WALTHAM, Mass. — Defense contractor Raytheon Co. will pay $410 million in cash and securities to settle a lawsuit filed nearly five years ago by shareholders who claimed the company misled them about its financial problems.
The trial was set to start later this month in U.S. District Court in Boston.
"Although Raytheon believes this suit is without merit," the Waltham-based firm said in a statement released Thursday, "the company is pleased to put the uncertainty of the class action litigation behind it, and believes that the decision to settle is in the best interest of its shareholders."
The tentative settlement leaves standing less-sweeping allegations against Raytheon's auditor, PricewaterhouseCoopers LLP, claiming it signed off on misleading financial statements by Raytheon, and stood to garner more than $70 million worth of fees for non-audit services.
Steve Silber, a PricewaterhouseCoopers spokesman, declined to say whether that firm also was involved in the settlement negotiations.
The settlement includes a cash payment of $210 million and stock warrants, which are similar to options, valued at $200 million. It will result in a $335 million reduction in the company's earnings in the current quarter. Those who bought shares in the company from Oct. 7, 1998, through Oct. 12, 1999, are eligible for settlement payments.
The settlement still requires approval from Judge Patti B. Saris.
Raytheon's best-known products include the Tomahawk cruise missile and the Patriot air defense system.
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