Well-established market position as a leading aerospace and defence contractor. Active across key and diverse military programs in the U.K., the U.S., and Saudi Arabia. Significant exposure to government defence spending and the outcome of government procurement decisions. Inherent project execution risks. Positive free operating cash flow (FOCF) generation. Substantial accounting pension deficit, which has weakened S&P Global Ratings-adjusted leverage metrics. Sizable payments to shareholders. Strong liquidity. The stable outlook on U.K.-based global aerospace and defense company BAE Systems PLC (BAE) reflects that we forecast improving leverage metrics over the next two years to about 3.0x debt to EBITDA and 25% funds from operations (FFO) to debt by 2018, supported by steady operating results and improving cash flow generation. We
