Edgar Filing: Morningstar, Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006

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)

225 West Wacker Drive

Chicago, Illinois

60606-6303

(Address of Principal Executive Offices)

(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. Yes x No o

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

Large accelerated filer o

Accelerated filer o

Non-accelerated filer x

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of November 1, 2006, there were 41,772,625 shares of the Company’s common stock, no par value, outstanding.

MORNINGSTAR, INC. AND SUBSIDIARIES

INDEX

PART 1	FINANCIAL INFORMATION

Item 1.	Unaudited Condensed Consolidated Financial Statements

	Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2006 and 2005

	Unaudited Condensed Consolidated Balance Sheets as of September 30, 2006 and December 31, 2005

	Unaudited Condensed Consolidated Statements of Shareholders’ Equity and Comprehensive Income for the nine months ended September 30, 2006

	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2006 and 2005

	Notes to Unaudited Condensed Consolidated Financial Statements

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

Item 3.	Quantitative and Qualitative Disclosure about Market Risk

Item 4.	Controls and Procedures

PART 2	OTHER INFORMATION

Item 1.	Legal Proceedings

Item 1A.	Risk Factors

Item 6.	Exhibits

SIGNATURE

PART 1: FINANCIAL INFORMATION

Item 1: Unaudited Condensed Consolidated Financial Statements

Morningstar, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations


	Three Months Ended September 30						Nine Months Ended September 30
(in thousands except per share amounts)	2006			2005			2006			2005

Revenue	$	81,821		$	56,927		$	228,138		$	166,374

Operating expense (1):
Cost of goods sold	22,389			16,261			63,114			47,847
Development	7,876			4,749			21,273			14,491
Sales and marketing	12,971			9,499			36,511			29,129
General and administrative	13,781			11,849			39,606			36,068
Depreciation and amortization	4,267			2,222			10,440			6,470
Total operating expense	61,284			44,580			170,944			134,005

Operating income	20,537			12,347			57,194			32,369

Non-operating income:
Interest income, net	1,169			892			3,086			1,946
Other income (expense), net	(31		)	(46		)	(343		)	14
Non-operating income, net	1,138			846			2,743			1,960

Income before income taxes, equity in net income of unconsolidated entities, and cumulative effect of accounting change	21,675			13,193			59,937			34,329

Income tax expense	9,228			5,857			24,450			14,517

Equity in net income of unconsolidated entities	1,100			183			2,405			1,212

Income before cumulative effect of accounting change	13,547			7,519			37,892			21,024

Cumulative effect of accounting change, net of income tax expense of $171	—			—			259			—

Net income	$	13,547		$	7,519		$	38,151		$	21,024

Basic income per share
Income before cumulative effect of accounting change	$	0.33		$	0.19		$	0.93		$	0.54
Cumulative effect of accounting change	—			—			—			—
Net income	$	0.33		$	0.19		$	0.93		$	0.54
Diluted income per share
Income before cumulative effect of accounting change	$	0.29		$	0.17		$	0.81		$	0.48
Cumulative effect of accounting change	—			—			0.01			—
Net income	$	0.29		$	0.17		$	0.82		$	0.48

Weighted average shares outstanding:
Basic	41,448			39,922			40,913			39,151
Diluted	46,578			45,354			46,598			43,939


	Three Months Ended September 30						Nine Months Ended September 30
	2006			2005			2006			2005
(1) Includes stock-based compensation expense of:
Cost of goods sold	$	302		$	274		$	859		$	1,202
Development	141			112			386			492
Sales and marketing	152			129			415			582
General and administrative	1,663			1,515			4,611			6,579
Total stock-based compensation expense	$	2,258		$	2,030		$	6,271		$	8,855

See notes to unaudited condensed consolidated financial statements.

Morningstar, Inc. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets


(in thousands except share amounts)	September 30 2006			December 31 2005

Assets
Current assets:
Cash and cash equivalents	$	71,181		$	92,367
Investments	53,069			60,823
Accounts receivable, less allowance of $101 and $418, respectively	57,893			47,530
Deferred tax asset, net	61			—
Other	6,777			5,495
Total current assets	188,981			206,215

Property, equipment, and capitalized software, net of accumulated depreciation of $46,382 and $40,687, respectively	16,102			17,355
Investments in unconsolidated entities	18,218			16,355
Goodwill	84,542			17,500
Intangible assets, net	77,876			7,251
Deferred tax asset, net	8,907			29,729
Other assets	2,263			1,906
Total assets	$	396,889		$	296,311

Liabilities and shareholders’ equity
Current liabilities:
Accounts payable and accrued liabilities	$	21,367		$	13,664
Accrued compensation	29,423			26,463
Income tax payable	2,470			1,259
Deferred revenue	92,750			71,155
Deferred tax liability, net	—			833
Other	2,312			2,467
Total current liabilities	148,322			115,841

Accrued compensation	5,147			4,458
Other long-term liabilities	3,471			2,298
Total liabilities	156,940			122,597

Shareholders’ equity:
Common stock, no par value, 200,000,000 shares authorized, of which 41,610,949 and 40,284,513 shares were outstanding as of September 30, 2006 and December 31, 2005, respectively	4			4
Treasury stock at cost, 233,334 shares as of September 30, 2006 and December 31, 2005	(3,280		)	(3,280		)
Additional paid-in capital	254,466			226,593
Accumulated deficit	(12,457		)	(50,608		)
Accumulated other comprehensive income:
Currency translation adjustment	1,287			1,130
Unrealized losses on available for sale securities	(71		)	(125		)
Total accumulated other comprehensive income	1,216			1,005
Total shareholders’ equity	239,949			173,714
Total liabilities and shareholders’ equity	$	396,889		$	296,311

See notes to unaudited condensed consolidated financial statements.

