest and penalties:

 
 
As of December 31
 
 
($000)
 
2011

 
2010

Liabilities for interest and penalties
 
$
1,726

 
$
1,526



We recorded the increase in the liability, net of any tax benefits, to income tax expense in our Consolidated Statement of Income in 2011.
Contingencies
Contingencies
Contingencies
 
Life's Good S.T.A.B.L. Hedge Fund

In September 2011, three individual investors in Life's Good S.T.A.B.L. Mortgage hedge fund (LG), Marta Klass, Gregory Martin, and Richard Roellig, filed a complaint in the United States District Court for the Eastern District of Pennsylvania against LG, its principal Robert Stinson, and several other parties, including Morningstar, Inc. (the Klass Matter). The claims against Morningstar relate to a 5-star rating LG obtained from Morningstar. Hedge fund managers self-report their performance data to Morningstar.
More than a year before the Klass Matter, in June 2010, the SEC filed suit against LG and other entities claiming they were part of a Ponzi scheme operated by Stinson. As a result, LG and the other entities were placed in court-appointed receivership. Morningstar was not part of the SEC suit or receivership. Since that time, the Receiver, as part of his duties, has been investigating whether to assert claims against third parties. Morningstar is aware of 13 lawsuits filed by the Receiver seeking to recover money for the fund. As part of that investigation, Morningstar has been responding to discovery requests and has had discussions with the Receiver. The Receiver has not filed a case against Morningstar, and Morningstar does not know whether a case will be filed.
The separate Klass Matter was filed in September 2011 against LG, Stinson, and several other parties, including Morningstar, in which plaintiffs claim that Morningstar committed fraud and aided and abetted the other defendants' breach of fiduciary duty through the 5-star rating LG obtained from Morningstar. The plaintiffs seek unspecified damages.
Morningstar filed a motion to dismiss the complaint. On behalf of the entities in receivership, the Receiver filed a motion to stay the proceedings because the Receivership Order does not permit suits against the entities in receivership without court permission. The court granted the Receiver's motion and stayed the action. Morningstar believes the allegations against it have no legal or factual basis and plans to re-file its motion to dismiss the case once the stay is lifted. While Morningstar is vigorously contesting the claims asserted, we cannot predict the outcome of the proceeding.
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.

We have not provided an estimate of loss or range of loss in connection with the matters described above because no such estimate can reasonably be made.

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 December 9, 2011, our board of directors declared a quarterly dividend of 10 cents per share, payable on January 31, 2012 to shareholders of record as of January 13, 2012. As of December 31, 2011, we recorded a liability for dividends payable of $5,009,000.
 
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. In December 2011, the board approved an increase to the $100 million share repurchase program it announced in 2010. The board approval authorized the company to repurchase up to an additional $200 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 December 31, 2011, we had repurchased a total of 798,337 shares for $44,456,000 under this authorization.
Subsequent Events
Subsequent Events
Subsequent Events

In January 2012, we acquired a minority equity stake in HelloWallet LLC (HelloWallet) for approximately $6.7 million. HelloWallet is a provider of personalized financial guidance to employees of Fortune 1000 companies. Our ownership interest in HelloWallet is approximately 15%. We plan to account for this investment using the cost method.

In February 2012, our board of directors declared a quarterly dividend of 10 cents per share. The dividend is payable on April 30, 2012 to shareholders of record as of April 13, 2012.

On February 17, 2012, a large Investment Consulting client notified us that it will be moving to in-house management of several fund of funds portfolios in April 2012. We received about $12.4 million in revenue from our work on these portfolios in 2011, which represented 2% of our consolidated revenue and a larger percentage of our consolidated operating income.
Recently Issued Accounting Pronouncements
Recently Issued Accounting Pronouncements
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 to have a material impact on our consolidated financial statements.

In December 2011, the FASB issued ASU No. 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. ASU No. 2011-12 defers the effective date of the requirement to present separate line items on the income statement for reclassification adjustments of items out of accumulated other comprehensive income into net income. The deferral is temporary until the Board reconsiders the operational concerns and needs of financial statement users. The Board has not yet established a timetable for its reconsideration.
Selected Quarterly Financial Data
Selected Quarterly Financial Data
Selected Quarterly Financial Data (unaudited)
 
 
2010
 
 
 
 
 
 
 
2011
 
 
 
 
 
 
 
(in thousands except per share amounts)
 
Q1

 
Q2

 
Q3

 
Q4

 
Q1

 
Q2

 
Q3

 
Q4

 
Revenue
 
$
128,290

 
$
136,091

 
$
139,817

 
$
151,153

 
$
151,767

 
$
161,011

 
$
160,051

 
$
158,571

 
Total operating expense (1)
 
97,348

 
108,424

 
109,656

 
118,864

 
119,958

 
122,404

 
126,187

 
124,436

 
Operating income
 
30,942

 
27,667

 
30,161

 
32,289

 
31,809

 
38,607

 
33,864

 
34,135

 
Non-operating income (expense), net
 
(179
)
 
21

 
6,206

 
684

 
774

 
9

 
(579
)
 
1,505

 
Income before income taxes and equity in net income of unconsolidated entities
 
30,763

 
27,688

 
36,367

 
32,973

 
32,583

 
38,616

 
33,285

 
35,640

 
Income tax expense
 
10,995

 
10,225

 
11,917

 
9,619

 
10,518

 
12,724

 
12,343

 
8,073

 
Equity in net income (loss) of unconsolidated entities
 
389

 
454

 
333

 
246

 
374

 
595

 
428

 
451

 
Consolidated net income
 
20,157

 
17,917

 
24,783

 
23,600

 
22,439

 
26,487

 
21,370

 
28,018

 
Net (income) loss attributable to the noncontrolling interests
 
31

 
85

 
(106
)
 
(97
)
 
98

 
(2
)
 
10

 
(63
)
 
Net income attributable to Morningstar, Inc.
 
$
20,188

 
$
18,002

 
$
24,677

 
$
23,503

 
$
22,537

 
$
26,485

 
$
21,380

 
$
27,955

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per share attributable to Morningstar, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.41

 
$
0.37

 
$
0.50

 
$
0.47

 
$
0.45

 
$
0.53

 
$
0.42

 
$
0.56

 
Diluted

$
0.40


$
0.36


$
0.49


$
0.46


$
0.44


$
0.52


$
0.42


$
0.55


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends declared per common share
 
$
—

 
$
—

 
$
0.05

 
$
—

 
$
0.05

 
$
0.05

 
$
0.05

 
$
0.10

 
Dividends paid per common share
 
$
—

 
$
—

 
$
—

 
$
—

 
$
0.05

 
$
0.05

 
$
0.05

 
$
0.05

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
48,828

 
49,234

 
49,401

 
49,523

 
49,800

 
50,165

 
50,278

 
49,883

 
Diluted
 
50,332

 
50,533

 
50,544

 
50,761

 
50,953

 
51,142

 
51,123

 
50,732

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2010
 
 
 
 
 
 
 
2011
 
 
 
 
 
 
 
(in thousands)
 
Q1

 
Q2

 
Q3

 
Q4

 
Q1

 
Q2

 
Q3

 
Q4

 
(1) Includes stock-based compensation expense of:
 
$
2,937

 
$
3,655

 
$
3,745

 
$
3,456

 
$
3,649

 
$
3,843

 
$
3,951

 
$
3,860

 
Summary of Significant Accounting Policies (Policies)
Principles of Consolidation 
Principles of Consolidation. We conduct our business operations through wholly owned or majority-owned operating subsidiaries. The accompanying consolidated financial statements include the accounts of Morningstar, Inc. and our subsidiaries. The assets, liabilities, and results of operations of subsidiaries in which we have a controlling interest have been consolidated. All significant intercompany accounts and transactions have been eliminated.

We account and report the noncontrolling (minority) interests in our Consolidated Financial Statements in accordance with FASB ASC 810, Consolidation. A noncontrolling interest is the portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to the parent company. We report the noncontrolling interest in our Consolidated Balance Sheet within equity separate from the shareholders' equity attributable to Morningstar, Inc. In addition, we present the net income (loss) and comprehensive income (loss) attributed to Morningstar, Inc.'s shareholders and the noncontrolling interest in our Consolidated Statements of Income, Consolidated Statements of Comprehensive Income, and Consolidated Statements of Equity.
Comprehensive Income 
Comprehensive Income. 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 Statements of Income and separately, our Consolidated Statements of Comprehensive Income. We no longer present total comprehensive income in our Consolidated Statement of Equity.
Use of Estimates 
Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses during the reporting period. Actual results may differ from these estimates.
Reclasifications 
Reclassifications. Certain amounts reported in previous years have been reclassified to conform to the 2011 presentation.
Cash and Cash Equivalents 
Cash and Cash Equivalents. Cash and cash equivalents consist of cash and investments with original maturities of three months or less. We state them at cost, which approximates fair value. We state at fair value the portion of our cash equivalents that are invested in money market funds, which are actively traded and have quoted market prices.
Investments 
Investments. We account for our investments in accordance with FASB ASC 320, Investments-Debt and Equity Securities. We classify our investments into three categories: held-to-maturity, trading, and available-for-sale.

•
Held-to-maturity:  We classify certain investments, primarily certificates of deposit, as held-to-maturity securities, based on our intent and ability to hold these securities to maturity. We record held-to-maturity investments at amortized cost in our Consolidated Balance Sheets.

•
Trading:  We classify certain other investments, primarily equity securities, as trading securities, primarily to satisfy the requirements of one of our wholly owned subsidiaries, which is a registered broker-dealer. We include realized and unrealized gains and losses associated with these investments as a component of our operating income in our Consolidated Statements of Income. We record these securities at their fair value in our Consolidated Balance Sheets.

•
Available-for-sale:  Investments not considered held-to-maturity or trading securities are classified as available-for-sale securities. Available-for-sale securities primarily consist of fixed-income securities. We report unrealized gains and losses for available-for-sale securities as other comprehensive income (loss), net of related income taxes. We record these securities at their fair value in our Consolidated Balance Sheets.
Fair Value Measurements 
Fair Value Measurements. We follow FASB ASC 820, Fair Value Measurements and Disclosures. FASB ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Under FASB ASC 820, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The standard applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in any new circumstances and does not require any new fair value measurements.

FASB ASC 820 uses a fair value hierarchy based on three broad levels of valuation inputs as described below:

•
Level 1:  Valuations based on quoted prices in active markets for identical assets or liabilities that the company has 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.

We provide additional information about our cash equivalents and investments that are subject to valuation under FASB ASC 820 in Note 5 in these Notes to our Consolidated Financial Statements.

The Fair Value Option for Financial Assets and Financial Liabilities. FASB ASC 825, Financial Instruments, permits entities the option to measure many financial instruments and certain other items at fair value with changes in fair value recognized in earnings each period. FASB ASC 825 allows the fair value option to be elected on an instrument-by-instrument basis when the asset or liability is initially recognized or when there's an event that gives rise to a new basis of accounting for that instrument. We do not apply this fair value option to any of our eligible assets.
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:
Concentration of Credit Risck 
Concentration of Credit Risk. No single customer is large enough to pose a significant credit risk to our operations or financial condition. For the years ended December 31, 2011, 2010, and 2009, no single customer represented 5% or more of our consolidated revenue. If receivables from our customers become delinquent, we begin a collections process. We maintain an allowance for doubtful accounts based on our estimate of the probable losses of accounts receivable.
Property, Equipment, and Depreciation 
Property, Equipment, and Depreciation. We state property and equipment at historical cost, net of accumulated depreciation. We depreciate property and equipment primarily using the straight-line method based on the useful life of the asset, which ranges from three to seven years. We amortize leasehold improvements over the lease term or their useful lives, whichever is shorter.
Computer Software and Internal Product Development Costs 
Computer Software and Internal Product Development Costs. We capitalize certain costs in accordance with FASB ASC 350-40, Internal-Use Software, FASB ASC 350-50, Website Development Costs, and FASB ASC 985, Software. Internal product development costs mainly consist of employee costs for developing new web-based products and certain major enhancements of existing products. We amortize these costs on a straight-line basis over the estimated economic life, which is generally three years. Capitalized software development costs related to projects that have not been placed into service yet are included in our construction in progress balance.
Business Combinations 
Business Combinations. Over the past several years, we have acquired companies that complement our business operations. For each acquisition, we allocate the purchase price to the assets acquired, liabilities assumed, and goodwill. We follow FASB ASC 805, Business Combinations. We recognize and measure the fair value of the acquired operation as a whole, and the assets acquired and liabilities assumed at their full fair values as of the date control is obtained, regardless of the percentage ownership in the acquired operation or how the acquisition was achieved. We expense direct costs related to the business combination, such as advisory, accounting, legal, valuation, and other professional fees, as incurred. We recognize restructuring costs, including severance and relocation for employees of the acquired entity, as post-combination expenses unless the target entity meets the criteria of FASB ASC 420, Exit or Disposal Cost Obligations on the acquisition date.

As part of the purchase price allocation, we follow the requirements of FASB ASC 740, Income Taxes. This includes establishing deferred tax assets or liabilities reflecting the difference between the values assigned for financial statement purposes and values applicable for income tax purposes. In certain acquisitions, the goodwill resulting from the purchase price allocation may not be deductible for income tax purposes. FASB ASC 740 prohibits recognition of a deferred tax asset or liability for temporary differences in goodwill if goodwill is not amortizable and deductible for tax purposes.
Goodwill 
Goodwill. Changes in the carrying amount of our recorded goodwill are mainly the result of business acquisitions. In accordance with FASB ASC 350, Intangibles - Goodwill and Other, we do not amortize goodwill; instead, goodwill is subject to an impairment test annually, or whenever indicators of impairment exist. An impairment would occur if the carrying amount of a reporting unit exceeded the fair value of that reporting unit. In 2011, we altered the definition of our reporting units to align with the definition of our operating segments. This realignment occurred because of our successful efforts to integrate acquired businesses and leverage proprietary content across multiple products. As a result, the businesses that previously represented components of our operating segments no longer met the criteria for recognition as reporting units. Our reporting units constitute businesses for which discrete financial information, which is regularly reviewed by management, is available. We performed annual impairment reviews in the fourth quarter of 2011, 2010, and 2009. We did not record any impairment losses in 2011, 2010, or 2009.

Intangible Assets 
Intangible Assets. We amortize intangible assets using the straight-line method over their estimated economic useful lives, which range from one to 25 years. In accordance with FASB ASC 360-10-35, Subsequent Measurement-Impairment or Disposal of Long Lived Assets, we review intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the value of future undiscounted cash flows is less than the carrying amount of an asset, we record an impairment loss based on the excess of the carrying amount over the fair value of the asset. We recorded an impairment loss of approximately $800,000 in 2011. We did not record any impairment losses in 2010 or 2009. The impairment charge is included in our amortization expense on our Consolidated Statements of Income.
Revenue Recognition 
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.

Effective January 1, 2011, we adopted FASB ASU No. 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements. ASU 2009-13 superseded 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 applied this guidance for revenue arrangements entered into or materially modified from January 1, 2011. The adoption of ASU 2009-13 did not significantly affect either the timing or amount of our 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, our structured credit research and ratings offerings, 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. For new-issue ratings and analysis for CMBS, we charge asset-based fees that are paid by the issuer on the rated balance of the transaction and recognize the revenue immediately upon issuance of the transaction.

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.
Advertising Costs 

Advertising Costs. Advertising costs include expenses incurred for various print and Internet ads, search engine fees, and direct mail campaigns. We expense advertising costs as incurred. The table below summarizes our advertising expense for the past three years:
($000)
 
2011

 
2010

 
2009

Advertising expense
 
$
8,210

 
$
8,572

 
$
7,361

Stock-Based Compensation Expense 

Stock-Based Compensation Expense. We account for our stock-based compensation expense in accordance with FASB ASC 718, Compensation—Stock Compensation. Our stock-based compensation expense reflects grants of restricted stock units, restricted stock, and stock options. We measure the fair value of our restricted stock units and restricted stock on the date of grant based on the closing market price of Morningstar's common stock on the day prior to grant. For stock options granted in 2011, we estimated the fair value of our stock options on the date of grant using a Black-Scholes option-pricing model. We amortize the fair values to stock-based compensation expense, net of estimated forfeitures, ratably over the vesting period.

We estimate expected forfeitures of all employee stock-based awards and recognize compensation cost only for those awards expected to vest. We determine forfeiture rates based on historical experience and adjust the estimated forfeitures to actual forfeiture experience as needed.
Liability for Sabbatical Leave 

Liability for Sabbatical Leave. In certain of our operations, we offer employees a sabbatical leave. Although the sabbatical policy varies by region, in general, Morningstar's full-time employees are eligible for six weeks of paid time off after four years of continuous service. We account for our sabbatical liability in accordance with FASB ASC 710-10-25, Compensated Absences. We record a liability for employees' sabbatical benefits over the period employees earn the right for sabbatical leave.
Income Taxes 

Income Taxes. We record deferred income taxes for the temporary differences between the carrying amount of assets and liabilities for financial statement purposes and the amounts used for income tax purposes in accordance with FASB ASC 740, Income Taxes. FASB ASC 740 prescribes the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements, and also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, and disclosure for uncertain tax positions.

