10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED June 30, 2015

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from         to

Commission File Number: 000-51280

MORNINGSTAR, INC.

(Exact Name of Registrant as Specified in its Charter) 

Illinois	36-3297908
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification Number)
22 West Washington Street
Chicago, Illinois	60602
(Address of Principal Executive Offices)	(Zip Code)

(312) 696-6000

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesxNoo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YesxNoo

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer   x	Accelerated filer  o	Non-accelerated filer   o	Smaller reporting company  o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YesoNox

As of July 24, 2015, there were 44,247,059 shares of the Company’s common stock, no par value, outstanding.

MORNINGSTAR, INC. AND SUBSIDIARIES

INDEX

PART 1		FINANCIAL INFORMATION		3
	Item 1.	Financial Statements		3
			Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2015 and 2014	4
			Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2015 and 2014	5
			Unaudited Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014	6
			Unaudited Condensed Consolidated Statement of Equity for the six months ended June 30, 2015	7
			Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014	8
			Notes to Unaudited Condensed Consolidated Financial Statements	9
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk		34
	Item 4.	Controls and Procedures		35
PART 2		OTHER INFORMATION		36
	Item 1.	Legal Proceedings		36
	Item 1A.	Risk Factors		36
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		37
	Item 6.	Exhibits		37
SIGNATURE				38
EXHIBIT INDEX				39

2

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

3

Morningstar, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

	Three months ended June 30					Six months ended June 30
(in millions except per share amounts)	2015		2014			2015			2014
Revenue	$	202.1	$	189.4		$	391.9		$	370.6
Operating expense:
Cost of revenue	83.2		81.5			161.8			157.1
Sales and marketing	25.1		27.9			50.5			56.4
General and administrative	27.8		30.4			53.9			56.5
Depreciation and amortization	16.3		13.4			31.4			25.8
Litigation settlement	—		61.0			—			61.0
Total operating expense	152.4		214.2			297.6			356.8
Operating income (loss)	49.7		(24.8		)	94.3			13.8
Non-operating income (expense):
Interest income, net	0.1		0.6			0.3			1.2
Gain on sale of investments, reclassified from other comprehensive income	0.5		0.4			0.4			0.3
Holding gain upon acquisition of additional ownership of equity and cost method investments	—		5.2			—			5.2
Other expense, net	—		(0.3		)	(0.4		)	—
Non-operating income, net	0.6		5.9			0.3			6.7
Income (loss) before income taxes and equity in net income of unconsolidated entities	50.3		(18.9		)	94.6			20.5
Equity in net income of unconsolidated entities	0.6		0.5			1.0			1.1
Income tax expense (benefit)	18.7		(8.6		)	33.6			5.0
Consolidated net income (loss)	32.2		(9.8		)	62.0			16.6
Net income attributable to the noncontrolling interest	—		—			(0.2		)	—
Net income (loss) attributable to Morningstar, Inc.	$	32.2	$	(9.8	)	$	61.8		$	16.6
Net income (loss) per share attributable to Morningstar, Inc.:
Basic	$	0.73	$	(0.22	)	$	1.39		$	0.37
Diluted	$	0.72	$	(0.22	)	$	1.39		$	0.37
Dividends per common share:
Dividends declared per common share	$	0.19	$	0.17		$	0.38		$	0.34
Dividends paid per common share	$	0.19	$	0.17		$	0.38		$	0.34
Weighted average shares outstanding:
Basic	44.3		44.8			44.3			44.8
Diluted	44.4		44.8			44.4			45.0

See notes to unaudited condensed consolidated financial statements.

4

Morningstar, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

	Three months ended June 30						Six months ended June 30
(in millions)	2015			2014			2015			2014
Consolidated net income (loss)	$	32.2		$	(9.8	)	$	62.0		$	16.6
Other comprehensive income (loss):
Foreign currency translation adjustment	8.8			2.9			(11.0		)	5.3
Unrealized gains (losses) on securities, net of tax:
Unrealized holding gains (losses) arising during period	(0.6		)	0.3			(0.5		)	0.4
Reclassification (gains) losses included in net income	0.3			(0.3		)	0.3			(0.2		)
Other comprehensive income (loss)	8.5			2.9			(11.2		)	5.5
Comprehensive income (loss)	40.7			(6.9		)	50.8			22.1
Comprehensive income attributable to noncontrolling interest	—			—			(0.2		)	—
Comprehensive income (loss) attributable to Morningstar, Inc.	$	40.7		$	(6.9	)	$	50.6		$	22.1

See notes to unaudited condensed consolidated financial statements.

5

Morningstar, Inc. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

	As of June 30			As of December 31
(in millions except share amounts)	2015			2014
Assets
Current assets:
Cash and cash equivalents	$	225.6		$	185.2
Investments	33.0			39.4
Accounts receivable, less allowance of $1.9 and $1.5, respectively	143.9			136.7
Deferred tax asset, net	10.5			9.0
Income tax receivable	—			6.9
Other current assets	22.4			22.6
Total current assets	435.4			399.8
Property, equipment, and capitalized software, less accumulated depreciation and amortization of $151.0 and $132.9, respectively	122.6			117.6
Investments in unconsolidated entities	34.9			28.8
Goodwill	364.2			370.1
Intangible assets, net	83.5			95.9
Other assets	7.0			7.1
Total assets	$	1,047.6		$	1,019.3
Liabilities and equity
Current liabilities:
Accounts payable and accrued liabilities	$	36.0		$	34.3
Accrued compensation	58.9			80.5
Deferred revenue	163.1			146.0
Short-term debt	35.0			30.0
Income tax payable	8.4			—
Other current liabilities	3.6			3.0
Total current liabilities	305.0			293.8
Accrued compensation	8.2			7.9
Deferred tax liability, net	28.7			26.0
Deferred rent	26.3			26.4
Other long-term liabilities	9.5			10.8
Total liabilities	377.7			364.9
Equity:
Morningstar, Inc. shareholders’ equity:
Common stock, no par value, 200,000,000 shares authorized, of which 44,247,059 and 44,345,763 shares were outstanding as of June 30, 2015 and December 31, 2014, respectively	—			—
Treasury stock at cost, 8,605,118 shares as of June 30, 2015 and 8,257,214 shares as of December 31, 2014	(550.6		)	(524.3		)
Additional paid-in capital	569.0			561.1
Retained earnings	686.4			641.5
Accumulated other comprehensive income (loss):
Currency translation adjustment	(36.1		)	(25.1		)
Unrealized gain on available-for-sale investments	0.1			0.3
Total accumulated other comprehensive loss	(36.0		)	(24.8		)
Total Morningstar, Inc. shareholders’ equity	668.8			653.5
Noncontrolling interests	1.1			0.9
Total equity	669.9			654.4
Total liabilities and equity	$	1,047.6		$	1,019.3

See notes to unaudited condensed consolidated financial statements.

6

Morningstar, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statement of Equity

For the six months ended June 30, 2015

	Morningstar, Inc. Shareholders’ Equity
														Accumulated Other Comprehensive Income (Loss)
	Common Stock							Additional Paid-in Capital									Non- Controlling Interests
(in millions, except share amounts)	Shares Outstanding		Par Value		Treasury Stock						Retained Earnings								Total Equity
Balance as of December 31, 2014	44,345,763		$	—	$	(524.3	)	$	561.1		$	641.5		$	(24.8	)	$	0.9	$	654.4
Net income			—		—			—			61.8			—			0.2		62.0
Other comprehensive loss:
Unrealized loss on available-for-sale investments, net of income tax of $0.3			—		—			—			—			(0.5		)	—		(0.5		)
Reclassification of adjustments for losses included in net income, net of income tax of $0.2			—		—			—			—			0.3			—		0.3
Foreign currency translation adjustment, net			—		—			—			—			(11.0		)	—		(11.0		)
Other comprehensive loss, net			—		—			—			—			(11.2		)	—		(11.2		)
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net	267,066		—		1.4			(3.1		)	—			—			—		(1.7		)
Stock-based compensation			—		—			8.9			—			—			—		8.9
Excess tax benefit derived from stock-option exercises and vesting of restricted stock units			—		—			2.1			—			—			—		2.1
Common shares repurchased	(365,770	)	—		(27.7		)	—			—			—			—		(27.7		)
Dividends declared — common shares outstanding			—		—			—			(16.9		)	—			—		(16.9		)
Balance as of June 30, 2015	44,247,059		$	—	$	(550.6	)	$	569.0		$	686.4		$	(36.0	)	$	1.1	$	669.9

See notes to unaudited condensed consolidated financial statements.

7

Morningstar, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

	Six months ended June 30
(in millions)	2015			2014
Operating activities
Consolidated net income	$	62.0		$	16.6
Adjustments to reconcile consolidated net income to net cash flows from operating activities:
Depreciation and amortization	31.4			25.8
Deferred income taxes	1.3			(2.6		)
Stock-based compensation expense	8.9			8.3
Provision for (recoveries of) bad debts	0.4			(0.3		)
Equity in net income of unconsolidated entities	(1.0		)	(1.1		)
Excess tax benefits from stock-option exercises and vesting of restricted stock units	(2.1		)	(1.9		)
Holding gain upon acquisition of additional ownership of equity and cost method investments	—			(5.2		)
Other, net	—			(0.8		)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	(8.8		)	(19.3		)
Other assets	—			0.2
Accounts payable and accrued liabilities	2.0			61.2
Accrued compensation	(18.1		)	(8.7		)
Income taxes—current	15.7			(12.2		)
Deferred revenue	19.1			8.8
Deferred rent	0.1			(1.0		)
Other liabilities	—			(1.1		)
Cash provided by operating activities	110.9			66.7
Investing activities
Purchases of investments	(14.0		)	(7.7		)
Proceeds from maturities and sales of investments	20.5			95.5
Capital expenditures	(27.6		)	(30.8		)
Acquisitions, net of cash acquired	—			(64.4		)
Other, net	(5.1		)	0.2
Cash used for investing activities	(26.2		)	(7.2		)
Financing activities
Common shares repurchased	(27.7		)	(36.7		)
Dividends paid	(16.9		)	(15.3		)
Proceeds from short-term debt	15.0			—
Repayment of short-term debt	(10.0		)	—
Proceeds from stock-option exercises	3.2			2.1
Employee taxes withheld for restricted stock units	(4.9		)	(5.0		)
Excess tax benefits from stock-option exercises and vesting of restricted stock units	2.1			1.9
Other, net	0.1			—
Cash used for financing activities	(39.1		)	(53.0		)
Effect of exchange rate changes on cash and cash equivalents	(5.2		)	1.6
Net increase in cash and cash equivalents	40.4			8.1
Cash and cash equivalents—beginning of period	185.2			168.2
Cash and cash equivalents—end of period	$	225.6		$	176.3
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	14.5		$	19.9
Supplemental information of non-cash investing and financing activities:
Unrealized gain on available-for-sale investments	$	0.3		$	0.3
Equipment obtained under long-term financing arrangement	$	1.3		$	—

See notes to unaudited condensed consolidated financial statements.

8

MORNINGSTAR, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation of Interim Financial Information

The accompanying condensed consolidated financial statements of Morningstar, Inc. and subsidiaries (Morningstar, we, our, the company) have been prepared to conform to the rules and regulations of the Securities and Exchange Commission (SEC). The preparation of financial statements in conformity with accounting principles generally accepted in the United States (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue, and expenses. Actual results could differ from those estimates. In the opinion of management, the statements reflect all adjustments, which are of a normal recurring nature, necessary to present fairly our financial position, results of operations, equity, and cash flows. These financial statements and notes are unaudited and should be read in conjunction with our Audited Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on February 27, 2015.

The acronyms that appear in the Notes to our Unaudited Condensed Consolidated Financial Statements refer to the following:

ASC: Accounting Standards Codification

ASU: Accounting Standards Update

FASB: Financial Accounting Standards Board

2. Summary of Significant Accounting Policies

We discuss our significant accounting policies in Note 3 of our Audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on February 27, 2015.

On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for us on January 1, 2018. The standard permits the use of either the retrospective or cumulative effect transition method. We are evaluating the effect that ASU No. 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.

9

3. Credit Arrangements

In July 2015, we renewed our $75.0 million, single-bank revolving credit facility. We had an outstanding principal balance of $35.0 million at an interest rate of LIBOR plus 100 basis points as of June 30, 2015. On July 20, 2015, we repaid the outstanding principal balance of $35.0 million, leaving full availability of the facility.

4. Goodwill and Other Intangible Assets

Goodwill

The following table shows the changes in our goodwill balances from December 31, 2014 to June 30, 2015:

	(in millions)
Balance as of December 31, 2014	$	370.1
Foreign currency translation	(5.9		)
Balance as of June 30, 2015	$	364.2

We did not record any impairment losses in the first six months of 2015 or 2014. We perform our annual impairment reviews in the fourth quarter.

Intangible Assets

The following table summarizes our intangible assets: 

	As of June 30, 2015								As of December 31, 2014
(in millions)	Gross		Accumulated Amortization			Net		Weighted Average Useful  Life (years)	Gross		Accumulated Amortization			Net		Weighted Average Useful  Life (years)
Intellectual property	$	28.6	$	(25.9	)	$	2.7	9	$	29.0	$	(25.0	)	$	4.0	9
Customer-related assets	139.4		(88.2		)	51.2		12	141.5		(83.6		)	57.9		12
Supplier relationships	0.2		(0.1		)	0.1		20	0.2		(0.1		)	0.1		20
Technology-based assets	88.5		(61.2		)	27.3		8	88.8		(57.4		)	31.4		8
Non-competition agreement	4.3		(2.1		)	2.2		5	4.4		(1.9		)	2.5		5
Total intangible assets	$	261.0	$	(177.5	)	$	83.5	10	$	263.9	$	(168.0	)	$	95.9	10

The following table summarizes our amortization expense related to intangible assets:

	Three months ended June 30				Six months ended June 30
(in millions)	2015		2014		2015		2014
Amortization expense	$	5.4	$	5.5	$	10.9	$	10.6

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

10

We expect intangible amortization expense for the remainder of 2015 and subsequent years as follows:

	(in millions)
Remainder of 2015 (from July 1 through December 31)	$	10.8
2016	17.2
2017	12.8
2018	10.6
2019	7.9
Thereafter	24.2

Our estimates of future amortization expense for intangible assets may be affected by acquisitions, divestitures, changes in the estimated average useful life, and currency translations.

