---



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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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, 2004



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: 333-104141



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REMINGTON ARMS COMPANY, INC.

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 51-0350935                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer 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)



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. [Not applicable]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act)

Yes ̈No x



As of March 23, 2004, the registrant had outstanding 1,000
shares of Class A Common Stock, par value $.01 per share and 0 shares of Class B Common Stock, par value $.01 per share.



|                                                                     | 
|-------------------------------------------------------------------- | 
|                                                                     | 
|REMINGTON ARMS COMPANY, INC.                                        
|FORM 10-K                                                           
|December 31, 2004                                                   
|INDEX                                                               
|PART I                                                               | 
|ITEM 1.         BUSINESS                                             | 
|ITEM 2.        PROPERTIES                                            | 
|ITEM 3.         LEGAL PROCEEDINGS                                    | 
|ITEM 4.         SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS  | 
|PART II                                                              | 
|ITEM 5.         MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED       | 
|STOCKHOLDER MATTERS AND ISSUER PURCHASES OF                          | 
|EQUITY SECURITIES                                                    | 
|ITEM 6.        SELECTED FINANCIAL DATA                               | 
|ITEM 7.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL     | 
|CONDITION AND RESULTS OF OPERATION                                   | 
|ITEM 7A.         QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT      | 
|MARKET RISK                                                          | 
|ITEM 8.         FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA          | 
|ITEM 9.         CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON     | 
|ACCOUNTING AND FINANCIAL DISCLOSURE                                  | 
|ITEM 9A.         CONTROLS AND PROCEDURES                             | 
|ITEM 9B.         OTHER INFORMATION                                   | 
|PART III                                                             | 
|ITEM 10.         DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT  | 
|ITEM 11.         EXECUTIVE COMPENSATION                              | 
|ITEM 12.         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND | 
|MANAGEMENT                                                           | 
|ITEM 13.         CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS      | 
|ITEM 14.         PRINCIPAL ACCOUNTING FEES AND SERVICES              | 
|PART IV                                                              | 
|ITEM 15.         EXHIBITS, FINANCIAL STATEMENT SCHEDULES             | 
|SIGNATURES                                                           | 
|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          | 
|                                                                     | 



# PART I

# Item 1. BUSINESS

References in this report to
we, us, our, and words of similar import mean the
collective reference to Remington Arms Company, Inc. and its subsidiaries, unless the
context otherwise requires. References in this report to Remington are to
Remington Arms Company, Inc., and references to Holding are to
Remingtons parent RACI Holding, Inc.

# Company Overview

Founded
in 1816, we design, manufacture and market a comprehensive line of primarily sporting
goods products for the global hunting and shooting sports marketplace under the
Remington® brand name. Our 188-year history gives us a
long-established reputation in the marketplace for our products. We believe that
Remington is a powerful brand in the broader U.S. sporting goods and outdoor
recreation markets and that our products are recognized by sportsmen worldwide for their
superior value, performance and durability.

Our
product lines consist primarily of firearms (shotguns and rifles) and ammunition, as well
as hunting and gun care accessories, clay targets, surveillance technology products for the law
enforcement and security communities, and powdered metal products. In 2003, we held a
leadership position in each of our major markets, with the #1 U.S. market share position
in shotguns, rifles and ammunition, according to the National Sporting Goods Association
NSGA, and the Sports Marketing Research Group, (SMRG). In 2003, we
estimate that 94% of our domestic net sales came from product categories where we held the
#1 U.S. market share position. We are the only major U.S. manufacturer of both firearms
and ammunition.

For the year
ended December 31, 2004, we had consolidated net sales of $393.0 million and a net loss of $4.0 million, including
a $15.2 million tax expense associated with establishing a valuation allowance against certain deferred tax assets
offset in part by a $13.6 million gain on our sale of our fishing line business. See Notes 3 and
18 to the audited consolidated financial statements for additional disclosures relating to
the sale of the fishing line business and the valuation allowance on the deferred tax
assets, respectively.

The
accompanying audited consolidated financial statements of Remington Arms Company, Inc.
(Remington) include the accounts of its wholly owned subsidiaries, RA Brands,
L.L.C. (RA Brands) and RA Factors, Inc. (RA Factors, and
collectively referred to with Remington and RA Brands as the Company), as well
as reflecting the impact of the Companys unconsolidated 50% joint venture interest
in Remington ELSAG Law Enforcement Systems, LLC (RELES). RA Brands primarily
exists to own, protect and comply with the legal requirements applicable to our patents,
trademarks, and copyrights (as discussed below), and RA Factors primarily exists to factor
our accounts receivables. The accounts of the Companys parent, RACI Holding, Inc.
(Holding), which owns 100% of the issued and outstanding common stock of
Remington, are not presented herein. Significant transactions between the Company and
Holding and the related balances are reflected in the consolidated financial statements
and related disclosures.

A
revision to the classification of licensing income from selling, general, and administrative expense to
other income was made to financial information from prior periods to conform with the
current presentation format. The change in classification did not have a material impact on the
previously reported financial condition, results of operations or cash flows of the
Company (See Note 4 to the accompanying audited consolidated financial statements for licensing income amounts).
In addition, as a result of the sale of specified assets of the fishing line
business on February 9, 2004, the results of these operations have been included in
discontinued operations and results from prior periods have been reclassified accordingly
(See Note 3 to the accompanying audited consolidated financial statements).