Morningstar, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statement of Shareholders’ Equity and Comprehensive Income

For the Nine Months Ended September 30, 2006

													Accumulated
	Common Stock						Additional						Other		Total
	Shares	Par		Treasury			Paid-in			Accumulated			Comprehensive		Shareholders’
(in thousands, except share amounts)	Outstanding	Value		Stock			Capital			Deficit			Income		Equity
Balance, December 31, 2005	40,284,513	$	4	$	(3,280	)	$	226,593		$	(50,608	)	$	1,005	$	173,714
Comprehensive income:
Net income		—		—			—			38,151			—		38,151
Unrealized gain on investments, net of income tax expense		—		—			—			—			54		54
Foreign currency translation adjustment		—		—			—			—			157		157
Total comprehensive income		—		—			—			38,151			211		38,362
Issuance of common stock related to stock option exercises, net	1,326,436	—		—			13,212			—			—		13,212
Stock-based compensation		—		—			6,271			—			—		6,271
Cumulative effect of accounting change		—		—			(430		)	—			—		(430		)
Tax benefit derived from stock option exercises		—		—			8,820			—			—		8,820
Balance, September 30, 2006	41,610,949	$	4	$	(3,280	)	$	254,466		$	(12,457	)	$	1,216	$	239,949

See notes to unaudited condensed consolidated financial statements.

Morningstar, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows


	Nine Months Ended September 30
(in thousands)	2006			2005

Operating activities
Net income	$	38,151		$	21,024
Adjustments to reconcile net income to net cash flows from operating activities:
Cumulative effect of accounting change, net of tax	(259		)	—
Depreciation and amortization	10,440			6,470
Deferred income tax benefit	(2,310		)	(292		)
Stock-based compensation expense	6,271			8,855
Provision for bad debt	161			243
Equity in net income of unconsolidated entities	(2,405		)	(1,212		)
Foreign exchange loss	450			124
Excess tax benefits from stock option exercises	(8,820		)	1,117
Other, net	13			(160		)
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	(2,375		)	(3,461		)
Other assets	1,120			366
Accounts payable and accrued liabilities	(473		)	(104		)
Accrued compensation	2,431			(1,281		)
Income taxes payable	22,695			(1,926		)
Deferred revenue	3,589			1,315
Other liabilities	348			(1,193		)
Cash provided by operating activities	69,027			29,885

Investing activities
Purchases of investments	(57,369		)	(54,938		)
Proceeds from sale of investments	65,239			55,830
Capital expenditures	(2,876		)	(3,625		)
Acquisitions, net of cash acquired	(116,859		)	(8,192		)
Other, net	(308		)	18
Cash used for investing activities	(112,173		)	(10,907		)

Financing activities
Payments of long-term debt and capital lease obligations	—			(18		)
Proceeds from initial public offering	—			18,108
Proceeds from stock option exercises	13,212			3,964
Excess tax benefits from stock option exercises	8,820			—
Cash provided by financing activities	22,032			22,054

Effect of exchange rate changes on cash	(72		)	(166		)
Net increase (decrease) in cash and cash equivalents	(21,186		)	40,866
Cash and cash equivalents — beginning of period	92,367			35,907
Cash and cash equivalents — end of period	$	71,181		$	76,773

Supplemental disclosure of cash flow information:
Cash paid for taxes	$	3,481		$	15,471
Supplemental information of non-cash investing and financing activities:
Unrealized gain (loss) on available for sale investments	$	91		$	(35	)

See notes to unaudited condensed consolidated financial statements.

MORNINGSTAR, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation of Interim Financial Information

The accompanying unaudited condensed consolidated financial statements of Morningstar, Inc. and subsidiaries (Morningstar, we, our, the Company) included herein 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 requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenue, and expense. 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, stockholders’ equity, and cash flows. These financial statements and notes should be read in conjunction with our Consolidated Financial Statements and Notes thereto as of December 31, 2005 included in our Annual Report on Form 10-K filed with the SEC on March 16, 2006.

In the first quarter of 2006, we changed our segment reporting by allocating stock-based compensation expense to each of our three business segments. Before 2006, stock-based compensation expense was recorded as a corporate item. We believe this change gives our chief operating decision maker a more complete picture of the profitability of each business segment after fully allocating stock-based compensation expense. We have reclassified the 2005 financial results for each segment to reflect this change.

2. Summary of Significant Accounting Policies

We discuss our significant accounting policies in Note 2 of our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2005 filed with the SEC.

Effective January 1, 2006, we adopted Statement of Financial Accounting Standards (SFAS) No. 123 (Revised 2004), Share-Based Payment (SFAS No. 123(R)), using the modified prospective transition method. Under this method, the provisions of SFAS
No. 123(R) apply to all awards granted after the date of adoption and to any unrecognized expense of awards unvested at the date of adoption based on the fair value as of the date of grant. Prior to this date, we accounted for our stock options in accordance with the fair value provisions of SFAS No. 123, Stock-Based Compensation (SFAS No. 123). Under SFAS No. 123, we accounted for forfeitures of stock options as they occurred. SFAS No. 123(R) requires us to estimate expected forfeitures at the grant date and recognize compensation cost only for those awards expected to vest. Accordingly, in the first quarter of 2006, we recorded a cumulative effect of accounting change, net of tax, of $259,000 to reverse the impact of stock-based compensation expense recorded in prior years related to outstanding stock options that we estimate will not vest. Besides recording this cumulative effect of accounting change, the adoption of SFAS No. 123(R) did not have a significant impact on our financial position or results of operations because we previously recognized stock-based compensation expense in accordance with SFAS No. 123.

Prior to our adoption of SFAS 123(R), we classified tax benefits arising from the exercise of stock options as operating cash flows. SFAS No. 123(R) requires that we classify the cash flows resulting from the tax benefit that arises when the tax deductions exceed the compensation cost recognized for those options (excess tax benefits) as financing cash flows. The excess tax benefits were $8,820,000 in the first nine months of 2006, and $1,117,000 in the first nine months of 2005. Refer to Note 8 of the Notes to our Unaudited Condensed Consolidated Financial Statements for more information regarding our adoption of SFAS No. 123(R) and our accounting for stock options and restricted stock units.

