8-K

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):  March 18, 2010

MORNINGSTAR, INC.

(Exact name of registrant as specified in its charter)

Illinois
(State or other jurisdiction
of incorporation) 000-51280
(Commission
File Number) 36-3297908
(I.R.S. Employer
Identification No.)

22 West Washington Street Chicago, Illinois (Address of principal executive offices) 60602 (Zip Code)

(312) 696-6000

(Registrant’s 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:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01.  Other Events.

On March 19, 2010, Morningstar, Inc., an Illinois corporation, issued a press release and posted questions and answers to its corporate website announcing that it had entered into a definitive agreement to acquire Realpoint, LLC, a Nationally Recognized Statistical Ratings Organization that specializes in structured finance, copies of which are filed as Exhibits 99.1 and 99.2.

Item 9.01.  Financial Statements and Exhibits.

Include the following information:

(d)        Exhibits:

Exhibit No.	Description
99.1	Press Release issued March 19, 2010.
99.2	Questions and Answers posted March 19, 2010.

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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: March 19, 2010	By:	/s/ Richard Robbins
	Name:	Richard Robbins
	Title:	General Counsel and Corporate Secretary

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release issued March 19, 2010.
99.2	Questions and Answers posted March 19, 2010.

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EX-99.1

Exhibit 99.1

	News Release
	22 West Washington Street	Telephone:  +1 312 696-6000
	Chicago	Facsimile:  +1 312 696-6009
	Illinois 60602

Media Contacts:

Margaret Kirch Cohen, 312-696-6383 or margaret.cohen@morningstar.com

Nadine Youssef, 312-696-6601 or nadine.youssef@morningstar.com

Investors: Investors may submit questions to investors@morningstar.com or by fax to 312-696-6009.

FOR IMMEDIATE RELEASE

Morningstar, Inc. to Acquire Realpoint, LLC, Nationally Recognized Statistical Ratings Organization

CHICAGO, March 19, 2010—Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, has entered into a definitive agreement to acquire Realpoint, LLC, a Nationally Recognized Statistical Ratings Organization (NRSRO) that specializes in structured finance. The purchase price is $52 million, subject to post-closing adjustments, and includes approximately $42 million in cash and $10 million in restricted stock. Realpoint had revenue of approximately $12 million in 2009. Morningstar expects to complete the transaction in the next few months.

“We believe there’s strong demand for unbiased ratings and research in the structured credit market, and we think the time is ripe to bring more competition to this market. This acquisition also builds on our recent entry into corporate credit ratings,” said Joe Mansueto, chairman and chief executive officer of Morningstar. “Realpoint has earned the respect of investors, and has built a solid business by being a reliable source for structured finance ratings and analysis. Realpoint and Morningstar share a strong commitment to investors. Together, we want to restore credibility to the credit ratings business and be a positive force in rating structured products.”

Realpoint currently offers securities ratings, research, surveillance services, and data to help institutional investors identify credit risk in commercial mortgage-backed securities. More than 225 institutional investment firms subscribe to Realpoint’s trusted ratings and analytics, including the majority of money managers who invest in commercial mortgage-backed securities.

“Realpoint and Morningstar have highly complementary values and are focused squarely on the best interests of investors,” said Robert Dobilas, chief executive officer of Realpoint. “Becoming part of a well-respected firm like Morningstar will give us the resources to expand our business on a global level, with a company that is equally focused on transparency and reliable ratings and analysis. At a time when market

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uncertainty is unprecedented, Morningstar’s acquisition of Realpoint demonstrates a firm commitment to re-establishing faith in structured finance ratings.”

On Dec. 2, 2009, Morningstar announced its entry into credit ratings and now publishes ratings on approximately 150 of the largest U.S. companies. Its corporate credit rating business and pending acquisition of Realpoint support one of the company’s growth strategies, which is to continue building thought leadership in independent investment research.

Once the acquisition is completed, Realpoint will become a business unit of Morningstar, reporting to Catherine Odelbo, Morningstar’s president of equity research. Over time, the company will be rebranded under Morningstar. Dobilas will continue to run the business, and the company will retain its offices in Horsham, Pa.

About Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of Internet, software, and print-based products and services for individuals, financial advisors, and institutions. Morningstar provides data on approximately 350,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 4 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. The company has operations in 20 countries and minority ownership positions in companies based in two other countries.

Caution Concerning Forward-Looking Statements

This press release 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 discussed not to occur or to differ significantly from what we expected. 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 filings with the Securities and Exchange Commission, including 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.

# # #

©2010 Morningstar, Inc.  All rights reserved.

MORN-C

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EX-99.2

Exhibit 99.2

Morningstar to Acquire Realpoint, LLC
Questions and Answers

Why is Morningstar acquiring Realpoint, LLC?

We believe there’s strong demand for unbiased ratings and research in the structured credit market, and we think the time is ripe to bring more competition to this market. This acquisition also builds on our recent entry into corporate credit ratings.

Realpoint and Morningstar share a strong commitment to investors. Morningstar is known for its independence, and has experience in the rating business. We’ve been considering the structured credits sector for some time. Together, we want to restore credibility to the credit ratings business and be a positive force in rating structured products.

Realpoint is a Nationally Recognized Statistical Ratings Organization and has earned the respect of investors. It is a profitable company with strong growth potential. It has built a solid business by being a reliable source for structured finance ratings and analysis.