11

5. 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:

	Three months ended June 30					Six months ended June 30
(in millions, except per share amounts)	2015		2014			2015		2014
Basic net income (loss) per share attributable to Morningstar, Inc.:
Net income (loss) attributable to Morningstar, Inc.:	$	32.2	$	(9.8	)	$	61.8	$	16.6
Less: Distributed earnings available to participating securities	—		—			—		—
Less: Undistributed earnings available to participating securities	—		—			—		—
Numerator for basic net income (loss) per share — undistributed and distributed earnings available to common shareholders	$	32.2	$	(9.8	)	$	61.8	$	16.6
Weighted average common shares outstanding	44.3		44.8			44.3		44.8
Basic net income (loss) per share attributable to Morningstar, Inc.	$	0.73	$	(0.22	)	$	1.39	$	0.37
Diluted net income (loss) per share attributable to Morningstar, Inc.:
Numerator for basic net income (loss) per share — undistributed and distributed earnings available to common shareholders	$	32.2	$	(9.8	)	$	61.8	$	16.6
Add: Undistributed earnings allocated to participating securities	—		—			—		—
Less: Undistributed earnings reallocated to participating securities	—		—			—		—
Numerator for diluted net income (loss) per share — undistributed and distributed earnings available to common shareholders	$	32.2	$	(9.8	)	$	61.8	$	16.6
Weighted average common shares outstanding	44.3		44.8			44.3		44.8
Net effect of dilutive stock options, restricted stock units, and performance share awards	0.1		—			0.1		0.2
Weighted average common shares outstanding for computing diluted income per share	44.4		44.8			44.4		45.0
Diluted net income (loss) per share attributable to Morningstar, Inc.	$	0.72	$	(0.22	)	$	1.39	$	0.37

12

The following table shows the number of restricted stock units and performance share awards excluded from our calculation of diluted earnings per share because their inclusion would have been anti-dilutive:

	Three months ended June 30		Six months ended June 30
(in thousands)	2015	2014	2015	2014
Weighted average stock options	—	160	—	—
Weighted average restricted stock units	43	108	42	18
Weighted average performance share awards	15	10	6	—
Weighted average restricted stock	—	3	—	6
Total	58	281	48	24

Stock options and restricted stock could be included in the calculation in the future.

6. Segment and Geographical Area Information

Segment Information

We report our results in a single reportable segment, which reflects how our chief operating decision maker allocates resources and evaluates our financial results.

Because we have one reportable segment, all required financial segment information can be found directly in the Unaudited Condensed Consolidated Financial Statements.

The accounting policies for our single reportable segment are the same as those described in “Note 3. Summary of Significant Accounting Policies” included in our Annual Report on Form 10-K for the year ended December 31, 2014. We evaluate the performance of our reporting segment based on revenue and operating income.

Geographical Area Information

The tables below summarize our revenue and long-lived assets by geographical area:

External revenue by geographical area
	Three months ended June 30				Six months ended June 30
(in millions)	2015		2014		2015		2014
United States	$	151.2	$	136.5	$	292.1	$	266.4
United Kingdom	16.0		15.6		30.8		31.0
Continental Europe	14.4		15.9		28.7		31.5
Australia	8.0		9.2		15.7		17.4
Canada	7.1		7.5		14.0		15.2
Asia	4.4		3.9		8.8		7.6
Other	1.0		0.8		1.8		1.5
Total International	50.9		52.9		99.8		104.2
Consolidated revenue	$	202.1	$	189.4	$	391.9	$	370.6

13

Long-lived assets by geographical area
	As of June 30		As of December 31
(in millions)	2015		2014
United States	$	104.2	$	98.1
United Kingdom	8.4		8.1
Continental Europe	2.0		2.1
Australia	1.0		0.8
Canada	0.7		0.9
Asia	6.2		7.5
Other	0.1		0.1
Total International	18.4		19.5
Consolidated property, equipment, and capitalized software, net	$	122.6	$	117.6

7. 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 into three categories: available-for-sale, held-to-maturity, and trading securities. Our investment portfolio is primarily invested in proprietary Morningstar portfolios, exchange-traded funds that seek to track the performance of certain Morningstar proprietary indexes, and various mutual funds. We classify our investment portfolio as shown below:

	As of June 30		As of December 31
(in millions)	2015		2014
Available-for-sale	$	8.8	$	13.2
Held-to-maturity	15.1		17.9
Trading securities	9.1		8.3
Total	$	33.0	$	39.4

The following table shows the cost, unrealized gains (losses), and fair value of investments classified as available-for-sale and held-to-maturity:

	As of June 30, 2015									As of December 31, 2014
(in millions)	Cost		Unrealized Gain		Unrealized Loss			Fair Value		Cost		Unrealized Gain		Unrealized Loss			Fair Value
Available-for-sale:
Equity securities and exchange-traded funds	$	7.4	$	0.3	$	(0.2	)	$	7.5	$	11.4	$	0.8	$	(0.3	)	$	11.9
Mutual funds	1.2		0.2		(0.1		)	1.3		1.2		0.2		(0.1		)	1.3
Total	$	8.6	$	0.5	$	(0.3	)	$	8.8	$	12.6	$	1.0	$	(0.4	)	$	13.2
Held-to-maturity:
Certificates of deposit	$	15.1	$	—	$	—		$	15.1	$	17.9	$	—	$	—		$	17.9

14

As of June 30, 2015 and December 31, 2014, investments with unrealized losses for greater than a 12-month period were not material to the Condensed Consolidated Balance Sheets and were not deemed to have other than temporary declines in value.

The table below shows the cost and fair value of investments classified as available-for-sale and held-to-maturity based on their contractual maturities as of June 30, 2015 and December 31, 2014. 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 June 30, 2015				As of December 31, 2014
(in millions)	Cost		Fair Value		Cost		Fair Value
Available-for-sale:
Equity securities, exchange-traded funds, and mutual funds	$	8.6	$	8.8	$	12.6	$	13.2
Total	$	8.6	$	8.8	$	12.6	$	13.2
Held-to-maturity:
Due in one year or less	$	15.1	$	15.1	$	17.9	$	17.9
Total	$	15.1	$	15.1	$	17.9	$	17.9

As of June 30, 2015 and December 31, 2014, held-to-maturity investments included a $1.5 million certificate of deposit held primarily as collateral against bank guarantees for our office leases, primarily in Australia.

The following table shows the realized gains and losses arising from sales of our investments classified as available-for-sale recorded in our Condensed Consolidated Statements of Operations: 

	Three months ended June 30					Six months ended June 30
(in millions)	2015			2014		2015			2014
Realized gains	$	0.7		$	0.4	$	0.9		$	0.6
Realized losses	(0.2		)	—		(0.5		)	(0.3		)
Realized gains, net	$	0.5		$	0.4	$	0.4		$	0.3

We determine realized gains and losses using the specific identification method.

The following table shows the net unrealized gains on trading securities as recorded in our Condensed Consolidated Statements of Operations:

	Three months ended June 30					Six months ended June 30
(in millions)	2015		2014			2015		2014
Unrealized gains (losses), net	$	0.2	$	(0.2	)	$	0.3	$	(0.2	)

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The table below shows the fair value of our assets subject to fair value measurements that are measured at fair value on a recurring basis using the fair value hierarchy and the necessary disclosures under FASB ASC 820, Fair Value Measurement:

	Fair Value		Fair Value Measurements as of June 30, 2015
	as of		Using Fair Value Hierarchy
(in millions)	June 30, 2015		Level 1		Level 2		Level 3
Available-for-sale investments:
Equity securities and exchange-traded funds	$	7.5	$	7.5	$	—	$	—
Mutual funds	1.3		1.3		—		—
Trading securities	9.1		9.1		—		—
Cash equivalents	0.5		0.5		—		—
Total	$	18.4	$	18.4	$	—	$	—

	Fair Value		Fair Value Measurements as of December 31, 2014
	as of		Using Fair Value Hierarchy
(in millions)	December 31, 2014		Level 1		Level 2		Level 3
Available-for-sale investments:
Equity securities and exchange-traded funds	$	11.9	$	11.9	$	—	$	—
Mutual funds	1.3		1.3		—		—
Trading securities	8.3		8.3		—		—
Cash equivalents	0.5		0.5		—		—
Total	$	22.0	$	22.0	$	—	$	—

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 each of these investment categories in the aggregate is appropriate.

We measure the fair value of money market funds, mutual funds, equity securities, and exchange-traded funds based on quoted prices in active markets for identical assets or liabilities. We did not hold any securities categorized as Level 2 or Level 3 as of June 30, 2015 and December 31, 2014.

8. 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, performance share awards, 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.

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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.

Accounting for Stock-Based Compensation Awards

The following table summarizes the stock-based compensation expense included in each of our operating expense categories:

	Three months ended June 30				Six months ended June 30
(in millions)	2015		2014		2015		2014
Cost of revenue	$	2.1	$	2.0	$	4.1	$	3.7
Sales and marketing	0.6		0.5		1.1		1.0
General and administrative	1.9		1.9		3.7		3.6
Total stock-based compensation expense	$	4.6	$	4.4	$	8.9	$	8.3

The following table summarizes the amount of unrecognized stock-based compensation expense as of June 30, 2015 and the expected number of months over which the expense will be recognized:

	Unrecognized stock-based compensation expense (in millions)		Expected amortization period (months)
Restricted stock units	$	39.3	35
Performance share awards	3.8		29
Total unrecognized stock-based compensation expense	$	43.1	34

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9. Income Taxes

Effective Tax Rate

The following table shows our effective tax rate for the three and six months ended June 30, 2015 and June 30, 2014:

	Three months ended June 30						Six months ended June 30
(in millions)	2015			2014			2015			2014
Income (loss) before income taxes and equity in net income of unconsolidated entities	$	50.3		$	(18.9	)	$	94.6		$	20.5
Equity in net income of unconsolidated entities	0.6			0.5			1.0			1.1
Net (income) loss attributable to the noncontrolling interest	—			—			(0.2		)	—
Total	$	50.9		$	(18.4	)	$	95.4		$	21.6
Income tax expense (benefit)	$	18.7		$	(8.6	)	$	33.6		$	5.0
Effective tax rate	36.7		%	46.8		%	35.2		%	23.3		%

Our effective tax rate in the second quarter of 2015 was 36.7%, a decrease of 10.1 percentage points compared with 46.8% in the prior-year period. During the second quarter of 2014, we reported a loss before income taxes and equity in net income of unconsolidated entities of $18.9 million, which included a litigation settlement expense of $61.0 million that is deductible for tax purposes. In the same period, we realized a $5.2 million non-taxable gain in connection with the purchase of the remaining ownership interest in HelloWallet. Because of these two items, we reported an income tax benefit of $8.6 million, which is equivalent to a 46.8% effective tax rate, in the second quarter of 2014.

Our effective tax rate for the first six months of 2015 was 35.2%.

Unrecognized Tax Benefits

The table below provides information concerning our gross unrecognized tax benefits as of June 30, 2015 and December 31, 2014, as well as the effect these gross unrecognized tax benefits would have on our income tax expense, if they were recognized.

	As of June 30		As of December 31
(in millions)	2015		2014
Gross unrecognized tax benefits	$	13.4	$	11.9
Gross unrecognized tax benefits that would affect income tax expense	$	11.3	$	11.9
Decrease in income tax expense upon recognition of gross unrecognized tax benefits	$	10.0	$	10.6

Our Condensed Consolidated Balance Sheets include the following liabilities for unrecognized tax benefits. These amounts include interest and penalties, less any associated tax benefits.

	As of June 30		As of December 31
Liabilities for Unrecognized Tax Benefits (in millions)	2015		2014
Current liability	$	5.9	$	5.1
Non-current liability	5.1		6.6
Total liability for unrecognized tax benefits	$	11.0	$	11.7

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We conduct business globally and, as a result, we file income tax returns in U.S. federal, state, local, and foreign jurisdictions. We are currently under audit by federal and various state and local tax authorities in the United States, as well as tax authorities in certain non-U.S. jurisdictions. It is possible, though not likely, that the examination phase of some of these audits will conclude in 2015. It is not possible to estimate the effect of current audits on previously recorded unrecognized tax benefits.

We have not provided federal and state income taxes on accumulated undistributed earnings of certain foreign subsidiaries because these earnings have been permanently reinvested. Approximately 63% of our cash, cash equivalents, and investments balance as of June 30, 2015 was held by our operations outside of the United States. We believe that our cash balances and investments in the United States, along with cash generated from our U.S. operations, will be sufficient to meet our U.S. operating and cash needs for the foreseeable future, without requiring us to repatriate earnings from these foreign subsidiaries. It is not practical to determine the amount of the unrecognized deferred tax liability related to the undistributed earnings.

Certain of our non-U.S. operations have incurred net operating losses (NOLs) which may become deductible to the extent these operations become profitable. For each of our operations, we evaluate whether it is more likely than not that the tax benefits related to NOLs will be realized. As part of this evaluation, we consider evidence such as tax planning strategies, historical operating results, forecasted taxable income, and recent financial performance. In the year that certain non-U.S. operations record a loss, we do not recognize a corresponding tax benefit, thus increasing our effective tax rate. Upon determining that it is more likely than not that the NOLs will be realized, we reduce the tax valuation allowances related to these NOLs, which results in a reduction to our income tax expense and our effective tax rate in the period.

10. Contingencies

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 the result of any of these matters will have a material adverse effect on our business, operating results, or financial position.

11. Share Repurchase Program

We have an ongoing authorization, originally approved by our board of directors in September 2010, and subsequently amended, to repurchase up to $700.0 million in shares of our outstanding common stock. The authorization expires on December 31, 2015. 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 June 30, 2015, we had repurchased a total of 8,507,780 shares for $554.2 million under this authorization, leaving approximately $145.8 million available for future repurchases.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The discussion included in this section, as well as other sections of this Quarterly Report on Form 10-Q, 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:

• liability for any losses that result from an actual or claimed breach of our fiduciary duties;

• failing to maintain and protect our brand, independence, and reputation;

• failing to differentiate our products and continuously create innovative, proprietary research tools;

• failing to respond to technological change, keep pace with new technology developments, or adopt a successful technology strategy;

• liability related to our storage of personal information related to individuals as well as portfolio and account-level information;

• compliance failures, regulatory action, or changes in laws applicable to our investment advisory or credit rating operations;

• downturns in the financial sector, global financial markets, and global economy;

• the effect of market volatility on revenue from asset-based fees;

• a prolonged outage of our database, technology-based products and services, or network facilities;

• challenges faced by our operations outside the United States, including the concentration of data and development work at our offshore facilities in China and India; and

• trends in the mutual fund industry, including the increasing popularity of passively managed investment vehicles.

A more complete description of these risks and uncertainties can be found in our other filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2014. If any of these risks and uncertainties materialize, our actual future results may vary significantly from what we expect. We do not undertake to update our forward-looking statements as a result of new information or future events.

All dollar and percentage comparisons, which are often accompanied by words such as “increase,” “decrease,” “grew,” “declined,” “was up,” “was down,” “was flat,” or “was similar” refer to a comparison with the same period in the previous year unless otherwise stated.

Understanding our Company

Our Business

Our mission is to create great products that help investors reach their financial goals. We offer an extensive line of products and services for financial advisors, asset managers, retirement plan providers and sponsors, and individual investors. Many of our products are sold through subscriptions or license agreements. As a result, we typically generate recurring revenue.

Industry Overview

We monitor developments in the financial information industry to help inform our company strategy, product development plans, and marketing initiatives.

Equity markets generally posted positive returns in the second quarter of 2015, but returns were stronger outside the United States. The Morningstar U.S. Market Index, a broad market benchmark, gained 0.08% in the quarter, while the Global Ex-U.S. Index finished the quarter with a total return of 0.75%.