3. Acquisitions, Goodwill, and Other Intangible Assets

Institutional Hedge Fund and Separate Accounts Database Division of InvestorForce, Inc.

In August 2006, we acquired the institutional hedge fund and separate account database division of InvestorForce, Inc. (InvestorForce), a financial software and data integration company based in Wayne, Pennsylvania, for $10,040,000 in cash, including expenses directly related to the acquisition. We have included the financial results of this acquisition in our Condensed Consolidated Financial Statements beginning on August 1, 2006. This acquisition includes both the Altvest database, one of the first and largest databases covering hedge funds, managers, and data, along with InvestorForce’s extensive institutional separate account database. It also includes several online software applications for manager search, research, and reporting. We believe that this acquisition will strengthen our proprietary investment data and allow us to continue offering one of the largest, most comprehensive databases.

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

	($000)
Accounts receivable	$	353
Intangible assets	5,180
Goodwill	6,121
Deferred revenue	(1,614		)
Total purchase price	$	10,040

The preliminary purchase price allocation includes $5,180,000 of acquired intangible assets. These assets include technology-based assets of $2,500,000 that will be amortized over a weighted average period of 5 years; customer-based assets of $2,210,000 that will be amortized over a weighted average period of 5 years; trade names of $420,000 that will be amortized over a weighted average period of 4 years; and a non-compete agreement of $50,000 that will be amortized over 3 years. The preliminary purchase price allocation also includes $6,121,000 of goodwill. Both the acquired intangible assets and the acquired goodwill are deductible for U.S. income tax purposes.

If the acquisition of the database division of InvestorForce had occurred as of January 1, 2005 and 2006, revenue, operating income, net income, and basic and diluted income per share would not have been significantly different from the amounts reported in the first nine months of 2006 and 2005, respectively.

Aspect Huntley Pty Limited

In July 2006, we acquired Aspect Huntley Pty Limited (Aspect Huntley), a leading provider of equity information, research, and financial trade publishing in Australia, for $23,526,000. We have included the results of Aspect Huntley’s operations in our Condensed Consolidated Financial Statements beginning on July 25, 2006. This acquisition fits with our growth strategy to expand our products and services internationally. The key benefit of this acquisition is the combination of Morningstar’s expertise in fund research and information with Aspect Huntley’s equity research, information, and financial media expertise in Australia. We believe this acquisition will significantly expand the breadth and quality of services we can deliver to individuals, advisors, and institutions and will offer Australian investors one place to obtain their investment information and research.

The purchase price represents Australian $30,000,000 in cash (of which Australian $2,000,000 will be paid in 2007) and our current estimate of certain post-closing adjustments. In the third quarter of 2006, the cash paid for Aspect Huntley, including transaction costs, was $20,469,000 (net of cash acquired). Of the remaining purchase price of $2,135,000, we anticipate that the majority will be paid in the third quarter of 2007. These remaining payments are subject to post-closing adjustments.

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

	($000)
Cash	$	922
Accounts receivable	671
Other current assets	324
Fixed assets	273
Intangible assets	14,490
Goodwill	13,926
Deferred revenue	(5,122		)
Other current liabilities	(1,850		)
Income taxes payable	(108		)
Total purchase price	$	23,526

The preliminary purchase price allocation includes $14,490,000 of acquired intangible assets. These assets include trade names of $8,245,000 that will be amortized over a weighted average period of 10 years; technology-based assets (primarily including a database) of $5,952,000 that will be amortized over a weighted average period of 19 years; and customer-related assets of $293,000 that will be amortized over 10 years.

If the acquisition of Aspect Huntley had occurred as of January 1, 2005 and 2006, revenue, operating income, net income, and basic and diluted income per share would not have been significantly different from the amounts reported in the first nine months of 2006 and 2005, respectively.

Ibbotson Associates, Inc.

In March 2006, we acquired Ibbotson Associates, Inc. (Ibbotson), a privately held firm specializing in asset allocation research and services, for $83,000,000 in cash, plus an additional $3,474,000 in cash for working capital and other items. We have included the results of Ibbotson’s operations in our Condensed Consolidated Financial Statements beginning on March 1, 2006. This acquisition fits several of Morningstar’s growth strategies and broadens our reach in the areas of investment consulting, managed retirement accounts, and institutional and advisor software.

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

	($000)
Cash	$	103
Accounts receivable	6,629
Income tax benefits, net	12,776
Other current assets	1,530
Fixed assets	1,407
Other assets	166
Intangible assets	55,280
Goodwill	47,009
Deferred revenue	(10,672		)
Accrued liabilities	(4,885		)
Deferred tax liability	(22,108		)
Other non-current liabilities	(761		)
Total purchase price	$	86,474

As part of the preliminary purchase price allocation, we recorded an asset of $12,776,000, primarily for the income tax benefit related to payment for the cancellation of Ibbotson’s stock options. This cash income tax benefit will reduce the amount of cash we pay for income taxes in 2006. This cash income tax benefit did not impact our income tax expense or net income in the first nine months of 2006.

The preliminary purchase price allocation also includes $55,280,000 of acquired intangible assets. These assets include customer-related assets of $34,200,000 that will be amortized over a weighted average period of 9 years; intellectual property (including patents and trade names) of $17,710,000 that will be amortized over a weighted average period of 10 years; technology-based assets of $3,070,000 that will be amortized over a weighted average period of 5 years; and a non-compete agreement of $300,000 that will be amortized over 5 years. Because the amortization expense for these intangible assets is not deductible for U.S. income tax purposes, we recorded a deferred tax liability of $21,971,000 based on these values.

Based on the preliminary purchase price allocation, we recorded $47,009,000 of goodwill. The goodwill we recorded is not deductible for U.S. income tax purposes. SFAS No. 109, Accounting for Income Taxes, prohibits recognition of a deferred tax asset or liability for goodwill temporary differences if goodwill is not amortizable and deductible for tax purposes. The goodwill will be tested at least annually for impairment in accordance with SFAS No. 142, Goodwill and Other Intangible Assets.