# Recent Business
Developments

In
June 2004, we delivered our first sales of the Spartan Gunworks product line, an opening
price point line of shotguns.

3



On
July 19, 2004, we entered into a ten year exclusive distribution rights agreement with a
technology products manufacturer for certain security products within the United States,
certain of its territories, and Canada, that required the payment of $0.5 million. We
expect to sell these security products to the federal agency and law enforcement markets.
We incurred a total of approximately $0.8 million (including the above mentioned $0.5
million) of expenses associated with the initial launching of these products during 2004
for distribution, selling, marketing, administrative, and transaction costs, and have
included the related financial results in the newly formed Technology Products operating
segment, which is combined with the All Other reporting segment. There were no sales or
gross profit associated with this agreement in 2004.

On
August 4, 2004, we entered into a joint venture agreement with ELSAG, Inc., an
unaffiliated third party, to form Remington ELSAG Law Enforcement Systems, LLC
(RELES).  RELES will sell and service a license plate reading technology
that is expected to be sold to state and local law enforcement agencies along with
certain federal agencies. The venture gives us a 50% ownership interest.  The
agreement calls for each member to provide 50% of required capital investments
and receive 50% of distributions, with a maximum contribution amount of $1.5
million by each party.  In addition, we will provide certain administrative
support functions, while ELSAG, Inc. will provide product technology support. On
October 15, 2004, we made our initial contribution to the venture of approximately $0.3
million. As of February 28, 2005, we have made a total of $0.5 million of cumulative
contributions to RELES. There were no sales or gross profit associated with this joint
venture in 2004.

# Sale of Fishing Line
Business

On
February 6, 2004, we entered into an Asset Purchase Agreement (the Stren Asset
Purchase Agreement) with Pure Fishing, Inc. and its wholly-owned subsidiaries Pure
Fishing I, LLC and Pure Fishing II, LLC (collectively, the Purchasers),
pursuant to which we sold to the Purchasers certain specific assets relating to our
fishing line business, effective as of February 9, 2004. The assets sold consisted of
specified machinery, equipment, inventory, purchase orders and other contracts,
trademarks, tradenames and other intellectual property, records, claims, and goodwill, in
each case relating to our fishing line business, which had been a part of our All Other
reporting segment.

The
purchase price paid to us, based on the fair market value of the assets sold, was $44.0
million in cash, $1.0 million of which was placed into escrow as security for certain
post-closing obligations to procure certain materials for the Purchasers. As a result of
the sale of our fishing line business, we applied the $43.0 million in cash proceeds to
pay down the then outstanding balance under Remingtons senior secured revolving
credit facility (the Credit Facility) on February 9, 2004, and the $1.0
million in cash proceeds released from escrow were used to pay down our then outstanding
Credit Facility balance on May 12, 2004. We have made required tax payments resulting from
the sale during 2004. Our after tax proceeds from the sale were
approximately $29.0 million. Pursuant to the Stren Asset Purchase Agreement, we agreed not
to compete with the Purchasers in the fishing line business for a period of five years,
and also agreed to provide the Purchasers with certain transitional services and other
services and rights relating to the sale of our fishing line business which were
completed as of the end of 2004. The indenture for the Companys $200.0 million
aggregate principal amount 10.5% Senior Notes due 2011 (the Notes) required us
to apply the net cash proceeds of the Stren sale in properties and assets that replace the
properties and assets that were the subject of the sale or in properties and assets that
will be used in the businesses of the Company or its Subsidiaries, in each case within 365
days after the date of the sale (February 9, 2005). Any uninvested amount was required to
be used to permanently repay our senior debt in accordance with the terms of the indenture
for the Notes and the Credit Facility agreement. The divestiture of the fishing line
business was consistent with Remingtons focus on its core businesses of hunting and
shooting sports, as well as the law enforcement and military markets. Management believes
that the Stren transaction provides Remington with flexibility to pursue a
number of strategic alternatives in these markets.

On
February 8, 2005, in connection with the passage of the one year requirement to invest in
productive assets, we entered into a fourth amendment under the Credit Facility primarily to permanently

4



Reduce our commitments under the Credit Agreement from $125.0 million to $101.0 million and to amend
the availability requirements.  See Note 12 to the accompanying audited financial statements for additional
details regarding the fourth amendment.

# Financial Information
about Segments and Geographic Areas

We
evaluate our business as three separate reporting segments:

|(1) | Firearms, which designs, manufactures and imports, and markets primarily
          sporting shotguns and rifles;
|--- | ----------------------------------------------------------------------------------------------------------------

|(2) | Ammunition, which designs, manufactures and markets primarily sporting
          ammunition and ammunition reloading components; and
|--- | ------------------------------------------------------------------------------------------------------------------------------------

|(3) | All Other, which includes accessories and other gun-related products, surveillance
          technology products primarily for the government, law enforcement and military
          markets, and the manufacture and marketing of clay targets and powdered metal
          products.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
following table sets forth our net sales, adjusted for the sale of our fishing line
business, for each of our aggregated reporting segments for the periods shown:

|           | Year Ended December 31,
|---------- | -----------------------
|
|           |                        
|Firearms   |                        
|Ammunition |                        
|All Other  |                        
|Total      |                        

See
Note 22 to the accompanying audited consolidated financial statements of Remington,
appearing elsewhere in the report. There are no material assets owned by the Company
outside of our country of domicile.

