[MamaS]

I wouldn't go off the deep end just yet. Sometimes it IS sexual acting out and sometimes it is just "boys being boys." Talk to your son. Was it a case of "You show me yours and I'll show you mine"?
My son's kindergarten class was studying connecting words "and, but, or" when one little boy stood up, announced "I know what 'but' means" dropped his pants and proceeded to show the entire classroom his! All the parents got a letter home explaining, in case our children mentioned the unscheduled "show and tell". I asked my son what he thought about what happened after I read the letter. He said "Zeke doesn't wear underwear. Why do I have to?" I share this so you can realize that your son's friend may not be traumatized for life. Before you imagine the worst, just talk with your son -- and listen to him without judging.