Based on plans in place at the time of acquisition, we recorded a liability of $596,000 for severance and $761,000 for lease termination costs, net of estimated sub-lease income. As of September 30, 2006, we have made substantially all of the related severance payments. We expect to pay the lease termination costs beginning in March 2008, which is when we plan to vacate Ibbotson’s office space.

The following unaudited pro forma information presents a summary of our consolidated statements of operations for the three and nine months ended September 30, 2006 and 2005 as if we had acquired Ibbotson as of January 1, 2005 and 2006, respectively. In calculating the pro forma information below, we made an adjustment to eliminate stock-based compensation expense previously recorded by Ibbotson based on the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. We also made an adjustment to record stock-based compensation expense for an estimated value of stock options assumed to be granted to Ibbotson employees. This adjustment assumes the stock option awards were made in May 2005, consistent with the timing of our annual equity grant, and vest over a four-year period. In 2005, we recorded stock-based compensation expense based on the recognition and measurement principles of SFAS No. 123, Accounting for Stock-Based Compensation.


	Three Months Ended September 30				Nine Months ended September 30
($000)	2006		2005		2006		2005
Revenue	$	81,821	$	63,385	$	235,529	$	196,693
Operating income	20,537		9,556		57,535		30,514
Income before cumulative effect of accounting change	13,547		5,535		37,867		18,870
Net income	13,547		5,535		38,126		18,870

Basic income per share:
Income before cumulative effect of accounting change	$	0.33	$	0.14	$	0.93	$	0.48
Net income	$	0.33	$	0.14	$	0.93	$	0.48

Diluted income per share:
Income before cumulative effect of accounting change	$	0.29	$	0.12	$	0.81	$	0.43
Net income	$	0.29	$	0.12	$	0.82	$	0.43

Variable Annuity Research and Data Service

In January 2005, we acquired Variable Annuity Research and Data Service (VARDS) from Finetre Corporation for $8,192,000 in cash, including costs directly related to the acquisition. The results of VARDS’ operations have been included in our Condensed Consolidated Financial Statements beginning in January 2005.

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

	($000)
Accounts receivable	$	639
Other assets	57
Intangible assets	6,370
Goodwill	3,084
Liabilities, primarily deferred revenue	(1,958		)
Total purchase price	$	8,192

The acquired intangible assets include $5,700,000 of customer-related assets, consisting primarily of acquired customer contracts; $430,000 for technology-based assets, consisting of a database and developed software; and $240,000 related to supplier relationships. Both the acquired intangible assets and the acquired goodwill are deductible for U.S. income tax purposes.

Goodwill

The following table shows the changes in our goodwill balance from January 1, 2005 to September 30, 2006:

	($000)
Balance as of January 1, 2005	$	14,408
Goodwill acquired related to VARDS	3,084
Other, primarily currency translation adjustment	8
Balance as of December 31, 2005	$	17,500
Goodwill acquired related to Ibbotson	47,009
Goodwill acquired related to Aspect Huntley	13,926
Goodwill acquired related to the database division of InvestorForce	6,121
Other, primarily currency translation adjustment	(14		)
Balance as of September 30, 2006	$	84,542

We did not record any impairment losses in the quarter or year-to-date periods ended September 30, 2006 or 2005, respectively.

Intangible Assets

We amortize intangible assets using the straight-line method over their expected economic useful lives. The following table summarizes our intangible assets:


	As of September 30, 2006								As of December 31, 2005
($000)	Gross		Accumulated Amortization			Net		Weighted Average Useful Life (years)	Gross		Accumulated Amortization			Net		Weighted Average Useful Life (years)
Intellectual property	$	27,456	$	(1,747	)	$	25,709	10	$	1,132	$	(405	)	$	727	7
Customer-related assets	43,272		(3,166		)	40,106		10	6,571		(597		)	5,974		18
Supplier relationships	240		(22		)	218		20	240		(12		)	228		20
Technology-based assets	12,329		(798		)	11,531		12	430		(108		)	322		4
Non-competition agreement	350		(38		)	312		5	—		—			—		—
Total intangible assets	$	83,647	$	(5,771	)	$	77,876	10	$	8,373	$	(1,122	)	$	7,251	16

Amortization expense was $2,199,000 and $172,000 for the three months ended September 30, 2006 and 2005, respectively, and $4,653,000 and $518,000 for the nine months ended September 30, 2006 and 2005, respectively.

As of September 30, 2006, we estimate that aggregate amortization expense for intangible assets will be $7,066,000 in 2006; $9,652,000 in 2007; $9,578,000 in 2008; $9,232,000 in 2009; $8,300,000 in 2010; and $7,624,000 in 2011.

4. Income Per Share

The numerator for both basic and diluted income per share is net income. The denominator for basic income per share is the weighted average number of common shares outstanding during the period. The dilutive effect of outstanding employee stock options and restricted stock units is reflected in the denominator for diluted income per share using the treasury stock method.

The following table shows how we reconcile the net income and the number of shares used in computing basic and diluted income per share:


	Three Months Ended September 30				Nine Months Ended September 30
(in thousands, except per share amounts)	2006		2005		2006		2005

Basic income per share:
Income before cumulative effect of accounting change	$	13,547	$	7,519	$	37,892	$	21,024
Cumulative effect of accounting change, net of tax	—		—		259		—
Net income	$	13,547	$	7,519	$	38,151	$	21,024
Weighted average common shares outstanding	41,448		39,922		40,913		39,151

Income before cumulative effect of accounting change	$	0.33	$	0.19	$	0.93	$	0.54
Cumulative effect of accounting change, net of tax	—		—		—		—
Net income	$	0.33	$	0.19	$	0.93	$	0.54

Diluted income per share:
Income before cumulative effect of accounting change	$	13,547	$	7,519	$	37,892	$	21,024
Cumulative effect of accounting change, net of tax	—		—		259		—
Net income	$	13,547	$	7,519	$	38,151	$	21,024

Weighted average common shares outstanding	41,448		39,922		40,913		39,151
Net effect of dilutive stock options and restricted stock units	5,130		5,432		5,685		4,788
Weighted average common shares outstanding for computing diluted income per share	46,578		45,354		46,598		43,939

Income before cumulative effect of accounting change	$	0.29	$	0.17	$	0.81	$	0.48
Cumulative effect of accounting change, net of tax	—		—		0.01		—
Net income	$	0.29	$	0.17	$	0.82	$	0.48

5. Segment and Geographical Area Information

We organize our operations based on products and services sold in three primary business segments: Individual, Advisor, and Institutional.