# NARRATIVE DESCRIPTION OF
BUSINESS BY SEGMENT

# Overview

According
to the American Sports Data, Inc. (ASDI) Superstudy of Sports Participation
for the year 2003, approximately 31 million people in the United States enjoy hunting and
shooting sports. We believe that the hunting and shooting sports industry is stable and
mature. According to the National Sporting Goods Association (NSGA), total
U.S. consumer expenditures for the shooting sports industry in 2003 were approximately
$1.9 billion, comprised of expenditures on shotguns of approximately $480 million, rifles
of approximately $550 million, and ammunition of approximately $820 million.

# Firearms

According
to the NSGA, we had the #1 market share position in units in the U.S. retail market for
both rifles and shotguns in 2003. Based on unit sales volume, our U.S. market share was
approximately 22% and 29% in rifles and shotguns, respectively, with our nearest
competitor holding a U.S. market share of approximately 17% and 15% in rifles and
shotguns, respectively.

Products

Our
firearms product offerings include a comprehensive line of sporting shotguns and rifles,
as well as firearms for the government, military, and law enforcement markets, marketed
predominantly under the Remingtonand Spartan Gunworks
brand names. Our goal has been to market a broad assortment of general-purpose firearms
together with more specialized products that embody Remingtons emphasis on value,
performance and design.

5



Our
most popular shotguns are the Model 870 pump-action shotgun, and
the Model 1100 and Model 11-87auto-loading shotguns. Remington shotguns are offered in versions that are marketed
to both novices and experienced gun owners. Specialty shotguns focus on the deer, turkey
and other specialized hunting markets, recreational and competitive clay target shooting,
and various law enforcement and military applications. We also offer opening price point
shotgun models under the Spartan Gunworksbrand name, versions of which in 2004
were over/under, side-by-side, and single shot shotguns. Retail list prices for our most
popular shotguns range up to $900.

Our
most popular rifles are the Model 700, Model
Seven, and Model 710 centerfire rifles and
the Model 597 and Model 504 rimfire
rifles. To appeal to a broad range of gun owners, we manufacture these rifles in a wide
variety of chamberings, configurations and finishes. Retail list prices for our most
popular rifles range up to $900.

Product Introductions

We
focus our product development efforts on introducing new products that satisfy the need
for specialized, high-performance firearms. In 2004, we introduced the
Model 504bolt action rimfire rifle, the Model
700 CDL, a classic styled line extension of our
famous Model 700line and a number of rifle and shotgun niche
products to address growing specialty end use markets. Also in 2004, we
introduced the Spartan Gunworks product line, our new opening price point line of
shotguns, as well as the Model 870 Modular Combat Shotgun (MCS). Our new shotgun offerings include
the 11-87 Sportsman, a line extension of our 11-87 family of autoloaders, positioned to compete more effectively
in high volume, specialty end use markets. In 2005 to date,
we have introduced a high performance Model 700, the XCR (Xtreme Conditions
Rifle), which is designed to provide durability and corrosion resistance in harsh
environments. Another 700 line extension includes the 700 SPS (Special Purpose
Synthetic), which we have positioned with value added features to increase penetration
in general markets. Our new shotgun offerings include the 11-87 Sportsman, a line
extension of our 11-87 family of autoloaders, positioned to compete more effectively in
high volume, specialty end use markets. Also in 2005, our new Spartan Gunworks line has
been expanded to include a differentiated offering of products, including rifles and
additional shotgun models.

Seasonality

We
produce a broad range of firearms products. Several models of our shotguns are intended
for target shooting, and some models are intended for government, military, and law
enforcement applications; sales of which occur outside the core fall hunting season
(September through December). The majority of our firearms products, however, are
manufactured for hunting use. Because our firearms products are generally used during the
fall hunting season, many of firearms products are sold pursuant to a dating
plan which allows the purchasing distributor to buy the products commencing at the
beginning of our dating plan year in December, 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, we receive orders from our customers, which are designated as firm
orders, although we may permit adjustments in outstanding unfilled orders. We also follow
industry practice in canceling most firearms orders from our distributors that remain
unfilled at the end of each sales year. For further discussion of seasonality and related
matters, see Managements Discussion and Analysis of Financial Condition and
Results of OperationsPurchasing Patterns; Seasonality.

Competition

Product
image, performance, quality and innovation are the primary competitive factors in the
firearms industry, with price and customer service also being factors. Our shotgun
products compete with products offered by O. F. Mossberg & Sons, Inc., USRAC (which
produces Winchester firearms), Browning, and Beretta. Our rifles compete with products
offered by Marlin Firearms Co., Sturm, Ruger & Co., Inc., USRAC, Savage Arms,
Inc. and Browning. We believe that we compete effectively with all of our present
competitors. However, there can be no assurance that we will continue to do so, and our
ability to compete could be adversely affected by our leveraged condition.

6



Manufacturing

Our
facility in Ilion, New York manufactures shotguns, rifles, powdered metal parts, extra
barrels, and gun parts, and also houses a portion of our gunsmith repair services and our
custom gun shop. Our facility in Mayfield, Kentucky manufactures rimfire and centerfire
rifles. To manufacture our various firearm models, we utilize a combination of parts
manufactured from raw materials at the Ilion and Mayfield facilities and components
purchased from independent manufacturers. Quality control processes are employed
throughout the production process, utilizing specifically tailored testing procedures and
analyses. We believe that our firearm manufacturing safety record is among the best in the
U.S. metal manufacturing industry.