We recognize interest and penalties related to unrecognized tax benefits as part of income tax expense in our Consolidated Statements of Income. We classify liabilities related to unrecognized tax benefits as either current liabilities or “Other long-term liabilities” in our Consolidated Balance Sheet, depending on when we expect to make payment.
Income per Share 

Income per Share. We compute and present income per share in accordance with FASB ASC 260, Earnings Per Share. The difference between weighted average shares outstanding and diluted shares outstanding primarily reflects the dilutive effect associated with our stock-based compensation plans. Beginning in 2010, we further compute income per share in accordance with FASB ASC 260-10-45-59A, Participating Securities and the Two Class Method.

In May 2010, we issued restricted stock in conjunction with the acquisition of Realpoint, LLC (now Morningstar Credit Ratings, LLC). Because the restricted stock contains nonforfeitable rights to dividends, it meets the criteria of a participating security. Under the two-class method, we allocate earnings 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. For purposes of calculating earnings per share, we reduce our reported net earnings by the amount allocated to participating securities to arrive at the earnings allocated to common stock shareholders.

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. 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.
Foreign Currency 

Foreign Currency. We translate the financial statements of non-U.S. subsidiaries to U.S. dollars using the period-end exchange rate for assets and liabilities and an average exchange rate for revenue and expense. We use the local currency as the functional currency for all of our non-U.S. subsidiaries. We record translation adjustments for non-U.S. subsidiaries as a component of “Other comprehensive income (loss)” in our Consolidated Statements of Comprehensive Income. We include exchange gains and losses arising from transactions denominated in currencies other than the functional currency in “Other income (expense), net” in our Consolidated Statements of Income.
Segment Reporting 
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.
Summary of Significant Accounting Policies (Tables)
Schedule of Advertizing Expense
The table below summarizes our advertising expense for the past three years:
($000)
 
2011

 
2010

 
2009

Advertising expense
 
$
8,210

 
$
8,572

 
$
7,361


Income Per Share (Tables)
Schedule of Earnings Per Share, Basic and Diluted
The following table shows how we reconcile our net income and the number of shares used in computing basic and diluted income per share:
 
(in thousands, except per share amounts)
 
2011

 
2010

 
2009

 
 
 
 
 
 
 
Basic net income per share attributable to Morningstar, Inc.:
 
 
 
 
 
 
Net income attributable to Morningstar, Inc.:
 
$
98,357

 
$
86,370

 
$
82,129

Less: Distributed earnings available to participating securities
 
(40
)
 
(10
)
 
—

Less: Undistributed earnings available to participating securities
 
(259
)
 
(335
)
 
—

Numerator for basic net income per share — undistributed and distributed earnings available to common shareholders
 
$
98,058

 
$
86,025

 
$
82,129

 
 
 
 
 
 
 
Weighted average common shares outstanding
 
50,032

 
49,249

 
48,112

 
 
 
 
 
 
 
Basic net income per share attributable to Morningstar, Inc.
 
$
1.96

 
$
1.75

 
$
1.71

 
 
 
 
 
 
 
Diluted net income per share attributable to Morningstar, Inc.:
 
 
 
 
 
 
Numerator for basic net income per share — undistributed and distributed earnings available to common shareholders
 
$
98,058

 
$
86,025

 
$
82,129

Add: Undistributed earnings allocated to participating securities
 
259

 
335

 
—

Less: Undistributed earnings reallocated to participating securities
 
(254
)
 
(326
)
 
—

Numerator for diluted net income per share — undistributed and distributed earnings available to common shareholders
 
$
98,063

 
$
86,034

 
$
82,129

 
 


 


 
 
Weighted average common shares outstanding
 
50,032

 
49,249

 
48,112

Net effect of dilutive stock options and restricted stock units
 
956

 
1,306

 
1,681

Weighted average common shares outstanding for computing diluted income per share
 
50,988

 
50,555

 
49,793

 
 


 


 
 
Diluted net income per share attributable to Morningstar, Inc.
 
$
1.92

 
$
1.70

 
$
1.65


Segment and Geographical Area Information (Tables)
Schedule of Segment Reporting Information, by Segment 
The following tables present information about our operating segments:
 
2011 Segment Information
 
 
 
 
 
 
 
 
 
 
Year ended December 31, 2011
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

External revenue
 
$
500,909

 
$
130,491

 
$
—

 
$
631,400

Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
351,194

 
58,596

 
24,979

 
434,769

Stock-based compensation expense
 
10,113

 
2,080

 
3,110

 
15,303

Depreciation and amortization
 
8,088

 
166

 
34,659

 
42,913

Operating income (loss)
 
$
131,514

 
$
69,649

 
$
(62,748
)
 
$
138,415

 
 
 
 
 
 
 
 
 
U.S. capital expenditures
 
 
 
 

 
 

 
$
13,816

Non-U.S. capital expenditures
 
 

 
 

 
 

 
$
9,506

 
 
 
 
 
 
 
 
 
U.S. revenue
 
 

 
 

 
 

 
$
446,470

Non-U.S. revenue
 
 

 
 

 
 

 
$
184,930

 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2011
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

Goodwill
 
$
277,059

 
$
41,433

 
$
—

 
$
318,492

 
 
 
 
 
 
 
 
 
U.S. long-lived assets
 
 
 
 
 
 
 
$
44,572

Non-U.S. long-lived assets
 
 
 
 
 
 
 
$
23,624

 
2010 Segment Information
 
 
 
 
 
 
 
 
 
 
Year ended December 31, 2010
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

External revenue
 
$
444,957

 
$
110,394

 
$
—

 
$
555,351

Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
301,722

 
51,361

 
27,752

 
380,835

Stock-based compensation expense
 
8,110

 
2,032

 
3,651

 
13,793

Depreciation and amortization
 
7,385

 
185

 
32,094

 
39,664

Operating income (loss)
 
$
127,740

 
$
56,816

 
$
(63,497
)
 
$
121,059

 
 
 
 
 
 
 
 
 
U.S. capital expenditures
 
 

 
 

 
 

 
$
5,067

Non-U.S. capital expenditures
 
 

 
 

 
 

 
$
9,704

 
 
 
 
 
 
 
 
 
U.S. revenue
 
 

 
 

 
 

 
$
398,215

Non-U.S. revenue
 
 

 
 

 
 

 
$
157,136

 
 
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

 
2009 Segment Information
 
 
 
 
 
 
 
 
 
 
Year ended December 31, 2009
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items
 
Total

External revenue
 
$
386,642

 
$
92,354

 
$
—

 
$
478,996

Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
237,101

 
37,296

 
36,372

 
310,769

Stock-based compensation expense
 
5,704

 
1,965

 
3,924

 
11,593

Depreciation and amortization
 
5,408

 
204

 
26,349

 
31,961

Operating income (loss)
 
$
138,429

 
$
52,889

 
$
(66,645
)
 
$
124,673

 
 
 
 
 
 
 
 
 
U.S. capital expenditures
 
 
 
 
 
 
 
$
4,479

Non-U.S. capital expenditures
 
 
 
 
 
 
 
$
7,893

 
 
 
 
 
 
 
 
 
U.S. revenue
 
 
 
 
 
 
 
$
349,836

Non-U.S. revenue
 
 
 
 
 
 
 
$
129,160

 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2009
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

Goodwill
 
$
217,258

 
$
32,234

 
$
—

 
$
249,492

 
 
 
 
 
 
 
 
 
U.S. long-lived assets
 
 
 
 
 
 
 
$
42,884

Non-U.S. long-lived assets
 
 
 
 
 
 
 
$
16,944

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas 
tization 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 present information about our operating segments:
 
2011 Segment Information
 
 
 
 
 
 
 
 
 
 
Year ended December 31, 2011
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

External revenue
 
$
500,909

 
$
130,491

 
$
—

 
$
631,400

Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
351,194

 
58,596

 
24,979

 
434,769

Stock-based compensation expense
 
10,113

 
2,080

 
3,110

 
15,303

Depreciation and amortization
 
8,088

 
166

 
34,659

 
42,913

Operating income (loss)
 
$
131,514

 
$
69,649

 
$
(62,748
)
 
$
138,415

 
 
 
 
 
 
 
 
 
U.S. capital expenditures
 
 
 
 

 
 

 
$
13,816

Non-U.S. capital expenditures
 
 

 
 

 
 

 
$
9,506

 
 
 
 
 
 
 
 
 
U.S. revenue
 
 

 
 

 
 

 
$
446,470

Non-U.S. revenue
 
 

 
 

 
 

 
$
184,930

 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2011
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

Goodwill
 
$
277,059

 
$
41,433

 
$
—

 
$
318,492

 
 
 
 
 
 
 
 
 
U.S. long-lived assets
 
 
 
 
 
 
 
$
44,572

Non-U.S. long-lived assets
 
 
 
 
 
 
 
$
23,624

 
2010 Segment Information
 
 
 
 
 
 
 
 
 
 
Year ended December 31, 2010
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

External revenue
 
$
444,957

 
$
110,394

 
$
—

 
$
555,351

Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
301,722

 
51,361

 
27,752

 
380,835

Stock-based compensation expense
 
8,110

 
2,032

 
3,651

 
13,793

Depreciation and amortization
 
7,385

 
185

 
32,094

 
39,664

Operating income (loss)
 
$
127,740

 
$
56,816

 
$
(63,497
)
 
$
121,059

 
 
 
 
 
 
 
 
 
U.S. capital expenditures
 
 

 
 

 
 

 
$
5,067

Non-U.S. capital expenditures
 
 

 
 

 
 

 
$
9,704

 
 
 
 
 
 
 
 
 
U.S. revenue
 
 

 
 

 
 

 
$
398,215

Non-U.S. revenue
 
 

 
 

 
 

 
$
157,136

 
 
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

 
2009 Segment Information
 
 
 
 
 
 
 
 
 
 
Year ended December 31, 2009
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items
 
Total

External revenue
 
$
386,642

 
$
92,354

 
$
—

 
$
478,996

Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
237,101

 
37,296

 
36,372

 
310,769

Stock-based compensation expense
 
5,704

 
1,965

 
3,924

 
11,593

Depreciation and amortization
 
5,408

 
204

 
26,349

 
31,961

Operating income (loss)
 
$
138,429

 
$
52,889

 
$
(66,645
)
 
$
124,673

 
 
 
 
 
 
 
 
 
U.S. capital expenditures
 
 
 
 
 
 
 
$
4,479

Non-U.S. capital expenditures
 
 
 
 
 
 
 
$
7,893

 
 
 
 
 
 
 
 
 
U.S. revenue
 
 
 
 
 
 
 
$
349,836

Non-U.S. revenue
 
 
 
 
 
 
 
$
129,160

 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2009
($000)
 
Investment
Information

 
Investment
Management

 
Corporate Items

 
Total

Goodwill
 
$
217,258

 
$
32,234

 
$
—

 
$
249,492

 
 
 
 
 
 
 
 
 
U.S. long-lived assets
 
 
 
 
 
 
 
$
42,884

Non-U.S. long-lived assets
 
 
 
 
 
 
 
$
16,944



Information by geographical region is as follows:
External revenue by geographic region
 
 
 
 
 
 
 
 
 
Year ended December 31
 
($000)
 
2011

 
2010

 
2009

 
United States
 
$
446,470

 
$
398,215

 
$
349,836

 
United Kingdom
 
53,427

 
43,797

 
36,666

 
Europe, excluding the United Kingdom
 
49,507

 
39,851

 
36,823

 
Australia
 
39,761

 
35,638

 
25,509

 
Canada
 
27,808

 
25,533

 
20,506

 
Asia, excluding Japan
 
9,240

 
7,855

 
5,725

 
Japan
 
3,948

 
3,871

 
3,726

 
Other
 
1,239

 
591

 
205

 
Total
 
$
631,400

 
$
555,351

 
$
478,996

 


Long-lived assets by geographic region
 
 
 
 
 
 
 
 
 
As of December 31
 
($000)
 
2011

 
2010

 
2009

 
United States
 
$
44,572

 
$
39,496

 
42,884

 
United Kingdom
 
7,512

 
5,960

 
5,870

 
Europe, excluding the United Kingdom
 
2,629

 
3,479

 
4,626

 
Australia
 
1,415

 
1,554

 
1,430

 
Canada
 
2,076

 
2,395

 
2,610

 
Asia, excluding Japan
 
9,656

 
8,874

 
1,988

 
Japan
 
282

 
233

 
279

 
Other
 
54

 
114

 
141

 
Total
 
$
68,196

 
$
62,105

 
59,828

 
Investments and Fair Value Measurements (Tables)
Schedule of Investments 
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 December 31
 
 
($000)
 
2011

 
2010

Available-for-sale
 
$
247,917

 
$
173,072

Held-to-maturity
 
16,347

 
7,476

Trading securities
 
5,491

 
4,692

Total
 
$
269,755

 
$
185,240

Unrealized Gain (Loss) on Investments 
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 December 31, 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
 
$
139,099

 
$
72

 
$
(402
)
 
$
138,769

 
$
113,597

 
$
36

 
$
(56
)
 
$
113,577

Corporate bonds
 
61,589

 
14

 
(280
)
 
61,323

 
42,839

 
63

 
(24
)
 
42,878

Commercial paper
 
29,964

 
2

 
(7
)
 
29,959

 
2,994

 
—

 
(3
)
 
2,991

Equity securities and exchange-traded funds
 
8,461

 
368

 
(558
)
 
8,271

 
4,510

 
418

 
(6
)
 
4,922

Mutual funds
 
9,298

 
363

 
(66
)
 
9,595

 
8,146

 
558

 
—

 
8,704

Total
 
$
248,411

 
$
819

 
$
(1,313
)
 
247,917

 
$
172,086

 
$
1,075

 
$
(89
)
 
$
173,072

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Held-to-maturity:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Certificates of deposit
 
$
16,347

 
$
—

 
$
—

 
$
16,347

 
$
7,476

 
$
—

 
$
—

 
$
7,476

Investments Classified by Contractual Maturity Date 
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 December 31, 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 December 31, 2011
 
As of December 31, 2010
($000)
 
Cost

 
Fair Value

 
Cost

 
Fair Value

Available-for-sale:
 
 

 
 

 
 

 
 

Due in one year or less
 
$
155,651

 
$
155,247

 
$
85,990

 
$
85,964

Due in one to two years
 
75,001

 
74,804

 
73,440

 
73,482

Equity securities, exchange-traded funds, and mutual funds
 
17,759

 
17,866

 
12,656

 
13,626

Total
 
$
248,411

 
$
247,917

 
$
172,086

 
$
173,072

 
 
 
 
 
 
 
 
 
Held-to-maturity:
 
 

 
 

 
 

 
 

Due in one year or less
 
$
16,342

 
$
16,342

 
$
7,223

 
$
7,223

Due in one to three years
 
5

 
5

 
253

 
253

Total
 
$
16,347

 
$
16,347

 
$
7,476

 
$
7,476

Schedule of Realized Gain (Loss) 
The following table shows the realized gains and losses arising from sales of our investments classified as available-for-sale recorded in our Consolidated Statements of Income: 
($000)
 
2011

 
2010

 
2009

Realized gains
 
$
761

 
$
276

 
$
—

Realized losses
 
(501
)
 
(1
)
 
—

Realized gains, net
 
$
260

 
$
275

 
$
—

Unrealized Gain Loss On Trading Securities 
The following table shows the net unrealized loss on trading securities as recorded in our Consolidated Statements of Income:
 
($000)
 
2011

 
2010

 
2009

Unrealized gains (losses), net
 
$
(387
)
 
$
237

 
$
1,233

Fair Value, Assets Measured on Recurring Basis 
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 December 31, 2011
 
 
as of
 
Using Fair Value Hierarchy
($000)
 
December 31, 2011
 
Level 1

 
Level 2

 
Level 3

Available-for-sale investments
 
 

 
 

 
 

 
 

Government obligations
 
$
138,769

 
$
—

 
$
138,769

 
$
—

Corporate bonds
 
61,323

 
—

 
61,323

 
—

Commercial paper
 
29,959

 
—

 
29,959

 
—

Equity securities and exchange-traded funds
 
8,271

 
8,271

 
—

 
—

Mutual funds
 
9,595

 
9,595

 
—

 
—

Trading securities
 
5,491

 
5,491

 
—

 
—

Cash equivalents
 
30,818

 
30,818

 
—

 
—

Total
 
$
284,226

 
$
54,175

 
$
230,051

 
$
—

 
 
 
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

 
—

 
—

Cash equivalents
 
27,007

 
27,007

 
—

 
—

Total
 
$
204,771

 
$
45,325

 
$
159,446

 
$
—

Acquisitions, Goodwill, and Other Intangible Assets (Tables)
Schedule of Goodwill 
The following table shows the changes in our goodwill balances from January 1, 2010 to December 31, 2011:
 
 
($000)

Balance as of January 1, 2010
$
249,492

Adjustments to 2009 Acquisitions:
 
Acquisition of the equity research and data business of CPMS
(249
)
Acquisition of Logical Information Machines, Inc.
(252
)
Goodwill for four other acquisitions completed in 2009
(492
)
Goodwill for Morningstar Korea
(121
)
2010 Acquisitions:
 
Acquisition of Aegis Equities Research
5,534

Acquisition of Old Broad Street Research, Ltd.
12,422

Acquisition of Realpoint, LLC
23,103

Acquisition of remaining ownership in Morningstar Denmark
12,342

Acquisition of annuity intelligence business of Advanced Sales and Marketing Corp.
8,921

Acquisition of Footnoted business of Financial Fineprint Inc. and Seeds Group
3,972

Other, primarily currency translation
2,989

Balance as of December 31, 2010
$
317,661

Adjustments to 2010 Acquisitions:
 
Acquisition of Aegis Equities Research
(417
)
Acquisition of Realpoint, LLC
1,800

Acquisition of annuity intelligence business of Advanced Sales and Marketing Corp.
107

Acquisition of Footnoted business of Financial Fineprint Inc. and Seeds Group
(103
)
Other, primarily currency translation
(556
)
Balance as of December 31, 2011
$
318,492

 
 
Schedule of Intangible Assets 
The following table summarizes our intangible assets: 
 
 
As of December 31, 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
 
$
32,293

 
$
(20,455
)
 
$
11,838

 
9

 
$
33,990

 
$
(15,970
)
 
$
18,020

 
10

Customer-related assets
 
134,396

 
(52,611
)
 
81,785

 
12

 
130,675

 
(39,951
)
 
90,724

 
11

Supplier relationships
 
240

 
(84
)
 
156

 
20

 
240

 
(72
)
 
168

 
20

Technology-based assets
 
80,694

 
(35,130
)
 
45,564

 
9

 
78,651

 
(25,682
)
 
52,969

 
9

Non-competition agreement
 
1,751

 
(1,285
)
 
466

 
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
 
$
249,374

 
$
(109,565
)
 
$
139,809

 
10

 
$
251,714

 
$
(82,691
)
 
$
169,023

 
10

Scheddule of Intangible Asset, Amortization Expense 
 
In 2011, we recorded an impairment loss of approximately $800,000 for the masthead related to one of the magazines we acquired from Aspect Huntley in 2006. We did not record any impairment losses in 2010 or 2009, respectively.

