Standard&Poor's Ratings Services 'BBB+' rating on U.K.-headquartered defense contractor BAE Systems PLC (BAE) is derived from: Our anchor of 'bbb+', based on our assessment of BAE's "strong" business risk and its "intermediate" financial risk. Analytical modifiers have no impact on the rating outcome. Strong competitive position in global defense markets through a portfolio of diverse high-priority programs. Good customer, program, and geographic diversification. Support from favorable characteristics of the defense industry. Risks of cuts for defense procurement spending, particularly in the U.S. Consistent generation of positive free cash flow, which we anticipate will continue over our 2014-2016 forecast period. Positive discretionary cash flow (free operating cash flow net regular dividends), but potentially higher leverage due to an announced