Supply of Raw Materials

To
manufacture our various products, we utilize numerous raw materials, including steel,
wood, and plastics, as well as manufactured parts purchased from independent
manufacturers. For a number of our raw materials, we rely on a limited number of suppliers. For
example, a major portion of our requirements for shotgun barrel blanks and wood stocks are
each currently being met by a limited number of vendors. We also import the Spartan Gunworks product
line from a single foreign vendor. Generally, we have had satisfactory,
long-term relationships with these suppliers. We have written purchase agreements with the majority of
our suppliers. Any disruption in our relationships with any of these vendors or reductions
in the production of the material supplied could, in each case, adversely affect our
ability to obtain an adequate supply of the material and could impose additional
operational costs associated with sourcing raw materials from new suppliers. We believe
that we have a good relationship with each of these vendors and do not currently
anticipate any material shortages or disruptions in supply from these vendors. Alternative
sources exist from which we could obtain such raw materials. Nonetheless, we do 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.

The
price and availability of production 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, commodity prices, and governmental
regulations. Specifically, our manufacturing sites experienced cost increases related to
steel purchases and energy prices (particularly in utility costs). These increases were
directly related to supply shortages due to foreign markets demand for domestic scrap and
increases in energy costs. Industry competition and the timing of price increases by suppliers limits to some
extent our ability and the ability of other industry participants to pass raw material
cost increases on to customers. See Managements Discussion and Analysis of
Financial Condition and Results of OperationsLiquidity and Capital
ResourcesFinancial Instruments and Quantitative and Qualitative
Disclosures about Market Risk.

Service and Warranty

We
support service and repair facilities for all of our firearms products in order to meet
the service needs of our distributors, customers and consumers nationwide. New Remington
firearms products purchased in North America, with the exception of our Spartan
Gunworks product line which is warranted by its third party vendor, 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. Warranty expense was $2.8 million, $2.8
million, and $3.2 million in 2004, 2003, and 2002, respectively.

# Ammunition

According
to the SMRG, we had the #1 market share position in the U.S. ammunition market in 2003.
Based on sales volume, our market share was approximately 33%, with our nearest competitor
holding a market share of approximately 27%.

7



Products

Our
ammunition product offerings include a comprehensive line of sporting ammunition and
ammunition reloading components, as well as ammunition for the government, military, and
law enforcement markets, which are marketed predominantly under the Remington brand
name, as well as the UMC® brand name. In general, Remington branded products
compete in both the middle and high performance categories, while the UMC brand competes in the
promotionally priced ammunition category.

We
market an extensive line of products that include everything from high volume,
promotionally priced, ammunition products to premium, high performance products that meet
the needs of the most discriminating hunters and shooters. Those products include, among
other things, shotgun shells, centerfire ammunition for use in rifles and handguns, and
..22 caliber rimfire ammunition. We also produce and market sporting ammunition components
used by smaller ammunition manufacturers, as well as by individual consumers engaged in
the practice of reloading centerfire cases or shotgun shells.

Our
most popular ammunition products include Core-Lokt centerfire rifle ammunition, the brand
share leader in the category, Premier STS and Nitro 27 target loads, which management
believes are widely viewed as the performance leader in trap, skeet and sporting clays
shooting by virtue of their combination of superior first firing performance and
reloadability. Recent ammunition product introductions have focused on developing
exclusive or proprietary technology with application to performance oriented hunting
segments.

Product Introductions

We
focus our product development efforts on introducing new products that satisfy the need
for specialized, high-performance ammunition. In 2004, we introduced a new line of Managed
Recoil ammunition in both centerfire rifle and shotshell configurations which reduce
recoil for deer hunters. We expanded our Premier Accutip offering to include a line of
ammunition specific to varmint hunters. Both our Nitro Steel and Sportsman Steel waterfowl
loads were upgraded to include new High Velocity specifications providing hunters with
higher energy payloads and long range performance improvement. We also expanded our
BuckHammer Deer slug line to include both 12 gauge Magnum and 20 gauge offerings. Finally
we expanded our retail presence through the introduction of a comprehensive line of
Remington branded prepackaged centerfire ammunition components for consumers who reload
their own ammunition.

Competition

Price,
service, quality and product innovation are the primary competitive factors in the
ammunition industry. In the ammunition market, we compete with the Winchester division of
Olin Corporation, and the Federal Cartridge Co. and CCI units of Alliant Techsystems, Inc.
Additionally, many imported ammunition brands compete in the domestic market focusing
primarily on price to maintain access and drive sales. We believe that we compete
effectively with all of our present competitors. However, there can be no assurance that
we will continue to do so, and our ability to compete could be adversely affected by our
leveraged condition.

Seasonality

Seasonality
in the ammunition segment revolves primarily upon hunting seasons for certain of our
hunting and shooting sports products, while other products, like shotshell target loads
and pistol and revolver ammunition, do not experience much seasonality. We offer extended
payment terms on select ammunition categories primarily as a competitive measure. For
further discussion of seasonality and related matters, see Managements
Discussion and Analysis of Financial Condition and Results of OperationsPurchasing
Patterns; Seasonality.

8



Manufacturing

Our
facility in Lonoke, Arkansas manufactures ammunition and ammunition components. Primer
mixture manufactured on site is combined with parts and raw materials to produce
ammunition. Some parts are manufactured on site, while other components are purchased from
independent manufacturers. Throughout the various processes, our technicians continuously
monitor and test the velocity, pressure and accuracy levels of the ammunition. We believe
that our ammunition manufacturing safety record is among the best in the U.S. ammunition
industry.