Most of Realpoint’s revenue comes from a subscription-based model, which is also the case at Morningstar. In fact, the majority of money managers who invest in commercial mortgage-backed securities (CMBS) subscribe to Realpoint’s trusted research, data, and analytics.

Why is Realpoint selling the company to Morningstar?

Becoming part of Morningstar will give Realpoint the resources to expand its business on a global level, with a company that is equally focused on transparency and reliable ratings and analysis. At a time when market uncertainty is unprecedented, Morningstar’s planned acquisition of Realpoint demonstrates a firm commitment to re-establishing faith in structured finance ratings.

Both companies have committed clients, dedicated employees, and strong management teams. The core values of both firms are highly complementary and focused squarely on the best interest of the investor community.

Realpoint will immediately become a valuable component of Morningstar by launching Morningstar’s presence in structured finance. At the same time, Morningstar will contribute 25+ years of experience, stability, credibility, and the resources that will allow Realpoint to continue to develop its business internationally across many sectors of the market.

What’s different about Realpoint’s ratings?

Realpoint’s ratings are thorough and transparent. As part of its standard new issue ratings analysis, the company underwrites all of the properties in a transaction, and makes the information about its findings and ratings process available to investors so they can clearly understand how Realpoint came to its ratings conclusion. Currently, the majority of the company’s revenue comes from its investor-paid subscription service for ongoing surveillance of CMBS securities, where Realpoint built its reputation with buy-side investors.

March 2010

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Will you be competing with the big three—Moody’s, S&P, and Fitch?

Yes, in fact, Realpoint is already successfully competing with the big three. It was selected by J.P. Morgan Securities and Inland Western Real Estate Trust in late 2009 to rate a new issues CMBS transaction, and Realpoint expects to announce other assignments in the near future.

What is Realpoint’s business model?

Realpoint’s business model offers unbiased research to investors.

The majority of Realpoint’s revenue currently comes from an investor-paid subscription service for ongoing surveillance of rated securities in the secondary market, where Realpoint rates the entire CMBS universe regardless of who issued the initial rating. Realpoint built its reputation with buy-side investors.

That said, the buy-side has embedded NRSRO language in thousands of investment policy statements and, under current SEC regulations for new-issue ratings, there’s no way to issue bonds without the issuer-pay model. If issuers want a market for their bonds, they must procure a rating from one or more NRSROs.

Realpoint has no choice but to operate under the issuer-paid model because it would not otherwise have access to the information required to provide the rating. It has addressed conflict of interest concerns by bringing a new level of transparency to the ratings process. Realpoint has gone to great lengths to make sure investors understand their ratings process, and provides an unprecedented level of analysis so that investors can understand how Realpoint came to its ratings conclusion.

Will you integrate Realpoint with Morningstar’s new corporate credit ratings group?

No, the two groups will remain separate, independent business units.

Will you apply for NRSRO status for your corporate credit ratings business?

It’s not something we are considering at this time.

What are Realpoint’s core offerings?

Realpoint currently offers securities ratings, research, surveillance services, and data to help institutional investors identify credit risk in commercial mortgage-backed securities.

How many clients does Realpoint have?

Realpoint has more than 225 clients, including some of the world’s largest institutional investment firms.

Will you keep the Realpoint name?

We expect to rebrand the company under Morningstar. Initially, the company will be called “Realpoint, a Morningstar company.” We expect to change the name to Morningstar over the summer. It will take the rest of the year for the name change to ripple through all of Realpoint’s content and product platforms.

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Will you keep Realpoint’s employees?

There’s not a lot of overlap or redundancy between jobs in our organizations, so we don’t expect to make staff reductions.

How many employees does Realpoint have and where are they located?

Realpoint has about 40 employees in Horsham, Pennsylvania, a suburb of Philadelphia.

Will you move the company’s Pennsylvania offices to Chicago?

We expect to keep the Pennsylvania offices for the foreseeable future.

Will Realpoint’s management team stay with the company?

Yes, we expect them to stay with the organization.

Who will head up the business?

Robert Dobilas, CEO of Realpoint, will lead the business and report to Cathy Odelbo, Morningstar’s president of equity research.

What are the financial terms of the deal?

Morningstar is acquiring the company for $52 million, subject to post-closing adjustments, and includes approximately $42 million in cash and $10 million in restricted stock.

What are Realpoint’s revenues?

Realpoint had approximately $12 million in revenue for 2009.

Is Realpoint profitable?

Yes.

Morningstar has acquired a number of companies recently. Do you expect to make more acquisitions?

We’ll continue to look at potential acquisitions that help us further our mission of creating great products that help investors meet their financial goals and fit our business model of leveraging fixed investments in databases and core skill sets. In reviewing potential acquisitions, we focus on transactions that:

·Offer a good strategic fit with our mission of creating great products that help investors reach their financial goals,

·Help us build our investment databases, research capabilities, technical expertise, or customer base faster and more cost effectively than we could if we built them ourselves, and

·Offer a good cultural fit with our entrepreneurial spirit and brand leadership.

Caution Concerning Forward-Looking Statements
This press release 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-

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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 discussed not to occur or to differ significantly from what we expected. 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 filings with the Securities and Exchange Commission, including 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.

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