Risk & Compliance

Raytheon Offers Up CFO to SEC

The case stems from disclosure and accounting practices several years ago, primarily related to the company's commuter aircraft business.
Stephen TaubApril 18, 2005

Raytheon Co. announced that it placed chief financial officer Edward S. Plinef and an unnamed non-executive on leave as part of a proposed settlement with the Securities and Exchange Commission. Raytheon named vice president and controller Biggs C. Porter as acting CFO.

The defense contractor, which added that it offered to pay a $12 million civil penalty and to consent to the entry of a cease-and-desist order, also said it would recommend that the commission bring action against the two employees.

The case stems from disclosure and accounting practices, primarily related to the company’s Raytheon Aircraft Co. commuter aircraft business, from 1997 to 2001. According to The Wall Street Journal the SEC probe appears to focus on changes in revenue recognition for its Raytheon Aircraft in January 2000. At the time, the parent company restated the unit’s revenue for 1997, 1998, and 1999 and explained that it was complying with a newly issued SEC accounting-rule clarification, the Journal added.

In a separate statement, the defense contractor announced that it agreed to pay $39 million to settle all claims in a class-action lawsuit related to certain issues that allegedly occurred in connection with the July 2000 sale of the company’s engineering and construction business to Washington Group International.

The lawsuit was brought on behalf of investors who purchased WGI stock or bonds from April 17, 2000, through March 2, 2001.

Raytheon added that it continues to deny liability, but that it is glad to put the uncertainty of the litigation behind it and believes that the decision to settle is in the best interest of its shareholders.