Supply of Raw Materials

To
manufacture our various products, we utilize numerous raw materials, including steel, lead, brass, powder and plastics.
For a number of our raw materials, we rely on a limited number of suppliers. For example, our brass strip requirements
are being serviced primarily by two vendors, our requirements for smokeless powder are primarily met by three suppliers,
who are the only sources of smokeless powder in the United States and Canada, and our requirements for lead are being serviced
primarily by two vendors.   Generally, we have had satisfactory, long-term relationships with our suppliers. We have
written purchase agreements with the majority of our suppliers. Any disruption in our relationships with any
of these vendors or reductions in the production of the material supplied could, in each
case, adversely affect our ability to obtain an adequate supply of the material and could
impose additional operational costs associated with sourcing raw materials from new
suppliers. We believe that we have a good relationship with each of these vendors and do
not currently anticipate any material shortages or disruptions in supply from these
vendors. Alternative sources exist from which we could obtain such raw materials.
Nonetheless, we do 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.

The
price and availability of production 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, commodity prices, and governmental
regulations. Specifically, our manufacturing sites experienced cost increases related to
purchases of base metals related to our business and increased energy costs. These increases were directly related to
supply shortages due to foreign markets demand for domestic scrap and increases in energy costs. Industry
competition and the timing of price increases by suppliers limits to some extent our
ability and the ability of other industry participants to pass raw material cost increases
on to customers. See Managements Discussion and Analysis of
Financial Condition and Results of OperationsLiquidity and Capital
ResourcesFinancial Instruments and Quantitative and Qualitative Disclosures about Market Risk.

# All Other Product Lines

Accessories.
          We market hunting and shooting accessories (including safety and security
          products, parts, gun care and cleaning products, clips, food consumables, and
          folding and collectible knives). We have licensed the Remington mark to
          certain third parties that manufacture and market sporting and outdoor products
          that complement our product line. Currently, the Remington mark is
          licensed for use on, among other things, sporting and outdoor apparel, caps, gun
          cases, tree stands, wildlife feeders, sporting dog equipment, air guns, game
          decoys & calls, and various other nostalgia/novelty goods. We strive to
          ensure that the quality, image and appeal of these licensed products are
          consistent with the high-quality image of our core products. These licenses
          generally grant an exclusive right to sell a specific product category, with the
          standard term being three years, with a three year renewal based on performance.
          We believe that these licenses increase the market recognition of the
          Remingtontrademark and enhance our ability to market core products and
          that licensing facilitates new cross-marketing promotional opportunities and
          generates income. Some of our licensing efforts are carried out under terms
          established in the Trademark Settlement Agreement described below in
          Other Corporate InformationPatents, Trademarks, and
          Copyrights.

Powdered
Metal Products. We market commercial powdered metal parts for the automotive, sporting
goods, office equipment, and hardware industries. These items are manufactured at our
Ilion, New York facility.

9



Clay
Targets. We produce a complete line of clay targets for use in trap, skeet and
sporting clays shooting activities, marketed under the STS brand
name. Targets are manufactured from a mixture of limestone and petroleum pitch. Our clay
targets are manufactured at two facilities located at Ada, Oklahoma and Findlay, Ohio.

Technology
Products.We have entered into an agreement to distribute surveillance security products to the federal
agency and law enforcement markets. These items are manufactured by another party, and we are the
exclusive distributor for them in the United States, certain of its territories, and
Canada.

# Unconsolidated Joint
Venture

Remington
ELSAG Law Enforcement Systems, LLC (RELES).We are 50% joint venture partners in an
entity that sells and services license plate reading technology to state and local law
enforcement agencies, as well as certain federal agencies.

# OTHER CORPORATE
INFORMATION

# Backlog Information

As
of February 28, 2005, the backlog of unfilled total orders was approximately $75.8 million
compared to $88.7 million as of February 29, 2004.

# Customer Concentration

Approximately
16% of our total 2004 sales consisted of sales made to one customer, Wal-Mart. National
accounts generally provide convenient access for hunting and shooting consumers to our
products but carry a more limited array of products and are more seasonal in sales. Our
sales to Wal-Mart are not governed by written contracts. Although we believe our
relationship with Wal-Mart is good, the loss of this customer or a substantial reduction
in sales to this customer could adversely affect our financial condition, results of
operations or cash flows. No other single customer comprises more than 10% of total sales.
No material portion of our business is subject to renegotiation of profits or termination
of contracts at the election of a governmental purchaser.

Foreign
sales were approximately 5% for 2004, 6% in 2003, and 5% in 2002 of our total net sales.
Our sales personnel and manufacturers sales representatives market to foreign
distributors generally on a nonexclusive basis and for a one-year term.

# Marketing and
Distribution

Our
products are distributed throughout the United States and in over 55 other countries. In
the United States, Remington products are distributed primarily through a
network of wholesalers and retailers who purchase the product directly from us for resale
to gun dealers and end users, respectively. The end users include sportsmen, hunters,
target shooters, gun collectors, and members of law enforcement and other government
organizations.

Our
products are marketed and sold primarily through manufacturers sales
representatives. In 2004, approximately 70% of our sales consisted of sales made through
our five manufacturers sales representative groups, who market and sell principally
to wholesalers, dealers and regional chains. These 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 and sell our 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 merchants and are less seasonal in sales.

