This section provides a brief description of the company's operations--major product lines, how and where it earns revenues, and any recent acquisition or spin-off activity.

This section gives a quick summary of the company's future strategy, including plans for growing the business, improving financial performance, or dealing with major opportunities and challenges.

Look for facts about management's past experience, who's in and who's out, as well as the successes--and foibles--of significant executives. We'll also use this section to address the company's compensation practices, as well as strengths and weaknesses in corporate governance.

Our analysts list the company's most direct competitors, to put the company's size and relative importance in perspective.

Morningstar's stock analysts produce a great deal of research beyond the Analyst Reports. More research can be found in Analyst Updates, Stock Analyst Picks, industry commentaries, and other articles. Links to recent Morningstar articles that mention the company are listed here.

These are the most important arguments about the company in favor of owning its stock.

These are the most important arguments about the company against owning its stock.

Here, the stock analyst provides links to recent articles about the company from writers outside Morningstar. These provide valuable additional insights about the company's history, strategy, and prospects.

On the left side of the analysis page are several buttons that lead to valuable links, including:

The Morningstar Rating for Stocks is calculated by comparing a stock's current market price with Morningstar's estimate of the stock's fair value. Our rating system also includes an uncertainty adjustment, so that it's more difficult for a company to earn a 5-star rating the more uncertain we are of our fair value estimate.

Under Review: We may place a stock's rating temporarily under review if a company releases significant news after the market's close and we need time to review our estimate of fair value. You can expect stocks that are under review to have new analyses and fair value estimate within a few days.

Pending: When we publish a new analysis during the trading day, the star rating and market price will display "pending" until after that day's market close. We do this because we need a stable reference price on which to base the star rating, which means waiting for a closing price to become available.

Fair Value Uncertainty is meant to give investors an idea of how tightly we feel we can bound our fair value estimate for any given company. To generate Morningstar Fair Value Uncertainty, analysts consider the following factors:

? Sales predictability
? Operating leverage
? Financial leverage
? A firm's exposure to contingent events

Based on these factors, analysts classify the stock into one of several uncertainty levels: Low, Medium, High, Very High, or Extreme. The greater the level of uncertainty, the greater the discount to fair value required before a stock can earn 5 stars, and the greater the premium to fair value before a stock earns a 1-star rating.

The idea of an economic moat refers to how likely companies are to keep competitors at bay for an extended period. One of the keys to finding superior long-term investments is buying companies that will be able to stay one step ahead of their competitors, and it's this characteristic--think of it as the strength and sustainability of a firm's competitive advantage--that we're trying to capture with the economic moat rating.

One of the first things we do when we're thinking about the size of a firm's economic moat is look at the company's historical financial performance. Companies that have generated returns on capital higher than their cost of capital for many years running usually have a moat, especially if their returns on capital have been rising or are fairly stable.

Of course, the past is a highly imperfect predictor of the future, so we look carefully at the source of a company's excess economic profits before assigning a moat rating. For example, a competitive advantage created by a hot new technology usually isn't very sustainable, because it won't be too long until someone comes along and invents a better widget.

Here are some of the attributes that can give companies economic moats:

Our corporate Stewardship Rating represents our assessment of management's stewardship of shareholder capital, with particular emphasis on capital allocation decisions. Analysts consider companies' investment strategy, history of investment timing and valuation, financial leverage, dividend and share buyback policies, execution, management compensation, related party transactions, and accounting practices. Corporate governance practices, such as poison pills and staggered boards, are only considered if they've had a demonstrated impact on shareholder value. Analysts assign one of three stewardship ratings: "exemplary," "standard," and "poor." Analysts judge stewardship from an equity holder's perspective. Ratings are determined on an absolute basis. Companies are judged not against peers within their industry, but against ideal stewardship of shareholder capital. Most companies will receive a standard rating, and this should be considered the default rating in the absence of evidence that a management team has made exceptionally strong or poor capital allocation decisions.

Morningstar calculates four separate scores to help arrive at its overall credit rating.

Below we discuss each component in more detail.

I. Business Risk

We consider seven elements in determining a firm's overall business risk, with the most weight put on the firm's Economic Moat and Uncertainty ratings.

Morningstar's Economic Moat Rating

The primary differentiating factor among firms is how long they can earn high returns on capital and hold competitors at bay. Only firms with economic moats ? something structural in their business models that rivals cannot easily replicate ? can stave off competitive forces for a prolonged period.

Uncertainty Rating

Morningstar's Uncertainty Rating represents our estimate of the predictability of future cash flows. Because equity is the residual value of a firm, it represents the cushion in the capital structure for bond holders.

Size

The larger a company's revenue base, the greater its resilience (other things equal), especially during periods of adversity. Small firms go bankrupt much more frequently than large firms.

Product/Customer Concentration

An important factor in the stability of a company's future revenues and profits is the diversification of both its product portfolio and its customer base. Other things being equal, a company with a wide variety of products sold to a variety of end markets is less subject to economic or regulatory shocks than a more-specialized company.