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U.S. mutual fund assets stood at $16.3 trillion as of May 31, 2015, based on data from the Investment Company Institute (ICI), compared with $15.5 trillion as of May 31, 2014. Based on Morningstar's estimated asset flow data, investors added a total of about $70 billion to long-term open-end funds during the second quarter, but net flows to U.S. equity funds were negative.

Assets in exchange-traded funds (ETFs) rose to $2.1 trillion as of May 31, 2015, compared with $1.8 trillion as of May 31, 2014, based on data from the ICI.

Despite generally positive market trends, we believe the business environment for the financial services industry remains mixed. While equity market returns have generally been positive, asset management firms have been facing increasing regulatory burdens, which are leading to higher costs and more cautious spending in other areas.

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Supplemental Operating Metrics

The tables below summarize our key product metrics and other supplemental data.

		As of June 30
		2015		2014			Change
Our business
Morningstar.com Premium Membership subscriptions (U.S.)		122,235		122,736			(0.4	)%
Morningstar.com registered users (U.S.)		8,377,139		8,021,734			4.4	%
Advisor Workstation clients (U.S.)		187		170			10.0	%
Morningstar Office licenses (U.S.)		4,298		4,201			2.3	%
Morningstar Direct licenses		10,839		9,222			17.5	%
Assets under advisement and management (approximate) ($bil)
	Investment Advisory services (1)	$	82.1	$	82.8	(3)	(0.8	)%
	Retirement Solutions
	Managed Accounts (2)	$	38.0	$	36.8		3.3	%
	Plan Sponsor Advice	28.8		26.0			10.8	%
	Custom Models	18.3		11.6			57.8	%
	Retirement Solutions (total)	$	85.1	$	74.4		14.4	%
	Morningstar Managed Portfolios	$	12.9	$	11.9	(3)	8.4	%
Our employees (approximate)
Worldwide headcount		3,740		3,800			(1.6	)%
Number of equity and credit analysts		185		175			5.7	%
Number of manager research analysts		105		100			5.0	%
		Three months ended June 30							Six months ended June 30
(in millions)		2015		2014			Change		2015		2014			Change
Key product revenue (4)
Morningstar Data		$	36.4	$	34.9	(5)	4.3	%	$	70.4	$	69.8	(5)	0.9	%
Morningstar Advisor Workstation		26.6		24.8			7.3	%	52.4		49.3			6.3	%
Morningstar Direct		25.1		22.7			10.6	%	49.6		44.3			12.0	%
Retirement Solutions		16.6		13.8			20.3	%	32.1		27.5			16.7	%
Morningstar.com		15.0		14.6			2.7	%	29.3		28.5			2.8	%
Other Metrics
Average assets under management and advisement ($bil)		$	179.8	$	166.3		8.1	%	$	176.5	$	164.0		7.6	%
Number of commercial mortgage-backed securities (CMBS) new-issue ratings completed		16		9			77.8	%	32		18			77.8	%
Asset value of CMBS new-issue ratings ($bil)		$	14.2	$	4.7		202.1	%	$	25.3	$	10.3		145.6	%

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(1) The asset totals include relationships for which we receive basis-point fees, including consulting arrangements and other agreements where we act as a portfolio construction manager for a mutual fund or variable annuity. We also provide Investment Advisory services for some assets for which we receive a flat fee; we do not include these assets in the total reported above.

Excluding changes related to new contracts and cancellations, changes in the value of assets under advisement can come from two primary sources: gains or losses related to overall trends in market performance, and net inflows or outflows caused when investors add to or redeem shares from these portfolios.

We cannot separately quantify cash inflows and outflows for these portfolios because we do not have custody of the assets in the majority of our investment management businesses. The information we receive from many of our clients does not separately identify the effect of cash inflows and outflows on asset balances for each period. We also cannot precisely quantify the effect of market appreciation or depreciation because the majority of our clients have discretionary authority to implement their own portfolio allocations.

(2)We cannot separately quantify the factors affecting assets under management and advisement for our managed retirement accounts. These factors primarily consist of employer and employee contributions, plan administrative fees, market movements, and participant loans and hardship withdrawals. We cannot quantify the effect of these other factors because the information we receive from the plan providers does not separately identify these transactions or the changes in balances caused by market movement.

(3) Revised to include Ibbotson Australia and a minor classification change.

(4) Key product revenue includes the effect of foreign currency translations.

(5) Revised to include a minor classification change.

Six Months Ended June 30, 2015 vs. Six Months Ended June 30, 2014

Consolidated Results

	Three months ended June 30										Six months ended June 30
Key Metrics (in millions)	2015			2014				Change			2015			2014				Change
Revenue	$	202.1		$	189.4			6.7	%		$	391.9		$	370.6			5.8	%
Operating income (loss)	$	49.7		$	(24.8	)	(1)	300.8	%		$	94.3		$	13.8		(1)	585.5	%
Operating margin	24.6		%	(13.1		)%		37.7		pp	24.1		%	3.7		%		20.4		pp
Cash provided by operating activities	$	75.9		$	54.8		(1)	38.5	%		$	110.9		$	66.7		(1)	66.3	%
Capital expenditures	(13.2		)	(10.0		)		32.0	%		(27.6		)	(30.8		)		(10.4	)%
Free cash flow	$	62.7		$	44.8		(1)	40.0	%		$	83.3		$	35.9		(1)	132.0	%

____________________________________________________________________________________________

pp — percentage points

(1) Operating income and free cash flow for the second quarter of 2014 and first six months of 2014 include a $61.0 million litigation settlement expense and corresponding cash outflow.

To supplement our consolidated financial statements presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP), we use the following non-GAAP measures: consolidated revenue excluding acquisitions and the effect of foreign currency translations (organic revenue), consolidated operating income excluding the litigation settlement (adjusted operating income), consolidated operating margin excluding the litigation settlement (adjusted operating margin), and free cash flow. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

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We define free cash flow as cash provided by or used for operating activities less capital expenditures. We present free cash flow solely as supplemental disclosure to help investors better understand how much cash is available after we spend money to operate our business. Our management team uses free cash flow to evaluate our business. Free cash flow is not equivalent to any measure required to be reported under GAAP.

Consolidated Revenue

	Three months ended June 30						Six months ended June 30
(in millions)	2015		2014		Change		2015		2014		Change
Consolidated revenue	$	202.1	$	189.4	6.7	%	$	391.9	$	370.6	5.8	%

In the second quarter of 2015, consolidated revenue increased 6.7% to $202.1 million. Currency movements were a major factor in our second quarter results, as continued strength in the U.S. dollar reduced revenue from our international operations when translated into U.S. dollars. This has been an ongoing trend for several quarters and during the second quarter reduced revenue by $7.6 million.

Some of the main contributors to the increase in consolidated revenue were Morningstar Credit Ratings (our structured credit research and ratings business), Morningstar Retirement Solutions, Morningstar Direct, Morningstar Advisor Workstation (including Morningstar Office), and Morningstar Data. Positive results for these products were partially offset by a $1.3 million decline for Morningstar Principia, as we've been migrating subscribers to newer workflow solutions.

Morningstar Credit Ratings revenue rose $4.3 million as a result of higher new issuance volume and a significant increase in the asset value of new-issue ratings. Morningstar Retirement Solutions' revenue rose $2.9 million. Assets under management and advisement for Retirement Solutions rose about 14% year over year, mainly reflecting growth in custom models. Morningstar Direct revenue rose $2.4 million reflecting strong growth in additional licenses for both new and existing clients.

For the first six months of 2015, consolidated revenue was up 5.8% to $391.9 million, compared with $370.6 million in the same period of 2014. Morningstar Credit Ratings, Morningstar Direct, Morningstar Retirement Solutions, Morningstar Managed Portfolios, and Morningstar Advisor Workstation (including Morningstar Office) were the main positive contributors, partially offset by lower revenue for Principia. Morningstar Data revenue for the first six months of 2015 was flat, mainly because of the negative effect of foreign currency mentioned above.

Revenue from asset-based fees made up approximately 15% of consolidated revenue in the second quarter and first six months of 2015 compared with approximately 12% of consolidated revenue for the same periods in 2014.

Organic revenue

To allow for more meaningful comparisons of our results in different periods, we provide information about organic revenue, which reflects our underlying business excluding acquisitions, divestitures, and the effect of foreign currency translations. We had $0.9 million of incremental revenue in the second quarter of 2015 from our acquisition of HelloWallet. As mentioned above, foreign currency translations had a $7.6 million unfavorable effect. Excluding these two factors, organic revenue rose 10.3% in the second quarter of 2015.

For the first six months of 2015, we had $4.0 million of incremental revenue from our acquisitions of ByAllAccounts and HelloWallet. Foreign currency translations had a $14.1 million unfavorable effect, and organic revenue increased about 8.5% for the six-month period.

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The table below reconciles consolidated revenue with organic revenue (revenue excluding acquisitions, divestitures, and the effect of foreign currency translations):

	Three months ended June 30							Six months ended June 30
(in millions)	2015			2014		Change		2015			2014		Change
Consolidated revenue	$	202.1		$	189.4	6.7	%	$	391.9		$	370.6	5.8	%
Less: acquisitions	(0.9		)	—		NMF		(4.0		)	—		NMF
Less: divestitures	—			—		NMF		—			—		NMF
Unfavorable effect of foreign currency translations	7.6			—		NMF		14.1			—		NMF
Organic revenue	$	208.8		$	189.4	10.3	%	$	402.0		$	370.6	8.5	%

 ___________________________________________________________________________________________

NMF - not meaningful

Revenue by region

	Three months ended June 30						Six months ended June 30
(in millions)	2015		2014		Change		2015		2014		Change
United States	$	151.2	$	136.5	10.8	%	$	292.1	$	266.4	9.6	%
United Kingdom	16.0		15.6		2.6	%	30.8		31.0		(0.6	)%
Continental Europe	14.4		15.9		(9.4	)%	28.7		31.5		(8.9	)%
Australia	8.0		9.2		(13.0	)%	15.7		17.4		(9.8	)%
Canada	7.1		7.5		(5.3	)%	14.0		15.2		(7.9	)%
Asia	4.4		3.9		12.8	%	8.8		7.6		15.8	%
Other	1.0		0.8		25.0	%	1.8		1.5		20.0	%
Total International	50.9		52.9		(3.8	)%	99.8		104.2		(4.2	)%
Consolidated revenue	$	202.1	$	189.4	6.7	%	$	391.9	$	370.6	5.8	%

International revenue made up about 26% of our consolidated revenue in the first six months of 2015, compared with 28% in the first six months of 2014. About 60% of this amount is from Continental Europe and the United Kingdom. We also have a fairly large revenue base in Australia and Canada.

Revenue from international operations decreased $2.0 million, or 3.8%, in the second quarter. Excluding acquisitions and the negative effect of foreign currency translations, international organic revenue increased 10.6%. Our operations in the United Kingdom were the main contributors to the increase, followed by Continental Europe and Japan.

For the first six months of 2015, revenue from international operations was down $4.4 million, or 4.2%. Excluding acquisitions and the negative effect of foreign currency translations, international organic revenue increased 9.3%. Our operations in Continental Europe were the main contributors to the increase, followed by the United Kingdom and Japan.

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The table below presents a reconciliation from international revenue to international organic revenue (international revenue excluding acquisitions, divestitures, and the effect of foreign currency translations):

	Three months ended June 30						Six months ended June 30
(in millions)	2015		2014		Change		2015		2014		Change
International revenue	$	50.9	$	52.9	(3.8	)%	$	99.8	$	104.2	(4.2	)%
Less: acquisitions	—		—		NMF		—		—		NMF
Less: divestitures	—		—		NMF		—		—		NMF
Unfavorable effect of foreign currency translations	7.6		—		NMF		14.1		—		NMF
International organic revenue	$	58.5	$	52.9	10.6	%	$	113.9	$	104.2	9.3	%

International organic revenue (international revenue excluding acquisitions, divestitures, and the effect of foreign currency translations) is considered a non-GAAP financial measure. The definition we use for this measure may not be the same as similarly titled measures used by other companies. International organic revenue should not be considered an alternative to any measure of performance as promulgated under GAAP.

Consolidated Operating Expense

	Three months ended June 30									Six months ended June 30
(in millions)	2015			2014			Change			2015			2014			Change
Cost of revenue	$	83.2		$	81.5		2.2	%		$	161.8		$	157.1		3.0	%
% of revenue	41.2		%	43.0		%	(1.8	)	pp	41.3		%	42.4		%	(1.1	)	pp
Sales and marketing	25.1			27.9			(10.3	)%		50.5			56.4			(10.5	)%
% of revenue	12.4		%	14.7		%	(2.3	)	pp	12.9		%	15.2		%	(2.3	)	pp
General and administrative	27.8			30.4			(8.6	)%		53.9			56.5			(4.7	)%
% of revenue	13.8		%	16.1		%	(2.3	)	pp	13.8		%	15.2		%	(1.4	)	pp
Depreciation and amortization	16.3			13.4			21.9	%		31.4			25.8			22.0	%
% of revenue	8.1		%	7.1		%	1.0		pp	8.0		%	7.0		%	1.0		pp
Litigation settlement	—			61.0			NMF			—			61.0			NMF
% of revenue	—		%	32.2		%	(32.2	)	pp	—		%	16.5		%	(16.5	)	pp
Total operating expense	$	152.4		$	214.2		(28.8	)%		$	297.6		$	356.8		(16.6	)%
% of revenue	75.4		%	113.1		%	(37.7	)	pp	75.9		%	96.3		%	(20.4	)	pp

Consolidated operating expense decreased $61.8 million, or 28.8%, in the second quarter of 2015, and $59.2 million, or 16.6%, in the first six months of 2015. The decrease in operating expense in both periods was primarily associated with the $61.0 million litigation settlement expense incurred in the second quarter of 2014 that did not recur in 2015. In addition, as a result of the continued strength in the U.S. dollar, foreign currency translations had a favorable effect of $6.5 million and $12.0 million on operating expense during the second quarter and first six months of 2015, respectively.

Sales commission expense decreased $2.2 million in the second quarter and $5.7 million in the first six months of 2015. In the first quarter of 2014, we changed to a new sales commission structure that requires a different accounting treatment. We now expense sales commissions as incurred instead of amortizing them over the term of the underlying contracts but continued to amortize the prepaid commission balance from the previous commission plan. This amortization triggered an additional $2.8 million and $0.9 million of sales commission cost in the second quarter of 2014 and 2015, respectively. In the first six months of 2014 and 2015, this amortization triggered an additional $5.5 million and $2.1 million of sales commission cost, respectively.

Legal and other professional fees were down $2.6 million in the second quarter of 2015 and $4.7 million in the first six months of 2015 as a result of litigation-related legal fees in the second quarter and first six months of 2014 that did not recur in 2015.

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Also reducing operating expense was a step up in capitalized software development. In the second quarter of 2015, we capitalized $5.3 million of software development costs related to ongoing enhancements for some of our key platforms as well as an additional $0.3 million for new software development. For the first six months of 2015, we capitalized $11.4 million of software development expense, including $9.5 million for ongoing enhancements of key platforms and an additional $1.9 million for new development of upgraded software platforms. In comparison, we capitalized a total of $4.4 million and $8.5 million of software development expense in the second quarter and first six months of 2014, respectively.