10



Our
in-house sales force primarily markets our product lines directly to national accounts
(consisting primarily of mass merchandisers) and to federal, state and local government
agencies.

# Patents, Trademarks, and
Copyrights

Our
operations are not dependent upon any single trademark other than the Remington
word mark and the Remington logo mark. Some of the other trademarks that we use,
however, are nonetheless identified with and important to the sale of our products.
Generally, registered trademarks have perpetual life, provided that they are renewed on a
timely basis and continue to be properly used as trademarks. Our business is not dependent
to a material degree on patents, copyrights, or trade secrets. We do not believe that the
expiration of any of our patents will have a material adverse effect on our financial
condition or our results of operations. We do not believe that any of our licenses to
third-party intellectual property are material to our business, taken as a whole.

In
June 2000, we formed RA Brands, L.L.C., a Delaware limited liability company and
wholly-owned subsidiary of Remington to which Remington transferred ownership of all of
its patents, trademarks and copyrights. RA Brands, L.L.C. owns all of the above-referenced
trademarks and licenses them to Remington at an arms length royalty rate.
We believe that we have adequate policies and procedures in place to protect our
intellectual property.

While
we own the Remington marks (and registrations thereof) for use in our firearms and
ammunition product lines and certain related products associated with hunting, wildlife
and the outdoors, Rayovac Corporation, with its September 2003 purchase of Remington
Products Company, L.L.C., and DESA Industries, Inc., which was purchased by HIG DESA Acquisition, L.L.C., all
unrelated companies, claim rights to the mark with respect to certain other product areas, particularly
personal care products (including electric razors) and lawn and garden products.

Pursuant to a Trademark Settlement Agreement, dated December 5, 1986, between us
and Remington Products, we agreed with Remington Products as follows:

| | 
 Remington Licensing Corporation, a Delaware corporation owned equally by us and
Remington Products, owns the Remington marks in the United States with respect to
products of mutual interest to us and to Remington Products.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
 Remington Licensing Corporation licenses the Remington marks on a
royalty-free basis to us and Remington Products for products in our and their respective
non-core markets.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
 We are restricted in our ability to expand our use of the Remington mark beyond what has been detailed
in the trademark agreement.
| | -------------------------------------------------------------------------------------------------------------------------------------

| | 
 If certain bankruptcy or insolvency-related events occur with respect to either us
or Remington Products, the bankrupt or insolvent party may be contractually required to
sell its interest in Remington Licensing corporation to the other party at book value or
fair market value, depending on the circumstances. While in some cases this requirement
may not be enforceable under the U.S. Bankruptcy Code, if Remington Products came to own
all of Remington Licensing Corporation, that could provide Remington Products with greater
leverage over our licensing relationship with Remington Licensing Corporation for the
non-core products discussed above.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Research and Development

We
maintain an ongoing research and development program, with approximately 40 employees
engaged in these efforts at our Elizabethtown, Kentucky facility as of February 28, 2005.
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
our competitors. Our research and development program involves an in-house team of
engineers and technicians working with operations personnel using tools such as
computer-assisted design. 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. We
continue to introduce new products employing

11



innovations in design, manufacturing and
safety in both firearms and ammunition, as outlined in the Product Introductions
sections above.

Research
and development expenditures for our continuing operations for the years ended December
31, 2004, 2003, and 2002 amounted to approximately $6.1 million in each year.

# Regulation

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

In
September 2004, the United States Congress failed to renew a federal law with a ten-year
term which generally prohibited the manufacture of certain firearms defined under that
statute as assault weapons as well as the sale or possession of assault
weapons except for those that, prior to the laws enactment, were legally in
the owners possession. The now-expired law expressly exempted approximately 650
models of firearms that are generally used by hunters and sporting enthusiasts. None of
our current firearms products are considered to be assault weapons under that
federal law or existing state law. 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.

Bills
have been introduced in Congress to establish, and to consider the feasibility of
establishing, a nationwide database recording so-called ballistic images of
ammunition fired from new guns. Should such a mandatory database be established, the cost
to Remington and its customers could be significant, depending on the type of firearms and
ballistic information included in the database. To date, only two states have established
such registries, and neither state includes such imaging data from long guns,
although there can be no assurance that these (or other states) will not require the
inclusion of such imaging in the future. Proposed legislation in at least one other state
would be applicable to Remingtonrifles, and would call for imaging of
both cartridges and projectiles. 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. Some of
these bills would apply to ammunition of the kind we produce, and accordingly, if enacted,
could have a material adverse effect on our business. We believe that existing regulations
applicable to ammunition have not had such an effect.

State
and local laws and regulations may place additional restrictions on gun ownership and
transfer, which vary significantly from jurisdiction to jurisdiction. 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
numerous jurisdictions presently have mandatory waiting periods for the sale of handguns
(and some for the sale of long guns as well), there are currently few restrictive state
regulations applicable to handgun ammunition. However, Remington firearms are covered
under several recently enacted state regulations requiring guns to be sold with internal
or external locking mechanisms. Some states are considering mandating certain design
features on safety grounds, most of which would be applicable only to handguns. We believe
that hunter safety issues may affect sales of firearms, ammunition and other
shooting-related products. In the northeastern United States, for example, some
communities

12



permit deer hunters to use only shotguns (which have a shorter average range
than rifles) to minimize the possibility of shooting accidents in more densely populated
areas.