Stewardship Grade

Our analysts assign each company we cover a Stewardship Grade of A through F. The Stewardship Grade captures our view of a company's transparency, board independence, incentives and ownership, and investor friendliness. We feel these are key components in determining whether a company's management team is looking out for investors (whether equity or bond holders) as opposed to their own interests.

Dependence on Capital Markets

We score companies based on whether their business models require them to regularly access the capital markets. For example, a firm that must securitize assets in order to fund its operations is vulnerable to significant problems when capital markets freeze up.

Cyclicality of Operations

The greater the economic sensitivity of a firm, the more likely it is to encounter financial difficulties. We pay special attention to the sensitivity of profits to economic cycles, penalizing firms with high fixed costs that crush profitability when revenues fall.

II. Cash Flow Cushion

Analyzing current and past financial statements is important, but a company's ability to meet its debt obligations can't be determined by looking in the rear-view mirror. That's where our detailed model of a company's future cash flows comes in. Analysts create customized industry and company-specific assumptions to feed income statement, balance sheet, and cash-flow assumptions into our standardized, proprietary discounted cash flow modeling templates. We then employ scenario analysis and a variety of other analytical tools to enhance and fine-tune this process.

Our proprietary Cash Flow Cushion gives us insight into whether a company will have the liquidity to meet its capital obligations well into the future. We make adjustments to the firm's reported operating cash flow to derive its cash available for servicing its obligations, and compare our forecasts for that cash to the company's future debt-related obligations, including interest and debt maturities.

III. Solvency Score

The Solvency Score a ratio-based scoring system that we developed through careful analysis of historical corporate bankruptcies. We consider several ratios to assess a firm's financial strength, including the size of a company's obligations relative to its assets, and comparing the firm's debt load to its cash flow. In addition to examining these ratios in past years, our analysts explicitly forecast the cash flows we think a company is likely to generate in the future, and consider how these balance sheet ratios are likely to change over time. In addition to industry-standard measures of profitability (such as profit margins and returns on equity), we focus on return on invested capital as a key metric in determining whether a company's profits will benefit debt and equity holders.

IV. Distance to Default

Morningstar's quantitative Distance to Default measure ranks companies on the likelihood of financial distress. The more likely the value of a company's assets is to fall below the value of its liabilities, the greater the likelihood of financial distress. The Distance to Default expresses how many standard deviations separate the current value of assets from the strike price. The measure treats a company's equity as a call option on the company's assets, with the total liabilities being the strike price.

The Final Rating

When combined, these four factors create a ranking system for measuring an individual corporation's financial strength against that of other firms in our coverage universe. All of these factors are then reviewed by a Morningstar credit rating committee made up of senior members of the research staff, where additional adjustments to rankings may be made. The committee than decides on the final rating--AAA through C--to award the company.

It's core to Morningstar's culture to put the investor first, which means we follow a set of rules designed to maintain the independence and objectivity of our analyst/editorial staff.

To help maintain the integrity of Morningstar's investment research, there is a strict functional separation between the fund and stock analyst groups (including for this purpose any employee who produces editorial content) on the one hand, and the company's sales teams on the other. Except as described below in this paragraph, sales personnel may not contact individual analysts directly. Instead, in the United States, all requests must be funneled through the head of securities analysis, the director of fund analysis, or the director of stock analysis. Outside of the United States, all requests must be funneled through the local head of research, editorial director for the relevant publication, or the local country manager. Sales personnel hired specifically to promote access to the stock analyst group may contact individual stock analysts solely in connection with those sales efforts. Most importantly, there must never be any explicit or implied pressure applied by anyone outside the relevant analyst group to influence or change the opinions or conclusions reached in analyses (including editorial content) or research projects. Morningstar's institutional clients are not given preferential access to fund analysts, and sales personnel are prohibited from setting up meetings between fund analysts and institutional clients or potential institutional clients. Again, maintaining objectivity and editorial freedom is essential for Morningstar to keep its position of respect in the investment community.

To avoid conflicts of interest, Morningstar maintains the following policies on employee stock ownership. These policies apply to employees and their immediate family members:

If an analyst or staff writer mentions a stock he or she owns, we disclose that fact in any editorial piece that mentions the security.

Morningstar has prepared the following research reports at the request of The NASDAQ OMX Group, Inc:

Athersys Inc
Famous Dave's of America Inc.
Hickory Tech Corp
IRIDEX Corp.
Integrated Silicon Solution, Inc.
Life Partners Holdings, Inc.
PLX Technology, Inc.
QCR Holdings, Inc.
Synalloy Corp.
DRI Corporation
Top Ships Inc.

Payment for these reports is received by Morningstar from NASDAQ OMX. The NASDAQ OMX-listed companies that are the subject of these reports may have contracted with NASDAQ OMX to receive coverage. The research is prepared independently by Morningstar. None of the content or ratings are subject to NASDAQ OMX's review or approval. These reports are not authored or created by The NASDAQ OMX Group, Inc. Collectively, with its affiliates and subsidiaries, NASDAQ OMX takes no responsibility for the accuracy, timeliness, completeness or presentation of the content. NASDAQ OMX makes no representation regarding the advisability of investing in any particular security. Nothing contained in these reports should be construed as investment advice, either on behalf of a particular security or an overall investment strategy by NASDAQ OMX.