• Individual segment. Our Individual segment focuses on products and services for individual investors. The largest product in this segment is our U.S.-based Web site, Morningstar.com, which includes both paid Premium Membership service and sales of advertising space. Our Individual segment also includes Morningstar Equity Research, which we distribute through several channels. Investors can access our equity research through our Premium Membership offering on Morningstar.com. In addition, our equity research is currently distributed through six major investment banks to meet the requirements for independent research under the Global Analyst Research Settlement, as well as to several other companies who provide our research to their affiliated financial advisors or to individual investors. We also offer a variety of print publications on stocks and mutual funds, including our monthly newsletters, Morningstar FundInvestor and Morningstar StockInvestor, and our twice-monthly publication, Morningstar Mutual Funds. We sell several annual reference guides, including the Morningstar Funds 500, the Morningstar Stocks 500, the Morningstar ETFs 100, and the Stocks, Bonds, Bills, and Inflation Yearbook. Following our acquisition of Aspect Huntley in July 2006, this segment also includes several newsletters and other publications for investors in Australia.

• Advisor segment. Our Advisor segment focuses on products and services for financial advisors. Key products in this segment are Morningstar Advisor Workstation and Principia. Advisor Workstation is a Web-based investment planning system that provides financial advisors with a comprehensive set of tools for conducting their core business — including investment research, planning, and presentation tools. Advisor Workstation is available in two editions: the Office Edition for independent financial advisors and the Enterprise Edition for financial advisors affiliated with larger firms. Principia is our CD-ROM-based investment research and planning software for financial planners. In addition, we offer Morningstar Managed Portfolios, a fee-based discretionary asset management service that includes a series of mutual fund and exchange-traded fund portfolios tailored to meet a range of investment time horizons and risk levels that financial advisors can use for their clients’ taxable and tax-deferred accounts. Through our acquisition of Ibbotson, we offer a series of NASD-reviewed Financial Communications materials that advisors can use to educate clients about asset allocation and demonstrate other key investment concepts, as well as data and graphs that financial advisors can license to use in published materials. Following our acquisition of Aspect Huntley, this segment also includes software that we sell to financial planners and other market participants in Australia as well as investment conferences.

• Institutional segment. Our Institutional segment focuses on products and services for institutions, including banks, insurance companies, mutual fund companies, brokerage firms, media outlets, and retirement plan providers and sponsors. Key products and services in this segment include Investment Consulting, which focuses on investment monitoring and asset allocation for funds of funds, including mutual funds and variable annuities; Licensed Data, a set of investment data spanning eight core databases, available through electronic data feeds; Retirement Advice, including the Morningstar Retirement Manager and Advice by Ibbotson platforms; Morningstar Direct, a Web-based institutional research platform that provides advanced research and tools on the complete range of securities in Morningstar’s global database; Licensed Tools and Content, a set of online tools and editorial content designed for institutions to use in their Web sites and software; Investment Profiles & Guides, which are designed for institutions to use in communicating investment information to individual investors; the Morningstar Research Annuity Center (formerly VARDS Online); and EnCorr, an asset allocation software package (acquired with Ibbotson). Following our acquisition of Aspect Huntley, this segment now includes financial information and other data on Australian stocks. The Institutional segment also includes the hedge fund and separate account database division we acquired from InvestorForce in August 2006.

We measure the operating results of these segments based on operating income (loss), including an allocation of corporate costs. We include intersegment revenue and expenses in segment information. We sell services and products between segments at predetermined rates primarily based on cost. The recovery of intersegment cost is shown as “Intersegment revenue.”

In the first quarter of 2006, we changed our segment reporting by allocating stock-based compensation expense to each of our three business segments; before 2006, stock-based compensation expense was recorded as a corporate item. We believe this change gives our chief operating decision maker a more complete picture of the profitability of each business segment. The 2005 financial results for each segment have been reclassified to reflect this change.

Our segment accounting policies are the same as those described in Note 2 to our Consolidated Financial Statements as of December 31, 2005 included in our Annual Report on Form 10-K, except for the capitalization and amortization of internal product development costs and amortization of intangible assets. We exclude these items from our operating segment results to provide our chief operating decision maker with a better indication of each segment’s ability to generate cash flow. This information is one of the criteria used by our chief operating decision maker in determining how to allocate resources to each segment. We include the capitalization and amortization of internal product development costs, the amortization of intangible assets, and the elimination of intersegment revenue and expense in the Corporate Items and Eliminations category to arrive at the consolidated financial information. Our segment disclosures include the business segment information provided to our chief operating decision maker on a recurring basis, and, therefore, we do not present balance sheet information, including goodwill or other intangibles, by

segment.