Compensation expense (including salaries, bonus, and other company-sponsored benefits) decreased $1.1 million in the second quarter of 2015 and rose $3.4 million in the first six months of 2015. The decline in the second quarter of 2015 partially reflects the effects of foreign currency translations. While we have recently experienced a slight decrease in our headcount, we continue to see opportunities to invest in our key growth initiatives.

Depreciation, advertising and marketing, rent, and production expense were also higher during the second quarter and first six months of 2015.

Cost of revenue

Cost of revenue is our largest category of operating expense, representing about one-half of our total operating expense. Our business relies heavily on human capital, and cost of revenue includes the compensation expense for employees who produce our products and services. We include compensation expense for approximately 80% of our employees in this category.

Cost of revenue increased $1.7 million in the second quarter of 2015, mainly because of higher salary expense in connection with hires made to support the growth of our business as well as annual merit increases. Production expense, bonus expense, and professional fees also contributed to the increase in this category.

For the first six months of 2015, cost of revenue was up $4.7 million. Higher salary expense of $4.7 million was the primary contributor to the increase as a result of additional hires to support the growth of our business. Annual merit increases also contributed to the increase in salary expense. Higher expense for bonus, bad debt expense, and professional fees also contributed to the change in this category.

Partially offsetting these increases was an increase in capitalized software development, which reduced cost of revenue in both periods. We capitalized $5.6 million of compensation expense associated with software development activities in the second quarter of 2015 and $11.4 million in the first six months of 2015. In comparison, we capitalized $4.4 million of expense in the second quarter of 2014 and $8.5 million in the first six months of 2014.

As a percentage of revenue, cost of revenue decreased by about 1.8 percentage points in the second quarter and 1.1 percentage points in the first six months of 2015.

Sales and marketing

Sales and marketing expense decreased $2.8 million in the second quarter of 2015. Lower sales commission expense of $2.3 million (mainly reflecting the change in sales commission structure discussed above) as well as lower salary expense of $0.8 million were the primary contributors to the decrease. Partly offsetting these decreases was an increase in advertising and marketing expense of $0.7 million.

For the first six months of 2015, sales and marketing expense was down about $5.9 million. Lower sales commission expense of $5.7 million (mainly reflecting of the change in sales commission plan discussed above) and lower salary expense of $1.1 million, as well as lower travel and conference expense of $0.9 million, were the primary contributors to the decrease. Partly offsetting these decreases was an increase in advertising and marketing expense of $1.9 million.

As a percentage of revenue, sales and marketing expense decreased 2.3 percentage points in both the second quarter of 2015 and first six months of the year.

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General and administrative

General and administrative expense decreased $2.6 million in the second quarter of 2015. Legal professional fees decreased $1.7 million as a result of litigation-related legal fees in the second quarter of 2014 that did not recur in the second quarter of 2015. This decrease was partially offset by an increase of $0.8 million in rent and utilities expense, mainly because of new and expanded office space in New York and London.

For the first six months of 2015, general and administrative expense was down $2.6 million. Legal professional fees decreased $3.7 million as a result of litigation-related legal fees in the first six months of 2014 that did not recur in the first six months of 2015. Salary expense as well as travel, training, and conference expense also decreased during the first half of the year. These decreases were partially offset by an increase of $2.2 million in rent and utilities expense, mainly because of new and expanded office space in New York and London.

As a percentage of revenue, general and administrative expense decreased 2.3 percentage points in the second quarter of 2015 and 1.4percentage points in the first six months of 2015.

Depreciation and amortization

Depreciation expense rose $3.0 million in the second quarter, primarily driven by higher capital expenditures for computer software and incremental capitalized software development costs for our operations in the United States. Intangible amortization expense decreased $0.1 million in the second quarter of 2015.

For the first six months of 2015, depreciation expense was up $5.4 million, largely driven by the same factors that contributed to growth in depreciation in the second quarter of 2015. Intangible amortization expense was up $0.2 million, as additional amortization expense for the intangible assets of HelloWallet and ByAllAccounts was largely offset by the completed amortization of intangible assets from some previous acquisitions.

We expect that amortization of intangible assets will be an ongoing cost for the remaining lives of the assets. We estimate that aggregate amortization expense for intangible assets will be approximately $10.8 million for the remainder of 2015 and $17.2 million in 2016. These estimates may be affected by additional acquisitions, dispositions, changes in the estimated average useful lives, and currency translations.

As a percentage of revenue, depreciation and amortization expense increased 1.0 percentage point in the second quarter and first six months of 2015.

Litigation settlement

We recorded a $61.0 million litigation settlement expense in the second quarter of 2014 that did not recur in 2015.

Consolidated Operating Income (Loss)

	Three months ended June 30									Six months ended June 30
(in millions)	2015			2014			Change			2015			2014			Change
Operating income (loss)	$	49.7		$	(24.8	)	300.8	%		$	94.3		$	13.8		585.5	%
% of revenue	24.6		%	(13.1		)%	37.7		pp	24.1		%	3.7		%	20.4		pp

For the second quarter and the first six months of 2014, consolidated operating expense included the $61.0 million litigation settlement expense referenced above, which had a corresponding negative effect on operating income. This did not recur in 2015.

As a result, consolidated operating income increased $74.5 million in the second quarter of 2015, as revenue increased $12.7 million and operating expense decreased $61.8 million. Operating margin was 24.6%, up 37.7 percentage points compared with the second quarter of 2014.

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Consolidated operating income increased $80.5 million in the first six months of 2015 as revenue increased $21.3 million and operating expense decreased $59.2 million. Operating margin was 24.1%, up 20.4 percentage points compared with the first half of 2014.

	Three months ended June 30							Six months ended June 30
(in millions)	2015		2014			Change		2015		2014		Change
Operating income (loss)	$	49.7	$	(24.8	)	300.8	%	$	94.3	$	13.8	585.5	%
Less: litigation settlement	—		61.0			NMF		—		61.0		NMF
Adjusted operating income	$	49.7	$	36.2		37.3	%	$	94.3	$	74.8	26.1	%

Excluding the litigation settlement, we reported adjusted operating income of $36.2 million in the second quarter of 2014 and $74.8 million for the first six months of 2014. Adjusted operating income is a non-GAAP measure; the table above shows a reconciliation to the comparable GAAP measure.

We present adjusted operating income (operating income excluding the litigation settlement) to show the effect of this charge, better reflect period-over-period comparisons, and improve overall understanding of our current and future financial performance.

	Three months ended June 30							Six months ended June 30
	2015		2014		Change			2015		2014		Change
Operating margin	24.6	%	(13.1	)%	37.7		pp	24.1	%	3.7	%	20.4		pp
Less: litigation settlement	—	%	32.2	%	(32.2	)	pp	—	%	16.5	%	(16.5	)	pp
Adjusted operating margin	24.6	%	19.1	%	5.5		pp	24.1	%	20.2	%	3.9		pp

Excluding the litigation settlement, we reported an adjusted operating margin of 19.1% in the second quarter of 2014 and 20.2% for the first six months of 2014. Adjusted operating margin is a non-GAAP measure; the table above shows a reconciliation to the comparable GAAP measure.

We present adjusted operating margin (operating margin excluding the litigation settlement) to show the effect of this charge, better reflect period-over-period comparisons, and improve overall understanding of our current and future financial performance.

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Non-Operating Income, Equity in Net Income of Unconsolidated Entities, and Effective Tax Rate and Income Tax Expense

Non-operating income

	Three months ended June 30						Six months ended June 30
(in millions)	2015			2014			2015			2014
Interest income	$	0.3		$	0.7		$	0.7		$	1.3
Interest expense	(0.2		)	(0.1		)	(0.4		)	(0.1		)
Gain on sale of investments, net	0.5			0.4			0.4			0.3
Holding gain upon acquisition of additional ownership of equity and cost method investments	—			5.2			—			5.2
Other expense, net	—			(0.3		)	(0.4		)	—
Non-operating income, net	$	0.6		$	5.9		$	0.3		$	6.7

Interest income mainly reflects interest from our investment portfolio. Interest expense mainly relates to the outstanding principal balance on the credit facility we established in 2014.

Non-operating income for both the second quarter and first six months of 2014 reflects the $5.2 million gain we recorded in connection with our purchase of the remaining ownership interest in HelloWallet, which was previously a minority investment.

Other expense, net primarily includes foreign currency exchange gains and losses arising from the ordinary course of business related to our operations.

Equity in net income of unconsolidated entities

	Three months ended June 30				Six months ended June 30
(in millions)	2015		2014		2015		2014
Equity in net income of unconsolidated entities	$	0.6	$	0.5	$	1.0	$	1.1

Equity in net income of unconsolidated entities primarily reflects Morningstar Japan K.K. (MJKK).

Effective tax rate and income tax expense

	Three months ended June 30						Six months ended June 30
(in millions)	2015			2014			2015			2014
Income (loss) before income taxes and equity in net income of unconsolidated entities	$	50.3		$	(18.9	)	$	94.6		$	20.5
Equity in net income of unconsolidated entities	0.6			0.5			1.0			1.1
Net income attributable to the noncontrolling interest	—			—			(0.2		)	—
Total	$	50.9		$	(18.4	)	$	95.4		$	21.6
Income tax expense (benefit)	$	18.7		$	(8.6	)	$	33.6		$	5.0
Effective tax rate	36.7		%	46.8		%	35.2		%	23.3		%

Our effective tax rate was 36.7% in the second quarter of 2015 and 35.2% in the first six months of 2015.

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During the second quarter of 2014, we reported a loss before income taxes and equity in net income of unconsolidated entities of $18.9 million, which included litigation settlement expense of $61.0 million that was deductible for tax purposes. In the same period, we realized a $5.2 million non-taxable gain in connection with the purchase of the remaining ownership interest in HelloWallet. Because of these two items, we reported an income tax benefit of $8.6 million, which is equivalent to a 46.8% effective tax rate.

Our effective tax rate for the first six months of 2014 was 23.3%, which is lower than the statutory rate mainly because of the non-taxable gain of $5.2 million recorded in connection with purchasing the remaining ownership interest in HelloWallet.

Liquidity and Capital Resources

We believe our available cash balances and investments, along with cash generated from operations and our line of credit, will be sufficient to meet our operating and cash needs for at least the next 12 months. We invest our cash reserves in cash equivalents and investments. We maintain a conservative investment policy for our investments. We invest a portion of our investments balance (approximately $17.9 million, or 54% of our total investments balance as of June 30, 2015) in proprietary Morningstar portfolios, exchange-traded funds that seek to track the performance of certain Morningstar proprietary indexes, and various mutual funds. These portfolios may consist of stocks, bonds, options, mutual funds, or exchange-traded funds.

Approximately 37% of our cash, cash equivalents, and investments balance as of June 30, 2015 was held by our operations in the United States, up from about 28% as of December 31, 2014. We do not expect to repatriate earnings from our foreign subsidiaries in the foreseeable future. We have not recognized deferred tax liabilities for the portion of the outside basis differences (including unremitted earnings) relating to foreign subsidiaries because the investment in these subsidiaries is considered permanent in duration. It is not practical to quantify the deferred tax liability associated with these outside basis differences.

We intend to use our cash, cash equivalents, and investments for general corporate purposes, including working capital and funding future growth.

As of June 30, 2015, we had cash, cash equivalents, and investments of $258.6 million, an increase of $34.0 million compared with $224.6 million as of December 31, 2014. The increase reflects net income, adjusted for non-cash items, the net effect of changes in our operating assets and liabilities, as well as an additional $15.0 million drawn on our credit facility which was offset by repayments of $10.0 million during the first six months of 2015. These items were partially offset by $27.6 million of capital expenditures, $27.7 million used to repurchase common stock through our share repurchase program, and bonus payments of $47.8 million made during the first quarter of 2015.

Cash provided by operating activities is our main source of cash. In the first six months of 2015, cash provided by operating activities was $110.9 million, driven by $100.9 million of net income, adjusted for non-cash items, partially offset by $10.0 million in changes from our net operating assets and liabilities.

In July 2015, we renewed our $75.0 million single-bank revolving credit facility in the United States, which we intend to use for general corporate purposes. We drew $15.0 million on this facility in the first quarter of 2015 and repaid $10.0 million during the second quarter of 2015. We had an outstanding principal balance of $35.0 million as of June 30, 2015 at an interest rate of LIBOR plus 100 basis points. On July 20, 2015, we repaid the outstanding principal balance of $35.0 million, leaving full availability of the facility.

In the first six months of 2015, we also paid dividends of $16.9 million. In May 2015, our board of directors approved payment of a regular quarterly dividend of 19.0 cents per share payable on July 31, 2015 to shareholders of record as of July 10, 2015.

In December 2013, our board approved a $200.0 million increase to our share repurchase program, bringing the total amount authorized under the program to $700.0 million. 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. In the first six months of 2015, we repurchased a total of 365,770 shares for $27.7 million. As of June 30, 2015, we have repurchased a total of 8.5 million shares for $554.2 million. The company had approximately $145.8 million available for future repurchases as of June 30, 2015.

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We expect to continue making capital expenditures in 2015, primarily for computer hardware and software, internally developed software, and leasehold improvements for new and existing office locations.

Consolidated Free Cash Flow

As described in more detail above, we define free cash flow as cash provided by or used for operating activities less capital expenditures.

	Three months ended June 30								Six months ended June 30
(in millions)	2015			2014			Change		2015			2014			Change
Cash provided by operating activities	$	75.9		$	54.8		38.5	%	$	110.9		$	66.7		66.3	%
Capital expenditures	(13.2		)	(10.0		)	32.0	%	(27.6		)	(30.8		)	(10.4	)%
Free cash flow	$	62.7		$	44.8		40.0	%	$	83.3		$	35.9		132.0	%

We generated free cash flow of $62.7 million in the second quarter of 2015, an increase of $17.9 million compared with free cash flow of $44.8 million in the second quarter of 2014. The change reflects a $21.1 million increase in cash provided by operating activities as well as a $3.2 million increase in capital expenditures.

In the first six months of 2015, we generated free cash flow of $83.3 million, an increase of $47.4 million compared with free cash flow of $35.9 million in the same period of 2014. The increase reflects a $44.2 million increase in cash provided by operating activities as well as a $3.2 million decrease in capital expenditures.

Application of Critical Accounting Policies and Estimates

We discuss our critical accounting policies and estimates in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC on February 27, 2015. We also discuss our significant accounting policies in Note 3 of our Audited Consolidated Financial Statements included in our Annual Report.

Rule 10b5-1 Sales Plans

Our directors and executive officers may exercise stock options or purchase or sell shares of our common stock in the market from time to time. We encourage them to make these transactions through plans that comply with Exchange Act Rule 10b5-1(c). Morningstar will not receive any proceeds, other than proceeds from the exercise of stock options, related to these transactions. The following table, which we are providing on a voluntary basis, shows the Rule 10b5-1 sales plans entered into by our directors and executive officers that were in effect as of July 15, 2015:

Name and Position	Date of Plan	Plan Termination Date	Number of Shares to be Sold under the Plan	Timing of Sales under the Plan	Number of Shares Sold under the Plan through July 15, 2015	Projected Beneficial Ownership (1)
Bevin Desmond Head of Global Markets and Human Resources	5/27/2015	12/31/2015	25,000	Shares to be sold under the plan if the stock reaches specified prices	—	53,735

During the first quarter of 2015, the previously disclosed Rule 10b5-1 sales plan for Don Phillips completed in accordance with its terms.

