Raytheon Reveals SEC Probe of Accounting Practices

Defense and aerospace contractor Raytheon Co. said
Monday the Securities and Exchange Commission has started an informal
investigation into the company’s accounting practices at its commuter aircraft
business and the timing of revenue recognition at its Raytheon Aircraft unit
from 1997 to 2001.

The Lexington, Mass., company said it believes that the accounting practices
at the unit are appropriate. Raytheon plans to cooperate fully with the SEC’s
investigation.

Raytheon has been under scrutiny by the SEC for alleged violations of federal
fair-disclosure laws. In December, Raytheon Chief Financial Officer Frank Caine
resigned after a series of financial setbacks on his watch, including an
embarrassing sanction by the SEC of both him and the company for the alleged
violation of federal fair-disclosure laws.

Company officials settled the matter without admitting wrongdoing. But the
situation proved personally embarrassing to Mr. Caine, who the SEC alleged had
disclosed sensitive financial data to a handful of analysts in phone calls in
February 2001 without publicly releasing the information, as required. His
comments led some Wall Street analysts to lower their financial expectations for
Raytheon and issue reports to their big institutional clients in a way that may
have disadvantaged smaller investors.

Last August Raytheon said it received a grand-jury subpoena seeking documents
related to activities of an international sales representative hired by the
company and related to a foreign military sales contract in South Korea in the
late 1990s.

-Maria P. Vallejo; Dow Jones Newswires; 201-938-5400