The following tables show selected segment data for the three and nine months ended September 30, 2006 and 2005:


	Three months ended September 30, 2006
($000)	Individual		Advisor		Institutional		Corporate Items & Eliminations			Total
Revenue:
External customers	$	19,515	$	24,367	$	37,939	$	—		$	81,821
Intersegment	874		30		630		(1,534		)	—
Total revenue	20,389		24,397		38,569		(1,534		)	81,821
Operating expense, excluding stock-based compensation expense, depreciation, and amortization	13,976		15,545		27,288		(2,050		)	54,759
Stock-based compensation expense	555		716		987		—			2,258
Depreciation and amortization	349		417		633		2,868			4,267
Operating income (loss)	$	5,509	$	7,719	$	9,661	$	(2,352	)	$	20,537

Capital expenditures	$	117	$	98	$	307	$	331		$	853

U.S. revenue										$	69,517
Non-U.S. revenue										$	12,304

	Three months ended September 30, 2005
($000)	Individual		Advisor		Institutional		Corporate Items & Eliminations			Total
Revenue:
External customers	$	14,808	$	18,593	$	23,526	$	—		$	56,927
Intersegment	681		—		537		(1,218		)	—
Total revenue	15,489		18,593		24,063		(1,218		)	56,927
Operating expense, excluding stock-based compensation expense, depreciation, and amortization	11,034		13,461		17,086		(1,253		)	40,328
Stock-based compensation expense	606		624		800		—			2,030
Depreciation and amortization	301		394		551		976			2,222
Operating income (loss)	$	3,548	$	4,114	$	5,626	$	(941	)	$	12,347

Capital expenditures	$	57	$	148	$	342	$	751		$	1,298

U.S. revenue										$	49,391
Non-U.S. revenue										$	7,536


	Nine months ended September 30, 2006
($000)	Individual		Advisor		Institutional		Corporate Items & Eliminations			Total
Revenue:
External customers	$	56,232	$	70,435	$	101,471	$	—		$	228,138
Intersegment	2,660		33		1,966		(4.659		)	—
Total revenue	58,892		70,468		103,437		(4,659		)	228,138
Operating expense, excluding stock-based compensation expense, depreciation, and amortization	39,001		47,102		73,487		(5,357		)	154,233
Stock-based compensation expense	1,738		1,920		2,613		—			6,271
Depreciation and amortization	860		1,250		1,663		6,667			10,440
Operating income (loss)	$	17,293	$	20,196	$	25,674	$	(5,969	)	$	57,194

Capital expenditures	$	237	$	278	$	967	$	1,394		$	2,876

U.S. revenue										$	197,879
Non-U.S. revenue										$	30,259

										Sept. 30, 2006
U.S. long-lived assets										$	11,955
Non-U.S. long-lived assets										$	4,147

	Nine months ended September 30, 2005
($000)	Individual		Advisor		Institutional		Corporate Items & Eliminations			Total
Revenue:
External customers	$	44,696	$	53,868	$	67,810	$	—		$	166,374
Intersegment	1,929		—		1,586		(3,515		)	—
Total revenue	46,625		53,868		69,396		(3,515		)	166,374
Operating expense, excluding stock-based compensation expense, depreciation, and amortization	32,476		39,151		50,799		(3,746		)	118,680
Stock-based compensation expense	2,750		2,668		3,437		—			8,855
Depreciation and amortization	876		1,113		1,513		2,968			6,470
Operating income (loss)	$	10,523	$	10,936	$	13,647	$	(2,737	)	$	32,369

Capital expenditures	$	222	$	475	$	993	$	1,935		$	3,625

U.S. revenue										$	144,739
Non-U.S. revenue										$	21,635

										Sept. 30, 2005
U.S. long-lived assets										$	13,200
Non-U.S. long-lived assets										$	1,931

6. Investments

We monitor the concentration, diversification, maturity, and liquidity of our investment portfolio, which is primarily invested in fixed-income securities. We classify our investment portfolio as follows:


($000)	September 30, 2006		December 31, 2005
Available for sale	$	50,564	$	58,761
Held to maturity	810		420
Trading securities	1,695		1,642
Total	$	53,069	$	60,823

7. Investments In Unconsolidated Entities

Morningstar Japan K.K. In April 1998, we entered into an agreement with Softbank Corporation to form a joint venture, Morningstar Japan K.K. (MJKK), which develops and markets products and services customized for the Japanese market. In June 2000, MJKK became a public company, and its shares are traded on the Osaka Stock Exchange, “Hercules Market,” using the ticker number 4765. Subsequent to MJKK’s initial public offering, the joint venture agreement between us and Softbank Corporation was terminated, but we continued to hold shares of MJKK stock. As of September 30, 2006 and December 31, 2005, we owned approximately 35% of MJKK. We account for our investment in MJKK using the equity method. Our investment in MJKK totaled $16,566,000 and $14,884,000 as of September 30, 2006 and December 31, 2005, respectively. MJKK’s market value was approximately Japanese Yen 29.5 billion (approximately U.S. $250,263,000) as of September 30, 2006 and Japanese Yen 27.8 billion (approximately U.S. $235,625,000) as of December 31, 2005.

In the third quarter of 2006, MJKK recorded a gain related to the sale of shares in a subsidiary’s initial public offering. Our share of the pre-tax gain was approximately $990,000.

Morningstar Korea, Ltd. In June 2000, we entered into a joint venture agreement with Shinheung Securities Co., Ltd. and SOFTBANK Finance Corporation to establish a Korean limited liability company Morningstar Korea Ltd. (Morningstar Korea). Morningstar Korea develops, markets, and sells products and services to assist in the analysis of financial portfolios and provides financial information and services for investors in South Korea. Our ownership interest and profit and loss sharing interest in Morningstar Korea was 40% as of September 30, 2006 and December 31, 2005. We account for this investment using the equity method. Our investment totaled $1,270,000 and $1,129,000 as of September 30, 2006 and December 31, 2005, respectively.

Other Investments in Unconsolidated Entities. As of September 30, 2006 and December 31, 2005, the book value of our other investments in unconsolidated entities totaled $382,000 and $342,000, respectively, and consist primarily of our investments in Morningstar Danmark A/S (Morningstar Denmark) and Morningstar Sweden AB (Morningstar Sweden). In August 2001, we entered into a joint venture agreement with Phosphorus A/S to establish Morningstar Denmark, which develops and markets products and services customized for the Danish market. In April 2001, we entered into a joint venture agreement with Stadsporten Citygate AB to establish Morningstar Sweden, which develops and markets products and services customized for the Swedish market. Our ownership interest in both Morningstar Denmark and Morningstar Sweden was approximately 25% as of September 30, 2006 and December 31, 2005. We account for our investments in Morningstar Denmark and Morningstar Sweden using the equity method.