______________________________

(1) This column reflects an estimate of the number of shares Bevin will beneficially own following the sale of all shares under the Rule 10b5-1 sales plan. This information reflects the beneficial ownership of our common stock on June 30, 2015, and includes shares of our common stock subject to options that were then exercisable or that will have become exercisable by August 29, 2015 and restricted stock units that will vest by August 29, 2015. The estimates do not reflect any changes to beneficial ownership that may have occurred since June 30, 2015. Bevin may amend or terminate her Rule 10b5-1 sales plan and may adopt additional Rule 10b5-1 plans in the future.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our investment portfolio is actively managed and may suffer losses from fluctuating interest rates, market prices, or adverse security selection. We invest our investment portfolio mainly in proprietary Morningstar portfolios and exchange-traded funds that seek to track the performance of certain Morningstar proprietary indexes, and various mutual funds. As of June 30, 2015, our cash, cash equivalents, and investments balance was $258.6 million. Based on our estimates, a 100 basis-point change in interest rates would not have a material effect on the fair value of our investment portfolio.

We are subject to risk from fluctuations in foreign currencies from our operations outside of the United States. To date, we have not engaged in currency hedging, and we do not currently have any positions in derivative instruments to hedge our currency risk.

The table below shows our exposure to foreign currency denominated revenue and operating income for the six months ended June 30, 2015:

	Six months ended June 30, 2015
(in millions, except foreign currency rates)	Euro			British Pound			Australian Dollar			Other Foreign Currencies
Foreign currency rate in U.S. dollars as of June 30, 2015	1.1097			1.5720			0.7658			—
Foreign currency denominated percentage of revenue	4.7		%	8.0		%	3.9		%	8.6		%
Foreign currency denominated percentage of operating income (loss)	7.1		%	0.2		%	3.4		%	(6.3		)%
Estimated effect of a 10% adverse currency fluctuation on revenue	$	(0.9	)	$	(1.2	)	$	(0.9	)	$	(1.8	)
Estimated effect of a 10% adverse currency fluctuation on operating income (loss)	$	(0.3	)	$	—		$	(0.2	)	$	0.3

The table below shows our exposure to net investment in foreign currencies as of June 30, 2015:

	As of June 30, 2015
(in millions)	Euro			British Pound			Australian Dollar			Other Foreign Currencies
Assets, net of unconsolidated entities	$	76.1		$	137.5		$	70.3		$	130.9
Liabilities	30.1			44.8			50.4			45.5
Net currency position	$	46.0		$	92.7		$	19.9		$	85.4
Estimated effect of a 10% adverse currency fluctuation on equity	$	(5.0	)	$	(9.3	)	$	(2.0	)	$	(8.5	)

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Item 4. Controls and Procedures

(a) Evaluation and Disclosure Controls and Procedures

Disclosure controls and procedures are designed to reasonably assure that information required to be disclosed in the reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to reasonably assure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including the chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of June 30, 2015. Based on that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported as and when required and is accumulated and communicated to management, including the chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART 2. OTHER INFORMATION

Item 1. Legal Proceedings

We incorporate by reference the information regarding legal proceedings set forth in Note 10, Contingencies, of the Notes to our Unaudited Condensed Consolidated Financial Statements contained in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in Item 1A—Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2014.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities*

The following table presents information related to repurchases of common stock we made during the three months ended June 30, 2015:

Period:	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced programs (1)	Approximate dollar value of shares that may yet be purchased under the programs (1)
Cumulative through March 31, 2015	8,174,036	$	64.68	8,174,036	$	171,136,960
April 1, 2015 - April 30, 2015	103,645	74.78		103,645	$	163,383,850
May 1, 2015 - May 31, 2015	228,298	76.26		228,298	$	145,968,961
June 1, 2015 - June 30, 2015	1,801	77.26		1,801	$	145,829,777
Total	8,507,780	$	65.12	8,507,780

_________________________________________________

* Subject to applicable law, we may repurchase shares at prevailing market prices directly on the open market or in privately negotiated transactions in amounts that we deem appropriate.

(1) We have an ongoing authorization, originally approved by our board of directors in September 2010, and subsequently amended, to repurchase up to $700.0 million in shares of our outstanding common stock. The authorization expires on December 31, 2015.

Item 6. Exhibits

Incorporated by reference to Exhibit Index included herewith.

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SIGNATURE

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 thereunto duly authorized.

			MORNINGSTAR, INC.
Date: July 30, 2015	By:	/s/ Stéphane Biehler
			Stéphane Biehler
			Chief Financial Officer

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EXHIBIT INDEX

Exhibit No	Description of Exhibit
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following financial information from Morningstar Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, filed with the SEC on July 30, 2015 formatted in XBRL: (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Statements of Comprehensive Income (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statement of Equity, (v) Condensed Consolidated Statements of Cash Flows and (vi) the Notes to Unaudited Condensed Consolidated Financial Statements

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EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Joe Mansueto, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Morningstar, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 30, 2015	/s/ Joe Mansueto
	Joe Mansueto
	Chairman of the Board and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Stéphane Biehler, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Morningstar, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 30, 2015	/s/ Stéphane Biehler
	Stéphane Biehler
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

Joe Mansueto, as Chairman of the Board and Chief Executive Officer of Morningstar, Inc. (the Company), certifies, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Joe Mansueto

Joe Mansueto

Chairman of the Board and Chief Executive Officer

Date: July 30, 2015

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

Stéphane Biehler, as Chief Financial Officer of Morningstar, Inc. (the Company), certifies, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Stéphane Biehler

Stéphane Biehler

Chief Financial Officer

Date: July 30, 2015

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Investments and Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Fair Value Disclosures [Abstract]
Certificate of deposit held as collateral against Australia office lease	$ 1.5	$ 1.5

XML

Segment and Geographical Area Information (External Revenue and Long-Lived Assets) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Revenues from External Customers and Long-Lived Assets [Line Items]
External revenue	$ 202.1	$ 189.4	$ 391.9	$ 370.6
Long-lived assets	122.6		122.6		$ 117.6
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
External revenue	151.2	136.5	292.1	266.4
Long-lived assets	104.2		104.2		98.1
Total International
Revenues from External Customers and Long-Lived Assets [Line Items]
External revenue	50.9	52.9	99.8	104.2
Long-lived assets	18.4		18.4		19.5
United Kingdom
Revenues from External Customers and Long-Lived Assets [Line Items]
External revenue	16.0	15.6	30.8	31.0
Long-lived assets	8.4		8.4		8.1
Continental Europe
Revenues from External Customers and Long-Lived Assets [Line Items]
External revenue	14.4	15.9	28.7	31.5
Long-lived assets	2.0		2.0		2.1
Australia
Revenues from External Customers and Long-Lived Assets [Line Items]
External revenue	8.0	9.2	15.7	17.4
Long-lived assets	1.0		1.0		0.8
Canada
Revenues from External Customers and Long-Lived Assets [Line Items]
External revenue	7.1	7.5	14.0	15.2
Long-lived assets	0.7		0.7		0.9
Asia
Revenues from External Customers and Long-Lived Assets [Line Items]
External revenue	4.4	3.9	8.8	7.6
Long-lived assets	6.2		6.2		7.5
Other
Revenues from External Customers and Long-Lived Assets [Line Items]
External revenue	1.0	$ 0.8	1.8	$ 1.5
Long-lived assets	$ 0.1		$ 0.1		$ 0.1

XML

Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule Of Compensation Cost By Expense Category

The following table summarizes the stock-based compensation expense included in each of our operating expense categories:

	Three months ended June 30				Six months ended June 30
(in millions)	2015		2014		2015		2014
Cost of revenue	$	2.1	$	2.0	$	4.1	$	3.7
Sales and marketing	0.6		0.5		1.1		1.0
General and administrative	1.9		1.9		3.7		3.6
Total stock-based compensation expense	$	4.6	$	4.4	$	8.9	$	8.3

Schedule of Unrecognized Stock-Based Compensation Expense

The following table summarizes the amount of unrecognized stock-based compensation expense as of June 30, 2015 and the expected number of months over which the expense will be recognized:

	Unrecognized stock-based compensation expense (in millions)		Expected amortization period (months)
Restricted stock units	$	39.3	35
Performance share awards	3.8		29
Total unrecognized stock-based compensation expense	$	43.1	34

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Income Taxes (Income Tax Reconciliation and Unrecognized Tax Benefits) (Details) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Effective Income Tax Rate Reconciliation, Amount [Abstract]
Income before income taxes and equity in net income of unconsolidated entities	$ 50.3	$ (18.9)	$ 94.6	$ 20.5
Equity in net income of unconsolidated entities	0.6	0.5	1.0	1.1
Net (income) loss attributable to the noncontrolling interest	0.0	0.0	(0.2)	0.0
Total	50.9	(18.4)	95.4	21.6
Income tax expense (benefit)	$ 18.7	$ (8.6)	$ 33.6	$ 5.0
Effective income tax rate	0.00%	46.80%	0.00%	0.00%
Effective income tax rate reconciliation, change in percentage points compared with prior year period	(10.1)
Litigation settlement expense included in loss before income taxes		$ 61.0
Non-taxable gain realized in connection with the purchase of remaining equity interest		$ 5.2
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued [Abstract]
Current liabilities	$ 5.9		$ 5.9		$ 5.1
Non-current liabilities	5.1		5.1		6.6
Total liability for unrecognized tax benefits	$ 11.0		$ 11.0		$ 11.7
Geographic Concentration Risk [Member] | Cash, Cash Equivalents and Investments [Member] | Non-U.S. [Member]
Concentration Risk [Line Items]
Percentage of cash, cash equivalents and investments held by operations outside of US			63.00%

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Investments and Fair Value Measurements (Unrealized Gains on Trading Securities) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Fair Value Disclosures [Abstract]
Unrealized gains (losses), net	$ 0.2	$ (0.2)	$ 0.3	$ (0.2)

XML

Basis of Presentation of Interim Financial Information

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation of Interim Financial Information

Basis of Presentation of Interim Financial Information

The accompanying condensed consolidated financial statements of Morningstar, Inc. and subsidiaries (Morningstar, we, our, the company) have been prepared to conform to the rules and regulations of the Securities and Exchange Commission (SEC). The preparation of financial statements in conformity with accounting principles generally accepted in the United States (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue, and expenses. Actual results could differ from those estimates. In the opinion of management, the statements reflect all adjustments, which are of a normal recurring nature, necessary to present fairly our financial position, results of operations, equity, and cash flows. These financial statements and notes are unaudited and should be read in conjunction with our Audited Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on February 27, 2015.

The acronyms that appear in the Notes to our Unaudited Condensed Consolidated Financial Statements refer to the following:

ASC: Accounting Standards Codification

ASU: Accounting Standards Update

FASB: Financial Accounting Standards Board

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Income Taxes (Income Tax Contingency) (Details) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Income Tax Disclosure [Abstract]
Gross unrecognized tax benefits	$ 13.4	$ 11.9
Gross unrecognized tax benefits which would affect income tax expense	11.3	11.9
Decrease in income tax expense upon recognition of gross unrecognized tax benefits	$ 10.0	$ 10.6

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Acquisitions, Goodwill and Other Intangible Assets (Schedule of Intangible Assets) (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Gross	$ 261.0	$ 263.9
Accumulated Amortization	(177.5)	(168.0)
Intangible assets, Net	$ 83.5	$ 95.9
Weighted-Average Useful Life (years)	10 years	10 years
Intellectual Property [Member]
Finite-Lived Intangible Assets [Line Items]
Gross	$ 28.6	$ 29.0
Accumulated Amortization	(25.9)	(25.0)
Intangible assets, Net	$ 2.7	$ 4.0
Weighted-Average Useful Life (years)	9 years	9 years
Customer Related Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Gross	$ 139.4	$ 141.5
Accumulated Amortization	(88.2)	(83.6)
Intangible assets, Net	$ 51.2	$ 57.9
Weighted-Average Useful Life (years)	12 years	12 years
Supplier Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross	$ 0.2	$ 0.2
Accumulated Amortization	(0.1)	(0.1)
Intangible assets, Net	$ 0.1	$ 0.1
Weighted-Average Useful Life (years)	20 years	20 years
Technology-Based Assets [Member]
Finite-Lived Intangible Assets [Line Items]
Gross	$ 88.5	$ 88.8
Accumulated Amortization	(61.2)	(57.4)
Intangible assets, Net	$ 27.3	$ 31.4
Weighted-Average Useful Life (years)	8 years	8 years
Non-competition Agreement [Member]
Finite-Lived Intangible Assets [Line Items]
Gross	$ 4.3	$ 4.4
Accumulated Amortization	(2.1)	(1.9)
Intangible assets, Net	$ 2.2	$ 2.5
Weighted-Average Useful Life (years)	5 years	5 years

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Acquisitions, Goodwill and Other Intangible Assets (Schedule of Goodwill) (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill, Impairment Loss	$ 0.0	$ 0.0
Goodwill [Roll Forward]
Goodwill, Beginning Balance	370.1
Foreign currency translation	(5.9)
Goodwill, Ending Balance	$ 364.2

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Share Repurchase Program (Details) - Jun. 30, 2015 - USD ($)	Total
Equity [Abstract]
Share repurchase program, authorized amount	$ 700,000,000
Shares repurchased, program life to date, shares	8,507,780
Shares repurchased, program life to date, value	$ 554,200,000
Stock Repurchase Program, Remaining Authorized Repurchase Amount	$ 145,800,000

XML

Acquisitions, Goodwill and Other Intangible Assets (Amortization Expense) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 5.4	$ 5.5	$ 10.9	$ 10.6
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
2015	10.8		10.8
2016	17.2		17.2
2017	12.8		12.8
2018	10.6		10.6
2019	7.9		7.9
Thereafter	$ 24.2		$ 24.2

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Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	58	281	48	24
Earnings Per Share, Basic [Abstract]
Net income attributable to Morningstar, Inc.	$ 32.2	$ (9.8)	$ 61.8	$ 16.6
Less: Distributed Earnings Available to Participating Securities	0.0	0.0	0.0	0.0
Undistributed Earnings (Loss) Allocated to Participating Securities, Basic	0.0	0.0	0.0	0.0
Numerator for basic net income per share - undistributed and distributed earnings available to common shareholders	$ 32.2	$ (9.8)	$ 61.8	$ 16.6
Weighted average common shares outstanding	44,300	44,800	44,300	44,800
Basic net income per share attributable to Morningstar, Inc.	$ 0.73	$ (0.22)	$ 1.39	$ 0.37
Earnings Per Share, Diluted [Abstract]
Numerator for basic net income per share - undistributed and distributed earnings available to common shareholders	$ 32.2	$ (9.8)	$ 61.8	$ 16.6
Add: Undistributed Earnings Allocated To Participating Securities	0.0	0.0	0.0	0.0
Less: Undistributed Earnings Reallocated to Participating Securities	0.0	0.0	0.0	0.0
Numerator for diluted net income per share - undistributed and distributed earnings available to common shareholders	$ 32.2	$ (9.8)	$ 61.8	$ 16.6
Weighted average common shares outstanding	44,300	44,800	44,300	44,800
Net effect of dilutive stock options and restricted stock units	100	0	100	200
Weighted average common shares outstanding for computing diluted income per share	44,400	44,800	44,400	45,000
Diluted net income per share attributable to Morningstar, Inc.	$ 0.72	$ (0.22)	$ 1.39	$ 0.37
Stock Options [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	0	160	0	0
Restricted Stock Units (RSUs) [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	43	108	42	18
Performance Shares [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	15	10	6	0
Restricted Stock [Member]
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	0	3	0	6

