The ratings on British American Tobacco PLC (BAT) are based on the group's strong position as the world's second-largest international tobacco company; its high, relatively predictable cash flows; and its exceptional geographical diversification. These factors are balanced, however, by BAT's moderate financial policy, which allows for potential further debt-funded acquisitions, and its ongoing litigation risk, particularly in the U.S. At Dec. 31, 2003, BAT had gross debt of £8.4 billion ($15.4 billion), including £0.8 billion in preferred shares, which may be converted into equity by June 2004. With stable sales of £10.6 billion in 2003, BAT commands a steady 15% share of the global cigarette market through a diverse portfolio of brands including Lucky Strike, Dunhill, Kent, and Pall Mall.