The following table summarizes our amortization expense related to intangible assets:
($000)
 
2011

 
2010

 
2009

Amortization expense
 
$
27,267

 
$
24,850

 
$
18,963

Schedule of Expected Amortization Expense 
intangible amortization expense for 2012 and subsequent years as follows:
 
($000)

2012
23,803

2013
21,131

2014
19,907

2015
19,042

2016
14,441

Schedule of Purchase Price Allocation 
The following table summarizes our allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:
 
 
($000)

Cash and cash equivalents
 
$
51

Investments
 
55

Accounts receivable
 
198

Other non-current assets
 
62

Intangible assets
 
5,801

Goodwill
 
5,117

Deferred revenue
 
(617
)
Other current and non-current liabilities
 
(347
)
Total purchase price
 
$
10,320

Schedule of Acquired Intangible Assets 
The allocation includes $5,801,000 of acquired intangible assets, as follows:
 
 
($000)

 
Weighted Average Useful Life (years)

Customer-related assets
 
$
1,879

 
10

Technology-based assets
 
3,253

 
6

Intellectual property (trademarks and trade names)
 
46

 
1

Non-competition agreement
 
623

 
3

Total intangible assets
 
$
5,801

 
7

Schedule of Purchase Price Allocation 
The following table summarizes our allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:
 
 
($000)

Cash and cash equivalents
 
$
4,632

Accounts receivable and other current assets
 
986

Other non-current assets
 
1,632

Intangible assets
 
9,266

Goodwill
 
12,422

Deferred revenue
 
(2,633
)
Accounts payable and accrued and other current liabilities
 
(1,342
)
Deferred tax liability--non-current
 
(2,317
)
Other non-current liabilities
 
(77
)
Total purchase price
 
$
22,569

Schedule of Acquired Intangible Assets 
The allocation includes $9,266,000 of acquired intangible assets, as follows:

 
 
($000)

 
Weighted Average Useful Life (years)

Customer-related assets
 
$
7,073

 
13

Technology-based assets
 
1,424

 
5

Intellectual property (trademarks and trade names)
 
769

 
10

Total intangible assets
 
$
9,266

 
12

Schedule of Purchase Price Allocation 
The following table summarizes our allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:

 
 
($000)

Cash and cash equivalents
 
$
5,489

Accounts receivable and other current assets
 
3,567

Other non-current assets
 
738

Deferred tax asset--non-current
 
195

Intangible assets
 
19,120

Goodwill
 
24,903

Deferred revenue
 
(7,316
)
Accounts payable and accrued and other current liabilities
 
(2,785
)
Other non-current liabilities
 
(95
)
Total purchase price
 
$
43,816

Schedule of Acquired Intangible Assets 
The allocation includes $19,120,000 of acquired intangible assets, as follows:

 
 
($000)

 
Weighted Average Useful Life (years)

Customer-related assets
 
$
5,000

 
10

Technology-based assets
 
13,610

 
10

Intellectual property (trademarks and trade names)
 
300

 
1

Non-competition agreement
 
210

 
6

Total intangible assets
 
$
19,120

 
10

Schedule of Purchase Price Allocation 
The following table summarizes our allocation of the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:
 
 
($000)

Cash and cash equivalents
 
$
915

Accounts receivable and other current assets
 
632

Other non-current assets
 
65

Intangible assets
 
9,854

Goodwill
 
12,342

Deferred revenue
 
(496
)
Deferred tax liability
 
(2,504
)
Other current and non-current liabilities
 
(616
)
Total fair value of Morningstar Denmark
 
$
20,192

Schedule of Acquired Intangible Assets 
The allocation includes $9,854,000 of acquired intangible assets, as follows:
 
 
($000)

 
Weighted Average Useful Life (years)

Customer-related assets
 
$
9,130

 
14

Technology-based assets
 
724

 
6

Total intangible assets
 
$
9,854

 
13

Schedule of Purchase Price Allocation 
The following table summarizes our allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:
 
 
($000)

Accounts receivable and other current assets
 
$
163

Other non-current assets
 
9

Intangible assets
 
6,300

Goodwill
 
9,028

Deferred revenue
 
(1,364
)
Accounts payable and accrued and other current liabilities
 
(23
)
Total purchase price
 
$
14,113

Schedule of Acquired Intangible Assets 
The allocation includes $6,300,000 of acquired intangible assets, as follows:
 
 
($000)

 
Weighted Average Useful Life (years)

Customer-related assets
 
$
4,100

 
20

Technology-based assets
 
2,100

 
9

Intellectual property (trademarks and trade names)
 
100

 
10

Total intangible assets
 
$
6,300

 
16

Schedule of Purchase Price Allocation 
For these two acquisitions, the following table summarizes our allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at the dates of acquisition:
 
 
($000)

Cash
 
$
1,442

Accounts receivable and other current assets
 
939

Other non-current assets
 
179

Intangible assets
 
2,661

Goodwill
 
3,869

Deferred revenue
 
(159
)
Accounts payable and accrued and other current liabilities
 
(576
)
Deferred tax liability--non-current
 
(800
)
Total purchase price
 
$
7,555

Schedule of Acquired Intangible Assets 
The allocation includes $2,661,000 of acquired intangible assets, as follows:

 
 
($000)

 
Weighted Average Useful Life (years)

Customer-related assets
 
$
1,835

 
10

Technology-based assets
 
447

 
4

Intellectual property (trademarks and trade names)
 
379

 
10

Total intangible assets
 
$
2,661

 
9

Schedule of Purchase Price Allocation 
The following table summarizes our allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:
 
 
($000)

Accounts receivable
 
$
352

Other current assets
 
54

Deferred tax asset--non-current
 
228

Intangible assets
 
8,588

Goodwill
 
5,727

Deferred revenue
 
(237
)
Accounts payable and accrued liabilities
 
(145
)
Other liabilities--non-current
 
(682
)
Total purchase price
 
$
13,885

Schedule of Acquired Intangible Assets 
The allocation includes $8,588,000 of acquired intangible assets, as follows:
 
 
($000)

 
Weighted Average Useful Life (years)

Customer-related assets
 
$
5,118

 
13

Technology-based assets
 
3,210

 
8

Intellectual property (trademarks and trade names)
 
260

 
10

Total intangible assets
 
$
8,588

 
11

Schedule of Purchase Price Allocation 
The following table summarizes our allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at December 31, 2009, the date of acquisition, for LIM:
 
 
($000)

Investments
 
$
2,233

Accounts receivable
 
1,551

Other current assets
 
391

Property and equipment
 
477

Other assets--non-current
 
4,473

Intangible assets
 
23,800

Goodwill
 
34,298

Deferred revenue
 
(511
)
Accounts payable and accrued liabilities
 
(2,124
)
Other current liabilities
 
(411
)
Other liabilities--non-current
 
(1,078
)
Deferred tax liability--non-current
 
(8,837
)
Total purchase price
 
$
54,262

Schedule of Acquired Intangible Assets 
The allocation includes $23,800,000 of acquired intangible assets, as follows:
 
 
($000)

 
Weighted Average Useful Life (years)

Customer-related assets
 
$
13,800

 
15

Technology-based assets
 
9,000

 
10

Intellectual property (trademarks and trade names)
 
1,000

 
10

Total intangible assets
 
$
23,800

 
13

Schedule of Purchase Price Allocation 
The following table summarizes our allocation of the purchase prices to the estimated fair values of the assets acquired and liabilities assumed at the dates of acquisition for these four acquisitions:
 
 
($000)

Cash and cash equivalents
 
$
1,295

Accounts receivable
 
2,342

Other current assets
 
515

Other non-current assets
 
135

Intangible assets
 
4,306

Goodwill
 
3,225

Accounts payable and accrued liabilities
 
(4,026
)
Deferred tax liability--non-current
 
(511
)
Other non-current liabilities
 
(300
)
Total purchase price
 
$
6,981

Schedule of Acquired Intangible Assets 
The allocation includes $4,306,000 of acquired intangible assets, as follows:
 
 
($000)

 
Weighted Average Useful Life (years)

Customer-related assets
 
$
3,135

 
10

Technology-based assets
 
971

 
9

Intellectual property (trademarks and trade names)
 
173

 
8

Non-competition agreement
 
27

 
4

Total intangible assets
 
$
4,306

 
10

Investments in Unconsolidated Entities (Tables)
Schedule of Equity Method And Cost Method Investments 
Our investments in unconsolidated entities consist primarily of the following:
 
 
 
As of December 31
 
 
($000)
 
2011

 
2010

Investment in MJKK
 
$
19,662

 
$
19,036

Other equity method investments
 
2,807

 
109

Investments accounted for using the cost method
 
5,173

 
5,117

Total investments in unconsolidated entities
 
$
27,642

 
$
24,262

Schedule of Equity Method Investments 
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 December 31
 
 
 
 
2011

 
2010

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

 
 

Japanese yen (¥000)
 
¥
2,797,704

 
¥
3,197,000

Equivalent U.S. dollars ($000)
 
$
36,146

 
$
38,361

Property, Equipment, and Capitalized Software Property, Equipment, and Capitalized Software (Tables)
Schedule of Property, Equipment, and Capitalized Software by Major Category 
The following table shows our property, equipment, and capitalized software summarized by major category:

 
 
As of December 31
 
 
($000)
 
2011

 
2010

Computer equipment
 
$
35,269

 
$
36,274

Capitalized software
 
25,918

 
27,308

Furniture and fixtures
 
19,918

 
18,816

Leasehold improvements
 
47,042

 
44,131

Telephone equipment
 
1,805

 
2,599

Construction in progress
 
8,993

 
1,545

Property, equipment, and capitalized software, at cost
 
138,945

 
130,673

Less accumulated depreciation
 
(70,749
)
 
(68,568
)
Property, equipment, and capitalized software, net
 
$
68,196

 
$
62,105


Capitalized Software Not Yet Placed In Service Included In Construction In Progress Balance 
The following table shows the amount of capitalized software development costs included in construction in progress:
 
 
As of December 31
 
 
($000)
 
2011

 
2010

Capitalized software development costs not yet placed into service
 
$
6,122

 
$
807

Summary of Depreciation Expense 
The following table summarizes our depreciation expense:
($000)
 
2011

 
2010

 
2009

Depreciation expense
 
$
15,646

 
$
14,814

 
$
12,998

Operating Leases Operating Leases (Tables)
Schedule of Minimum Future Rental Commitments 
The following table shows our minimum future rental commitments due in each of the next five years and thereafter for all non-cancelable operating leases, consisting primarily of leases for office space:
Minimum Future Rental Commitments
 
($000)

2012
 
$
16,856

2013
 
15,624

2014
 
15,975

2015
 
15,722

2016
 
15,413

Thereafter
 
67,036

Total
 
$
146,626


Schedule of Rent Expense 
The following table summarizes our rent expense including taxes, insurance, and other operating costs:

($000)
 
2011

 
2010

 
2009

Rent expense
 
$
20,122

 
$
18,638

 
$
19,489

Schedule of Deferred Rent 
Deferred rent includes build-out and rent abatement allowances received, which are amortized over the remaining portion of the original term of the lease as a reduction in office lease expense. We include deferred rent, as appropriate, in “Accounts payable and accrued liabilities” and “Other long-term liabilities” on our Consolidated Balance Sheets.
 
 
As of December 31
 
 
($000)
 
2011

 
2010

Deferred rent
 
$
27,282

 
$
28,293

Schedule of Liability for Vacant Office Space 
The following table shows the change in our liability for vacant office space from December 31, 2009 to December 31, 2011:

Liability for Vacant Office Space
 
($000)

Balance as of December 31, 2009
 
$
3,371

Increase liability for vacant office space
 
1,005

Reduction of liability for lease and other related payments
 
(1,880
)
Other, net
 
(67
)
Balance as of December 31, 2010
 
2,429

Reduction of liability for lease and other related payments
 
(1,510
)
Balance as of December 31, 2011
 
$
919

Stock-Based Compensation (Tables)
Schedule of Shares Available for Future Grants 
The following table summarizes the number of shares available for future grants under our 2011 Plan:
 
 
As of December 31
(000)
 
2011

Shares available for future grants
 
4,981

Schedule of Stock-Based Compensation Expense 
The following table summarizes our stock-based compensation expense and the related income tax benefit we recorded in the past three years:

($000)
 
2011

 
2010

 
2009

Restricted stock units
 
$
12,765

 
$
12,545

 
$
10,591

Restricted stock
 
2,196

 
1,248

 
—

Stock options
 
342

 
—

 
1,002

Total stock-based compensation expense
 
$
15,303

 
$
13,793

 
$
11,593

 
 
 
 
 
 
 
Income tax benefit related to the stock-based compensation expense
 
$
3,535

 
$
3,500

 
$
3,625

Schedule of Uncategorized Stock-Based Compensation Expense 
he following table summarizes the amount of unrecognized stock-based compensation expense as of December 31, 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
 
$
27,111

 
32

Restricted stock
 
5,919

 
40

Stock options
 
1,849

 
39

Total unrecognized stock-based compensation expense
 
$
34,879

 
34

Schedule of Restricted Stock Units Award Activity 
The following table summarizes restricted stock unit activity during the past three years:
Restricted Stock Units (RSUs)
 
Unvested

 
Vested but
Deferred

 
Total

 
Weighted
Average
Grant Date Value
per RSU

RSUs Outstanding - January 1, 2009
 
494,500

 
22,024

 
516,524

 
$
55.17

Granted
 
373,829

 
—

 
373,829

 
38.89

Vested
 
(150,031
)
 
—

 
(150,031
)
 
53.27

Vested but deferred
 
(17,570
)
 
17,570

 
—

 
—

Forfeited
 
(19,303
)
 
—

 
(19,303
)
 
50.05

RSUs Outstanding - December 31, 2009
 
681,425

 
39,594

 
721,019

 
46.99

Granted
 
399,349

 
—

 
399,349

 
47.76

Vested
 
(232,292
)
 
—

 
(232,292
)
 
47.77

Vested but deferred
 
(16,748
)
 
16,748

 
—

 
—

Issued
 
—

 
(11,153
)
 
(11,153
)
 
49.29

Forfeited
 
(54,068
)
 
—

 
(54,068
)
 
46.70

RSUs Outstanding - December 31, 2010
 
777,666

 
45,189

 
822,855

 
47.14

Granted
 
292,398

 
—

 
292,398

 
57.36

Dividend equivalents
 
2,673

 
—

 
2,673

 
48.57

Vested
 
(256,623
)
 
—

 
(256,623
)
 
48.28

Vested but deferred
 
(1,753
)
 
1,753

 
—

 
—

Issued
 
—

 
(26,866
)
 
(26,866
)
 
46.69

Forfeited
 
(73,318
)
 
—

 
(73,318
)
 
47.59

RSUs Outstanding - December 31, 2011
 
741,043

 
20,076

 
761,119

 
50.66

Schedule of Stock Options, Valuation Assumptions 
In May 2011, we granted 86,106 stock options under the 2004 Stock Incentive Plan. In November 2011, we granted 6,095 stock options under the 2011 Plan. We estimated the fair value of the options on the grant date using a Black-Scholes option-pricing model. The weighted average fair value of options granted during 2011 was $23.81 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
%
Schedule of Options Granted at Exercise Price Below Fair Value per Share on Grant Date 
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.

