Advisor software revenue represented approximately 25.9% of the increase in segment revenue in 2010 as higher revenue from Advisor Workstation and Site Builder and Licensed Tools offset the decline in Principia revenue. In comparison, advisor software revenue was down in 2009 because lower Principia revenue more than offset the increase in Advisor Workstation and other products. Principia rev- enue declined 6.6% in 2010 and 14.3% in 2009. The decline partly reflects clients migrating from Principia to Advisor Workstation. 

The number of U.S. licenses for Morningstar Advisor Workstation increased slightly to 153,170 as of December 31, 2010 from 148,392 as of December 31, 2009 and 151,874 as of December 31, 2008. Principia subscriptions totaled 32,681as of December 31, 2010, down from 35,844 as of December 31, 2009 and 43,019 as of December 31, 2008. 

Licensed Data made positive contributions to segment revenue in both 2010 and 2009, reflecting strong renewal rates and new client contracts. The Licensed Data service gives institutions access to a full range of proprietary investment data spanning numerous invest- ment databases, including real-time pricing data. The data packages we offer include proprietary statistics, such as the Morningstar Style Box and Morningstar Rating, and a wide range of other data, including information on investment performance, risk, portfolios, operations data, fees and expenses, cash flows, and ownership. 

Investment research revenue declined in 2010 as well as in 2009. As mentioned above, the period covered by GARS expired at the end of July 2009. Our post-settlement equity research revenue in 2010 replaced approximately one-third of the annual GARS revenue. GARS revenue was $12.5 million in 2009, compared with $21.9 million in 2008. We entered into new equity research contracts with two of the banks that were clients under GARS. In addition, we’re continu- ing to provide broad equity coverage to individual investors, finan- cial advisors, and institutions through a variety of other channels. 

Revenue from our other investment research products was essen- tially flat in 2010 after declining in 2009. In 2010, higher revenue from conferences and corporate credit ratings research helped off- set the continuing decline in revenue from newsletters and books. In the first quarter of 2009, we discontinued three of the print pub- lications we previously published in the first quarter of each year: Morningstar Funds 500 , Morningstar Stocks 500 , and Morningstar ETFs 150 . Lower advertising revenue from publications sold in Australia and lower revenue from the annual Morningstar Investment Conference held in the second quarter also contributed to the decline in 2009. 

In 2010, operating income for the Investment Information segment decreased $10.7 million, or 7.7%, as operating expense increased more than revenue. 

Operating expense was up $69.0 million in 2010, with additional costs from acquisitions contributing approximately 45% of the increase. Higher salaries (reflecting expanded headcount) and incen- tive compensation (including bonus and sales commission expense) also contributed to the increase. Bonus expense increased $10.9 million in 2010, including incremental bonus expense from recent acquisitions. An increase in employee benefits expense, including employee healthcare benefits and the partial reinstatement of match- ing contributions to our 401(k) plan in the United States, also con- tributed to the increase, but to a lesser extent. 

Operating margin for the Investment Information segment declined 7.1 percentage points in 2010. Approximately 6.4 percentage points of the margin decline reflects higher compensation-related expense as a percentage of revenue. Acquisitions had a slightly negative impact on the margin. 

In 2009, operating income for the Investment Information segment was $138.4 million, a slight decrease compared with 2008, as the $4.1 million decline in revenue was partially offset by lower operating expense. 

Operating expense decreased $3.8 million in 2009 as cost reductions for bonuses, other compensation expense, and advertising and marketing were partially offset by additional operating expense from acquisitions. Bonus expense declined $11.0 million in 2009. Most of this reduction reflects the changes we made to our bonus program for 2009 as part of our efforts to better align our cost structure with revenue. The reduction in bonus expense also reflects a slowdown in our financial performance in 2009 compared with 2008. Other compensation-related expense was down, primarily because we suspended matching contributions to our 401(k) plan in the United States, reducing operating expense by $4.3 million in 2009. 

