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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)
[X]                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                       OR

[ ]               TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE TRANSITION PERIOD FROM _____ TO _____

                        COMMISSION FILE NUMBER : 333-4520

                               RACI HOLDING, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                    <C>
                     DELAWARE                                        51-0350929
(State or other jurisdiction of incorporation or       (I.R.S. Employer Identification No.)
                 organization)
</TABLE>

                               870 REMINGTON DRIVE
                                  P.O. BOX 700
                       MADISON, NORTH CAROLINA 27025-0700
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (336) 548-8700

              (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act: NONE

        Securities registered pursuant to Section 12(g) of the Act: NONE

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

         Yes  [X]          No  [ ]

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.

          [X]

         As of March 23, 2001, the registrant had outstanding 763,050 shares of
Class A Common Stock, par value $.01 per share and 0 shares of Class B Common
Stock, par value $.01 per share.


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                         TABLE OF CONTENTS TO FORM 10-K



PART I....................................................................... 3
    ITEM 1. BUSINESS......................................................... 3
    ITEM 2. PROPERTIES.......................................................12
    ITEM 3. LEGAL PROCEEDINGS................................................13
    ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............15

PART II......................................................................16
    ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
            STOCKHOLDER MATTERS..............................................16
    ITEM 6. SELECTED FINANCIAL DATA..........................................17
    ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS..............................19
    ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
             MARKET RISK.....................................................29
    ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA......................30
    ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
            ACCOUNTING AND FINANCIAL DISCLOSURE..............................56

PART III.....................................................................57
    ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..............57
    ITEM 11. EXECUTIVE COMPENSATION..........................................60
    ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
             MANAGEMENT......................................................64
    ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................65


PART IV......................................................................67
    ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
             ON FORM 8-K.....................................................67



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                                     PART I

ITEM 1.   BUSINESS

         RACI Holding, Inc. ("Holding") and its wholly-owned subsidiary
Remington Arms Company, Inc. ("Remington"), are Delaware corporations organized
in 1993 at the direction of Clayton, Dubilier & Rice, Inc. ("CD&R"), a private
investment firm, to acquire (the "Acquisition") substantially all the assets and
business of Sporting Goods Properties, Inc. ("Sporting Goods") as well as
certain other assets of E. I. du Pont de Nemours and Company ("DuPont" and
together with Sporting Goods, the "Sellers") used in connection with the
marketing of fishline and fishline accessories (such assets and business
collectively, the "Business"). Unless the context otherwise requires, the term
"Company" means Holding and its subsidiaries, including Remington.

         Founded in 1816, the Company is engaged in the design, manufacture and
sale of sporting goods products for the hunting/shooting sports and related
markets. The Company's product lines consist of firearms, ammunition, fishline
and hunting/gun care accessories sold under the Remington(R) name and other
labels, fishing products sold under the Stren(R) and Remington(R) names and
other labels and clay targets.

         Certain market share and competitive position data contained in this
report is based on the most recent data published by the National Sporting Goods
Association ("NSGA"), American Sports Data, Inc. ("ASDI") and the National
Sports Markets Research Group ("SMRG"). The Company believes that such data is
inherently imprecise and may not accurately reflect the Company's market shares
for more recent periods, but is generally indicative of its relative market
share and competitive position.

         The following sets forth the Company's sales for its aggregated
operating segments for the periods shown (see Note 20 to the Company's
consolidated financial statements for the year ended December 31, 2000 appearing
elsewhere in this report):

                                 YEAR ENDED DECEMBER 31,
                             ------------------------------
                              2000        1999        1998
                             ------      ------      ------

Hunting/Shooting Sports      $345.1      $354.0      $333.9
Other (a)                      43.6        49.1        51.9
                             ------      ------      ------

Total Sales                  $388.7      $403.1      $385.8
                             ======      ======      ======

----------------

(a) Consists of fishing products, accessories, clay targets and commercial
powder metal product ("PMP") parts.

HUNTING/SHOOTING SPORTS

         Remington is the only domestic manufacturer of both firearms and
ammunition and, according to the NSGA, was one of the largest U.S. manufacturers
of rifles in 1999. The Company enjoys a domestic market leadership position for
many of its firearms product lines and is one of the three major manufacturers
in the domestic ammunition market. According to ASDI in 1999, approximately 31
million people in the United States enjoy shooting sports, including
approximately 17 million who hunt annually. Overall, the market for
hunting-related products is a large, mature market that the Company believes
generally will remain relatively flat, at least in the near future. Total
domestic consumer expenditures in this market for hunting and firearms
equipment, including ammunition in 1999 was estimated by NSGA to be
approximately $1.7 billion.

         The Company believes that a number of trends currently exist that are
potentially significant to the hunting/shooting sports market. First, the
Company believes that the development of rural property in many locations has
curtailed or eliminated access by hunters to private and public lands. However,
the Company also believes that the number of private hunting facilities is
increasing, as is the availability of alternatives to traditional hunting
activities, such as sporting clays and shooting games that simulate hunting, and
that these trends may help offset increasing restrictions on access and land
use. Second, environmental issues, such as concern about lead in the
environment, may also adversely affect the industry. See "--Environmental
Matters." The Company has developed a line of shotshells that use steel shot
instead of the industry standard lead shot. These shotshells are intended to
reduce the amount of lead being introduced into the environment and to appeal
not only to the shooter legally required to use steel shot, but also to the
environmentally concerned shooter. Third, the Company believes that hunting
safety issues may affect sales of



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firearms, ammunition and other shooting-related products; in the northeastern
United States, for example, some communities permit hunters to use only shotguns
(which have a shorter average range than rifles) for deer hunting in order to
minimize the possibility of shooting accidents in more densely populated areas.
The Company markets specialized ammunition, its Premier(R) Copper Solid(TM)
sabot slug, intended for use in a shotgun, which is designed to give hunters the
accuracy and effectiveness of a rifle. Additionally, the Company believes that
the current trend, or the consumer perception thereof, toward firearms
regulatory proposals and municipal handgun litigation could adversely affect the
firearms and ammunition market. The Company produces firearms and ammunition
that are generally used by hunters and sporting enthusiasts. It does not produce
either "assault weapons" as defined in the federal law enacted in 1994, or
handguns, although it does produce handgun ammunition.

           Although the Company believes that these trends have not had a
material adverse effect on its business in the past, there can be no assurance
that they will not do so in the future, or that industry sales of firearms,
ammunition and other shooting-related products will not decline. See
"--Regulation."

Products

         The Company's Hunting/Shooting Sports product offerings include a
comprehensive line of recreational shotguns and rifles, sporting ammunition and
ammunition reloading components. In the 185 years since the first Remington
firearm was made, Remington has introduced its versions of the metallic
centerfire cartridge (1867), the auto-loading shotgun (1905), the repeating
centerfire rifle (1906), the pump-action shotgun (1907) and the bolt-action
centerfire rifle (1921), all of which became standards in the industry.

         The Company produces and markets a broad selection of shotguns and
rifles under the Remington brand name. The Company's goal has been to market a
combination of general-purpose firearms together with more specialized products
that embody Remington's emphasis on value, performance and design. In addition,
the Company produces custom-made shotguns and rifles in the custom shop at its
Ilion, New York facility.

         In 2000, according to NSGA, the Company had one of the largest shares
of the U.S. retail shotgun market based on sales volume, at approximately 21%,
with its leading competitor holding a market share of approximately 23%. The
Company produces numerous variations of shotguns. The Company's most popular
shotguns, the Model 1100(TM) and Model 11-87(TM) auto-loading and the Model
870(TM) pump-action, range in retail list price from approximately $300 to
$1,200. Remington shotguns are offered in versions that are marketed to both the
novice and the experienced gun owner. Specialty shotguns focus on the deer and
turkey hunting markets, recreational and competitive clay target shooting and
various law enforcement applications.

         Remington was also a leading brand of rifles in the United States in
2000 based on sales volume, according to NSGA, with a market share of
approximately 22%, with its nearest competitor holding a market share of
approximately 21%. The Company's most popular rifles are the Model 700(TM),
Model Seven(TM), Model 7400(TM) and Model 7600(TM) centerfire rifles and the
family of Model 597(TM) rimfire rifles. To appeal to a broad range of shooters,
the Company manufactures these rifles in a wide variety of calibers,
configurations and finishes. The Company presently manufactures three types of
centerfire rifles: bolt-action, pump-action and auto-loading. In addition, the
Company produces bolt-action, pump-action and auto-loading .22 caliber rimfire
rifles. The Company's bolt-action Model 700 rifle is the standard in the
industry, and the Company has versions utilizing stainless steel barrels and
synthetic stocks for weather durability. Retail list prices for the Company's
most popular rifles range from approximately $160 to $1,900.

         In the ammunition market, the Company believes it is one of the largest
brands in the United States. The Company designs, manufactures and markets a
complete line of sporting ammunition products, including shotgun shells,
metallic centerfire ammunition for use in rifles and handguns and .22 caliber
rimfire ammunition. The Company also produces and markets sporting ammunition
components used by smaller ammunition manufacturers, as well as by private
consumers engaged in the practice of reloading centerfire cases or shotgun
shells.

         The Company distributes its ammunition products primarily under the
brand names Remington(R), Peters(R) and UMC(R), through firearms dealers,
sporting goods stores and mass merchandisers. In general, Remington branded
products compete in both the middle and high performance categories, while the
UMC and Peters brands are used for popularly priced ammunition.



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         In 2000, the Company continued to demonstrate industry leadership by
introducing new products that satisfy the need for specialized, high performance
firearms and ammunition. The Model 700 Etron X(TM) bolt-action electronic
centerfire rifle, introduced by the Company in 2000, is the first centerfire
rifle that ignites primers by means of a non-mechanical electronic pulse. The
Company expanded on the Ultra Mag(TM) centerfire rifle cartridge product line by
introducing the 7mm Remington Ultra Mag and the .375 Remington Ultra Mag in
2000. Additional 2000 introductions included Premier(R) high-velocity turkey and
Express(R) high-velocity upland shotshell lines, the Model 300(TM) Ideal(TM)
over and under shotgun and the 3 1/2'" Model 1187 Super Magnum(TM) shotgun.

Service and Warranty

         The Company supports service and repair facilities for all of its
firearm products in order to meet the service needs of its distributors,
customers and consumers nationwide. Effective January 1, 1999, new Remington
firearms products purchased in North America are warranted to the original
purchaser, to be free from defects in material and workmanship for a period of
two years from the registered date of purchase. Prior to January 1, 1999, the
Company had no express consumer warranty program for firearms products, but
honored an implied warranty similar to the new express warranty. The costs
associated with this program in 2000 were comparable to the Company's warranty
costs in 1999 and were not material to its financial condition, results of
operations or cash flows.

Manufacturing

         The Company currently manufactures its Hunting/Shooting Sports products
at three plants, located within the United States. The Company's facility in
Ilion, New York manufactures shotguns, rifles, powder metal parts and
accessories such as extra barrels, and also houses a portion of the Company's
gunsmith repair services and its custom gun shop. The Company's facility in
Mayfield, Kentucky manufactures rimfire and centerfire rifles. The Company's
facility in Lonoke, Arkansas manufactures ammunition and ammunition components.

         To manufacture its various firearm models, the Company utilizes a
combination of parts manufactured from raw materials at the Ilion and Mayfield
facilities or components purchased from independent manufacturers. Prior to
assembly, purchased parts may be modified through several secondary processes,
such as metal removal, joining, heat treating, forming and coloring.
Manufactured parts, including many of the basic metal component parts of the
firearms manufactured by the Company, are produced from raw materials via the
processes of material removal, finishing, heat treating and forming using metal
and plastic injection molding techniques. Quality control processes are employed
throughout the production process, utilizing specifically tailored testing
procedures and analyses. The Company believes that its firearm manufacturing
safety record is excellent.

         The manufacturing of ammunition at Lonoke consists of four major
production areas: Primer, Centerfire, Shotshell and Rimfire. In the Primer area,
ingredients are manufactured on site utilizing two separate precipitation
processes and then combined with fuels and binders to form primer mixture. The
Centerfire operation consists of bullet manufacture, shell manufacture, priming,
loading and packaging. The Shotshell operation consists of shot manufacture,
head manufacture, body manufacture, assembly and priming, loading and packaging.
Lead shot is manufactured by pouring molten lead through a screen, forming lead
spheres that solidify as they fall over 100 feet into a cushion of water. The
other components of a shotshell are made by forming from brass strip, brass
plated steel and polyethylene hulls and wads via several stamping and extrusion
processes. The Rimfire operation consists of shell manufacture, priming, loading
and packaging. Several continuous rotary machines form shells, insert bullets
and add smokeless powder. Throughout the various processes, Company technicians
continuously monitor and test the velocity, pressure and accuracy levels of the
ammunition. The Company believes that its ammunition manufacturing safety record
is among the best in the U.S. ammunition market.

Supply of Raw Materials

         To manufacture its various products, the Company utilizes numerous raw
materials, including steel, lead, brass, powder, plastics and wood, as well as
manufactured parts purchased from independent manufacturers. For a number of the
Company's raw materials, it relies on one or a few suppliers. The Company's
requirements for brass strip and walnut gun stock blanks are each currently
being met by a single vendor. Generally, the Company has had satisfactory,
long-term relationships with these suppliers. The Company has purchase contracts
with certain of these



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suppliers for periods ranging from one to seven years with no commitment to
purchase specified quantities, but no formal contracts with others. Although
alternative vendors could be found for brass strip and walnut gun stock blanks,
any disruption in the Company's relationships with any of these vendors or
reductions in the production of the material supplied could, in each case,
adversely affect the Company's ability to obtain an adequate supply of the
material. The Company believes that it has a good relationship with each of
these vendors and does not currently anticipate any material shortages or
disruptions in supply from these vendors.

         Three companies in the United States and Canada produce smokeless
powder, which is an indispensable component in the ammunition manufactured and
sold by the Company. The Company currently purchases powder from each of these
three suppliers. The Company believes that any two of these three companies
could supply substantially all of the Company's powder requirements. However,
given the complex formulas and production processes involved in manufacturing
the powder mixtures used by the Company, obtaining powder from sources other
than these three companies may not be feasible.

         The Company purchases a number of stamped parts from one vendor. While
alternative vendors can be found to replace this supplier, any disruption in the
Company's relationship with this supplier could result in substantial
expenditures for tooling. The Company believes that it has a good relationship
with its current supplier and does not currently anticipate any material
shortages or disruptions in supply of these stamped parts.

         Alternative sources, many of which are foreign, exist for each of these
materials from which the Company could obtain such raw materials. Nonetheless,
the Company does not currently have significant supply relationships with any of
these alternative sources and cannot estimate with any certainty the length of
time that would be required to establish such a supply relationship, or the
sufficiency of the quantity or quality of materials that could be so obtained.
In addition, the Company may incur additional costs in sourcing raw materials
from alternative producers.

         The price and availability of raw materials are affected by a wide
variety of interrelated economic and other factors, including alternative uses
of materials and their components, changes in production capacity, energy prices
and governmental regulations. Industry competition and the timing of price
increases by suppliers limits to some extent the ability of the Company and
other industry participants to pass raw material cost increases on to customers.

         The Company uses commodity options and futures contracts to hedge
against the risk of increased prices for raw materials. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources -- Financial Instruments."

ALL OTHER PRODUCT LINES

         According to ASDI, as of 1999, approximately 54 million people
participated in fishing activities. Fishing is considered an inexpensive sport
that can be enjoyed by people of widely varying ages, skills and abilities. The
Company distributes a range of monofilament fishline, terminal tackle and
accessories under the brand name Stren, offering eight families of fishline for
the recreational fisherman. In 2000, the Company also began to market
monofilament fishline under the Remington brand name. The Company also markets a
limited line of fishing accessories, including tools, knives, terminal tackle
and lure accessories. SMRG estimates that the U.S. retail market for
recreational fishline was approximately $70 million in 1999, of which the
Company had a 28% market share based on sales dollars.

         The Company purchases a significant amount of the fishline it requires
for its product lines from DuPont under a supply agreement, which is
automatically renewed annually unless either party notifies the other of its
intent to terminate. Any disruption in the Company's relationship with DuPont,
or reductions in fishline production by DuPont, could adversely affect the
Company's ability to obtain an adequate supply of fishline on terms favorable to
the Company. Alternative sources, many of which are foreign, exist from which
the Company could obtain such supply. Although the Company currently has supply
relationships with some of these alternative sources, the Company cannot
estimate with any certainty the sufficiency of the quantity or quality of
materials that could be so obtained. In addition, the Company may incur
additional costs in sourcing raw materials from alternative producers.



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         Remington produces a complete line of clay targets for use in trap,
skeet and sporting clays shooting activities, marketed under the Blue Rock(R)
brand name. The Company's clay targets are manufactured at two facilities
located at Ada, Oklahoma and Findlay, Ohio. Targets are manufactured from a
mixture of limestone and petroleum pitch.

         The Company also markets hunting and shooting accessories (including
safety and security products, parts, gun care and cleaning products, belts,
clips and folding and collectible knives) and commercial powder metal parts for
the automotive, sporting goods, office equipment, hardware, medical and
communication industries. The Company has licensed the Remington mark to certain
third parties that manufacture and market sporting and outdoor products that
complement the Company's product line. See "--Licensing."

MARKETING AND DISTRIBUTION

         The Company's products are distributed throughout the United States and
in over 60 other countries. In the United States, Remington products are
distributed primarily through a network of wholesalers and retailers who
purchase the product directly from the Company for resale predominantly to gun
dealers and end users, respectively. The end users include sportsmen, hunters,
target shooters, gun collectors, and law enforcement and other government
organizations.

         The Company's products are marketed primarily through manufacturer's
sales representatives. In 2000, approximately 64% of the Company's sales
consisted of sales made through the top five manufacturer's sales representative
groups who market principally to wholesalers, dealers and regional chains. Such
sales representatives are prohibited from selling competing goods from other
manufacturers and are paid variable commissions based on the type of products
that are sold. The customers to which the sales representatives market the
Company's products are authorized to carry specified types of Remington products
for a non-exclusive one-year term, though not all carry the full range of
products. These customers generally carry broader lines of merchandise than do
the mass merchandisers and are less seasonal in sales.

         The Company's in-house sales force markets the Company's product lines
directly to national accounts (consisting primarily of mass merchandisers) and
to federal, state and local government agencies. Approximately 20% of the
Company's total net revenues and approximately 18% of the Company's
Hunting/Shooting Sports revenues in 2000 consisted of sales made to a national
account, Wal-Mart Stores, Inc. ("Wal-Mart"). National accounts generally provide
convenient access for hunting and shooting consumers to the Company's products
but carry a more limited array of products and are more seasonal in sales. The
Company's sales to Wal-Mart are not governed by a written contract between the
parties. Although the Company believes its relationship with Wal-Mart is good,
the loss of this customer or a substantial reduction in sales to this customer
could adversely affect the Company's financial condition or results of
operations. No other single customer comprises greater than or equal to 10% of
sales. No material portion of the Company's business is subject to renegotiation
of profits or termination of contracts at the election of a governmental
purchaser.

         Foreign sales were approximately 6% for 2000, 6% for 1999 and 7% for
1998 of the Company's total sales. Hunting/Shooting Sports foreign sales were
approximately 7% for 2000 and 1999, and 8% for 1998 of the Company's
Hunting/Shooting Sports total sales. Company sales personnel and manufacturer's
sales representatives market to foreign distributors generally on a nonexclusive
basis and for a one-year term. Remington also has a wholly owned subsidiary,
Remington International, Ltd., which is a foreign sales corporation.

         Most of the Company's firearms products that are generally used during
the fall hunting season have been sold pursuant to a "dating" plan which allows
the purchasing distributor to buy the products commencing at the beginning of
the Company's dating plan year, and pay for them on extended terms. Discounts
are offered for early payment under this plan. In the first quarter of each
dating plan year, the Company receives orders from its customers, which are
designated as firm by such customers, although the Company may permit
adjustments in outstanding unfilled orders. The Company also follows industry
practice in canceling most firearms orders from its distributors that remain
unfilled at the end of each dating plan year. The Company maintains a dating
plan relating to ammunition that offers discounts for payment prior to the
Company's usual 90-day payment period. Beginning in 2000, as a competitive
measure, the Company also began offering extended payment terms on select
ammunition purchases. For further discussion of seasonality and related matters,
see "Management's Discussion of Financial Condition and Results of Operations --
Purchasing Patterns; Seasonality." The backlog of unfilled total company orders
was approximately $131.5 million as



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of February 28, 2001, compared to $210.0 million in the prior year. The backlog
of unfilled Hunting/Shooting Sports orders was approximately $129.4 million as
of February 28, 2001, compared to $206.6 million in the prior year.

RESEARCH AND DEVELOPMENT

         The Company maintains a research and development program, with 45
employees assigned to these efforts as of December 31, 2000. New products and
improvements to existing products are developed based upon the perceived needs
and demands of consumers, as well as successful products introduced to the
market by the Company's competitors. The Company's research and development
program involves an in-house team of engineers, draftsmen, product testers and
marketing managers using tools such as computer-assisted design and a variety of
consumer research techniques. Research and plant technical staff then
collaborate to produce an experimental prototype, ensuring that products and
manufacturing processes are concurrently designed. Following a successful
prototype, a pilot run is commenced to ensure that plant personnel and equipment
can manufacture the product efficiently. The Company continues to introduce new
products employing innovations in design and manufacturing in both firearms and
ammunition. New firearms developed in 2000 include the Model 710(TM) bolt-action
rifle and the Model 700(TM) titanium ultimate lightweight bolt-action rifle.
Product line expansions include new versions of the Model 11-87 Super Magnum(TM)
shotgun, which the Company believes provides Remington with the most extensive
line of turkey-specific shotguns in the industry. New ammunition offerings in
2000 include the introduction of the 7mm Remington Ultra Mag(TM) and the .375
Remington Ultra Mag(TM) centerfire rifle cartridges as well as new Premier(R)
high-velocity turkey and Express(R) high-velocity upland shotshell lines.

         Research and development expenditures for the continuing operations of
the Company in 2000, 1999 and 1998 amounted to approximately $6.4 million, $6.7
million and $7.3 million, respectively.

PATENTS AND TRADEMARKS

         The Company's operations are not dependent to any significant extent
upon any single or related group of patents. The Company does not believe that
the expiration of any of its patents will have a material adverse effect on the
Company's financial condition or its results of operations. The Company's
operations are not dependent upon any single trademark other than the Remington
word mark, the Remington logo mark, and, to a lesser extent, the Stren mark.
Some of the trademarks used by the Company, however, are identified with and
important to the sale of the Company's products. Some of the more important
trademarks used by the Company are: Remington, the Remington scroll logo, Stren,
Core-Lokt(R) (jacketed centerfire bullets), Express(R) (long range shotshells),
Power Piston(R) (shotshell wads), Premier(R) (the Company's highest quality
ammunition), Copper Solid (solid copper slugs), Golden Saber(TM) (high
performance jacketed hollow point bullets for pistols/revolvers), Nitro-Steel
(high powered steel shotshells), UMC(R) (popularly priced ammunition, in a
limited line of popular specifications), Leadless(TM) (reduced lead-releasing
bullets), Nitro-27(R) (handicap trap loads), Model 700 (a family of bolt-action
centerfire rifles), Model 1100 and Model 11-87 (families of auto-loading
shotguns), Model 7600 (a family of pump-action centerfire rifles), Model 7400 (a
family of auto-loading centerfire rifles), Model 870, including the
Wingmaster(R) and the Express(R) (a family of pump-action shotguns) and Model
597 (a family of .22 caliber rimfire rifles). In June 2000, the Company formed
RA Brands, L.L.C., a Delaware limited liability company and wholly-owned
subsidiary of Remington to which it transferred ownership of all of its patents,
trademarks and copyrights. RA Brands, L.L.C. owns all of the above-referenced
trademarks and licenses them to Remington. The Company believes it has adequate
policies and procedures in place to protect its intellectual property.

         The Company owns the Remington marks (and registrations thereof) for
use in its firearms and ammunition product lines, as well as for certain related
products associated with hunting, wildlife and the outdoors. The Company does
not own, but has the right to use, the Remington mark with respect to certain
other products marketed by it (the "Ancillary Products"), including certain
knives and other merchandising items, pursuant to the Trademark Settlement
Agreement, dated December 5, 1986 (the "Trademark Settlement Agreement"),
between the Company and Remington Products, Inc. ("RPI"). The Trademark
Settlement Agreement resulted from the settlement of certain litigation between
the Company and RPI over the use of the Remington mark on products marketed by
both parties. RPI is not affiliated with Remington, Holding, DuPont or Sporting
Goods and was not involved with the Acquisition. The Trademark Settlement
Agreement provided for the formation of Remington Licensing Corporation ("RLC"),
the capital stock of which is owned equally by the Company and Remington
Products Company LLC ("RPC") as successor to RPI, which also holds as transferee
RPI's interest in respect of the Trademark Settlement Agreement. RLC owns the
Remington



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marks in the United States with respect to products of mutual interest to the
Company and RPC, and licenses such marks on a royalty-free basis to the Company
and RPC for products in their respective markets. The Trademark Settlement
Agreement does limit, however, the Company's ability to expand the use of the
Remington mark into product areas claimed by RPC, particularly personal care
products. The Trademark Settlement Agreement is currently relevant primarily to
the Company's U.S. operations, but does provide for cross-licensing between the
Company and RPC outside the United States. The Trademark Settlement Agreement
also provides that, if certain bankruptcy or insolvency-related events occur
with respect to either of RLC's shareholders, such shareholder may be
contractually required to sell such shareholder's RLC stock to RLC or RLC's
other shareholder at its book value or, under certain circumstances, at fair
market value. While in some cases such requirement may not be enforceable under
the U.S. Bankruptcy Code, such a purchase from the Company could provide RPC
with greater leverage over RLC's licensing relationship with the Company with
respect to Ancillary Products.

         The Company does not own any patents or other intellectual property
with respect to the manufacture of the nylon monofilament fishline products that
it markets and distributes. The Company purchases a significant amount of its
fishline requirements under a supply agreement with DuPont. See "--All Other
Product Lines."

LICENSING

         The Company licenses the Remington and Stren marks to certain companies
that manufacture and market products that complement the Company's product line.
Currently, the Remington mark is licensed for use on, among other things,
sporting and outdoor apparel, caps, gun cases, fishing rods and reels,
non-prescription sun, shooting and safety glasses, tree stands, wildlife feeders
and certain other nostalgia/novelty goods. The Stren mark is licensed for use on
sunglasses, wildlife feeders and caps. The Company strives to ensure that the
quality, image and appeal of these licensed products are consistent with the
high-quality image of its core products. These licenses generally grant an
exclusive right to sell a specific product category, with the standard term
being five years. The Company believes that these licenses increase the market
recognition of the Remington trademark and enhance the Company's ability to
market core products and that licensing facilitates new cross-marketing
promotional opportunities and generates income. Certain of the Company's
licensing efforts are carried out under terms established in the Trademark
Settlement Agreement described above.

COMPETITION

         The markets in which the Company operates are highly competitive.
Competition is based primarily on quality of products, product innovation,
price, and customer service and support. Product image, quality and innovation
are the dominant competitive factors in the firearms industry, with price the
dominant factor in the ammunition industry.

         The Company's competitors vary according to product line. Certain of
these competitors are subsidiaries of large corporations with substantially
greater financial resources than the Company. The Company's shotgun products
compete primarily with products offered by O. F. Mossberg & Sons, Inc., USRAC
(which produces Winchester firearms) and Browning (both owned by the Walloon
regional government of Belgium). The Company's rifles compete primarily with
products offered by Marlin Firearms Co., Ruger & Co., Inc., USRAC, Savage Arms,
Inc. and Browning. In the ammunition market, the Company competes primarily with
the Winchester unit of Olin Corporation, and the Federal Cartridge Co. and CCI
units of Blount, Inc. In August 1999 Blount completed a merger with Lehman
Brothers Merchant Banking Partners II, L.P. The Company's fishing line products
compete primarily with products offered by Pure Fishing, formerly Berkley, Inc.
and JWA Fishing, and private label products.

         The Company believes that it competes effectively with all of its
present competitors. However, there can be no assurance that the Company will
continue to do so, and the Company's ability to compete could be adversely
affected by its leveraged condition.

SEASONALITY

         During 2000 and 1999, the Company's sales have been moderately
seasonal, with higher sales during the third quarter, and lower sales during the
other quarters, principally due to the need to meet customer requirements for
ammunition and, to a lesser extent, firearms, during the primary hunting season.
The Company follows the industry practice of selling firearms pursuant to a
"dating" plan allowing the customer to buy the products commencing at the


                                       9
<PAGE>   10

beginning of the Company's dating plan year. The Company believes that this
dating plan has partially offset the seasonality of the Company's business by
shifting firearms sales to the first quarter. During 2000, as a competitive
measure, the Company also offered extended terms on select ammunition purchases,
which the Company believes had the effect of shifting ammunition sales to the
second quarter. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Purchasing Patterns; Seasonality."

REGULATION

         The manufacture, sale and purchase of firearms are subject to extensive
federal, state and local governmental regulation. The basic federal laws are the
National Firearms Act and the Federal Firearms Act, which were originally
enacted in the 1930s and which have been amended from time to time. Federal laws
generally prohibit the private ownership of fully automatic weapons and place
certain restrictions on the interstate sale of firearms unless certain licenses
are obtained. The Company does not manufacture fully automatic weapons. The
Company possesses valid federal licenses for all of its owned and leased sites
to manufacture and/or sell firearms and ammunition.

