Business Context and Reporting Period
This Form 8-K Current Report was filed by Morningstar, Inc. on July 6, 2009. The filing serves as a Regulation FD disclosure to provide public access to information shared during investor communications. The report details the company's policy on monthly investor Q&A sessions and announces the completion of a strategic acquisition in Australia.
Key Financial Metrics and Operational Data
The filing does not provide consolidated revenue, profit, cash flow, or debt figures for Morningstar, Inc. However, it discloses specific operational metrics regarding the acquired entity, Intech Pty Ltd:
- Intech Assets Under Management (AUM): Approximately A$3.5 billion as of the acquisition date (June 30, 2009).
- Intech AUM Trend: Declined from A$10.2 billion at year-end 2007 to A$4 billion at year-end 2008.
- Licensed Data Revenue Mix: Morningstar Essentials (used for marketing and client communication) accounts for approximately 25% of total Licensed Data revenue.
Material Changes and Acquisitions
The primary material event reported is the acquisition of Intech Pty Ltd, completed on June 30, 2009, by Morningstar's Australian subsidiary. Intech is a provider of multimanager and investment portfolio solutions, similar to Morningstar's Ibbotson Associates subsidiary. The acquisition targets the Australian superannuation market, which is characterized by compulsory employer contributions of 9% of salary. Management noted that Intech's AUM decline in 2008 and 2009 was partly attributed to a previous change in ownership rather than solely market conditions.
Guidance, Outlook, and Risks
Management Commentary and Outlook:
- Investment Consulting: Management stated there have been no additional large contract losses beyond previously disclosed nonrenewals, though normal client turnover continues.
- Strategic Intent: The Intech acquisition is intended to accelerate the development of Morningstar's consulting and asset management business in Australia, leveraging Intech's team in risk management and quantitative analysis.
- Investor Relations: The company plans to publish written responses to investor questions on the first Friday of every month.
- Forward-Looking Statements: The filing includes standard disclaimers regarding uncertainties, including the global financial crisis, market volatility affecting asset-based fees, and potential reputation damage from conflict of interest claims.
- Operational Risks: Risks include prolonged database outages, industry consolidation, and the availability of free investment information.
The filing does not disclose any unusual items or restatements for the reporting period.
Key Facts for Investor Verification
- Verify the integration timeline and expected synergies of the Intech Pty Ltd acquisition.
- Monitor the trend of Intech's AUM to determine if the decline stabilizes post-acquisition.
- Review the upcoming monthly Q&A documents for updates on Investment Consulting client wins or losses.
- Assess the impact of the global financial crisis on Morningstar's asset-based fee revenue, as highlighted in the risk factors.