The following table shows condensed combined unaudited financial information for our investments in unconsolidated entities:


	Three months ended September 30				Nine months ended September 30
($000)	2006		2005		2006		2005
Revenue	$	4,201	$	3,417	$	13,921	$	10,421
Operating income	$	951	$	554	$	3,836	$	2,037
Net income	$	2,954	$	339	$	6,073	$	2,034

8. Stock-Based Compensation

Stock-Based Compensation Plans

Prior to November 2004, we granted stock options under various plans including the 1993 Stock Option Plan (the 1993 Plan), the 2000 Morningstar Stock Option Plan (the 2000 Plan), and the 2001 Morningstar Stock Option Plan (the 2001 Plan). In general, options granted under the 1993 Plan vest ratably over a five-year period and options granted under the 2000 Plan and the 2001 Plan vest ratably over a four-year period; options under all three plans expire 10 years after the date of grant.

In November 2004, we adopted the 2004 Stock Incentive Plan. The 2004 Stock Incentive Plan amends and restates the 1993 Plan, the 2000 Plan, and the 2001 Plan (collectively, the Prior Plans). Under the 2004 Stock Incentive Plan, we will not grant any additional

options under any of the Prior Plans, and any shares subject to an award under any of the Prior Plans that are forfeited, canceled, settled, or otherwise terminated without a distribution of shares, or withheld by us in connection with the exercise of options or in payment of any required income tax withholding, will not be available for awards under the 2004 Stock Incentive Plan. The 2004 Stock Incentive Plan provides for grants of options, stock appreciation rights, restricted stock, restricted stock units, and performance shares. All of our employees are eligible for awards under the 2004 Stock Incentive Plan. Our non-employee directors are also eligible for awards under the 2004 Stock Incentive Plan. Joe Mansueto, our chairman and chief executive officer, does not participate in the 2004 Stock Incentive Plan or the Prior Plans.

Since the adoption of the 2004 Stock Incentive Plan, we have granted stock options and, beginning in 2006, restricted stock units. Stock options granted under the 2004 Stock Incentive Plan generally vest ratably over a four-year period and expire 10 years after the date of grant. Almost all of the options granted under the 2004 Stock Incentive Plan have a premium feature in which the exercise

price increases over the term of the option at a rate equal to the 10-year Treasury bond yield as of the date of grant. Restricted stock units represent the right to receive a share of Morningstar common stock when that unit vests. Restricted stock units granted under the 2004 Stock Incentive Plan generally vest ratably over a four-year period. The number of shares available for future grants under our 2004 Stock Incentive Plan as of September 30, 2006 and December 31, 2005 was 2,829,046 and 2,989,322, respectively.

In February 1999, we entered into an Incentive Stock Option Agreement and a Nonqualified Stock Option Agreement under the 1999 Incentive Stock Option Plan (the 1999 Plan) with Don Phillips, an officer of Morningstar. Under these agreements, we granted Don options to purchase 1,500,000 shares of common stock at an exercise price of $2.77 per share, equal to the fair value at the grant date. These options are fully vested and expire in February 2009. On the date of grant, 1,138,560 options were fully exercisable and an additional 36,144 were scheduled to become exercisable each year from 1999 through 2008. As of September 30, 2006 and December 31, 2005, there were 789,174 and 869,174 options remaining to be exercised, respectively.

Accounting for Stock-Based Compensation Awards

Effective January 1, 2006, we adopted SFAS No. 123 (Revised 2004), Share-Based Payment (SFAS No. 123(R)), using the modified prospective transition method. Prior to this date, we accounted for our equity plans in accordance with the fair value provisions of SFAS No. 123, Stock-Based Compensation (SFAS No. 123). Under SFAS No. 123, we accounted for forfeitures of stock options as they occurred. SFAS No. 123(R) requires us to estimate expected forfeitures at the grant date and recognize compensation cost only for those awards expected to vest. Accordingly, in the first quarter of 2006, we recorded a cumulative effect of accounting change, net of tax, of $259,000 to reverse the impact of stock-based compensation expense recorded in prior years related to outstanding stock options that we estimate will not vest. Other than recording this cumulative effect of accounting change, the adoption of SFAS No. 123(R) did not have a significant impact on our financial position or results of operations because we previously recognized stock-based compensation expense in accordance with SFAS No. 123.

Prior to our adoption of SFAS 123(R), we presented the tax benefit of deductions arising from the exercise of stock options as operating cash flows in our Condensed Consolidated Statement of Cash Flows. SFAS No. 123(R) requires that we classify the cash flows resulting from the tax benefit that arises when the tax deductions exceed the compensation cost recognized for those options (excess tax benefits) as financing cash flows. The excess tax benefits classified as financing cash flows were $8,820,000 in the first nine months of 2006; the excess tax benefits classified as operating cash flows were $1,117,000 in the first nine months of 2005.

Prior to our initial public offering in May 2005, we accounted for stock options granted under the 1993 Plan and the 1999 Plan using the liability method in accordance with SFAS No. 123 because these plans allowed for cash settlement at the option holder’s election, subject to certain conditions. Under the liability method, we accounted for options as a liability that was measured each period using the fair value per share of our common stock. We recorded changes in the liability, resulting from changes in the fair value of our common stock, in our Consolidated Statements of Operations. As a result of our initial public offering, we are no longer required to settle options under the 1993 Plan and the 1999 Plan in cash. Upon our initial public offering, we valued the liability using a fair value of $18.50 per share, which was equivalent to the fair value of our common stock at the time of our initial public offering. We reclassified stock options accounted for as current liabilities of $16,707,000 and long-term liabilities of $24,882,000 to additional paid-in capital. In addition, because all of the options previously accounted for under the liability method were fully vested by March 31, 2005, we have not recorded any additional expense for these options in subsequent periods.