 
 
2011
 
 
 
2010
 
 
 
2009
 
 
Options Granted At an Exercise Price Below the Fair Value Per Share on the Grant Date
 
Underlying
Shares

 
Weighted
Average
Exercise
Price

 
Underlying
Shares

 
Weighted
Average
Exercise
Price

 
Underlying
Shares

 
Weighted
Average
Exercise
Price

Options outstanding—beginning of year
 
648,885

 
$
18.91

 
809,169

 
$
17.75

 
1,110,652

 
$
15.33

Granted
 
—

 
—

 
—

 
—

 
—

 
—

Canceled
 
—

 
—

 
(1,250
)
 
14.21

 
(175
)
 
15.14

Exercised
 
(250,026
)
 
19.25

 
(159,034
)
 
16.62

 
(301,308
)
 
10.75

Options outstanding—end of year
 
398,859

 
19.72

 
648,885

 
18.91

 
809,169

 
17.75

 
 
 
 
 
 
 
 
 
 
 
 
 
Options exercisable—end of year
 
398,859

 
$
19.72

 
648,885

 
$
18.91

 
809,169

 
$
17.75

Schedule of All Other Option Granted 

 
 
2011
 
 
 
2010
 
 
 
2009
 
 
All Other Option Grants, Excluding Activity Shown Above
 
Underlying
Shares

 
Weighted
Average
Exercise
Price

 
Underlying
Shares

 
Weighted
Average
Exercise
Price

 
Underlying
Shares

 
Weighted
Average
Exercise
Price

Options outstanding—beginning of year
 
1,207,540

 
$
17.09

 
1,868,408

 
$
16.15

 
2,942,706

 
$
15.14

Granted
 
92,201

 
57.42

 
—

 
—

 
—

 
—

Canceled
 
(1,960
)
 
16.04

 
(15,524
)
 
13.72

 
(3,127
)
 
21.99

Exercised
 
(479,229
)
 
16.17

 
(645,344
)
 
19.73

 
(1,071,171
)
 
13.95

Options outstanding—end of year
 
818,552

 
22.76

 
1,207,540

 
17.09

 
1,868,408

 
16.15

 
 
 
 
 
 
 
 
 
 
 
 
 
Options exercisable—end of year
 
726,351

 
$
18.36

 
1,207,540

 
$
17.09

 
1,858,865

 
$
16.02


Schedule of Intrinsic Value of Stock Options Exercised During Period 
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:
($000)
 
2011

 
2010

 
2009

Intrinsic value of options exercised
 
$
29,899

 
$
31,410

 
$
37,356

Schedule of Options, Vested and Expected to Vest, Outstanding and Exercisable 
The table below shows additional information for options outstanding and exercisable as of December 31, 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
 
353,498

 
0.92

 
$
9.52

 
$
17,649

 
353,498

 
0.92

 
$
9.52

 
$
17,649

$19.47 - $44.35
 
771,712

 
3.13

 
23.11

 
28,046

 
771,712

 
3.13

 
23.11

 
28,046

57.28 - $59.35
 
92,201

 
9.53

 
57.42

 
187

 
—

 
—

 
—

 
—


 


 


 


 


 


 


 


 


$8.57 - $59.35
 
1,217,411

 
2.97

 
21.76

 
$
45,882

 
1,125,210

 
2.43

 
18.84

 
$
45,695

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vested or Expected to Vest
 
 
 
 
 
 
 
 
 
 
 
 
 
$8.57 - $59.35
 
1,217,411

 
2.97

 
$
21.76

 


 
 
 
 
 
 
 
 
Schedule of Tax Benefits Related To Share Based Compensation 
The following table summarizes our excess tax benefits for the past three years:

($000)
 
2011

 
2010

 
2009

Excess tax benefits related to stock-based compensation
 
$
9,525

 
$
7,507

 
$
8,693

Defined Contribution Plan (Tables)
Schedule of Defined Contribution Plan, Employer Matching Contributions
The following table summarizes our matching contributions:

($000)
 
2011

 
2010

 
2009

401(k) matching contributions
 
$
5,601

 
$
3,321

 
$
—



Non-Operating Income (Tables)
Schedule of Nonoperating Income, by Component
The following table presents the components of our net non-operating income:

($000)
 
2011

 
2010

 
2009

Interest income
 
$
3,679

 
$
2,718

 
$
3,364

Interest expense
 
(1,318
)
 
(281
)
 
(348
)
Other income (expense), net
 
(652
)
 
4,295

 
(82
)
Non-operating income, net
 
$
1,709

 
$
6,732

 
$
2,934

Income Taxes (Tables)
Schedule of Income Tax Expense and Effective Tax Rate 
The following table shows our income tax expense and our effective tax rate:

($000)
 
2011

 
2010

 
2009

Income before income taxes and equity in net income of unconsolidated entities
 
$
140,124

 
$
127,791

 
$
127,607

Equity in net income of unconsolidated entities
 
1,848

 
1,422

 
1,165

Net (income) loss attributable to the noncontrolling interest
 
43

 
(87
)
 
132

Total
 
$
142,015

 
$
129,126

 
$
128,904

Income tax expense
 
$
43,658

 
$
42,756

 
$
46,775

Effective tax rate
 
30.7
%
 
33.1
%
 
36.3
%
Schedule of Effective Income Tax Rate Reconciliation 
The following table reconciles our income tax expense at the U.S. federal income tax rate of 35% to income tax expense as recorded:

 
 
2011
 
 
 
2010
 
 
 
2009
 
 
($000, except percentages)
 
Amount

 
%

 
Amount

 
%

 
Amount

 
%

Income tax expense at U.S. federal rate
 
$
49,705

 
35.0
 %
 
$
45,194

 
35.0
 %
 
$
45,117

 
35.0
 %
State income taxes, net of federal income tax benefit
 
1,376

 
1.0

 
1,756

 
1.3

 
3,470

 
2.7

Stock-based compensation activity
 
440

 
0.3

 
97

 
0.1

 
(396
)
 
(0.3
)
Disqualifying dispositions on incentive stock options
 
—

 
—

 
—

 
—

 
(68
)
 
—

Non-U.S. withholding taxes, net of federal income tax effect, and foreign tax credits
 
346

 
0.2

 
77

 
0.1

 
(1,311
)
 
(1.0
)
Net change in valuation allowance related to non-U.S. deferred tax assets, primarily net operating losses
 
394

 
0.3

 
(1,186
)
 
(0.9
)
 
1,221

 
0.9

Impact of equity in net income of unconsolidated entities
 
—

 
—

 
79

 
0.1

 
(70
)
 
—

Difference between U.S. federal statutory and foreign tax rates
 
(2,393
)
 
(1.7
)
 
(2,567
)
 
(2.0
)
 
266

 
0.2

Non-deductible deposit penalty
 
—

 
—

 
—

 
—

 
1,384

 
1.1

Expenses related to treatment of stock options originally considered incentive stock options, subject to limitation for tax purposes
 
—

 
—

 
—

 
—

 
1,082

 
0.8

Adjustment to accruals for state taxes
 
—

 
—

 
(2,633
)
 
(2.0
)
 
—

 
—

Change in unrecognized tax benefits
 
3,126

 
2.2

 
2,869

 
2.2

 
(1,786
)
 
(1.4
)
Credits and incentives
 
(7,734
)
 
(5.4
)
 
(984
)
 
(0.8
)
 
(1,923
)
 
(1.5
)
Recognition of deferred tax assets
 
(1,778
)
 
(1.3
)
 
—

 
—

 
—

 
—

Other - net
 
176

 
0.1

 
54

 
—

 
(211
)
 
(0.2
)
Total income tax expense
 
$
43,658

 
30.7
 %
 
$
42,756

 
33.1
 %
 
$
46,775

 
36.3
 %
Schedule of Components of Income Tax Expense 
Income tax expense consists of the following:

($000)
 
2011

 
2010

 
2009

Current tax expense:
 
 
 
 
 
 
U.S.
 
 
 
 
 
 
Federal
 
$
41,520

 
$
38,901

 
$
41,347

State
 
1,808

 
2,445

 
4,942

Non-U.S.
 
5,756

 
4,122

 
3,856

Current tax expense
 
49,084

 
45,468

 
50,145

Deferred tax expense (benefit):
 
 
 
 
 
 
U.S.
 
 
 
 
 
 
Federal
 
(1,011
)
 
61

 
(713
)
State
 
(242
)
 
(7
)
 
(38
)
Non-U.S.
 
(4,173
)
 
(2,766
)
 
(2,619
)
Deferred tax benefit, net
 
(5,426
)
 
(2,712
)
 
(3,370
)
Income tax expense
 
$
43,658

 
$
42,756

 
$
46,775

Schedule of Income before Income Tax 
The following table provides our income before income taxes and equity in net income of unconsolidated entities, generated by our U.S. and non-U.S. operations:

($000)
 
2011

 
2010

 
2009

U.S.
 
$
123,390

 
$
112,357

 
$
123,948

Non-U.S.
 
16,734

 
15,434

 
3,659

Income before income taxes and equity in net income of unconsolidated entities
 
$
140,124

 
$
127,791

 
$
127,607

Schedule of Deferred Tax Assets and Liabilities 
The tax effects of the temporary differences that give rise to the deferred income tax assets and liabilities are as follows:

 
 
As of December 31
 
 
($000)
 
2011

 
2010

Deferred tax assets:
 
 
 
 
Stock-based compensation expense
 
$
5,567

 
$
7,859

Accrued liabilities
 
7,789

 
5,728

Net operating loss carryforwards - U.S. federal and state
 
1,009

 
1,087

Net operating loss carryforwards - Non-U.S.
 
13,297

 
12,977

Research and development
 
631

 
—

Deferred royalty revenue
 
403

 
430

Allowance for doubtful accounts
 
503

 
461

Deferred rent
 
8,847

 
8,837

Unrealized exchange losses, net
 
159

 
—

Other
 
383

 
185

Total deferred tax assets
 
38,588

 
37,564

 
 
 
 
 
Deferred tax liabilities:
 
 
 
 
Acquired intangible assets
 
(17,558
)
 
(22,287
)
Property, equipment, and capitalized software
 
(8,523
)
 
(8,439
)
Unrealized exchange gains, net
 
—

 
(529
)
Prepaid expenses
 
(1,724
)
 
(1,856
)
Accrued liabilities
 
—

 
(578
)
Investments in unconsolidated entities
 
(9,580
)
 
(9,471
)
Other
 
—

 
(95
)
Total deferred tax liabilities
 
(37,385
)
 
(43,255
)
Net deferred tax liability before valuation allowance
 
1,203

 
(5,691
)
Valuation allowance
 
(12,039
)
 
(11,424
)
Net deferred tax liability
 
$
(10,836
)
 
$
(17,115
)
Schedule of Deferred Tax Assets and Liabilities Included in Consolidated Balance Sheets 
The deferred tax assets and liabilities are included in our Consolidated Balance Sheets as follows:

 
 
As of December 31
 
 
($000)
 
2011

 
2010

Deferred tax asset, net - current
 
$
5,104

 
$
2,860

Deferred tax liability, net - non-current
 
(15,940
)
 
(19,975
)
Net deferred tax liability
 
$
(10,836
)
 
$
(17,115
)
Schedule of Gross Unrecognized Tax Benefits 

The table below reconciles the beginning and ending amount of the gross unrecognized tax benefits as follows:

($000)
 
2011

 
2010

Gross unrecognized tax benefits - beginning of the year
 
$
9,089

 
$
6,069

Increases as a result of tax positions taken during a prior-year period
 
1,639

 
1,720

Decreases as a result of tax positions taken during a prior-year period
 
(876
)
 
(150
)
Increases as a result of tax positions taken during the current period
 
3,662

 
2,131

Decreases relating to settlements with tax authorities
 
(1,001
)
 
(272
)
Reductions as a result of lapse of the applicable statute of limitations
 
(324
)
 
(409
)
Gross unrecognized tax benefits - end of the year
 
$
12,189

 
$
9,089


Summary of Income Tax Examinations 
 The following table summarizes our gross liability for interest and penalties:

 
 
As of December 31
 
 
($000)
 
2011

 
2010

Liabilities for interest and penalties
 
$
1,726

 
$
1,526


Summary of Operating Loss Carryforwards 
The following table summarizes our U.S. net operating loss (NOL) carryforwards:

 
 
As of December 31
 
 
 
($000)
 
 
2011
 
 
2010
 
 
 
Expiration Date
 
 
Expiration Date
U.S. federal NOLs subject to expiration dates
 
$
2,587

2023
 
$
2,811

2023
Summary of Operating Loss Carryforwards 
The following table summarizes our NOL carryforwards for our non-U.S. operations:

 
 
As of December 31
 
 
($000)
 
2011

 
2010

Non-U.S. NOLs subject to expiration dates from 2012 through 2031
 
$
5,048

 
$
3,113

Non-U.S. NOLs with no expiration date
 
45,002

 
45,934

Total
 
$
50,050

 
$
49,047

 
 
 
 
 
Non-U.S. NOLs not subject to valuation allowances
 
$
5,284

 
$
5,611

Selected Quarterly Financial Data (Tables)
Schedule of Quarterly Financial Data
 
 
2010
 
 
 
 
 
 
 
2011
 
 
 
 
 
 
 
(in thousands except per share amounts)
 
Q1

 
Q2

 
Q3

 
Q4

 
Q1

 
Q2

 
Q3

 
Q4

 
Revenue
 
$
128,290

 
$
136,091

 
$
139,817

 
$
151,153

 
$
151,767

 
$
161,011

 
$
160,051

 
$
158,571

 
Total operating expense (1)
 
97,348

 
108,424

 
109,656

 
118,864

 
119,958

 
122,404

 
126,187

 
124,436

 
Operating income
 
30,942

 
27,667

 
30,161

 
32,289

 
31,809

 
38,607

 
33,864

 
34,135

 
Non-operating income (expense), net
 
(179
)
 
21

 
6,206

 
684

 
774

 
9

 
(579
)
 
1,505

 
Income before income taxes and equity in net income of unconsolidated entities
 
30,763

 
27,688

 
36,367

 
32,973

 
32,583

 
38,616

 
33,285

 
35,640

 
Income tax expense
 
10,995

 
10,225

 
11,917

 
9,619

 
10,518

 
12,724

 
12,343

 
8,073

 
Equity in net income (loss) of unconsolidated entities
 
389

 
454

 
333

 
246

 
374

 
595

 
428

 
451

 
Consolidated net income
 
20,157

 
17,917

 
24,783

 
23,600

 
22,439

 
26,487

 
21,370

 
28,018

 
Net (income) loss attributable to the noncontrolling interests
 
31

 
85

 
(106
)
 
(97
)
 
98

 
(2
)
 
10

 
(63
)
 
Net income attributable to Morningstar, Inc.
 
$
20,188

 
$
18,002

 
$
24,677

 
$
23,503

 
$
22,537

 
$
26,485

 
$
21,380

 
$
27,955

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per share attributable to Morningstar, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.41

 
$
0.37

 
$
0.50

 
$
0.47

 
$
0.45

 
$
0.53

 
$
0.42

 
$
0.56

 
Diluted

$
0.40


$
0.36


$
0.49


$
0.46


$
0.44


$
0.52


$
0.42


$
0.55


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends declared per common share
 
$
—

 
$
—

 
$
0.05

 
$
—

 
$
0.05

 
$
0.05

 
$
0.05

 
$
0.10

 
Dividends paid per common share
 
$
—

 
$
—

 
$
—

 
$
—

 
$
0.05

 
$
0.05

 
$
0.05

 
$
0.05

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
48,828

 
49,234

 
49,401

 
49,523

 
49,800

 
50,165

 
50,278

 
49,883

 
Diluted
 
50,332

 
50,533

 
50,544

 
50,761

 
50,953

 
51,142

 
51,123

 
50,732

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2010
 
 
 
 
 
 
 
2011
 
 
 
 
 
 
 
(in thousands)
 
Q1

 
Q2

 
Q3

 
Q4

 
Q1

 
Q2

 
Q3

 
Q4

 
(1) Includes stock-based compensation expense of:
 
$
2,937

 
$
3,655

 
$
3,745

 
$
3,456

 
$
3,649

 
$
3,843

 
$
3,951

 
$
3,860

 
Description of Business (Details)
Dec. 31, 2011
Countries
Organization, Consolidation and Presentation of Financial Statements [Abstract]
 
Number of countries in which entity operates
27 
Summary of Significant Accounting Policies (Details) (USD $)
12 Months Ended
Dec. 31, 2011
Years
Dec. 31, 2010
Dec. 31, 2009
Business Acquisition [Line Items]
 
 
 
Advertising expense
$ 8,210,000 
$ 8,572,000 
$ 7,361,000 
Property, Equipment, and Depreciation, useful life, minimum
3 
 
 
Property, Equipment, and Depreciation, useful life, maximum
7 
 
 
Computer Software and Internal Product Development Costs, useful life, average
3 
 
 
Intangible Assets, useful life, minimum
1 
 
 
Intangible Assets, useful life, maximum
25 
 
 
Aspect Huntley [Member]
 
 
 
Business Acquisition [Line Items]
 
 
 
Impairment loss
$ 800,000 
$ 0 
$ 0 
Income Per Share (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Basic net income per share attributable to Morningstar, Inc.:
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to Morningstar, Inc.
$ 27,955 
$ 21,380 
$ 26,485 
$ 22,537 
$ 23,503 
$ 24,677 
$ 18,002 
$ 20,188 
$ 98,357 
$ 86,370 
$ 82,129 
Less: Distributed earnings availabline to participating securities
 
 
 
 
 
 
 
 
(40)
(10)
0 
Less: Undistributed earnings allocated to participating securities
 
 
 
 
 
 
 
 
(259)
(335)
0 
Numerator for basic net income per share - undistributed and distributed earnings available to common shareholders
 
 
 
 
 
 
 
 
98,058 
86,025 
82,129 
Weighted average common shares outstanding
49,883 
50,278 
50,165 
49,800 
49,523 
49,401 
49,234 
48,828 
50,032 
49,249 
48,112 
Basic net income per share attributable to Morningstar, Inc.
$ 0.56 
$ 0.42 
$ 0.53 
$ 0.45 
$ 0.47 
$ 0.50 
$ 0.37 
$ 0.41 
$ 1.96 
$ 1.75 
$ 1.71 
Diluted net income per share attributable to Morningstar, Inc.:
 