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Operating activities
Consolidated net income (loss)	$ 62.0	$ 16.6
Adjustments to reconcile consolidated net income to net cash flows from operating activities:
Depreciation and amortization	31.4	25.8
Deferred income taxes	1.3	(2.6)
Stock-based compensation expense	8.9	8.3
Provision for (recoveries of) bad debts	0.4	(0.3)
Equity in net income of unconsolidated entities	(1.0)	(1.1)
Excess tax benefits from stock-option exercises and vesting of restricted stock units	(2.1)	(1.9)
Holding gain upon acquisition of additional ownership of equity and cost method investments	0.0	5.2
Other, net	0.0	(0.8)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	(8.8)	(19.3)
Other assets	0.0	0.2
Accounts payable and accrued liabilities	2.0	61.2
Accrued compensation	(18.1)	(8.7)
Income taxes- current	15.7	(12.2)
Deferred revenue	19.1	8.8
Deferred rent	0.1	(1.0)
Other liabilities	0.0	(1.1)
Cash provided by operating activities	110.9	66.7
Investing activities
Purchases of investments	(14.0)	(7.7)
Proceeds from maturities and sales of investments	20.5	95.5
Capital expenditures	(27.6)	(30.8)
Acquisitions, net of cash acquired	0.0	64.4
Other, net	(5.1)	0.2
Cash used for investing activities	(26.2)	(7.2)
Financing activities
Common shares repurchased	(27.7)	(36.7)
Dividends paid	(16.9)	(15.3)
Proceeds from short-term debt	15.0	0.0
Repayment of short-term debt	(10.0)	0.0
Proceeds from stock-option exercises, net	3.2	2.1
Employee taxes withheld for restricted stock units	4.9	5.0
Excess tax benefits from stock-option exercises and vesting of restricted stock units	2.1	1.9
Other, net	0.1	0.0
Cash used for financing activities	(39.1)	(53.0)
Effect of exchange rate changes on cash and cash equivalents	(5.2)	1.6
Net increase (decrease) in cash and cash equivalents	40.4	8.1
Cash and cash equivalents-beginning of period	185.2	168.2
Cash and cash equivalents-end of period	225.6	176.3
Supplemental disclosure of cash flow information:
Cash paid for income taxes	14.5	19.9
Supplemental information of non-cash investing and financing activities:
Unrealized gain on available-for-sale investments	0.3	0.3
Equipment obtained under long-term financing arrangement	$ 1.3	$ 0.0

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Segment and Geographical Area Information (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Segment Reporting Information, Operating Income (Loss) [Abstract]
External revenue	$ 202.1	$ 189.4	$ 391.9	$ 370.6
U.S. [Member]
Segment Reporting Information, Operating Income (Loss) [Abstract]
External revenue	151.2	136.5	292.1	266.4
Non-U.S. [Member]
Segment Reporting Information, Operating Income (Loss) [Abstract]
External revenue	$ 50.9	$ 52.9	$ 99.8	$ 104.2

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Stock-Based Compensation (Allocation of Stock-Based Compensation Costs by Plan) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense	$ 4.6	$ 4.4	$ 8.9	$ 8.3
Cost of Revenue [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense	2.1	2.0	4.1	3.7
Selling and Marketing Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense	0.6	0.5	1.1	1.0
General and Administrative Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense	$ 1.9	$ 1.9	$ 3.7	$ 3.6

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Condensed Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenue	$ 202.1	$ 189.4	$ 391.9	$ 370.6
Operating expense:
Cost of revenue	83.2	81.5	161.8	157.1
Sales and marketing	25.1	27.9	50.5	56.4
General and administrative	27.8	30.4	53.9	56.5
Depreciation and amortization	16.3	13.4	31.4	25.8
Litigation settlement	0.0	(61.0)	0.0	(61.0)
Total operating expense	152.4	214.2	297.6	356.8
Operating income (loss)	49.7	(24.8)	94.3	13.8
Non-operating income (expense):
Interest income (expense), net	0.1	0.6	0.3	1.2
Gain on sale of investments, reclassified from other comprehensive income	0.5	0.4	0.4	0.3
Holding gain upon acquisition of additional ownership of equity and cost method investments	0.0	5.2	0.0	5.2
Other expense, net	0.0	(0.3)	(0.4)	0.0
Non-operating income (expense), net	0.6	5.9	0.3	6.7
Income (loss) before income taxes and equity in net income of unconsolidated entities	50.3	(18.9)	94.6	20.5
Equity in net income of unconsolidated entities	0.6	0.5	1.0	1.1
Income tax expense (benefit)	18.7	(8.6)	33.6	5.0
Consolidated net income (loss)	32.2	(9.8)	62.0	16.6
Net (income) loss attributable to the noncontrolling interest	0.0	0.0	(0.2)	0.0
Net income (loss) attributable to Morningstar, Inc.	$ 32.2	$ (9.8)	$ 61.8	$ 16.6
Net income (loss) per share attributable to:
Basic (in dollars per share)	$ 0.73	$ (0.22)	$ 1.39	$ 0.37
Diluted (in dollars per share)	0.72	(0.22)	1.39	0.37
Dividends declared per common share	0.19	0.17	0.38	0.34
Dividends paid per common share	$ 0.19	$ 0.17	$ 0.38	$ 0.34
Weighted average shares outstanding:
Basic (in shares)	44.3	44.8	44.3	44.8
Diluted (in shares)	44.4	44.8	44.4	45.0

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Condensed Consolidated Statement of Equity - 6 months ended Jun. 30, 2015 - USD ($) $ in Millions	Total	Common Stock	Treasury Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Non Controlling Interests
Balance at Dec. 31, 2014	$ 654.4	$ 0.0	$ (524.3)	$ 561.1	$ 641.5	$ (24.8)	$ 0.9
Balance (in shares) at Dec. 31, 2014	44,345,763	44,345,763
Increase (Decrease) in Stockholders' Equity
Net income	$ 62.0				61.8		0.2
Other comprehensive loss:
Unrealized loss on available-for-sale investments, net of income tax of $0.3	(0.5)					(0.5)	0.0
Reclassification of adjustments for losses included in net income, net of income tax of $0.2	0.3					0.3	0.0
Foreign currency translation adjustment, net	(11.0)					(11.0)	0.0
Other comprehensive income (loss)	(11.2)					(11.2)	0.0
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net	(1.7)	$ 0.0	1.4	(3.1)
Issuance of common stock related to stock-option exercises and vesting of restricted stock units, net (in shares)		267,066
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition
Stock-based compensation - restricted stock units	8.9
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition				8.9
Excess tax benefit derived from stock-option exercises and vesting of restricted stock units	2.1			2.1
Common share repurchased	(27.7)		(27.7)
Common share repurchased (in shares)		(365,770)
Dividends declared - common shares outstanding	(16.9)				(16.9)
Balance at Jun. 30, 2015	$ 669.9	$ 0.0	$ (550.6)	$ 569.0	$ 686.4	$ (36.0)	$ 1.1
Balance (in shares) at Jun. 30, 2015	44,247,059	44,247,059

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Investments and Fair Value Measurements (Gains (Losses) on Investments) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Available-for-sale:
Available-for-sale securities, Cost	$ 8.6		$ 8.6		$ 12.6
Available-for-sale Securities, Unrealized Gain	0.5		0.5		1.0
Available-for-sale Securities, Unrealized Loss	(0.3)		(0.3)		(0.4)
Available-for-sale securities, Fair Value	8.8		8.8		13.2
Held-to-maturity:
Held-to-maturity securities, Cost	15.1		15.1		17.9
Held-to-maturity Securities, Unrecognized Gain	0.0		0.0		0.0
Held-to-maturity Securities, Unrecognized Loss	0.0		0.0		0.0
Held-to-maturity	15.1		15.1		17.9
Available-for-sale Securities, Gross Realized Gain (Loss) [Abstract]
Available-for-sale securities, realized gains	0.7	$ 0.4	0.9	$ 0.6
Available-for-sale securities, realized losses	(0.2)	0.0	(0.5)	(0.3)
Available-for-sale securities, realized gains (losses), net	0.5	$ 0.4	0.4	$ 0.3
Equity Securities and Exchange-traded Funds [Member]
Available-for-sale:
Available-for-sale securities, Cost	7.4		7.4		11.4
Available-for-sale Securities, Unrealized Gain	0.3		0.3		0.8
Available-for-sale Securities, Unrealized Loss	(0.2)		(0.2)		(0.3)
Available-for-sale securities, Fair Value	7.5		7.5		11.9
Mutual Funds [Member]
Available-for-sale:
Available-for-sale securities, Cost	1.2		1.2		1.2
Available-for-sale Securities, Unrealized Gain	0.2		0.2		0.2
Available-for-sale Securities, Unrealized Loss	(0.1)		(0.1)		(0.1)
Available-for-sale securities, Fair Value	$ 1.3		$ 1.3		$ 1.3

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Income Per Share (Tables)

6 Months Ended

Jun. 30, 2015

Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block]

The following table shows the number of restricted stock units and performance share awards excluded from our calculation of diluted earnings per share because their inclusion would have been anti-dilutive:

	Three months ended June 30		Six months ended June 30
(in thousands)	2015	2014	2015	2014
Weighted average stock options	—	160	—	—
Weighted average restricted stock units	43	108	42	18
Weighted average performance share awards	15	10	6	—
Weighted average restricted stock	—	3	—	6
Total	58	281	48	24

Stock options and restricted stock could be included in the calculation in the future.

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:

	Three months ended June 30					Six months ended June 30
(in millions, except per share amounts)	2015		2014			2015		2014
Basic net income (loss) per share attributable to Morningstar, Inc.:
Net income (loss) attributable to Morningstar, Inc.:	$	32.2	$	(9.8	)	$	61.8	$	16.6
Less: Distributed earnings available to participating securities	—		—			—		—
Less: Undistributed earnings available to participating securities	—		—			—		—
Numerator for basic net income (loss) per share — undistributed and distributed earnings available to common shareholders	$	32.2	$	(9.8	)	$	61.8	$	16.6
Weighted average common shares outstanding	44.3		44.8			44.3		44.8
Basic net income (loss) per share attributable to Morningstar, Inc.	$	0.73	$	(0.22	)	$	1.39	$	0.37
Diluted net income (loss) per share attributable to Morningstar, Inc.:
Numerator for basic net income (loss) per share — undistributed and distributed earnings available to common shareholders	$	32.2	$	(9.8	)	$	61.8	$	16.6
Add: Undistributed earnings allocated to participating securities	—		—			—		—
Less: Undistributed earnings reallocated to participating securities	—		—			—		—
Numerator for diluted net income (loss) per share — undistributed and distributed earnings available to common shareholders	$	32.2	$	(9.8	)	$	61.8	$	16.6
Weighted average common shares outstanding	44.3		44.8			44.3		44.8
Net effect of dilutive stock options, restricted stock units, and performance share awards	0.1		—			0.1		0.2
Weighted average common shares outstanding for computing diluted income per share	44.4		44.8			44.4		45.0
Diluted net income (loss) per share attributable to Morningstar, Inc.	$	0.72	$	(0.22	)	$	1.39	$	0.37

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Investments and Fair Value Measurements (Cost and Fair Value of Investments Classified by Maturity) (Details) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Available-for-sale Securities, Debt Maturities [Abstract]
Available-for-sale securities, Equity securities, exchange-traded funds, and mutual funds, Cost	$ 8.6	$ 12.6
Available-for-sale securities, Equity securities, exchange-traded funds, and mutual funds, Fair Value	8.8	13.2
Available-for-sale securities, Cost	8.6	12.6
Available-for-sale securities, Fair Value	8.8	13.2
Held-to-maturity Securities, Debt Maturities [Abstract]
Held-to-maturity securities, Due in one year or less, Cost	15.1	17.9
Held-to-maturity securities, Due within one year or less, Fair Value	15.1	17.9
Held-to-maturity securities, Cost	15.1	17.9
Held-to-maturity securities, Fair Value	15.1	17.9
Certificate of deposit held as collateral against Australia office lease	$ 1.5	$ 1.5

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Investments and Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Schedule of Investments

We classify our investment portfolio as shown below:

	As of June 30		As of December 31
(in millions)	2015		2014
Available-for-sale	$	8.8	$	13.2
Held-to-maturity	15.1		17.9
Trading securities	9.1		8.3
Total	$	33.0	$	39.4

Unrealized Gain (Loss) on Investments

The following table shows the cost, unrealized gains (losses), and fair value of investments classified as available-for-sale and held-to-maturity:

	As of June 30, 2015									As of December 31, 2014
(in millions)	Cost		Unrealized Gain		Unrealized Loss			Fair Value		Cost		Unrealized Gain		Unrealized Loss			Fair Value
Available-for-sale:
Equity securities and exchange-traded funds	$	7.4	$	0.3	$	(0.2	)	$	7.5	$	11.4	$	0.8	$	(0.3	)	$	11.9
Mutual funds	1.2		0.2		(0.1		)	1.3		1.2		0.2		(0.1		)	1.3
Total	$	8.6	$	0.5	$	(0.3	)	$	8.8	$	12.6	$	1.0	$	(0.4	)	$	13.2
Held-to-maturity:
Certificates of deposit	$	15.1	$	—	$	—		$	15.1	$	17.9	$	—	$	—		$	17.9

Investments Classified by Contractual Maturity Date

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 June 30, 2015				As of December 31, 2014
(in millions)	Cost		Fair Value		Cost		Fair Value
Available-for-sale:
Equity securities, exchange-traded funds, and mutual funds	$	8.6	$	8.8	$	12.6	$	13.2
Total	$	8.6	$	8.8	$	12.6	$	13.2
Held-to-maturity:
Due in one year or less	$	15.1	$	15.1	$	17.9	$	17.9
Total	$	15.1	$	15.1	$	17.9	$	17.9

Schedule of Realized Gain (Loss) on Available-For-Sale Securities

The following table shows the realized gains and losses arising from sales of our investments classified as available-for-sale recorded in our Condensed Consolidated Statements of Operations: 

	Three months ended June 30					Six months ended June 30
(in millions)	2015			2014		2015			2014
Realized gains	$	0.7		$	0.4	$	0.9		$	0.6
Realized losses	(0.2		)	—		(0.5		)	(0.3		)
Realized gains, net	$	0.5		$	0.4	$	0.4		$	0.3