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense (including expense for both stock options and restricted stock units) recorded in our Consolidated Statements of Operations:


	Three months ended September 30				Nine months ended September 30
($000)	2006		2005		2006		2005
Stock-based compensation expense under the liability method	$	—	$	—	$	—	$	2,810
Stock-based compensation expense under the equity method	2,258		2,030		6,271		6,045
Total stock-based compensation expense	$	2,258	$	2,030	$	6,271	$	8,855

The deferred tax benefit related to the stock-based compensation expense above was $831,000 and $742,000 for the three months ended September 30, 2006 and 2005, respectively, and $2,221,000 and $2,201,000 for the nine months ended September 30, 2006 and 2005, respectively.

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

Restricted Stock Units

We measure the fair value of our restricted stock units on the date of grant based on the market price of the underlying common stock as of the close of trading on the day prior to grant. We amortize that value to stock-based compensation expense, net of estimated forfeitures, ratably over the vesting period. We granted restricted stock units for the first time in May 2006. The total grant date fair value of restricted stock units granted through September 30, 2006 was approximately $11,351,000.

The following table summarizes restricted stock unit activity in the first nine months of 2006:


	Nine months ended September 30, 2006
Restricted Stock Units	Shares		Weighted Average Grant Date Fair Value
Nonvested shares—January 1, 2006	—		—
Granted	259,223		$	43.79
Vested	—		—
Forfeited	(16,985	)	$	42.67
Nonvested shares—September 30, 2006	242,238		$	43.86

As of September 30, 2006, the total amount of unrecognized stock-based compensation expense related to restricted stock units was approximately $8,215,000, which is expected to be recognized over an average period of approximately 44 months.

Stock Option Fair Value

We measure the fair value of our stock options on the date of grant using a Black-Scholes option-pricing model and amortize that value to stock-based compensation expense ratably over the option’s vesting period. The weighted average fair value of options granted during the first nine months of 2006 and 2005 using this model was $14.16 per share and $9.62 per share, respectively. We estimated the fair value of the options granted in the first nine months of 2006 and 2005 on the date of grant using the following weighted average assumptions:

	2006			2005
Expected life (years)	6.25			7.0
Expected volatility (%)	43.0		%	50.0		%
Dividend yield (%)	—			—
Interest rate (%)	4.33		%	4.04		%
Expected exercise price	$	45.31		$	26.20

Expected life. The expected life represents the period over which the stock options are expected to be outstanding. Because we have limited historical information regarding stock option exercises since becoming a public company in May 2005, we have determined the expected life using the “shortcut method” described in Staff Accounting Bulletin Topic 14.D.2, which is based on a calculation to arrive at the midpoint between the vesting date and the end of the contractual term.

Expected volatility. The volatility factor used in our assumptions is based on an average of the historical stock prices of a group of our peers over the most recent period commensurate with the expected life of the stock option award. As a recently public company with limited historical data on the price of our stock, we do not base our volatility assumption on our own stock price.

Dividend yield. We do not intend to pay dividends on our common stock for the foreseeable future. Accordingly, we used a dividend yield of zero in our assumptions.

Interest rate. We based the risk-free interest rate used in our assumptions on the implied yield available on U.S. Treasury zero-coupon issues with a remaining term that approximates the stock option award’s expected life.

Expected exercise price. Options granted in 2006 have initial exercise prices that will increase over the term of the options at a rate equal to the 10-year Treasury bond rate as of the date of grant. The expected exercise price included in the option pricing models for these options was calculated using an estimated life of 6.25 years and the applicable 10-year Treasury bond rate.

Stock Option Activity

The following tables summarize stock option activity for our various stock option grants. The first table includes activity for options granted at an exercise price below the fair value per share of our common stock on the grant date; the second table includes activity for all other option grants.


	Nine months ended September 30, 2006
Options Granted At an Exercise Price Below the Fair Value Per Share on the Grant Date	Underlying Shares		Weighted Average Exercise Price
Options outstanding—January 1, 2006	3,338,959		$		10.50
Canceled	(64,464	)	15.26
Exercised	(171,643	)	9.34
Options outstanding—September 30, 2006	3,102,852		$		10.68

Options exercisable—September 30, 2006	2,307,127		$		9.32

	Nine months ended September 30, 2006
All Other Option Grants, Excluding Activity Shown Above	Underlying Shares		Weighted Average Exercise Price
Options outstanding—January 1, 2006	7,795,848		$	11.96
Canceled	(76,977	)	21.33
Exercised	(1,158,069	)	10.03
Granted	46,451		34.64
Options outstanding—September 30, 2006	6,607,253		$	12.44

Options exercisable—September 30, 2006	5,643,264		$	11.34

The total intrinsic value (difference between the market value of our stock on the date of exercise and the exercise price of the option) of options exercised in the nine months ended September 30, 2006 and 2005 was $41,717,000 and $7,044,000, respectively.

Stock Options Outstanding and Exercisable

The table below shows additional information for options outstanding and options exercisable as of September 30, 2006:


	Options Outstanding						Options Exercisable
Range of Exercise Prices	Outstanding Shares	Weighted Average Remaining Contractual Life (years)	Weighted Average Exercise Price		Aggregate Intrinsic Value ($000)		Exercisable Shares	Weighted Average Remaining Contractual Life (years)	Weighted Average Exercise Price		Aggregate Intrinsic Value ($000)
$2.00 - $2.77	1,981,108	1.95	$	2.54	$	68,073	1,901,247	1.93	$	2.53	$	65,342
$8.57 - $14.70	5,391,367	4.28	12.58		131,109		5,213,123	4.20	12.72		126,065
$15.88 - $35.78	2,337,630	8.37	18.18		43,757		836,021	8.29	17.17		16,494
$2.00 - $35.78	9,710,105	4.79	$	11.88	$	242,939	7,950,391	4.09	$	10.75	$	207,901
Vested or Expected to Vest
$2.00 - $35.78