Contextualized Analysis of BAE Systems

By

TABLE OF CONTENTS

CHAPTER 1: OVERVIEW OF THE COMPANY3

Products3

Company Perspectives4

Major Shareholders of BAE Systems and Their Holdings5

Peer Comparison6

BAESY6

History of the Company6

CHAPTER 2: FINANCIAL ANALYSIS8

Theoretical Elements Related to Ratio Analysis8

Profitability ratios8

Efficiency ratios9

Liquidity Ratios10

Leverage ratios12

Analysis of BAE Systems13

Financial Highlights13

Financial Highlights as of 12/31/2011 in GBP13

Long Term Debt15

Capital Structure15

Earnings Estimates17

Ratios17

Profitability Ratios19

Liquidity Ratios20

Assets Management Ratios20

Debt Management21

Per Share or Investor Ratios21

Cash Flow per Share21

CHAPTER 3: INVESTOR RETURNS AND RISK ANALYSIS22

Risk Management within BAE Systems22

Industry Revenue Rises23

Technology will be Vital24

Emerging Markets and Business Models24

Industry profitability25

Establishments, Employment and Wages26

CHAPTER 4 (I): CORPORATE GOVERNANCE28

Management at BEA28

The Challenge28

CHAPTER 4 (II): CORPORATE SOCIAL RESPONSIBILITY31

CHAPTER 5: FUTURE PROSPECTS37

REFERENCES40

APPENDIX46

CHAPTER 1: OVERVIEW OF THE COMPANY

BAE Systems plc is the fourth largest military contractor in the world as well as a commercial aircraft builder. BAE is a British company based in Farnborough , Hampshire and with worldwide interests, particularly in North America through its subsidiary BAE Systems Inc (BAE Systems, 2004, website). BAE was formed on 30 November 1999 with the merger of British Aerospace (BAe) and Marconi Electronic Systems (MES), the defense subsidiary of General Electric (GEC). As a result of the merger, BAE Systems is the successor to many of the most famous aircraft and defense systems UK.

Products

BAE Systems has led or at least heavily involved in some of the high-tech projects worldwide aerospace, naval or land. BAE Systems' interests in commercial aviation are focused on Airbus and BAE Systems Regional Aircraft (BAE SYSTEMS Overview, website). The former division of BAE in Airbus was transferred to the new "Airbus Integrated Company" in 2001 to receive as compensation a 20% of the new company. As Airbus UK, this division manufactures wings for all Airbus: A300 , A310 , A318 , A319 , A320 , A321 , A330 , A340 , A350 , A380 (just right) and A400M . BAE Systems is considering getting rid of this division. BAE Systems Regional Aircraft and aircraft manufactures not yet continuous hiring and supporting their products, like the Avro RJ / BAE 146, BAe ATP , the BAe BAe Jetstream or 748 (Statman, 1995: 8). BAE plays important roles in military aircraft production. Combat aircraft Eurofighter Typhoon , Panavia Tornado and Harrier II, all of BAE, are at the forefront in the RAF fleet. BAE is a fundamental part in the program of the F-35 Lightning II. Its Hawk advanced training aircraft has been widely exported.

BAE Systems Land Systems manufactures the Challenger 2 battle tank of the British Army, the Warrior Tracked Armoured Vehicle, M777 howitzer, the vehicle Panther command and liaison assault rifle and SA80-L85. BAE Systems Land and Armaments (formerly United Defense) manufactures Family M2/M3 Bradley fighting vehicles, the "Advanced Weapon System" and U.S. Navy M109 Paladin howitzer (Varian, 1993: 159). Among the major projects are naval Astute submarines, destroyers Type-45 aircraft and the CVF project of the Royal Navy for a new aircraft carrier.

Company Perspectives

BAE Systems is a leading global design, production and marketing of systems and equipment for defence and aerospace. BAE Systems plc delivers, through its wholly owned subsidiaries and ...