Unrealized Gain (Loss) On Trading Securities

The following table shows the net unrealized gains on trading securities as recorded in our Condensed Consolidated Statements of Operations:

	Three months ended June 30					Six months ended June 30
(in millions)	2015		2014			2015		2014
Unrealized gains (losses), net	$	0.2	$	(0.2	)	$	0.3	$	(0.2	)

Fair Value, Assets Measured on Recurring Basis

The table below shows the fair value of our assets subject to fair value measurements that are measured at fair value on a recurring basis using the fair value hierarchy and the necessary disclosures under FASB ASC 820, Fair Value Measurement:

	Fair Value		Fair Value Measurements as of June 30, 2015
	as of		Using Fair Value Hierarchy
(in millions)	June 30, 2015		Level 1		Level 2		Level 3
Available-for-sale investments:
Equity securities and exchange-traded funds	$	7.5	$	7.5	$	—	$	—
Mutual funds	1.3		1.3		—		—
Trading securities	9.1		9.1		—		—
Cash equivalents	0.5		0.5		—		—
Total	$	18.4	$	18.4	$	—	$	—

	Fair Value		Fair Value Measurements as of December 31, 2014
	as of		Using Fair Value Hierarchy
(in millions)	December 31, 2014		Level 1		Level 2		Level 3
Available-for-sale investments:
Equity securities and exchange-traded funds	$	11.9	$	11.9	$	—	$	—
Mutual funds	1.3		1.3		—		—
Trading securities	8.3		8.3		—		—
Cash equivalents	0.5		0.5		—		—
Total	$	22.0	$	22.0	$	—	$	—

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Condensed Consolidated Statement of Equity (Parenthetical) $ in Millions	6 Months Ended
	Jun. 30, 2015 USD ($)
Statement of Stockholders' Equity [Abstract]
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Tax	$ 0.3
Other Comprehensive Income (Loss), Reclassification Adjustment for Sale of Securities Included in Net Income, Tax	$ 0.2

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Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Consolidated net income (loss)	$ 32.2	$ (9.8)	$ 62.0	$ 16.6
Other comprehensive income (loss):
Foreign currency translation adjustment	8.8	2.9	(11.0)	5.3
Unrealized gains (losses) on securities, net of tax:
Unrealized holding gains (losses) arising during period	(0.6)	0.3	(0.5)	0.4
Reclassification (gains) losses included in net income	0.3	(0.3)	0.3	(0.2)
Other comprehensive income (loss)	8.5	2.9	(11.2)	5.5
Comprehensive income (loss)	40.7	(6.9)	50.8	22.1
Comprehensive income attributable to noncontrolling interest	0.0		(0.2)	0.0
Comprehensive income (loss) attributable to Morningstar, Inc.	$ 40.7	$ (6.9)	$ 50.6	$ 22.1

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Income Taxes

6 Months Ended

Jun. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Effective Tax Rate

The following table shows our effective tax rate for the three and six months ended June 30, 2015 and June 30, 2014:

	Three months ended June 30						Six months ended June 30
(in millions)	2015			2014			2015			2014
Income (loss) before income taxes and equity in net income of unconsolidated entities	$	50.3		$	(18.9	)	$	94.6		$	20.5
Equity in net income of unconsolidated entities	0.6			0.5			1.0			1.1
Net (income) loss attributable to the noncontrolling interest	—			—			(0.2		)	—
Total	$	50.9		$	(18.4	)	$	95.4		$	21.6
Income tax expense (benefit)	$	18.7		$	(8.6	)	$	33.6		$	5.0
Effective tax rate	36.7		%	46.8		%	35.2		%	23.3		%

Our effective tax rate in the second quarter of 2015 was 36.7%, a decrease of 10.1 percentage points compared with 46.8% in the prior-year period. During the second quarter of 2014, we reported a loss before income taxes and equity in net income of unconsolidated entities of $18.9 million, which included a litigation settlement expense of $61.0 million that is deductible for tax purposes. In the same period, we realized a $5.2 million non-taxable gain in connection with the purchase of the remaining ownership interest in HelloWallet. Because of these two items, we reported an income tax benefit of $8.6 million, which is equivalent to a 46.8% effective tax rate, in the second quarter of 2014.

Our effective tax rate for the first six months of 2015 was 35.2%.

Unrecognized Tax Benefits

The table below provides information concerning our gross unrecognized tax benefits as of June 30, 2015 and December 31, 2014, as well as the effect these gross unrecognized tax benefits would have on our income tax expense, if they were recognized.

	As of June 30		As of December 31
(in millions)	2015		2014
Gross unrecognized tax benefits	$	13.4	$	11.9
Gross unrecognized tax benefits that would affect income tax expense	$	11.3	$	11.9
Decrease in income tax expense upon recognition of gross unrecognized tax benefits	$	10.0	$	10.6

Our Condensed Consolidated Balance Sheets include the following liabilities for unrecognized tax benefits. These amounts include interest and penalties, less any associated tax benefits.

	As of June 30		As of December 31
Liabilities for Unrecognized Tax Benefits (in millions)	2015		2014
Current liability	$	5.9	$	5.1
Non-current liability	5.1		6.6
Total liability for unrecognized tax benefits	$	11.0	$	11.7

We conduct business globally and, as a result, we file income tax returns in U.S. federal, state, local, and foreign jurisdictions. We are currently under audit by federal and various state and local tax authorities in the United States, as well as tax authorities in certain non-U.S. jurisdictions. It is possible, though not likely, that the examination phase of some of these audits will conclude in 2015. It is not possible to estimate the effect of current audits on previously recorded unrecognized tax benefits.

We have not provided federal and state income taxes on accumulated undistributed earnings of certain foreign subsidiaries because these earnings have been permanently reinvested. Approximately 63% of our cash, cash equivalents, and investments balance as of June 30, 2015 was held by our operations outside of the United States. We believe that our cash balances and investments in the United States, along with cash generated from our U.S. operations, will be sufficient to meet our U.S. operating and cash needs for the foreseeable future, without requiring us to repatriate earnings from these foreign subsidiaries. It is not practical to determine the amount of the unrecognized deferred tax liability related to the undistributed earnings.

Certain of our non-U.S. operations have incurred net operating losses (NOLs) which may become deductible to the extent these operations become profitable. For each of our operations, we evaluate whether it is more likely than not that the tax benefits related to NOLs will be realized. As part of this evaluation, we consider evidence such as tax planning strategies, historical operating results, forecasted taxable income, and recent financial performance. In the year that certain non-U.S. operations record a loss, we do not recognize a corresponding tax benefit, thus increasing our effective tax rate. Upon determining that it is more likely than not that the NOLs will be realized, we reduce the tax valuation allowances related to these NOLs, which results in a reduction to our income tax expense and our effective tax rate in the period.

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 24, 2015
Document and Entity Information Abstract
Entity Registrant Name	MORNINGSTAR, INC.
Entity Central Index Key	0001289419
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		44,247,059

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Contingencies

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Contingencies

Contingencies

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 the result of any of these matters will have a material adverse effect on our business, operating results, or financial position.

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Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 225.6	$ 185.2
Investments	33.0	39.4
Accounts receivable, less allowance of $1.9 and $1.5, respectively	143.9	136.7
Deferred tax asset, net	10.5	9.0
Income tax receivable, net	0.0	6.9
Other	22.4	22.6
Total current assets	435.4	399.8
Property, equipment, and capitalized software, net	122.6	117.6
Investments in unconsolidated entities	34.9	28.8
Goodwill	364.2	370.1
Intangible assets, net	83.5	95.9
Other assets	7.0	7.1
Total assets	1,047.6	1,019.3
Current liabilities:
Accounts payable and accrued liabilities	36.0	34.3
Accrued compensation	58.9	80.5
Deferred revenue	163.1	146.0
Short-term debt	35.0	30.0
Income tax payable	8.4	0.0
Other	3.6	3.0
Total current liabilities	305.0	293.8
Accrued compensation	8.2	7.9
Deferred tax liability, net	28.7	26.0
Deferred rent	26.3	26.4
Other long-term liabilities	9.5	10.8
Total liabilities	377.7	364.9
Morningstar, Inc. shareholders' equity:
Common stock, no par value, 200,000,000 shares authorized, of which 44,247,059 and 44,345,763 shares were outstanding as of June 30, 2015 and December 31, 2014, respectively	0.0	0.0
Treasury stock at cost, 8,605,118 shares as of June 30, 2015 and 8,257,214 shares as of December 31, 2014	(550.6)	(524.3)
Additional paid-in capital	569.0	561.1
Retained earnings	686.4	641.5
Accumulated other comprehensive income (loss):
Currency translation adjustment	(36.1)	(25.1)
Unrealized gain on available-for-sale securities	0.1	0.3
Total accumulated other comprehensive income (loss)	(36.0)	(24.8)
Total Morningstar, Inc. shareholders' equity	668.8	653.5
Noncontrolling interest	1.1	0.9
Total equity	669.9	654.4
Total liabilities and equity	$ 1,047.6	$ 1,019.3

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Acquisitions, Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Goodwill

The following table shows the changes in our goodwill balances from December 31, 2014 to June 30, 2015:

	(in millions)
Balance as of December 31, 2014	$	370.1
Foreign currency translation	(5.9		)
Balance as of June 30, 2015	$	364.2

We did not record any impairment losses in the first six months of 2015 or 2014. We perform our annual impairment reviews in the fourth quarter.

Intangible Assets

The following table summarizes our intangible assets: 

	As of June 30, 2015								As of December 31, 2014
(in millions)	Gross		Accumulated Amortization			Net		Weighted Average Useful  Life (years)	Gross		Accumulated Amortization			Net		Weighted Average Useful  Life (years)
Intellectual property	$	28.6	$	(25.9	)	$	2.7	9	$	29.0	$	(25.0	)	$	4.0	9
Customer-related assets	139.4		(88.2		)	51.2		12	141.5		(83.6		)	57.9		12
Supplier relationships	0.2		(0.1		)	0.1		20	0.2		(0.1		)	0.1		20
Technology-based assets	88.5		(61.2		)	27.3		8	88.8		(57.4		)	31.4		8
Non-competition agreement	4.3		(2.1		)	2.2		5	4.4		(1.9		)	2.5		5
Total intangible assets	$	261.0	$	(177.5	)	$	83.5	10	$	263.9	$	(168.0	)	$	95.9	10

The following table summarizes our amortization expense related to intangible assets:

	Three months ended June 30				Six months ended June 30
(in millions)	2015		2014		2015		2014
Amortization expense	$	5.4	$	5.5	$	10.9	$	10.6

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

We expect intangible amortization expense for the remainder of 2015 and subsequent years as follows:

	(in millions)
Remainder of 2015 (from July 1 through December 31)	$	10.8
2016	17.2
2017	12.8
2018	10.6
2019	7.9
Thereafter	24.2

Our estimates of future amortization expense for intangible assets may be affected by acquisitions, divestitures, changes in the estimated average useful life, and currency translations.

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Credit Arrangements (Notes)

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Credit Arrangements

Credit Arrangements

In July 2015, we renewed our $75.0 million, single-bank revolving credit facility. We had an outstanding principal balance of $35.0 million at an interest rate of LIBOR plus 100 basis points as of June 30, 2015. On July 20, 2015, we repaid the outstanding principal balance of $35.0 million, leaving full availability of the facility.

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Segment and Geographical Area Information (Tables)

6 Months Ended

Jun. 30, 2015

Revenue from External Customer [Line Items]

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]

External revenue by geographical area
	Three months ended June 30				Six months ended June 30
(in millions)	2015		2014		2015		2014
United States	$	151.2	$	136.5	$	292.1	$	266.4
United Kingdom	16.0		15.6		30.8		31.0
Continental Europe	14.4		15.9		28.7		31.5
Australia	8.0		9.2		15.7		17.4
Canada	7.1		7.5		14.0		15.2
Asia	4.4		3.9		8.8		7.6
Other	1.0		0.8		1.8		1.5
Total International	50.9		52.9		99.8		104.2
Consolidated revenue	$	202.1	$	189.4	$	391.9	$	370.6

Long-lived assets by geographical area
	As of June 30		As of December 31
(in millions)	2015		2014
United States	$	104.2	$	98.1
United Kingdom	8.4		8.1
Continental Europe	2.0		2.1
Australia	1.0		0.8
Canada	0.7		0.9
Asia	6.2		7.5
Other	0.1		0.1
Total International	18.4		19.5
Consolidated property, equipment, and capitalized software, net	$	122.6	$	117.6

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Share Repurchase Program

6 Months Ended

Jun. 30, 2015

Equity [Abstract]

Share Repurchase Program

Share Repurchase Program

We have an ongoing authorization, originally approved by our board of directors in September 2010, and subsequently amended, to repurchase up to $700.0 million in shares of our outstanding common stock. The authorization expires on December 31, 2015. 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 June 30, 2015, we had repurchased a total of 8,507,780 shares for $554.2 million under this authorization, leaving approximately $145.8 million available for future repurchases.

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Investments and Fair Value Measurements

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

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 into three categories: available-for-sale, held-to-maturity, and trading securities. Our investment portfolio is primarily invested in proprietary Morningstar portfolios, exchange-traded funds that seek to track the performance of certain Morningstar proprietary indexes, and various mutual funds. We classify our investment portfolio as shown below:

	As of June 30		As of December 31
(in millions)	2015		2014
Available-for-sale	$	8.8	$	13.2
Held-to-maturity	15.1		17.9
Trading securities	9.1		8.3
Total	$	33.0	$	39.4

The following table shows the cost, unrealized gains (losses), and fair value of investments classified as available-for-sale and held-to-maturity:

	As of June 30, 2015									As of December 31, 2014
(in millions)	Cost		Unrealized Gain		Unrealized Loss			Fair Value		Cost		Unrealized Gain		Unrealized Loss			Fair Value
Available-for-sale:
Equity securities and exchange-traded funds	$	7.4	$	0.3	$	(0.2	)	$	7.5	$	11.4	$	0.8	$	(0.3	)	$	11.9
Mutual funds	1.2		0.2		(0.1		)	1.3		1.2		0.2		(0.1		)	1.3
Total	$	8.6	$	0.5	$	(0.3	)	$	8.8	$	12.6	$	1.0	$	(0.4	)	$	13.2
Held-to-maturity:
Certificates of deposit	$	15.1	$	—	$	—		$	15.1	$	17.9	$	—	$	—		$	17.9

As of June 30, 2015 and December 31, 2014, investments with unrealized losses for greater than a 12-month period were not material to the Condensed Consolidated Balance Sheets and were not deemed to have other than temporary declines in value.

The table below shows the cost and fair value of investments classified as available-for-sale and held-to-maturity based on their contractual maturities as of June 30, 2015 and December 31, 2014. 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 June 30, 2015				As of December 31, 2014
(in millions)	Cost		Fair Value		Cost		Fair Value
Available-for-sale:
Equity securities, exchange-traded funds, and mutual funds	$	8.6	$	8.8	$	12.6	$	13.2
Total	$	8.6	$	8.8	$	12.6	$	13.2
Held-to-maturity:
Due in one year or less	$	15.1	$	15.1	$	17.9	$	17.9
Total	$	15.1	$	15.1	$	17.9	$	17.9

As of June 30, 2015 and December 31, 2014, held-to-maturity investments included a $1.5 million certificate of deposit held primarily as collateral against bank guarantees for our office leases, primarily in Australia.