         In 1994, a federal law was enacted that generally prohibits the
manufacture of certain firearms defined as "assault weapons" as well as the sale
or possession of "assault weapons" except for those that, prior to the law's
enactment into law, were legally in the owner's possession. This law expressly
exempts approximately 650 models of firearms that are generally used by hunters
and sporting enthusiasts, including all of the Company's current firearms
products. Various bills have been introduced in Congress in recent years to
repeal the ban on semi-automatic assault weapons and large-capacity ammunition
feeding devices; the likelihood of their passage is uncertain. Another federal
law, enacted in 1993 and extended in 1998, the so-called "Brady Bill," mandates
a national system of instant background checks for all firearms purchases from
federally-licensed firearms retail dealers. Legislation has been proposed to
further extend this system to sales made by non-retail sellers at gun shows.

         In addition, bills have been introduced in Congress in the past several
years that would affect the manufacture and sale of handgun ammunition,
including bills to regulate the manufacture, importation and sale of any
projectile that is capable of penetrating body armor, to impose a tax and import
controls on bullets designed to penetrate bullet-proof vests, to prohibit the
manufacture, transfer or importation of .25 caliber, .32 caliber and 9mm handgun
ammunition, to increase the tax on handgun ammunition, to impose a special
occupational tax and registration requirements on manufacturers of handgun
ammunition, and to drastically increase the tax on certain handgun ammunition,
such as 9mm, .25 caliber, and .32 caliber bullets. Certain of these bills would
apply to handgun ammunition of the kind produced by the Company, and
accordingly, if enacted, could have a material adverse effect on the business of
the Company. The Company believes that existing regulations applicable to
handgun ammunition have not had such an effect.

         State and local laws and regulations vary significantly in the level of
restrictions they place on gun ownership and transfer. Some states have recently
enacted, and others are considering, legislation restricting or prohibiting the
ownership, use or sale of certain categories of firearms and/or ammunition.
Although many states have mandatory waiting period laws for handguns in effect,
there are currently few restrictive state regulations applicable to handgun
ammunition. The Company's current firearm and ammunition products generally are
not subject to existing state restrictions on ownership, use or sale of certain
categories of firearms and ammunition, and generally would not be subject to any
known proposed state legislation relating to regulation of "assault weapons."
However, Remington Firearms are covered under several recently enacted state
regulations requiring guns to be sold with internal or external locking
mechanisms.

         The Company believes that existing federal and state regulation
regarding firearms and ammunition has not had a material adverse effect on its
sales of these products to date. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations." However, there can be no
assurance that federal, state, local or foreign regulation of firearms and/or
ammunition will not become more restrictive in the future and that any such
development would not have a material adverse effect on the business of the
Company.

EMPLOYEES

         As of February 28, 2001, the Company employed approximately 2,229
full-time employees of whom nearly 1,997 were engaged in manufacturing,
approximately 187 in sales and general administration and approximately 45 in
research and development. An additional work force of temporary employees is
engaged during peak production schedules.



                                       10
<PAGE>   11

         The United Mine Workers of America ("UMWA") represent hourly employees
at the Company's plant in Ilion, New York. The collective bargaining agreement
with UMWA was renegotiated effective September 1997 for a five-year period
expiring in September 2002. The Company also has a labor agreement with Local
2021 of the United Automobile, Aircraft and Agricultural Implement Workers of
America, U.A.W., which represents hourly employees at the Company's plant in
Findlay, Ohio, which agreement is terminable by either party on notice.
Employees at the Company's Lonoke, Arkansas, Mayfield, Kentucky and Ada,
Oklahoma facilities are not represented by unions. There have been no
significant interruptions or curtailments of operations due to labor disputes
since prior to 1968 and the Company believes that relations with its employees
are satisfactory.

ENVIRONMENTAL MATTERS

         The Company has in place programs that monitor compliance with various
federal, state and local environmental regulations. In the normal course of its
manufacturing operations, the Company is subject to occasional governmental
proceedings and orders pertaining to waste disposal, air emissions and water
discharges into the environment. The Company believes that it is in compliance
with applicable environmental regulations in all material respects, and that the
outcome of any such proceedings and orders will not have a material adverse
effect on its business.

         On June 7, 1999, the Company was informed that it was a potentially
responsible party in a case involving the RSR Corporation (RSR) Superfund site
in Dallas, Texas. The Company shipped lead waste to this facility in the 1980's.
DuPont has accepted responsibilities for this liability under the terms of the
1993 Environmental Liability Services Agreement with the Company. See "--Certain
Indemnities."

         On January 6, 2000 the Company received a request for information
related to shipments of used drums to Container Recycling Inc., a Superfund site
in Kansas City, Kansas. Shipments were made in 1994 and it is possible that the
Company may be identified as a potentially responsible party as the
investigation continues. Based upon the limited number of containers shipped to
this site, the Company believes that if it were found to be a potentially
responsible party, the Company's costs to settle would not be significant.

         Based on information known to the Company, the Company does not expect
current environmental regulations or environmental proceedings and claims to
have a material adverse effect on the results of operations or financial
condition of the Company. However, it is not possible to predict with certainty
the impact on the Company of future environmental compliance requirements or of
the cost of resolution of any future environmental proceedings and claims, in
part because the scope of the remedies that may be required is not certain,
liability under federal environmental laws is joint and several in nature, and
environmental laws and regulations are subject to modification and changes in
interpretation. There can be no assurance that environmental regulation will not
become more burdensome in the future and that any such development would not
have a material adverse effect on the Company.

CERTAIN INDEMNITIES

         In connection with the Acquisition on December 1, 1993 under the asset
purchase agreement (the "Purchase Agreement") among Remington, Sporting Goods,
and DuPont, Remington assumed (i) certain specified liabilities, including
certain trade payables and contractual obligations of Sporting Goods, (ii)
limited financial responsibility for certain product liability claims relating
to disclosed occurrences prior to the Acquisition and for environmental claims
relating to the operation of the Business prior to the Acquisition and (iii)
liabilities for product liability claims relating to occurrences after the
Acquisition, except for claims involving discontinued products. All other
liabilities relating to or arising out of the operation of the Business prior to
the Acquisition are excluded liabilities (the "Excluded Liabilities"), which the
Sellers retained. The Sellers are required to indemnify Remington and its
affiliates for inaccuracies in their Purchase Agreement representations, subject
to certain limitations (environmental matters being addressed separately), for
the Sellers' failure to comply with Purchase Agreement covenants, and in respect
of the Excluded Liabilities, which include, among other liabilities, certain tax
liabilities and certain employee and retiree compensation and benefit
liabilities. The Sellers' overall liability in respect of their representations,
covenants and the Excluded Liabilities, excluding environmental liabilities and
product liability matters relating to events occurring prior to the purchase but
not disclosed in connection with the Purchase Agreement, or relating to
discontinued products, is limited to $324.8 million. With certain exceptions,
the Sellers' representations have expired. The Company made claims for such
indemnification involving product liability issues prior to such expiration. See
"Legal Proceedings."



                                       11
<PAGE>   12

         Remington has fully paid the amount of its limited financial
responsibility for all environmental liabilities relating to the ownership or
operation of the Business prior to the Acquisition, and for liabilities relating
to any product liability claims arising from occurrences prior to the
Acquisition. The Sellers retained all liabilities in respect of such
environmental and product liability matters in excess of such amount, as well as
for all claims relating to discontinued products, and are required to indemnify
Remington with respect thereto. The Sellers are also required to indemnify
Remington for certain other product-related claims for economic loss. In
addition, the Sellers agreed in 1996 to indemnify Remington against a portion of
certain product liability costs involving shotguns manufactured prior to 1995
and arising from occurrences on or prior to November 30, 1999. These
indemnification obligations of the Sellers relating to product liability and
environmental matters (subject to a limited exception) are not subject to any
survival period limitation, deductible or other dollar threshold or cap. The
Sellers and Remington are also party to separate agreements setting forth agreed
procedures for the management and disposition of environmental and product
liability claims and proceedings relating to the operation or ownership of the
Business prior to the Acquisition, and are currently engaged in the joint
defense of certain product liability claims and proceedings. See "Legal
Proceedings."

ITEM 2.  PROPERTIES

         The Company's manufacturing operations are currently conducted at five
owned facilities. The following table sets forth certain information regarding
each of these facilities:

                                                                   SQUARE FEET
      PLANT                           PRODUCT                     (IN THOUSANDS)
------------------  --------------------------------------------  --------------
Ilion, New York     Shotguns; centerfire and rimfire rifles               1,000
Lonoke, Arkansas    Shotshell; rimfire and centerfire ammunition            750
Mayfield, Kentucky  Rimfire rifles and centerfire rifles                     44
Findlay, Ohio       Clay targets                                             40
Ada, Oklahoma       Clay targets                                             21

         The Company believes that these facilities are suitable for the
manufacturing conducted therein and have capacities appropriate to meet existing
production requirements. The Lonoke, Ilion and Mayfield facilities each contain
enclosed ranges for testing firearms and ammunition.

         The Company's headquarters and related operations are conducted in an
office building owned by the Company in Madison, North Carolina. Research and
development is conducted at a facility owned by the Company in Elizabethtown,
Kentucky. All of the real property owned by the Company has been mortgaged to
secure the Company's obligations under the Company's senior bank credit
agreement. The Company also leases or contracts for services from various
warehouses and is a party to a leasing arrangement involving a facility operated
by a Company contractor.


                                       12
<PAGE>   13

ITEM 3.  LEGAL PROCEEDINGS

         Pursuant to the Purchase Agreement, the Sellers retained liability for,
and are required to indemnify the Company against, (1) all product liability
cases and claims (whenever they may arise) involving discontinued products, (2)
all product liability cases and claims involving products that had not been
discontinued as of the Acquisition ("extant products") and relating to
occurrences that took place prior to the Acquisition and (3) certain
environmental liabilities based on conditions existing at the time of the
Acquisition. These indemnification obligations of the Sellers are not subject to
any survival period limitation. The Company has no current information on the
extent, if any, to which the Sellers have insured these indemnification
obligations. Except for certain cases and claims relating to shotguns as
described below and except for all cases and claims relating to products
discontinued prior to the Acquisition, the Company generally bears financial
responsibility for product liability cases and claims relating to occurrences
after the Acquisition.

         Since December 1, 1993, the Company has maintained insurance coverage
for product liability claims subject to certain self-insured retentions both on
a per-occurrence basis and in the aggregate for personal injury or property
damage relating to occurrences arising after the Acquisition. The Company
believes that its current product liability insurance coverage for personal
injury and property damage is adequate for its needs. The Company's current
product liability insurance policy provides for a self-insured retention of $0.5
million per occurrence, with an aggregate annual limit of $9.0 million for
liability indemnity and defense and other expenses combined, and aggregate
annual sublimits of $4.5 million for indemnity and $4.5 million for expenses.
The current policy has a batch clause endorsement, which in general provides
that if a batch of the Company's products were to be defective, the Company's
liability for expenses and damages related to the entire batch would be capped
at the amount of self-insured retention for a single occurrence. The current
policy excludes from coverage any pollution-related liability. The current
policy period runs from December 1, 2000 through November 30, 2001. There can be
no assurance that the Company will be able to obtain adequate product liability
insurance coverage upon the expiration of the current policy. Certain of the
Company's post-December 2000 excess insurance coverage expressly does not apply
to actions brought by municipalities as described below.

         As a result of contractual arrangements, the Company manages the joint
defense of product liability litigation involving Remington brand firearms and
Company ammunition products for both Remington and the Sellers. As of December
31, 2000, 19 individual bodily injury cases and claims were pending, primarily
alleging defective product design or manufacture, or failure to provide adequate
warnings, some of these cases seek punitive as well as compensatory damages. Of
these pending individual cases, approximately two involve matters for which the
Sellers retained liability and are required to indemnify the Company. The
remaining approximately 17 of the pending cases involve post-Acquisition
occurrences for which the Company bears responsibility under the Purchase
Agreement; the Sellers have some responsibility for the costs of two of these
cases involving certain shotguns, as described below. One of the pending cases
or claims for which Remington bears financial responsibility involves the
accidental fatal shooting with a Remington Model 700 bolt action rifle of a
nine-year-old boy by his mother after a hunting trip in Montana. Although no
lawsuit has been filed as of March 22, 2001, this incident has been the subject
of repeated local and national media attention. The Company has previously
disposed of a number of other cases involving post-Acquisition occurrences by
settlement.

         As a manufacturer of shotguns and rifles, Remington has been named in
only three of the approximately 30 actions brought by certain municipalities,
primarily against manufacturers and sellers of handguns: (i) City of Boston, et
al. v. Smith & Wesson, et al., No. 99-2590 (Suffolk Super Ct.); (ii) City of St.
Louis, Missouri v. Henry Cernicek, et al., No. 992-01209 (Cir. Ct. St. Louis) &
00 Civil 1895 (U.S. Dist. Ct.. E.D. Missouri); and (iii) City of New York, et
al. v. B.L. Jennings, Inc., et al., 00 Civil 3641 (JBW) (U.S. Dist. Ct.
E.D.N.Y.).

         In the City of Boston case, first filed on June 2, 1999, the City of
Boston and the Boston Public Health Commission claim (among other allegations)
that the distribution practices of defendant firearms manufacturers allegedly
permit their products to enter a secondary market, from which guns may be
obtained by unauthorized users; that defendants have failed to include adequate
safety devices in their firearms to prevent unauthorized use and accidental
misuse; and that defendants' conduct has created a public nuisance. Plaintiffs
seek injunctive relief and money damages (consisting of the cost of providing
certain city services and lost tax and other revenues). By



                                       13
<PAGE>   14

order of July 13, 2000, the trial court denied manufacturer-defendants' motion
to dismiss, and defendants' request for interlocutory appeal of this decision
was denied on September 19, 2000. Discovery is proceeding pursuant to the Joint
Case Management Order, under which trial is presently scheduled for September
2002

         The City of St. Louis makes claims similar to those in the City of
Boston litigation and seeks punitive as well as compensatory damages. The First
Amended Complaint naming Remington was filed on August 15, 2000, in Circuit
Court of the City of St. Louis. The case was removed on November 29, 2000, to
the United States District Court for the Eastern District of Missouri by
third-party defendant, Denel (Pty) Ltd., a firearms manufacturer majority-owned
by the Republic of South Africa. Removal was made pursuant to Title 28, section
1330, of the United States Code, as an action involving a foreign state. As of
March 22, 2001 the City's motion to remand and the manufacturing defendants'
fully-briefed motion to dismiss were pending before the District Court.

         The City of New York, the New York City Health and Hospitals Corp., and
certain city officials filed an Amended Complaint, dated September 1, 2000, in
the United States District Court for the Eastern District of New York naming
Remington and asserting claims similar to those in the City of Boston
litigation. The Company answered on December 1, 2000. To date, there has not
been any substantive activity in this case.

         Motions to intervene had been filed in another such municipal lawsuit,
Chicago v. Beretta U.S.A. Corp. (Cook Co. Ct.), seeking to name as additional
defendants unidentified "ammunition manufacturers." Such intervention was not
permitted by the Court, which, on September 15, 2000, granted the existing
defendants' motion to dismiss the case. The City filed its notice of appeal of
this decision on October 11, 2000, and the parties are in the process of filing
their respective briefs.

         Remington also was named in a lawsuit filed in the United States
District Court for the Eastern District of New York by the National Association
for the Advancement of Colored People ("NAACP") on July 16, 1999, against more
than a hundred defendants involved in the manufacture of firearms. NAACP v. A.A.
Arms, Inc., No. 99-CV-3999 (JBW) (E.D.N.Y.). The complaint, as amended in
October 1999 to add the National Spinal Cord Injury Association as a plaintiff,
seeks injunctive relief rather than monetary damages and contains allegations
about defendants' manufacturing and distribution practices similar to those in
the City of Boston litigation. Plaintiffs purport to limit their claims to the
manufacture and sale of handguns. Remington has not made or sold handguns, as
that term is conventionally understood, for over 60 years. In September 2000,
plaintiffs agreed to dismiss Remington from this action, and on October 10,
2000, the joint stipulation of dismissal was "so ordered" by the Court and filed
three days later.

         The Federal Trade Commission and the attorneys general of several
states have instituted investigations into allegations of anticompetitive
retaliation against Smith & Wesson by other participants in the firearms
industry. To date, Remington has received and replied to civil investigative
demands and subpoenas duces tecum from the State of Connecticut and the Federal
Trade Commission. Remington, which makes only long guns, does not compete with
Smith & Wesson, which makes handguns.

         In recognition of and support of certain legal and legislative
initiatives, the firearms industry has established the Hunting and Shooting
Sports Heritage Fund of which the Company is a member. During 2001, the Company
will contribute a percentage of its domestic net revenue from sales of its
hunting and shooting sports-related products to this organization.

         The number of cases listed above do not include Joe Luna, et al. v.
Remington Arms Company, Inc. and E. I. Du Pont de Nemours and Company et al.
("Luna"), which was first filed in 1989 in Texas district court in Jim Wells
County. The plaintiffs sought certification of a class consisting of all Texas
owners of Model 700 bolt-action rifles seeking the cost of repair of the guns.
In June 1996, the district court certified for class treatment certain limited
issues; this ruling was reversed on appeal. Remington was not named as a
defendant until July 1996, and was not a party to the appeal, although the
appellate courts' decisions should govern class action claims against Remington
as well. The Sellers' obligations with respect to Luna include a requirement
that they indemnify the Company against claims for economic loss involving Model
700 rifles shipped prior to the end of May 1997. Claims involving Model 700
rifles shipped thereafter would be the Company's responsibility and, to the
extent that they do not involve personal injury or property damage, would not be
covered by the Company's product liability insurance.



                                       14
<PAGE>   15

         The Company has made claims for indemnification involving product
liability issues under the Purchase Agreement. In 1996, the Company and the
Sellers agreed that the Sellers would assume financial responsibility for a
portion of the costs relating to product liability claims and cases involving
certain shotguns manufactured prior to mid-1995 and based on occurrences arising
prior to November 30, 1999, and that any claims the Company and the Sellers may
have against each other under the Purchase Agreement relating to shotguns
(excluding various indemnification rights and the allocation of certain costs)
would be released. Any claims between the Company and the Sellers relating to
other product liability issues remain open.

         Because the Company's assumption of financial responsibility for
certain product liability cases and claims involving pre-Acquisition occurrences
was limited to an amount that has now been fully paid, with the Sellers
retaining liability in excess of that amount and indemnifying the Company in
respect thereof, and because of the Company's accruals with respect to such
cases and claims, the Company believes that product liability cases and claims
involving occurrences arising prior to the Acquisition are not likely to have a
material adverse effect upon the financial condition or results of operations of
the Company. Moreover, although it is difficult to forecast the outcome of
litigation, the Company does not believe, in light of relevant circumstances
(including the current availability of insurance for personal injury and
property damage with respect to cases and claims involving occurrences arising
after the Acquisition, the Company's accruals for the uninsured costs of such
cases and claims and the Sellers' agreement to be responsible for a portion of
certain post-Acquisition shotgun-related product liability costs, as described
above, as well as the type of firearms products made by the Company), that the
outcome of all pending post-Acquisition product liability cases and claims will
be likely to have a material adverse effect upon the financial condition or
results of operations of the Company. Nonetheless, in part because of the
uncertainty as to the nature and extent of manufacturer liability for personal
injury due to alleged product defects, especially as to firearms, there can be
no assurance that the Company's resources will be adequate to cover future
product liability occurrences, cases or claims, in the aggregate, or that such a
material adverse effect will not result therefrom. Because of the nature of its
products, the Company anticipates that it will continue to be involved in
product liability litigation in the future.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matter was submitted to a vote of the Company's shareholders during
the fourth quarter of 2000.


                                       15
<PAGE>   16

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

There is no established public trading market for either Holding's or
Remington's common stock. Prior to 1997, the only holder of Holding's Common
Stock was The Clayton & Dubilier Private Equity Fund IV Limited Partnership
("C&D Fund IV"). On August 25, 1997 Holding filed a registration statement on
Form S-8 with the Securities and Exchange Commission to register 12,500 shares
of Class A Common Stock ("Common Stock"), par value $.01 per share, of Holding
for issuance in accordance with the RACI Holding, Inc. Director Stock Purchase
Plan (the "1997 Directors' Plan"). As of December 31, 2000, a total of 11,250
shares of Class A Common Stock had been issued to five directors under the 1997
Directors' Plan and 1,800 shares of Class A Common Stock were issued to five
directors under the 1994 Directors' Plan. See "Security Ownership of Certain
Beneficial Owners and Management." The only holder of Remington's common stock
is Holding. On April 25, 2000, the Company declared a special dividend of
$63.933 per share, in an aggregate amount of $49.1 million, to all shareholders
of record on that date. The Company also declared a special payment to holders
of all stock options and deferred shares of $63.933 per share, in an aggregate
amount of $6.1 million on that date. On October 24, 2000, the Company declared a
special dividend of $7.996 per share, in an aggregate amount of $6.1 million, to
all shareholders of record on October 20, 2000. The Company also declared a
special payment to holders of all stock options and deferred shares of $7.996
per share, in an aggregate amount of $0.8 million on that date. As Holding has
no separate operations, its ability to pay dividends is dependent upon the
extent to which it receives dividends or other funds from Remington. The
declaration and payment of future dividends, if any, will be at the sole
discretion of the Board of Directors of the respective company, subject to the
restrictions set forth in the Amended and Restated Credit Agreement, dated as of
April 28, 2000, among the Company, The Chase Manhattan Bank, Bank of America,
Goldman Sachs Credit Partners L.P. and certain other lenders (the "New Credit
Agreement"), and the indenture for its subordinated notes (the "Indenture"),
which currently restrict the payment of cash dividends to shareholders, and
restrictions, if any, imposed by other indebtedness outstanding from time to
time. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources," "--Credit Agreement"
and "--Notes" and Notes 14 and 15 to the Company's consolidated financial
statements for the year ended December 31, 2000 appearing elsewhere in this
report.


                                       16
<PAGE>   17

ITEM 6.  SELECTED FINANCIAL DATA

The following table sets forth certain selected financial information derived
from the Company's consolidated financial statements as audited by its
independent accountants, PricewaterhouseCoopers LLP, for each of the years in
the five-year period ended December 31, 2000. The table should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," and the Company's consolidated financial statements
and related notes and other financial information included elsewhere in this
report.

<TABLE>
<CAPTION>
                                                                    YEAR ENDED DECEMBER 31,
                                               ---------------------------------------------------------------
                                                 2000          1999          1998          1997          1996
                                               -------       -------       -------       -------       -------
<S>                                            <C>           <C>           <C>           <C>           <C>
STATEMENT OF OPERATIONS DATA:                           (Dollars in Millions, Except Per Share Data)

Sales (a) ................................     $ 388.7       $ 403.1       $ 385.8       $ 384.0       $ 390.4
Gross Profit .............................       132.8         129.9         123.0         113.0         108.7
Operating Expenses .......................        84.8          78.1          75.5          77.6          94.8
Restructuring and Nonrecurring Items .....          --            --            --            --           9.6
Operating Income .........................        48.0          51.8          47.5          32.6           4.3
Interest Expense .........................        15.6          14.1          19.2          23.6          25.1
Income (Loss) before Taxes ...............        32.4          37.7          28.3           9.0         (20.8)
Net Income (Loss) ........................        19.9          23.0          17.2           5.5         (13.8)
Basic Income (Loss) Per Common Share .....       25.10         29.68         22.63          7.33        (18.40)
Diluted Income (Loss) Per Common Share ...       24.49         28.89         22.26          7.33        (18.40)
Dividends Paid per Common & Redeemable
 Share (b) ...............................       71.93            --            --            --            --
Ratio of Earnings to Fixed Charges (c) ...        3.0x          3.7x          2.5x          1.4x          0.2x

OPERATING AND OTHER DATA:
EBITDA as Defined (d) ....................     $  73.0       $  74.0       $  64.2       $  52.2       $  29.4
EBITDA Margin (d) (e) ....................        18.8%         18.4%         16.6%         13.7%          7.5%
Depreciation and Amortization (f) ........     $  16.4       $  16.0       $  15.9       $  15.1       $  13.9
Other Non-cash Charges (g) ...............         1.2           6.2           1.1           3.7            --
Nonrecurring and Restructuring Items (h) .          .5            --          (0.3)          0.8          11.2
Special Payment (b) ......................         6.9            --            --            --            --
Ratio of EBITDA to Interest Expense (d)(f)        5.4x          6.1x          3.7x          2.4x          1.3x
Consolidated Fixed Charge Coverage
   Ratio (i) .............................        4.2x          5.2x          3.4x          2.2x          0.7x
Capital Expenditures .....................     $  17.4       $  13.0       $   8.5       $   5.8       $  22.5
Cash flows provided by (used in):
   Operating Activities ..................        21.8          64.5          56.7          54.0          (2.7)
   Investing Activities ..................       (17.4)        (13.0)         (8.5)         (5.8)        (22.5)
   Financing Activities ..................       (28.0)        (30.1)        (43.9)        (57.2)         33.4

BALANCE SHEET DATA (END OF PERIOD):
Working Capital ..........................     $ 115.9       $  91.1       $  92.7       $ 108.2       $ 136.1
Total Assets .............................       363.1         358.8         354.5         380.7         435.0
Total Debt (j) ...........................       154.6         118.5         146.9         195.0         253.1
Shareholders' Equity .....................        91.7         126.2         103.5          86.3          79.8
</TABLE>

(a)  Sales are presented net of federal excise taxes. Excise taxes were $33.2
     million, $33.8 million, $31.5 million, $31.0 million and $31.7 million for
     the years ended December 31, 2000, 1999, 1998, 1997 and 1996, respectively.
     For the years ended December 31, 1999, 1998 and 1997, Arms Service sales
     (revenue from the parts and repairs operation) of $3.7 million, $5.1
     million and $2.8 million, respectively, have been reclassified from
     operating expenses`.

(b)  On April 25, 2000, the Company declared a special dividend of $63.933 per
     share, in an aggregate amount of $49.1 million, to all shareholders of
     record on that date. The Company also declared a special payment to holders
     of all stock options and deferred shares of $63.933 per share, in an
     aggregate amount of $6.1 million



                                       17
<PAGE>   18

     on that date. On October 24, 2000, the Company declared a special dividend
     of $7.996 per share, in an aggregate amount of $6.1 million, to all
     shareholders of record on October 20, 2000. The Company also declared a
     special payment to holders of all stock options and deferred shares of
     $7.996 per share, in an aggregate amount of $0.8 million on that date.

(c)  For purposes of computing this ratio, earnings consists of earnings before
     income taxes and fixed charges, excluding capitalized interest. Fixed
     charges consist of interest expense, capitalized interest, amortization of
     discount on indebtedness and one-third of rental expense (the portion
     deemed representative of the interest factor). Earnings were inadequate to
     cover fixed charges for the year ended December 31, 1996 by $21.0 million.

(d)  EBITDA as presented is calculated in accordance with the definition of that
     term contained in the New Credit Agreement, and may not be comparable to
     similarly titled measures reported by other companies. Generally, the New
     Credit Agreement defines EBITDA to consist of net income (loss) adjusted to
     exclude cash interest expense, income tax expense, depreciation,
     amortization, non-cash expenses and charges, gain or loss on sale or
     write-off of assets, and extraordinary, unusual or nonrecurring gains,
     losses, charges or credits, amounts paid as permitted dividends that are
     treated as compensation expense ("special payment") and defines interest
     expense as cash interest. EBITDA, and the Ratio of EBITDA to Interest
     Expense, are presented to facilitate a more complete analysis of the
     Company's financial performance, by adding back non-cash and nonrecurring
     items to operating income, as an indicator of the Company's ability to
     generate cash to service debt and other fixed obligations. Investors should
     not rely on EBITDA as an alternative to operating income or cash flows, as
     determined in accordance with generally accepted accounting principles, as
     an indicator of the Company's operating performance, liquidity or ability
     to meet cash needs. See "Management's Discussion and Analysis of Financial
     Condition and Results of Operations" for further discussion of the
     Company's operating income and cash flows.

(e)  Represents EBITDA as a percentage of sales.

(f)  Excludes amortization of deferred financing costs of $2.0 million, $1.8
     million, 2.0 million, $1.7 million and $1.6 million in 2000, 1999, 1998,
     1997 and 1996, respectively, which is included in interest expense.

(g)  Non-cash charges consist of the following: (1) for 2000, a $0.5 million
     loss on disposal of assets and $0.6 million accrual for executive pension
     and $0.1 million for other postretirement benefits, (2) for 1999, a $3.8
     million stock based compensation expense, $1.8 million pension accrual and
     $0.6 million loss on disposal of assets; (3) for 1998, a pension accrual of
     $0.4 million and a $0.7 million loss on disposal of assets and (4) for
     1997, a pension accrual of $3.2 million and a $0.5 million loss on disposal
     of assets.

(h)  Nonrecurring and restructuring expenses excluded in calculating EBITDA
     consist of the following: (1) for 2000, nonrecurring professional fees of
     $0.5 million related to establishment of subsidiaries, (2) for 1998,
     nonrecurring legal charge of $0.4 million and restructuring accrual
     adjustments of $(0.7); (3) for 1997, $0.8 million of unusual and
     nonrecurring charges; (4) for 1996, $4.9 million in restructuring charges,
     a $4.7 million nonrecurring charge related to resolving a dispute with the
     Sellers and $1.6 million for corporate relocation and employee training.

(i)  The Consolidated Fixed Charge Coverage Ratio is a financial measure used in
     the Indenture for the Notes to determine when the Company can incur certain
     kinds of new debt and engage in certain other transactions. It measures the
     ratio of (a) the sum of Consolidated Net Income, Consolidated Interest
     Expense, Consolidated Income Tax Expense and Consolidated Non-Cash Charges
     (including depreciation, amortization and other non-cash charges) deducted
     in computing Consolidated Net Income (Loss), all determined in accordance
     with GAAP, to (b) the sum of Consolidated Interest Expense and cash
     dividends paid, if any, on any Preferred Stock, as each of these terms is
     defined in the Indenture. Generally, the principal difference between the
     Ratio of EBITDA to Interest Expense and the Consolidated Fixed Charge
     Coverage Ratio arises from the exclusion of nonrecurring and restructuring
     expenses, and amounts paid as permitted dividends that are treated as
     compensation expense ("special payment") in calculating EBITDA.

(j)  Total debt consists of long-term debt, current portion of long-term debt
     and capital lease commitments.


                                       18
<PAGE>   19

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

         The following discussion and analysis should be read in conjunction
with the "Selected Financial Data" and the Company's consolidated financial
statements and related notes and the other financial information appearing
elsewhere in this report.

OVERVIEW

General

         The following discussion and analysis relates to Holding, its
subsidiary Remington, and Remington's wholly owned subsidiaries, Remington
International, Ltd., RA Brands, L.L.C. and RA Factors, L.L.C. on a consolidated
basis. Holding has virtually no operations and its only significant asset is its
investment in Remington.

         The Company's business is classified as one aggregated operating
segment, and its revenues are derived primarily from sales of hunting/shooting
sports and related products. This reportable segment accounted for approximately
89% of the Company's sales in 2000, 88% in 1999 and 87% in 1998. Other Company
product lines include firearm-related accessories, clay targets and fishline and
related products.

Business Trends and Initiatives

         The sale of hunting/shooting sports and fishing products depends upon a
number of factors related to the level of consumer spending including the
general state of the economy and the willingness of consumers to spend on
discretionary items. Historically, the general level of economic activity has
significantly affected the demand for sporting goods products in the
hunting/shooting sports and related markets. As economic activity slows, as it
did in the fourth quarter 2000, confidence and discretionary spending by
consumers declines. Management believes that the current economic slowdown
affected sales in the fourth quarter of 2000. Competitive pressures arising from
any significant or prolonged economic downturn could have a material adverse
impact on the Company's financial condition, results of operation or cash flows.

         Although the Company believes that regulation of firearms and
ammunition, and consumer concerns about such regulation, have not had a
significant influence on the market for its firearms and ammunition products
from 1998 through 2000, there can be no assurance that the regulation of
firearms and ammunition will not become more restrictive in the future and that
any such development would not adversely affect these markets. See
"Business--Regulation" and "Legal Proceedings."

         In light of market constraints on sales growth opportunities and the
Company's increased liquidity and working capital needs, the Company continues
to focus on increasing profitability by increasing brand name awareness,
introducing new products and containing costs. Since 1996, the Company has
undertaken a number of cost containment initiatives, strengthened the management
team and invested capital to continue improvement in operating efficiencies at
the manufacturing facilities. The Company's management team continues to focus
on controlling costs and will continue to review all aspects of the Company's
operations with a view towards managing costs in response to competitive
pressures.



                                       19
<PAGE>   20

RESULTS OF OPERATIONS

          The following table shows, for the periods indicated, the percentage
relationships to sales of certain selected financial data. Management's
discussion and analysis of the Company's results of operations compares 2000 to
1999 results, and 1999 to 1998 results.

                       Year Ended     Year Ended     Year Ended
                      December 31,   December 31,   December 31,
                          2000           1999           1998
                          ----           ----           ----
Sales                     100%           100%           100%
Cost of Goods Sold         66             68             68
Gross Profit               34             32             32
Operating Expenses         22             19             20
Operating Profit           12             13             12
Net Income                  5              6              4


Year Ended December 31, 2000 as Compared to Year Ended December 31, 1999

         Sales. Consolidated Sales for the year ended December 31, 2000
decreased $14.4 million or 4% from the year ended December 31, 1999 for the
reasons discussed below. The following table compares sales by segment for each
of the years in the two-year period ended December 31, 2000:

                                        Year Ended December 31,
                             -----------------------------------------
                                         Percent               Percent
                              2000      of Total     1999     of Total
                             -------------------    ------------------

Sales
  Hunting/Shooting Sports    $ 345.1      89%       $ 354.0      88%
  All Other                     43.6      11%          49.1      12%
                             -------                -------
    Consolidated Sales       $ 388.7     100%       $ 403.1     100%
                             =======                =======

         Hunting/Shooting Sports sales decreased $8.9 million or 3% in 2000 as
compared to 1999. Firearms sales of $184.1 million for the year ended December
31, 2000 increased $2.4 million from the year ended December 31, 1999, due to
overall higher pricing of firearm products together with an increase in sales
volumes of higher priced shotguns and centerfire rifles partially offset by
lower sales volumes in the other firearm product categories.

         Ammunition sales of $161.0 million for the year ended December 31, 2000
decreased $11.3 million or 7% from 1999, due primarily to lower sales volumes in
all ammunition categories, mainly shotshell, rimfire and pistol and revolver,
partially offset by higher overall pricing in ammunition products. The decline
in sales volumes resulted from an unanticipated softening in demand during the
fourth quarter of 2000.

         Sales of all other products declined year over year by $5.5 million or
11%. The sales declined primarily as a result of lower demand for certain
fishline and target products, approximately $4.5 million or 15%, slightly offset
by sales of new product introductions in fishline and accessories, mainly gun
safes and gun parts.

         Cost of Goods Sold. Cost of goods sold for 2000 decreased to $255.9
million, a decrease of $17.3 million or 6% from the 1999 level of $273.2
million, resulting primarily from the lower volumes in both the Hunting/Shooting
and All Other segments. As a percentage of sales, cost of goods sold decreased
to 66% in 2000 from 68% in 1999, due



                                       20
<PAGE>   21

mainly to higher overall pricing in the Hunting/Shooting Sports segment,
partially offset by higher other manufacturing costs associated with line
enhancement projects and retiree benefit expense.

         Gross Profit. Gross profit was $132.8 million in 2000, an increase of
$2.9 million, or 2%, from a gross profit of $129.9 million in 1999. The increase
in gross profit was primarily due to the overall favorable pricing in both the
firearms and ammunition product lines along with increased sales of higher
priced shotguns and centerfire rifles.

         Operating Expenses. Operating expenses consist of selling, general and
administrative expenses, research and development expense and other expense.
Operating expenses for 2000 were $84.8 million, an increase of $6.7 million, or
9%, from $78.1 million for 1999.

         Selling, general and administrative expenses for 2000 were $68.3
million, an increase of $3.4 million, or 5% from $64.9 million for 1999. The
increase between the two periods was primarily attributable to the Company's
contributions in 2000 to The Hunting and Shooting Sports Heritage Fund and an
increase in bad debt expense partially offset by planned decreases in marketing
communications expenses.

         Research and development expenses were $6.4 million for 2000, a $0.3
million, or 4%, decrease from $6.7 million in 1999.

         Other period expense of $10.1 million in 2000 includes two special
payments totaling $6.9 million to holders of all stock options and deferred
shares. See Note 15 of the Notes to the Company's consolidated financial
statements herein. Other expense of $6.5 million for 1999 includes $3.1 million
for the Company's portion of expenses incurred in connection with the issuance
of stock and the grant of options under the 1999 Stock Incentive Plan.

         Operating Income. Operating income of $48.0 million in 2000 decreased
by $3.8 million or 7% from 1999's operating income of $51.8 million. Operating
income decreased as a result of the increase in operating expenses partially
offset by the increase in gross profit, as discussed above.

         Interest Expense. Interest expense in, 2000 was $15.6 million, an
increase of $1.5 million, or 11%, from the 1999 level of $14.1 million. The
increase in interest expense was primarily a result of higher borrowings on the
revolver combined with higher interest rates incurred on variable rate debt
partially offset by a reduction in borrowings on the term loan.

Year Ended December 31, 1999 as Compared to Year Ended December 31, 1998

         Sales. Consolidated Sales for the year ended December 31, 1999
increased $17.3 million or 4% from the year ended December 31, 1998. Although
there is an increase in sales from year to year, the Company cannot be assured
that this trend will continue due to the relatively mature and highly
competitive market in which the Company operates. The following table compares
sales by segment for each of the years in the two-year period ended December 31,
1999:

                                        Year Ended December 31,
                             -----------------------------------------
                                         Percent               Percent
                              1999      of Total     1998     of Total
                             -------------------    ------------------

Sales
  Hunting/Shooting Sports    $ 354.0      88%       $ 333.9      87%
  All Other                     49.1      12%          51.9      13%
                             -------                -------
    Consolidated Sales       $ 403.1     100%       $ 385.8     100%
                             =======                =======

         Hunting/Shooting Sports sales increased $20.1 million or 6% in 1999 as
compared to 1998. Firearms sales of $181.7 million for the year ended December
31, 1999 increased $5.9 million from the year ended December 31,



                                       21
<PAGE>   22

1998. The increase primarily resulted from favorable overall pricing and
increased volumes of the pump action shotguns. Ammunition sales of $172.3
million for the year ended December 31, 1999 increased $14.2 million from 1998.
The increase in ammunition sales was primarily due to higher volumes across all
ammunition categories partially offset by unfavorable pricing.

         Sales of all other products declined year over year by $2.8 million or
5%. The decline in the fishing, accessory and target product sales was partially
offset by an increase in sales of the powder metal products. During 1999, sales
in fishing and accessory products decreased $3.3 million, or 9%, from 1998 as a
result of lower volumes in the fishline, knives and gun safe product categories
offset by higher volumes and favorable pricing of gun parts.

         Cost of Goods Sold. Cost of goods sold for 1999 increased to $273.2
million, an increase of $10.4 million or 4% from the 1998 level of $262.8
million. The increase resulted primarily from the higher volumes in both
firearms and ammunition product lines offset by favorable commodity pricing and
cost containment at the manufacturing level. As a percentage of sales, cost of
goods sold was equal to 1998 at 68%.

         Gross Profit. Gross profit was $129.9 million in 1999, an increase of
$6.9 million, or 6%, from a gross profit of $123.0 million in 1998. The increase
in gross profit was primarily due to the overall favorable pricing in firearms
and the increase in volumes in both the firearms and ammunition product lines
offset by unfavorable pricing in ammunition as discussed above and unfavorable
mix in both firearms and ammunition.

         Operating Expenses. Operating expenses consist of selling, general and
administrative expenses, research and development expense and other expense.
Operating expenses for 1999 were $78.1 million, an increase of $2.6 million, or
3%, from $75.5 million for 1998.

         Selling, general and administrative expenses for 1999 were $64.9
million, an increase of $0.3 million, or less than 1% from $64.6 million for
1998. The increase between the two periods was primarily attributable to higher
variable selling expenses, sales commissions and distribution costs relating to
the increase in sales volumes offset by lower legal and marketing communications
expenses. There was no bad debt expense, net of recoveries, in 1999 or 1998.

         Research and development expenses were $6.7 million for 1999, a $0.6
million, or 8%, decrease from $7.3 million in 1998.

         Other period expense of $6.5 million for 1999 increased $2.9 million or
81% from the $3.6 million balance in 1998. The increase resulted primarily from
a non-cash expense of $3.1 million incurred in connection with the issuance of
stock and the grant of options under the 1999 Stock Incentive Plan.

         Operating Income. Operating income increased to $51.8 million in 1999,
an increase of $4.3 million from 1998's operating income of $47.5 million.
Operating income increased primarily as a result of the increase in gross profit
partially offset by the increase in operating expenses, as discussed above.

         Interest Expense. Interest expense, 1999 was $14.1 million, a decrease
of $5.1 million, or 27%, from the 1998 level of $19.2 million. The decrease in
interest expense between periods was principally due to a reduction in average
outstanding debt on the Company's revolving credit facility and lower term debt
levels resulting from scheduled debt repayments and, to a lesser extent, the
reduction in the interest rates on the term debt.


TAXES

         The Company's balance sheet as of December 31, 2000 includes net
deferred tax assets in the amount of $13.3 million. See Note 17 to the Company's
consolidated financial statements for the year ended December 31, 2000 appearing
elsewhere in this report.

         The Company's effective tax rates for 2000, 1999 and 1998 were 38.6%,
39.0% and 39.2%, respectively. These rates were higher than the Federal
statutory rate principally due to the impact of state income taxes and certain
non-deductible expenses.


                                       22
<PAGE>   23

PURCHASING PATTERNS; SEASONALITY

         The Company's firearms products that are generally used during the fall
hunting season may be purchased under an early order or "dating" plan. Under the
dating plan, the Company allows a distributor to purchase these products
commencing in December (the start of the Company's dating plan year) and to pay
for them on extended terms. Discounts are offered for early payment under this
plan. Discounts amounting to $5.0 million were given in 2000 and 1999 and $4.1
were given in 1998. The Company believes that allowing extended payment terms
for early orders helps to level out the demand for these otherwise seasonal
products throughout the year. Historically, use of the dating plan has had the
effect of shifting some firearms sales from the second and third quarters to the
first quarter. The Company believes that the dating plan helps facilitate a more
efficient manufacturing schedule. Use of the dating plan, however, also results
in significant deferral of collection of accounts receivable until the latter
part of the year.

         The Company generally sells ammunition products on standard terms of 90
days or less and offers discounts for earlier payments. Beginning in 2000, as a
competitive measure, the Company also began offering extended payment terms on
select ammunition purchases. Effective with the 1998 sales year, an early order
program was instituted which allows customers an additional 30 days to pay for
ammunition purchased prior to April 1st of each year.

         As a result of the seasonal nature of the Company's sales, combined
with the Company's dating plan billing practices, the Company's working capital
financing needs generally have significantly exceeded cash provided by
operations during the middle of a year, until its extended accounts receivable
were collected in the third and fourth quarters. As a result, the Company's
working capital financing needs tend to be greatest during the spring and summer
months, decreasing during the fall and reaching their lowest point during the
winter. See "Business -- Seasonality."


LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

         Net cash provided by operating activities was $21.8 million and $64.5
million for the years ended December 31, 2000 and 1999, respectively. The
decrease in cash provided by operating activities is primarily a result of a
decrease in earnings and non-cash items mainly related to the 1999 stock based
compensation expense paired with an increase in working capital. Inventories
increased $28.8 million to $99.6 million in 2000 mainly as a result of an
unanticipated decrease in ammunition sales volumes in the third and fourth
quarters. Accounts receivable decreased $5.2 million and accounts payable
increased $1.2 million, primarily as a result of the Company's ongoing working
capital management program to help maximize cash from operations. Net cash used
in investing activities in 2000 and 1999 was $17.4 million and $13.0 million,
respectively, consisting of capital expenditures for maintenance of operations
which extend the useful life of existing equipment and improvement projects
concentrated on enhancing the efficiency of existing facilities. Net cash used
in financing activities in 2000 and 1999 was $28.0 million and $30.1 million,
respectively. The decrease in cash used in financing activities primarily
resulted from an increase in net borrowings under the revolving credit facility
provided under the New Credit Agreement (the "New Revolving Credit Facility")
and the revolving credit facility provided under the Company's previous credit
agreement (the "Old Credit Agreement") in 2000 of $64.5, offset by cash
dividends paid, net of shareholder loan repayments, of $54.8 million. Cash flow
from operating activities for the years ended December 31, 2000, and 1999 was
sufficient to fund the Company's capital expenditure program. Borrowings under
the New Revolving Credit Facility were required to fund cash dividends and
financing costs incurred in connection with the New Credit Agreement.

         Net cash provided by operating activities was $64.5 million and $56.7
million for the years ended December 31, 1999 and 1998, respectively. The
increase in cash provided by operating activities is primarily a result of
improved earnings, non-cash items mainly related to the stock based compensation
expense together with a decrease in working capital. Accounts receivable
decreased $6.4 million to $56.6 million and accounts payable increased $1.7
million primarily as a result of the Company's ongoing working capital
management program to help maximize cash from operations. Net cash used in
investing activities in 1999 and 1998 was $13.0 million and $8.5 million,
respectively, consisting of capital expenditures for maintenance of operations,
which extend the useful life of existing equipment and improvement projects
concentrated on enhancing the efficiency of existing facilities. Net cash used
in financing activities in 1999 and 1998 was $30.1 million and $43.9 million,
respectively. The decrease in the cash used in financing activities primarily
results from the net repayment of $19.9 million on the revolving credit



                                       23
<PAGE>   24

facility under the Old Credit Agreement during 1998. Cash flow from operating
activities for the years ended December 31, 1999 and 1998 was sufficient to fund
the Company's capital expenditure program and scheduled principal payments on
outstanding indebtedness.

Working Capital

         Working capital increased to $115.9 million at December 31, 2000 from
$91.1 million at December 31, 1999 primarily as a result of an increase in
inventory, as a result of a decrease in ammunition sales volume, offset by a
decrease in accounts receivable and an increase in accounts payable, related to
the Company's ongoing working capital management program to help maximize cash
from operations.

Capital Expenditures

         Capital expenditures were $17.4 million, $13.0 million and $8.5 million
in 2000, 1999 and 1998, respectively. The capital expenditures in 2000 were
principally for equipment and improvement projects concentrated on enhancing the
efficiency of existing facilities. The Company anticipates that capital
expenditures in 2001 will be approximately $13.5 million, principally for
equipment that will improve production efficiencies and operations. The Company
expects to fund capital expenditures primarily from operational cash flow and
the New Revolving Credit Facility.

Liquidity

         The Company incurred substantial indebtedness in connection with the
Acquisition. As of December 31, 2000, the Company had outstanding approximately
$154.6 million of indebtedness, consisting of approximately $86.8 million ($86.9
million face amount) in the Notes, $64.5 million in New Revolving Credit
Facility borrowings and $3.3 million in capital lease obligations. As of
December 31, 2000 the Company also had aggregate letters of credit outstanding
of $5.0 million.

         At present, the principal sources of liquidity for the Company's
business and operating needs are internally generated funds from its operations
and revolving credit borrowings under the New Credit Agreement. The Company paid
special dividends of $49.1 million and $6.1 million to stockholders and special
payments of $6.1 million and $0.8 million to holders of stock options and
deferred shares on April 28, 2000 and October 31, 2000, respectively. The
Company believes that it will be able to meet its debt service obligations and
fund its operating requirements with cash flow from operations and revolving
credit borrowings prior to the maturity of the New Revolving Credit Facility,
although no assurance can be given in this regard. In addition, the Company has
implemented certain programs and initiatives in order to improve cash flow from
operations. See "--Cash Flows."

Financial Instruments

         The Company has only limited involvement with financial instruments and
does not use them for trading purposes. Financial instruments, which are a type
of financial derivative instrument, are used to manage well-defined interest
rate and commodity price risks. The criteria to qualify for hedge accounting are
that the instrument must be related to an asset, liability, firm commitment or
anticipated transaction that is probable and whose characteristics and terms
have been identified. In addition, the investment must reduce the risks of
commodity price movements or change the character of the interest rate.

         The Company employs various strategies, including call options, zero
cost collars and futures to hedge the price risk related to firm commitments and
anticipated purchases of lead and copper to be used in the manufacturing
process. The Company buys call options for an up front fee for the right to
purchase a specified amount of metal at a pre-determined price and date. On
occasion, zero cost collars are created by selling put options for quantities
and timing identical to the call options, which in effect pay for the call
options. These put options give a third party the right to sell to the Company a
specified amount of metal at a price which is below the call option price on a
pre-determined date. This zero cost collar results in no up front fee and
insures that the Company can purchase a specified amount of metal within a
specified price range on a pre-determined date. Futures are a commitment to
purchase a given amount of metal at an agreed upon price on a future date with a
settlement between the contract price and the market price at the expiration of
the contract. Hedging gains and losses are offset against purchase price
variances on physical purchases of the commodities.




                                       24
<PAGE>   25

         The amount of premiums paid for commodity contracts outstanding at
December 31, 2000 and 1998 was $0.7 million. There were no call options or
premiums paid for commodity contracts outstanding at December 31, 1999. At
December 31, 2000, 1999 and 1998, the market value of the Company's outstanding
contracts relating to firm commitments and anticipated purchases up to one year
from the respective balance sheet date was $0.3 million, $1.3 million and $0.1
million, respectively. There were no hedging losses related to closed commodity
future contracts included in inventory at December 31, 2000. As of December 31,
1999 and 1998 hedging losses related to closed commodity futures contracts of
$0.2 million were included in inventory. See Note 19 to the Company's
consolidated financial statements for the year ended December 31, 2000 appearing
elsewhere in this report.

         The estimated value of the Company's debt at December 31, 2000 was
$137.3 million compared to a carrying value of $154.6 million. The estimated
value of the Company's debt at December 31, 1999 was $116.3 million compared to
a carrying value of $118.5 million.

         The Company was not a party to any interest rate cap, hedging or other
protection arrangements with respect to its variable rate indebtedness as of
December 31, 2000 or December 31, 1999. See Note 19 to the Company's
consolidated financial statements for the year ended December 31, 2000 appearing
elsewhere in this report.

Credit Agreement

         On April 28, 2000, the Company entered into the New Credit Agreement.
The New Revolving Credit Facility provides for borrowings of up to $170.0
million, with a final maturity of September 30, 2003. Up to $15.0 million of the
New Revolving Credit Facility availability may be used for letters of credit.

         The obligations under the New Credit Agreement are guaranteed by
Holding and are secured by a pledge of the Company's capital stock and by
pledges of and security interests in substantially all the Company's property
and assets including the Company's ownership interests in its subsidiaries RA
Brands, L.L.C. and RA Factors L.L.C. The New Credit Agreement contains various
default provisions and affirmative and negative covenants, including a negative
pledge with respect to the Company's unencumbered assets, and certain financial
covenants that require the Company to meet certain financial ratios and tests.
As of December 31, 2000, the Company was in compliance in all material respects
with the financial covenants under the New Credit Agreement.

         Borrowings under the New Credit Agreement generally bear interest, at
the Company's option, at a variable rate equal to either (i) the rate that is
the highest of the administrative agent's prime rate, or certain alternative
rates, in each case plus up to 1.25% per annum, or (ii) the rate at which
certain Eurodollar deposits are offered in the interbank Eurodollar market plus
up to 2.25% per annum. Upon the Company's delivery to the New Credit Agreement's
administrative agent of the Company's quarterly financial statements, the
interest rate on the Company's New Credit Agreement borrowings can be reduced by
up to 0.5% per annum from levels in effect at April 28, 2000 if the Company has
met certain financial ratios, based on earnings before interest, taxes,
depreciation and amortization ("EBITDA") and total indebtedness, for the four
quarters then ended. Once reduced, such interest rate can also be increased up
to 0.5% per annum if the Company no longer meets the financial ratios making it
eligible for interest rate reduction. Commitment fees of 0.5% are payable on the
average daily unused portion of the New Revolving Credit Facility can be reduced
up to 0.125% based upon the same financial performance measures. On October 31,
2000, the interest rate and commitment fees were reduced 0.5% and 0.125%,
respectively, as a result of the Company's financial performance. Mandatory
prepayments of borrowings may be required under the New Credit Agreement upon
the occurrence of certain changes in control. The weighted average interest rate
for borrowings under the New Revolving Credit Facility under the new Credit
Agreement, and for periods prior to April 28, 2000, the revolving credit
facility under the Old Credit Agreement, was 10.1% in 2000 and 7.1% in 1999.

         Prior to its replacement with the New Credit Agreement, the Old Credit
Agreement required the Company to make mandatory prepayments on the term loans
thereunder annually, in an amount equal to 50% of the Company's Excess Cash Flow
(as defined therein) for the preceding fiscal year. The Company had Excess Cash
Flow of $4.3 million for the year ended December 31, 1999 and accordingly, a
prepayment of $2.2 million was made on March 31, 2000. The Company did not have
Excess Cash Flow for the year ended December 31, 1998 and accordingly no such
prepayment was required in 1999.



                                       25
<PAGE>   26

Notes

         In connection with the Acquisition, the Company issued $100 million
aggregate principal amount of its 9.5% Senior Subordinated Notes due 2003 (the
"Notes"). The interest rate on the Notes is 9.5% per annum. Interest on the
Notes is payable semi-annually and principal is payable at maturity on December
1, 2003.

         During 1999, the Company repurchased approximately $6.3 million of the
Notes at an average price of 99.4% of the face value on the open market with
cash from operations. These repurchases had no material impact on the Company's
results of operations. No repurchases were made during 2000. From time to time,
the Company may continue to repurchase additional amounts of the Notes on the
open market subject to any limitations that may be contained in the New Credit
Agreement and the Indenture.

PRODUCT LIABILITY

         For information concerning product liability cases and claims involving
the Company, see "Legal Proceedings." Because the Company's assumption of
financial responsibility for certain product liability cases and claims
involving pre-Acquisition occurrences was limited, to an amount that has now
been fully paid, with the Sellers retaining liability in excess of that amount
and indemnifying the Company in respect thereof, the Company believes that
product liability cases and claims involving occurrences arising prior to the
Acquisition are not likely to have a material adverse effect upon the financial
condition or results of operations of the Company. While it is difficult to
forecast the outcome of litigation, the Company does not believe, in light of
relevant circumstances (including the current availability of insurance for
personal injury and property damage with respect to cases and claims involving
occurrences arising after the Acquisition, the Company's accruals for the
uninsured costs of such cases and claims and the Seller's agreement to be
responsible for certain post-Acquisition shotgun-related product liability
costs, as well as the type of firearms products made by the Company), that the
outcome of all pending product liability cases and claims will be likely to have
a material adverse effect upon the financial condition or results of operations
of the Company. However, in part because of the uncertainty as to the nature and
extent of manufacturer liability for personal injury due to alleged product
defects, especially as to firearms, there can be no assurance that the Company's
resources will be adequate to cover future product liability occurrences, cases
or claims, in the aggregate, or that such a material adverse effect will not
result there from. Because of the nature of its products, the Company
anticipates that it will continue to be involved in product liability cases and
claims in the future.

         Since December 1, 1993 the Company has maintained insurance coverage
for product liability claims for personal injury or property damage relating to
occurrences after the Acquisition, subject to certain self-insured retentions
both on a per-occurrence basis and in the aggregate. The current insurance
policy extends through November 30, 2001. Certain of the Company's post December
2000 insurance coverage expressly does not apply to actions brought by
municipalities as described in "Legal Proceedings." Based on actual defense and
disposition costs incurred by the Company and Sporting Goods with respect to
product liability cases and claims in recent years, management estimates that
the Company's liability for product liability cases and claims outstanding at
December 31, 2000 is in the range of $8.9 million to $12.1 million. Management
estimates that the amount of the self-insured retention accrued each year will
be paid out over the following three to five years. The Company charged $2.6
million, $1.8 million and $2.0 million of payments for product liabilities
(including pre-Acquisition occurrences for which the Company assumed
responsibility) in the years ended December 31, 2000, 1999 and 1998,
respectively, against the amounts previously accrued.

STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NOT YET ADOPTED

         The Company has adopted FASB Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as of January 1, 2001. This
statement requires all derivatives to be recognized as assets or liabilities on
the balance sheet and measured at fair value. Changes in the fair value of
derivatives will be recognized in either net income or other comprehensive
income, depending on the designated purpose of the derivative. The cumulative
effect of adopting this new statement was a decrease in reported comprehensive
net income, net of tax, of $0.2 million as of January 1, 2001.


                                       26
<PAGE>   27

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

         The statements contained in this report (other than the Company's
consolidated financial statements and other statements of historical fact) are
forward-looking statements, including, without limitation, (i) the statement in
"Business--Hunting/Shooting Sports" that the Company believes the markets for
hunting-related products such as shotguns, rifles and ammunition will generally
remain relatively flat at least in the near future; (ii) the statement in
"Business--Hunting/Shooting Sports" that the Company believes that the number of
private hunting facilities is increasing, as is the availability of alternatives
to traditional hunting activities, and that these trends may offset increasing
restriction on access and land use; (iii) the statement in
"Business--Hunting/Shooting Sports" that the Company believes that hunting
safety issues may affect sales of firearms, ammunition and other
shooting-related products; (iv) the statement in "Business--Hunting/Shooting
sports" that the Company believes that the current trend, or the consumer
perception thereof, toward firearms regulatory proposals and municipal handgun
litigation could adversely affect the firearms and ammunition market; (v) the
statement in "Business--Hunting/Shooting Sports" that the Company believes it
has a good relationship with its single-source vendors and does not currently
anticipate material shortages or disruptions in supply from these vendors; (vi)
the statement in "Business--Hunting /Shooting Sports" that the Company believes
it has a good relationship with its stamped parts supplier and does not
currently anticipate any material shortages or disruption in supply of these
stamped parts; (vii) the statement in "Business--Environmental Matters"
concerning the Company's belief that current environmental regulations or the
outcome of any governmental proceedings and orders pertaining to environmental
compliance will not have a material adverse effect on its business; (viii) the
statement in "Business--Environmental Matters" that the Company believes its
costs to settle would not be significant if it were found to be a potentially
responsible party in connection with the Superfund site in Kansas; (ix) other
statements as to management's or the Company's expectations and beliefs
presented in "Business;" (x) the statement in "--Liquidity and Capital
Resources--Capital Expenditures" that the Company anticipates year 2001 capital
expenditures of $22.5 million for equipment that will improve production
efficiencies and operations which it expects to fund primarily from operational
cash flow and borrowings under the New Revolving Credit Facility; (xi) the
statements in "--Liquidity and Capital Resources--Liquidity" concerning the
Company's belief that it will be able to meet its debt service obligations and
fund its operating requirements with cash flow from operations and revolving
credit borrowings prior to the maturity of the New Revolving Credit Facility
and; (xii) the statement in "--Liquidity and Capital Resources--Notes" that,
from time to time, the Company may continue to repurchase additional amounts of
the Notes on the open market, subject to the limitations in the New Credit
Agreement and the Indenture; (xiii) the statements in "--Product Liability"
concerning (a) the Company's belief that product liability cases and claims
involving occurrences arising prior to the Acquisition are not likely to have a
material adverse effect upon the financial condition or results or operations of
the Company, (b) the Company's belief that the outcome of all pending product
liability cases and claims will not have a material adverse effect upon the
financial condition or result of operations of the Company and (c) management's
estimates concerning the Company's liability for product liability cases and
claims relating to occurrences arising during 2000, 1999 and 1998 and the time
period during which the amount of the Company's self insured retention will be
paid out; (xiv) other statements as to management's or the Company's
expectations and beliefs presented in this "Management's Discussion and Analysis
of Financial Condition and Results of Operations;" (xv) the statements in "Legal
Proceedings" concerning (a) the Company's belief that its current product
liability insurance coverage for personal injury and property damage is adequate
for its needs, (b) the Company's belief that appellate courts' decision in Luna
should govern class action claims against Remington and the Sellers, (c) the
Company's belief that although it anticipates that it will continue to be
involved in product liability cases and claims in the future, the outcome of all
pending product liability cases and claims will not be likely to have a material
adverse effect upon the financial conditions or results of operations of the
Company and (d) the Company's anticipation that it, as well as other
manufacturers of firearm or ammunition products, will continue to be involved in
product liability cases and claims in the future and (xvi) other statements as
to management's or the Company's expectations and beliefs presented in "Legal
Proceedings."

         Forward-looking statements are made based upon management's current
expectations and beliefs concerning future developments and their potential
effects upon the Company. There can be no assurance that future developments
will be in accordance with management's expectations or that the effect of
future developments on the Company will be those anticipated by management. The
following important factors, and those important factors described elsewhere in
this report (including, without limitation, those discussed in
"Business--Hunting/Shooting Sports," "--Marketing and Distribution," "--Patents
and Trademarks" and "--Environmental Matters" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Overview," "--Taxes,"
"--Liquidity and Capital Resources," "--Product Liability," and "Legal
Proceedings"), or in



                                       27
<PAGE>   28

other Securities and Exchange Commission filings of the Company, could affect
(and in some cases have affected) the Company's actual results and could cause
such results to differ materially from estimates or expectations reflected in
such forward-looking statements.

o    The Company's ability to make scheduled payments of principal or interest
     on, or to refinance its obligations with respect to its indebtedness and to
     comply with the covenants and restrictions contained in the instruments
     governing such indebtedness will depend on its future operating performance
     and cash flow, which are subject to prevailing economic conditions,
     prevailing interest rate levels, and financial, competitive, business and
     other factors beyond its control including the responses of competitors,
     changes in customer inventory management practices, changes in customer
     buying patterns, regulatory developments and increased operating costs.

o    The degree to which the Company is leveraged could have important
     consequences to the holders of the Notes, including the following: (i) the
     Company's ability to obtain additional financing for working capital or
     other purposes in the future may be limited; (ii) a substantial portion of
     the Company's cash flow from operations will be dedicated to the payment of
     principal and interest on its indebtedness, thereby reducing funds
     available for operations; (iii) certain of the Company's borrowings will be
     at variable rates of interest, which could cause the Company to be
     vulnerable to increases in interest rates and (iv) the Company may be more
     vulnerable to economic downturns and be limited in its ability to withstand
     competitive pressures.

o    The Company's ability to meet its debt service and other obligations will
     depend in significant part on customers purchasing the Company's products
     during the fall hunting season. Notwithstanding the Company's cost
     containment initiatives and continuing management of costs, a decrease in
     demand during the fall hunting season for the Company's higher priced,
     higher margin products would require the Company to further reduce costs or
     increase its reliance on borrowings under the New Revolving Credit Facility
     to fund operations. No assurance can be given that the Company would be
     able to reduce costs or increase its borrowings sufficiently to adjust to
     such a reduction in demand.

o    Because of the nature of its products, the Company anticipates that it will
     continue to be involved in product liability litigation in the future. The
     Company's ability to meet its product liability obligations will depend
     (among other things) upon the availability of insurance, the adequacy of
     Company accruals, the Seller's ability to satisfy their obligations to
     indemnify the Company against certain product liability cases and claims
     and Seller's agreement to be responsible for certain post-Acquisition
     shotgun related costs.

o    The Company's sales revenues have been adversely affected by changes in
     inventory management practices at several of its key customers. In
     addition, changes in customer buying patterns at certain key customers have
     increased the seasonality of the Company's sales of certain higher priced,
     higher margin products.

o    The Company faces significant competition. The Company's competitors vary
     according to product line. Certain of these competitors are subsidiaries of
     large corporations with substantially greater financial resources than the
     Company. There can be no assurance that the Company will continue to
     compete effectively with all of its present competition, and the Company's
     ability to so compete could be adversely affected by its leveraged
     condition.

o    Sales made to Wal-Mart Stores, Inc. ("Wal-Mart") accounted for
     approximately 20% of the Company's total net revenues in 2000. The
     Company's sales to Wal-Mart are not governed by a written contract between
     the parties. In the event that Wal-Mart were to significantly reduce or
     terminate its purchases of firearms and/or ammunition from the Company, the
     Company's financial condition or results of operations could be adversely
     affected.

o    The Company utilizes numerous raw materials, including steel, lead, brass,
     plastics and wood, as well as manufactured parts, that are purchased from
     one or a few suppliers. In addition, the Company purchases a significant
     amount of the fishline it requires for its product lines from DuPont under
     a supply agreement that was renewed in January 1997 with subsequent
     addendums, and is annually automatically renewed until notice by either
     party. Any disruption in the Company's relationship with these suppliers
     could increase the cost of operations.



                                       28
<PAGE>   29

o    The purchase of firearms is subject to federal, state and local
     governmental regulation. Regulatory proposals, even if never enacted, may
     affect firearms or ammunition sales as a result of consumer perceptions.
     While the Company does not believe that existing federal and state
     legislation relating to the regulation of firearms and ammunition has had a
     material adverse effect on its sales from 1998 through 2000, no assurance
     can be given that more restrictive regulations, if proposed or enacted,
     will not have a material adverse effect on the Company in the future.

o    As a manufacturer of firearms, the Company has been named as a defendant in
     certain lawsuits brought by municipalities or organizations challenging
     manufacturers' distribution practices and alleging that the defendants have
     also failed to include a variety of safety devices in their firearms. The
     Company's insurance coverage regarding such claims may be limited. In the
     event that additional such lawsuits were filed, or if certain legal
     theories advanced by plaintiffs were to be generally accepted by the
     courts, the Company, its financial condition and results of operations
     could be adversely affected.

         While the Company periodically reassesses material trends and
uncertainties affecting the operations and financial condition in connection
with its preparation of Management's Discussion and Analysis of Financial
Condition and Results of Operations contained in its quarterly and annual
reports, the Company does not intend to review or revise any particular
forward-looking statement referenced in this report in light of future events.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Certain of the Company's financial instruments are subject to market
risks, including interest rate risk. The Company uses commodity futures
contracts to hedge against the risk of increased prices for lead and copper to
be used in the manufacture of the Company's products. At December 31, 2000, the
market value of the Company's outstanding contracts relating to firm commitments
and anticipated purchases up to one year from the respective balance sheet date
was $0.3 million. The Company believes that a near-term change in commodity
prices will not materially impact the consolidated financial position, results
of operations, future earnings, fair value or cash flows of the Company. The
Company was not a party to any interest rate cap or other protection
arrangements with respect to its variable rate indebtedness as of December 31,
2000. Additionally, the Company believes it does not have a material exposure to
fluctuations in foreign currencies. The Company does not hold or issue financial
instruments for trading purposes. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources--Financial Instruments" and Note 19 to the Company's consolidated
financial statements for the year ended December 31, 2000 appearing elsewhere in
this report.



                                       29
<PAGE>   30

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                        REPORT OF INDEPENDENT ACCOUNTANTS


To The Board of Directors and Shareholders of RACI Holding, Inc.

In our opinion, the accompanying consolidated financial statements listed in the
accompanying index appearing under Item 14. (a) (1) on page 67 present fairly,
in all material respects, the financial position of RACI Holding, Inc. and
subsidiaries (the "Company") at December 31, 2000 and 1999, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States of America. In addition, in our opinion, the
financial statement schedule listed in the index appearing under Item 14. (a)
(2) on page 67 presents fairly, in all material respects the information set
forth therein when read in conjunction with the consolidated financial
statements. These financial statements and financial statement schedule are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.



Greensboro, North Carolina
March 5, 2001



                                       30
<PAGE>   31

                       RACI HOLDING, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                  (Dollars in Millions, Except Per Share Data)


<TABLE>
<CAPTION>
                                                                      December 31,    December 31,
                                                                          2000            1999
                                                                      ------------    ------------
<S>                                                                      <C>             <C>

ASSETS
Current Assets
Cash and Cash Equivalents                                                $  2.7          $ 26.3
Accounts Receivable Trade - net of allowances
    of $5.6 and $2.5, respectively                                         51.4            56.6
Inventories                                                                99.6            70.8
Supplies                                                                   12.1            10.6
Prepaid Expenses and Other Current Assets                                   7.7             7.8
Deferred Income Taxes                                                      10.1             9.1
                                                                         ------          ------
  Total Current Assets                                                    183.6           181.2

Property, Plant and Equipment - net                                        91.5            87.8
Intangibles and Debt Issuance Costs - net                                  83.8            84.5
Deferred Income Taxes                                                       3.2             4.3
Other Noncurrent Assets                                                     1.0             1.0
                                                                         ------          ------
  TOTAL ASSETS                                                           $363.1          $358.8
                                                                         ======          ======

LIABILITIES, REDEEMABLE SHARES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable                                                         $ 24.9          $ 23.7
Book Overdraft                                                              1.2             6.4
Short-Term Debt                                                             1.4             1.0
Current Portion of Long-Term Debt                                           1.3            29.2
Product Liabilities                                                         2.1             2.6
Income Taxes                                                                0.3             0.4
Other Accrued Liabilities                                                  36.5            26.8
                                                                         ------          ------
  Total Current Liabilities                                                67.7            90.1

Long-Term Debt, Net of current portion                                    153.3            89.3
Retiree Benefits                                                           34.7            36.9
Product Liabilities                                                         9.4             9.9
                                                                         ------          ------
  Total Liabilities                                                       265.1           226.2

Redeemable Deferred Shares of Class A Common Stock, par
   value $.01; 25,718 and 25,869 issued at December 31, 2000
   and December 31, 1999, respectively                                      5.3             5.4
Redeemable Shares of Class A Common Stock, par
   value $.01; 5,082 issued at December 31, 2000
   and December 31, 1999                                                    1.0             1.0

Commitments and Contingencies

Shareholders' Equity
Class A Common Stock, par value $.01; 1,250,000 shares
   authorized, 763,050 issued and outstanding at
   December 31, 2000 and December 31, 1999                                   --              --
Class B Common Stock, par value $.01; 1,250,000 shares
   authorized, none issued and outstanding                                   --              --
Paid in Capital                                                            76.6            76.6
Due from Shareholders                                                        --            (0.5)
Accumulated Other Comprehensive Loss                                         --            (0.4)
Retained Earnings                                                          15.1            50.5
                                                                         ------          ------
                            Total Shareholders' Equity                     91.7           126.2
                                                                         ------          ------
  TOTAL LIABILITIES, REDEEMABLE SHARES AND SHAREHOLDERS' EQUITY          $363.1          $358.8
                                                                         ======          ======
</TABLE>

                     The accompanying notes are an integral
                part of these consolidated financial statements.



                                       31
<PAGE>   32

                       RACI HOLDING, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations
                  (Dollars in Millions, Except Per Share Data)


<TABLE>
<CAPTION>
                                                                Year Ended December 31,
                                                       -----------------------------------------
                                                         2000             1999             1998
                                                       -------          -------          -------
<S>                                                    <C>              <C>              <C>
Sales                                                  $ 388.7          $ 403.1          $ 385.8

Cost of Goods Sold                                       255.9            273.2            262.8
                                                       -------          -------          -------

   Gross Profit                                          132.8            129.9            123.0

Selling, General and Administrative
  Expenses                                                68.3             64.9             64.6

Research & Development Expenses                            6.4              6.7              7.3

Other Expenses, net                                       10.1              6.5              3.6
                                                       -------          -------          -------

    Operating Income                                      48.0             51.8             47.5

Interest Expense                                          15.6             14.1             19.2
                                                       -------          -------          -------

    Income before Taxes                                   32.4             37.7             28.3

Provision for Income Taxes                                12.5             14.7             11.1
                                                       -------          -------          -------

     Net Income                                        $  19.9          $  23.0          $  17.2
                                                       =======          =======          =======

Per Share Data:

Basic Income Per Share                                 $ 25.10          $ 29.68          $ 22.63
                                                       =======          =======          =======
Diluted Income Per Share                               $ 24.49          $ 28.89          $ 22.26
                                                       =======          =======          =======

Dividend paid per Common and Redeemable Share          $ 71.93          $    --          $    --
                                                       =======          =======          =======
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.



                                       32
<PAGE>   33

                       RACI Holding, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                              (Dollars in Millions)

<TABLE>
<CAPTION>
                                                                             Year Ended December 31,
                                                                    ----------------------------------------
                                                                     2000             1999             1998
                                                                    ------           ------           ------
<S>                                                                 <C>              <C>              <C>
Operating Activities
Net Income                                                          $ 19.9           $ 23.0           $ 17.2
Adjustments to reconcile Net Income to Net Cash
  provided by Operating Activities:
        Restructuring                                                   --               --             (0.7)
        Depreciation                                                  14.0             13.6             13.5
        Amortization                                                   4.4              4.2              4.4
        Loss on disposal of Property, Plant and Equipment              0.5              0.6              0.7
        Provision for Retiree Benefits                                 4.5              0.9              0.8
        Provision for Deferred Income Taxes                            0.1              3.9              5.1
        Stock Based Compensation Expense                                --              4.2              1.6
        Changes in Operating Assets and Liabilities:
                 Accounts Receivable Trade - Net                       5.2              6.4             (6.7)
                 Inventories                                         (28.8)             0.9             18.3
                 Supplies                                             (1.5)              --              2.1
                 Prepaid Expenses and Other Current Assets             0.1              1.8             (0.3)
                 Other Noncurrent Assets                                --              1.4              1.9
                 Accounts Payable                                      1.2              1.7              1.2
                 Product and Environmental Liabilities                (1.0)              --              0.1
                 Income Taxes Payable                                 (0.1)             0.4               --
                 Deferred Stock Payable                               (0.1)              --               --
                 Other Accrued Liabilities                             3.4              1.5             (2.5)
                                                                    ------           ------           ------
    Net Cash provided by Operating Activities                         21.8             64.5             56.7
                                                                    ------           ------           ------

Investing Activities
Purchase of Property, Plant and Equipment                            (17.4)           (13.0)            (8.5)
                                                                    ------           ------           ------
    Net Cash used in Investing Activities                            (17.4)           (13.0)            (8.5)
                                                                    ------           ------           ------

Financing Activities
Proceeds from Revolving Credit Facility                              380.4            158.6            174.2
Principal Payments on Revolving Credit Facility                     (315.9)          (158.6)          (194.1)
Cash Dividends Paid, Net of Shareholder Loan Repayments              (54.8)              --               --
Book Overdraft                                                        (5.2)             0.2              4.3
Principal Payments on Long-Term Debt                                 (29.2)           (24.8)           (21.5)
Repurchase of Senior Subordinated Notes                                 --             (6.3)            (6.7)
Proceeds from Short-Term Debt                                          1.9              1.8              1.0
Principal Payments on Short-Term Debt                                 (1.5)            (1.7)            (1.1)
Debt Issuance Costs                                                   (3.7)              --               --
Proceeds from Issuance of Common Stock                                  --              0.7               --
                                                                    ------           ------           ------
    Net Cash used in Financing Activities                            (28.0)           (30.1)           (43.9)
                                                                    ------           ------           ------

Increase (Decrease) in Cash and Cash Equivalents                     (23.6)            21.4              4.3
Cash and Cash Equivalents at beginning of period                      26.3              4.9              0.6
                                                                    ------           ------           ------
Cash and Cash Equivalents at end of period                          $  2.7           $ 26.3           $  4.9
                                                                    ======           ======           ======

Supplemental Cash Flow Information:
        Cash Paid During the Year for:
                 Interest                                           $ 13.2           $ 13.0           $ 18.0
                 Income Taxes                                       $ 13.7           $  9.7           $  6.8
        Noncash Activities:
                 Capital Lease Obligations Incurred                 $  0.8           $  2.7           $   --
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       33
<PAGE>   34

                       RACI Holding, Inc. and Subsidiaries
     Consolidated Statement of Shareholders' Equity and Comprehensive Income
                              (Dollars in Millions)

<TABLE>
<CAPTION>
                                                                                  Accumulated
                                                                                     Other                          Total
                                                      Paid-in        Due from    Comprehensive     Retained      Shareholders'
                                                      Capital      Shareholders       Loss         Earnings         Equity
                                                      -------      ------------  -------------     --------      -------------
<S>                                                    <C>            <C>            <C>            <C>               <C>
Balance, December 31, 1997                             $ 76.0         $   --         $   --         $ 10.3            86.3

     Comprehensive Income:
       Net Income                                          --             --             --           17.2            17.2
                                                       ------         ------         ------         ------          ------

Balance, December 31, 1998                               76.0             --             --           27.5           103.5
                                                       ------         ------         ------         ------          ------

     Comprehensive Income:
       Net Income                                          --             --             --           23.0            23.0
       Other comprehensive loss:
         Minimum Pension Liability Adjustment              --             --           (0.4)            --            (0.4)
                                                       ------         ------         ------         ------          ------
     Total Comprehensive Income                            --             --           (0.4)          23.0            22.6
                                                       ------         ------         ------         ------          ------

     Issuance of 1,800 shares of Common
       Stock under the 1994 Directors'
       Stock Plan                                         0.4             --             --             --             0.4

     Issuance of 1,250 shares of  Common
       Stock under the 1999 Stock
       Incentive Plan                                     0.2           (0.5)            --             --            (0.3)
                                                       ------         ------         ------         ------          ------

Balance, December 31, 1999                               76.6           (0.5)          (0.4)          50.5           126.2
                                                       ------         ------         ------         ------          ------

     Comprehensive Income:
       Net Income                                          --             --             --           19.9            19.9
       Other comprehensive income:
         Minimum Pension Liability Adjustment              --             --            0.4             --             0.4
                                                       ------         ------         ------         ------          ------
     Total Comprehensive Income                            --             --            0.4           19.9            20.3
                                                       ------         ------         ------         ------          ------

     Repayment of Loans issued
      under the 1999 Stock Incentive Plan                  --            0.5             --             --             0.5

     Cash Dividends Paid                                   --             --             --          (55.3)          (55.3)
                                                       ------         ------         ------         ------          ------

Balance, December 31, 2000                             $ 76.6         $   --         $   --         $ 15.1          $ 91.7
                                                       ======         ======         ======         ======          ======
</TABLE>


              The accompanying notes are an integral part of these
                       consolidated financial statements.


                                       34
<PAGE>   35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

NOTE 1 - BASIS OF PRESENTATION

         The accompanying consolidated financial statements of RACI Holding,
Inc. ("Holding") include the accounts of its subsidiary, Remington Arms Company,
Inc. ("Remington") and Remington's wholly owned subsidiaries, Remington
International, Ltd., RA Brands, L.L.C. and RA Factors, L.L.C. (together with
Remington and Holding, the "Company"). Holding has no material assets other than
its investment in Remington. All intercompany accounts and transactions have
been eliminated in consolidation.

         Certain reclassifications were made to the prior year's financial
information to conform with the current presentation format.

NOTE 2 - DESCRIPTION OF THE BUSINESS

         The Company is engaged in the design, manufacture and sale of sporting
goods products for the hunting/shooting sports and related markets. The
Company's product lines consist of firearms, ammunition, and hunting/gun care
accessories, sold under the Remington name and other labels, fishing products
sold under the Stren and Remington names and other labels and clay targets.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents:

         Cash and cash equivalents include demand deposits with banks and highly
liquid investments with remaining maturities, when purchased, of three months or
less.

Inventories:

         Inventories are stated at the lower of cost or market. The cost of
inventories is determined by the first-in, first-out ("FIFO") method.

Supplies:

         The cost of supplies is determined by the average cost method.

Property, Plant and Equipment:

         Property, plant and equipment are stated at cost. Depreciation is
determined on a straight-line basis over the estimated lives of the assets. The
estimated useful lives are principally 20 to 40 years for buildings and
improvements, and 5 to 15 years for machinery and equipment. Management assesses
property, plant and equipment for impairment whenever facts and circumstances
indicate that the carrying amount may not be fully recoverable. To analyze
recoverability, management projects undiscounted future cash flows over the
remaining life of the asset. If these projected cash flows are less than the
carrying amount of the asset, an impairment loss would be recognized, resulting
in a writedown of property, plant and equipment with a corresponding charge to
income. The impairment loss would be measured based upon the difference between
the carrying amount of the asset and the present value of future cash flows. The
Company uses a discount rate equal to its average cost of funds to discount the
expected future cash flows.

         Maintenance and repairs are charged to operations; replacements and
betterments are capitalized. Computer hardware and software costs under capital
leases are amortized over the term of the lease. The cost and related
accumulated depreciation applicable to assets sold or retired are removed from
the accounts and the gain or loss on disposition is recognized in income.



                                       35
<PAGE>   36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

         Interest is capitalized in connection with the construction of major
facilities. The capitalized interest is recorded as part of the asset to which
it relates and is amortized over the asset's useful life. Approximately $0.5 of
interest was capitalized in 2000. No interest cost was capitalized in 1999 or
1998.

Intangibles and Debt Issuance Costs:

         Intangibles, consisting primarily of goodwill and trade names, are
amortized on a straight-line basis over their estimated useful lives of 40
years. Debt issuance costs are being amortized over the life of the related
debt. Management assesses goodwill for impairment whenever facts and
circumstances indicate that the carrying amount may not be fully recoverable. To
analyze recoverability, management projects undiscounted future cash flows over
the remaining life of the goodwill. If these projected cash flows are less than
the carrying amount of the goodwill, an impairment loss would be recognized,
resulting in a writedown of goodwill with a corresponding charge to income. The
impairment loss would be measured based upon the difference between the carrying
amount of the goodwill and the present value of future cash flows. The Company
uses a discount rate equal to its average cost of funds to discount the expected
future cash flows.

Financial Instruments:

         The Company does not use financial instruments for trading purposes.
Financial instruments, which are a type of financial derivative instrument, are
used to manage well-defined commodity price and interest rate risks and are
considered hedges when certain criteria are met.

         Gains and losses on commodity futures contracts qualifying as hedges
are deferred and recognized as a component of the cost of acquiring the related
inventory. Market values of financial instruments were estimated based on quoted
market prices, where available, or on current rates offered to the Company for
debt with similar terms and maturities. Unless otherwise disclosed, the fair
value of financial instruments approximates their recorded values.

Income Taxes:

         Deferred tax assets and liabilities are based on the difference between
the financial reporting and tax bases of assets and liabilities, applying tax
rates applicable to the year in which the differences are expected to reverse. A
valuation allowance is recorded when it is more likely than not that the
deferred tax asset will not be realized.

Product Liability:

         The Company provides for estimated defense and settlement costs related
to product liabilities when it becomes probable that a liability has been
incurred and reasonable estimates of such costs are available. The Company
maintains insurance coverage for product liability claims, subject to certain
policy limits and to certain self-insured retentions for personal injury or
property damage relating to occurrences arising after December 1, 1993. The
current insurance policy extends through November 30, 2001. Product liabilities
are not recorded net of recoveries that are probable of realization. For the
years ending, December 31, 2000, 1999 and 1998, no recoveries have been
recorded.

Revenue Recognition:

         Sales, net of an estimate for discounts, returns and allowances, and
related cost of sales are recorded in income when goods are shipped at which
time risk of loss and title transfers to the customer. Sales are presented net
of Federal Excise Taxes of $33.2 million, $33.8 million and $31.5 million for
the years ending December 31, 2000, 1999 and 1998, respectively. Adoption of SAB
101, Revenue Recognition, during the fourth quarter 2000 did not have a material
impact on the financial results.


                                       36
<PAGE>   37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

Advertising and Promotional Costs:

         Advertising and promotional costs are expensed as incurred. In 2000,
1999 and 1998 advertising and promotional costs totaled $12.5, $14.8 and $15.0,
respectively.

Self-Insurance:

         The Company is self-insured for elements of its employee benefit plans
including, among others, medical, workers' compensation and elements of its
property and liability insurance programs, but limits its liability through
stop-loss insurance and annual plan maximum coverage limits. Self-insurance
liabilities are based on claims filed and estimates for claims incurred but not
yet reported.

Pension and Postretirement:

         Unrecognized prior service costs are amortized over the estimated
remaining service lives of employees. The unrecognized net gain or loss
resulting from changes in the amount of either the projected benefit obligation
or plan assets from experience different from that assumed are amortized over
five years.

Use of Estimates:

         The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Statement of Financial Accounting Standard Not Yet Adopted

         The Company has adopted FASB Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as of January 1, 2001. This
statement requires all derivatives to be recognized as assets or liabilities on
the balance sheet and measured at fair value. Changes in the fair value of
derivatives will be recognized in either net income or other comprehensive
income, depending on the designated purpose of the derivative. The cumulative
effect of adopting this new statement was a decrease in reported comprehensive
net income, net of tax, of $0.2 million as of January 1, 2001.


NOTE 4 - CONCENTRATIONS OF CREDIT RISK

         Concentrations of credit risk with respect to trade accounts receivable
are generally diversified, except as noted below, due to the large number of
customers comprising the Company's customer base. The Company reviews a
customer's credit history before extending credit and establishes an allowance
for doubtful accounts based upon factors surrounding the credit risk of specific
customers, historical trends and other information. During 2000 bad debt
expense, net of recoveries, was $2.8. There was no bad debt expense, net of
recoveries, in 1999 or 1998.

         Sales to the Company's largest customer approximated 20%, 21% and 19%
of sales in 2000, 1999 and 1998, respectively. The accounts receivable balance
of the Company's largest customer approximated 13% and 20% at December 31, 2000
and 1999, respectively.

         The Company's cash and cash equivalents are invested in high-quality
securities placed with institutions with high credit ratings. This investment
policy limits the Company's exposure to concentrations of credit risk.



                                       37
<PAGE>   38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

NOTE 5 - INVENTORIES

         At December 31, Inventories consist of the following:

                                                        2000             1999
                                                        ----             ----
                Raw Materials                       $    17.6         $    14.9
                Semi-Finished Products                   23.3              18.9
                Finished Products                        58.7              37.0
                                                    ---------         ---------
                          Total                     $    99.6         $    70.8
                                                    =========         =========

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

         At December 31, Property, Plant and Equipment consist of the following:

                                                          2000           1999
                                                          ----           ----
                Land                                  $     1.5      $     1.5
                Building and Improvements                  24.3           23.5
                Leased Assets                               7.3           10.3
                Machinery and Equipment                   122.0          110.7
                Construction in Progress                   13.6            7.7
                                                      ---------      ---------
                          Subtotal                        168.7          153.7
                Less: Accumulated Depreciation            (77.2)         (65.9)
                                                      ---------      ----------
                          Total                       $    91.5      $    87.8
                                                      =========      =========

NOTE 7 - INTANGIBLES AND DEBT ISSUANCE COSTS

         At December 31, Intangibles and Debt Issuance Costs consist of the
following:

                                                           2000         1999
                                                           ----         ----
                Intangibles                            $    95.9     $    95.9
                Debt Issuance Costs                         13.2          12.9
                                                       ---------     ---------
                          Subtotal                         109.1         108.8
                Less: Accumulated Amortization             (25.3)        (24.3)
                                                       ---------     ---------
                          Total                        $    83.8     $    84.5
                                                       =========     =========

NOTE 8 - OTHER ACCRUED LIABILITIES

         At December 31, Other Accrued Liabilities consist of the following:

                                              2000              1999
                                              ----              ----
                Marketing                 $     8.4         $     9.2
                Health Costs                    7.3               6.6
                Compensation                    4.1               3.7
                Retiree Benefits                6.9               -
                Other                           9.8               7.3
                                          ---------         ---------
                          Total           $    36.5         $    26.8
                                          =========         =========



                                       38
<PAGE>   39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

NOTE 9- RETIREE BENEFITS

Pension Plans:

         The Company sponsors a defined benefit pension plan (the "Plan").
Additionally a supplemental defined benefit pension plan (the "SERP") was
adopted January 1, 1998. Under the provisions of SFAS No. 132, the disclosure
requirements for the Plan and the SERP have been combined.

CHANGE IN BENEFIT OBLIGATION:
                                                    2000       1999
                                                    ----       ----
Benefit Obligation at Beginning of Year          $   78.7   $   75.4
Service Cost                                          3.9        4.5
Interest Cost                                         6.7        5.2
Actuarial Assumption Changes                         (2.1)       -
Actuarial  (Gain)/Loss                               10.4       (5.4)
Benefits Paid                                        (1.3)      (1.0)
                                                 --------   --------
Benefit Obligation at End of Year                $   96.3   $   78.7
                                                 ========   ========

 CHANGE IN PLAN ASSETS:
                                                   2000        1999
                                                   ----        ----
Fair Value of Plan Assets at Beginning of Year   $   66.9   $   69.7
Actual Return on Plan Assets                          6.9       (1.8)
Benefits Paid                                        (1.3)      (1.0)
                                                 --------   --------
Fair Value of Plan Assets at End of Year         $   72.5   $   66.9
                                                 ========   ========

 NET AMOUNT RECOGNIZED:
                                                   2000        1999
                                                   ----        ----
Funded Status                                    $  (23.8)  $  (11.8)
Unamortized Prior Service Cost                       (2.3)      (2.6)
Unrecognized Net Actuarial Gain/(Loss)                6.3       (0.7)
                                                 --------   --------
Net amount recognized                            $  (19.8)  $  (15.1)
                                                 ========   ========

AMOUNTS RECOGNIZED IN THE STATEMENT OF
    FINANCIAL POSITION CONSIST OF:
                                                    2000       1999
                                                    ----       ----

Accrued Benefit Liability                           (20.2)     (15.9)
Accumulated Other Comprehensive Income                -          0.4
Intangible Asset                                      0.4        0.4
                                                 --------   --------
Net Amount Recognized                            $  (19.8)  $  (15.1)
                                                 ========   ========

 COMPONENTS OF NET PERIODIC PENSION COST:
                                                   2000         1999      1998
                                                   ----         ----      ----
Service Cost                                     $   3.9    $    4.5   $   4.2
Interest Cost                                        6.7         5.2       4.5
Expected Return on Assets                           (6.2)        1.8      (7.0)
Net Amortization and Deferral                       (0.1)       (9.5)     (0.2)
                                                 -------     -------   -------
Net Periodic Pension Cost                        $   4.3    $    2.0   $   1.5
                                                 =======    ========   =======

ACTUARIAL ASSUMPTIONS:
   Discount Rate                                     7.8%        7.8%      6.8%
   Long-Term Rate on Assets                          8.5%        8.5%      8.5%
   Rate of Compensation Increase                     5.5%        Age-      Age-
                                                              Related   Related


                                       39
<PAGE>   40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

SAVINGS PLANS:

         The Company sponsors a qualified defined contribution plan and matches
50% of a participant's contributions up to a maximum of 6% of a participant's
compensation. All employees hired after May 31, 1996 are also eligible for a
discretionary contribution. The Company's contribution to this plan was $1.4,
$1.4 and $1.3 in 2000, 1999 and 1998, respectively.

         Effective January 1, 1998, the Company adopted a non-qualified defined
contribution plan. The Company's matching contribution was not material during
2000, 1999 and 1998.

Postretirement Benefit Plan:

         The Company sponsors an unfunded postretirement defined benefit plan
which provides certain employees and their covered dependents and beneficiaries
with retiree health and welfare benefits.

CHANGE IN BENEFIT OBLIGATION:
                                             2000            1999
                                             ----            ----
Benefit Obligation at Beginning of Year   $    8.0        $    8.2
Service Cost                                   0.5             0.4
Interest Cost                                  0.9             0.6
Plan Participants' Contributions               0.1             0.1
Amendments                                     2.9             -
Actuarial (Loss)/Gain                          0.6            (1.2)
Benefits Paid                                 (0.1)           (0.1)
                                          --------        --------
Benefit Obligation at End of Year         $   12.9        $    8.0
                                          ========        ========

ACCRUED BENEFIT COST:
                                            2000            1999
                                            ----            ----
Funded Status                             $  (12.9)      $   (8.0)
Unrecognized Net Actuarial Gain               (2.5)          (4.1)
Unrecognized Prior Service Cost               (5.0)          (8.2)
                                          --------       --------
Accrued Postretirement Benefit Obligation $  (20.4)      $  (20.3)
                                          ========       ========

COMPONENTS OF NET PERIODIC BENEFIT COST:
                                            2000            1999          1998
                                            ----            ----          ----
Service Cost                              $    0.5       $    0.4       $   0.4
Interest Cost                                  0.9            0.6           0.5
Net Amortization and Deferral                 (1.2)          (2.1)         (1.6)
                                          --------       --------       -------
Net Periodic Benefit Income/(Expense)     $    0.2       $   (1.1)      $  (0.7)
                                          ========       ========       =======

         To determine the accumulated postretirement benefit obligation, (1) the
assumed discount rate used was 7.8% at December 31, 2000 and 1999, (2) the
assumed health care trend rate was 10.0% and 8.0%, for 2000 and 1999,
respectively, declining gradually to 5.0% in 2010 and remaining at that level
thereafter and (3) the assumed dental benefit rate was 8.0% for 2000 and 6.0%
for 1999, declining gradually to 5.0% in 2007 and remaining at that level
thereafter.

         A one-percentage-point increase or decrease in the assumed health care
cost trend rates would increase or decrease, respectively, the accumulated
postretirement benefit obligation by approximately $0.9 as of December 31, 2000
and increase or decrease the total service and interest cost components by
approximately $0.1.

         The Company also provides certain severance benefits. At December 31,
2000 and 1999, the accumulated postemployment benefit obligation and the annual
periodic cost of these obligations were not significant.



                                       40
<PAGE>   41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

NOTE 10 - DEBT

         Short-term debt consists of unsecured, fixed interest rate agreements
for financing insurance premiums. The weighted average interest rate under these
agreements was 6.9% and 6.7% at December 31, 2000 and 1999, respectively.

         Long-term Debt at December 31, consisted of the following:

                                                             2000        1999
                                                             ----        ----
                Credit Agreement:
                   Term Loans                            $    -       $   27.3
                   Revolving Credit Facility                  64.5         -
                9.5% Senior Subordinated Notes due 2003       86.8        86.7
                Capital Lease Obligations (Note 11)            3.3         4.2
                Other                                         -            0.3
                                                         ---------    --------
                          Subtotal                       $   154.6    $  118.5
                Less: Current Portion                          1.3        29.2
                                                         ---------    --------
                          Total                          $   153.3    $   89.3
                                                         ==========   ========

         On April 28, 2000 the Company entered into an amended and restated
credit agreement with certain lending institutions (the "New Credit Agreement")
that provides for aggregate borrowings of $170.0 under a revolving credit
facility (the "New Revolving Credit Facility"). All borrowings under the New
Credit Agreement are guaranteed by Holding, and are collateralized by
substantially all of the assets of the Company. The Company may borrow up to
$170.0 (including certain letters of credit) under the New Revolving Credit
Facility through September 30, 2003. Financing costs paid in connection with the
New Credit Agreement of $3.7 were capitalized and will be amortized over the
remaining term of the New Credit Agreement. In connection with the amendment and
restatement, the remaining balance on the Term Loans of $18.3 was paid.

         The weighted average interest rate for borrowings under the New
Revolving Credit Facility and, for periods prior to April 28, 2000, the
revolving credit facility provided under the Old Credit Agreement referred to
below was 10.1% in 2000 and 7.1% in 1999. The Company is not currently a party
to any interest rate cap, hedging or other protection arrangements with respect
to its variable rate indebtedness. At December 31, 2000, the Company had $5.0 in
letters of credit and borrowings of $64.5 outstanding with the remaining $100.5
of the New Revolving Credit Facility available for borrowing. At December 31,
1999, the Company had $3.8 in letters of credit and no borrowings outstanding.

         Prior to the amendment and restatement on April 28, 2000, the original
Credit Agreement (the "Old Credit Agreement") required the Company to make
mandatory prepayments on the Term Loans thereunder annually, in an amount equal
to 50% of the Company's Excess Cash Flow (as defined therein) for the preceding
fiscal year. The Company had Excess Cash Flow of $4.3 for the year ended
December 31, 1999 and accordingly, a prepayment of $2.2 was made on March 31,
2000. The Company did not have Excess Cash Flow for the year ended December 31,
1998 and accordingly no such prepayment was required in 1999.

         Borrowings under the New Credit Agreement generally bear interest, at
the Company's option, at a variable rate equal to either (i) the rate that is
the highest of the administrative agent's prime rate, or certain alternative
rates, in each case plus up to 1.25% per annum, or (ii) the rate at which
certain Eurodollar deposits are offered in the interbank Eurodollar market plus
up to 2.25% per annum. Upon the Company's delivery to the New Credit Agreement's
administrative agent of the Company's quarterly financial statements, the
interest rate on the Company's New Credit Agreement borrowings can be reduced by
up to 0.5% per annum from levels in effect at April 28, 2000 if the Company has
met certain financial ratios, based on earnings before interest, taxes,
depreciation and amortization ("EBITDA") and total indebtedness, for the four
quarters then ended. Once reduced, such interest rate can also be increased up
to 0.5% per annum if the Company no longer meets the financial ratios making it
eligible for interest rate reduction. Commitment fees of 0.5% are payable on the
average daily unused portion of the New



                                       41
<PAGE>   42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

Revolving Credit Facility and can be reduced up to 0.125% based upon the same
financial performance measures. On October 31, 2000, the interest rate and
commitment fees were reduced 0.5% and 0.125%, respectively, as a result of the
Company's financial performance. Mandatory prepayments of borrowings may be
required under the New Credit Agreement upon the occurrence of certain changes
in control. At December 31, 2000, the Company was in compliance in all material
respects with the financial covenants under the New Credit Agreement.

         The Company's 9.5% Senior Subordinated Notes (the "Notes"), in an
original aggregate $100.0 principal amount, mature on December 1, 2003. The
Notes were redeemable at the option of the Company, in whole or in part, any
time on or after December 1, 1998. The redemption price ranges from 104.5% of
the principal amount in 1998 to 101.5% in the year 2000. In the event of a
change in control, the Notes may be redeemed at the option of the Company for
the principal amount plus applicable interest and premium at that date. The
Notes, issued by Remington, are subordinate to borrowings under the New Credit
Agreement and are fully and unconditionally guaranteed on a subordinated basis
by Holding. See Note 23 for Holding's Condensed Consolidating Financial Data.
The Notes are not collateralized by any of the Company's assets. The original
issue discounts on the Notes of $0.6 are being amortized at 9.6% per annum. The
reduction in interest payments was $0.5 per year. As of December 31, 2000, the
total accumulated amortization was $0.5.

         The Indenture for the Notes and the New Credit Agreement contain
various restrictions on the Company's ability to incur debt, pay dividends and
enter into certain other transactions. The Old Credit Agreement was amended as
of September 23, 1998 to permit the Company to expend up to $25.0 toward the
repurchase of the Notes. During 1999, the Company repurchased approximately $6.3
of the Notes on the open market with cash from operations. The Company
repurchased the Notes at an average price of 99.4% of the face value on the open
market, and the transactions had no material impact on its results of
operations. The New Credit Agreement permits repurchases of the Notes on the
open market, subject to limitations that may be contained in the New Credit
Agreement and the Indenture. No Notes were repurchased in 2000.

         The aggregate payments of long-term debt outstanding at December 31,
2000, for the next three years are $1.3, $1.4 and $0.6, respectively. The Notes,
with a maturity value of $86.8 as of December 31, 2000, are due in the third
year. Borrowings outstanding under the New Revolving Credit Facility are payable
September 30, 2003.

NOTE 11 - LEASES

         Future minimum lease payments under capital leases and operating
leases, together with the present value of the net minimum capital lease
payments at December 31, 2000, are as follows:

                                                         Capital       Operating
                                                          Leases        Leases
                                                        ---------     ----------
    Minimum Lease Payments for Years
    Ending December 31:
       2001                                             $     1.3     $     1.4
       2002                                                   1.4           1.4
       2003                                                   0.6           1.3
       2004                                                   -             1.1
       2005                                                   -             1.1
       And Thereafter                                         -             4.6
                                                        ---------     ---------
          Total Minimum Lease Payments                        3.3     $    10.9
                                                                      =========
    Less:  Amount representing interest                       0.2
                                                        ---------
          Present Value of Net Minimum Lease Payments   $     3.1
                                                        =========



                                       42
<PAGE>   43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

NOTE 12 - REDEEMABLE CLASS A COMMON STOCK

         Certain employees and key management of the Company who hold or have
the right to receive (i.e.: deferred shares) Class A common stock may require
Holding to repurchase, under certain conditions, namely, death, disability or
retirement at normal retirement age, all of such shares. This repurchase right
terminates upon the consummation of an initial equity public offering of
Holding's Class A common stock. In connection with the redemption feature
described above, Holding has classified, outside of permanent equity, an amount
representing the initial fair value of the redeemable shares. These shares have
not been marked to market since the events of redemption are considered remote.

NOTE 13 - SHAREHOLDERS' EQUITY

          Holding has authorized 2,500,000 shares of Common Stock, consisting of
1,250,000 shares of Class A Common Stock, par value $.01 per share, and
1,250,000 shares of Class B Common Stock, par value $.01 per share. The Class A
Common Stock is voting stock and the Class B Common Stock is non-voting stock.
None of the Class B Common Stock has been issued. Dividends, net of shareholder
loan repayments, of $54.8 million have been paid by the Company on its shares of
common stock. The declaration and payment of future dividends, if any, will be
at the sole discretion of the Board of Directors of the Company, subject to the
restrictions set forth in the Company's New Credit Agreement and the Indenture,
which currently restrict the payment of cash dividends to shareholders, and
restrictions, if any, imposed by other indebtedness outstanding from time to
time.

NOTE 14 - STOCK PURCHASE AND OPTION PLANS

         As of December 31, 2000, the Company has reserved 184,580 shares of the
Class A Common Stock, par value $.01 per share, of Holding ("Common Stock") for
issuance in accordance with the terms of the Amended and Restated RACI Holding,
Inc. Stock Option Plan (the "Option Plan"), the RACI Holding, Inc. 1994
Directors' Stock Plan (the "1994 Directors' Plan"), the RACI Holding, Inc.
Director Stock Purchase Plan (the "1997 Directors' Plan) and the RACI Holding,
Inc. Stock Incentive Plan (the "1999 Stock Incentive Plan").

         As of December 31, 2000, 11,250 shares of Class A Common Stock and
1,250 shares of redeemable deferred stock have been issued under the 1997
Directors' Plan, 1,800 shares have been issued under the 1994 Directors' Plan in
lieu of directors' fees and no shares of Common Stock have been issued under the
Option Plan.

         On May 14, 1999, the board of directors of Holding adopted the 1999
Stock Incentive Plan. As of December 31, 1999; 23,958 shares of Class A Common
Stock have been issued of which 18,876 shares are redeemable deferred stock.
During 2000, 5,592 shares of redeemable deferred stock were issued.

           As of December 31, 1999, the Company has granted 31,221 options to
purchase Common Stock to certain employees at an exercise price of $200 per
share. Of these options, 18,678 options vest ratably on the third, fourth and
fifth anniversaries of the options' grant date and expire in 2009 and 12,543
options vest based on the financial performance of the Company in 1999 and 2000,
but no later than 2008. During 2000, the Company granted 1,617 options to
purchase Common Stock to certain employees at an exercise price of $230 per
share. Of these options, 149 options vest ratably on the third, fourth, and
fifth anniversaries of the options' grant date and expire in 2010 and 1,468
options vest based on the financial performance of the Company in 2000, but no
later than 2009.

         As of December 31, 2000, 70,877 shares of Class A Common Stock remain
available for grant under the above mentioned plans.

         The Option Plan provides for the grant of options (the "Options") which
are generally exercisable in three equal annual installments, beginning on the
second anniversary of the date of grant, subject to the continued employment of
any employee option-holder. The vesting of Options may be accelerated upon the
occurrence of certain events specified in the Option Plan, as amended, including
a change in control as defined therein. Options not


                                       43
<PAGE>   44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

exercised will expire on the tenth anniversary of the date of grant. The
following is a summary of stock option activity under the Option Plan and the
1999 Stock Incentive Plan:

<TABLE>
<CAPTION>
                                    2000                  1999                  1998
                              ------------------    ------------------   ------------------
                                       Wtd. Avg              Wtd. Avg             Wtd. Avg
                               Shares  Ex. Price    Shares   Ex. Price   Shares   Ex. Price
                              -------- ---------    -------  ---------   -------  ---------
<S>                             <C>      <C>        <C>       <C>        <C>        <C>
Outstanding at January 1,       68,838   $  146     37,965    $  100     43,140     $  100
Granted                          1,617   $  230     31,773    $  200        -
Forfeited                       (1,402)  $  124       (900)   $  100     (5,175)    $  100
                              --------   ------    -------    ------    -------     ------
Outstanding at December 31,     69,053   $  148     68,838    $  146     37,965     $  100
                              ========   ======    =======    ======    =======     ======

Exercisable at December 31,     45,297   $  125     38,747    $  116     20,907     $  100
                              ========   ======    =======    ======    =======     ======

Weighted Average
Fair Value Options Granted    $  44.68             $ 31.42                N/A
                              ========             =======              =======
</TABLE>

         The Company has adopted the disclosure-only provision of SFAS No. 123
"Accounting for Stock-Based Compensation." Accordingly, since options have been
granted at an option exercise price equal to the estimated fair value of the
underlying Common Stock, no compensation expense has been recognized with
respect to grants of stock options granted to date. Had compensation expense for
such option grants been recognized under SFAS No. 123 based on the fair value of
such options at the grant dates thereof in 2000 and 1999, the Company's net
income and income per share on a pro forma basis would have been as follows:

                                  2000            1999            1998
                                --------        --------        --------
Net Income      As Reported     $   19.9        $   23.0        $   17.2
                Pro Forma           19.6            22.8            17.1

Basic EPS       As Reported        25.10           29.68           22.63
                Pro Forma          24.72           29.41           22.50

Diluted EPS     As Reported        24.49           28.89           22.26
                Pro Forma          24.12           28.64           22.13


         For purposes of the foregoing the fair value of each option grant is
estimated as of the date of grant using a modified-Black Scholes Option Model
with the following weighted average assumptions for:

                                                     2000          1999
                                                     ----          ----
             Risk Free Interest Rate                 5.5%          6.0%
             Dividend Yields                         0.0%          0.0%
             Volatility Factor                       0.0%          0.0%
             Weighted Average
                   Expected Option Life           4.4 years     3.5 years



                                       44
<PAGE>   45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

NOTE 15 - DIVIDENDS AND OTHER COMPENSATION

         On April 25, 2000, the Company declared a special dividend of $63.933
per share, in an aggregate amount of $49.1, to all shareholders of record on
that date. The Company also declared a special payment to holders of all stock
options and deferred shares of $63.933 per share, in an aggregate amount of $6.1
million on that date, which was recorded as other expense. The special dividend
and special payment were paid on April 28, 2000 with proceeds from the
borrowings under the New Credit Agreement. All loans due from shareholders were
repaid with proceeds from the special dividend and special payment.

         On October 24, 2000, the Company declared a special dividend of $7.996
per share, in an aggregate amount of $6.1, to all shareholders of record on
October 20, 2000. The Company also declared a special payment to holders of all
stock options and deferred shares of $7.996 per share, in an aggregate amount of
$0.8 on that date, which was recorded as other expense. The special dividend and
special payment were paid on October 31, 2000 with proceeds from the borrowings
under the New Credit Agreement.

NOTE 16 - COMMITMENTS AND CONTINGENCIES

         The Company has various purchase commitments, approximating $1.7 for
2001, $1.6 for 2002, $1.5 for 2003, $1.5 for 2004; and $1.5 for 2005, for
services incidental to the ordinary conduct of business. Such commitments are
not at prices in excess of current market prices. In addition, the Company is
required to pay a minimum termination fee of $0.5 should there be a termination
prior to the close of one of the agreements. The Company has purchase contracts
with certain raw materials suppliers, for periods ranging from one to seven
years with no commitment to purchase specified quantities, but no formal
contracts with others, however such contracts had no significant impact on the
financial condition or results of operations during the reportable periods. In
recognition of and support of certain legal and legislative initiatives, the
firearms industry has established the Hunting and Shooting Sports Heritage Fund
of which the Company is a member. During 2001, the Company will contribute a
percentage of its domestic net revenue from sales of its hunting and shooting
sports-related products to this organization.

         Effective January 1, 1999 new Remington firearms products purchased in
North America are warranted, to the original purchaser, to be free from defects
in material and workmanship for a period of two years from the registered date
of purchase. The costs associated with this program in 2000 were comparable to
the Company's warranty costs in 1999 and were not material to its financial
condition, results of operations or cash flows.

         Pursuant to the Asset Purchase Agreement dated as of December 1, 1993
(the "Purchase Agreement"), the Sellers retained liability for, and are required
to indemnify the Company against, (1) all product liability cases and claims
(whenever they may arise) involving discontinued products, (2) all product
liability cases and claims involving products that had not been discontinued as
of the Acquisition ("extant products") and relating to occurrences that took
place prior to the Acquisition and (3) certain environmental liabilities based
on conditions existing at the time of the Acquisition. These indemnification
obligations of the Sellers are not subject to any survival period limitation.
The Company has no current information on the extent, if any, to which the
Sellers have insured these indemnification obligations. Except for certain cases
and claims relating to shotguns as described below and except for all cases and
claims relating to products discontinued prior to the Acquisition, the Company
generally bears financial responsibility for product liability cases and claims
relating to occurrences after the Acquisition.

         Since December 1, 1993, the Company has maintained insurance coverage
for product liability claims subject to certain self-insured retentions both on
a per-occurrence basis and in the aggregate for personal injury or property
damage relating to occurrences arising after the Acquisition. The Company
believes that its current product liability insurance coverage for personal
injury and property damage is adequate for its needs. The Company's current
product liability insurance policy provides for a self-insured retention of $0.5
per occurrence, with an aggregate annual limit of $9.0 for liability indemnity
and defense and other expenses combined, and aggregate annual sublimits of $4.5
for



                                       45
<PAGE>   46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

indemnity and $4.5 for expenses. The current policy has a batch clause
endorsement, which in general provides that if a batch of the Company's products
were to be defective, the Company's liability for expenses and damages related
to the entire batch would be capped at the amount of self-insured retention for
a single occurrence. The current policy excludes from coverage any
pollution-related liability. The current policy period runs from December 1,
2000 through November 30, 2001. There can be no assurance that the Company will
be able to obtain adequate product liability insurance coverage upon the
expiration of the current policy. Certain of the Company's post-December 2000
excess insurance coverage expressly does not apply to actions brought by
municipalities as described below.

         As a result of contractual arrangements, the Company manages the joint
defense of product liability litigation involving Remington brand firearms and
Company ammunition products for both Remington and the Sellers. As of December
31, 2000, 19 individual bodily injury cases and claims were pending, primarily
alleging defective product design or manufacture, or failure to provide adequate
warnings. Some of these cases seek punitive as well as compensatory damages. Of
these pending individual cases, approximately two involve either matters for
which the Sellers retained liability and are required to indemnify the Company.
The remaining approximately 17 of the pending cases involve post-Acquisition
occurrences for which the Company bears responsibility under the Purchase
Agreement; the Sellers have some responsibility for the costs of two of these
cases involving certain shotguns, as described below. One of the pending cases
or claims for which Remington bears financial responsibility involves the
accidental fatal shooting with a Remington Model 700 bolt action rifle of a
nine-year-old boy by his mother after a hunting trip in Montana. Although no
lawsuit has been filed as of March 22, 2001, this incident has been the subject
of repeated local and national media attention. The Company has previously
disposed of a number of other cases involving post-Acquisition occurrences by
settlement.

         As a manufacturer of shotguns and rifles, Remington has been named in
only three of the approximately 30 actions brought by certain municipalities,
primarily against manufacturers and sellers of handguns: (i) City of Boston, et
al. v. Smith & Wesson, et al., No. 99-2590 (Suffolk Super Ct.); (ii) City of St.
Louis, Missouri v. Henry Cernicek, et al., No. 992-01209 (Cir. Ct. St. Louis) &
00 Civil 1895 (U.S. Dist. Ct.. E.D. Missouri); and (iii) City of New York, et
al. v. B.L. Jennings, Inc., et al., 00 Civil 3641 (JBW) (U.S. Dist. Ct.
E.D.N.Y.).

         In the City of Boston case, first filed on June 2, 1999, the City of
Boston and the Boston Public Health Commission claim (among other allegations)
that the distribution practices of defendant firearms manufacturers allegedly
permit their products to enter a secondary market, from which guns may be
obtained by unauthorized users; that defendants have failed to include adequate
safety devices in their firearms to prevent unauthorized use and accidental
misuse; and that defendants' conduct has created a public nuisance. Plaintiffs
seek injunctive relief and money damages (consisting of the cost of providing
certain city services and lost tax and other revenues). By order of July 13,
2000, the trial court denied manufacturer-defendants' motion to dismiss, and
defendants' request for interlocutory appeal of this decision was denied on
September 19, 2000. Discovery is proceeding pursuant to the Joint Case
Management Order, under which trial is presently scheduled for September 2002.

         The City of St. Louis makes claims similar to those in the City of
Boston litigation and seeks punitive as well as compensatory damages. The First
Amended Complaint naming Remington was filed on August 15, 2000, in Circuit
Court of the City of St. Louis. The case was removed on November 29, 2000, to
the United States District Court for the Eastern District of Missouri by
third-party defendant, Denel (Pty) Ltd., a firearms manufacturer majority-owned
by the Republic of South Africa. Removal was made pursuant to Title 28, section
1330, of the United States Code, as an action involving a foreign state. As of
March 22, 2001 the City's motion to remand and the manufacturing defendants'
fully-briefed motion to dismiss were pending before the District Court.

         The City of New York, the New York City Health and Hospitals Corp., and
certain city officials filed an Amended Complaint, dated September 1, 2000, in
the United States District Court for the Eastern District of New York naming
Remington and asserting claims similar to those in the City of Boston
litigation. The Company answered on December 1, 2000. To date, there has not
been any substantive activity in this case.



                                       46
<PAGE>   47

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

         Motions to intervene had been filed in another such municipal lawsuit,
Chicago v. Beretta U.S.A. Corp. (Cook Co. Ct.), seeking to name as additional
defendants unidentified "ammunition manufacturers." Such intervention was not
permitted by the Court, which, on September 15, 2000, granted the existing
defendants' motion to dismiss the case. The City filed its notice of appeal of
this decision on October 11, 2000, and the parties are in the process of filing
their respective briefs.

         Remington also was named in a lawsuit filed in the United States
District Court for the Eastern District of New York by the National Association
for the Advancement of Colored People ("NAACP") on July 16, 1999, against more
than a hundred defendants involved in the manufacture of firearms. NAACP v. A.A.
Arms, Inc., No. 99-CV-3999 (JBW) (E.D.N.Y.). The complaint, as amended in
October 1999 to add the National Spinal Cord Injury Association as a plaintiff,
seeks injunctive relief rather than monetary damages and contains allegations
about defendants' manufacturing and distribution practices similar to those in
the City of Boston litigation. Plaintiffs purport to limit their claims to the
manufacture and sale of handguns. Remington has not made or sold handguns, as
that term is conventionally understood, for over 60 years. In September 2000,
plaintiffs agreed to dismiss Remington from this action, and on October 10,
2000, the joint stipulation of dismissal was "so ordered" by the Court and filed
three days later.

         The Federal Trade Commission and the attorneys general of several
states have instituted investigations into allegations of anticompetitive
retaliation against Smith & Wesson by other participants in the firearms
industry. To date, Remington has received and replied to civil investigative
demands and subpoenas duces tecum from the State of Connecticut and the Federal
Trade Commission. Remington, which makes only long guns, does not compete with
Smith & Wesson, which makes handguns.

         The numbers of cases listed above do not include Joe Luna, et al. v.
Remington Arms Company, Inc. and E. I. Du Pont de Nemours and Company et al.
("Luna"), which was first filed in 1989 in Texas district court in Jim Wells
County. The plaintiffs sought certification of a class consisting of all Texas
owners of Model 700 bolt-action rifles seeking the cost of repair of the guns.
In June 1996, the district court certified for class treatment certain limited
issues; this ruling was reversed on appeal. Remington was not named as a
defendant until July 1996, and was not a party to the appeal, although the
appellate courts' decisions should govern class action claims against Remington
as well. The Sellers' obligations with respect to Luna include a requirement
that they indemnify the Company against claims for economic loss involving Model
700 rifles shipped prior to the end of May 1997. Claims involving Model 700
rifles shipped thereafter would be the Company's responsibility and, to the
extent that they do not involve personal injury or property damage, would not be
covered by the Company's product liability insurance.

           The Company has made claims for indemnification involving product
liability issues under the Purchase Agreement. In 1996, the Company and the
Sellers agreed that the Sellers would assume financial responsibility for a
portion of the costs relating to product liability claims and cases involving
certain shotguns manufactured prior to mid-1995 and based on occurrences arising
prior to November 30, 1999, and that any claims the Company and the Sellers may
have against each other under the Purchase Agreement relating to shotguns
(excluding various indemnification rights and the allocation of certain costs)
would be released. Any claims between the Company and the Sellers relating to
other product liability issues remain open.

         Because the Company's assumption of financial responsibility for
certain product liability cases and claims involving pre-Acquisition occurrences
was limited to an amount that has been fully paid, with the Sellers retaining
liability in excess of that amount and indemnifying the Company in respect
thereof, and because of the Company's accruals with respect to such cases and
claims, the Company believes that product liability cases and claims involving
occurrences arising prior to the Acquisition are not likely to have a material
adverse effect upon the financial condition or results of operations of the
Company. Moreover, although it is difficult to forecast the outcome of
litigation, the Company does not believe, in light of relevant circumstances
(including the current availability of insurance for personal injury and
property damage with respect to cases and claims involving occurrences arising
after the Acquisition, the Company's accruals for the uninsured costs of such
cases and claims and the Sellers' agreement to be responsible for a portion of
certain post-Acquisition shotgun-related product liability costs,



                                       47
<PAGE>   48

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

as described above, as well as the type of firearms products made by the
Company), that the outcome of all pending post-Acquisition product liability
cases and claims will be likely to have a material adverse effect upon the
financial condition or results of operations of the Company. Nonetheless, in
part because of the uncertainty as to the nature and extent of manufacturer
liability for personal injury due to alleged product defects, especially as to
firearms, there can be no assurance that the Company's resources will be
adequate to cover future product liability occurrences, cases or claims, in the
aggregate, or that such a material adverse effect will not result therefrom.
Because of the nature of its products, the Company anticipates that it will
continue to be involved in product liability litigation in the future.

         The Company does not expect current environmental regulations to have a
material adverse effect on the financial condition or results of operations and
has not been identified by regulatory authorities as a potentially responsible
party. However, the Company's liability for future environmental remediation
costs is subject to considerable uncertainty due to the complex, ongoing and
evolving process of identifying the necessity for, and generating cost estimates
for, remedial work. Furthermore, there can be no assurance that environmental
regulations will not become more restrictive in the future.

NOTE 17 - INCOME TAXES

         The provision (benefit) for income taxes consists of the following
components:

                                        2000              1999             1998
                                        ----              ----             ----
                Federal:
                     Current       $    11.8         $     8.4        $     5.5
                     Deferred              -               4.5              4.5
                State:
                     Current             0.7               2.4              0.5
                     Deferred              -              (0.6)             0.6
                                   ---------         ---------        ---------
                                   $    12.5         $    14.7        $    11.1
                                   =========         =========        =========

         The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are presented
below:

                                                               2000       1999
                                                               ----       ----
         Deferred tax assets:
              Accrued employee and retiree benefits         $   19.8   $   20.4
              Product, environmental and other liabilities       6.2        6.7
              Receivables and inventory                          4.3        2.5
              Tax credits                                        0.6        0.5
                                                            --------   --------
                                                                30.9       30.1
                                                            --------   --------
         Deferred tax liabilities:
             Property, plant and equipment                     (12.4)     (12.2)
             Intangibles                                        (5.2)      (4.5)
                                                            --------   --------
                                                               (17.6)     (16.7)
                                                            --------   --------
         Net deferred tax assets                            $   13.3   $   13.4
                                                            ========   ========

         At December 31, 2000 the Company has state tax credit carryforwards of
$0.6 for tax purposes which expire between 2002 and 2013.



                                       48
<PAGE>   49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

         The following is a reconciliation of the statutory federal income tax
rate to the Company's effective income tax rates:

                                               2000      1999     1998
                                               ----      ----     ----
                Federal statutory rate         35.0%     35.0%    35.0%
                State income taxes, net of
                     Federal benefits           2.1       4.6      3.8
                Nondeductible expenses          1.4       1.3      1.9
                Other                           0.1      (1.9)    (1.5)
                                               ----      ----     ----
                Effective income tax rate      38.6%     39.0%    39.2%
                                               ====      ====     ====

NOTE 18 - RELATED PARTY TRANSACTIONS

         The Clayton & Dubilier Private Equity Fund IV Limited Partnership ("C&D
Fund IV"), which owns 750,000 shares of the 763,050 shares of Class A Common
Stock outstanding, or 98.3% at December 31, 2000, is a private investment fund
managed by Clayton, Dubilier & Rice, Inc. ("CD&R"). CD&R receives an annual fee
for management and financial consulting services provided to the Company and
reimbursement of related out-of-pocket expenses. Fees and out-of-pocket expenses
paid to CD&R were $0.5 in 2000, 1999 and 1998.

NOTE 19 - FINANCIAL INSTRUMENTS

         The estimated value of the Company's debt at December 31, 2000 was
$137.3 compared to a carrying value of $154.6. The estimated value of the
Company's debt at December 31, 1999 was $116.3 compared to a carrying value of
$118.5.

         The Company employs various strategies, including call options, zero
cost collars and futures to hedge the price risk related to firm commitments and
anticipated purchases of lead and copper to be used in the manufacturing
process. The Company buys call options for an up front fee for the right to
purchase a specified amount of metal at a pre-determined price and date. On
occasion, zero cost collars are created by selling put options for quantities
and timing identical to the call options, which in effect pay for the call
options. These put options give a third party the right to sell to the Company a
specified amount of metal at a price which is below the call option price on a
pre-determined date. This zero cost collar results in no up front fee and
insures that the Company can purchase a specified amount of metal within a
specified price range on a pre-determined date. Futures are a commitment to
purchase a given amount of metal at an agreed upon price on a future date with a
settlement between the contract price and the market price at the expiration of
the contract. Hedging gains and losses are offset against purchase price
variances on physical purchases of the commodities. There were no premiums paid
for commodity contracts outstanding at December 31, 1999. The amount of premiums
paid for commodity contracts outstanding at December 31, 2000 and 1998 was $0.7.
At December 31, 2000, 1999 and 1998, the market value of the Company's
outstanding contracts relating to firm commitments and anticipated purchases up
to one year from the respective balance sheet date was $0.3, $1.3 and $0.1,
respectively. There were no hedging losses related to closed commodity future
contracts included in inventory at December 31, 2000. As of December 31, 1999
and 1998 hedging losses related to closed commodity futures contracts of $0.2
were included in inventory.

         The Company was not a party to any interest rate cap or other
protection arrangements with respect to its variable rate indebtedness as of
December 31, 2000, 1999,or 1998.

NOTE 20 - SEGMENT INFORMATION

         The Company's business is classified into one aggregated reportable
segment, Hunting/Shooting Sports, which designs, manufactures and markets
recreational shotguns and rifles, sporting ammunition and ammunition reloading
components. These products are sold primarily to wholesalers and retailers,
mainly through manufacturer's sales representatives. The classification All
Other includes corporate and the manufacture and marketing of clay targets, and
the marketing of hunting/gun care accessories, fishing products and powdered
metal



                                       49
<PAGE>   50

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

products. The types of customer and distribution method are similar for
substantially all of the Company's products.

         The Company primarily evaluates the performance of its segments and
allocates resources to them based on EBITDA. The chief operating decision maker
is the president and chief executive officer. Reportable segments were
separately identified based on segment revenue, EBITDA and assets. The firearms
and ammunition operations are aggregated because of similarity in nature of
product, manufacturing process and the regulatory environment, in addition to
the type of customer and distribution method. During 2000, revenue for the
Hunting/Shooting Sports segment accounted for 89% of consolidated revenue. The
Company has no material intersegment revenue.

Information on Segments:

<TABLE>
<CAPTION>
                                                                   2000        1999       1998
                                                                   ----        ----       ----
<S>                                                             <C>         <C>          <C>
         Net Sales:
              Hunting/Shooting Sports                           $   345.1   $   354.0    $  333.9
              All Other                                              43.6        49.1        51.9
                                                                ---------   ---------    --------
                   Consolidated Net Sales                       $   388.7   $   403.1    $  385.8
                                                                =========   =========    ========

         EBITDA:
              Hunting/Shooting Sports                           $    67.2   $    65.2    $   55.0
              All Other                                               5.8         8.8         9.2
                                                                ---------   ---------    --------
                   Consolidated EBITDA                          $    73.0   $    74.0    $   64.2
                                                                =========   =========    ========

         Assets:
              Hunting/Shooting Sports                           $   223.3   $   189.5    $  195.4
              All Other                                             139.8       169.3       159.1
                                                                ---------   ---------    --------
                   Consolidated Assets                          $   363.1   $   358.8    $  354.5
                                                                =========   =========    ========

         Capital Expenditures:
              Hunting/Shooting Sports                           $    14.1   $    10.9    $    6.5
              All Other                                               3.3         2.1         2.0
                                                                ---------   ---------    --------
                   Consolidated Capital Expenditures            $    17.4   $    13.0    $    8.5
                                                                =========   =========    ========

Net Sales by Product Line:
                                                                   2000        1999        1998
                                                                   ----        ----        ----
         Firearms                                               $   184.1   $   181.7    $  175.8
         Ammunition                                                 161.0       172.3       158.1
                                                                ---------   ---------    --------
            Hunting/Shooting Sports                                 345.1       354.0       333.9
            All Other                                                43.6        49.1        51.9
                                                                ---------   ---------    --------
                Net Sales                                       $   388.7   $   403.1    $  385.8
                                                                =========   =========    ========

Reconciliation of Reportable Segments:
                                                                   2000        1999        1998
                                                                   ----        ----        ----
         Consolidated EBITDA                                    $    73.0   $    74.0    $   64.2
                                                                ---------   ---------    --------

         Less:  Interest Expense                                     15.6        14.1        19.2
                   Depreciation and Amortization (1)                 16.4        16.0        15.9
                   Other Noncash Charges                              1.2         6.2         1.1
                   Nonrecurring and Restructuring Items               0.5                    (0.3)
                   Special Payment                                    6.9           -           -
                                                                ---------   ---------    --------
                                                                     40.6        36.3        35.9
                                                                ---------   ---------    --------
                   Consolidated Income from Continuing
                   Operations Before Income Taxes               $    32.4   $    37.7    $   28.3
                                                                =========   =========    ========
</TABLE>

                                       50
<PAGE>   51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

(1) Excludes amortization of deferred financing costs of $2.0, $1.8 and $2.0 in
2000, 1999 and 1998, respectively, which is included in interest expense.

Geographic Information:

                                              2000        1999        1998
                                              ----        ----        ----
         Net Sales:
              Domestic                     $   363.5   $   378.0    $  358.3
              Foreign                           25.2        25.1        27.5
                                           ---------   ---------    --------
                   Consolidated Net Sales  $   388.7   $   403.1    $  385.8
                                           =========   =========    ========

         Of the Company's Hunting/Shooting Sports revenues in 2000, 1999 and
1998 approximately 18%, 20% and 18%, respectively, consisted of sales made to a
single customer. The Company's sales to this customer are governed by a written
contract between the parties. Although the Company believes its relationship
with this customer is good, the loss of this customer or a substantial reduction
in sales to this customer could adversely affect the Company's financial
condition or results of operations. No other single customer comprises greater
than or equal to 10% of sales.

NOTE 21 - QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
           2000                                            Quarter
           ----                           ------------------------------------------
                                           First      Second      Third     Fourth      Total
                                           -----      ------      -----     ------      -----
<S>                                       <C>        <C>         <C>         <C>       <C>
           Sales                          $  96.6    $  101.5    $ 113.6     $  77.0   $ 388.7
           Gross Profit                      32.3        33.4       40.1        27.0     132.8
           Net Income                         5.8         1.0        9.3         3.8      19.9
           Basic Income Per Share            7.34        1.26      11.71        4.79     25.10
           Diluted Income Per Share          7.12        1.22      11.36        4.69     24.49

           1999                                            Quarter
           ----                           ------------------------------------------
                                           First      Second      Third     Fourth      Total
                                           -----      ------      -----     ------      -----
           Sales                          $  91.4    $   95.9    $ 124.6     $  91.2   $ 403.1
           Gross Profit                      30.7        30.3       39.4        29.5     129.9
           Net Income                         4.5         2.7       10.8         5.0      23.0
           Basic Income Per Share            5.92        3.54      13.71        6.35     29.68
           Diluted Income Per Share          5.78        3.45      13.38        6.17     28.89
</TABLE>

NOTE 22 - INCOME PER SHARE

      The basic and diluted income per share was determined as follows:

<TABLE>
<CAPTION>
                                                                        2000             1999              1998
                                                                        ----             ----              ----
<S>                                                                    <C>              <C>               <C>
Basic Income Per Share
      Net Income Available to Common Shareholders                       $ 19.9           $ 23.0            $ 17.2
      Weighted Average Common Shares                                   792,929          775,042           760,000
          Basic Income Per Share                                       $ 25.10          $ 29.68           $ 22.63

Diluted Income Per Share
      Net Income Available to Common Shareholders                       $ 19.9           $ 23.0            $ 17.2
      Weighted Average Common Shares                                   792,929          775,042           760,000
      Effect of Outstanding Options                                     19,632           21,186            12,655
      Weighted Average Common Shares and Dilutive Potential
      Common Stock                                                     812,561          796,228           772,655
          Diluted Income Per Share                                     $ 24.49          $ 28.89           $ 22.26
</TABLE>


                                       51
<PAGE>   52

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

         In the fourth quarter of 2000 and for the year ended December 31, 2000,
32,838 and 1,617 outstanding options, respectively, were excluded from the
calculation of diluted income per share as they were anti-dilutive. Based on an
independent evaluation, the estimated fair value of the Company's Common Stock
at December 31, 2000, 1999 and 1998 were $180, $230 and $200 per share,
respectively. The estimated average price during 2000, 1999 and 1998 was $205,
$215 and $150 per share, respectively.

NOTE 23 - FINANCIAL POSITION AND RESULTS OF OPERATIONS OF HOLDING AND REMINGTON

         The following condensed consolidating financial data provides
information regarding the financial position and results of operations of
Holding and its wholly owned subsidiary, Remington, including Remington's wholly
owned subsidiaries Remington International, Ltd., RA Brands, L.L.C. and RA
Factors, L.L.C. Separate financial statements of Holding are not presented
because management has determined that they would not be material to holders of
the Company's public securities, Remington's 9.5% Senior Subordinated Notes due
2003, Series B (the "Notes"). Further, the Notes are fully and unconditionally
guaranteed by Holding and the subsidiaries of Remington, other than Remington
International, Ltd., which has no significant operations.

                       RACI HOLDING, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATING BALANCE SHEETS
                                DECEMBER 31, 2000


<TABLE>
<CAPTION>
                                               Combined
                                              Guarantor                                              RACI Holding, Inc
ASSETS                                       Subsidiaries    Remington     Holding    Eliminations   and Subsidiaries
------                                       ------------   ------------   -------    ------------   -----------------
<S>                                          <C>            <C>            <C>          <C>              <C>
Current Assets                               $       53.3   $      130.2   $   0.1      $     -          $  183.6
Receivable from Remington                            63.5              -       7.7         71.2                 -
Noncurrent Assets                                     3.6          287.4      90.2        201.7             179.5
                                             ------------   ------------   -------      -------          --------
               Total Assets                  $      120.4   $      417.6   $  98.0      $ 272.9          $  363.1
                                             ============   ============   =======      =======          ========

LIABILITIES, REDEEMABLE SHARES
AND SHAREHOLDERS' EQUITY
Current Liabilities                          $        8.9   $       58.8   $     -      $     -          $   67.7
Payable to RACI Holding, Inc.                           -            7.7         -          7.7                 -
Payable to RA Brands, L.L.C.                            -           15.6         -         15.6                 -
Payable to RA Factors, L.L.C.                           -           47.9         -         47.9                 -
Noncurrent Liabilities                                  -          197.4         -            -             197.4
Redeemable Shares                                       -              -       6.3            -               6.3
Shareholders' Equity                                111.5           90.2      91.7        201.7              91.7
                                             ------------   ------------   -------      -------          --------
Total Liabilities, Redeemable Shares
  and Shareholders' Equity                   $      120.4   $      417.6   $  98.0      $ 272.9          $  363.1
                                             ============   ============   =======      =======          ========
</TABLE>


                                       52
<PAGE>   53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

                       RACI HOLDING, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATING BALANCE SHEETS
                                DECEMBER 31, 1999

<TABLE>
<CAPTION>
                                                                                     RACI Holding, Inc
ASSETS                                       Remington     Holding    Eliminations   and Subsidiaries
------                                      -----------   --------    ------------   -----------------
<S>                                         <C>           <C>           <C>              <C>
Current Assets                              $     181.2   $      -      $      -         $    181.2
Receivable from Remington                             -        7.5           7.5                  -
Receivable from RACI Holding, Inc.                  0.1          -           0.1                  -
Noncurrent Assets                                 177.6      125.2         125.2              177.6
                                            -----------   --------      --------         ----------
               Total Assets                 $     358.9   $  132.7      $  132.8         $    358.8
                                            ===========   ========      ========         ==========

LIABILITIES, REDEEMABLE SHARES
AND SHAREHOLDERS' EQUITY
Current Liabilities                         $      90.1   $      -      $      -         $     90.1
Payable to Remington                                  -        0.1           0.1                  -
Payable to RACI Holding, Inc.                       7.5          -           7.5                  -
Noncurrent Liabilities                            136.1          -             -              136.1
Redeemable Shares                                     -        6.4             -                6.4
Shareholders' Equity                              125.2      126.2         125.2              126.2
                                            -----------   --------      --------         ----------
Total Liabilities, Redeemable Shares
   and Shareholders' Equity                 $     358.9   $  132.7      $  132.8         $    358.8
                                            ===========   ========      ========         ==========
</TABLE>


                                       53
<PAGE>   54

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Millions, Except Per Share Data)

                       RACI HOLDING, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                        Combined
YEAR ENDED                              Guarantor                                                RACI Holding, Inc
DECEMBER 31, 2000                     Subsidiaries       Remington     Holding   Eliminations     and Subsidiaries
----------------------------------------------------------------------------------------------------------------------
<S>                                    <C>              <C>            <C>        <C>               <C>
Sales                                  $      -         $    388.7     $     -    $     -           $    388.7
Gross Profit                                  -              132.8           -          -                132.8
Royalty Income (Expense)                   14.5              (14.5)          -          -                    -
Factoring Income (Expense)                  6.6               (6.6)          -          -                    -
Income from Equity Investees                  -               14.3        19.9       34.2                    -
Net Income                                 14.3               19.9        19.9       34.2                 19.9
</TABLE>


<TABLE>
<CAPTION>
YEAR ENDED                                                                              RACI Holding, Inc
DECEMBER 31, 1999                               Remington     Holding   Eliminations     and Subsidiaries
-----------------------------------           ---------------------------------------------------------------
<S>                                            <C>            <C>        <C>              <C>
Sales                                          $    403.1     $     -    $      -         $     403.1
Gross Profit                                        129.9           -           -               129.9
Income from Equity Investees                            -        23.0        23.0                   -
Net Income                                           23.0        23.0        23.0                23.0


YEAR ENDED                                                                              RACI Holding, Inc
DECEMBER 31, 1998                               Remington     Holding   Eliminations     and Subsidiaries
-----------------------------------           ---------------------------------------------------------------
Sales                                          $    385.8     $     -    $      -         $     385.8
Gross Profit                                        123.0           -           -               123.0
Income from Equity Investees                            -        17.2        17.2                   -
Net Income                                           17.2        17.2        17.2                17.2
</TABLE>


                                       54
<PAGE>   55

                                                                     SCHEDULE II



                       RACI HOLDING, INC. AND SUBSIDIARIES
                        Valuation and Qualifying Accounts
                  Years Ended December 31, 2000, 1999 and 1998
                              (Dollars in Millions)


<TABLE>
<CAPTION>
                                                 ADDITIONS
                                                 ----------
                                 BALANCE AT      CHARGED TO      ADDITIONS/     BALANCE AT
                                 BEGINNING        COSTS AND      DEDUCTIONS       END OF
                                 OF PERIOD        EXPENSES       DESCRIBE(1)      PERIOD
                                -----------      ----------      -----------    ----------
<S>                             <C>             <C>             <C>             <C>
DESCRIPTION

  DEDUCTED FROM ASSET ACCOUNT:
    ALLOWANCE FOR DOUBTFUL ACCOUNTS

      Year ended
        December 31, 2000       $    (2.5)      $     (2.8)     $     (0.3)     $     (5.6)

      Year ended
        December 31, 1999            (3.3)            (0.7)            1.5            (2.5)

      Year ended
        December 31, 1998            (5.2)               -             1.9            (3.3)
</TABLE>


(1) Reclass from underpayments accrual.

                                       55
<PAGE>   56

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

         None.


                                       56
<PAGE>   57


                                    PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The names, ages and positions of the directors and executive officers
of Remington as of March 23, 2001 are set forth below. Each of the directors of
Remington is also a director of Holding. Messrs. Millner and Little serve as
executive officers in the same capacities with Holding as they do with
Remington, and Mr. Grecco serves as Corporate Secretary and Vice President of
Holding. All directors are elected annually and hold office until their
successors are elected and qualified, or until their earlier removal or
resignation.

<TABLE>
<CAPTION>
Name                                   Age     Position
-------------------------              ---     -----------------------------------------------------------------
<S>                                    <C>     <C>
Leon J. Hendrix, Jr.        (a)(b)(d)   59     Director, Chairman
B. Charles Ames             (c)         75     Director
Michael G. Babiarz          (c)         35     Director
Stephen D. Bechtel, Jr.     (a)(b)      75     Director
Bobby R. Brown              (a)(b)(c)   68     Director
Richard A. Gilleland        (b)(c)(d)   56     Director
Richard E. Heckert          (b)(d)      77     Director
Hubbard C. Howe                         72     Director
Ulrich Middelmann           (c)         56     Director
Joseph L. Rice, III         (a)         69     Director
H. Norman Schwarzkopf       (b)(d)      66     Director
Thomas L. Millner           (a)(b)      47     Director, President and Chief Executive Officer
Ronald H. Bristol, II                   38     Executive Vice President and Chief Operating Officer
Mark A. Little                          53     Executive Vice President, Chief Financial Officer and Chief
                                               Administrative Officer
Paul L. Cahan                           59     Vice President, General Manager - Ammunition
Robert L. Euritt                        66     Vice President - Human Resources
Samuel G. Grecco                        47     Vice President - E-Business and E-Commerce, and Corporate Secretary
Arthur W. Wheaton                       59     Vice President, General Manager - Worldwide Sales
</TABLE>

         (a)  Member, Executive Committee
         (b)  Member, Public Policy Committee
         (c)  Member, Audit Committee
         (d)  Member, Compensation Committee

         Each officer of the Company is elected by the Board of Directors to
hold office until the next succeeding annual meeting of the Board of Directors.

         None of the Company's officers has any family relationship with any
director or other officer. "Family relationship" for this purpose means any
relationship by blood, marriage or adoption, not more remote than first cousin.

         The business experience during the past five years of each of the
directors and executive officers listed above is as follows:

         Leon J. (Bill) Hendrix, Jr. has been a director of Remington and
Holding since prior to 1996, and became Chairman in December 1997. In November
2000, Mr. Hendrix retired as a principal of CD&R and became an outside director
and paid Chairman of Remington and Holding. From December 1997 until April 1999,
Mr. Hendrix was Chief Executive Officer. From prior to 1996 until November 2000,
Mr. Hendrix was a principal of CD&R. In November 2000, Mr Hendrix became an
employee of the Company, retaining his title of Chairman. Mr. Hendrix currently
serves as a director of Keithley Instruments, NACCO Industries, Inc. and Cambrex
Corp. He is also a director of Riverwood International Corporation, and its
parents RIC Holding, Inc. and Riverwood Holding, Inc., corporations in which an
investment partnership managed by CD&R has an investment. Mr. Hendrix serves on
the compensation committees of the Boards of Directors of Keithley Instruments,
Cambrex Corp. and Riverwood International Corporation.



                                       57
<PAGE>   58

         B. Charles Ames was elected to the Boards of Directors of Remington and
Holding in December 1997. Mr. Ames is a professional employee, and since prior
to 1996, has been a principal of CD&R and a general partner of Clayton &
Dubilier Associates IV Limited Partnership ("Associates IV"), the general
partner of C&D Fund IV. Mr. Ames is also a director of Schulte Bautechnik GmbH,
a director and Chairman of the Board of Riverwood International Corporation and
its parents RIC Holding, Inc. and Riverwood Holding, Inc., and is the Chairman
of the Board and a director of Kinko's, Inc., corporations in which an
investment partnership managed by CD&R has an investment. Mr. Ames also serves
on the Boards of Directors of The Progressive Corporation and Lexmark
International, Inc. where he is Chairman of the Board. Mr. Ames serves on the
compensation committees of the Boards of Directors of Riverwood International
Corporation and Lexmark International, Inc.

         Michael G. Babiarz was elected to the Boards of Directors of Remington
and Holding in October 1998. He has been a principal of CD&R since prior to
1996. Mr. Babiarz currently serves as a director of Allied Worldwide, Inc. and
Fairchild Dornier Corporation, corporations in which an investment partnership
managed by CD&R has an investment.

         Stephen D. Bechtel has been a director of Remington and Holding since
prior to 1996. Since prior to 1996, Mr. Bechtel has been Chairman Emeritus of
Bechtel Corp. and Bechtel Group, Inc., both of which are engineering and
construction companies. Mr. Bechtel has been Chairman Emeritus of Fremont
Investors, Inc. (previously named Fremont Group, Inc.), a management investment
company, and Sequoia Ventures, Inc., an investment company, since prior to 1996,
and Chairman Emeritus of Fremont Group, L.L.C. since April 1996.

         Bobby R. Brown has been a director of Remington and Holding since prior
to 1996. From July 1997 to January 1998, Mr. Brown was President, and from prior
to 1996 to January 1996, and again from July 1997 to January 1998, was Chairman
and Chief Executive Officer, of CONSOL Inc. and its parent CONSOL Energy Inc.,
the parents of Consolidation Coal Company, a coal mining company. Mr. Brown was
the Chairman of CONSOL Inc. and CONSOL Energy Inc. from prior to 1996 to
February 1999. Mr. Brown also was a director of CONSOL Inc. and CONSOL Energy
Inc. from prior to 1996 to February 2000.

         Richard A. Gilleland has been a director of Remington and Holding since
prior to 1996. From October 1998 to March 1999, Mr. Gilleland was President of
Tyco Healthcare Group, a medical supplies company. He was Chairman and Chief
Executive Officer of Physicians Resource Group, Inc., which provides management
services to physicians and clinics, from December 1997 to October 1998, and
President and Chief Executive Officer of AMSCO International, Inc., a
manufacturer of medical products, from prior to 1996 to July 1996. Mr. Gilleland
currently serves as a director of DePuy Orthopedics and Tyco International, Ltd.

         Richard E. Heckert has been a director of Remington and Holding since
prior to 1996. Mr. Heckert was a director of Marsh & McLennan Companies Inc.
from prior to 1996 until 1996.

         Hubbard C. Howe has been a director of Remington and Holding since
prior to 1996, and was Chairman and Chief Executive Officer of Remington and
Holding from prior to 1996 until December 1997. Mr. Howe served as Vice Chairman
of Remington from prior to 1996 to November 1997. Mr. Howe has served as
Chairman and as a director since prior to 1996 of A.P.S., Inc., a distributor of
automotive replacement parts, and its parent, APS Holding Corporation,
corporations in which an investment partnership managed by CD&R had an
investment. From March 1997 until January 1998, Mr. Howe served as the interim
Chief Executive Officer of APS Holding Corporation and A.P.S., Inc. On February
2, 1998, A.P.S., Inc. and several of its direct and indirect subsidiaries filed
voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code with
the United States Bankruptcy Court for the District of Delaware. A.P.S., Inc.
was liquidated in 1999. Mr. Howe currently serves as a director of Phoenix
Packaging, Inc. and Western Industries Natural Pharmaceuticals. He is also a
director of Riverwood International Corporation, and its parents RIC Holding,
Inc. and Riverwood Holding, Inc., corporations in which an investment
partnership managed by CD&R has an investment.

         Ulrich Middelmann has been a director of Remington and Holding since
July 1999. From prior to 1996 to March 1999, Dr. Middelmann was a member of the
Board of Management of Fried Krupp AG, a capital goods and



                                       58
<PAGE>   59

steel company, and from March 1999 has been a member of the Board of Management
of Thyssen Krupp AG, a capital goods and steel company.

         Joseph L. Rice, III has been a director of Remington and Holding since
prior to 1996. Since prior to 1996, Mr. Rice has been Chairman of CD&R, which he
joined in 1978, and is a general partner of Associates IV. From prior to 1996 to
1998, he also served as Chief Executive Officer of CD&R. Mr. Rice is a director
of Uniroyal Holding, Inc., Acterna Corporation, Schulte Bautechnik GmbH, and
Fairchild Dornier Corporation, corporations in which an investment partnership
managed by CD&R has an investment.

         H. Norman Schwarzkopf has been a director of Remington and Holding
since prior to 1996. From prior to 1996 he has been a commentator for NBC, as
well as a lecturer and author. He currently serves as a director of USA
Networks, Inc., and served as a director of Burns International Services, Inc.
from prior to 1996 until April 2000. General Schwarzkopf is also a member of the
University of Richmond Board of Trustees and the Nature Conservancy's
President's Council.

         Thomas L. Millner was President and Chief Operating Officer of
Remington since prior to 1996 until April 1999, and in April 1999 became
President and Chief Executive Officer. Mr. Millner has been a director of
Remington and Holding since prior to 1996. Mr. Millner currently serves on the
Board of Directors of Stanley Furniture Co, Inc., The Atlanta Belting Co. and
Old London Foods, Inc.

         Ronald H. Bristol, II joined Remington prior to 1996 as Vice President
- Operations, became Vice President and General Manager - Firearms in December
1997, and became Executive Vice President and Chief Operating Officer in April
2000.

         Mark A. Little joined Remington in May 1996 as Director of Planning and
Business Development. In September 1996, he became Vice President and
Controller, and in June 1997, he became Vice President, Chief Financial Officer
and Controller. In September 1999, he became Vice President, Chief Financial
Officer and Treasurer, and in April 2000, he became Executive Vice President,
Chief Financial Officer and Chief Administrative Officer. From prior to 1996
until joining Remington, Mr. Little held the position of Executive Vice
President and Chief Financial Officer of The Pillod Cabinet Company, now named
Pillod Furniture, Inc.

         Paul L. Cahan joined Remington prior to 1996 as Vice President -
Ammunition and in January 1998 became Vice President and General Manager -
Ammunition.

         Robert L. Euritt joined Remington prior to 1996 as Vice President -
Human Resources and Customer Service. Mr. Euritt currently serves on the Board
of Directors of Employee Services.com and is the chairman of the compensation
committee of the Board of Directors of Employee Services.com

         Samuel G. Grecco became Vice President - Business Development and
Planning in September 1996, became Vice President - Business Development and
Corporate Secretary in December 1996, and became Vice President - eCommerce and
eBusiness and Corporate Secretary in April 2000. From prior to 1996 until June
1996, he was Vice President, Controller and Treasurer of the Company. From June
1996 until September 1996, he was Vice President and Controller of the Company.

         Arthur W. Wheaton became Vice President - Sales and Marketing in
December 1996, and became Vice President and General Manger - Worldwide Sales in
December 1997. From prior to 1996 until December 1996, he was Vice President -
Corporate Marketing. Mr. Wheaton is currently Chairman of the Board of Directors
of the Sporting Arms and Ammunition Manufacturer's Institute, and serves on the
Board of the National Shooting Sports Foundation, the Wildlife Management
Institute and Congressional Sportsman Foundation.


                                       59
<PAGE>   60

ITEM 11.   EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS

         Members of the Board of Directors of Remington and Holding who are not
employees of the Company or CD&R (each, an "Eligible Director") receive a per
meeting fee of $1,000 for each Remington board and committee meeting attended
and an annual retainer of $20,000. An additional per meeting fee of $1,000 is
paid to the chairman of each committee. Members of the Board of Directors of
Holding do not receive any additional compensation for their services in such
capacity. All directors are reimbursed for reasonable travel and lodging
expenses incurred to attend meetings. Each Eligible Director was also eligible
to participate in the RACI Holding, Inc. 1994 Directors' Stock Plan (the "1994
Directors' Plan") under which a director could forego part or all of the annual
retainer and meeting fee payable to him for calendar years 1995-1997 in exchange
for shares of the Holding's Common Stock. The number of shares payable was
determined by dividing (i) the amount of cash retainer fees foregone with
respect to services provided during a calendar year by (ii) the greater of (x)
the fair market value of a share of Common Stock as of the last day of such
calendar year and (y) $100. Under this Plan, 1,800 shares of Common Stock have
been issued. The 1994 Directors' Plan terminated in 1998. Effective July 1, 1997
under the RACI Holding, Inc. Director Stock Purchase Plan (the "1997 Directors'
Plan"), the Company offered each Eligible Director the opportunity to purchase
up to 2,500 shares of Common Stock at a purchase price per share of $100. The
1997 Directors' Plan extends until July 1, 2002. As of the date of this report,
11,250 shares and 1,250 matching deferred shares of Common Stock have been
issued under the 1997 Directors' Plan.

COMPENSATION OF EXECUTIVE OFFICERS

         The following table summarizes the compensation paid by Remington to
its Chief Executive Officer and to each of the Company's four other most highly
compensated executive officers (the "Named Executive Officers") during or with
respect to the 1998, 1999 and 2000 fiscal years for services in all capacities
rendered to the Company for such fiscal years.

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                                               LONG TERM
                                                                                             COMPENSATION
                                                                                                 AWARDS
                                                            ANNUAL COMPENSATION              ------------
                                                 ----------------------------------------         (g)               (i)
                                                                                 (e)           SECURITIES       ALL OTHER
                 (a)                     (b)       (c)          (d)          OTHER ANNUAL      UNDERLYING      COMPENSATION
     NAME AND PRINCIPAL POSITION        YEAR     SALARY($)    BONUS($)     COMPENSATION($)     OPTIONS(#)          ($)
     ---------------------------        ----     ---------    --------     ---------------     ----------      ------------
<S>                                     <C>      <C>            <C>            <C>               <C>           <C>
Thomas L. Millner.....................  1998     376,260        6,800             --               --            464,151(1)
   President and Chief Executive        1999     385,000       10,310             --             7,776           876,519(2)
   Officer                              2000     419,167      350,200             --               881         2,165,423(3)

Ronald H. Bristol, II.................  1998     165,000          100             --               --            162,550(4)
   Executive Vice President and         1999     175,000      159,800             --             2,288           162,852(5)
    Chief Operating Officer             2000     219,167       87,680             --               --            501,998(6)

Mark A. Little........................  1998     165,000        2,400             --               --            164,801(1)
   Executive Vice President, Chief      1999     178,333      103,450             --             4,255           366,596(2)
    Financial Officer and               2000     208,917      159,400             --               122           652,837(3)
    Chief Administrative Officer

Robert L. Euritt......................  1998     165,000        2,400          37,853(7)           --            160,950(4)
   Vice President-Human Resources       1999     170,333      149,500          35,383(7)         4,750           355,155(5)
                                        2000     173,000      111,400          52,971(7)           --            697,150(8)

Arthur W. Wheaton.....................  1998     165,000        2,200             --               --            144,550(4)
   Vice President, General Manager      1999     169,000       75,250             --             1,198           219,030(9)
    -Worldwide Sales                    2000     173,000      111,400             --               162           504,665(10)
</TABLE>


                                       60
<PAGE>   61

(1)  Amount reflects premiums paid by the Company for a Disability Insurance
     Policy, Remington's matching contributions on behalf of the Named Executive
     Officer to the Remington Savings and Investment Plans and deferred stock
     issuance in lieu of bonus.

(2)  Amount reflects premiums paid by the Company for a Disability Insurance
     Policy, Remington's matching contributions on behalf of the Named Executive
     Officer to the Remington Savings and Investment Plans, deferred matching
     share awards valued at $200 per share, interest paid due to delayed bonus
     payment and deferred stock issuance in lieu of bonus.

(3)  Amount reflects premiums paid by the Company for a Disability Insurance
     Policy, Remington's matching contributions on behalf of the Named Executive
     Officer to the Remington Savings and Investment Plans, deferred matching
     share awards valued at $230 per share and special bonus payments (made in
     connection with dividends) of $63.933 and $7.996 per unit paid on each
     option and deferred share that was held by the Named Executive Officer on
     the respective record dates.

(4)  Reflects Remington's matching contributions on behalf of the Named
     Executive Officer to the Remington Savings and Investment Plans and
     deferred stock issuance in lieu of bonus.

(5)  Reflects Remington's matching contributions on behalf of the Named
     Executive Officer to the Remington Savings and Investment Plans, deferred
     matching share awards valued at $200 per share and interest paid due to
     delayed bonus payment.

(6)  Reflects Remington's matching contribution on behalf of the Named Executive
     Officer to the Remington Savings and Investment Plans, special bonus
     payments (made in connection with dividends) of $63.933 and $7.996 per unit
     paid on each option and deferred share that was held by the Named Executive
     Officer on the respective record dates, and grant of deferred share awards
     valued at $180 per share.

(7)  Amount reflects reimbursements for temporary living expenses incurred
     by the Named Executive Officer.

(8)  Reflects Remington's matching contributions on behalf of the Named
     Executive Officer to the Remington Savings and Investment Plans and special
     bonus payments (made in connection with dividends) of $63.933 and $7.996
     per unit paid on each option and deferred share that was held by the Named
     Executive Officer on the respective record dates.

(9)  Reflects Remington's matching contributions on behalf of the Named
     Executive Officer to the Remington Savings and Investment Plan, deferred
     matching share awards valued at $200 per share, interest paid due to
     delayed bonus payment and deferred stock issuance in lieu of bonus.

(10) Reflects Remington's matching contributions on behalf of the Named
     Executive Officer to the Remington Savings and Investment Plan, deferred
     matching share awards valued at $230 per share and special bonus payments
     (made in connection with dividends) of $63.933 and $7.996 per unit paid on
     each option and deferred share that was held by the Named Executive Officer
     on the respective record dates.



                                       61
<PAGE>   62

<TABLE>
<CAPTION>
                                                                                      Potential Realized Value/
                                                                                      Assumed Annual Rates of
                                                                                      Stock Price Appreciation
                          Number of         Percentage                                    for Option Term
                         Securities      of Total Options      Exercise              --------------------------
                         Underlying    Granted to Employees     Price   Expiration       5%              10%
Name                  Options Granted     in Fiscal 2000        ($/SH)      Date     ($374.65)        ($596.56)
--------------------- ---------------  --------------------   --------  ----------   ---------        ---------
<S>                        <C>                  <C>               <C>      <C>        <C>             <C>
Thomas L. Millner          881     (A)          54%               230      3/2/00     $127,437        $322,939
Ronald H. Bristol, II        0     (A)           0%               230      3/2/00            -               -
Mark A. Little             122     (A)           8%               230      3/2/00       17,647          44,720
Robert L. Euritt             0     (A)           0%               230      3/2/00            -               -
Arthur W. Wheaton          162     (A)          10%               230      3/2/00       23,433          59,383
</TABLE>

(A)  Subject to the Named Executive Officer's continued employment, the options
     become exercisable no later than 2009, or earlier based on the earnings
     performance of Holding in 2000, subject to acceleration under certain
     circumstances.


            AGGREGATED OPTION EXERCISES AND FY-END OPTION VALUE TABLE

<TABLE>
<CAPTION>
                                                                NUMBER OF SECURITIES
                                                               UNDERLYING UNEXERCISED      VALUE OF UNEXERCISED
                                                                     OPTIONS AT            IN-THE-MONEY OPTIONS
                            SHARES ACQUIRED                            FY-END                    AT FY-END
NAME                        ON EXERCISE (#) VALUE REALIZED($) EXERCISABLE/UNEXERCISABLE  EXERCISABLE/UNEXERCISABLE(1)
----                        --------------- ----------------- -------------------------  ----------------------------
<S>                         <C>             <C>                   <C>                    <C>
Thomas L. Millner                 --               --             9,850 / 6,307           537,130 / (136,700)
Robert L. Euritt                  --               --             4,173 / 2,917           133,840 / (41,640)
Ronald H. Bristol, II             --               --             2,338 / 1,825           124,040 / (19,800)
Mark A. Little                    --               --             2,277 / 3,100            52,250 / (63,450)
Arthur W. Wheaton                 --               --             3,155 / 705             183,990 / (16,050)
</TABLE>

(1)  Calculated based on a per share price of Holding Common Stock of $180, the
     estimated fair value as of December 31, 2000, less the exercise price for
     the option.

PENSION AND RETIREMENT PLAN

         The Remington Arms Company, Inc. Pension and Retirement Plan was
established effective December 1, 1993 to provide retirement income and survivor
benefits to Remington's employees and their beneficiaries through a tax
qualified program. Pension benefits under the Retirement Plan are limited in
accordance with the provision of the Internal Revenue Code of 1986, as amended
(the "Code"), governing tax qualified pension plans. The Company has adopted a
Supplemental Pension Plan effective January 1, 1998 (the "Supplemental Plan"
and, together with the Pension and Retirement Plan, the "Pension Plans") that
provides for payment to participants of retirement benefits equal to the excess,
if any, of 2% of the participant's average monthly pay multiplied by such
participant's years of service over the amount actually earned by such
participant under the Pension and Retirement Plan. Each of the Named Executive
Officers is eligible to participate in the Pension Plans. Benefits under the
Supplemental Plan are not pre-funded; such benefits are paid by the Company when
due.

         Retirement benefits under the Pension Plans are generally based on an
employee's years of benefit service and highest final average compensation.
Generally, an employee's benefit service under the Pension Plans includes all of
his service with Remington and his service, if any, with DuPont prior to the
Acquisition. DuPont service is not recognized for benefit accrual or early
retirement eligibility, however, in the case of eligible employees who elected
to retire from DuPont and commence receiving retirement income from the DuPont
retirement plan in connection with the Acquisition. Retirement benefits are
generally paid in annuity form, for life, commencing at the employee's 65th
birthday, although longer service employees may elect to commence receiving
retirement income at an earlier age.


                                       62
<PAGE>   63

<TABLE>
<CAPTION>
   Salary and                         Estimated Annual Retirement Benefits Based on Service of
50% of Incentive           -------------------------------------------------------------------------------
   Compensation            15 Years         20 Years          25 Years          30 Years          35 Years
------------------         --------         --------          --------          --------          --------
<S>                         <C>              <C>               <C>              <C>               <C>

       175,000               52,500           70,000            87,500          105,000           122,500
       200,000               60,000           80,000           100,000          120,000           140,000
       225,000               67,500           90,000           112,500          135,000           157,500
       250,000               75,000          100,000           125,000          150,000           175,000
       300,000               90,000          120,000           150,000          180,000           210,000
       400,000              120,000          160,000           200,000          240,000           280,000
       450,000              135,000          180,000           225,000          270,000           315,000
       500,000              150,000          200,000           250,000          300,000           350,000
       550,000              165,000          220,000           275,000          330,000           385,000
</TABLE>

         The above table illustrates the estimated annual amounts payable under
the Pension Plans, including the Supplemental Plan, in the form of a straight
life annuity to employees retiring at age 65 in 2000. Compensation recognized
under the Pension Plans generally includes an employee's average compensation
for the three consecutive year period in the employee's final ten years of
service for which such compensation was the highest. Compensation for this
purpose includes overtime, shift differentials and 50% of any incentive
compensation award. Compensation does not include awards and payments under any
other special compensation plans, payments for severance, relocation or other
special payments.

         The years of benefit service and average monthly pay (expressed as an
annual amount), recognized as of December 31, 2000, under the Pension Plans for
each eligible Named Executive Officer are as follows:


Name                        Years of Service          Average Pay
----                        ----------------          -----------
Thomas L. Millner                  6.6                  $589,642
Robert L. Euritt                   6.3                  $241,428
Ronald H. Bristol, II              5.5                  $267,689
Mark A. Little                     4.5                  $263,683
Arthur W. Wheaton                 34.75                 $236,117


EXECUTIVE EMPLOYMENT AGREEMENTS

         In June 1999, the Company entered into Executive Employment Agreements
with each of the Named Executive Officers. The agreements provide continued
employment terms and severance terms if employment is terminated under certain
conditions. In the event of a termination of the Named Executive Officer's
employment by the Company without "cause" (as defined in the agreement) or by
such Named Executive Officer for "good reason" (as defined in the agreement),
the Named Executive Officer will receive his base salary (as defined in the
agreement) for the longer of one year or the period from such date of
termination through the end of the term, and a portion of incentive compensation
that would have been payable for the calendar year in which his employment
terminates. Messrs. Millner and Little's agreements have terms of three years
and two years, respectively, and Messrs. Euritt, Bristol and Wheaton's
agreements each have terms of one year. The agreements also contain certain
non-competition and non-solicitation provisions and provide for the termination
of previously existing employment and severance agreements and arrangements.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         The Board of Directors of the Company established a Compensation
Committee to review all compensation arrangements for executive officers of the
Company. The individuals serving on the Compensation Committee during 2000 were
Richard A. Gilleland, Chairman, Leon J. Hendrix, Jr., H. Norman Schwarzkopf and
Richard E. Heckert. Mr. Hendrix has served as Chairman of the Company since
December 1997 and Chief Executive Officer from December 1997 to April 1999. Mr.
Hendrix was also a principal of CD&R until his retirement in 2000. In November



                                       63
<PAGE>   64

2000, Mr. Hendrix became an employee of the Company, retaining the title of
Chairman. Mr. Hendrix continues to serve as a director of the Company and as a
member of the Compensation Committee. CD&R receives an annual fee for management
and financial consulting services to the Company and reimbursement of
out-of-pocket expenses. The consulting fees paid to CD&R were $400,000 for each
of 1998, 1999 and 2000. The consulting fees to be paid to CD&R may not exceed
$500,000 per year under the terms of the New Credit Agreement and the Indenture
unless certain requirements are met. Such consulting fees will be reviewed on an
annual basis. Holding and the Company have also agreed to indemnify the members
of the boards employed by CD&R and CD&R against certain liabilities incurred
under the federal securities laws, other laws regulating the business of the
Company and certain other claims and liabilities with respect to their services
for Holding and the Company.


ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Holding owns all of the outstanding common stock (par value $.01 per
share) of Remington. Each share of common stock is entitled to one vote. The
following table sets forth the beneficial ownership, as of March 23, 2001, of
Common Stock by each director of Holding, by all directors and executive
officers of Holding as a group, by each Named Executive Officer, and by each
person who owns beneficially more than five percent of the outstanding shares of
Common Stock:

<TABLE>
<CAPTION>
                                                                               NUMBER               PERCENT
NAME OF BENEFICIAL OWNER                                                      OF SHARES            OF CLASS
------------------------                                                      ---------            --------
<S>                                                                            <C>                    <C>
The Clayton & Dubilier Private Equity Fund IV Limited Partnership (1)          750,000                98.3
B. Charles Ames (2)                                                                 --                --
Michael G. Babiarz (2)                                                              --                --
Leon J. Hendrix, Jr. (2)                                                            --                --
Hubbard C. Howe (2)                                                                 --                --
Joseph L. Rice, III (2)                                                             --                --
Stephen D. Bechtel                                                               2,500                 *
Bobby R. Brown                                                                   2,700                 *
Richard A. Gilleland                                                             2,700                 *
Richard E. Heckert                                                               2,700                 *
Ulrich Middelmann                                                                   --                --
H. Norman Schwarzkopf (3)                                                        1,650                 *
Thomas L. Millner (4)                                                            9,850                 1.3
Robert L. Euritt (4)                                                             5,893                 *
Arthur W. Wheaton (4)                                                            3,155                 *
Mark A. Little (4)                                                               3,002                 *
Ronald H. Bristol, II (4)                                                        2,338                 *
Executive officers and directors as a group (2)(3)(5)                           46,341                 6.1
</TABLE>

*Less than 1%

(1)  Clayton & Dubilier Associates IV Limited Partnership ("Associates IV") is
     the general partner of The Clayton & Dubilier Private Equity Fund IV
     Limited Partnership ("C&D Fund IV") and by virtue of such status may be
     deemed to be the beneficial owner of the shares owned by C&D Fund IV.
     Associates IV has the power to direct C&D Fund IV as to the voting and
     disposition of shares held by C&D Fund IV. No person controls the voting
     and dispositive power of Associates IV with respect to the shares owned by
     C&D Fund IV. Associates IV expressly disclaims beneficial ownership of the
     shares owned by C&D Fund IV. The business address for each of C&D Fund IV
     and Associates IV is 270 Greenwich Avenue, Greenwich, Connecticut 06830.

(2)  Does not include shares owned by C&D Fund IV.

(3)  Excludes 1,250 deferred shares held by Mr. Schwarzkopf, director.

(4)  Includes 9,850, 4,173, 3,155, 2,277, 2,338 shares that may be acquired upon
     exercise of options by Messrs. Millner, Euritt, Wheaton, Little and
     Bristol, respectively. Excludes 8,078, 2,530, 2,046, 2,775, 1,576 deferred
     shares of common stock held by Messrs. Millner, Euritt, Wheaton, Little and
     Bristol, respectively.



                                       64
<PAGE>   65

(5)  Includes 29,033 shares that may be acquired upon exercise of vested options
     and excludes 22,192 deferred shares of common stock held by the executive
     officers as a group.


ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CD&R AND C&D FUND IV

         C&D Fund IV, which currently is Holding's largest shareholder, is a
private investment fund managed by CD&R. Amounts contributed to C&D Fund IV by
its limited partners are invested at the discretion of the general partner in
equity or equity-related securities of entities formed to effect leveraged
buy-out transactions and in the equity of corporations where the infusion of
capital coupled with the provision of managerial assistance by CD&R can be
expected to generate returns on investments comparable to returns historically
achieved in leveraged buy-out transactions. The general partner of C&D Fund IV
is Associates IV. Leon J. Hendrix, Jr., formally a principal of CD&R, is a
director and has served in the capacity of Chairman since December 1997. In
November 2000, Mr. Hendrix became an employee of the Company, retaining the
title of Chairman. The Company and Mr. Hendrix are discussing a proposed
agreement with respect to the terms of Mr. Hendrix's employment with the
Company. Joseph L. Rice, III and B. Charles Ames are principals of CD&R, general
partners of Associates IV, and directors of Remington and Holding. Michael G.
Babiarz is a principal and stockholder of CD&R and director of Remington and
Holding. Joseph L. Rice, III is a stockholder of CD&R. Hubbard C. Howe is a
director of Remington and a former principal of CD&R.

         CD&R receives an annual fee for management and financial consulting
services provided to the Company and reimbursement of out-of-pocket expenses,
pursuant to a consulting agreement among Holding, the Company and CD&R. Such
services include helping the Company to establish effective banking, legal and
other business relationships, and assisting management in developing and
implementing strategies for improving the operational, marketing and financial
performance of the Company. The consulting fees paid to CD&R were $400,000 for
each of 2000, 1999 and 1998. The Consulting fees to be paid to CD&R may not
exceed $500,000 per year under the terms of the New Credit Agreement and the
Indenture unless certain requirements are met.

         The Company, Holding and CD&R are currently discussing a proposed
amendment to the consulting agreement. As proposed, the amendment would provide
for an annual fee of $500,000 for ongoing services provided to the Company, the
amount of which may be adjusted at the discretion of a majority of the directors
of the Company not affiliated with CD&R, but may not be adjusted downward
without CD&R's consent. In addition, the proposed amendment adds to CD&R's
services under the agreement financial advisory, investment banking and similar
services with respect to future proposals for an acquisition, merger,
recapitalization, or any other similar transaction directly or indirectly
involving the Company, Holding and their subsidiaries. The fee for such
additional services in connection with future transactions would be an amount
equal to 1% of the transaction value for the transaction to which such fee
relates. Such transaction fees may be increased if a majority of the
Disinterested Directors approves. The proposed amendment also provides that if
an employee of CD&R is appointed to an executive management position (or a
position of comparable responsibility) in the Company, the annual fee will be
increased by an amount to be determined by CD&R, the amount of such increase not
to exceed 100% of the existing annual fee in effect at that time. Any such
increase would be subject to the terms of the New Credit Agreement and the
Indenture. If the proposed amendment is adopted, the Company will pay an annual
fee of $500,000 for 2001 to CD&R.

         The Company paid fees to the law firm of Debevoise & Plimpton during
2000 for legal services rendered. Franci J. Blassberg, Esq., a member of
Debevoise & Plimpton, is married to Joseph L. Rice, III, a director of the
Company and a general partner of Associates IV.

         CD&R, C&D Fund IV, Holding and the Company have entered into an
indemnification agreement, pursuant to which Holding and the Company have agreed
to indemnify CD&R, C&D Fund IV, Associates IV and their respective directors,
officers, partners, employees, agents and controlling persons against certain
liabilities arising under the federal securities laws, other laws regulating the
business of the Company and certain other claims and liabilities.

         C&D Fund IV currently owns 98.3% of the outstanding Common Stock. C&D
Fund IV and Holding have entered into a registration rights agreement that,
among other things, provides C&D Fund IV and will provide certain other Holding
equity holders with certain registration rights with respect to their Common
Stock.




                                       65
<PAGE>   66

STOCK OPTION AND PURCHASE PLANS

         As of December 31, 2000, the Company has reserved 184,580 shares of the
Common Stock for issuance in accordance with the terms of the Amended and
Restated RACI Holding, Inc. Stock Option Plan (the "Option Plan"), the RACI
Holding, Inc. Stock Purchase Plan (the "Purchase Plan"), the RACI Holding, Inc.
1994 Directors' Stock Plan (the "1994 Directors' Plan") and the RACI Holding,
Inc. Stock Incentive Plan (the "1999 Stock Incentive Plan"). On July 22, 1997
the Board of Directors of Holding adopted the 1997 Directors' Plan and reserved
an additional 12,500 shares of the Common Stock, par value $.01 per share, of
Holding for issuance thereunder. As of December 31, 2000, 11,250 shares and
1,250 deferred matching shares of Common Stock have been issued under the 1997
Directors' Plan; 1,800 shares have been issued under the 1994 Directors' Plan;
5,082 shares have been issued, 24,468 deferred shares were awarded and 32,838
options were granted under the 1999 Stock Incentive Plan and no shares of Common
Stock have been issued under the Option Plan or the Purchase Plan. As of
December 31, 2000, 70,877 shares of common stock remain available for grant
under the above mentioned plans.

         At December 31, 2000 options to purchase 36,215 shares of Common Stock
were outstanding, at a per share exercise price of $100, of which 34,381 options
were exercisable, options to purchase 31,221 shares of Common Stock were
outstanding, at a per share exercise price of $200, of which 10,035 options were
exercisable and options to purchase 1,617 shares of common stock were
outstanding at a per share exercise price of $230, of which 881 options were
exercisable.

         In March 2000, certain members of management acquired an aggregate of
2,469 deferred shares at a purchase price of $230 per share and were granted
options to purchase 1,233 shares of Common Stock and received matching grants of
2,469 deferred shares (including 1,763, 325 and 245 matching deferred shares to
Messrs. Millner, Wheaton and Little, respectively).


                                       66
<PAGE>   67

                                     PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(A) DOCUMENTS FILED AS PART OF THIS REPORT:

(1) Financial Statements                                                    Page

         Report of Independent Accountants.................................  30
         Consolidated Balance Sheets as of December 31, 2000 and 1999......  31
         Consolidated Statements of Operation for the years ended
         December 31, 2000, 1999 and 1998..................................  32
         Consolidated Statements of Cash Flows for the years ended
         December 31, 2000, 1999, and 1998.................................  33
         Consolidated Statements of Shareholders' Equity and Comprehensive
         Income for the years ended December 31, 2000, 1999 and 1998.......  34
         Notes to Consolidated Financial Statements........................  35

(2) Financial Statement Schedule

         Valuation and Qualifying Accounts.................................  55

(3) List of Exhibits

Exhibit No.                Description
-----------                -----------

2.1      Asset Purchase Agreement, dated as of November 24, 1993, among
         Remington Arms Company, Inc., formerly named RACI Acquisition
         Corporation ("Remington"), E.I. du Pont de Nemours and Company
         ("DuPont") and Sporting Goods Products, Inc., formerly named Remington
         Arms Company, Inc. ("Sporting Goods"); previously filed as Exhibit 2.1
         to Registration Statement No. 333-4520, 333-4520-01 under the
         Securities Act of 1933, as amended, filed May 3, 1996, and herein
         incorporated by reference.

2.2      Understanding and Agreement Regarding Product Liability Litigation,
         dated as of June 1, 1996 between DuPont and Remington; previously filed
         as Exhibit 2.2 to Amendment No. 2 to Registration Statement No.
         333-4520, 333-4520-01 under the Securities Act of 1933, as amended,
         filed April 23, 1997, and herein incorporated by reference.

2.3      Non-Competition Agreement, dated as of December 1, 1993, among DuPont,
         Sporting Goods and Remington; previously filed as Exhibit 2.3 to
         Registration Statement No. 333-4520, 333-4520-01 under the Securities
         Act of 1933, as amended, filed May 3, 1996, and herein incorporated by
         reference.

2.4      Product Liability Services and Defense Coordination Agreement, dated as
         of December 1, 1993, among DuPont, Sporting Goods and Remington;
         previously filed as Exhibit 2.4 to Registration Statement No. 333-4520,
         333-4520-01 under the Securities Act of 1933, as amended, filed May 3,
         1996, and herein incorporated by reference.

2.5      Environmental Liability Services Agreement, dated as of December 1,
         1993, between DuPont and Remington; previously filed as Exhibit 2.5 to
         Registration Statement No. 333-4520, 333-4520-01 under the Securities
         Act of 1933, as amended, filed May 3, 1996, and herein incorporated by
         reference.

3.1      Certificate of Incorporation of RACI Holding, Inc. ("Holding"), dated
         October 21, 1993, as amended on June 21, 1995; previously filed as
         Exhibit 3.1 to Registration Statement No. 333-4520, 333-4520-01 under
         the Securities Act of 1933, as amended, filed May 3, 1996, and herein
         incorporated by reference.



                                       67
<PAGE>   68

3.2      By-Laws of Holding, as amended and restated on July 27, 1999;
         previously filed as Exhibit 3.1 to Quarterly Report on Form 10-Q, filed
         November 12, 1999, and herein incorporated by reference.

4.1      Specimen of Holding Class A Common Stock Certificate; previously filed
         as Exhibit 4.1 to Annual Report on Form 10-K, filed March 30, 1998, and
         herein incorporated by reference.

4.2      Specimen of Holding Class B Common Stock Certificate; previously filed
         as Exhibit 4.2 to Annual Report on Form 10-K, filed March 30, 1998, and
         herein incorporated by reference.

4.3      Indenture, dated as of November 30, 1993 (the "Indenture"), among
         Remington, First Trust National Association, as Trustee, and Holding,
         as Guarantor, with respect to Remington's 9.5% Senior Subordinated
         Notes due 2003 (the "Notes"); previously filed as Exhibit 4.1 to
         Registration Statement No. 333-4520, 333-4520-01 under the Securities
         Act of 1933, as amended, filed May 3, 1996, and herein incorporated by
         reference.

4.4      First Supplemental Indenture, dated as of June 30, 2000, among RA
         Brands, L.L.C., as a Subsidiary Guarantor, Remington, Holding, as a
         Guarantor, and U.S. Bank National Association, as Trustee, to the
         Indenture referred to Exhibit 4.3 above; filed herewith.

4.5      Second Supplemental Indenture, dated as of August 25, 2000, among RA
         Factors, L.L.C., as a Subsidiary Guarantor, Remington, Holding, as a
         Guarantor, and U.S. Bank National Association, as Trustee, to the
         Indenture referred to Exhibit 4.3 above; filed herewith.

4.6      Purchase Agreement, dated November 19, 1993, among Remington, Holding,
         Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
         ("Merrill Lynch"), and CS First Boston Corporation ("First Boston" and,
         together with Merrill Lynch, the "Initial Purchaser"); previously filed
         as Exhibit 4.2 to Registration Statement No. 333-4520, 333-4520-01
         under the Securities Act of 1933, as amended, filed May 3, 1996, and
         herein incorporated by reference.

4.7      Registration Rights Agreement, dated as of November 30, 1993, among
         Remington, Holding and the Initial Purchasers; previously filed as
         Exhibit 4.3 to Registration Statement No. 333-4520, 333-4520-01 under
         the Securities Act of 1933, as amended, filed May 3, 1996, and herein
         incorporated by reference.

4.8      Amended and Restated Credit Agreement, dated as of April 28, 2000,
         among Remington, The Chase Manhattan Bank, as Administrative Agent and
         the other lenders named therein; previously filed as Exhibit 4.1 to the
         Company's quarterly report on Form 10-Q for the quarter ended March 31,
         2000 and herein incorporated by reference.

4.9      Borrower Stock Pledge Agreement, dated as of April 28, 2000 between
         Remington and The Chase Manhattan Bank, as Administrative Agent;
         previously filed as Exhibit 4.2 to the Company's quarterly report on
         Form 10-Q for the quarter ended March 31, 2000 and herein incorporated
         by reference.

4.10     Borrower Security Agreement, dated as of April 28, 2000 between
         Remington and The Chase Manhattan Bank, as Administrative Agent;
         previously filed as Exhibit 4.3 to the Company's quarterly report on
         Form 10-Q for the quarter ended March 31, 2000 and herein incorporated
         by reference.

4.11     Borrower Patent and Trademark Security Agreement, dated as of April 28,
         2000 between Remington and The Chase Manhattan Bank, as Administrative
         Agent; previously filed as Exhibit 4.4 to the Company's quarterly
         report on Form 10-Q for the quarter ended March 31, 2000 and herein
         incorporated by reference.



                                       68
<PAGE>   69

4.12     Holding Stock Pledge Agreement, dated as of April 28, 2000 between
         Remington and The Chase Manhattan Bank, as Administrative Agent;
         previously filed as Exhibit 4.5 to the Company's quarterly report on
         Form 10-Q for the quarter ended March 31, 2000 and herein incorporated
         by reference.

4.13     Holding Guarantee, dated as of April 28, 2000 between Remington and The
         Chase Manhattan Bank, as Administrative Agent; previously filed as
         Exhibit 4.6 to the Company's quarterly report on Form 10-Q for the
         quarter ended March 31, 2000 and herein incorporated by reference.

4.14     Supplement No. 1 to Borrower Stock Pledge Agreement, dated as of June
         30, 2000, between Remington and The Chase Manhattan Bank, as
         Administrative Agent; filed herewith.

4.15     Subsidiary Guarantee, dated as of June 30, 2000, between RA Brands,
         L.L.C. and The Chase Manhattan Bank, as Administrative Agent; filed
         herewith.

4.16.    Subsidiary Security Agreement, dated as of June 30, 2000, between RA
         Brands, L.L.C. and The Chase Manhattan Bank, as Administrative Agent;
         filed herewith.

4.17     Subsidiary Patent and Trademark Security Agreement, dated as of June
         30, 2000, between RA Brands, L.L.C. and The Chase Manhattan Bank, as
         Administrative Agent; filed herewith.

4.18     Supplement No. 2 to Borrower Stock Pledge Agreement, dated as of August
         25, 2000, between Remington and The Chase Manhattan Bank, as
         Administrative Agent; filed herewith.

4.19     Subsidiary Guarantee, dated as of August 25, 2000, between RA Factors,
         L.L.C. and The Chase Manhattan Bank, as Administrative Agent; filed
         herewith.

4.20     Subsidiary Security Agreement, dated as of August 25, 2000, between RA
         Factors, L.L.C. and The Chase Manhattan Bank, as Administrative Agent;
         filed herewith.

4.21     Sublease, dated as of March 1, 1987, between S&K Industries, Inc., as
         lessor, and Remington as assignee of DuPont, as lessee (agreement to
         furnish such sublease to the Securities and Exchange Commission upon
         its request); previously filed as Exhibit 4.17 to Annual Report on Form
         10-K, filed March 30, 1998, and herein incorporated by reference.

Items in this Section 10 constitute management contracts or compensatory plans
or arrangements with the exception of Exhibits 10.1 through 10.26.

10.1     Filed as Exhibit 2.1.

10.2     Filed as Exhibit 2.2.

10.3     Filed as Exhibit 2.3.

10.4     Filed as Exhibit 2.4.

10.5     Filed as Exhibit 2.5.

10.6     Filed as Exhibit 4.3.



                                       69
<PAGE>   70

10.7     Filed as Exhibit 4.4.

10.8     Filed as Exhibit 4.5.

10.9     Filed as Exhibit 4.6.

10.10    Filed as Exhibit 4.7.

10.11    Filed as Exhibit 4.8.

10.12    Filed as Exhibit 4.9.

10.13    Filed as Exhibit 4.10.

10.14    Filed as Exhibit 4.11.

10.15    Filed as Exhibit 4.12.

10.16    Filed as Exhibit 4.13.

10.17    Filed as Exhibit 4.14.

10.18    Filed as Exhibit 4.15.

10.19    Filed as Exhibit 4.16.

10.20    Filed as Exhibit 4.17.

10.21    Filed as Exhibit 4.18.

10.22    Filed as Exhibit 4.19.

10.23    Filed as Exhibit 4.20.

10.24    Registration and Participation Agreement, dated as of November 30,
         1993, between Holding and The Clayton & Dubilier Private Equity Fund IV
         Limited Partnership (the "C&D Fund"); previously filed as Exhibit 10.14
         to Registration Statement No. 333-4520, 333-4520-01 under the
         Securities Act of 1933, as amended, filed May 3, 1996, and herein
         incorporated by reference.

10.25    Stock Subscription Agreement, dated as of November 30, 1993, between
         Holding and the C&D Fund; previously filed as Exhibit 10.15 to
         Registration Statement No. 333-4520, 333-4520-01 under the Securities
         Act of 1933, as amended, filed May 3, 1996, and herein incorporated by
         reference.

10.26    Indemnification Agreement, dated as of November 30, 1993, among
         Remington, Holding, Clayton, Dubilier & Rice, Inc. and the C&D Fund;
         previously filed as Exhibit 10.16 to Registration Statement No.
         333-4520, 333-4520-01 under the Securities Act of 1933, as amended,
         filed May 3, 1996, and herein incorporated by reference.

10.27    RACI Holding, Inc. 1994 Directors' Stock Plan, adopted on June 2, 1994;
         previously filed as Exhibit 10.18 to Registration Statement No.
         333-4520, 333-4520-01 under the Securities Act of 1933, as amended,
         filed May 3, 1996, and herein incorporated by reference.



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<PAGE>   71

10.28    RACI Holding, Inc. Stock Purchase Plan, adopted on June 2, 1994;
         previously filed as Exhibit 10.19 to Registration Statement No.
         333-4520, 333-4520-01 under the Securities Act of 1933, as amended,
         filed May 3, 1996, and herein incorporated by reference.

10.29    Amended and Restated RACI Holding, Inc. Stock Option Plan, adopted as
         of July 17, 1995; previously filed as Exhibit 10.20 to Registration
         Statement No. 333-4520, 333-4520-01 under the Securities Act of 1933,
         as amended, filed May 3, 1996, and herein incorporated by reference.

10.30    Amendment No. 1, effective as of July 22, 1996, to the Amended and
         Restated RACI Holding, Inc. Stock Option Plan referred to as Exhibit
         10.25 above; previously filed as Exhibit 10.25 to Amendment No. 1 to
         Registration Statement No. 333-4520, 333-4520-01 under the Securities
         Act of 1933, as amended, filed January 10, 1997, and herein
         incorporated by reference.

10.31    Form of Management Stock Option Agreement; previously filed as Exhibit
         10.21 to Registration Statement No. 333-4520, 333-4520-01 under the
         Securities Act of 1933, as amended, filed May 3, 1996, and herein
         incorporated by reference.

10.32    RACI Holding, Inc. Director Stock Purchase Plan, adopted on July 22,
         1997; previously filed as Exhibit 10.1 by the Company in its Form 10-Q
         for the quarter ended September 30, 1997, and herein incorporated by
         reference.

10.33    Form of Director Stock Subscription Agreement; previously filed as
         Exhibit 10.2 by the Company in its Form 10-Q for the quarter ended
         September 30, 1997, and herein incorporated by reference.

10.34    RACI Holding, Inc. Director Stock Option Plan, adopted on July 22,
         1996; previously filed as Exhibit 10.27 to Amendment No. 1 to
         Registration Statement No. 333-4520, 333-4520-01 under the Securities
         Act of 1933, as amended, filed January 10, 1997, and herein
         incorporated by reference.

10.35    Consulting Agreement, dated as of December 1, 1993, among Holding,
         Remington and Clayton, Dubilier & Rice, Inc.; previously filed as
         Exhibit 10.28 to Amendment No. 2 to Registration Statement No.
         333-4520, 333-4520-01 under the Securities Act of 1933, as amended,
         filed April 23, 1997, and herein incorporated by reference.

10.36    Form of Executive Employment Agreement; previously filed as Exhibit
         10.34 to the Company's Annual Report on Form 10-K, filed March 30,
         1999, and herein incorporated by reference.

10.37    Director Stock Subscription Agreement; previously filed as Exhibit 10.1
         to the Company's Quarterly Report on Form 10-Q, for the quarter ended
         June 30, 1999, and herein incorporated by reference.

10.38    Director Matching Deferred Share Award Agreement; previously filed as
         Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q, for the
         quarter ended June 30, 1999, and herein incorporated by reference.

10.39    1999 RACI, Holding, Inc. Stock Incentive Plan; previously filed as
         Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q, for the
         quarter ended June 30, 1999, and herein incorporated by reference.

10.40    Form of Management Stock Subscription Agreement; previously filed as
         Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q, for the
         quarter ended June 30, 1999, and herein incorporated by reference.

10.41    Form of Management Stock Subscription Agreement - Performance Option;
         previously filed as Exhibit 10.5 to the Company's Quarterly Report on
         Form 10-Q, for the quarter ended June 30, 1999, and herein



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<PAGE>   72

         incorporated by reference.

10.42    Form of Management Stock Subscription Agreement - Service Option;
         previously filed as Exhibit 10.6 to the Company's Quarterly Report on
         Form 10-Q, for the quarter ended June 30, 1999, and herein incorporated
         by reference.

10.43    Form of Stock Purchase Right Deferred Share Award Agreement; previously
         filed as Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q,
         for the quarter ended June 30, 1999, and herein incorporated by
         reference.

10.44    Form of Matching Deferred Share Award Agreement; previously filed as
         Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q, for the
         quarter ended June 30, 1999, and herein incorporated by reference.

10.45    Form of Pledge and Security Agreement; previously filed as Exhibit 10.9
         to the Company's Quarterly Report on Form 10-Q, for the quarter ended
         June 30, 1999, and herein incorporated by reference.

10.46    Form of Promissory Note; previously filed as Exhibit 10.10 to the
         Company's Quarterly Report on Form 10-Q, for the quarter ended June 30,
         1999, and herein incorporated by reference

10.47    Profit Based Bonus Plan; previously filed as Exhibit 10.11 to the
         Company's Quarterly Report on Form 10- Q, for the quarter ended June
         30, 1999, and herein incorporated by reference


12.1     Computation of Ratio of Earnings to Fixed Charges.

21.1     List of Subsidiaries.

23.1     Consent of PricewaterhouseCoopers LLP as Independent Accountants of the
         Registrant.

99.1     Reconciliation of Income (Loss) from Operations to EBITDA.

99.2     Form of Proxy sent to security holders for 2001 annual meeting.

99.3     Notice of Annual Meeting and Instructions sent to security holders for
         2001 annual meeting.


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<PAGE>   73

(B) REPORTS ON FORM 8-K.

         During the quarter ended December 31, 2000, the Company filed no
reports on Form 8-K.



                                       73
<PAGE>   74

                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized as of March 23, 2001.

                                RACI HOLDING, INC.


                                By:     /s/ Thomas L. Millner
                                   --------------------------------------------
                                         Thomas L. Millner
                                Chief Executive Officer, President and Director

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 23, 2001.

<TABLE>
<S>                                                  <C>
               /s/ Thomas L. Millner                 Chief Executive Officer, President and Director
---------------------------------------------------- (Principal Executive Officer)
                 Thomas L. Millner

                                                     Executive Vice President, Chief Financial Officer and
                /s/ Mark A. Little                   Chief Administrative Officer
---------------------------------------------------- (Principal Financial and Accounting Officer)
                  Mark A. Little

             /s/ Leon J. Hendrix, Jr.                Chairman and Director
----------------------------------------------------
               Leon J. Hendrix, Jr.

                /s/ B. Charles Ames                  Director
----------------------------------------------------
                  B. Charles Ames

              /s/ Michael G. Babiarz                 Director
----------------------------------------------------
                Michael G. Babiarz

            /s/ Stephen D. Bechtel, Jr.              Director
----------------------------------------------------
              Stephen D. Bechtel, Jr.

                /s/ Bobby R. Brown                   Director
----------------------------------------------------
                  Bobby R. Brown

             /s/ Richard A. Gilleland                Director
----------------------------------------------------
               Richard A. Gilleland

              /s/ Richard E. Heckert                 Director
----------------------------------------------------
                Richard E. Heckert

               /s/ Ulrich Middelmann                 Director
----------------------------------------------------
                 Ulrich Middelmann

                /s/ Hubbard C. Howe                  Director
----------------------------------------------------
                  Hubbard C. Howe

              /s/ Joseph L. Rice, III                Director
----------------------------------------------------
                Joseph L. Rice, III

             /s/ H. Norman Schwarzkopf               Director
----------------------------------------------------
               H. Norman Schwarzkopf
</TABLE>


                                       74
<PAGE>   75


SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.

         The form of proxy, notice of annual meeting and instructions sent to
security holders are attached here to as exhibits 99.2 and 99.3.



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<PAGE>   76


                                  EXHIBIT INDEX
                FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 31, 2000


EXHIBIT NO.                DESCRIPTION
-----------                -----------

2.1      Asset Purchase Agreement, dated as of November 24, 1993, among
         Remington Arms Company, Inc., formerly named RACI Acquisition
         Corporation ("Remington"), E.I. du Pont de Nemours and Company
         ("DuPont") and Sporting Goods Products, Inc., formerly named Remington
         Arms Company, Inc. ("Sporting Goods"); previously filed as Exhibit 2.1
         to Registration Statement No. 333-4520, 333-4520-01 under the
         Securities Act of 1933, as amended, filed May 3, 1996, and herein
         incorporated by reference.

2.2      Understanding and Agreement Regarding Product Liability Litigation,
         dated as of June 1, 1996 between DuPont and Remington; previously filed
         as Exhibit 2.2 to Amendment No. 2 to Registration Statement No.
         333-4520, 333-4520-01 under the Securities Act of 1933, as amended,
         filed April 23, 1997, and herein incorporated by reference.

2.3      Non-Competition Agreement, dated as of December 1, 1993, among DuPont,
         Sporting Goods and Remington; previously filed as Exhibit 2.3 to
         Registration Statement No. 333-4520, 333-4520-01 under the Securities
         Act of 1933, as amended, filed May 3, 1996, and herein incorporated by
         reference.

2.4      Product Liability Services and Defense Coordination Agreement, dated as
         of December 1, 1993, among DuPont, Sporting Goods and Remington;
         previously filed as Exhibit 2.4 to Registration Statement No. 333-4520,
         333-4520-01 under the Securities Act of 1933, as amended, filed May 3,
         1996, and herein incorporated by reference.

2.5      Environmental Liability Services Agreement, dated as of December 1,
         1993, between DuPont and Remington; previously filed as Exhibit 2.5 to
         Registration Statement No. 333-4520, 333-4520-01 under the Securities
         Act of 1933, as amended, filed May 3, 1996, and herein incorporated by
         reference.

3.1      Certificate of Incorporation of RACI Holding, Inc. ("Holding"), dated
         October 21, 1993, as amended on June 21, 1995; previously filed as
         Exhibit 3.1 to Registration Statement No. 333-4520, 333-4520-01 under
         the Securities Act of 1933, as amended, filed May 3, 1996, and herein
         incorporated by reference.

3.2      By-Laws of Holding, as amended and restated on July 27, 1999;
         previously filed as Exhibit 3.1 to Quarterly Report on Form 10-Q, filed
         November 12, 1999, and herein incorporated by reference.

4.1      Specimen of Holding Class A Common Stock Certificate; previously filed
         as Exhibit 4.1 to Annual Report on Form 10-K, filed March 30, 1998, and
         herein incorporated by reference.

4.2      Specimen of Holding Class B Common Stock Certificate; previously filed
         as Exhibit 4.2 to Annual Report on Form 10-K, filed March 30, 1998, and
         herein incorporated by reference.

4.3      Indenture, dated as of November 30, 1993 (the "Indenture"), among
         Remington, First Trust National Association, as Trustee, and Holding,
         as Guarantor, with respect to Remington's 9.5% Senior Subordinated
         Notes due 2003 (the "Notes"); previously filed as Exhibit 4.1 to
         Registration Statement No. 333-4520, 333-4520-01 under the Securities
         Act of 1933, as amended, filed May 3, 1996, and herein incorporated by
         reference.



                                       76
<PAGE>   77

4.4      First Supplemental Indenture, dated as of June 30, 2000, among RA
         Brands, L.L.C., as a Subsidiary Guarantor, Remington, Holding, as a
         Guarantor, and U.S. Bank National Association, as Trustee, to the
         Indenture referred to Exhibit 4.3 above; filed herewith.

4.5      Second Supplemental Indenture, dated as of August 25, 2000, among RA
         Factors, L.L.C., as a Subsidiary Guarantor, Remington, Holding, as a
         Guarantor, and U.S. Bank National Association, as Trustee, to the
         Indenture referred to Exhibit 4.3 above; filed herewith.

4.6      Purchase Agreement, dated November 19, 1993, among Remington, Holding,
         Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
         ("Merrill Lynch"), and CS First Boston Corporation ("First Boston" and,
         together with Merrill Lynch, the "Initial Purchaser"); previously filed
         as Exhibit 4.2 to Registration Statement No. 333-4520, 333-4520-01
         under the Securities Act of 1933, as amended, filed May 3, 1996, and
         herein incorporated by reference.

4.7      Registration Rights Agreement, dated as of November 30, 1993, among
         Remington, Holding and the Initial Purchasers; previously filed as
         Exhibit 4.3 to Registration Statement No. 333-4520, 333-4520-01 under
         the Securities Act of 1933, as amended, filed May 3, 1996, and herein
         incorporated by reference.

4.8      Amended and Restated Credit Agreement, dated as of April 28, 2000,
         among Remington, The Chase Manhattan Bank, as Administrative Agent and
         the other lenders named therein; previously filed as Exhibit 4.1 to the
         Company's quarterly report on Form 10-Q for the quarter ended March 31,
         2000 and herein incorporated by reference.

4.9      Borrower Stock Pledge Agreement, dated as of April 28, 2000 between
         Remington and The Chase Manhattan Bank, as Administrative Agent;
         previously filed as Exhibit 4.2 to the Company's quarterly report on
         Form 10-Q for the quarter ended March 31, 2000 and herein incorporated
         by reference.

4.10     Borrower Security Agreement, dated as of April 28, 2000 between
         Remington and The Chase Manhattan Bank, as Administrative Agent;
         previously filed as Exhibit 4.3 to the Company's quarterly report on
         Form 10-Q for the quarter ended March 31, 2000 and herein incorporated
         by reference.

4.11     Borrower Patent and Trademark Security Agreement, dated as of April 28,
         2000 between Remington and The Chase Manhattan Bank, as Administrative
         Agent; previously filed as Exhibit 4.4 to the Company's quarterly
         report on Form 10-Q for the quarter ended March 31, 2000 and herein
         incorporated by reference.

4.12     Holding Stock Pledge Agreement, dated as of April 28, 2000 between
         Remington and The Chase Manhattan Bank, as Administrative Agent;
         previously filed as Exhibit 4.5 to the Company's quarterly report on
         Form 10-Q for the quarter ended March 31, 2000 and herein incorporated
         by reference.

4.13     Holding Guarantee, dated as of April 28, 2000 between Remington and The
         Chase Manhattan Bank, as Administrative Agent; previously filed as
         Exhibit 4.6 to the Company's quarterly report on Form 10-Q for the
         quarter ended March 31, 2000 and herein incorporated by reference.

4.14     Supplement No. 1 to Borrower Stock Pledge Agreement, dated as of June
         30, 2000, between Remington and The Chase Manhattan Bank, as
         Administrative Agent.

4.15     Subsidiary Guarantee, dated as of June 30, 2000, between RA Brands,
         L.L.C. and The Chase Manhattan Bank, as Administrative Agent; filed
         herewith.

4.16     Subsidiary Security Agreement, dated as of June 30, 2000, between RA
         Brands, L.L.C. and The Chase Manhattan Bank, as Administrative Agent;
         filed herewith.



                                       77
<PAGE>   78

4.17     Subsidiary Patent and Trademark Security Agreement, dated as of June
         30, 2000, between RA Brands, L.L.C. and The Chase Manhattan Bank, as
         Administrative Agent; filed herewith.

4.18     Supplement No. 2 to Borrower Stock Pledge Agreement, dated as of August
         25, 2000, between Remington and The Chase Manhattan Bank, as
         Administrative Agent; filed herewith.

4.19     Subsidiary Guarantee, dated as of August 25, 2000, between RA Factors,
         L.L.C. and The Chase Manhattan Bank, as Administrative Agent; filed
         herewith.

4.20     Subsidiary Security Agreement, dated as of August 25, 2000, between RA
         Factors, L.L.C. and The Chase Manhattan Bank, as Administrative Agent;
         filed herewith.

4.21     Sublease, dated as of March 1, 1987, between S&K Industries, Inc., as
         lessor, and Remington as assignee of DuPont, as lessee (agreement to
         furnish such sublease to the Securities and Exchange Commission upon
         its request); previously filed as Exhibit 4.17 to Annual Report on Form
         10-K, filed March 30, 1998, and herein incorporated by reference.

Items in this Section 10 constitute management contracts or compensatory plans
or arrangements with the exception of Exhibits 10.1 through 10.26.

10.1     Filed as Exhibit 2.1.

10.2     Filed as Exhibit 2.2.

10.3     Filed as Exhibit 2.3.

10.4     Filed as Exhibit 2.4.

10.5     Filed as Exhibit 2.5.

10.6     Filed as Exhibit 4.3.

10.7     Filed as Exhibit 4.4.

10.8     Filed as Exhibit 4.5.

10.9     Filed as Exhibit 4.6.

10.10    Filed as Exhibit 4.7.

10.11    Filed as Exhibit 4.8.

10.12    Filed as Exhibit 4.9.

10.13    Filed as Exhibit 4.10.

10.14    Filed as Exhibit 4.11.



                                       78
<PAGE>   79

10.15    Filed as Exhibit 4.12.

10.16    Filed as Exhibit 4.13.

10.17    Filed as Exhibit 4.14.

10.18    Filed as Exhibit 4.15.

10.19    Filed as Exhibit 4.16.

10.20    Filed as Exhibit 4.17.

10.21    Filed as Exhibit 4.18.

10.22    Filed as Exhibit 4.19.

10.23    Filed as Exhibit 4.20.

10.24    Registration and Participation Agreement, dated as of November 30,
         1993, between Holding and The Clayton & Dubilier Private Equity Fund IV
         Limited Partnership (the "C&D Fund"); previously filed as Exhibit 10.14
         to Registration Statement No. 333-4520, 333-4520-01 under the
         Securities Act of 1933, as amended, filed May 3, 1996, and herein
         incorporated by reference.

10.25    Stock Subscription Agreement, dated as of November 30, 1993, between
         Holding and the C&D Fund; previously filed as Exhibit 10.15 to
         Registration Statement No. 333-4520, 333-4520-01 under the Securities
         Act of 1933, as amended, filed May 3, 1996, and herein incorporated by
         reference.

10.26    Indemnification Agreement, dated as of November 30, 1993, among
         Remington, Holding, Clayton, Dubilier & Rice, Inc. and the C&D Fund;
         previously filed as Exhibit 10.16 to Registration Statement No.
         333-4520, 333-4520-01 under the Securities Act of 1933, as amended,
         filed May 3, 1996, and herein incorporated by reference.

10.27    RACI Holding, Inc. 1994 Directors' Stock Plan, adopted on June 2, 1994;
         previously filed as Exhibit 10.18 to Registration Statement No.
         333-4520, 333-4520-01 under the Securities Act of 1933, as amended,
         filed May 3, 1996, and herein incorporated by reference.

10.28    RACI Holding, Inc. Stock Purchase Plan, adopted on June 2, 1994;
         previously filed as Exhibit 10.19 to Registration Statement No.
         333-4520, 333-4520-01 under the Securities Act of 1933, as amended,
         filed May 3, 1996, and herein incorporated by reference.

10.29    Amended and Restated RACI Holding, Inc. Stock Option Plan, adopted as
         of July 17, 1995; previously filed as Exhibit 10.20 to Registration
         Statement No. 333-4520, 333-4520-01 under the Securities Act of 1933,
         as amended, filed May 3, 1996, and herein incorporated by reference.

10.30    Amendment No. 1, effective as of July 22, 1996, to the Amended and
         Restated RACI Holding, Inc. Stock Option Plan referred to as Exhibit
         10.25 above; previously filed as Exhibit 10.25 to Amendment No. 1 to
         Registration Statement No. 333-4520, 333-4520-01 under the Securities
         Act of 1933, as amended, filed January 10, 1997, and herein
         incorporated by reference.

10.31    Form of Management Stock Option Agreement; previously filed as Exhibit
         10.21 to Registration Statement No. 333-4520, 333-4520-01 under the
         Securities Act of 1933, as amended, filed May 3, 1996, and herein
         incorporated by reference.



                                       79
<PAGE>   80

10.32    RACI Holding, Inc. Director Stock Purchase Plan, adopted on July 22,
         1997; previously filed as Exhibit 10.1 by the Company in its Form 10-Q
         for the quarter ended September 30, 1997, and herein incorporated by
         reference.

10.33    Form of Director Stock Subscription Agreement; previously filed as
         Exhibit 10.2 by the Company in its Form 10-Q for the quarter ended
         September 30, 1997, and herein incorporated by reference.

10.34    RACI Holding, Inc. Director Stock Option Plan, adopted on July 22,
         1996; previously filed as Exhibit 10.27 to Amendment No. 1 to
         Registration Statement No. 333-4520, 333-4520-01 under the Securities
         Act of 1933, as amended, filed January 10, 1997, and herein
         incorporated by reference.

10.35    Consulting Agreement, dated as of December 1, 1993, among Holding,
         Remington and Clayton, Dubilier & Rice, Inc.; previously filed as
         Exhibit 10.28 to Amendment No. 2 to Registration Statement No.
         333-4520, 333-4520-01 under the Securities Act of 1933, as amended,
         filed April 23, 1997, and herein incorporated by reference.

10.36    Form of Executive Employment Agreement; previously filed as Exhibit
         10.34 to the Company's Annual Report on Form 10-K, filed March 30,
         1999, and herein incorporated by reference.

10.37    Director Stock Subscription Agreement; previously filed as Exhibit 10.1
         to the Company's Quarterly Report on Form 10-Q, for the quarter ended
         June 30, 1999, and herein incorporated by reference.

10.38    Director Matching Deferred Share Award Agreement; previously filed as
         Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q, for the
         quarter ended June 30, 1999, and herein incorporated by reference.

10.39    1999 RACI, Holding, Inc. Stock Incentive Plan; previously filed as
         Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q, for the
         quarter ended June 30, 1999, and herein incorporated by reference.

10.40    Form of Management Stock Subscription Agreement; previously filed as
         Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q, for the
         quarter ended June 30, 1999, and herein incorporated by reference.

10.41    Form of Management Stock Subscription Agreement - Performance Option;
         previously filed as Exhibit 10.5 to the Company's Quarterly Report on
         Form 10-Q, for the quarter ended June 30, 1999, and herein incorporated
         by reference.

10.42    Form of Management Stock Subscription Agreement - Service Option;
         previously filed as Exhibit 10.6 to the Company's Quarterly Report on
         Form 10-Q, for the quarter ended June 30, 1999, and herein incorporated
         by reference.

10.43    Form of Stock Purchase Right Deferred Share Award Agreement; previously
         filed as Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q,
         for the quarter ended June 30, 1999, and herein incorporated by
         reference.

10.44    Form of Matching Deferred Share Award Agreement; previously filed as
         Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q, for the
         quarter ended June 30, 1999, and herein incorporated by reference.

10.45    Form of Pledge and Security Agreement; previously filed as Exhibit 10.9
         to the Company's Quarterly Report on Form 10-Q, for the quarter ended
         June 30, 1999, and herein incorporated by reference.



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<PAGE>   81

10.46    Form of Promissory Note; previously filed as Exhibit 10.10 to the
         Company's Quarterly Report on Form 10-Q, for the quarter ended June 30,
         1999, and herein incorporated by reference

10.47    Profit Based Bonus Plan; previously filed as Exhibit 10.11 to the
         Company's Quarterly Report on Form 10- Q, for the quarter ended June
         30, 1999, and herein incorporated by reference

12.1     Computation of Ratio of Earnings to Fixed Charges.

21.1     List of Subsidiaries.

23.1     Consent of PricewaterhouseCoopers LLP as Independent Accountants of the
         Registrant.

99.1     Reconciliation of Income (Loss) from Operations to EBITDA.

99.2     Form of proxy set to security holders for 2000 annual meeting.

99.3     Notice of Annual Meeting and Instructions sent to security holders for
         2000 annual meeting.




                                       81