 
 
 
 
 
 
 
 
 
 
Numerator for basic net income per share - undistributed and distributed earnings available to common shareholders
 
 
 
 
 
 
 
 
98,058 
86,025 
82,129 
Add: Undistributed earnings allocated to participating securities
 
 
 
 
 
 
 
 
259 
335 
0 
Less: Undistributed earnings reallocated to participating securities
 
 
 
 
 
 
 
 
(254)
(326)
0 
Numerator for diluted net income per share - undistributed and distributed earnings available to common shareholders
 
 
 
 
 
 
 
 
$ 98,063 
$ 86,034 
$ 82,129 
Weighted average common shares outstanding
49,883 
50,278 
50,165 
49,800 
49,523 
49,401 
49,234 
48,828 
50,032 
49,249 
48,112 
Net effect of dilutive stock options and restricted stock units
 
 
 
 
 
 
 
 
956 
1,306 
1,681 
Weighted average common shares outstanding for computing diluted income per share
50,732 
51,123 
51,142 
50,953 
50,761 
50,544 
50,533 
50,332 
50,988 
50,555 
49,793 
Diluted net income per share attributable to Morningstar, Inc.
$ 0.55 
$ 0.42 
$ 0.52 
$ 0.44 
$ 0.46 
$ 0.49 
$ 0.36 
$ 0.40 
$ 1.92 
$ 1.70 
$ 1.65 
Segment and Geographical Area Information (Operating Segments) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Segment Reporting Information, Operating Income (Loss) [Abstract]
 
 
 
 
 
 
 
 
 
 
 
External revenue
$ 158,571 
$ 160,051 
$ 161,011 
$ 151,767 
$ 151,153 
$ 139,817 
$ 136,091 
$ 128,290 
$ 631,400 
$ 555,351 
$ 478,996 
Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
 
 
 
 
 
 
 
434,769 
380,835 
310,769 
Stock-based compensation expense
3,860 
3,951 
3,843 
3,649 
3,456 
3,745 
3,655 
2,937 
15,303 
13,793 
11,593 
Depreciation and amortization
 
 
 
 
 
 
 
 
42,913 1
39,664 1
31,961 1
Operating income
34,135 
33,864 
38,607 
31,809 
32,289 
30,161 
27,667 
30,942 
138,415 
121,059 
124,673 
Segment Reporting Information, Additional Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Goodwill
318,492 
 
 
 
317,661 
 
 
 
318,492 
317,661 
249,492 
Long-lived Assets
68,196 
 
 
 
62,105 
 
 
 
68,196 
62,105 
59,828 
Investment Information [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information, Operating Income (Loss) [Abstract]
 
 
 
 
 
 
 
 
 
 
 
External revenue
 
 
 
 
 
 
 
 
500,909 
444,957 
386,642 
Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
 
 
 
 
 
 
 
351,194 
301,722 
237,101 
Stock-based compensation expense
 
 
 
 
 
 
 
 
10,113 
8,110 
5,704 
Depreciation and amortization
 
 
 
 
 
 
 
 
8,088 
7,385 
5,408 
Operating income
 
 
 
 
 
 
 
 
131,514 
127,740 
138,429 
Segment Reporting Information, Additional Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Goodwill
277,059 
 
 
 
275,611 
 
 
 
277,059 
275,611 
217,258 
Investment Management [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information, Operating Income (Loss) [Abstract]
 
 
 
 
 
 
 
 
 
 
 
External revenue
 
 
 
 
 
 
 
 
130,491 
110,394 
92,354 
Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
 
 
 
 
 
 
 
58,596 
51,361 
37,296 
Stock-based compensation expense
 
 
 
 
 
 
 
 
2,080 
2,032 
1,965 
Depreciation and amortization
 
 
 
 
 
 
 
 
166 
185 
204 
Operating income
 
 
 
 
 
 
 
 
69,649 
56,816 
52,889 
Segment Reporting Information, Additional Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Goodwill
41,433 
 
 
 
42,050 
 
 
 
41,433 
42,050 
32,234 
Corporate Elimination [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information, Operating Income (Loss) [Abstract]
 
 
 
 
 
 
 
 
 
 
 
External revenue
 
 
 
 
 
 
 
 
0 
0 
0 
Operating expense, excluding stock-based compensation expense, depreciation, and amortization
 
 
 
 
 
 
 
 
24,979 
27,752 
36,372 
Stock-based compensation expense
 
 
 
 
 
 
 
 
3,110 
3,651 
3,924 
Depreciation and amortization
 
 
 
 
 
 
 
 
34,659 
32,094 
26,349 
Operating income
 
 
 
 
 
 
 
 
(62,748)
(63,497)
(66,645)
Segment Reporting Information, Additional Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Goodwill
0 
 
 
 
0 
 
 
 
0 
0 
0 
United States [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information, Operating Income (Loss) [Abstract]
 
 
 
 
 
 
 
 
 
 
 
External revenue
 
 
 
 
 
 
 
 
446,470 
398,215 
349,836 
Segment Reporting Information, Additional Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditure
 
 
 
 
 
 
 
 
13,816 
5,067 
4,479 
Long-lived Assets
44,572 
 
 
 
39,496 
 
 
 
44,572 
39,496 
42,884 
Non United States [Member]
 
 
 
 
 
 
 
 
 
 
 
Segment Reporting Information, Operating Income (Loss) [Abstract]
 
 
 
 
 
 
 
 
 
 
 
External revenue
 
 
 
 
 
 
 
 
184,930 
157,136 
129,160 
Segment Reporting Information, Additional Information [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Capital Expenditure
 
 
 
 
 
 
 
 
9,506 
9,704 
7,893 
Long-lived Assets
$ 23,624 
 
 
 
$ 22,609 
 
 
 
$ 23,624 
$ 22,609 
$ 16,944 
Segment and Geographical Area Information (External Revenue and Long-Lived Assets) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
$ 158,571 
$ 160,051 
$ 161,011 
$ 151,767 
$ 151,153 
$ 139,817 
$ 136,091 
$ 128,290 
$ 631,400 
$ 555,351 
$ 478,996 
Long-lived assets
68,196 
 
 
 
62,105 
 
 
 
68,196 
62,105 
59,828 
United States [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
446,470 
398,215 
349,836 
Long-lived assets
44,572 
 
 
 
39,496 
 
 
 
44,572 
39,496 
42,884 
United Kingdom [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
53,427 
43,797 
36,666 
Long-lived assets
7,512 
 
 
 
5,960 
 
 
 
7,512 
5,960 
5,870 
Europe, excluding the United Kingdom [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
49,507 
39,851 
36,823 
Long-lived assets
2,629 
 
 
 
3,479 
 
 
 
2,629 
3,479 
4,626 
Australia [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
39,761 
35,638 
25,509 
Long-lived assets
1,415 
 
 
 
1,554 
 
 
 
1,415 
1,554 
1,430 
Canada [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
27,808 
25,533 
20,506 
Long-lived assets
2,076 
 
 
 
2,395 
 
 
 
2,076 
2,395 
2,610 
Asia, Excluding Japan [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
9,240 
7,855 
5,725 
Long-lived assets
9,656 
 
 
 
8,874 
 
 
 
9,656 
8,874 
1,988 
Japan [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
3,948 
3,871 
3,726 
Long-lived assets
282 
 
 
 
233 
 
 
 
282 
233 
279 
Other [Member]
 
 
 
 
 
 
 
 
 
 
 
Revenues from External Customers and Long-Lived Assets [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
1,239 
591 
205 
Long-lived assets
$ 54 
 
 
 
$ 114 
 
 
 
$ 54 
$ 114 
$ 141 
Investments and Fair Value Measurements (Classification of Securities) (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Fair Value Disclosures [Abstract]
 
 
Available-for-sale
$ 247,917 
$ 173,072 
Held-to-maturity
16,347 
7,476 
Trading securities
5,491 
4,692 
Total
$ 269,755 
$ 185,240 
Investments and Fair Value Measurements (Gains (Losses) on Investments) (Details) (USD $)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Available-for-sale:
 
 
 
Available-for-sale securities, amortized cost basis
$ 248,411,000 
$ 172,086,000 
 
Available-for-sale securities, unrealized gain
819,000 
1,075,000 
 
Available-for-sale securities, unrealized loss
1,313,000 
89,000 
 
Available-for-sale Securities, Current
247,917,000 
173,072,000 
 
Held-to-maturity:
 
 
 
Held-to-maturity securities, total amortized cost
16,347,000 
7,476,000 
 
Held-to-maturity securities, unrecognized gain
0 
0 
 
Held-to-maturity securities, unrecognized loss
0 
0 
 
Held-to-maturity Securities, Current
16,347,000 
7,476,000 
 
Available-for-sale Securities, Gross Realized Gain (Loss) [Abstract]
 
 
 
Available-for-sale securities, realized gains
761,000 
276,000 
0 
Available-for-sale securities, realized losses
(501,000)
(1,000)
0 
Available-for-sale securities, realized gains, net
260,000 
275,000 
0 
Unrealized losses on investments
0 
0 
 
US Treasury and Government [Member]
 
 
 
Available-for-sale:
 
 
 
Available-for-sale securities, amortized cost basis
139,099,000 
113,597,000 
 
Available-for-sale securities, unrealized gain
72,000 
36,000 
 
Available-for-sale securities, unrealized loss
(402,000)
(56,000)
 
Available-for-sale securities, fair value disclosure
138,769,000 
113,577,000 
 
Corporate Bonds [Member]
 
 
 
Available-for-sale:
 
 
 
Available-for-sale securities, amortized cost basis
61,589,000 
42,839,000 
 
Available-for-sale securities, unrealized gain
14,000 
63,000 
 
Available-for-sale securities, unrealized loss
(280,000)
(24,000)
 
Available-for-sale securities, fair value disclosure
61,323,000 
42,878,000 
 
Commercial Paper [Member]
 
 
 
Available-for-sale:
 
 
 
Available-for-sale securities, amortized cost basis
29,964,000 
2,994,000 
 
Available-for-sale securities, unrealized gain
2,000 
0 
 
Available-for-sale securities, unrealized loss
(7,000)
(3,000)
 
Available-for-sale securities, fair value disclosure
29,959,000 
2,991,000 
 
Equity Securities and Exchange-Traded Funds [Member]
 
 
 
Available-for-sale:
 
 
 
Available-for-sale securities, amortized cost basis
8,461,000 
4,510,000 
 
Available-for-sale securities, unrealized gain
368,000 
418,000 
 
Available-for-sale securities, unrealized loss
(558,000)
(6,000)
 
Available-for-sale securities, fair value disclosure
8,271,000 
4,922,000 
 
Mutual Funds [Member]
 
 
 
Available-for-sale:
 
 
 
Available-for-sale securities, amortized cost basis
9,298,000 
8,146,000 
 
Available-for-sale securities, unrealized gain
363,000 
558,000 
 
Available-for-sale securities, unrealized loss
(66,000)
0 
 
Available-for-sale securities, fair value disclosure
$ 9,595,000 
$ 8,704,000 
 
Investments and Fair Value Measurements (Cost and Fair Value of Securities) (Details) (USD $)
Dec. 31, 2011
Dec. 31, 2010
Available-for-sale Securities, Debt Maturities [Abstract]
 
 
Available-for-sale securities, due in one year or less, amortized cost basis
$ 155,651,000 
$ 85,990,000 
Available-for-sale securities, due in one year or less, fair vlaue
155,247,000 
85,964,000 
Available for sale securities, due in one to two years, amortized cost basis
75,001,000 
73,440,000 
Available-for-sale securities, due in one to two years, fair value
74,804,000 
73,482,000 
Available-for-sale securities, equity securities and mutual funds, amortized cost basis
17,759,000 
12,656,000 
Available-for-sale securities, equity securities and mutual funds, fair value
17,866,000 
13,626,000 
Available-for-sale securities, amortized cost basis
248,411,000 
172,086,000 
Available-for-sale Securities, Current
247,917,000 
173,072,000 
Held-to-maturity Securities, Debt Maturities [Abstract]
 
 
Held-to-maturity securities, due in one year, net carrying amount
16,342,000 
7,223,000 
Held-to-maturity securities, due within one year, fair value
16,342,000 
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
16,347,000 
7,476,000 
Held-to-maturity Securities, Current
16,347,000 
7,476,000 
Certificate of Deposit Held as Collateral Against Australia Office Lease
$ 1,600,000 
$ 1,600,000 
Investments and Fair Value Measurements (Unrealized Gains on Trading Securities) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Schedule of Trading Securities and Other Trading Assets [Line Items]
 
 
 
Unrealized gains (losses), net
$ (387)
$ 237 
$ 1,233 
Investments and Fair Value Measurements (Fair Value of Assets) (Details) (Fair Value, Measurements, Recurring [Member], USD $)
In Thousands, unless otherwise specified
Dec. 31, 2011
Dec. 31, 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
$ 5,491 
$ 4,692 
Cash equivalents, fair value disclosure
30,818 
27,007 
Investments, fair value disclosure
284,226 
204,771 
Estimate of Fair Value, Fair Value Disclosure [Member] |
Government Obligations
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
138,769 
113,577 
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
61,323 
42,878 
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
29,959 
2,991 
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
8,271 
4,922 
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
9,595 
8,704 
Fair Value, Inputs, Level 1 [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Trading securities, fair value disclosure
5,491 
4,692 
Cash equivalents, fair value disclosure
30,818 
27,007 
Investments, fair value disclosure
54,175 
45,325 
Fair Value, Inputs, Level 1 [Member] |
Government Obligations
 
 
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
8,271 
4,922 
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
9,595 
8,704 
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 
Cash equivalents, fair value disclosure
0 
0 
Investments, fair value disclosure
230,051 
159,446 
Fair Value, Inputs, Level 2 [Member] |
Government Obligations
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Available-for-sale securities, fair value disclosure
138,769 
113,577 
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
61,323 
42,878 
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
29,959 
2,991 
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 
Cash equivalents, fair value disclosure
0 
0 
Investments, fair value disclosure
0 
0 
Fair Value, Inputs, Level 3 [Member] |
Government Obligations
 
 
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 
Acquisitions, Goodwill, and Other Intangible Assets (Narrative) (Details) (USD $)
12 Months Ended 3 Months Ended 0 Months Ended 12 Months Ended 1 Months Ended 1 Months Ended 12 Months Ended 12 Months Ended 12 Months Ended
Dec. 31, 2011
Countries
Dec. 31, 2010
Dec. 31, 2009
Mar. 31, 2010
Aegis Equities Research [Member]
Years
Mar. 31, 2010
Aegis Equities Research [Member]
Deductions for Income Tax Purposes [Member]
Apr. 12, 2010
Old Broad Street Research Ltd. [Member]
May 3, 2010
Realpoint, LLC [Member]
Dec. 31, 2010
Morningstar Denmark [Member]
Jun. 30, 2010
Morningstar Denmark [Member]
Nov. 1, 2010
Annuity Intelligence Business of Advanced Sales and Marketing Corporation [Member]
Years
Jun. 30, 2010
Footnoted business of Financial Fineprint Inc. and Seeds Group [Member]
May 1, 2009
Computerized Portfolio Management Services Inc. (CPMS) [Member]
Years
Dec. 31, 2009
Logical Information Machines, Inc. (LIM) [Member]
Clients
Apr. 20, 2009
Global Reports [Member]
Countries
Dec. 31, 2009
Global Reports, Andex, Intech and Canadian Investment Awards and Gala [Member]
Years
Dec. 31, 2009
Global Reports, Andex, Intech and Canadian Investment Awards and Gala [Member]
Deductions for Income Tax Purposes [Member]
Dec. 31, 2009
Morningstar Korea [Member]
Dec. 31, 2010
Morningstar Korea [Member]
Dec. 31, 2011
Aspect Huntley [Member]
Dec. 31, 2010
Aspect Huntley [Member]
Dec. 31, 2009
Aspect Huntley [Member]
Dec. 31, 2009
Minimum [Member]
Sources
Apr. 20, 2009
Minimum [Member]
Global Reports [Member]
Companies
Jun. 30, 2010
75% [Member]
Morningstar Denmark [Member]
Jun. 30, 2010
25% [Member]
Morningstar Denmark [Member]
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash paid to acquire the entity
 
 
 
$ 10,269,000 
 
$ 17,937,000 
$ 38,327,000 
 
 
 
$ 6,113,000 
 
 
 
$ 5,686,000 
 
 
 
 
 
 
 
 
$ 15,467,000 
$ 4,725,000 
Intangible assets
 
 
 
 
1,787,000 
 
 
 
 
 
 
 
 
 
 
1,344,000 
 
 
 
 
 
 
 
 
 
Intangible assets
 
 
 
5,801,000 
 
9,266,000 
19,120,000 
 
9,854,000 
6,300,000 
2,661,000 
8,588,000 
23,800,000 
 
4,306,000 
 
 
 
 
 
 
 
 
 
 
Business acquisition, purchase price
 
 
 
 
 
 
 
 
 
14,113,000 
 
13,885,000 
54,262,000 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares of restricted stock issued to acquire the entity
 
 
 
 
 
 
199,174 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of clients
 
 
 
 
 
 
 
 
 
 
 
 
130 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization period for tax purposes assigned to goodwill and intangible assets, in years
 
