The ratings on BAE Systems PLC reflect the company's very strong competitive positions in the worldwide defense market and a moderately leveraged balance sheet, with substantial liquidity, offset by near-term challenges because of several problem contracts. Also, the firm has an active acquisition program, with the attendant operating and financial risks. Farnborough, U.K.-based BAE Systems is a major supplier of defense electronics, military and commercial avionics and aerostructures, submarines and surface combatants for the Royal Navy, and support services and information technology. Also, the firm participates in numerous joint ventures, owning 20% of Airbus SAS, a major manufacturer of commercial jet aircraft. Airbus is under near-term pressure, but continues to have good long-term prospects. BAE Systems' operations in North America
