- Current report filing (8-K)
April 05 2010 - 4:16PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13
or 15(d) of
the Securities
Exchange Act of 1934
Date of Report (Date of earliest
event reported):
April 5, 2010
MORNINGSTAR,
INC.
(Exact name of registrant as
specified in its charter)
Illinois
|
|
000-51280
|
|
36-3297908
|
(State or
other jurisdiction
of incorporation)
|
|
(Commission
File Number)
|
|
(I.R.S.
Employer
Identification No.)
|
22 West
Washington Street
Chicago, Illinois 60602
(Address of principal executive
offices)
(312) 696-6000
(Registrants telephone number,
including area code)
N/A
(Former name or former address,
if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
o
Written communications pursuant to Rule 425 under
the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under
the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
Item 7.01. Regulation FD
Disclosure.
The following information is included in this Current Report on Form 8-K
as a result of Morningstar, Inc.s policy regarding public disclosure of
corporate information. Answers to additional inquiries, if any, that comply with
this policy are scheduled to become available on May 7, 2010.
Caution Concerning Forward-Looking Statements
This current report on Form 8-K contains forward-looking statements as
that term is used in the Private Securities Litigation Reform Act of 1995.
These statements are based on our current expectations about future events or
future financial performance. Forward-looking statements by their nature
address matters that are, to different degrees, uncertain, and often contain
words such as may, could, expect, intend, plan, seek, anticipate,
believe, estimate, predict, potential, or continue. These statements
involve known and unknown risks and uncertainties that may cause the events we
discuss not to occur or to differ significantly from what we expect. For us,
these risks and uncertainties include, among others, general industry
conditions and competition, including current global financial uncertainty; the
impact of market volatility on revenue from asset-based fees; damage to our
reputation resulting from claims made about possible conflicts of interest;
liability for any losses that result from an actual or claimed breach of our
fiduciary duties; financial services industry consolidation; a prolonged outage
of our database and network facilities; challenges faced by our non-U.S.
operations; and the availability of free or low-cost investment information.
A more complete description of these risks and uncertainties can be found
in our Annual Report on Form 10-K for the year ended December 31, 2009.
If any of these risks and uncertainties materialize, our actual future results
may vary significantly from what we expected. We do not undertake to update our
forward-looking statements as a result of new information or future events.
Investor Questions and Answers: April 2010
We plan to make written responses available addressing investor questions
about our business on the first Friday of every month. The following answers
respond to selected questions received through March 31, 2010. We intend
to answer as many questions as time allows, although we will not answer product
support questions through this channel. We may wait to respond to a given
question until the following month if we need more time to research the answer.
If you would like to submit a question, please send an e-mail to
investors@morningstar.com, contact us via fax at 312-696-6009, or write to us
at the following address:
Morningstar, Inc.
Investor Relations
22 W. Washington
Chicago, IL 60602
Retirement Advice
1.
Given the recent IPO and expansion plans of Financial Engines, your
rival in retirement-account management, could you outline this businesss
addressable market, your market position in this business, what you believe to
be competitive advantages vs. Financial Engines/target-date funds?
2
We believe the addressable market
for retirement advice is at least $200 to $300 million in size, although the
market potential will ultimately depend on trends such as continued growth in
defined contribution plans and adoption rates for managed retirement accounts
and other retirement advice services.
Based on data from Cerulli
Associates, there were approximately 490,000 401(k) plans with $2.4
trillion in assets in the United States as of year-end 2008, up from
approximately 98,000 plans at the end of 1990. We believe were one of the
larger providers of retirement advice, which we offer through our Morningstar
Associates and Ibbotson Associates subsidiaries. As of December 31, 2009,
approximately 21 million retirement plan participants had access to our
retirement advice services through approximately 151,000 plan sponsors and 23
plan providers. Assets invested in our managed retirement accounts (including
those offered by Advice by Ibbotson and Morningstar Retirement Manager) totaled
$15.7 billion as of the same date.