 
 
3 
 
 
 
 
 
15 
 
15 
 
 
15 
 
 
 
 
 
 
 
 
 
 
Additional percentage of ownership acquired
 
 
 
 
 
 
 
 
75.00% 
 
 
 
 
 
 
 
40.00% 
 
 
 
 
 
 
 
 
Ownership percentage
 
 
 
 
 
 
 
 
100.00% 
 
 
 
 
 
 
 
80.00% 
 
 
 
 
 
 
 
 
Equity method investment, ownership percentage
 
 
 
 
 
 
 
 
25.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business Acquisition, Purchase Price Allocation, Assets Acquired (Liabilities Assumed), Net
 
 
 
10,320,000 
 
22,569,000 
43,816,000 
 
20,192,000 
14,113,000 
7,555,000 
13,885,000 
54,262,000 
 
6,981,000 
 
 
 
 
 
 
 
 
 
 
Goodwill impairment loss
0 
0 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred tax liability
 
 
 
 
 
2,317,000 
 
 
2,504,000 
 
800,000 
 
8,837,000 
 
511,000 
 
 
 
 
 
 
 
 
 
 
Number of companies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
37,000 
 
 
Number of securities tracked by entity acquired
 
 
 
 
 
 
 
 
 
 
 
4,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of countries in which entity operates, approximately
27 
 
 
 
 
 
 
 
 
 
 
 
 
130 
 
 
 
 
 
 
 
 
 
 
 
Holding gain upon acquisition of additional ownership of equity
0 
4,564,000 
352,000 
 
 
 
 
4,564,000 
 
 
 
 
 
 
 
 
352,000 
 
 
 
 
 
 
 
 
Goodwill
 
 
 
5,117,000 
 
12,422,000 
24,903,000 
 
12,342,000 
9,028,000 
3,869,000 
5,727,000 
34,298,000 
 
3,225,000 
1,099,000 
1,027,000 
 
 
 
 
 
 
 
 
Fair value allocation, intangible assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
609,000 
 
 
 
 
 
 
 
 
Total deferred tax liabilities
(37,385,000)
(43,255,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(229,000)
 
 
 
 
 
 
 
 
Noncontrolling interest
1,646,000 
1,109,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
550,000 
 
 
 
 
 
 
 
Number of data sources
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
200 
 
 
 
Impairment loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 800,000 
$ 0 
$ 0 
 
 
 
 
Acquisitions, Goodwill, and Other Intangible Assets (Purchase Price Allocation) (Details) (Details) (USD $)
Mar. 31, 2010
Aegis Equities Research [Member]
Apr. 12, 2010
Old Broad Street Research Ltd. [Member]
May 3, 2010
Realpoint, LLC [Member]
Jun. 30, 2010
Morningstar Denmark [Member]
Nov. 1, 2010
Annuity Intelligence Business of Advanced Sales and Marketing Corporation [Member]
Jun. 30, 2010
Footnoted business of Financial Fineprint Inc. and Seeds Group [Member]
May 1, 2009
Computerized Portfolio Management Services Inc. (CPMS) [Member]
Dec. 31, 2009
Logical Information Machines, Inc. (LIM) [Member]
Dec. 31, 2009
Global Reports, Andex, Intech and Canadian Investment Awards and Gala [Member]
Business Acquisition, Purchase Price Allocation [Abstract]
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$ 51,000 
$ 4,632,000 
$ 5,489,000 
$ 915,000 
 
$ 1,442,000 
 
 
$ 1,295,000 
Accounts receivable and other current assets
 
986,000 
3,567,000 
632,000 
163,000 
939,000 
 
 
 
Investments
55,000 
 
 
 
 
 
 
2,233,000 
 
Accounts receivable
198,000 
 
 
 
 
 
352,000 
1,551,000 
2,342,000 
Other current assets
 
 
 
 
 
 
54,000 
391,000 
515,000 
Property and equipment
 
 
 
 
 
 
 
477,000 
 
Other non-current assets
62,000 
1,632,000 
738,000 
65,000 
9,000 
179,000 
 
4,473,000 
135,000 
Intangible assets
5,801,000 
9,266,000 
19,120,000 
9,854,000 
6,300,000 
2,661,000 
8,588,000 
23,800,000 
4,306,000 
Deferred tax asset--non-current
 
 
195,000 
 
 
 
228,000 
 
 
Goodwill
5,117,000 
12,422,000 
24,903,000 
12,342,000 
9,028,000 
3,869,000 
5,727,000 
34,298,000 
3,225,000 
Deferred revenue
(617,000)
(2,633,000)
(7,316,000)
(496,000)
(1,364,000)
(159,000)
(237,000)
(511,000)
 
Accounts payable and accrued and other current liabilities
 
(1,342,000)
(2,785,000)
 
(23,000)
(576,000)
(145,000)
(2,124,000)
(4,026,000)
Other current liabilities
 
 
 
 
 
 
 
(411,000)
 
Deferred tax liability--non-current
 
(2,317,000)
 
(2,504,000)
 
(800,000)
 
(8,837,000)
(511,000)
Other non-current liabilities
 
(77,000)
(95,000)
 
 
 
(682,000)
(1,078,000)
(300,000)
Other current and non-current liabilities
(347,000)
 
 
(616,000)
 
 
 
 
 
Total purchase price
$ 10,320,000 
$ 22,569,000 
$ 43,816,000 
$ 20,192,000 
$ 14,113,000 
$ 7,555,000 
$ 13,885,000 
$ 54,262,000 
$ 6,981,000 
Acquisitions, Goodwill, and Other Intangible Assets (Allocation of Acquired Intangible Assets) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended 1 Months Ended 0 Months Ended 6 Months Ended 1 Months Ended 12 Months Ended
Dec. 31, 2011
Years
Dec. 31, 2010
Years
Dec. 31, 2011
Customer-Related Assets [Member]
Years
Dec. 31, 2010
Customer-Related Assets [Member]
Years
Dec. 31, 2011
Technology-Based Assets [Member]
Years
Dec. 31, 2010
Technology-Based Assets [Member]
Years
Dec. 31, 2011
Intellectual Property (Trademarks and Trade Names) [Member]
Years
Dec. 31, 2010
Intellectual Property (Trademarks and Trade Names) [Member]
Years
Dec. 31, 2011
Non-Competition Agreement [Member]
Years
Dec. 31, 2010
Non-Competition Agreement [Member]
Years
Mar. 31, 2010
Aegis Equities Research [Member]
Years
Mar. 31, 2010
Aegis Equities Research [Member]
Customer-Related Assets [Member]
Years
Mar. 31, 2010
Aegis Equities Research [Member]
Technology-Based Assets [Member]
Years
Mar. 31, 2010
Aegis Equities Research [Member]
Intellectual Property (Trademarks and Trade Names) [Member]
Years
Mar. 31, 2010
Aegis Equities Research [Member]
Non-Competition Agreement [Member]
Years
Apr. 12, 2010
Old Broad Street Research Ltd. [Member]
Years
Apr. 12, 2010
Old Broad Street Research Ltd. [Member]
Customer-Related Assets [Member]
Years
Apr. 12, 2010
Old Broad Street Research Ltd. [Member]
Technology-Based Assets [Member]
Years
Apr. 12, 2010
Old Broad Street Research Ltd. [Member]
Intellectual Property (Trademarks and Trade Names) [Member]
Years
May 3, 2010
Realpoint, LLC [Member]
Years
May 3, 2010
Realpoint, LLC [Member]
Customer-Related Assets [Member]
Years
May 3, 2010
Realpoint, LLC [Member]
Technology-Based Assets [Member]
Years
May 3, 2010
Realpoint, LLC [Member]
Intellectual Property (Trademarks and Trade Names) [Member]
Years
May 3, 2010
Realpoint, LLC [Member]
Non-Competition Agreement [Member]
Years
Jun. 30, 2010
Morningstar Denmark [Member]
Years
Jun. 30, 2010
Morningstar Denmark [Member]
Customer-Related Assets [Member]
Years
Jun. 30, 2010
Morningstar Denmark [Member]
Technology-Based Assets [Member]
Years
Nov. 1, 2010
Annuity Intelligence Business of Advanced Sales and Marketing Corporation [Member]
Years
Nov. 1, 2010
Annuity Intelligence Business of Advanced Sales and Marketing Corporation [Member]
Customer-Related Assets [Member]
Years
Nov. 1, 2010
Annuity Intelligence Business of Advanced Sales and Marketing Corporation [Member]
Technology-Based Assets [Member]
Years
Nov. 1, 2010
Annuity Intelligence Business of Advanced Sales and Marketing Corporation [Member]
Intellectual Property (Trademarks and Trade Names) [Member]
Years
Jun. 30, 2010
Footnoted business of Financial Fineprint Inc. and Seeds Group [Member]
Years
Jun. 30, 2010
Footnoted business of Financial Fineprint Inc. and Seeds Group [Member]
Customer-Related Assets [Member]
Years
Jun. 30, 2010
Footnoted business of Financial Fineprint Inc. and Seeds Group [Member]
Technology-Based Assets [Member]
Years
Jun. 30, 2010
Footnoted business of Financial Fineprint Inc. and Seeds Group [Member]
Intellectual Property (Trademarks and Trade Names) [Member]
Years
May 1, 2009
Computerized Portfolio Management Services Inc. (CPMS) [Member]
Years
May 1, 2009
Computerized Portfolio Management Services Inc. (CPMS) [Member]
Customer-Related Assets [Member]
Years
May 1, 2009
Computerized Portfolio Management Services Inc. (CPMS) [Member]
Technology-Based Assets [Member]
Years
May 1, 2009
Computerized Portfolio Management Services Inc. (CPMS) [Member]
Intellectual Property (Trademarks and Trade Names) [Member]
Years
Dec. 31, 2009
Logical Information Machines, Inc. (LIM) [Member]
Years
Dec. 31, 2009
Logical Information Machines, Inc. (LIM) [Member]
Customer-Related Assets [Member]
Years
Dec. 31, 2009
Logical Information Machines, Inc. (LIM) [Member]
Technology-Based Assets [Member]
Years
Dec. 31, 2009
Logical Information Machines, Inc. (LIM) [Member]
Intellectual Property (Trademarks and Trade Names) [Member]
Years
Dec. 31, 2009
Global Reports, Andex, Intech and Canadian Investment Awards and Gala [Member]
Years
Dec. 31, 2009
Global Reports, Andex, Intech and Canadian Investment Awards and Gala [Member]
Customer-Related Assets [Member]
Years
Dec. 31, 2009
Global Reports, Andex, Intech and Canadian Investment Awards and Gala [Member]
Technology-Based Assets [Member]
Years
Dec. 31, 2009
Global Reports, Andex, Intech and Canadian Investment Awards and Gala [Member]
Intellectual Property (Trademarks and Trade Names) [Member]
Years
Dec. 31, 2009
Global Reports, Andex, Intech and Canadian Investment Awards and Gala [Member]
Non-Competition Agreement [Member]
Years
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-Average Useful Life (years)
10 
10 
12 
11 
9 
9 
9 
10 
4 
4 
7 
10 
6 
1 
3 
12 
13 
5 
10 
10 
10 
10 
1 
6 
13 
14 
6 
16 
20 
9 
10 
9 
10 
4 
10 
11 
13 
8 
10 
13 
15 
10 
10 
10 
10 
9 
8 
4 
Intangible assets
 
 
 
 
 
 
 
 
 
 
$ 5,801 
$ 1,879 
$ 3,253 
$ 46 
$ 623 
$ 9,266 
$ 7,073 
$ 1,424 
$ 769 
$ 19,120 
$ 5,000 
$ 13,610 
$ 300 
$ 210 
$ 9,854 
$ 9,130 
$ 724 
$ 6,300 
$ 4,100 
$ 2,100 
$ 100 
$ 2,661 
$ 1,835 
$ 447 
$ 379 
$ 8,588 
$ 5,118 
$ 3,210 
$ 260 
$ 23,800 
$ 13,800 
$ 9,000 
$ 1,000 
$ 4,306 
$ 3,135 
$ 971 
$ 173 
$ 27 
Acquisitions, Goodwill, and Other Intangible Assets (Schedule of Goodwill) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Computerized Portfolio Management Services Inc. (CPMS) [Member]
Dec. 31, 2009
Logical Information Machines, Inc. (LIM) [Member]
Dec. 31, 2009
Global Reports, Andex, Intech and Canadian Investment Awards and Gala [Member]
Dec. 31, 2009
Morningstar Korea [Member]
Dec. 31, 2011
Aegis Equities Research [Member]
Dec. 31, 2010
Aegis Equities Research [Member]
Dec. 31, 2010
Old Broad Street Research Ltd. [Member]
Dec. 31, 2011
Realpoint, LLC [Member]
Dec. 31, 2010
Realpoint, LLC [Member]
Dec. 31, 2010
Morningstar Denmark [Member]
Dec. 31, 2011
Annuity Intelligence Business of Advanced Sales and Marketing Corporation [Member]
Dec. 31, 2010
Annuity Intelligence Business of Advanced Sales and Marketing Corporation [Member]
Dec. 31, 2011
Footnoted business of Financial Fineprint Inc. and Seeds Group [Member]
Dec. 31, 2010
Footnoted business of Financial Fineprint Inc. and Seeds Group [Member]
Goodwill [Roll Forward]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill, Beginning Balance
$ 317,661 
$ 249,492 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjustments to Acquisitions
 
 
(249)
(252)
(492)
(121)
(417)
 
 
1,800 
 
 
107 
 
(103)
 
Goodwill, Acquisitions
 
 
 
 
 
 
 
5,534 
12,422 
 
23,103 
12,342 
 
8,921 
 
3,972 
Other, primarily currency translation
(556)
2,989 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill, Ending Balance
$ 318,492 
$ 317,661 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisitions, Goodwill, and Other Intangible Assets (Schedule of Intangible Assets) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Years
Dec. 31, 2010
Years
Finite-Lived Intangible Assets [Line Items]
 
 
Gross
$ 249,374 
$ 251,714 
Accumulated Amortization
(109,565)
(82,691)
Intangible Assets, Net
139,809 
169,023 
Weighted-Average Useful Life (years)
10 
10 
Intellectual Property [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross
32,293 
33,990 
Accumulated Amortization
(20,455)
(15,970)
Intangible Assets, Net
11,838 
18,020 
Weighted-Average Useful Life (years)
9 
10 
Customer-Related Assets [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross
134,396 
130,675 
Accumulated Amortization
(52,611)
(39,951)
Intangible Assets, Net
81,785 
90,724 
Weighted-Average Useful Life (years)
12 
11 
Supplier Relationships [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross
240 
240 
Accumulated Amortization
(84)
(72)
Intangible Assets, Net
156 
168 
Weighted-Average Useful Life (years)
20 
20 
Technology-Based Assets [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross
80,694 
78,651 
Accumulated Amortization
(35,130)
(25,682)
Intangible Assets, Net
45,564 
52,969 
Weighted-Average Useful Life (years)
9 
9 
Non-Competition Agreement [Member]
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
Gross
1,751 
1,751 
Accumulated Amortization
(1,285)
(909)
Intangible Assets, Net
466 
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, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Acquisitions, Goodwill, and Other Intangible Assets [Abstract]
 
 
 
Amortization expense
$ 27,267 
$ 24,850 
$ 18,963 
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]
 
 
 
2012
23,803 
 
 
2013
21,131 
 
 
2014
19,907 
 
 
2015
19,042 
 
 
2016
$ 14,441 
 
 
Investments in Unconsolidated Entities (Details)
12 Months Ended 1 Months Ended
Dec. 31, 2011
USD ($)
Dec. 31, 2010
USD ($)
Dec. 31, 2011
Other Equity Method Investments [Member]
USD ($)
Dec. 31, 2010
Other Equity Method Investments [Member]
USD ($)
Dec. 31, 2011
Morningstar Sweden AB [Member]
Dec. 31, 2010
Morningstar Sweden AB [Member]
Nov. 30, 2011
YCharts [Member]
USD ($)
Dec. 31, 2011
YCharts [Member]
Dec. 31, 2011
Morningstar Japan KK [Member]
USD ($)
Dec. 31, 2011
Morningstar Japan KK [Member]
JPY (¥)
Dec. 31, 2010
Morningstar Japan KK [Member]
USD ($)
Dec. 31, 2010
Morningstar Japan KK [Member]
JPY (¥)
Schedule of Equity Method Investments [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Equity method investments
 
 
$ 2,807,000 
$ 109,000 
 
 
 
 
$ 19,662,000 
 
$ 19,036,000 
 
Cost method investments
5,173,000 
5,117,000 
 
 
 
 
 
 
 
 
 
 
Total investments in unconsolidated entities
27,642,000 
24,262,000 
 
 
 
 
 
 
 
 
 
 
Equity method investment, ownership percentage
 
 
 
 
24.00% 
24.00% 
 
20.00% 
33.00% 
33.00% 
34.00% 
34.00% 
Equity method investment, approximate market value
 
 
 
 
 
 
 
 
36,146,000 
2,797,704,000 
38,361,000 
3,197,000,000 
Payment to aquire a minority equity stake
 
 
 
 
 
 
2,450,000 
 
 
 
 
 
Cost-method investments, other than temporary impairment
$ 0 
$ 0 
 
 
 
 
 
 
 
 
 
 
Property, Equipment, and Capitalized Software (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Property, Plant and Equipment, Net [Abstract]
 
 
 
Property, equipment, and capitalized software, at cost
$ 138,945 
$ 130,673 
 
Less accumulated depreciation
(70,749)
(68,568)
 
Property, equipment, and capitalized software, net
68,196 
62,105 
59,828 
Capitalized software development costs not yet placed into service
6,122 
807 
 
Depreciation expense
15,646 
14,814 
12,998 
Computer equipment [Member]
 
 
 
Property, Plant and Equipment, Net [Abstract]
 
 
 
Property, equipment, and capitalized software, at cost
35,269 
36,274 
 
Capitalized software [Member]
 
 
 
Property, Plant and Equipment, Net [Abstract]
 
 
 
Property, equipment, and capitalized software, at cost
25,918 
27,308 
 
Furniture and fixtures [Member]
 
 
 
Property, Plant and Equipment, Net [Abstract]
 
 
 
Property, equipment, and capitalized software, at cost
19,918 
18,816 
 
Leasehold improvements [Member]
 
 
 
Property, Plant and Equipment, Net [Abstract]
 
 
 
Property, equipment, and capitalized software, at cost
47,042 
44,131 
 
Telephone equipment [Member]
 
 
 
Property, Plant and Equipment, Net [Abstract]
 
 
 
Property, equipment, and capitalized software, at cost
1,805 
2,599 
 
Construction in progress [Member]
 
 
 
Property, Plant and Equipment, Net [Abstract]
 
 
 
Property, equipment, and capitalized software, at cost
$ 8,993 
$ 1,545 
 
Operating Leases Operating Leases (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Operating Leases, Future Minimum Payments Due [Abstract]
 
 
 
2012
$ 16,856 
 
 
2013
15,624 
 
 
2014
15,975 
 
 
2015
15,722 
 
 
2016
15,413 
 
 
Thereafter
67,036 
 
 
Total
146,626 
 
 
Rent expense
20,122 
18,638 
19,489 
Deferred rent
27,282 
28,293 
 
Liability for Vacant Office Space [Roll Forward]
 
 
 
Vacant office space liability, beginning balance
2,429 
3,371 
 
Increase liability for vacant office space
 
1,005 
 
Reduction of liability for lease payments
(1,510)
(1,880)
 
Other, net
 
(67)
 
Vacant office space liability, ending balance
$ 919 
$ 2,429 
$ 3,371 
Stock-Based Compensation (Narrative) (Details) (USD $)
12 Months Ended 1 Months Ended 12 Months Ended 1 Months Ended
Dec. 31, 2011
Months
Dec. 31, 2011
Stock Options [Member]
Months
Dec. 31, 2011
Restricted Stock [Member]
Months
Dec. 31, 2011
Restricted Stock Units (RSUs) [Member]
Months
May 31, 2011
2004 Stock Incentive Plan [Member]
Dec. 31, 2011
2004 Stock Incentive Plan [Member]
Nov. 30, 2011
2011 Plan [Member]
May 31, 2010
Realpoint, LLC [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
Issuance of restricted stock
 
 
 
 
 
 
 
199,174 
Amortized fair value to stock-based compensation
 
 
$ 9,363,000 
 
 
 
 
 
Expense recognized upon accelerated vesting of restricted stock
 
 
396,000 
 
 
 
 
 
Unrecognized stock-based compensation expense
$ 34,879,000 
$ 1,849,000 
$ 5,919,000 
$ 27,111,000 
 
 
 
 
Expected amortization period (months)
34 
39 
40 
32 
 
 
 
 
Grants expiration date
 
 
 
 
 
10 
 
 
Stock option granted
 
 
 
 
86,106 
 
6,095 
 
Fair value per share
 
 
 
 
$ 23.81 
 
 
 
Stock-Based Compensation (Shares Available for Future Grants) (Details)
In Thousands, unless otherwise specified
Dec. 31, 2011
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
Shares available for future grants
4,981 
Stock-Based Compensation (Allocation of Stock-Based Compensation Costs) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Stock-based compensation expense
$ 15,303 
$ 13,793 
$ 11,593 
Income tax benefit related to the stock-based compensation expense
3,535 
3,500 
3,625 
Restricted Stock Units (RSUs) [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Stock-based compensation expense
12,765 
12,545 
10,591 
Restricted Stock [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Stock-based compensation expense
2,196 
1,248 
0 
Stock Options [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Stock-based compensation expense
$ 342 
$ 0 
$ 1,002 
Stock-Based Compensation (Unrecognized Stock-Based Compensation Expense) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Months
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Income tax benefit related to the stock-based compensation expense
$ 34,879 
Expected amortization period (months)
34 
Restricted Stock Units (RSUs) [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Income tax benefit related to the stock-based compensation expense
27,111 
Expected amortization period (months)
32 
Restricted Stock [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Income tax benefit related to the stock-based compensation expense
5,919 
Expected amortization period (months)
40 
Stock Options [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Income tax benefit related to the stock-based compensation expense
$ 1,849 
Expected amortization period (months)
39 
Stock-Based Compensation (Restricted Stock Units Activity) (Details) (Restricted Stock Units (RSUs) [Member], USD $)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Restricted Stock Units (RSUs) [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested [Roll Forward]
 
 
 
RSUs Outstanding, Beginning Balance, Unvested
777,666 
681,425 
494,500 
RSUs Outstanding, Beginning Balance, Vested but Deferred
45,189 
39,594 
22,024 
RSUs Outstanding, Beginning Balance
822,855 
721,019 
516,524 
RSUs Outstanding, Beginning Balance, Weighted Average Grant Date Value per RSU
$ 47.14 
$ 46.99 
$ 55.17 
Granted, Unvested
292,398 
399,349 
373,829 
Granted, Vested but Deferred
0 
0 
0 
Granted
292,398 
399,349 
373,829 
Granted, Weighted Average Grant Date Value per RSU
$ 57.36 
$ 47.76 
$ 38.89 
Dividend equivalents, Unvested
2,673 
 
 
Dividends equivalents, Vested but Deferred
0 
 
 
Dividends equivalents
2,673 
 
 
Dividends equivalents, Weighted Average Grant Date Value per RSU
$ 48.57 
 
 
Vested, Unvested
(256,623)
(232,292)
(150,031)
Vested, Vested but Deferred
0 
0 
0 
Vested
(256,623)
(232,292)
(150,031)
Vested, Weighted Average Grant Date Value per RSU
$ 48.28 
$ 47.77 
$ 53.27 
Vested but Deferred, Unvested
(1,753)
(16,748)
(17,570)
Vested but Deferred, Vested but Deferred
1,753 
16,748 
17,570 
Vested but Deferred
0 
0 
0 
Vested but Deferred, Weighted Average Grant Date Value per RSU
$ 0.00 
$ 0.00 
$ 0.00 
Issued, Unvested
0 
0 
 
Issued, Vested but Deferred
(26,866)
(11,153)
 
Issued
(26,866)
(11,153)
 
Issued, Weighted Average Grant Date Value per RSU
$ 46.69 
$ 49.29 
 
Forfeited, Unvested
(73,318)
(54,068)
(19,303)
Forfeited, Vested but Deferred
0 
0 
0 
Forfeited
(73,318)
(54,068)
(19,303)
Forfeited, Weighted Average Grant Date Value per RSU
$ 47.59 
$ 46.70 
$ 50.05 
RSUs Outstanding, Ending Balance, Unvested
741,043 
777,666 
681,425 
RSUs Outstanding, Ending Balance, Vested but Deferred
20,076 
45,189 
39,594 
RSUs Outstanding, Ending Balance
761,119 
822,855 
721,019 
RSUs Outstanding, Ending Balance, Weighted Average Grant Date Value per RSU
$ 50.66 
$ 47.14 
$ 46.99 
Stock-Based Compensation (Assumptions for Black-Scholes Option Pricing Model) (Details) (Stock Options [Member])
12 Months Ended
Dec. 31, 2011
Years
Stock Options [Member]
 
Assumptions for Black-Scholes Option Pricing Model [Line Items]
 
Expected life (years):
7.4 
Volatility factor:
35.10% 
Dividends yield:
0.35% 
Interest rate:
2.87% 
Stock-Based Compensation (Stock Option Activity) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Intrinsic Value of Options Exercised [Abstract]
 
 
 
Intrinsic value of options exercised
$ 29,899 
$ 31,410 
$ 37,356 
Options Granted At Discount [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
 
 
 
Beginning Balance, Options, Outstanding, Underlying Shares
648,885 
809,169 
1,110,652 
Granted, Underlying Shares
0 
0 
0 
Canceled, Underlying Shares
0 
(1,250)
(175)
Exercised, Underlying Shares
(250,026)
(159,034)
(301,308)
Ending Balance, Options, Outstanding, Underlying Shares
398,859 
648,885 
809,169 
Options, Weighted Average Exercise Price [Abstract]
 
 
 
Beginning Balance, Options, Outstanding, Weighted Average Exercise Price
$ 18.91 
$ 17.75 
$ 15.33 
Granted, Weighted Average Exercise Price
$ 0.00 
$ 0.00 
$ 0.00 
Canceled, Weighted Average Exercise Price
$ 0.00 
$ 14.21 
$ 15.14 
Exercised, Weighted Average Exercise Price
$ 19.25 
$ 16.62 
$ 10.75 
Ending Balance, Options, Outstanding, Weighted Average Exercise Price
$ 19.72 
$ 18.91 
$ 17.75 
Options, Exercisable, Number of Shares and Weighted Average Exercise Price [Abstract]
 
 
 
Options exercisable - end of year, Underlying Shares
398,859 
648,885 
809,169 
Options exercisable - end of year, Weighted Average Exercise Price
$ 19.72 
$ 18.91 
$ 17.75 
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, Underlying Shares
1,207,540 
1,868,408 
2,942,706 
Granted, Underlying Shares
92,201 
0 
0 
Canceled, Underlying Shares
(1,960)
(15,524)
(3,127)
Exercised, Underlying Shares
(479,229)
(645,344)
(1,071,171)
Ending Balance, Options, Outstanding, Underlying Shares
818,552 
1,207,540 
1,868,408 
Options, Weighted Average Exercise Price [Abstract]
 
 
 
Beginning Balance, Options, Outstanding, Weighted Average Exercise Price
$ 17.09 
$ 16.15 
$ 15.14 
Granted, Weighted Average Exercise Price
$ 57.42 
$ 0.00 
$ 0.00 
Canceled, Weighted Average Exercise Price
$ 16.04 
$ 13.72 
$ 21.99 
Exercised, Weighted Average Exercise Price
$ 16.17 
$ 19.73 
$ 13.95 
Ending Balance, Options, Outstanding, Weighted Average Exercise Price
$ 22.76 
$ 17.09 
$ 16.15 
Options, Exercisable, Number of Shares and Weighted Average Exercise Price [Abstract]
 
 
 
Options exercisable - end of year, Underlying Shares
726,351 
1,207,540 
1,858,865 
Options exercisable - end of year, Weighted Average Exercise Price
$ 18.36 
$ 17.09 
$ 16.02 
Stock-Based Compensation (Additional Information on Options) (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Closing Stock Price Used to Calculate Intrinsic Value
$ 59.45 
Expiration date
10 years 
Award vesting period
4 years 
Range One [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Range of Exercise Prices
$8.57 - $14.70 
Exercise price range, lower range limit
$ 8.57 
Exercise price range, upper range limit
$ 14.70 
Options Outstanding, Number of Options
353,498 
Options Outstanding, Weighted Average Remaining Contractual Life (years)
0.92 
Options Outstanding, Weighted Average Exercise Price
$ 9.52 
Options Outstanding, Aggregate Intrinsic Value
$ 17,649 
Options Exercisable, Exercisable Shares
353,498 
Options Exercisable, Weighted Average Remaining Contractual Life (years)
0.92 
Options Exercisable, Weighted Average Exercise Price
$ 9.52 
Options Exercisable, Aggregate Intrinsic Value
17,649 
Range Two [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Range of Exercise Prices
$19.47 - $44.35 
Exercise price range, lower range limit
$ 19.47 
Exercise price range, upper range limit
$ 44.35 
Options Outstanding, Number of Options
771,712 
Options Outstanding, Weighted Average Remaining Contractual Life (years)
3.13 
Options Outstanding, Weighted Average Exercise Price
$ 23.11 
Options Outstanding, Aggregate Intrinsic Value
28,046 
Options Exercisable, Exercisable Shares
771,712 
Options Exercisable, Weighted Average Remaining Contractual Life (years)
3.13 
Options Exercisable, Weighted Average Exercise Price
$ 23.11 
Options Exercisable, Aggregate Intrinsic Value
28,046 
Range Three [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Range of Exercise Prices
57.28 - $59.35 
Exercise price range, upper range limit
$ 57.28 
Options Outstanding, Number of Options
92,201 
Options Outstanding, Weighted Average Remaining Contractual Life (years)
9.53 
Options Outstanding, Weighted Average Exercise Price
$ 57.42 
Options Outstanding, Aggregate Intrinsic Value
187 
Options Exercisable, Exercisable Shares
0 
Options Exercisable, Weighted Average Remaining Contractual Life (years)
0.00 
Options Exercisable, Weighted Average Exercise Price
$ 0.00 
Options Exercisable, Aggregate Intrinsic Value
0 
Range Four [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Range of Exercise Prices
$8.57 - $59.35 
Exercise price range, lower range limit
$ 8.57 
Exercise price range, upper range limit
$ 57.28 
Options Outstanding, Number of Options
1,217,411 
Options Outstanding, Weighted Average Remaining Contractual Life (years)
2.97 
Options Outstanding, Weighted Average Exercise Price
$ 21.76 
Options Outstanding, Aggregate Intrinsic Value
45,882 
Options Exercisable, Exercisable Shares
1,125,210 
Options Exercisable, Weighted Average Remaining Contractual Life (years)
2.43 
Options Exercisable, Weighted Average Exercise Price
$ 18.84 
Options Exercisable, Aggregate Intrinsic Value
45,695 
Vested or Expected to Vest [Member]
 
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
 
Exercise price range, lower range limit
$ 8.57 
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 - $59.35 
Option Outstanding, Number of Options, Vested or Expected to Vest
1,217,411 
Options Outstanding, Weighted Average Remaining Contractual Life (years), Vested or Expected to vest
2.97 
Options Outstanding, Weighted Average Exercise Price, Vested or Expected to Vest
$ 21.76 
Options Outstanding, Average Intrinsic Value, Vested or Expected to Vest
   
Related Party Transactions (Details) (Management [Member], USD $)
3 Months Ended
Mar. 31, 2010
Dec. 31, 2009
Management [Member]
 
 
Related Party Transaction [Line Items]
 
 
Operating expense related to tax treatment of Incentive Stock Options
 
$ 4,887,000 
Compensation for difference in tax treatment
$ 4,887,000 
 
Defined Contribution Plan (Details) (USD $)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Defined Contribution Plan [Abstract]
 
 
 
Matching contribution to 401(k) for every dollar
$ 0.75 
$ 0.50 
 
Matching contribution percent to employee's contribution in pay period
7.00% 
7.00% 
 
401(k) matching contribution
$ 5,601,000 
$ 3,321,000 
$ 0 
Non-Operating Income (Details) (USD $)
3 Months Ended 12 Months Ended
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Interest income
 
 
 
 
 
 
 
 
$ 3,679,000 
$ 2,718,000 
$ 3,364,000 
Interest expense
 
 
 
 
 
 
 
 
(1,318,000)
(281,000)
(348,000)
Other income (expense), net
 
 
 
 
 
 
 
 
(652,000)
4,295,000 
(82,000)
Non-operating income (expense), net
1,505,000 
(579,000)
9,000 
774,000 
684,000 
6,206,000 
21,000 
(179,000)
1,709,000 
6,732,000 
2,934,000 
Interest on business tax expense related to prior years
 
 
 
 
 
 
 
 
900,000 
 
 
Business tax expense related to prior years
 
 
1,400,000 
 
 
 
 
 
 
 
 
Holding gain upon acquisition of additional ownership of equity
 
 
 
 
 
 
 
 
0 
4,564,000 
352,000 
Morningstar Denmark [Member]
 
 
 
 
 
 
 
 
 
 
 
Holding gain upon acquisition of additional ownership of equity
 
 
 
 
 
 
 
 
 
4,564,000 
 
Morningstar Korea [Member]
 
 
 
 
 
 
 
 
 
 
 
Holding gain upon acquisition of additional ownership of equity
 
 
 
 
 
 
 
 
 
 
$ 352,000 
Income Taxes (Schedule of Income Tax Expense and Effective Tax Rate) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Income Tax Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes and equity in net income of unconsolidated entities
$ 35,640 
$ 33,285 
$ 38,616 
$ 32,583 
$ 32,973 
$ 36,367 
$ 27,688 
$ 30,763 
$ 140,124 
$ 127,791 
$ 127,607 
Equity in net income of unconsolidated entities
451 
428 
595 
374 
246 
333 
454 
389 
1,848 
1,422 
1,165 
Net (income) loss attributable to the noncontrolling interest
(63)
10 
(2)
98 
(97)
(106)
85 
31 
43 
(87)
132 
Income loss from continuing operations before income taxes domestic and foreign
 
 
 
 
 
 
 
 
142,015 
129,126 
128,904 
Income tax expense
$ 8,073 
$ 12,343 
$ 12,724 
$ 10,518 
$ 9,619 
$ 11,917 
$ 10,225 
$ 10,995 
$ 43,658 
$ 42,756 
$ 46,775 
Effective income tax rate
 
 
 
 
 
 
 
 
30.70% 
33.10% 
36.30% 
Income Taxes (Schedule of Effective Income Tax Rate Reconciliation) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Income Tax Examination [Line Items]
 
 
 
 
 
 
 
 
 
 
 
Income tax expense at U.S. federal rate
 
 
 
 
 
 
 
 
$ 49,705 
$ 45,194 
$ 45,117 
Income tax expense at U.S. federal rate, percent
 
 
 
 
 
 
 
 
35.00% 
35.00% 
35.00% 
State income taxes, net of frderal income tax benefit
 
 
 
 
 
 
 
 
1,376 
1,756 
3,470 
State income taxes, net of frderal income tax benefit, percent
 
 
 
 
 
 
 
 
1.00% 
1.30% 
2.70% 
Stock option activity
 
 
 
 
 
 
 
 
440 
97 
(396)
Stock option activity, percent
 
 
 
 
 
 
 
 
0.30% 
0.10% 
(0.30%)
Disqualifying dispositions on incentive stock options
 
 
 
 
 
 
 
 
0 
0 
(68)
Disqualifying dispositions on incentive stock options, percent
 
 
 
 
 
 
 
 
0.00% 
0.00% 
0.00% 
Non-U.S. witholding taxes, net of federal income tax effect, and foreign tax credits
 
 
 
 
 
 
 
 
346 
77 
(1,311)
Non-U.S. witholding taxes, net of federal income tax effect, and foreign tax credits, percent
 
 
 
 
 
 
 
 
0.20% 
0.10% 
(1.00%)
Net change in valuation allowance related to non-U.S. deffered tax assets, primarily net operating losses
 
 
 
 
 
 
 
 
394 
(1,186)
1,221 
Net change in valuation allowance related to non-U.S. deffered tax assets, primarily net operating losses, percent
 
 
 
 
 
 
 
 
0.30% 
(0.90%)
0.90% 
Impact of equity in net income of unconsolidated entities
 
 
 
 
 
 
 
 
0 
79 
(70)
Impact of equity in net income of unconsolidated entities, percent
 
 
 
 
 
 
 
 
0.00% 
0.10% 
0.00% 
Difference between U.S. federal statutory and foreign tax rates
 
 
 
 
 
 
 
 
(2,393)
(2,567)
266 
Difference between U.S. federal statutory and foreign tax rates, percent
 
 
 
 
 
 
 
 
(1.70%)
(2.00%)
0.20% 
Non-deductible deposit penalty
 
 
 
 
 
 
 
 
0 
0 
1,384 
Non-deductible deposit penalty, percent
 
 
 
 
 
 
 
 
0.00% 
0.00% 
1.10% 
Expenses related to treatment of stock options originally considered incentive stock options, subject to limitation for tax purposes
 
 
 
 
 
 
 
 
0 
0 
1,082 
Expenses related to treatment of stock options originally considered incentive stock options, subject to limitation for tax purposes, percent
 
 
 
 
 
 
 
 
0.00% 
0.00% 
0.80% 
Adjustments to accruals for state taxes
 
 
 
 
 
 
 
 
0 
(2,633)
0 
Adjustments to accruals for state taxes, percent
 
 
 
 
 
 
 
 
0.00% 
(2.00%)
0.00% 
Change in unrecognized tax benefits
 
 
 
 
 
 
 
 
3,126 
2,869 
(1,786)
Changes in unrecognized tax benefits, percent
 
 
 
 
 
 
 
 
2.20% 
2.20% 
(1.40%)
Other tax credits
 
 
 
 
 
 
 
 
(7,734)
(984)
(1,923)
Other tax credits, percent
 
 
 
 
 
 
 
 
(5.40%)
(0.80%)
(1.50%)
Recognition of deferred tax assets
 
 
 
 
 
 
 
 
(1,778)
0 
0 
Recognition of deferred tax assets, percent
 
 
 
 
 
 
 
 
(1.30%)
0.00% 
0.00% 
Other - net
 
 
 
 
 
 
 
 
176 
54 
(211)
Other - net, percent
 
 
 
 
 
 
 
 
0.10% 
0.00% 
(0.20%)
Income tax expense
$ 8,073 
$ 12,343 
$ 12,724 
$ 10,518 
$ 9,619 
$ 11,917 
$ 10,225 
$ 10,995 
$ 43,658 
$ 42,756 
$ 46,775 
Incomr tax expense, percent
 
 
 
 
 
 
 
 
30.70% 
33.10% 
36.30% 
Income Taxes (Schedule of Components of Income Tax Expense) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Current tax expense:
 
 
 
 
 
 
 
 
 
 
 
Federal
 
 
 
 
 
 
 
 
$ 41,520 
$ 38,901 
$ 41,347 
State
 
 
 
 
 
 
 
 
1,808 
2,445 
4,942 
Non-U.S.
 
 
 
 
 
 
 
 
5,756 
4,122 
3,856 
Current tax expense
 
 
 
 
 
 
 
 
49,084 
45,468 
50,145 
Deferred tax expense (benefit):
 
 
 
 
 
 
 
 
 
 
 
Federal
 
 
 
 
 
 
 
 
(1,011)
61 
(713)
State
 
 
 
 
 
 
 
 
(242)
(7)
(38)
Non-U.S.
 
 
 
 
 
 
 
 
(4,173)
(2,766)
(2,619)
Deferred tax expense (benefit)
 
 
 
 
 
 
 
 
(5,426)
(2,712)
(3,370)
Income tax expense
$ 8,073 
$ 12,343 
$ 12,724 
$ 10,518 
$ 9,619 
$ 11,917 
$ 10,225 
$ 10,995 
$ 43,658 
$ 42,756 
$ 46,775 
Income Taxes (Schedule of Income befor Income Tax) (Details) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Income Tax Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
U.S.
 
 
 
 
 
 
 
 
$ 123,390 
$ 112,357 
$ 123,948 
Non-U.S.
 
 
 
 
 
 
 
 
16,734 
15,434 
3,659 
Income before income taxes and equity in net income of unconsolidated entities
$ 35,640 
$ 33,285 
$ 38,616 
$ 32,583 
$ 32,973 
$ 36,367 
$ 27,688 
$ 30,763 
$ 140,124 
$ 127,791 
$ 127,607 
Income Taxes (Schedule of Deferred Tax Assets and Liabilities) (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Deferred tax assets:
 
 
Stock-based compensation expense
$ 5,567 
$ 7,859 
Accrued liabilities
7,789 
5,728 
Net operating loss carryforwards - U.S.
1,009 
1,087 
Net operating loss carryforwards - Non-U.S.
13,297 
12,977 
Research and development
631 
0 
Deferred royalty revenue
403 
430 
Allowance for doubtful accounts
503 
461 
Deferred rent
8,847 
8,837 
Unrealized exchange losses, net
159 
0 
Other
383 
185 
Total deferred tax assets
38,588 
37,564 
Deferred tax liabilities:
 
 
Acquired intangible assets
(17,558)
(22,287)
Property, equipment and capitalized software
(8,523)
(8,439)
Unrealized exchange gains, net
0 
(529)
Prepaid expenses
(1,724)
(1,856)
Accrued liabilities
0 
(578)
Investments in unconsolidated entities
(9,580)
(9,471)
Other
0 
(95)
Total deferred tax liabilities
(37,385)
(43,255)
Net deferred tax liability before valuation allowance
(1,203)
5,691 
Valuation allowance
(12,039)
(11,424)
Net deferred tax liability
$ (10,836)
$ (17,115)
Income Taxes (Schedule of Deferred Tax Assets and Liabilities Included in Consolidated Balance Sheets) (Details) (USD $)
In Thousands, unless otherwise specified
Dec. 31, 2011
Dec. 31, 2010
Income Tax Disclosure [Abstract]
 
 
Deferred tax assets, net - current
$ 5,104 
$ 2,860 
Deferred tax liabilities, net - noncurrent
(15,940)
(19,975)
Net deferred tax liability
$ (10,836)
$ (17,115)
Income Taxes (Summary of Operating Loss Carryforward- U.S and Non-U.S) (Details) (USD $)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Operating Loss Carryforwards [Line Items]
 
 
Undistributed earnings of foreigh subsidiaries, permanently invested
$ 66,000,000 
 
Non-U.S. [Member]
 
 
Operating Loss Carryforwards [Line Items]
 
 
Operating loss carryforwards
50,050,000 
49,047,000 
Operating loss carryforwards, not subject to valuation allowances
5,284,000 
5,611,000 
Non-U.S. [Member] |
Subject to Expiration Date [Member]
 
 
Operating Loss Carryforwards [Line Items]
 
 
Operating loss carryforwards
5,048,000 
3,113,000 
Non-U.S. [Member] |
Subject to Expiration Date [Member] |
Minimum [Member]
 
 
Operating Loss Carryforwards [Line Items]
 
 
Operating loss carryforwards, expiration dates
2016 
2016 
Non-U.S. [Member] |
Subject to Expiration Date [Member] |
Maximum [Member]
 
 
Operating Loss Carryforwards [Line Items]
 
 
Operating loss carryforwards, expiration dates
2021 
2021 
Non-U.S. [Member] |
No Expiration Date [Member]
 
 
Operating Loss Carryforwards [Line Items]
 
 
Operating loss carryforwards
45,002,000 
45,934,000 
U.S [Member]
 
 
Operating Loss Carryforwards [Line Items]
 
 
Operating loss carryforward, amount subject to limitations
225,000 
 
U.S [Member] |
Subject to Expiration Date [Member]
 
 
Operating Loss Carryforwards [Line Items]
 
 
Operating loss carryforwards
$ 2,587,000 
$ 2,811,000 
Operating loss carryforwards, expiration dates
2023 
2023 
Income Taxes (Accounting for Uncertainty in Tax Positions) (Details) (USD $)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Income Tax Disclosure [Abstract]
 
 
Gross unrecognized tax benefits - beginning of the year
$ 9,089,000 
$ 6,069,000 
Increases as a resulting of tax positions taken during a prior-year period
1,639,000 
1,720,000 
Decreases as a resulting of tax positions taked during a prior-year period
(876,000)
(150,000)
Increases as a result of tax positions taken during the current period
3,662,000 
2,131,000 
Decreases relating to settlements with tax authorities
(1,001,000)
(272,000)
Reductions as a result of lapse of the applicable statute of limitations
(324,000)
(409,000)
Gross unrecognized tax benefits - end of the year
12,189,000 
9,089,000 
Unrecognized tax benefits included in current liabilities
5,329,000 
 
Unrecognized tax benefits included in non-current liabilities
6,200,000 
 
Result of tax position taken during period
4,426,000 
 
Increase in income tax expense
3,956,000 
 
Reductions resulting from settlements and lapse of statute of limitations
(1,325,000)
 
Unrecognized tax benefits that would impact effective tax rate
11,907,000 
 
Unrecognized tax benefits, period increase (decrease)
3,100,000 
 
Reductions resulting from settlements and lapse statute of limitations, tax effect
(1,001,000)
 
Unrecognized tax benefits that would impact effective tax rate, impact on tax expense
$ 9,827,000 
 
Income Taxes (Summary of Income Tax Examinations) (Details) (USD $)
In Thousands, unless otherwise specified
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Income Tax Disclosure [Abstract]
 
 
Liabilities for interest and penalties
$ 1,726 
$ 1,526 
Quarterly Dividend and Share Repurchase Programs (Details) (USD $)
0 Months Ended 1 Months Ended 3 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended
Dec. 9, 2011
Feb. 29, 2012
Sep. 30, 2010
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Sep. 30, 2011
Dividend Declared [Member]
Dec. 31, 2011
Dividend Declared [Member]
Dividends Payable, Date Declared, Day, Month and Year
 
 
 
 
 
 
 
 
 
 
 
Dec. 09, 2011 
 
 
 
 
Dividends payable, date to be paid
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jan. 31, 2012 
Dividends payable, date of record
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jan. 13, 2012 
Dividends payable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 5,009,000 
Common stock, dividends, per share, declared
$ 0.10 
$ 0.10 
 
$ 0.10 
$ 0.05 
$ 0.05 
$ 0.05 
$ 0.00 
$ 0.05 
$ 0.00 
$ 0.00 
$ 0.25 
$ 0.05 
$ 0.00 
$ 0.10 
 
Stock repurchase program, authorized amount
 
 
100,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total shares repurchased, value
 
 
 
 
 
 
 
 
 
 
 
200,000,000 
 
 
 
 
Shares repurchased, program life to date, shares
 
 
 
798,337 
 
 
 
 
 
 
 
798,337 
 
 
 
 
Shares repurchased, program life to date, value
 
 
 
$ 44,456,000 
 
 
 
 
 
 
 
$ 44,456,000 
 
 
 
 
Subsequent Events (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
0 Months Ended 1 Months Ended 3 Months Ended 12 Months Ended
Feb. 17, 2012
Dec. 9, 2011
Feb. 29, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Jan. 31, 2012
HelloWallet [Member]
Subsequent Event [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subsequent event, amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ 6.7 
Ownership percentage
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15.00% 
Dividends declared per common share
 
$ 0.10 
$ 0.10 
$ 0.10 
$ 0.05 
$ 0.05 
$ 0.05 
$ 0.00 
$ 0.05 
$ 0.00 
$ 0.00 
$ 0.25 
$ 0.05 
$ 0.00 
 
Related Party Transaction, Revenues from Transactions with Related Party
$ 12.4 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Percent of Consolidated Revenue
2.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recently Issued Accounting Pronouncements (Details) (Minimum [Member])
12 Months Ended
Dec. 31, 2011
Minimum [Member]
 
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
 
More-likely-than-not threshold
50.00% 
Selected Quarterly Financial Data (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
0 Months Ended 1 Months Ended 3 Months Ended 12 Months Ended
Dec. 9, 2011
Feb. 29, 2012
Dec. 31, 2011
Sep. 30, 2011
Jun. 30, 2011
Mar. 31, 2011
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2009
Quarterly Financial Information Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
$ 158,571 
$ 160,051 
$ 161,011 
$ 151,767 
$ 151,153 
$ 139,817 
$ 136,091 
$ 128,290 
$ 631,400 
$ 555,351 
$ 478,996 
Total operating expense
 
 
124,436 1
126,187 1
122,404 1
119,958 1
118,864 1
109,656 1
108,424 1
97,348 1
492,985 2
434,292 2
354,323 2
Operating income
 
 
34,135 
33,864 
38,607 
31,809 
32,289 
30,161 
27,667 
30,942 
138,415 
121,059 
124,673 
Non-operating income (expense), net
 
 
1,505 
(579)
9 
774 
684 
6,206 
21 
(179)
1,709 
6,732 
2,934 
Income before income taxes and equity in net income of unconsolidated entities
 
 
35,640 
33,285 
38,616 
32,583 
32,973 
36,367 
27,688 
30,763 
140,124 
127,791 
127,607 
Income tax expense
 
 
8,073 
12,343 
12,724 
10,518 
9,619 
11,917 
10,225 
10,995 
43,658 
42,756 
46,775 
Equity in net income (loss) of unconsolidated entities
 
 
451 
428 
595 
374 
246 
333 
454 
389 
1,848 
1,422 
1,165 
Consolidated net income
 
 
28,018 
21,370 
26,487 
22,439 
23,600 
24,783 
17,917 
20,157 
98,314 
86,457 
81,997 
Net (income) loss attributable to the noncontrolling interest
 
 
(63)
10 
(2)
98 
(97)
(106)
85 
31 
43 
(87)
132 
Net income attributable to Morningstar, Inc.
 
 
27,955 
21,380 
26,485 
22,537 
23,503 
24,677 
18,002 
20,188 
98,357 
86,370 
82,129 
Earnings Per Share, Basic [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net income per share attributable to Morningstar, Inc.
 
 
$ 0.56 
$ 0.42 
$ 0.53 
$ 0.45 
$ 0.47 
$ 0.50 
$ 0.37 
$ 0.41 
$ 1.96 
$ 1.75 
$ 1.71 
Weighted average common shares outstanding - basic
 
 
49,883 
50,278 
50,165 
49,800 
49,523 
49,401 
49,234 
48,828 
50,032 
49,249 
48,112 
Earnings Per Share, Diluted [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted net income per share attributable to Morningstar, Inc.
 
 
$ 0.55 
$ 0.42 
$ 0.52 
$ 0.44 
$ 0.46 
$ 0.49 
$ 0.36 
$ 0.40 
$ 1.92 
$ 1.70 
$ 1.65 
Weighted average common shares outstanding - diluted
 
 
50,732 
51,123 
51,142 
50,953 
50,761 
50,544 
50,533 
50,332 
50,988 
50,555 
49,793 
Dividends Per Common Share: [Abstract]
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock, dividends, per share, declared
$ 0.10 
$ 0.10 
$ 0.10 
$ 0.05 
$ 0.05 
$ 0.05 
$ 0.00 
$ 0.05 
$ 0.00 
$ 0.00 
$ 0.25 
$ 0.05 
$ 0.00 
Dividends paid per common share
 
 
$ 0.05 
$ 0.05 
$ 0.05 
$ 0.05 
$ 0.00 
$ 0.00 
$ 0.00 
$ 0.00 
$ 0.20 
$ 0.00 
$ 0.00 
Includes stock-based compaensation expense of:
 
 
$ 3,860 
$ 3,951 
$ 3,843 
$ 3,649 
$ 3,456 
$ 3,745 
$ 3,655 
$ 2,937 
$ 15,303 
$ 13,793 
$ 11,593