The following table shows the realized gains and losses arising from sales of our investments classified as available-for-sale recorded in our Condensed Consolidated Statements of Operations: 

	Three months ended June 30					Six months ended June 30
(in millions)	2015			2014		2015			2014
Realized gains	$	0.7		$	0.4	$	0.9		$	0.6
Realized losses	(0.2		)	—		(0.5		)	(0.3		)
Realized gains, net	$	0.5		$	0.4	$	0.4		$	0.3

We determine realized gains and losses using the specific identification method.

The following table shows the net unrealized gains on trading securities as recorded in our Condensed Consolidated Statements of Operations:

	Three months ended June 30					Six months ended June 30
(in millions)	2015		2014			2015		2014
Unrealized gains (losses), net	$	0.2	$	(0.2	)	$	0.3	$	(0.2	)

The table below shows the fair value of our assets subject to fair value measurements that are measured at fair value on a recurring basis using the fair value hierarchy and the necessary disclosures under FASB ASC 820, Fair Value Measurement:

	Fair Value		Fair Value Measurements as of June 30, 2015
	as of		Using Fair Value Hierarchy
(in millions)	June 30, 2015		Level 1		Level 2		Level 3
Available-for-sale investments:
Equity securities and exchange-traded funds	$	7.5	$	7.5	$	—	$	—
Mutual funds	1.3		1.3		—		—
Trading securities	9.1		9.1		—		—
Cash equivalents	0.5		0.5		—		—
Total	$	18.4	$	18.4	$	—	$	—

	Fair Value		Fair Value Measurements as of December 31, 2014
	as of		Using Fair Value Hierarchy
(in millions)	December 31, 2014		Level 1		Level 2		Level 3
Available-for-sale investments:
Equity securities and exchange-traded funds	$	11.9	$	11.9	$	—	$	—
Mutual funds	1.3		1.3		—		—
Trading securities	8.3		8.3		—		—
Cash equivalents	0.5		0.5		—		—
Total	$	22.0	$	22.0	$	—	$	—

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 each of these investment categories in the aggregate is appropriate.

We measure the fair value of money market funds, mutual funds, equity securities, and exchange-traded funds based on quoted prices in active markets for identical assets or liabilities. We did not hold any securities categorized as Level 2 or Level 3 as of June 30, 2015 and December 31, 2014.

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Income Per Share

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

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:

	Three months ended June 30					Six months ended June 30
(in millions, except per share amounts)	2015		2014			2015		2014
Basic net income (loss) per share attributable to Morningstar, Inc.:
Net income (loss) attributable to Morningstar, Inc.:	$	32.2	$	(9.8	)	$	61.8	$	16.6
Less: Distributed earnings available to participating securities	—		—			—		—
Less: Undistributed earnings available to participating securities	—		—			—		—
Numerator for basic net income (loss) per share — undistributed and distributed earnings available to common shareholders	$	32.2	$	(9.8	)	$	61.8	$	16.6
Weighted average common shares outstanding	44.3		44.8			44.3		44.8
Basic net income (loss) per share attributable to Morningstar, Inc.	$	0.73	$	(0.22	)	$	1.39	$	0.37
Diluted net income (loss) per share attributable to Morningstar, Inc.:
Numerator for basic net income (loss) per share — undistributed and distributed earnings available to common shareholders	$	32.2	$	(9.8	)	$	61.8	$	16.6
Add: Undistributed earnings allocated to participating securities	—		—			—		—
Less: Undistributed earnings reallocated to participating securities	—		—			—		—
Numerator for diluted net income (loss) per share — undistributed and distributed earnings available to common shareholders	$	32.2	$	(9.8	)	$	61.8	$	16.6
Weighted average common shares outstanding	44.3		44.8			44.3		44.8
Net effect of dilutive stock options, restricted stock units, and performance share awards	0.1		—			0.1		0.2
Weighted average common shares outstanding for computing diluted income per share	44.4		44.8			44.4		45.0
Diluted net income (loss) per share attributable to Morningstar, Inc.	$	0.72	$	(0.22	)	$	1.39	$	0.37

The following table shows the number of restricted stock units and performance share awards excluded from our calculation of diluted earnings per share because their inclusion would have been anti-dilutive:

	Three months ended June 30		Six months ended June 30
(in thousands)	2015	2014	2015	2014
Weighted average stock options	—	160	—	—
Weighted average restricted stock units	43	108	42	18
Weighted average performance share awards	15	10	6	—
Weighted average restricted stock	—	3	—	6
Total	58	281	48	24

Stock options and restricted stock could be included in the calculation in the future.

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Segment and Geographical Area Information

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Segment and Geographical Area Information

Segment and Geographical Area Information

Segment Information

We report our results in a single reportable segment, which reflects how our chief operating decision maker allocates resources and evaluates our financial results.

Because we have one reportable segment, all required financial segment information can be found directly in the Unaudited Condensed Consolidated Financial Statements.

The accounting policies for our single reportable segment are the same as those described in “Note 3. Summary of Significant Accounting Policies” included in our Annual Report on Form 10-K for the year ended December 31, 2014. We evaluate the performance of our reporting segment based on revenue and operating income.

Geographical Area Information

The tables below summarize our revenue and long-lived assets by geographical area:

External revenue by geographical area
	Three months ended June 30				Six months ended June 30
(in millions)	2015		2014		2015		2014
United States	$	151.2	$	136.5	$	292.1	$	266.4
United Kingdom	16.0		15.6		30.8		31.0
Continental Europe	14.4		15.9		28.7		31.5
Australia	8.0		9.2		15.7		17.4
Canada	7.1		7.5		14.0		15.2
Asia	4.4		3.9		8.8		7.6
Other	1.0		0.8		1.8		1.5
Total International	50.9		52.9		99.8		104.2
Consolidated revenue	$	202.1	$	189.4	$	391.9	$	370.6

Long-lived assets by geographical area
	As of June 30		As of December 31
(in millions)	2015		2014
United States	$	104.2	$	98.1
United Kingdom	8.4		8.1
Continental Europe	2.0		2.1
Australia	1.0		0.8
Canada	0.7		0.9
Asia	6.2		7.5
Other	0.1		0.1
Total International	18.4		19.5
Consolidated property, equipment, and capitalized software, net	$	122.6	$	117.6

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

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, performance share awards, 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.

Accounting for Stock-Based Compensation Awards

The following table summarizes the stock-based compensation expense included in each of our operating expense categories:

	Three months ended June 30				Six months ended June 30
(in millions)	2015		2014		2015		2014
Cost of revenue	$	2.1	$	2.0	$	4.1	$	3.7
Sales and marketing	0.6		0.5		1.1		1.0
General and administrative	1.9		1.9		3.7		3.6
Total stock-based compensation expense	$	4.6	$	4.4	$	8.9	$	8.3

The following table summarizes the amount of unrecognized stock-based compensation expense as of June 30, 2015 and the expected number of months over which the expense will be recognized:

	Unrecognized stock-based compensation expense (in millions)		Expected amortization period (months)
Restricted stock units	$	39.3	35
Performance share awards	3.8		29
Total unrecognized stock-based compensation expense	$	43.1	34

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Investments and Fair Value Measurements (Classification of Securities) (Details) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Fair Value Disclosures [Abstract]
Available-for-sale	$ 8.8	$ 13.2
Held-to-maturity	15.1	17.9
Trading securities	9.1	8.3
Total	$ 33.0	$ 39.4

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Acquisitions, Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The following table shows the changes in our goodwill balances from December 31, 2014 to June 30, 2015:

	(in millions)
Balance as of December 31, 2014	$	370.1
Foreign currency translation	(5.9		)
Balance as of June 30, 2015	$	364.2

Schedule of Intangible Assets

The following table summarizes our intangible assets: 

	As of June 30, 2015								As of December 31, 2014
(in millions)	Gross		Accumulated Amortization			Net		Weighted Average Useful  Life (years)	Gross		Accumulated Amortization			Net		Weighted Average Useful  Life (years)
Intellectual property	$	28.6	$	(25.9	)	$	2.7	9	$	29.0	$	(25.0	)	$	4.0	9
Customer-related assets	139.4		(88.2		)	51.2		12	141.5		(83.6		)	57.9		12
Supplier relationships	0.2		(0.1		)	0.1		20	0.2		(0.1		)	0.1		20
Technology-based assets	88.5		(61.2		)	27.3		8	88.8		(57.4		)	31.4		8
Non-competition agreement	4.3		(2.1		)	2.2		5	4.4		(1.9		)	2.5		5
Total intangible assets	$	261.0	$	(177.5	)	$	83.5	10	$	263.9	$	(168.0	)	$	95.9	10

Schedule of Intangible Asset, Amortization Expense

The following table summarizes our amortization expense related to intangible assets:

	Three months ended June 30				Six months ended June 30
(in millions)	2015		2014		2015		2014
Amortization expense	$	5.4	$	5.5	$	10.9	$	10.6

Schedule of Expected Amortization Expense

We expect intangible amortization expense for the remainder of 2015 and subsequent years as follows:

	(in millions)
Remainder of 2015 (from July 1 through December 31)	$	10.8
2016	17.2
2017	12.8
2018	10.6
2019	7.9
Thereafter	24.2

Our estimates of future amortization expense for intangible assets may be affected by acquisitions, divestitures, changes in the estimated average useful life, and currency translations.

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2015

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation

The following table shows our effective tax rate for the three and six months ended June 30, 2015 and June 30, 2014:

	Three months ended June 30						Six months ended June 30
(in millions)	2015			2014			2015			2014
Income (loss) before income taxes and equity in net income of unconsolidated entities	$	50.3		$	(18.9	)	$	94.6		$	20.5
Equity in net income of unconsolidated entities	0.6			0.5			1.0			1.1
Net (income) loss attributable to the noncontrolling interest	—			—			(0.2		)	—
Total	$	50.9		$	(18.4	)	$	95.4		$	21.6
Income tax expense (benefit)	$	18.7		$	(8.6	)	$	33.6		$	5.0
Effective tax rate	36.7		%	46.8		%	35.2		%	23.3		%

Schedule of Gross Unrecognized Tax Benefits

The table below provides information concerning our gross unrecognized tax benefits as of June 30, 2015 and December 31, 2014, as well as the effect these gross unrecognized tax benefits would have on our income tax expense, if they were recognized.

	As of June 30		As of December 31
(in millions)	2015		2014
Gross unrecognized tax benefits	$	13.4	$	11.9
Gross unrecognized tax benefits that would affect income tax expense	$	11.3	$	11.9
Decrease in income tax expense upon recognition of gross unrecognized tax benefits	$	10.0	$	10.6

Schedule of Liabilities for Unrecognized Tax Benefits

Our Condensed Consolidated Balance Sheets include the following liabilities for unrecognized tax benefits. These amounts include interest and penalties, less any associated tax benefits.

	As of June 30		As of December 31
Liabilities for Unrecognized Tax Benefits (in millions)	2015		2014
Current liability	$	5.9	$	5.1
Non-current liability	5.1		6.6
Total liability for unrecognized tax benefits	$	11.0	$	11.7

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Stock-Based Compensation (Schedule of Unrecognized Stock-based Compensation Expense) (Details) - Jun. 30, 2015 - USD ($) $ in Millions	Total
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock-based compensation expense	$ 43.1
Expected amortization period (months)	34 years
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock-based compensation expense	$ 39.3
Expected amortization period (months)	35 years
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock-based compensation expense	$ 3.8
Expected amortization period (months)	29 years

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Allowance for doubtful accounts receivable	$ 1.9	$ 1.5
Accumulated depreciation and amortization	$ 151.0	$ 132.9
Common Stock, No Par Value	$ 0	$ 0
Common Stock, Shares Authorized	200,000,000	200,000,000
Common Stock, Shares, Outstanding	44,247,059	44,345,763
Treasury Stock, Shares	8,605,118	8,257,214

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

We discuss our significant accounting policies in Note 3 of our Audited Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on February 27, 2015.

On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for us on January 1, 2018. The standard permits the use of either the retrospective or cumulative effect transition method. We are evaluating the effect that ASU No. 2014-09 will have on our consolidated financial statements and related disclosures. We have not yet selected a transition method nor have we determined the effect of the standard on our ongoing financial reporting.

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Credit Arrangements (Details) - Revolving Credit Facility [Member] - USD ($) $ in Millions	Jun. 30, 2015	Jul. 09, 2015
Line of Credit Facility [Line Items]
Outstanding principal balance	$ 35.0
London Interbank Offered Rate (LIBOR) [Member]
Line of Credit Facility [Line Items]
Debt Instrument, Basis Spread on Variable Rate	100.00%
Subsequent Event [Member]
Line of Credit Facility [Line Items]
Line of credit		$ 75.0

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Investments and Fair Value Measurements (Fair Value of Assets) (Details) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading securities, fair value	$ 9.1	$ 8.3
Fair Value, Measurements, Recurring [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading securities, fair value	9.1	8.3
Cash equivalents, fair value	0.5	0.5
Total investments, fair value	18.4	22.0
Fair Value, Measurements, Recurring [Member] | Equity Securities and Exchange-traded Funds [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, fair value	7.5	11.9
Fair Value, Measurements, Recurring [Member] | Mutual Funds [Member] | Estimate of Fair Value Measurement [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, fair value	1.3	1.3
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading securities, fair value	9.1	8.3
Cash equivalents, fair value	0.5	0.5
Total investments, fair value	18.4	22.0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Equity Securities and Exchange-traded Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, fair value	7.5	11.9
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | Mutual Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, fair value	1.3	1.3
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading securities, fair value	0.0	0.0
Cash equivalents, fair value	0.0	0.0
Total investments, fair value	0.0	0.0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Equity Securities and Exchange-traded Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, fair value	0.0	0.0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Mutual Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, fair value	0.0	0.0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Trading securities, fair value	0.0	0.0
Cash equivalents, fair value	0.0	0.0
Total investments, fair value	0.0	0.0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Equity Securities and Exchange-traded Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, fair value	0.0	0.0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Mutual Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale securities, fair value	$ 0.0	$ 0.0

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2015

Accounting Policies [Abstract]

Segment Reporting Policy

We report our results in a single reportable segment, which reflects how our chief operating decision maker allocates resources and evaluates our financial results.

Because we have one reportable segment, all required financial segment information can be found directly in the Unaudited Condensed Consolidated Financial Statements.

The accounting policies for our single reportable segment are the same as those described in “Note 3. Summary of Significant Accounting Policies” included in our Annual Report on Form 10-K for the year ended December 31, 2014. We evaluate the performance of our reporting segment based on revenue and operating income.

Investments- Debt and Equity Securities Policy

We account for our investments in accordance with FASB ASC 320, Investments—Debt and Equity Securities. We classify our investments into three categories: available-for-sale, held-to-maturity, and trading securities. Our investment portfolio is primarily invested in proprietary Morningstar portfolios, exchange-traded funds that seek to track the performance of certain Morningstar proprietary indexes, and various mutual funds. We classify our investment portfolio as shown below: