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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, 1999

                                       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)

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

                               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 22, 2000, the registrant had outstanding 768,132 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...............14

PART II.......................................................................15
    ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
            STOCKHOLDER MATTERS...............................................15
    ITEM 6. SELECTED FINANCIAL DATA...........................................16
    ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS...............................18
    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...............................57

PART III......................................................................58
    ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...............58
    ITEM 11. EXECUTIVE COMPENSATION...........................................60
    ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
             MANAGEMENT.......................................................65
    ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................66


PART IV.......................................................................68
    ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
             ON FORM 8-K......................................................68



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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 and
hunting/gun care accessories sold under the Remington(R) name and other labels,
fishing products sold under the Stren(R) name 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") 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 19 to the Company's
consolidated financial statements for the year ended December 31, 1999 appearing
elsewhere in this report):

                                 YEAR ENDED DECEMBER 31,
                             ------------------------------
                              1999        1998        1997
                             ------      ------      ------

Hunting/Shooting Sports      $350.3      $328.8      $328.8
Other (a)                      49.1        51.9        52.4
                             ------      ------      ------

Total Sales                  $399.4      $380.7      $381.2
                             ======      ======      ======

---------------
(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 the largest U.S. manufacturer of
shotguns and rifles in 1998. 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 NSGA, in 1998,
approximately 30 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 firearms and ammunition in
1998 was estimated by NSGA to be approximately $1.6 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 safety
issues may affect sales of firearms,



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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, that is intended for use in a shotgun but that 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 184 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 1998, according to NSGA, the Company had the largest share of the
U.S. retail shotgun market based on sales volume, at approximately 36%, with its
nearest competitor holding a market share of approximately 18%. 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 $220 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 the largest brand of rifles in the United States in
1998 based on sales volume, according to NSGA, with a market share of
approximately 30%, with its nearest competitor holding a market share of
approximately 19%. 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 $140 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, 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 1999, the Company continued to demonstrate industry leadership by
introducing new products that satisfy the need for specialized, high performance
firearms and ammunition. The introduction of the .300 Ultra Mag(TM) centerfire
rifle cartridge marks the first commercially available non-belted magnum case.
It was simultaneously introduced with nine versions of the Model 700 rifle
chambered for this innovative round. Additional 1999 introductions included
Premier Partition, a high-performance line of centerfire rifle ammunition for
big game, and the Model 700 Composite. The Model 700 Composite is a classic
Model 700 frame combined with a steel lined composite barrel yielding a
light-weight rifle with improved accuracy and durability.

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 Company
believes that any additional cost resulting from this program will not be
material to its financial condition or results of operations.

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, its custom gun shop, the Remington Country Store and
the Remington Museum. The Company's facility in Mayfield, Kentucky manufactures
rimfire rifles. The Company's facility in Lonoke, Arkansas manufactures loaded
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 which 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 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, 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 carbon steel, stainless steel, brass strip and walnut gun stock
blanks are each currently being met by a single vendor. Generally, the



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Company has had satisfactory, long-term relationships with these suppliers. The
Company has purchase contracts with certain of these 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, carbon steel, stainless steel 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 NSGA, as of 1998, 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. 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 $80 million in 1998, of which the Company had a 28% market share
based on sales dollars.

         The Company purchases most 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, care products, belts, clips and folding and
collectible knives) and commercial powder metal parts for the automotive and
firearms 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 1999, 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 21% of the
Company's total net revenues and approximately 20% of the Company's
Hunting/Shooting Sports revenues in 1999 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. See "Management's Discussion of Financial Condition and Results of
Operations--Overview--Business Trends and Initiatives." 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 1999, 7% for 1998 and 8% for
1997 of the Company's total sales. Hunting/Shooting Sports foreign sales were
approximately 7% for 1999, 8% for 1998 and 9% for 1997 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. 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 $210.0 million as of February 29, 2000,
compared to $139.1 million in the prior year. The backlog of unfilled
Hunting/Shooting Sports orders was approximately $206.6 million as of February
29, 2000, compared to $136.3 million in the prior year.


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RESEARCH AND DEVELOPMENT

         The Company maintains a research and development program, with 45
employees assigned to these efforts as of December 31, 1999. 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 introductions include the Model 300(TM) Ideal(TM) over
and under shotgun, the 3 1/2" Model 11-87 Super Magnum(TM) shotgun, the Model
700 Composite bolt-action rifle with a steel lined composite barrel and the
EtronX(TM) bolt-action, electronic ignition center-fire rifle. New ammunition
offerings include a line of EtronX center-fire rifle cartridges and .300
Remington Ultra Mag, which management believes is the first commercially
available non-belted magnum case.

         Research and development expenditures for the continuing operations of
the Company in 1999, 1998 and 1997 amounted to approximately $6.7 million, $7.3
million and $7.4 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, all of which are owned 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).
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 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



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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 most of its fishline
requirements under a supply agreement with DuPont. See "--All Other Product
Lines."

LICENSING

         The Company licenses the Remington mark 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, tents, backpacks, sleeping bags, leather
products, non-prescription sun/safety eyeglasses, leisure furniture, tree
stands, playing cards and certain other nostalgia/novelty goods. 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. Licenses increase the market recognition of the
Remington trademark and enhance the Company's ability to market core products.
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.

         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 1999 and 1998, 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
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. 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



                                       9
<PAGE>   10

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."

         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 29, 2000, the Company employed approximately 2,234
full-time employees of whom nearly 2,004 were engaged in manufacturing,
approximately 185 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.

         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.


                                       10
<PAGE>   11

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 Services Agreement with the Company. See "--The Acquisition."

         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 "Asset 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) financial responsibility up to the Cap, for certain product liability
claims relating to disclosed occurrences prior to the Closing and for
environmental claims relating to the operation of the Business prior to the
Closing and (iii) liabilities for product liability claims relating to
occurrences after the Closing, except for claims involving discontinued
products. All other liabilities relating to or arising out of the operation of
the Business prior to the Closing are excluded liabilities (the "Excluded
Liabilities") which the Sellers retained and with respect to which the Sellers
have certain obligations to indemnify Remington, as discussed below.

         The Asset Purchase Agreement requires the Sellers to indemnify
Remington and its affiliates for inaccuracies in the representations and
warranties made in the Asset Purchase Agreement (environmental matters being
addressed separately), for the Sellers' failure to comply with covenants made in
the Asset Purchase Agreement, and in respect of the Excluded Liabilities, which
include, among other liabilities, certain tax liabilities and certain employee
and retiree compensation and benefit liabilities. Subject to certain exceptions,
the Sellers' indemnification obligation with respect to inaccuracies in their
representations and warranties is subject to a deductible of $1.5 million and is
limited to



                                       11
<PAGE>   12

individual claims that exceed $25,000. The Sellers' overall liability in respect
of their representations and warranties, covenants and the Excluded Liabilities,
excluding environmental liabilities and certain product liability matters of the
Company, is limited to an amount equal to the $299.8 million cash portion of the
adjusted purchase price for the Acquisition plus $25.0 million. With certain
exceptions, the Sellers' representations and warranties in the Asset Purchase
Agreement expired 18 months after the Closing, and all claims for
indemnification with respect thereto under the Asset Purchase Agreement were to
have been asserted within 30 days of such expiration. The Company made claims
for such indemnification involving product liability issues within such time
period. See "Legal Proceedings."

         Under the Asset Purchase Agreement, Remington's financial
responsibility for all environmental liabilities relating to the ownership or
operation of the Business prior to the Closing, and for liabilities relating to
any product liability claims arising from occurrences prior to the Closing, was
limited to the Cap, which has been fully utilized. 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 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 Closing, 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:

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

         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, as amended, (the "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 Asset 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 and (2) all product liability cases and claims involving
products that had not been discontinued as of the Closing ("extant products")
and relating to occurrences that took place prior to the Closing. The Company
assumed financial responsibility, up to the Cap, for certain product liability
cases disclosed to the Company and arising prior to the Closing. The Cap was
exhausted in 1997, and the Sellers retained liability for, and are required to
indemnify the Company against, all such disclosed product liability occurrences
and such environmental liabilities in excess of the Cap. This indemnification
obligation of the Sellers is not subject to any survival period limitation.
Prior to the Acquisition, the Sellers were self-insured for product liability
obligations of the Business, with excess insurance coverage available at $50.0
million per occurrence. Except for certain cases and claims relating to shotguns
as described below and except for all cases and claims relating to discontinued
products, the Company generally bears financial responsibility for product
liability cases and claims relating to occurrences after the Closing.

         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 Closing. 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 $7.0 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, 1998 through November 30, 2000.

         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, 1999, 23 individual bodily injury cases 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 three involve either discontinued
products or pre-Closing occurrences, for which the Sellers retained liability
and are required to indemnify the Company. The remaining approximately 20 of the
pending cases involve post-Closing occurrences for which the Company bears
responsibility under the Asset Purchase Agreement; the Sellers have some
responsibility for the costs of three of these cases involving certain shotguns,
as described below. 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 one of the approximately 30 recent actions brought by certain
municipalities, primarily against manufacturers and sellers of handguns. In City
of Boston et al. v. Smith & Wesson et al., filed in Superior Court, Suffolk
County, Massachusetts on June 2, 1999, the City of Boston and the Boston Public
Health Commission claim (among other allegations) that industry distribution
practices of the defendants (including handgun and long gun manufacturers)
allegedly permit firearms to enter a secondary market, from which guns may be
obtained by unauthorized users, and that defendants have failed to include
adequate safety devices in their firearms to prevent unauthorized use.
Plaintiffs seek injunctive relief and monetary damages (consisting of the cost
of providing certain city services and lost tax and other revenues.) The parties
recently stipulated to a schedule for defendants' consolidated motion to
dismiss, pursuant to which briefing will be completed by the end of March 2000.

         Remington is not named in Chicago v. Beretta U.S.A. Corp., another such
case. However, a motion to intervene was filed in November 1998 seeking to name
as additional defendants unidentified "ammunition manufacturers." A second
motion for the same purpose was filed by a different entity in February 2000. To
date, neither motion has been heard or ruled upon.

         Remington has been named in NAACP et al v. A.A. Arms, Inc., et al a
lawsuit filed in federal court in the Eastern District of New York by the
National Association for the Advancement of Colored People on July 16, 1999,
against more than a hundred defendants involved in the manufacture of firearms.
The complaint, as amended in October 1999 to add the



                                       13
<PAGE>   14

National Spinal Cord Injury Association as a plaintiff, purports to seek
injunctive relief rather than monetary damages and contains allegations about
defendants' manufacturing and distribution practices similar to those in the
Boston complaint described above. 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 60 years.

         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 2000, 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 filed in 1989 in Texas district court in Jim Wells County.
The plaintiffs sought certification of a class consisting of all Texas owners,
allegedly 400,000 in number, of Model 700 bolt-action rifles. In June 1996, the
district court certified for class treatment the limited issues of whether the
Model 700 fire control system is "defective" and, if so, the "cost of repair."
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 representations and warranties in the Asset Purchase Agreement
expired 18 months after the Acquisition, with certain exceptions, and claims for
indemnification with respect thereto were to be made within 30 days of such
expiration. The Company made claims for such indemnification involving product
liability issues within that time period. 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 Asset Purchase Agreement relating to shotguns
(excluding various indemnification rights and the allocation of certain costs
under the Cap) 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 the amount of the Cap, with the Sellers retaining liability in
excess of the Cap 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, its
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 1999.


                                       14
<PAGE>   15

                                     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, 1999, a total of 11,250
shares of Class A Common Stock had been issued to five directors under the 1997
Directors' Plan, 1,800 shares of Class A Common Stock were issued to five
directors under the 1994 Directors' Plan, and 5,082 shares were issued to key
management under the 1999 Stock Incentive Plan. See "Security Ownership of
Certain Beneficial Owners and Management." The only holder of Remington's common
stock is Holding. No dividends have been paid by Holding on its shares of Common
Stock. 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 Credit Agreement and the indenture for its
subordinated notes ("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--Subsequent Events,"
"--Liquidity and Capital Resources," "--Credit Agreement" and "--Notes" and Note
14 to the Company's consolidated financial statements for the year ended
December 31, 1999 appearing elsewhere in this report.



                                       15
<PAGE>   16

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, 1999. 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,
                                                -------------------------------------------------------------------
                                                  1999           1998          1997           1996           1995
                                                  ----           ----          ----           ----           ----
<S>                                             <C>            <C>            <C>            <C>            <C>
STATEMENT OF OPERATIONS DATA:                               (Dollars in Millions, Except Per Share Data)

Sales (a) ................................      $ 399.4        $ 380.7        $ 381.2        $ 390.4        $ 427.0
Gross Profit (b) .........................        128.3          121.7          111.3          108.7          134.3
Operating Expenses (b) ...................         76.5           74.5           78.7           94.8           92.8
Restructuring and Nonrecurring Items .....           --           (0.3)            --            9.6             --
Operating Profit .........................         51.8           47.5           32.6            4.3           41.5
Interest Expense .........................         14.1           19.2           23.6           25.1           21.5
Profit (Loss) before Income Taxes ........         37.7           28.3            9.0          (20.8)          20.0
Net Income (Loss) ........................         23.0           17.2            5.5          (13.8)          11.5
Basic Income (Loss) Per Common Share .....        29.68          22.63           7.33         (18.40)         15.33
Diluted Income (Loss) Per Common Share ...        28.89          22.26           7.33         (18.40)         15.33
Ratio of Earnings to Fixed Charges (c) ...         3.7x           2.5x           1.4x           0.2x           1.9x

OPERATING AND OTHER DATA:
EBITDA (d) ...............................      $  74.0        $  64.2        $  52.2        $  29.4        $  56.0
EBITDA Margin (d) (e) ....................         18.5%          16.9%          13.7%           7.5%          13.1%
Depreciation and Amortization (f) ........      $  16.0        $  15.9        $  15.1        $  13.9        $  11.7
Other Non-cash Charges (g) ...............          6.2            1.1            3.7             --             --
Nonrecurring and Restructuring Items (h) .           --           (0.3)           0.8           11.2            2.8
Ratio of EBITDA to Interest Expense (d)(f)         6.1x           3.7x           2.4x           1.3x           2.8x
Consolidated Fixed Charge Coverage
   Ratio (i) .............................         5.2x           3.4x           2.2x           0.7x           2.4x
Capital Expenditures .....................      $  13.0        $   8.5        $   5.8        $  22.5        $  18.9
Cash flows provided by (used in):
   Operating Activities ..................         64.7           61.0           55.9           (2.7)         (12.5)
   Investing Activities ..................        (13.0)          (8.5)          (5.8)         (22.5)         (17.5)
   Financing Activities ..................        (30.3)         (48.2)         (59.1)          33.4          (10.5)

BALANCE SHEET DATA (END OF PERIOD):
Working Capital ..........................      $  91.1        $  92.7        $ 108.2        $ 136.1        $ 125.0
Total Assets .............................        358.8          354.5          380.7          435.0          404.4
Total Debt (j) ...........................        118.5          146.9          195.0          253.1          213.2
Shareholders' Equity .....................        127.2          103.5           86.3           79.8           93.6
</TABLE>

(a)  Sales are presented net of federal excise taxes. Excise taxes were $33.8
     million, $31.5 million, $31.0 million, $31.7 million and $36.0 million for
     the years ended December 31, 1999, 1998, 1997, 1996 and 1995, respectively.

(b)  Property and payroll taxes of $6.6 million and $7.4 million for the years
     ended December 31, 1996 and 1995, respectively, have been reclassified from
     operating expenses to cost of goods sold to conform with the current
     presentation format.

(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.



                                       16
<PAGE>   17

(d)  EBITDA as presented is calculated in accordance with the definition of that
     term contained in the Company's Credit Agreement, and may not be comparable
     to similarly titled measures reported by other companies. Generally, the
     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, 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 $1.9 million, 2.0
     million, $1.7 million, $1.6 million and $1.5 million in 1999, 1998, 1997,
     1996 and 1995, respectively, which is included in interest expense.

(g)  Non-cash charges consist of the following: (1) for 1999, a $3.8 million
     stock based compensation expense, $1.6 million pension accrual, $0.2
     million SERP accrual and $0.6 million loss on disposal of assets; (2) for
     1998, a pension accrual of $0.4 million and a $0.7 million loss on disposal
     of assets and (3) 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 1998, nonrecurring legal charge of $0.4
     and restructuring accrual adjustments of $(0.7); (2) for 1997, $0.8 million
     of unusual and nonrecurring charges; (3) 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; and (4) for 1995, $2.8 million in
     nonrecurring charges for computer system implementation and $1.0 million
     for corporate relocation, net of a $1.0 million nonrecurring research and
     development-related benefit.

(i)  The Consolidated Fixed Charge Coverage Ratio is a financial measure used in
     the Indenture 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 in calculating EBITDA.

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


                                       17
<PAGE>   18

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 subsidiary, Remington
International, Ltd., 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
88% of the Company's sales in 1999 and 86% in both 1998 and 1997. Other Company
product lines include firearm-related accessories, clay targets and fishline and
related products.

Business Trends and Initiatives

          The Company believes that several of its key customers instituted
tighter inventory control practices to reduce inventory levels during 1997. This
shift in customer buying patterns resulted in a modest softness in demand for
the Company's products during 1997. Although tighter inventory control practices
have caused, and are likely to continue to cause, the Company to experience
increased liquidity and working capital requirements to meet customers' shorter
lead time order requirements, management believes that demand has stabilized as
customers' inventories have reached their targeted levels.

         The Company began its 1997 sales plan year on December 1, 1996 rather
than on January 1, 1997. This change in the sales plan year extended the
qualifying period for the early order or "dating" plan by one month to include
December orders which, the Company believes, had the effect of reducing orders
for firearms products in the first quarter of 1997. Since then the sales plan
year has begun on December 1 and ended on November 30.

         Although the Company believes that consumer concerns about regulation
has not had a significant market influence for its firearms and ammunition
products from 1997 through 1999, 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.


                                       18
<PAGE>   19

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 1999 to
1998 results, and 1998 to 1997 results.

                                Year Ended       Year Ended        Year Ended
                               December 31,     December 31,      December 31,
                                   1999             1998              1997
                                   ----             ----              ----
Sales                               100%             100%             100%
Cost of Goods Sold                   68               68               71
Gross Profit                         32               32               29
Operating Expenses                   19               20               20
Operating Profit                     13               12                9
Net Income                            6                5                1


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


         Sales. Consolidated Sales for the year ended December 31, 1999
increased $18.7 million or 5% 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    $350.3       88%      $328.8       86%
  All Other                    49.1       12%        51.9       14%
                             ------                ------
    Consolidated Sales       $399.4      100%      $380.7      100%
                             ------                ------

         Hunting/Shooting Sports sales increased $21.5 million or 7% in 1999 as
compared to 1998. Firearms sales of $178.0 million for the year ended December
31, 1999 increased $7.3 million from the year ended December 31, 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 $271.1
million, an increase of $12.1 million or 5% from the 1998 level of $259.0
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%.



                                       19
<PAGE>   20

         Gross Profit. Gross profit was $128.3 million in 1999, an increase of
$6.6 million, or 5%, from a gross profit of $121.7 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 $76.5 million, an increase of $2.0 million, or
3%, from $74.5 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.
Selling, general and administrative expenses decreased to 16% of sales in 1999
from 17% of sales in 1998 as a result of maintaining a level of spending
comparable to the prior year.

         Research and development expenses were $6.7 million for 1999, a $0.6
million, or 8.2%, decrease from $7.3 million in 1998.

         Other period expense of $4.9 million for 1999 increased $2.3 million or
88% from the $2.6 million balance in 1998. The increase resulted primarily from
a non-cash expense of $3.1 million for deferred stock compensation (discussed in
Note 12 to the Company's consolidated financial statements for the year ended
December 31, 1999 appearing elsewhere in this report) offset by higher arms
service income.

         Restructuring and Nonrecurring Items. During 1998 the Company recorded
a nonrecurring legal charge of $0.4 million related to a proposed transaction
that was not consummated, and reduced the accrued restructuring charge by $0.7
million reflecting lower than expected severance expenses of $0.1 million, lease
costs of $0.3 million and other expenses of $0.3 million. There were no
restructuring or nonrecurring expenses in 1999.

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

         Interest Expense. Interest expense for the year ended December 31, 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 (the "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.

Year Ended December 31, 1998 as Compared to Year Ended December 31, 1997

         Sales. Sales for the year ended December 31, 1998 of $380.7 million,
were flat compared to 1997 sales of $381.2 million. The following table compares
sales by segment for each of the years in the two-year period ended December 31,
1998:

                                       Year Ended December 31,
                             ----------------------------------------
                                        Percent               Percent
                              1998     of Total     1997     of Total
                             ------    --------    ------    --------
Sales
  Hunting/Shooting Sports    $328.8       86%      $328.8       86%
  All Other                    51.9       14%        52.4       14%
                             ------                ------
    Consolidated Sales       $380.7      100%      $381.2      100%
                             ------                ------




                                       20
<PAGE>   21

          Hunting/Shooting Sports sales were $328.8 million for both the years
ended December 31, 1998 and 1997. Firearms sales of $170.7 million for the year
ended December 31, 1998 increased $1.2 million from 1997. The Company believes
the increase was primarily the result of increased volume due to successful new
product introductions, such as the 3 1/2" Model 870 Express Super Magnum
shotgun, and favorable pricing partially offset by a shift in the mix of
firearms sold. Firearms sales for 1997 were also affected by the change in the
Company's 1997 sales plan year, which adversely impacted first quarter sales as
discussed above. Ammunition sales of $158.1 million for the year ended December
31, 1998 decreased $1.2 million from 1997. The decrease in ammunition sales was
primarily due to a slight decrease in volume across all ammunition categories
partially offset by favorable pricing.

         Overall sales of all other products, including fishline, accessories,
targets and powdered metal products, decreased $0.5 million, or less than 1%, to
$51.9 million from 1997 sales of $52.4 million, primarily as a result of lower
knife sales.

         Cost of Goods Sold. Cost of goods sold for 1998 was $259.0 million, a
decrease of $10.9 million, or 4%, from $269.9 million for 1997. This decrease
was principally due to favorable commodity prices, a favorable mix of lower-cost
firearm products, lower volumes of accessory products and reductions in other
manufacturing costs (including reductions in pension expense, due to prior plan
amendments and portfolio performance, and the absence in 1998 of certain
nonrecurring and start-up costs incurred in 1997). As a percentage of sales,
cost of goods sold decreased to 68% in 1998 from 71% in 1997, due primarily to
the reductions in commodity prices, price increases in firearms and ammunition
and a favorable mix of higher margin firearms products.

         Gross Profit. Gross profit was $121.7 million for 1998, an increase of
$10.4 million, or 9%, from a gross profit of $111.3 million in 1997. The
increase in gross profit was primarily due to the favorable commodity prices,
the more favorable mix of higher margin firearms products and the increased
prices on the Company's firearms and ammunition products discussed above,
partially offset by lower sales volume in the Company's ammunition and accessory
business.

         Operating Expenses. Operating expenses consist of selling, general and
administrative expenses, research and development expense and other expense.
Operating expenses for 1998 were $74.5 million, a decrease of $4.2 million, or
5%, from $78.7 million for 1997.

         Selling, general and administrative expenses for 1998 were $64.6
million, a decrease of $4.3 million, or 6%, from $68.9 million for 1997. The
decrease between the two periods was primarily attributable to lower marketing
communications, distribution and product liability expenses. There was no bad
debt expense, net of recoveries, in 1998 compared to $0.4 million during 1997.
Selling, general and administrative expenses decreased to 17% of sales in 1998
from 18% of sales in 1997 primarily as a result of the reduction in costs
discussed above.

         Research and development expenses were $7.3 million for 1998, a $0.1
million, or 1%, decrease from $7.4 million in 1997.

         Restructuring and Nonrecurring Items. During 1998 the Company recorded
a nonrecurring legal charge of $0.4 million related to a proposed transaction
that was not consummated, and reduced the accrued restructuring charge by $0.7
million reflecting lower than expected severance expenses of $0.1 million, lease
costs of $0.3 million and other expenses of $0.3 million.

         Operating Profit. Operating profit increased to $47.5 million for 1998,
an increase of $14.9 million from 1997's operating profit of $32.6 million.
Operating profit increased primarily as a result of the increase in gross profit
and the decrease in operating expenses discussed above.

         Interest Expense. Interest expense for the year ended December 31, 1998
was $19.2 million, a decrease of $4.4 million, or 19%, from the 1997 level of
$23.6 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 (the "Revolving Credit Facility") and lower term debt levels resulting
from scheduled debt repayments and, to a lesser extent, the reduction in the
interest rate from 10% to 9.5%, effective June 23, 1997, on the 9.5% Senior
Subordinated Notes due 2003, Series B (the "New Notes") as a result of the
completion of the Exchange Offer (as defined below).



                                       21
<PAGE>   22

TAXES

         The Company's balance sheet as of December 31, 1999 includes net
deferred tax assets in the amount of $13.4 million. See Note 16 to the Company's
consolidated financial statements for the year ended December 31, 1999 appearing
elsewhere in this report. The Company has generated sufficient taxable income in
1999 and 1998 to fully utilize all deferred tax assets. Accordingly, management
has not established a valuation allowance against the net deferred tax assets.

         The Company's effective tax rates for 1999, 1998 and 1997 were 39.0%,
39.2% and 39.0%, respectively. These rates were higher than the Federal
statutory rate principally due to the impact of state income taxes and certain
non-deductible expenses.

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, $4.1 million and $4.2 million were
given in 1999, 1998 and 1997, respectively. 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 is selling the majority of its ammunition products on terms
of 90 days or less and offering discounts for earlier payments. 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 $64.7 million and $61.0
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 $1.9
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
and improvement projects concentrated on enhancing the efficiency of existing
facilities. Net cash used in financing activities in 1999 and 1998 was $30.3
million and $48.2 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 Facility 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.

         Net cash provided by operating activities was $61.0 million and $55.9
million for the years ended December 31, 1998 and 1997, respectively. The
increase in cash provided by operating activities is primarily a result of
improved earnings and improved management of working capital. Inventories
decreased $18.3 million to $71.7 million and accounts payable increased $5.5 to
$28.2 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



                                       22
<PAGE>   23

in 1998 and 1997 was $8.5 million and $5.8 million, respectively, consisting of
capital expenditures for maintenance of operations and improvement projects
concentrated on enhancing the efficiency of existing facilities. Net cash used
in financing activities in 1998 and 1997 was $48.2 million and $59.1 million,
respectively. The decrease in cash used in financing activities primarily
resulted from a decrease in the net repayment on the Revolving Credit Facility
in 1998 of $19.9, offset by the repurchase of $6.7 million of the New Notes (see
"--Notes"). Cash flow from operating activities for the years ended December 31,
1998, and 1997 was sufficient to fund the Company's capital expenditure program,
scheduled principal payments on outstanding indebtedness and significant
reductions in amounts outstanding under the Revolving Credit Facility.

Working Capital

         Working capital decreased to $91.1 million at December 31, 1999 from
$92.7 million at December 31, 1998 primarily as a result of 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 offset by an increase of $21.4 million in cash and cash equivalents
on hand at year end. This program includes maintaining inventory levels in line
with sales projections and increased focus on management of accounts payable and
accounts receivable. As of December 31, 1999, accounts receivable was $56.6
million, a $6.4 million reduction from the December 31, 1998 ending balance.

Capital Expenditures

         Capital expenditures were $13.0 million, $8.5 million and $5.8 million
in 1999, 1998 and 1997, respectively. The capital expenditures in 1999 were
principally for maintenance of operations and improvement projects concentrated
on enhancing the efficiency of existing facilities, including computer system
upgrades. The Company anticipates that capital expenditures in 2000 will be
approximately $22.5 million, principally for equipment that will improve
production efficiencies and operations. The Company expects to fund capital
expenditures primarily from operational cash flow.

Liquidity

         The Company incurred substantial indebtedness in connection with the
Acquisition. As of December 31, 1999, the Company had outstanding approximately
$118.5 million of indebtedness, consisting of approximately $86.7 million ($86.9
million face amount) in the New Notes, $27.3 million in term loan borrowings,
$4.2 million in capital lease obligations and $0.3 million of other long-term
debt. There were no revolving credit borrowings under the Credit Agreement
outstanding at December 31, 1999. As of December 31, 1999 the Company also had
aggregate letters of credit outstanding of $4.2 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 Credit Agreement. 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 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." The Company intends to replace the current Revolving Credit
Facility and refinance any outstanding amounts thereunder. The Company is
currently in the process of negotiating a replacement working capital facility
with its existing lenders and expects to have such facility in place in the
second quarter of 2000. The Company also expects to pay a substantial dividend
in an amount yet to be determined in the second quarter of 2000. The Company
expects to use the proceeds of the borrowings under the replacement working
capital facility to fund such dividend except to the extent that the funds are
otherwise available. Although the Company expects to have the replacement
working capital facility in place in the second quarter of 2000, no assurance
can be given that the Company will be able to obtain such a replacement working
capital facility or refinance such amounts on terms acceptable to the Company.


                                       23
<PAGE>   24

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.

         There were no call options or premiums paid for commodity contracts
outstanding at December 31, 1999. The amount of premiums paid for commodity
contracts outstanding at December 31, 1998 and 1997 were, $0.7 million and $0.6
million, respectively. At December 31, 1999, 1998 and 1997, 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 $1.3
million, $0.1 million and $0.2 million, respectively. As of December 31, 1999,
1998 and 1997 hedging losses related to closed commodity futures contracts of
$0.2 million were included in inventory. See Note 18 to the Company's
consolidated financial statements for the year ended December 31, 1999 appearing
elsewhere in this report.

         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 estimated
value of the Company's debt at December 31, 1998 was $147.0 million compared to
a carrying value of $146.9 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, 1999 or December 31, 1998. See Note 18 to the Company's
consolidated financial statements for the year ended December 31, 1999 appearing
elsewhere in this report.

Credit Agreement

         The Company is currently party to the Credit Agreement with The Chase
Manhattan Bank ("Chase"), Union Bank of Switzerland ("UBS") and certain other
lenders, which was initially entered into in connection with the Acquisition.
The Credit Agreement provides for a term loan facility (the "Term Loans"),
originally in an aggregate principal amount of $130.0 million, in addition to
the Revolving Credit Facility. Although, both facilities have a final maturity
of December 31, 2000 the Company is currently in the process of negotiating a
replacement working capital facility with its existing lenders. See
"--Liquidity." Up to $40.0 million of Revolving Credit Facility availability may
be used for standby and commercial letters of credit. In addition, for at least
30 consecutive days of each 12-month period commencing on December 1,
outstanding amounts under the Revolving Credit Facility are limited to $60.0
million or less.

         The obligations under the 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. The
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. Since September 1995, the Company has
obtained five amendments to its Credit Agreement, which, among other things,
modified (i) the minimum earnings, minimum interest coverage ratio and net



                                       24
<PAGE>   25

worth covenants to decrease the required levels, (ii) the maximum debt to
earnings ratio covenant to increase the permissible debt levels, (iii) the
capital expenditure covenant, initially to increase but ultimately to reduce the
permissible levels of capital expenditures and (iv) the limitation on optional
payments to permit the repurchase of up to $25.0 million of the New Notes under
certain conditions. As of December 31, 1999, the Company was in compliance in
all material respects with the financial covenants under the Credit Agreement.

         In accordance with the Credit Agreement, the Company made scheduled
principal payments on the Term Loans thereunder of $22.7 million in 1999, $18.2
million in 1998 and $18.2 million in 1997. The Credit Agreement requires the
Company to make further quarterly principal payments on the Term Loans
thereunder (after pro rata reduction for certain prepayments and subject to
further pro rata or other reduction, if any, in the future) in an aggregate
amount of approximately $27.3 million in 2000. The Credit Agreement also
requires 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. Any such prepayment will result
in a pro rata reduction in all subsequently scheduled principal payments on such
Term Loans, except that any such payment made within the twelve months prior to
the date on which an installment or other payment of principal is scheduled to
be paid on the Term Loans may, at the option of the Company, be applied first to
such installment or other payment. The Company did not have Excess Cash Flow for
the years ended December 31, 1998 or 1997 and accordingly no such prepayment has
been required in 1999 or 1998. 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 is required to be made on or by March 31, 2000.

         Loans under the 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
2.50% per annum. The interest rate on the Company's Credit Agreement borrowings
can be reduced by 0.25% to 1.0% per annum from the levels originally in effect
if the Company meets certain financial ratios, based on EBITDA and consolidated
interest expense, for the four quarters most recently ended. Once reduced, such
interest rate can also be increased up to the original levels if the Company no
longer meets the financial ratios making it eligible for the interest rate
reduction. During 1998, the interest rate was reduced by 0.75% per annum as a
result of the Company's improved financial performance. The weighted average
interest rate for borrowings under the Term Loan was 6.9% per annum in 1999 and
8.0% per annum in 1998. The weighted average interest rate for borrowings under
the Revolving Credit Facility was 7.1% in 1999 and 8.3% in 1998.

         As noted above, the Credit Agreement was amended as of September 23,
1998 to permit the Company to expend up to $25.0 million toward the repurchase
of the New Notes. See "--Notes" and Note 10 to the Company's consolidated
financial statements for the year ended December 31, 1999 appearing elsewhere in
this report.

Notes

         In connection with the Acquisition, the Company issued $100 million
aggregate principal amount of its 9.5% Senior Subordinated Notes due 2003,
Series A (the "Old Notes" together with the New Notes, the "Notes"). On June 23,
1997 the Company completed its offer to exchange (the "Exchange Offer") up to
$100 million aggregate principal amount of Remington's New Notes for a like
principal amount of Remington's issued and outstanding Old Notes. All of the Old
Notes were exchanged for New Notes. The interest rate on the Notes was 10% per
annum from April 30, 1994 until June 22, 1997, the day before the date of
consummation of the Exchange Offer, and is currently 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
New Notes at an average price of 99.4% of the face value on the open market with
cash from operations. During December 1998, the Company repurchased
approximately $6.8 million of the New Notes at an average price of 98.7% 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. From time to time,
the Company may continue to repurchase additional amounts of the New Notes on
the open market, subject to the $25.0 million aggregate repurchase limit set
forth in the amended Credit Agreement.


                                       25
<PAGE>   26

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 the amount of the Cap,
which has been exhausted, with the Sellers retaining liability in excess of the
Cap 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 Closing 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 Closing, the Company's accruals for the uninsured
costs of such cases and claims and the Seller's agreement to be responsible for
certain post-Closing 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 therefrom. 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 Closing, subject to certain self-insured retentions both
on a per-occurrence basis and in the aggregate. The current insurance policy
extends through November 30, 2000. 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 relating to occurrences during
1999 will be in the range of $3.6 million to $8.5 million, and that the
liability for product liability cases and claims relating to occurrences during
1998 and 1997 will be in the range of $2.0 million to $7.0 million, and $3.1
million to $7.0 million, respectively, per year. 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 $1.8 million, $2.0 million
and $4.3 million of payments for product and environmental liabilities
(including pre-Acquisition occurrences which were subject to the Cap) in the
years ended December 31, 1999, 1998 and 1997, respectively, against the amounts
previously accrued.

YEAR 2000 COMPLIANCE

         The Company has completed all phases of its year 2000 compliance
project. As of the filing date the Company has experienced no significant
disruptions to its business resulting from failures of the Company's internal
computer system or its critical suppliers' and business partners' processes or
systems as a result of the year 2000 issue. Although the Company believes that
it has successfully avoided any significant disruption, it will continue to
monitor all critical systems for the appearance of delayed complications or
disruptions, most particularly any month-end, quarter-end and year-end
processing that has yet to be executed in a production environment. The costs
associated with the year 2000 computer problem as of December 31, 1999 have not
been material to the Company.

STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NOT YET ADOPTED

         During 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 requires entities
to recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at their fair value. In June
1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133-an
amendment of FASB Statement No. 133", that revises SFAS No. 133 to become
effective in the first quarter of fiscal 2001. The Company is evaluating the
provisions of SFAS No. 133, but does not anticipate its adoption to have a
material impact on financial position or results of operation.


                                       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 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 that any costs
resulting from the warranty program effective January 1, 1999 will not have a
material impact on its financial condition or results of operations; (vi) 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; (vii)
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; (viii) 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; (ix) 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; (x) other
statements as to management's or the Company's expectations and beliefs
presented in "Business;" (xi) the statements in "--Results of
Operations--Business Trends and Initiatives" concerning (a) the Company's belief
that the tighter inventory control practices will continue and are likely to
cause the Company to experience increased liquidity and working capital
requirements and (b) management's belief that demand has stabilized as
customers' inventories have reached their targeted levels; (xii) the statements
in "--Liquidity and Capital Resources--Liquidity" that the Company expects (a)
to have a replacement working capital facility in place in the second quarter of
2000, (b) to pay a dividend in the second quarter of 2000 and (c) to use the
proceeds of the borrowings under the replacement working capital facility to
fund such dividend except to the extent funds are otherwise available; (xiii)
the statement in "--Liquidity and Capital Resources--Capital Expenditures" that
the Company anticipates year 2000 capital expenditures of $22.5 million to
improve production efficiencies and operations which it expects to fund
primarily from operational cash flow; (xiv) the statements in "--Liquidity and
Capital Resources--Liquidity" concerning (a) 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 Revolving Credit Facility and (b) the Company's expectation that
it will replace the Revolving Credit Facility and refinance any outstanding
amounts thereunder; (xv) the statement in "--Liquidity and Capital
Resources--Notes" that, from time to time, the Company may continue to
repurchase additional amounts of the New Notes on the open market, subject to
the $25.0 aggregate repurchase limit in the amended Credit Agreement; (xvi) the
statements in "--Product Liability" concerning (a) the Company's belief that
product liability cases and claims involving occurrences arising prior to the
Closing 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
1999, 1998 and 1997 and the time period during which the amount of the Company's
self insured retention will be paid out; (xvii) the statements in "--Year 2000
Compliance" concerning the Company's belief that it has avoided significant
disruption; (xviii) 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;" (xix) 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



                                       27
<PAGE>   28

continue to be involved in product liability cases and claims in the future and
(xx) 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," "--Year 2000
Compliance" and "Legal Proceedings"), or in 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 New 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 Company's 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 21% of the Company's total net revenues in 1999. 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



                                       28
<PAGE>   29

     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 most 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.

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 1997 through 1999, 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. 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, 1999, 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 $1.3 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,
1999. 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 18 to the Company's consolidated
financial statements for the year ended December 31, 1999 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 balance sheets and the related
consolidated statements of operations, cash flows, and shareholders' equity and
comprehensive income present fairly, in all material respects, the financial
position of RACI Holding, Inc. and subsidiaries (the "Company") at December 31,
1999 and 1998, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, 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
statements presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.


/s/ PricewaterhouseCoopers LLP

Greensboro, North Carolina
March 2, 2000




                                       30
<PAGE>   31

                       RACI Holding, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                  (Dollars in Millions, Except Per Share Data)


<TABLE>
<CAPTION>
                                                                December 31,   December 31,
                                                                    1999           1998
                                                                ------------   ------------
<S>                                                                <C>           <C>
ASSETS
Current Assets
Cash and Cash Equivalents                                          $ 26.3        $  4.9
Accounts Receivable Trade - net of allowances
      of $2.5 and $3.3, respectively                                 56.6          63.0
Inventories                                                          70.8          71.7
Supplies                                                             10.6          10.6
Prepaid Expenses and Other Current Assets                             7.8           9.6
Deferred Income Taxes                                                 9.1          15.3
                                                                   ------        ------
  Total Current Assets                                              181.2         175.1

Property, Plant and Equipment - net                                  87.8          86.3
Intangibles and Debt Issuance Costs - net                            84.5          88.7
Deferred Income Taxes                                                 4.3           2.0
Other Noncurrent Assets                                               1.0           2.4
                                                                   ------        ------
  Total Assets                                                     $358.8        $354.5
                                                                   ======        ======

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable                                                   $ 30.1        $ 28.2
Short-Term Debt                                                       1.0           0.9
Current Portion of Long-Term Debt                                    29.2          24.9
Product and Environmental Liabilities                                 2.6           3.1
Income Taxes                                                          0.4            --
Other Accrued Liabilities                                            26.8          25.3
                                                                   ------        ------
  Total Current Liabilities                                          90.1          82.4

Long-Term Debt                                                       89.3         122.0
Retiree Benefits                                                     36.9          35.6
Product and Environmental Liabilities                                 9.9           9.4
Deferred Stock Payable                                                5.4           1.6
                                                                   ------        ------
  Total Liabilities                                                 231.6         251.0
                                                                   ------        ------

Commitments and Contingencies

Shareholders' Equity
Class A Common Stock, par value $.01; 1,250,000 shares
   authorized, 768,132 and 760,000 issued and outstanding at
   December 31, 1999 and December 31, 1998, respectively               --            --
Class B Common Stock, par value $.01; 1,250,000 shares
   authorized, none issued and outstanding                             --            --
Paid in Capital                                                      77.6          76.0
Due from Shareholders                                                (0.5)           --
Accumulated Other Comprehensive Loss                                 (0.4)           --
Retained Earnings                                                    50.5          27.5
                                                                   ------        ------
      Total Shareholders' Equity                                    127.2         103.5
                                                                   ------        ------
Total Liabilities and Shareholders' Equity                         $358.8        $354.5
                                                                   ======        ======
</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,
                                            --------------------------------------
                                             1999            1998            1997
                                            -------        -------         -------
<S>                                         <C>            <C>             <C>

Sales (1)                                   $ 399.4        $ 380.7         $ 381.2

Cost of Goods Sold                            271.1          259.0           269.9
                                            -------        -------         -------

   Gross Profit                               128.3          121.7           111.3

Selling, General and Administrative
  Expenses                                     64.9           64.6            68.9

Research & Development Expenses                 6.7            7.3             7.4

Other Expenses, net                             4.9            2.6             2.4

Restructuring and Nonrecurring Items             --           (0.3)             --
                                            -------        -------         -------

    Operating Profit                           51.8           47.5            32.6

Interest Expense                               14.1           19.2            23.6
                                            -------        -------         -------

    Profit before Income Taxes                 37.7           28.3             9.0

Provision for Income Taxes                     14.7           11.1             3.5
                                            -------        -------         -------

     Net Income                             $  23.0        $  17.2         $   5.5
                                            =======        =======         =======

Per Share Data:

Basic Income Per Share                      $ 29.68        $ 22.63         $  7.33
                                            =======        =======         =======
Diluted Income Per Share                    $ 28.89        $ 22.26         $  7.33
                                            =======        =======         =======
</TABLE>



(1) Sales are presented net of Federal Excise Taxes of $33.8, $31.5 and $31.0,
    respectively.

                 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,
                                                              ------------------------------------
                                                               1999           1998           1997
                                                              ------         ------         ------
<S>                                                           <C>            <C>            <C>
Operating Activities
Net Income                                                    $ 23.0         $ 17.2         $  5.5
Adjustments to reconcile Net Income to Net Cash
  provided by Operating Activities:
     Restructuring                                                --           (0.7)            --
     Depreciation                                               13.6           13.5           12.7
     Amortization                                                4.2            4.4            4.1
     Loss on disposal of Property, Plant and Equipment           0.6            0.7            0.5
     Provision for Retiree Benefits                              0.9            0.8            2.9
     Provision for Deferred Income Taxes                         3.9            5.1            5.0
     Stock Based Compensation Expense                            4.2            1.6             --
     Changes in Operating Assets and Liabilities:
          Accounts Receivable Trade - Net                        6.4           (6.7)          14.8
          Inventories                                            0.9           18.3           11.9
          Supplies                                                --            2.1            1.2
          Prepaid Expenses and Other Current Assets              1.8           (0.3)           1.4
          Other Noncurrent Assets                                1.4            1.9            1.3
          Accounts Payable                                       1.9            5.5          (10.2)
          Customer Prepayments                                    --             --           (0.2)
          Product and Environmental Liabilities                   --            0.1           (1.4)
          Income Taxes Payable                                   0.4             --             --
          Other Accrued Liabilities                              1.5           (2.5)           6.4
                                                              ------         ------         ------
    Net Cash provided by Operating Activities                   64.7           61.0           55.9
                                                              ------         ------         ------

Investing Activities
Purchase of Property, Plant and Equipment                      (13.0)          (8.5)          (5.8)
                                                              ------         ------         ------
    Net Cash used in Investing Activities                      (13.0)          (8.5)          (5.8)
                                                              ------         ------         ------

Financing Activities
Proceeds from Revolving Credit Facility                        158.6          174.2          163.8
Principal Payments on Revolving Credit Facility               (158.6)        (194.1)        (202.9)
Proceeds from Issuance of Long-Term Debt                          --             --            0.8
Principal Payments on Long-Term Debt                           (24.8)         (21.5)         (20.8)
Repurchase of Senior Subordinated Notes                         (6.3)          (6.7)            --
Proceeds from Short-Term Debt                                    1.8            1.0            1.0
Principal Payments on Short-Term Debt                           (1.7)          (1.1)          (1.2)
Proceeds from Issuance of Common Stock                           0.7             --            1.0
Debt Issuance Costs                                               --             --           (0.8)
                                                              ------         ------         ------
    Net Cash used in Financing Activities                      (30.3)         (48.2)         (59.1)
                                                              ------         ------         ------

Increase (Decrease) in Cash and Cash Equivalents                21.4            4.3           (9.0)
Cash and Cash Equivalents at beginning of period                 4.9            0.6            9.6
                                                              ------         ------         ------
Cash and Cash Equivalents at end of period                    $ 26.3         $  4.9         $  0.6
                                                              ======         ======         ======

Supplemental Cash Flow Information:
     Cash Paid During the Year for:
          Interest                                            $ 13.0         $ 18.0         $ 22.2
          Income Taxes                                        $  9.7         $  6.8         $  1.3
     Noncash Activities:
          Capital Lease Obligations Incurred                  $  2.7         $   --         $  1.0
</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, 1996                      $ 75.0         $   --        $   --        $  4.8        $ 79.8

     Comprehensive Income:
       Net Income                                   --             --            --           5.5           5.5

     Issuance of 10,000 shares
       of Class A Common Stock
       to non-employee directors                   1.0             --            --            --           1.0
                                                ------         ------        ------        ------        ------

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

     Purchase of 6,332 shares of  Common
       Stock under the 1997 Directors' Plan
      and the 1999 Stock Incentive Plan            1.2           (0.5)           --            --           0.7
                                                ------         ------        ------        ------        ------

Balance, December 31, 1999                      $ 77.6         $ (0.5)       $ (0.4)       $ 50.5        $127.2
                                                ======         ======        ======        ======        ======
</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 subsidiary, Remington
International, Ltd. (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.

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 name 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.

         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. No interest cost was
capitalized in 1999 or 1998. Approximately $0.2 of interest cost was capitalized
in 1997.


                                       35
<PAGE>   36

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


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, 2000. Product liabilities
are not recorded net of recoveries that are probable of realization. At December
31, 1999, 1998 and 1997, no recoveries have been recorded.

Revenue Recognition:

         Sales, net of an estimate for discounts, returns and allowances, and
related cost of sales are included in income when goods are shipped to the
customer.

Advertising and Promotional Costs:

         Advertising and promotional costs are expensed as incurred. In 1999,
1998 and 1997 advertising and promotional costs totaled $14.8, $15.0 and $17.2,
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



                                       36
<PAGE>   37

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


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 being 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.

Reporting Comprehensive Income:

         In June 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 130, "Reporting Comprehensive Income" which established standards for
reporting and displaying comprehensive income and its components. SFAS No. 130
requires comprehensive income and its components, as recognized under accounting
standards, to be displayed in a financial statement with the same prominence as
other financial statements. The disclosure requirements of SFAS No. 130 have
been included in the Company's Consolidated Statements of Shareholder's Equity.

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 Accounting Standards Not Yet Adopted:

         During 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 requires entities to recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at their fair value. In June 1999, the
FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities-Deferral of the Effective Date of FASB Statement No. 133-an amendment
of FASB Statement No. 133", that revises SFAS No. 133 to become effective in the
first quarter of fiscal 2001. The Company is evaluating the provisions of SFAS
No. 133, but does not anticipate its adoption to have a material impact on
financial position or results of operation.

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. There was no bad debt
expense, net of recoveries, in 1999 or 1998. During 1997 bad debt expense was
$0.4.

         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.

         Sales to the Company's largest customer approximated 21%, 19% and 20%
of sales in 1999, 1998 and 1997, respectively. The accounts receivable balance
of the Company's largest customer approximated 20% and 14% in 1999 and 1998.



                                       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:

<TABLE>
<CAPTION>
                                                                                   1999             1998
                                                                                   ----             ----
<S>                                                                            <C>               <C>
                Raw Materials                                                  $    14.9         $    10.7
                Semi-Finished Products                                              18.9              17.4
                Finished Products                                                   37.0              43.6
                                                                               ---------         ---------
                          Total                                                $    70.8         $    71.7
                                                                               =========         =========
</TABLE>

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

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

<TABLE>
<CAPTION>
                                                                                   1999              1998
                                                                                   ----              ----
<S>                                                                            <C>               <C>
                Land                                                           $     1.5         $     1.5
                Building and Improvements                                           23.5              23.1
                Leased Assets                                                       10.3               7.9
                Machinery and Equipment                                            110.7             103.0
                Construction in Progress                                             7.7               4.6
                                                                                --------          --------
                          Subtotal                                                 153.7             140.1
                Less: Accumulated Depreciation                                     (65.9)            (53.8)
                                                                               ---------         ---------
                          Total                                                $    87.8         $    86.3
                                                                               =========         =========
</TABLE>

NOTE 7 - INTANGIBLES AND DEBT ISSUANCE COSTS

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

<TABLE>
<CAPTION>
                                                                                   1999             1998
                                                                                   ----             ----
<S>                                                                            <C>               <C>
                Intangibles                                                    $    95.9         $    95.9
                Debt Issuance Costs                                                 12.9              13.0
                                                                               ---------         ---------
                          Subtotal                                                 108.8             108.9
                Less: Accumulated Amortization                                     (24.3)            (20.2)
                                                                               ---------         ---------
                          Total                                                $    84.5         $    88.7
                                                                               =========         =========
</TABLE>

NOTE 8 - OTHER ACCRUED LIABILITIES

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

<TABLE>
<CAPTION>
                                                                                   1999              1998
                                                                                   ----              ----
<S>                                                                            <C>               <C>
                Marketing                                                      $     9.2         $     8.6
                Health Costs                                                         6.6               6.2
                Compensation                                                         3.7               5.5
                Other                                                                6.1               6.6
                                                                               ---------         ---------
                          Total                                                $    25.6         $    26.9
                                                                               =========         =========
</TABLE>

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.



                                       38
<PAGE>   39

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

    CHANGE IN BENEFIT OBLIGATION:
                                                            1999          1998
                                                            ----          ----
    Benefit Obligation at Beginning of Year              $   75.4      $   64.1
    Service Cost                                              4.5           4.2
    Interest Cost                                             5.2           4.5
    Amendments/SERP                                           -             0.5
    Actuarial  (Gain)/Loss                                   (5.4)          2.8
    Benefits Paid                                            (1.0)         (0.7)
                                                         --------      --------
    Benefit Obligation at End of Year                    $   78.7      $   75.4
                                                         ========      ========

    CHANGE IN PLAN ASSETS:
                                                           1999          1998
                                                           ----          ----
    Fair Value of Plan Assets at Beginning of Year       $   69.7     $   63.4
    Actual Return on Plan Assets                             (1.8)         7.0
    Employer Contribution                                     -            -
    Plan Participants' Contribution                           -            -
    Benefits Paid                                            (1.0)        (0.7)
                                                         --------     --------
    Fair Value of Plan Assets at End of Year             $   66.9     $   69.7
                                                         ========     ========

    NET AMOUNT RECOGNIZED:
                                                           1999          1998
                                                           ----          ----
    Funded Status                                        $  (11.8)    $   (5.7)
    Unamortized Prior Service Cost                           (2.6)        (2.9)
    Unrecognized Net Actuarial Gain                           (.7)        (4.9)
                                                         ---------    ---------
    Net amount recognized                                $  (15.1)    $  (13.5)
                                                         ========     ========

    Amounts recognized in the statement of
      financial position consist of:
                                                           1999         1998
                                                           ----         ----
    Accrued Benefit Liability                               (15.9)       (13.9)
    Accumulated Other Comprehensive Income                    0.4          --
    Intangible Asset                                          0.4          0.4
                                                         --------     --------
    Net Amount Recognized                                $  (15.1)    $  (13.5)
                                                         ========     ========

    COMPONENTS OF NET PERIODIC PENSION COST:
                                                1999          1998        1997
                                                ----          ----      ------
    Service Cost                              $    4.5     $    4.2     $   4.1
    Interest Cost                                  5.2          4.5         4.3
    Actual Return on Assets                        1.8         (7.0)       (7.2)
    Net Amortization and Deferral                 (9.5)        (0.2)        2.0
                                              --------     --------     -------
    Net Periodic Pension Cost                 $    2.0     $    1.5     $   3.2
                                              ========     ========     =======

    ACTUARIAL ASSUMPTIONS:
       Discount Rate                               7.8%         6.8%        7.3%
       Long-Term Rate on Assets                    8.5%         8.5%        8.5%
       Rate of Compensation Increase               4.0%         4.0%        3.5%



                                       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 ,
$1.3 and $1.4 in 1999, 1998 and 1997, respectively.

         Effective January 1, 1998, the Company adopted a non-qualified defined
contribution plan. The Company's matching contribution was not material during
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:
                                                            1999          1998
                                                            ----          ----
        Benefit Obligation at Beginning of Year           $   8.2       $   6.8
        Service Cost                                          0.4           0.4
        Interest Cost                                         0.6           0.5
        Plan Participants' Contributions                      0.1             -
        Actuarial (Gain) Loss                                (1.2)          0.6
        Benefits Paid                                        (0.1)         (0.1)
                                                          -------       -------
        Benefit Obligation at End of Year                 $   8.0       $   8.2
                                                          =======       =======

        ACCRUED BENEFIT COST:
                                                           1999           1998
                                                           ----           ----
        Funded Status                                     $  (8.0)      $  (8.2)
        Unrecognized Net Actuarial Gain                      (4.1)         (4.2)
        Unrecognized Prior Service Cost                      (8.2)         (9.1)
                                                          -------       -------
        Accrued Postretirement Benefit Obligation         $ (20.3)      $ (21.5)
                                                          =======       =======

        COMPONENTS OF NET PERIODIC BENEFIT COST:

                                                1999          1998       1997
                                                ----          ----       ----
        Service Cost                          $    0.4     $    0.4    $   0.5
        Interest Cost                              0.6          0.5        0.6
        Net Amortization and Deferral             (2.1)        (1.6)      (1.4)
                                              --------     --------    -------
        Net Periodic Benefit Income           $   (1.1)    $   (0.7)   $  (0.3)
                                              ========     ========    =======

         To determine the accumulated postretirement benefit obligation, (1) the
assumed discount rate used was 7.8% and 6.8% at December 31, 1999 and 1998,
respectively; (2) the assumed health care trend rate was 8.0% and 7.8%, for 1999
and 1998, respectively, declining gradually to 4.5% in 2006 and remaining at
that level thereafter and (3) the assumed dental benefit rate was 6.0% for 1999
and 5.1% for 1998, declining gradually to 4.5% in 2005 and remaining at that
level thereafter. The average assumed salary increase rate was age-related for
both 1999 and 1998.

         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 $0.1 as of December 31, 1999
and the effect on total service and interest cost components would be
immaterial.

         The Company also provides certain severance benefits. At December 31,
1999 and 1998, the accumulated postemployment benefit obligation and the annual
periodic cost of these obligations was 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 interest rate under these agreements was
6.7% and 5.6% at December 31, 1999 and 1998, respectively.

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

<TABLE>
<CAPTION>
                                                                  1999             1998
                                                                  ----             ----
<S>                                                           <C>               <C>
                Credit Agreement:
                   Term Loans                                 $    27.3         $    50.0
                   Revolving Credit Facility                        -                 -
                9.5% Senior Subordinated Notes due 2003            86.7              92.9
                Capital Lease Obligations (Note 11)                 4.2               3.5
                Other                                               0.3               0.5
                                                               --------          --------
                          Subtotal                            $   118.5         $   146.9
                Less: Current Portion                              29.2              24.9
                                                              ---------         ---------
                          Total                               $    89.3         $   122.0
                                                              =========         =========
</TABLE>

         The Company has a credit agreement, as amended, with certain lending
institutions (the "Credit Agreement") that provides for aggregate borrowings of
$280.0, including a term loan facility of $130.0 (the "Term Loans") and a
revolving credit facility of $150.0 (the "Revolving Credit Facility"). All
borrowings under the Credit Agreement are guaranteed by Holding, and are
collateralized by substantially all of the assets of the Company. The Company
may borrow up to $150.0 (including certain letters of credit) under the
Revolving Credit Facility through December 31, 2000, provided that such
borrowings are reduced for a period of 30 consecutive days of each 12-month
period commencing on December 1 to $60.0 or less. The weighted average interest
rate for borrowings under the Term Loan was 6.9% per annum in 1999 and 8.0% per
annum in 1998. The weighted average interest rate for borrowings under the
Revolving Credit Facility was 7.1% in 1999 and 8.3% in 1998. The Company is not
currently a party to any interest rate cap, hedging or other protection
arrangements with respect to its variable rate indebtedness. Commitment fees of
0.5% are payable on the average daily unused portion of the Revolving Credit
Facility. At December 31, 1999, the Company had $3.8 in letters of credit and no
borrowings outstanding with the remaining $146.2 of the Company's Revolving
Credit Facility available for borrowing. At December 31, 1998, the Company had
$2.5 in letters of credit and no borrowings outstanding with the remaining
$147.5 of the Company's Revolving Credit Facility available for borrowing.
Borrowings under the Revolving Credit Facility are classified as short-term as
the current Revolving Credit Facility expires December 31, 2000. The Company is
currently in the process of negotiating a replacement working capital facility
with its existing lenders.

         The Credit Agreement requires the Company to make further quarterly
principal payments on the Term Loans thereunder in an aggregate amount of
approximately $27.3 in 2000 with all remaining amounts then outstanding under
the Credit Agreement to be repaid on December 31, 2000. The Credit Agreement
also requires 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. Any such prepayment will
result in a pro rata reduction in all subsequently scheduled principal payments
on such Term Loans, except that any such payment made within the twelve months
prior to the date on which an installment or other payment of principal is
scheduled to be paid on the Term Loans may, at the option of the Company, be
applied first to such installment or other payment. The Company had Excess Cash
Flow of $4.3 for the year ended December 31, 1999 and accordingly, a prepayment
of $2.2 is required to be made on or by March 31, 2000. The Company did not have
Excess Cash Flow for the years ended December 31, 1998 and 1997 and accordingly
no such prepayment was required in 1999 and 1998.

         Loans under the 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
2.50% per annum. Upon the Company's delivery to the Credit Agreement's
administrative agent of the Company's quarterly financial statements the
interest rate on the Company's Credit Agreement borrowings can be reduced by
0.25% to 1.0% per annum from levels in effect at December 31, 1994 if the
Company has met certain



                                       41
<PAGE>   42

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


financial ratios, based on earnings before interest, taxes, depreciation and
amortization ("EBITDA") and consolidated interest expense, for the four quarters
then ended. Once reduced, such interest rate can also be increased up to the
original levels if the Company no longer meets the financial ratios making it
eligible for interest rate reduction. During 1998, the interest rate was reduced
0.75% as a result of the Company's improved financial performance. At December
31, 1999, the Company was in compliance in all material respects with the
financial covenants under the Credit Agreement.

         Mandatory prepayments of borrowings may also be required under the
Credit Agreement upon the occurrence of any of the following: certain changes in
control, the sale of a class of equity securities, the issuance or sale of a
class of debt securities or redeemable preferred stock, the incurrence of
indebtedness not permitted by the Credit Agreement, certain sales of assets
other than in the normal course of business and any receipt of certain insurance
or litigation proceeds relating to the loss of or damage to any assets in
amounts exceeding $5.0.

         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 Credit
Agreement and are fully and unconditionally guaranteed on a subordinated basis
by Holding. See Note 22 for Holding's Condensed Consolidating Financial Data.
The Notes are not collateralized by any of the Company's assets. On June 23,
1997 the Company completed its offer to exchange (the "Exchange Offer") up to
$100.0 aggregate principal amount of Remington's registered 9.5% Senior
Subordinated Notes due 2003, Series B (the "New Notes") for a like principal
amount of Remington's issued and outstanding 9.5% Senior Subordinated Notes due
2003, Series A (the "Old Notes"). All of the Old Notes were exchanged for New
Notes. The interest rate on the Notes was 10% per annum from April 30, 1994
until June 22, 1997, the day before the date of consummation of the Exchange
Offer, and is currently 9.5% per annum. 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, 1999, the total accumulated
amortization was $0.4.

         The Credit Agreement was amended as of September 23, 1998 to permit the
Company to expend up to $25.0 toward the repurchase of the New Notes. During
1999, the Company repurchased approximately $6.3 of the New Notes on the open
market with cash from operations. The Company repurchased the New 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. During 1998,
the Company repurchased approximately $6.8 of the New Notes on the open market
with cash from operations. The Company repurchased the New Notes at an average
price of 98.7% of the face value on the open market, and the transaction had no
material impact on its results of operations. From time to time, the Company may
continue to repurchase additional amounts of the New Notes on the open market,
subject to the $25.0 aggregate repurchase limit set forth in the amended Credit
Agreement.

         The indenture for the Notes and the Credit Agreement contain various
restrictions on the Company's ability to incur debt, pay dividends and enter
into certain other transactions. In addition, the Credit Agreement contains
certain requirements with respect to minimum working capital, net worth and
earnings levels, as well as minimum ratios regarding profitability and interest
expense. Under the Credit Agreement, dividends by Remington to Holding are not
to exceed $1.0 annually unless for certain specific purposes, as defined in the
Credit Agreement.

         The Company also had additional letters of credit outstanding of and
$0.4 and $1.1, as December 31, 1999 and 1998, respectively.

         The aggregate payments of long-term debt outstanding at December 31,
1999, for the next three years are $29.2, $1.5 and $1.1, respectively. The
Notes, with a maturity value of $86.7 as of December 31, 1999, are due in the
fourth year.


                                       42
<PAGE>   43

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


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, 1999, are as follows:

<TABLE>
<CAPTION>
                                                                           Capital      Operating
                                                                            Leases       Leases
                                                                           -------      ---------
<S>                                                                         <C>           <C>
                Minimum Lease Payments for Years
                Ending December 31:
                   2000                                                     $ 1.9         $  0.5
                   2001                                                       1.5            0.4
                   2002                                                       1.0            0.4
                   2003                                                        -             0.2
                   2004                                                        -             0.2

                   And Thereafter                                              -              -
                                                                            -----         ------
                          Total Minimum Lease Payments                        4.4         $  1.7
                                                                                          ======
                Less:  Amount representing interest                           0.2
                                                                            -----
                          Present Value of Net Minimum Lease Payments       $ 4.2
                                                                            =====
</TABLE>


NOTE 12 - DEFERRED STOCK PAYABLE

         As of December 31, 1999, deferred stock payable consists of:

         (1)      7,912 deferred shares of Class A Common Stock, par value $.01
                  per share, of Holding ("Common Stock") priced at $200 per
                  share and issued to certain employees in lieu of 1998
                  incentive compensation ($1.6),

         (2)      2,943 deferred shares Common Stock priced at $230 per share to
                  be issued to certain employees in lieu of 1999 incentive
                  compensation ($0.7),

         (3)      13,764 matching deferred shares of Common Stock granted to
                  certain employees ($2.8), and

         (4)      1,250 matching deferred shares of Common Stock granted to a
                  Director ($0.3).

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. No dividends 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 Credit
Agreement and the indenture for its subordinated notes, 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, 1998, the Company had reserved 132,380 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. Stock
Purchase Plan (the "Purchase Plan") and the RACI Holding, Inc. 1994 Directors'
Stock Plan (the "1994 Directors' Plan").



                                       43
<PAGE>   44

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


         On July 22, 1997 the Board of Directors of Holding terminated the
Purchase Plan and adopted the RACI Holding, Inc. Director Stock Purchase Plan
(the "1997 Directors' Plan") and reserved an additional 12,500 shares of the
Class A Common Stock, par value $.01 per share, of Holding for issuance
thereunder. As of December 31, 1998, 10,000 shares of Class A Common 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 and Purchase Plan. On June 24,
1999, 1,250 shares of Class A Common Stock were issued under the 1997 Directors'
Plan at a price of $200 per share and 1,250 deferred matching shares were
granted with no cost to the director which resulted in a charge of approximately
$.3.

         On May 14, 1999, the board of directors of Holding adopted the RACI
Holding, Inc. Stock Incentive Plan (the "1999 Stock Incentive Plan"). Under the
1999 Stock Incentive Plan, the Company reserved 87,900 shares of Common Stock
for issuance. The 1999 Stock Incentive Plan provides for (1) stock purchase
rights to purchase up to 29,300 shares of Common Stock or deferred share awards,
(2) options to purchase up to 40,725 shares of Common Stock and (3) up to 17,875
additional deferred share awards. The following represents activities recorded
related to the 1999 Stock Incentive Plan in 1999:

         (1)      issued 5,082 shares of Common Stock to certain employees at a
                  price of $200 per share,

         (2)      granted 7,912 deferred shares to certain employees in lieu of
                  1998 incentive compensation priced at $200 per share,

         (3)      granted 2,943 shares of Common Stock to certain employees in
                  lieu of 1999 incentive compensation priced at $230 per share,

         (4)      granted 13,764 deferred share awards to certain employees at
                  no cost, which resulted in a charge of approximately $2.8,

         (5)      granted 15,773 options to purchase Common Stock to certain
                  employees at an exercise price of $200 per share. Of these
                  options, 3,079 options vest ratably on the third, fourth, and
                  fifth anniversaries of the options' grant date and expire in
                  2009 and 12,694 options vest based on the financial
                  performance of the Company in 1999 and 2000, but no later than
                  2008, and

         (6)      granted 16,000 options to purchase Common Stock to certain
                  employees at an exercise price of $200 per share. These
                  options vest ratably on the third, fourth and fifth
                  anniversaries of the options' grant date and expire in 2009.

          Additionally on March 2, 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 2008.

         As of December 31, 1999, the Company has 182,780 shares of Class A
Common Stock reserved for issuance, of which 75,533 shares remain available for
grant, under the above mentioned plans.


                                       44
<PAGE>   45

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


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 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>
                                                 1999                         1998                       1997
                                     ---------------------------   -------------------------   -------------------------
                                                      Wtd Avg                     Wtd Avg                     Wtd Avg
                                        Shares       Ex. Price       Shares      Ex. Price       Shares      Ex. Price
                                     -------------- ------------   ------------ ------------   ------------ ------------
<S>                                         <C>           <C>           <C>           <C>           <C>           <C>
Outstanding at Beg of Year                  37,965        $ 100         43,140        $ 100         30,415        $ 100
Granted                                     31,773        $ 200              -                      12,850        $ 100
Forfeited                                     (900)       $ 100         (5,175)       $ 100           (125)       $ 100
                                     -------------- ------------   ------------ ------------   ------------ ------------
Outstanding at End of Year                  68,838        $ 146         37,965        $ 100         43,140        $ 100
                                     ============== ============   ============ ============   ============ ============

Exercisable at End of Year                  38,747        $ 116         20,907        $ 100         11,614        $ 100
                                     ============== ============   ============ ============   ============ ============

Weighted Average
Fair Value Options Granted                 $ 31.42                     N/A                         $ 20.97
                                     ==============                ============                ============
</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 1999 and 1997, the Company's net
earnings and earnings per share on a pro forma basis would have been as follows:

                                          1999         1998          1997
                                         ------       ------        ------

Net Income       As Reported             $ 23.0       $ 17.2        $  5.5
                 Pro Forma                 22.8         17.1           5.4

Basic EPS        As Reported              29.68        22.63          7.33
                 Pro Forma                29.41        22.50          7.20

Diluted EPS      As Reported              28.89        22.26          7.33
                 Pro Forma                28.64        22.13          7.20


         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:

                                                     1999          1997
                                                     ----          ----
             Risk Free Interest Rate                 6.0%          6.0%
             Dividend Yields                         0.0%          0.0%
             Volatility Factor                       0.0%          0.0%
             Weighted Average
                   Expected Option Life           3.5 years     4.0 years



                                       45
<PAGE>   46

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


NOTE 15 - COMMITMENTS AND CONTINGENCIES

         The Company has various purchase commitments, approximating $2.6 for
2000, $2.4 for 2001, $2.5 for 2002, $1.5 for 2003, and $1.5 for 2004, 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 2000, 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 Company believes that the impact from this program will not be
material to its financial condition or results of operations.

         Pursuant to the Asset Purchase Agreement dated as of December 1, 1993,
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 and (2) all product liability cases and claims
involving products that had not been discontinued as of the Closing ("extant
products") and relating to occurrences that took place prior to the Closing. The
Company assumed financial responsibility, up to a maximum aggregate amount (the
"Cap"), for certain product liability cases disclosed to the Company and arising
prior to the Closing. The Cap was exhausted in 1997, and the Sellers retained
liability for, and are required to indemnify the Company against, all such
disclosed product liability occurrences and such environmental liabilities in
excess of the Cap. This indemnification obligation of the Sellers is not subject
to any survival period limitation. Prior to the Acquisition, the Sellers were
self-insured for product liability obligations of the Business, with excess
insurance coverage available at $50.0 per occurrence. Except for certain cases
and claims relating to shotguns as described below and except for all cases and
claims relating to discontinued products, the Company generally bears financial
responsibility for product liability cases and claims relating to occurrences
after the Closing.

         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 Closing. 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 $7.0 for liability indemnity and
defense and other expenses combined, and aggregate annual sublimits of $4.5 for
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,
1998 through November 30, 2000.

         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, 1999, 23 individual bodily injury cases 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 three involve either discontinued
products or pre-Closing occurrences, for which the Sellers retained liability
and are required to indemnify the Company. The remaining approximately 20 of the
pending cases involve post-Closing occurrences for which the Company bears
responsibility under the Asset Purchase Agreement; the Sellers have some
responsibility for the costs of three of these cases involving



                                       46
<PAGE>   47

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


certain shotguns, as described below. 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 one of the approximately 30 recent actions brought by certain
municipalities, primarily against manufacturers and sellers of handguns. In City
of Boston et al. v. Smith & Wesson et al., filed in Superior Court, Suffolk
County, Massachusetts on June 2, 1999, the City of Boston and the Boston Public
Health Commission claim (among other allegations) that industry distribution
practices of the defendants (including handgun and long gun manufacturers)
allegedly permit firearms to enter a secondary market, from which guns may be
obtained by unauthorized users, and that defendants have failed to include
adequate safety devices in their firearms to prevent unauthorized use.
Plaintiffs seek injunctive relief and monetary damages (consisting of the cost
of providing certain city services and lost tax and other revenues.) The parties
recently stipulated to a schedule for defendants' consolidated motion to
dismiss, pursuant to which briefing will be completed by the end of March 2000.

         Remington is not named in Chicago v. Beretta U.S.A. Corp., another such
case. However, a motion to intervene was filed in November 1998 seeking to name
as additional defendants unidentified "ammunition manufacturers." A second
motion for the same purpose was filed by a different entity in February 2000. To
date, neither motion has been heard or ruled upon.

         Remington has been named in NAACP et al v. A.A. Arms, Inc., et al, a
lawsuit filed in federal court in the Eastern District of New York by the
National Association for the Advancement of Colored People on July 16, 1999,
against more than a hundred defendants involved in the manufacture of firearms.
The complaint, as amended in October 1999 to add the National Spinal Cord Injury
Association as a plaintiff, purports to seek injunctive relief rather than
monetary damages and contains allegations about defendants' manufacturing and
distribution practices similar to those in the Boston complaint described above.
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 60 years.

         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 filed in 1989 in Texas district court in Jim Wells County.
The plaintiffs sought certification of a class consisting of all Texas owners,
allegedly 400,000 in number, of Model 700 bolt-action rifles. In June 1996, the
district court certified for class treatment the limited issues of whether the
Model 700 fire control system is "defective" and, if so, the "cost of repair."
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 representations and warranties in the Asset Purchase Agreement
expired 18 months after the Acquisition, with certain exceptions, and claims for
indemnification with respect thereto were to be made within 30 days of such
expiration. The Company made claims for such indemnification involving product
liability issues within that time period. 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 Asset Purchase Agreement relating to shotguns
(excluding various indemnification rights and the allocation of certain costs
under the Cap) would be released. Any claims between the Company and the Sellers
relating to other product liability issues remain open.



                                       47
<PAGE>   48

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


         Because the Company's assumption of financial responsibility for
certain product liability cases and claims involving pre-Acquisition occurrences
was limited to the amount of the Cap, with the Sellers retaining liability in
excess of the Cap 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, its
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.

         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 16 - INCOME TAXES

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

                                           1999          1998          1997
                                        ---------     ---------     ---------
                Federal:
                     Current            $     8.4     $     5.5     $    (1.2)
                     Deferred                 4.5           4.5           4.5
                State:
                     Current                  2.4           0.5          (0.3)
                     Deferred                (0.6)          0.6           0.5
                                        ---------     ---------     ---------
                                        $    14.7     $    11.1     $     3.5
                                        =========     =========     =========

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

<TABLE>
<CAPTION>
                                                                       1999         1998
                                                                       ----         ----
<S>                                                                 <C>          <C>
                Deferred tax assets:
                     Accrued employee and retiree benefits          $   20.4     $   17.6
                     Product, environmental and other liabilities        6.7          7.4
                     Receivables and inventory                           2.5          2.2
                     Tax credits                                         0.5          5.6
                                                                     -------      -------
                                                                        30.1         32.8
                                                                     -------      -------
                Deferred tax liabilities:
                    Property, plant and equipment                      (12.2)       (11.9)
                    Intangibles                                         (4.5)        (3.6)
                                                                    --------     --------
                                                                       (16.7)       (15.5)
                                                                    --------     --------
                Net deferred tax assets                             $   13.4     $   17.3
                                                                    ========     ========
</TABLE>



                                       48
<PAGE>   49

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


         The Company has not established a valuation allowance against the net
deferred tax assets as it is more likely than not that the assets will be fully
utilized against future taxable income.

         At December 31, 1999 the Company has the following carryforwards for
tax purposes:

         State tax credits                     $0.2   Expires between 2002-2013
         Research and development tax credit   $0.3   Expires 2011

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

                                                  1999       1998      1997
                                                  ----       ----      ----
                Federal statutory rate            35.0%      35.0%     35.0%
                State income taxes, net of
                     Federal benefits              4.6        3.8       2.0
                Nondeductible expenses             1.3        1.9       6.3
                Other                             (1.9)      (1.5)     (4.3)
                                                  ----       ----      ----
                Effective income tax rate         39.0%      39.2%     39.0%
                                                  ====       ====      ====

NOTE 17 - RELATED PARTY TRANSACTIONS

         The Clayton & Dubilier Private Equity Fund IV Limited Partnership ("C&D
Fund IV"), which owns 750,000 shares of the 768,132 shares of Class A Common
Stock outstanding, or 97.6% at December 31, 1999, 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 1999, 1998 and 1997.

NOTE 18 - FINANCIAL INSTRUMENTS

         The estimated value of the Company's debt at December 31, 1999 was
$116.3 compared to a carrying value of $118.5. The estimated value of the
Company's debt at December 31, 1998 was $147.0 compared to a carrying value of
$146.9.

         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. The amount of premiums paid
for commodity contracts outstanding at December 31, 1998 and 1997 was $0.7 and
$0.6, respectively. At December 31, 1999, 1998 and 1997, 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 $1.3, $0.1
and $0.2, respectively. As of December 31, 1999, 1998 and 1997 hedging losses
related to closed commodity futures contracts of $0.2, $0.2 and $0.2,
respectively, 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, 1999, 1998 or 1997.



                                       49
<PAGE>   50

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


NOTE 19 - 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 the manufacture and marketing of clay targets, and the marketing
of hunting/gun care accessories, fishing products and powdered metal products.
The type 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 1999, revenue for the
Hunting/Shooting Sports segment accounted for 88% of consolidated revenue. The
Company has no material intersegment revenue.



                                       50
<PAGE>   51

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

<TABLE>
<CAPTION>

Information on Segments:
                                                                   1999        1998         1997
                                                                   ----        ----         ----
<S>                                                             <C>         <C>            <C>

         Net Sales:
              Hunting/Shooting Sports                           $   350.3   $   328.8      $ 328.8
              All Other                                              49.1        51.9         52.4
                                                                ---------   ---------      -------
                   Consolidated Net Sales                       $   399.4   $   380.7      $ 381.2
                                                                =========   =========      =======

         EBITDA:
              Hunting/Shooting Sports                           $    65.2   $    55.0      $  43.7
              All Other                                               8.8         9.2          8.5
                                                                ---------   ---------      -------
                   Consolidated EBITDA                          $    74.0   $    64.2      $  52.2
                                                                =========   =========      =======

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

         Capital Expenditures:
              Hunting/Shooting Sports                           $    10.9   $     6.5      $   4.6
              All Other                                               2.1         2.0          1.2
                                                                ---------   ---------      -------
                   Consolidated Capital Expenditures            $    13.0   $     8.5      $   5.8
                                                                =========   =========      =======

Net Sales by Product Line:
                                                                   1999        1998        1997
                                                                   ----        ----        ----
         Firearms                                                $  178.0    $  170.7     $  169.5
         Ammunition                                                 172.3       158.1        159.3
                                                                 --------    --------     --------
            Hunting/Shooting Sports                                 350.3       328.8        328.8
            All Other                                                49.1        51.9         52.4
                                                                 --------    --------     --------
                Net Sales                                        $  399.4    $  380.7     $  381.2
                                                                 ========    ========     ========

Reconciliation of Reportable Segments:
                                                                   1999        1998        1997
                                                                   ----        ----        ----
         Consolidated EBITDA                                     $   74.0    $   64.2     $   52.2
                                                                 --------    --------     ---------

         Less:  Interest Expense                                     14.1        19.2         23.6
                   Depreciation and Amortization (1)                 16.0        15.9         15.1
                   Other Noncash Charges                              6.2         1.1          3.7
                   Nonrecurring and Restructuring Items                 -        (0.3)         0.8
                                                                 --------    --------     --------
                                                                     36.3        35.9         43.2
                                                                 --------    --------     --------
         Consolidated Income from Continuing
                Operations Before Taxes                         $    37.7   $    28.3     $    9.0
                                                                =========   =========     ========
</TABLE>

(1) Excludes amortization of deferred financing costs of $1.9, $2.0 and $1.7 in
1999, 1998 and 1997, respectively, which was included in interest expense.

Geographic Information:

<TABLE>
<CAPTION>
                                                                   1999        1998        1997
                                                                   ----        ----        ----
<S>                                                             <C>         <C>          <C>
         Net Sales:
              Domestic                                          $   374.3   $   353.0    $   351.4
              Foreign                                                25.1        27.7         29.8
                                                                ---------   ---------    ---------
                   Consolidated Net Sales                       $   399.4   $   380.7    $   381.2
                                                                =========   =========    =========
</TABLE>



                                       51
<PAGE>   52

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


         Of the Company's Hunting/Shooting Sports revenues in 1999, 1998 and
1997 approximately 20%, 18% and 20%, 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 20 - QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
           1999                                                                    Quarter
           ----                                             ---------------------------------------------------
                                                             First      Second      Third      Fourth     Total
                                                            -------    --------    -------     -------   ------
<S>                                                         <C>        <C>         <C>         <C>       <C>
           Sales                                            $  90.5    $   95.0    $ 123.7     $  90.2   $399.4
           Gross Profit                                        30.3        29.9       39.1        29.0    128.3
           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

           1998                                                                    Quarter
           ----                                             ---------------------------------------------------
                                                             First      Second      Third      Fourth     Total
                                                            -------    --------    -------     -------   ------
           Sales                                            $  89.0    $   90.9    $ 114.9     $  85.9   $380.7
           Gross Profit                                        28.7        31.5       34.6        26.9    121.7
           Net Income                                           3.7         4.6        6.4         2.5     17.2
           Basic Income Per Share                              4.87        6.05       8.42        3.29    22.63
           Diluted Income Per Share                            4.79        5.95       8.28        3.24    22.26
</TABLE>

NOTE 21 - INCOME PER SHARE

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

<TABLE>
<CAPTION>
                                                            1999             1998                1997
                                                            ----             ----                ----
<S>                                                     <C>               <C>               <C>
Basic Income Per Share
      Net Income Available to Common Shareholders       $      23.0       $      17.2       $       5.5
      Weighted Average Common Shares                        775,042           760,000           750,438
          Basic Income Per Share                        $     29.68       $     22.63       $      7.33

Diluted Income Per Share
      Net Income Available to Common Shareholders       $      23.0       $      17.2       $       5.5
      Weighted Average Common Shares                        775,042           760,000           750,438
      Effect of Outstanding Options                          21,186            12,655                --
      Weighted Average Common Shares and Dilutive
      Potential Common Stock                                796,228           772,655           750,438
          Diluted Income Per Share                      $     28.89       $     22.26       $      7.33
</TABLE>

         Based on an independent evaluation, the estimated fair value of the
Company's Common Stock at December 31, 1999, 1998 and 1997 were $230, $200 and
$100 per share, respectively. The estimated average price during 1999 and 1998
was $215 and $150 per share, respectively. During 1997 there was no effect of
outstanding options as the options' exercise price of $100 was equal to the
estimated fair value of the common shares.


                                       52
<PAGE>   53

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


NOTE 22 - 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 subsidiary Remington International, Ltd. 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. Further, the Notes are fully and
unconditionally guaranteed by Holding.

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

<TABLE>
<CAPTION>
                                                                                   RACI
                                                                                HOLDING, INC.
                                                                                    AND
                                          HOLDING     REMINGTON   ELIMINATIONS  SUBSIDIARIES
                                          -------     ---------   ------------  ------------
<S>                                        <C>          <C>          <C>          <C>
ASSETS
Current Assets                             $   --       $181.2       $   --       $181.2
Receivable from Remington                     1.0           --          1.0           --
Receivable from RACI Holding, Inc.             --          0.1          0.1           --
Noncurrent Assets                           132.2        177.6        132.1        177.6
                                           ------       ------       ------       ------
        Total Assets                       $133.2       $358.9       $133.2       $358.8
                                           ======       ======       ======       ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities                        $   --       $ 88.9       $   --       $ 88.9
Payable to Remington                          0.1           --          0.1           --
Payable to RACI Holding, Inc.                  --          1.0          1.0           --
Noncurrent Liabilities                         --        142.7           --        142.7
Shareholders' Equity                        133.1        126.3        132.1        127.2
                                           ------       ------       ------       ------
       Total Liabilities and
           Shareholders' Equity            $133.2       $358.9       $133.2       $358.8
                                           ======       ======       ======       ======
</TABLE>


                       RACI HOLDING, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATING BALANCE SHEETS
                                December 31, 1998

<TABLE>
<CAPTION>
                                                                                   RACI
                                                                                HOLDING, INC.
                                                                                    AND
                                          HOLDING     REMINGTON   ELIMINATIONS  SUBSIDIARIES
                                          -------     ---------   ------------  ------------
<S>                                        <C>          <C>          <C>          <C>
ASSETS
Current Assets                             $   --       $175.1       $   --       $175.1
Receivable from Remington                     0.9           --          0.9           --
Noncurrent Assets                           102.6        179.4        102.6        179.4
                                           ------       ------       ------       ------
        Total Assets                       $103.5       $354.5       $103.5       $354.5
                                           ======       ======       ======       ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities                        $   --       $ 84.0       $   --       $ 84.0
Payable to RACI Holding, Inc.                  --          0.9          0.9           --
Noncurrent Liabilities                         --        167.0           --        167.0
Shareholders' Equity                        103.5        102.6        102.6        103.5
                                           ------       ------       ------       ------
       Total Liabilities and
           Shareholders' Equity            $103.5       $354.5       $103.5       $354.5
                                           ======       ======       ======       ======
</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>
                                                                            RACI
                                                                         HOLDING, INC.
                                                                             AND
                                     HOLDING   REMINGTON   ELIMINATIONS  SUBSIDIARIES
                                     -------   ---------   ------------  ------------
<S>                                  <C>         <C>          <C>         <C>
                YEAR ENDED
            DECEMBER 31, 1999
            -----------------
Sales                                $   --      $399.4       $   --      $399.4
Gross Profit                             --       128.3           --       128.3
Equity in Income of Subsidiary         23.0          --         23.0          --
Net Income                             23.0        23.0         23.0        23.0

                YEAR ENDED
            DECEMBER 31, 1998
            -----------------

Sales                                $   --      $380.7       $   --      $380.7
Gross Profit                             --       121.7           --       121.7
Equity in Income of Subsidiary         17.2          --         17.2          --
Net Income                             17.2        17.2         17.2        17.2

                YEAR ENDED
            DECEMBER 31, 1997
            -----------------

Sales                                $   --      $381.2       $   --      $381.2
Gross Profit                             --       111.3           --       111.3
Equity in Income of Subsidiary          5.5          --          5.5          --
Net Income                              5.5         5.5          5.5         5.5
</TABLE>



                                       54
<PAGE>   55

                        REPORT OF INDEPENDENT ACCOUNTANTS


Our report on the financial statements of RACI Holding, Inc. and is subsidiaries
is included on page 30 of this Form 10-K. In connection with our audits of such
financial statements, we have also audited the related financial statement
schedule listed in the index on page 56 of this form 10-K.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basis financial statements, taken as a whole,
presents fairly, in all material aspects, the information required to be
included therein.


PricewaterhouseCoopers LLP

Greensboro, North Carolina
March 2, 2000




                                       55
<PAGE>   56

                                                                     SCHEDULE II



                       RACI HOLDING, INC. AND SUBSIDIARIES
                        Valuation and Qualifying Accounts
                  Years Ended December 31, 1999, 1998 and 1997
                              (Dollars in Millions)


<TABLE>
<CAPTION>
                                                               Additions
                                                               ---------
                                             Balance at        Charged to                          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, 1999          $   (3.3)         $   (0.7)         $   1.5           $  (2.5)

       Year ended December 31, 1998              (5.2)               -               1.9              (3.3)

       Year ended December 31, 1997              (5.7)             (1.1)             1.6              (5.2)
</TABLE>


(1) Uncollectible accounts written off, net of recoveries.




                                       56
<PAGE>   57

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

         None.



                                       57
<PAGE>   58

                                    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 22, 2000 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)   58     Director, Chairman
B. Charles Ames             (c)         74     Director
Michael G. Babiarz          (c)         34     Director
Stephen D. Bechtel, Jr.     (a)(b)      74     Director
Bobby R. Brown              (a)(b)(c)   67     Director
Richard A. Gilleland        (b)(c)(d)   55     Director
Richard E. Heckert          (b)(d)      76     Director
Hubbard C. Howe                         71     Director
Ulrich Middelmann                       55     Director
Joseph L. Rice, III         (a)         68     Director
H. Norman Schwarzkopf       (b)         65     Director
Thomas L. Millner           (a)(b)      46     Director, President and Chief Executive Officer
Ronald H. Bristol, II                   37     Vice President, General Manager - Firearms
Paul L. Cahan                           58     Vice President, General Manager - Ammunition
Robert L. Euritt                        65     Vice President - Human Resources
Samuel G. Grecco                        46     Vice President - Business Development and Corporate Secretary
Mark A. Little                          52     Vice President, Chief Financial Officer and Treasurer
Arthur W. Wheaton                       58     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 1995, and became Chairman in December 1997. From December
1997 until April 1999, Mr. Hendrix was Chief Executive Officer. Mr. Hendrix
joined CD&R prior to 1995 as a principal. 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., a corporation in which an investment
partnership managed by CD&R has an investment.

         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 1995 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 GmbH & Co. KG, and its parent
CDRB Holding AG, and a director and Chairman of the Board of Riverwood
International Corporation, and its parents RIC Holding, Inc. and Riverwood
Holding, Inc.,



                                       58
<PAGE>   59

corporations in which an investment partnership managed by CD&R has an
investment. Mr. Ames serves on the Boards of Directors of The Progressive
Corporation and the M.A. Hanna Company.

         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
1995. Mr. Babiarz currently serves as a director of Allied Worldwide, Inc.

         Stephen D. Bechtel, Jr. has been a director of Remington and Holding
since prior to 1995. Since prior to 1995 Mr. Bechtel has been Chairman Emeritus
of Bechtel Corp. and of Bechtel Group, Inc., both of which are engineering and
construction companies. Mr. Bechtel had been Chairman of Fremont Investors, Inc.
(previously named Fremont Group, Inc.), a management investment company and
Sequoia Ventures, Inc., an investment company from prior to 1995 until May 1995.
Mr. Bechtel has been Chairman Emeritus of Fremont Investors, Inc. and Sequoia
Ventures, Inc. since June 1995, 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 1995. From prior to 1995 to January 1995, and from July 1997 to January 1998,
Mr. Brown was President, and from prior to 1995 to January 1996, and from July
1997 to January 1998 was Chairman and Chief Executive Officer of CONSOL Inc. and
CONSOL Energy Inc., the parents of Consolidation Coal Company, a coal mining
company. Mr. Brown was the Chairman of CONSOL Inc. and its parent CONSOL Energy
Inc. from September 1982 to February 1999. Mr. Brown also was a director of
CONSOL Inc. and CONSOL Energy Inc from prior to 1995 to February 2000.

         Richard A. Gilleland has been a director of Remington and Holding since
prior to 1995. 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 July 1995 to July 1996. From prior to
1995 to July 1995, Mr. Gilleland was Chairman, President and Chief Executive
Officer of Kendall International, Inc., a manufacturer of hospital supplies. 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 1995. Mr. Heckert served as a director of The Seagram Company, Ltd.
from prior to 1995 to April 1995. From prior to 1995 to May 1995, he served on
the International Committee of L'Air Liquide. Mr. Heckert was a director of
Marsh & McLennan Companies Inc., from prior to 1995 until 1996.

         Hubbard C. Howe has been a director of Remington and Holding since
prior to 1995, and was Chairman and Chief Executive Officer of Remington and
Holding from prior to 1995 until December 1997. Mr. Howe served as Vice
Chairman from prior to 1995 to November 1997. Mr. Howe has served as Chairman
and as a director since prior to 1995 of A.P.S., Inc., a distributor of
automotive replacement parts, and its parent, APS Holding Corporation 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. He is
also a director of Riverwood International Corporation, and its parents RIC
Holding, Inc. and Riverwood Holding, Inc., a corporation 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 1995 to March 1999 Mr. Middelmann was a member of the
Board of Management of Fried Krupp AG a capital goods and steel company and from
March 1999 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 1995. Since 1998, Mr. Rice has been Chairman of CD&R, which he joined
in 1978 and is a general partner of Associates IV. From prior to 1995 to 1995 he
served as President and from 1995 to 1998 he served as Chairman and Chief
Executive Officer of CD&R. Mr. Rice is also a director of Uniroyal Holding,
Inc., a corporation in which an investment partnership managed by CD&R has an
investment; Dynatech Corporation, a corporation in which an investment
partnership managed by CD&R has an


                                       59
<PAGE>   60

investment; and Schulte GmbH & Co. KG, and its parent CDRB Holding AG,
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 September 1995. From prior to 1995 he served as a commentator for CBS and
is a commentator for NBC. He currently serves as a director of USA Networks,
Inc. and is a member of the University of Richmond Board of Trustees and The
Nature Conservacy's President's Council.

         Thomas L. Millner became President and Chief Operating Officer of
Remington prior to 1995 and in April 1999 became Chief Executive Officer and
President. Mr. Millner has been a director of Remington and Holding since prior
to 1995. 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 in June 1995 as Vice President
Operations, and in December 1997 became Vice President, General Manager
Firearms. From prior to June 1995, Mr. Bristol was a Manager with Arthur
Andersen & Co.

         Paul L. Cahan joined Remington in March 1995 as Vice President
Ammunition and in December 1997 became Vice President, General Manager
Ammunition. From prior to March 1995, Mr. Cahan was director of Steel Tooling
Operations with Kennametal, Inc., a leading manufacturer of tooling and supplies
for the metalworking and mining industries.

         Robert L. Euritt joined Remington prior to 1995 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.

         Samuel G. Grecco became Vice President-Business Development and
Planning in September 1996 and became Vice President - Business Development and
Corporate Secretary in December 1996. From prior to 1995 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.

         Mark A. Little joined Remington in July 1996 as Director of Planning
and Business Development. In September 1996, he became Vice President,
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. From prior to 1995 until joining Remington, Mr. Little
held the position of Executive Vice President and Chief Financial Officer of The
Pilliod Cabinet Company, now named Pilliod Furniture, Inc.

         Arthur W. Wheaton became Vice President - Sales and Marketing in
December 1996 and in December 1997, he became Vice President, General Manager
Worldwide Sales. From March 1995 until December 1996 he was Vice President
Corporate Marketing. From prior to March 1995 he was Vice President. 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.

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


                                       60
<PAGE>   61

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. During 1999, 1,800 shares of Common
Stock were issued under this Plan. 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 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
each person who served as its Chief Executive Officer during 1999 and to each of
the Company's four other most highly compensated executive officers (the "Named
Executive Officers") during or with respect to the 1997, 1998 and 1999 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>

Leon J. Hendrix, Jr................... 1997       --            --              --             --               --
   Chairman and Chief Executive        1998       --            --              --             --               --
   Officer (1)                         1999       --            --              --             --               --
Thomas L. Millner..................... 1997    350,016        437,500           --             --             8,951(2)
   President and Chief Executive       1998    376,260          6,800           --             --           464,151(3)
   Officer                             1999    385,000         10,310           --            7,776         876,519(4)
Robert L. Euritt...................... 1997    152,500        165,000        36,818(5)          500           4,575(6)
   Vice President-Human Resources      1998    165,000          2,400        37,853(5)         --           160,950(7)
    And Customer Service               1999    170,333        149,500        35,383(5)        4,750         355,155(8)
Ronald H. Bristol, II................. 1997    145,000        162,525           --            1,500           4,350(6)
   Vice President, General Manager     1998    165,000            100           --             --           162,550(7)
    -Firearms                          1999    175,000        159,800           --            2,288         162,852(8)
Mark A. Little........................ 1997    152,500        165,000           --            1,000           6,176(2)
   Vice President, Chief  Financial    1998    165,000          2,400           --             --           164,801(3)
    Officer and Treasurer              1999    178,333        103,450           --            4,255         366,596(4)
Arthur W. Wheaton..................... 1997    137,300        123,400         5,000(9)          500           4,119(6)
   Vice President, General Manager     1998    165,000          2,200           --             --           144,550(7)
    -Worldwide Sales                   1999    169,000         75,250           --            1,198         219,030(10)
</TABLE>

(1)  Mr. Hendrix is a principal of CD&R and received no compensation directly
     from Remington for his services as Chairman and Chief Executive Officer.
     Mr. Hendrix has served in the capacity of Chairman since December 1997. He
     also served as Chief Executive Officer from December 1997 until April 1999
     when Mr. Millner was appointed Chief Executive Officer. Remington pays CD&R
     an annual fee (amounting to $400,000 in each 1999, 1998 and 1997) for
     management consulting services (see "Certain Relationships and Related
     Transactions" below) which include Mr. Hendrix's services as Chairman and
     Chief Executive Officer.

(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 Plan.


                                       61
<PAGE>   62

(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 Plan and deferred stock
     issuance in lieu of bonus.

(4)  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 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.

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

(6)  Reflects Remington's matching contributions on behalf of the Named
     Executive Officer to the Remington Savings and Investment Plan.

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

(8)  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 and interest paid due to
     delayed bonus payment.

(9)  Reflects amount awarded to Named Executive Officer for the sale of a home.

(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 $200 per share, interest paid due to
     delayed bonus payment and deferred stock issuance in lieu of bonus.

                     Option/SAR Grants in Last Fiscal Year

<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 1999        ($/SH)      Date       ($325.78)     ($518.75)
----                       ---------------   --------------------    --------  ----------    ---------     ---------
<S>                              <C>                 <C>                <C>      <C>         <C>           <C>
Leon J. Hendrix, Jr.                --
Thomas L. Millner                2,276   (A)          7%                200      6/24/09     $ 286,275     $  725,475
Thomas L. Millner                5,500   (B)         17%                200      7/26/09       691,790      1,753,125
Robert L. Euritt                 2,500   (A)          8%                200      6/24/09       314,450        796,875
Robert L. Euritt                   750   (B)          2%                200      6/24/09        94,335        239,063
Robert L. Euritt                 1,500   (B)          5%                200      7/26/09       188,670        478,125
Mark A. Little                   1,505   (A)          5%                200      6/24/09       189,299        479,719
Mark A. Little                   2,750   (B)          9%                200      7/26/09       345,895        876,563
Ronald H. Bristol, II              788   (A)          2%                200      6/24/09        99,115        251,175
Ronald H. Bristol, II            1,500   (B)          5%                200      7/26/09       188,670        478,125
Arthur W. Wheaton                  698   (A)          2%                200      6/24/09        87,794        222,488
Arthur W. Wheaton                  500   (B)          2%                200      7/26/09        62,890        159,375
</TABLE>


(A)  Subject to the Named Executive Officer's continued employment, the options
     become exercisable in two equal installments based on the earnings
     performance of Holding in the years 1999 and 2000, but no later than 2008,
     subject to acceleration under certain circumstances.

(B)  Subject to the Named Executive Officer's continued employment, the options
     become exercisable in three equal installments on each of the third,
     fourth, and fifth anniversaries of the date of grant, subject to
     acceleration under certain circumstances.



                                       62
<PAGE>   63

            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  VALUE REALIZED           FY-END                      AT FY-END
NAME                        ON EXERCISE (#)       ($)         EXERCISABLE/UNEXERCISABLE  EXERCISABLE/UNEXERCISABLE(1)
----                        ---------------  --------------   -------------------------  ----------------------------
<S>                         <C>              <C>                  <C>                     <C>
Leon J. Hendrix, Jr.              --               --                   --                          --
Thomas L. Millner                 --               --             8,638 / 6,638           1,009,140 / 199,140
Robert L. Euritt                  --               --             3,256 / 3,834             298,280 / 148,420
Ronald H. Bristol, II             --               --             1,602 / 2,561             168,860 / 143,530
Mark A. Little                    --               --             1,420 / 3,835             109,300 / 148,350
Arthur W. Wheaton                 --               --             2,516 / 1,182             292,180 / 68,760
</TABLE>

(1) Calculated based on a per share price of Holding Common Stock of $230, the
    estimated fair value as of December 31, 1999, 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 (other than Mr. Hendrix) 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
Closing. 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.

<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 1999. 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



                                       63
<PAGE>   64

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, 1999, under the Pension Plans for
each eligible Named Executive Officer are as follows:


Name                        Years of Service          Average Pay
----                        ----------------          -----------
Thomas L. Millner                  5.6                  $589,600
Robert L. Euritt                   5.3                  $241,400
Ronald H. Bristol, II              4.5                  $241,671
Mark A. Little                     3.5                  $245,800
Arthur W. Wheaton                 33.75                 $226,300

         Mr. Hendrix is not a participant in the Pension Plans.

EXECUTIVE EMPLOYMENT AGREEMENTS

         In June 1999, the Company entered into Executive Employment Agreements
with each of the Named Executive Officers, except Mr. Hendrix. 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 1999 were Richard A.
Gilleland, Chairman, Leon J. Hendrix, Jr. 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 is also a principal of
CD&R. CD&R receives an annual fee for management and financial consulting
services to the Company, including Mr. Hendrix's services as Chairman and Chief
Executive Officer of the Company, and reimbursement of out-of-pocket expenses.
The consulting fees paid to CD&R were $400,000 for each of 1997, 1998 and 1999.
The consulting fees to be paid to CD&R may not exceed $500,000 per year under
the terms of the 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.
Prior to joining the Compensation Committee, Mr. Heckert served as Chairman of
the Board and Chief Executive Officer of DuPont from May 1986 to April 1989, and
also served as a director of DuPont from April 1989 to April 1994.



                                       64
<PAGE>   65

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 22, 2000, 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                97.6
B. Charles Ames (2)                                   --                --
Michael G. Babiarz                                    --                --
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)                              8,638                 1.1
Robert L. Euritt (4)                               4,976                 *
Arthur W. Wheaton (4)                              2,516                 *
Mark A. Little (4)                                 2,145                 *
Ronald H. Bristol, II (4)                          1,602                 *
Executive officers and directors as
  a group (2)(3)(5)                               40,763                 5.3
*Less than 1%
</TABLE>

(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 05830.

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

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

(4)  Includes 8,638, 3,256, 2,516, 1,420, 1,602 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.

(5)  Includes 23,455 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.



                                       65
<PAGE>   66

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., a principal of CD&R, is a director and
has served in the capacity of Chairman since December 1997. He also served as
Chief Executive Officer from December 1997 until April 1999 when Mr. Millner was
appointed Chief Executive Officer. 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 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. In addition, CD&R has agreed to furnish the services
of Mr. Hendrix to serve as Chairman of the Company and Holding as a part of the
services provided pursuant to that consulting agreement. Mr. Hendrix's
compensation from CD&R is established without regard to the extent of particular
services provided by Mr. Hendrix to the Company. The number of CD&R employees,
and the amount of time spent by them, working with a particular portfolio varies
from time to time with the scope and type of services provided. The consulting
fees paid to CD&R were $400,000 for each of 1999, 1998 and 1997. The consulting
fees to be paid to CD&R may not exceed $500,000 per year under the terms of the
Credit Agreement and the Indenture unless certain requirements are met. Such
consulting fees will be reviewed on an annual basis and will be calculated with
reference to the size and complexity of the Company's business, the type and
magnitude of the advisory and management consulting services being provided, the
fees being paid to CD&R by other companies for which it provides such services
and the fees charged by other managers with comparable organizations for similar
services provided to companies in which investment funds managed by such
managers have invested.

         The Company paid fees to the law firm of Debevoise & Plimpton during
1999 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 97.6% 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.

STOCK OPTION AND PURCHASE PLANS

         As of December 31, 1999, the Company had reserved 182,780 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, 1999, 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, 19,027 deferred shares were awarded and 31,773
options were granted under the 1999 Stock Incentive Plan and no shares of Common
Stock



                                       66
<PAGE>   67

have been issued under the Option Plan or the Purchase Plan. As of December 31,
1999, the Company has 182,780 shares of Common Stock reserved for issuance of
which 75,533 shares remain available for grant under the above mentioned plans.

         At December 31, 1999 options to purchase 37,065 shares of Common Stock
were outstanding, at a per share exercise price of $100, of which 32,397 options
were exercisable and options to purchase 31,773 shares of Common Stock were
outstanding, at a per share exercise price of $200, of which 6,350 options were
exercisable.

         In June 1999, Messrs. Millner, Euritt, Wheaton, Little and Bristol and
all executive officers as a group purchased 2,276, 780, 698, 788 and 6,873
deferred shares and 0, 1,720, 0, 725, 4,258 shares of Common Stock of the
Company, respectively, at a purchase price of $200 per share. Certain executive
officers borrowed an aggregate of $525,400 from the Company to help finance the
purchase of their shares (including Messrs. Euritt and Little, who borrowed
$100,000 and $75,000, respectively). Interest on such loans is payable annually
at an initial rate of 5.79% per annum, adjusted annually. Members of management
who purchased shares or deferred shares were also granted options and matching
grants of 10,381 deferred shares (including deferred share grants of 2,276,
1,750, 698, 1,505 and 788 to Messrs. Millner, Euritt, Wheaton, Little, and
Bristol, respectively). Mr. Schwartzkopf, a director of the Company, purchased
1,250 shares of Common Stock for a purchase price of $200 per share and
received a matching grant of 1,250 deferred shares.

         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).




                                       67
<PAGE>   68

                                     PART IV


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

(a) LIST OF EXHIBITS.

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.


                                       68
<PAGE>   69

4.4     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.

4.5     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.

4.6     Credit Agreement, dated as of November 30, 1993, among Remington, the
        lenders named therein, The Chase Manhattan Bank, N.A., Chemical Bank
        ("Chemical"), and Union Bank of Switzerland, as co-agents, and Chemical,
        as administrative agent (the "Administrative Agent"); previously filed
        as Exhibit 4.4 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.

4.7     First Amendment, dated as of September 29, 1995, to the Credit Agreement
        referred to as Exhibit 4.6 above; previously filed as Exhibit 4.5 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.

4.8     Second Amendment, dated as of March 29, 1996, to the Credit Agreement
        referred to as Exhibit 4.6 above; previously filed as Exhibit 4.6 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.

4.9     Third Amendment, dated as of June 28, 1996, to the Credit Agreement
        referred to as Exhibit 4.6 above; previously filed as Exhibit 4.7 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.

4.10    Fourth Amendment, dated as of December 30, 1996 to the Credit Agreement
        referred to as Exhibit 4.6 above; previously filed as Exhibit 4.8 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.

4.11    Fifth Amendment, dated as of September 23, 1998 to the Credit Agreement
        referred to as Exhibit 4.6 above; previously filed as Exhibit 4 by the
        Company in its Form 10-Q for the quarter ended September 30, 1998, and
        herein incorporated by reference.

4.12    Borrower Stock Pledge Agreement, dated as of November 30, 1993, between
        Remington and the Administrative Agent; previously filed as Exhibit 4.7
        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.

4.13    Borrower Stock Pledge Agreement, dated as of March 30, 1996, between
        Remington and the Administrative Agent; previously filed as Exhibit 4.10
        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.

4.14    Borrower Security Agreement, dated as of November 30, 1993, between
        Remington and the Administrative Agent; previously filed as Exhibit 4.8
        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.


                                       69
<PAGE>   70

4.15    Borrower Patent and Trademark Security Agreement, dated as of November
        30, 1993, between Remington and the Administrative Agent; previously
        filed as Exhibit 4.9 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.

4.16    Holding Stock Pledge Agreement, dated as of November 30, 1993, between
        Holding and the Administrative Agent; previously filed as Exhibit 4.10
        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.

4.17    Holding Guarantee, dated as of November 30, 1993, by Holding to the
        Administrative Agent; previously filed as Exhibit 4.11 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.

4.18    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.

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 4.4.

10.7    Filed as Exhibit 4.5.

10.8    Filed as Exhibit 4.6.

10.9    Filed as Exhibit 4.7.

10.10   Filed as Exhibit 4.8.

10.11   Filed as Exhibit 4.9.

10.12   Filed as Exhibit 4.10.

10.13   Filed as Exhibit 4.11.

10.14   Filed as Exhibit 4.12.

10.15   Filed as Exhibit 4.13.


                                       70
<PAGE>   71

10.16   Filed as Exhibit 4.14.

10.17   Filed as Exhibit 4.15.

10.18   Filed as Exhibit 4.16.

10.19   Filed as Exhibit 4.17.

10.20   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.

10.21   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.

10.22   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.

10.23   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.

10.24   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.

10.25   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.

10.26   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.

10.27   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.

10.28   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.

10.29   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.


                                       71
<PAGE>   72

10.30   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.

10.31   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.

10.32   Loan-Out Agreement, dated as of December 1, 1993, among Holding,
        Remington and Clayton, Dubilier & Rice, Inc.; previously filed as
        Exhibit 10.29 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.

10.33   Loan-Out Agreement, dated as of December 16, 1997, among Holding,
        Remington and Clayton, Dubilier & Rice, Inc.; previously filed as
        Exhibit 10.32 to Annual Report on Form 10-K, filed March 30, 1998, and
        herein incorporated by reference.

10.34   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.

10.35   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.

10.36   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.

10.37   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.

10.38   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.

10.39   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.

10.40   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.

10.41   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.

10.42   Form of Matching Deferred Share Award Agreement; previously filed as
        Exhibit 10.8 to the Company's 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 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.

10.44   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.



                                       72
<PAGE>   73

10.45   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.

27      Financial Data Schedule.

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

99.2    Form of Proxy sent to security holders for 2000 annual meeting.

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



                                       73
<PAGE>   74

(b) FINANCIAL STATEMENT SCHEDULE.

         Reference is made to the Financial Statements of the Company included
as Item 8 of this Annual Report on Form 10-K and Schedule II to such Financial
Statements appearing on page 56 of this Annual Report on Form 10-K.




                                       74
<PAGE>   75

(c) REPORTS ON FORM 8-K.

         During the quarter ended December 31, 1999, the Company filed no
reports on Form 8-K.




                                       75
<PAGE>   76

                                   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 22, 2000.

                                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 22, 2000.

<TABLE>
<S>                                      <C>

         /s/Thomas L. Millner            Chief Executive Officer, President and Director
---------------------------------------- (Principal Executive Officer)
           Thomas L. Millner

          /s/ Mark A. Little             Vice President, Chief Financial Officer and Treasurer
---------------------------------------- (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>



                                       76
<PAGE>   77

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.



                                       77
<PAGE>   78

                                  EXHIBIT INDEX
                FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 31, 1999


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.


                                       78
<PAGE>   79

4.4     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.

4.5     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.

4.6     Credit Agreement, dated as of November 30, 1993, among Remington, the
        lenders named therein, The Chase Manhattan Bank, N.A., Chemical Bank
        ("Chemical"), and Union Bank of Switzerland, as co-agents, and Chemical,
        as administrative agent (the "Administrative Agent"); previously filed
        as Exhibit 4.4 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.

4.7     First Amendment, dated as of September 29, 1995, to the Credit Agreement
        referred to as Exhibit 4.6 above; previously filed as Exhibit 4.5 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.

4.8     Second Amendment, dated as of March 29, 1996, to the Credit Agreement
        referred to as Exhibit 4.6 above; previously filed as Exhibit 4.6 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.

4.9     Third Amendment, dated as of June 28, 1996, to the Credit Agreement
        referred to as Exhibit 4.6 above; previously filed as Exhibit 4.7 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.

4.10    Fourth Amendment, dated as of December 30, 1996 to the Credit Agreement
        referred to as Exhibit 4.6 above; previously filed as Exhibit 4.8 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.

4.11    Fifth Amendment, dated as of September 23, 1998 to the Credit Agreement
        referred to as Exhibit 4.6 above; previously filed as Exhibit 4 by the
        Company in its Form 10-Q for the quarter ended September 30, 1998, and
        herein incorporated by reference.

4.12    Borrower Stock Pledge Agreement, dated as of November 30, 1993, between
        Remington and the Administrative Agent; previously filed as Exhibit 4.7
        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.

4.13    Borrower Stock Pledge Agreement, dated as of March 30, 1996, between
        Remington and the Administrative Agent; previously filed as Exhibit 4.10
        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.

4.14    Borrower Security Agreement, dated as of November 30, 1993, between
        Remington and the Administrative Agent; previously filed as Exhibit 4.8
        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

4.15    Borrower Patent and Trademark Security Agreement, dated as of November
        30, 1993, between Remington and the Administrative Agent; previously
        filed as Exhibit 4.9 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.

4.16    Holding Stock Pledge Agreement, dated as of November 30, 1993, between
        Holding and the Administrative Agent; previously filed as Exhibit 4.10
        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.

4.17    Holding Guarantee, dated as of November 30, 1993, by Holding to the
        Administrative Agent; previously filed as Exhibit 4.11 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.

4.18    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.

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 4.4.

10.7    Filed as Exhibit 4.5.

10.8    Filed as Exhibit 4.6.

10.9    Filed as Exhibit 4.7.

10.10   Filed as Exhibit 4.8.

10.11   Filed as Exhibit 4.9.

10.12   Filed as Exhibit 4.10.

10.13   Filed as Exhibit 4.11.

10.14   Filed as Exhibit 4.12.

10.15   Filed as Exhibit 4.13.


                                       80
<PAGE>   81

10.16   Filed as Exhibit 4.14.

10.17   Filed as Exhibit 4.15.

10.18   Filed as Exhibit 4.16.

10.19   Filed as Exhibit 4.17.

10.20   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.

10.21   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.

10.22   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.

10.23   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.

10.24   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.

10.25   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.

10.26   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.

10.27   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.

10.28   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.

10.29   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.


                                       81
<PAGE>   82

10.30   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.

10.31   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.

10.32   Loan-Out Agreement, dated as of December 1, 1993, among Holding,
        Remington and Clayton, Dubilier & Rice, Inc.; previously filed as
        Exhibit 10.29 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.

10.33   Loan-Out Agreement, dated as of December 16, 1997, among Holding,
        Remington and Clayton, Dubilier & Rice, Inc.; previously filed as
        Exhibit 10.32 to Annual Report on Form 10-K, filed March 30, 1998, and
        herein incorporated by reference.

10.34   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.

10.35   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.

10.36   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.

10.37   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.

10.38   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.

10.39   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.

10.40   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.

10.41   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.

10.42   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.

10.43   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.

10.44   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.



                                       82
<PAGE>   83

10.45   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.

27      Financial Data Schedule.

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.


                                       83