We
believe that existing federal and state regulation regarding firearms and ammunition has
not had a material adverse effect on our sales of these products to date.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 our business whether directly or
by placing additional burdens on those who distribute and sell our products.

# Environmental Matters

Our
operations are subject to a variety of federal, state and local environmental laws and
regulations which govern, among other things, the discharge of hazardous materials to the
air and water, handling, treatment, storage and disposal of such materials, as well as
remediation of contaminated soil and groundwater. We have in place programs that monitor
compliance with these requirements and believe our operations are in material compliance
with them. In the normal course of our manufacturing operations, we are subject to
occasional governmental proceedings and orders pertaining to waste disposal, air emissions
and water discharges into the environment. We believe that we are 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 our business. Under
the terms of the Asset Purchase Agreement (the Purchase Agreement) pursuant to
which certain assets of E.I. DuPont Nemours & Company (DuPont) and its
affiliates (collectively, the Sellers) were acquired in 1993 (the
Acquisition) to constitute Remington in its present form, DuPont agreed to
retain responsibility for pre-closing environmental liabilities. In connection with the
Acquisition, Remington also entered into an agreement with Dupont with respect to
cooperation and responsibility for specified environmental matters. See
Certain Indemnities.

There
are various pending proceedings associated with environmental liability naming the Company
for which the Sellers have accepted liability. Our obligation on these cases is not
significant for disclosure purposes.

During
2003 and 2004, Remington and DuPont completed a remediation project at the Lonoke,
Arkansas facility addressing some fourteen Solid Waste Management Units. Upon completion
of the final remediation report in January 2005, Remington was awarded a Ready for
Reuse certificate from the EPA and the Arkansas Department of Environmental Quality.

Based
on information known to us, we do not expect current environmental regulations or
environmental proceedings and claims to have a material adverse effect on our results of
operations, financial condition or cash flows. However, it is not possible to predict with
certainty the impact 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 some federal
environmental laws is under certain circumstances 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 or that unknown conditions will not be discovered and that
any such development would not have a material adverse effect on our business.

# Employees

As
of February 28, 2005, we employed approximately 2,400 full-time employees of whom nearly
2,150 were engaged in manufacturing, approximately 200 in sales and general administration
and approximately 50 in research and development. An additional work force of temporary
employees is engaged during peak production schedules at certain of our manufacturing
facilities.

The
United Mine Workers of America (UMWA) represents approximately 900 hourly
employees at our plant in Ilion, New York. The collective bargaining agreement with UMWA
was renegotiated effective October 2002 with the contract expiring in September 2007.
We also have a labor agreement with Local 2021 of the United Automobile, Aircraft and
Agricultural Implement Workers of America, U.A.W., which represents less than 10 hourly
employees at our plant in Findlay, Ohio, which agreement is terminable by either party on
notice. Employees at our Lonoke, Arkansas, Mayfield, Kentucky and Ada

13



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 we believe that
our relations with our employees are satisfactory.

# Available Information

Our
internet address is www.remington.com. We make available, free of charge, on our
internet website the latest annual report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and amendments to those reports filed pursuant to Section
15(d) of the Exchange Act as soon as reasonably practicable after filing with the
Securities and Exchange Commission (SEC) via a link on our website to our page
in the SEC electronic filing database.

14



Item 2. PROPERTIES

Our
manufacturing operations are currently conducted at five owned facilities. The following
table sets forth selected information regarding each of these facilities:

|Plant              |  | Product                                      |  | Segment    |  | Square Feet  (in thousands) | 
|------------------ |  | -------------------------------------------- |  | ---------- |  | --------------------------- | 
|Ilion, New York    |  | Shotguns; centerfire and rimfire rifles      |  | Firearms   |  | 1,000                       | 
|Lonoke, Arkansas   |  | Shotshell; rimfire and centerfire ammunition |  | Ammunition |  | 750                         | 
|Mayfield, Kentucky |  | Rimfire and centerfire rifles                |  | Firearms   |  | 44                          | 
|Findlay, Ohio      |  | Clay targets                                 |  | All Other  |  | 40                          | 
|Ada, Oklahoma      |  | Clay targets                                 |  | All Other  |  | 21                          | 

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

Our
headquarters and related operations are conducted in an office building that we own in
Madison, North Carolina.

Research
and development is conducted at a facility that we own in Elizabethtown, Kentucky.

All
of the real property owned by us has been mortgaged to secure our obligations under our
credit agreement.

We
also lease a facility from and contract for distribution services with our major third
party contractors.

15



Item 3. LEGAL PROCEEDINGS

Under
the terms of the asset Purchase Agreement, the Sellers retained liability for, and are
required to indemnify us against:

| | 
 all product liability cases and claims involving products that had not been
discontinued as of the Acquisition but relating to occurrences that took place prior to
the Acquisition;
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
 all product liability cases and claims (whenever they may arise) involving
discontinued products; and
| | --------------------------------------------------------------------------------------------------------

| | 
 environmental liabilities based on conditions existing at the time of the Acquisition.
| | -----------------------------------------------------------------------------------------

These
indemnification obligations of the Sellers are not subject to any survival period
limitation. We have no current information on the extent, if any, to which the Sellers
have insured these indemnification obligations. Except for certain cases and claims
relating to shotguns as described below, and except for all cases and claims relating to
products discontinued prior to the Acquisition, we generally bear financial responsibility
for the costs of product liability cases and claims relating to occurrences after the
Acquisition and are required to indemnify the Sellers against such cases and claims. See
Certain Indemnities.

