The ratings for U.K.-based BAE Systems PLC are based on its strong competitive positions in the worldwide defense market, with additional credit support provided by substantial liquidity and a moderately leveraged balance sheet. On the other hand, profitability has been weak (write-offs produced net losses in the past two years), with expectations that subpar earnings will continue in 2002. An active acquisition program, with the attendant operating and financial risks, is likely to be managed to maintain credit protection measures consistent with current ratings. BAE Systems is major global supplier of military aircraft, defense electronics, military and commercial avionics and aerostructures, submarines and surface combatants for the Royal Navy, and support services and information technology. The company's operations in North