We believe some of our competitive
advantages in this area include:
·
Expertise in
both qualitative and quantitative investment research
·
Extensive holdings-based information
drawing from our database covering approximately 350,000 investments
·
Ability to
tailor solutions to meet specific plan needs
·
Brand
recognition and trust among individual investors
·
Strong
academic framework and proprietary research
·
Patented
human capital approach for Ibbotson Associates, which takes into account how an
individuals potential to earn and save money changes over time
·
Ability to
host our models on plan providers network, offering greater data security and
customization
Credit Ratings and
Research
2.
Your job listings include a bond strategist and credit analyst
positions. Can you clarify if the plan with fixed-income research is to provide
credit ratings or to expand into fixed-income asset management?
In December 2009, we launched
our corporate credit ratings business, and we plan to produce credit ratings on
up to 700 corporate issuers by the end of 2010. Our analysts will also offer
fixed-income investment ideas to our buy-side clients. Were also interested in
expanding our fixed-income data, and asset management may follow at some point.
Equity Research
3.
The GARS agreement ran out in July last year, correct? If so,
accounting for the 10% retention from those agreements, should we model a loss
of roughly $9mm to $10mm in revenue in the first half of 2010 relative to the
previous year?
Yes, the Global Analyst Research
Settlement (GARS) period ended in July 2009. We recognized seven months of
GARS revenue in 2009, and as mentioned in our most recent 10-K, GARS revenue
was $12.5 million in 2009, compared with $21.9 million in 2008. Weve also
entered into new equity research contracts with two of the banks that were
clients under GARS, and these contracts represent about 10% of the previous
annual GARS revenue.
Realpoint, LLC
4.
Do you plan to expand Realpoints research/ratings beyond CMBS into
other structured products? If you do expand the business, is it likely to go
from modestly profitable today to unprofitable due to investment/expansion in
the next year or two? Will the companys ratings be included in Morningstar
Direct or will they be solely available to Realpoint subscribers?
3
Currently, the majority of Realpoints
revenue comes from its investor-paid subscription service for ongoing
surveillance of commercial mortgage-backed (CMBS) securities, where Realpoint
built its reputation with buy-side investors. Realpoint also provides ratings
and analysis on other investments, including mortgage indexes, real estate
investment trusts, and collateralized debt obligations (CDOs). We may consider
adding coverage on other types of structured products, but we havent completed
the transaction yet and havent made any final decisions at this point.
We plan to maintain Realpoint as a
separate subscription-based service, although well look to integrate Realpoints
research and ratings with other Morningstar products over time as it makes
sense.
Acquisitions
5.
This was likely previously disclosed, so apologies, but could you
update us on the revenue and cumulative earnings of companies acquired over the
past 12 months? This is helpful in thinking about this years top and bottom
line.
The companies we acquired during
2009 have approximately $38 million in combined annual revenue. We dont report
cumulative earnings for acquired operations.
Business Trends
6.
In your core U.S. business, are existing customers generally expanding
the prices they pay for existing services or are prices mainly flat as contracts
renew? Are existing customers expanding the services they buy? Is the number of
customers for core services like Licensed Data up so far this year? YTD is the
number of investment consulting clients for Morningstar Associates and Ibbotson
higher or lower?
As weve mentioned before, its our
policy not to comment on intra-quarter trends, but we can talk about trends
through the end of 2009. Weve generally been able to keep prices on contract
renewals flat or negotiate small increases, although in some cases weve made
shorter-term price concessions with clients who were under unusual budget
constraints. We believe business conditions have improved, and our clients were
more engaged in sales discussions in the fourth quarter of 2009.
International Operations
7.
How is customer growth progressing overseas relative to your more
mature business in the U.S.? Were these units more or less affected by the
credit crisis than your U.S. business?
Our international operations were
also impacted by the global financial crisis, but somewhat less than in the
United States. In 2009, for example, our international organic revenue declined
5.5%, compared with an 8.8% decline overall.
4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
|
MORNINGSTAR, INC.
|
|
|
|
|
|
|
Date: April 5, 2010
|
By:
|
/s/ Scott Cooley
|
|
Name:
|
Scott Cooley
|
|
Title:
|
Chief Financial Officer
|
5
Morningstar (NASDAQ:MORN)
Historical Stock Chart
From Jun 2024 to Jul 2024
Morningstar (NASDAQ:MORN)
Historical Stock Chart
From Jul 2023 to Jul 2024