The
main types of legal proceedings include:

| | 
 Product liability litigation filed by customers
| | --------------------------------------------------

| | 
 Product liability litigation filed by municipalities.
| | --------------------------------------------------------

| | 
 Environmental litigation.
| | ----------------------------

# Product Liability
Litigation

Since
December 1, 1993, we have maintained insurance coverage for product liability claims
subject to certain self-insured retentions on a per-occurrence basis for personal injury
or property damage relating to occurrences arising after the Acquisition. We believe that
our current product liability insurance coverage for personal injury and property damage
is adequate for our needs. Our current product liability insurance policy runs from
December 1, 2004 through November 30, 2005 and provides for a self-insured retention of
$0.5 million per occurrence up to the first $2.0 million in claims, with a
self-insured retention of $0.8 million per occurrence thereafter. The current policy has a
batch clause endorsement, which in general provides that if a batch of our products were
to be defective, our liability for product liability expenses and damages related to the
entire batch would be capped at the amount of self-insured retention for a single
occurrence. The policy excludes from coverage any pollution-related liability. Based in
part on the nature of our products, and the continued impact on the insurance market of
the events of September 11, 2001, there can be no assurance that we will be able to obtain
adequate product liability insurance coverage upon the expiration of the current policy.
Certain of our current excess insurance coverage expressly excludes actions brought by
municipalities as described below.

As
a result of contractual arrangements, we manage the joint defense of product liability
litigation involving Remingtonbrand firearms and our ammunition products for both
Remington and the Sellers. As of December 31, 2004, 17 individual bodily injury cases and
claims were pending, primarily alleging defective product design, defective manufacture
and/or failure to provide adequate warnings; some of these cases seek punitive as well as
compensatory damages. We have previously disposed of a number of other cases involving
post-Acquisition occurrences by settlement. Of the individual cases and claims pending as
of December 31, 2004, five involve matters for which the Sellers retained liability
and are required to indemnify us. The remaining 12 pending cases involve post-Acquisition
occurrences for which we bear responsibility under the Purchase Agreement; the Sellers
have some responsibility for the costs of approximately one of these cases involving
certain shotguns.

The
relief sought in individual cases includes compensatory and, sometimes, punitive damages.
Not all complaints or demand letters expressly state the amount of damages sought. As a
general matter, when specific amounts are provided, compensatory damages sought range from
less than $75,000 to more than $10 million, while demands for punitive damages may range
from less than $500,000, to as much as $100

16



millin of the 12 individual post-Acquisition claims pending as of December 31, 2004,
claimants purport to seek approximately $23.5 million in compensatory and an unspecified amount of punitive damages. In the
Companys experience, initial demands do not generally bear a reasonable relationship
to the facts and circumstances of a particular matter, and in any event, are typically
reduced significantly as a case proceeds. The Company believes that its accruals for
product liability cases and claims, as described below, are a superior quantitative
measure of the cost to it of product liability cases and claims.

At
December 31, 2004, our accrual for product liability cases and claims was $13.4 million.
The amount of our accrual for product liability cases and claims is based upon estimates
developed as follows. We establish reserves for anticipated defense and disposition costs
to us of those pending cases and claims for which we are financially responsible. Based on
those estimates and an actuarial analysis of actual defense and disposition costs incurred
by us with respect to product liability cases and claims in recent years, we determine the
estimated defense and disposition costs for unasserted product liability cases and claims.
We combine the estimated defense and disposition costs for both pending and unasserted
cases and claims to determine the amount of our accrual for product liability cases and
claims. It is reasonably possible additional experience could result in further increases
or decreases in the period in which such information is made available. We believe that
our accruals for losses relating to such cases and claims are adequate. Our accruals for
losses relating to product liability cases and claims include accruals for all probable
losses the amount of which can be reasonably estimated. Based on the 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, our 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 well as the type of firearms products that we
make), we do not believe with respect to product liability cases and claims that any
reasonably possible loss exceeding amounts already recognized through our accruals has
been incurred.

Because
our assumption of financial responsibility for certain product liability cases and claims
involving pre-Acquisition occurrences was limited to an amount that has now been fully
paid, with the Sellers retaining liability in excess of that amount and indemnifying us in
respect of such liabilities, and because of our accruals with respect to such cases and
claims, we believe that product liability cases and claims involving occurrences arising
prior to the Acquisition are not likely to have a material adverse effect upon our
financial condition, results of operations or cash flows. Moreover, although it is
difficult to forecast the outcome of litigation, we do 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, our 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 well as the type of firearms products that we
make), that the outcome of all pending post-Acquisition product liability cases and claims
will be likely to have a material adverse effect upon our financial condition, results of
operations or cash flows. Nonetheless, in part because the nature and extent of liability
based on the manufacture and/or sale of allegedly defective products (particularly as to
firearms and ammunition) is uncertain, there can be no assurance that our resources will
be adequate to cover pending and future product liability occurrences, cases or claims, in
the aggregate, or that a material adverse effect upon our financial condition, results of
operations or cash flows will not result therefrom. Because of the nature of our products,
we anticipate that we will continue to be involved in product liability litigation in the
future. Because of the potential nature of injuries relating to firearms and ammunition,
certain public perceptions of our products, and recent efforts to expand liability of
manufacturers of firearms and ammunition, product liability cases and claims, and
insurance costs associated with such cases and claims, may cause us to incur material
costs.

Municipal
Litigation

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

17



As a general matter, these lawsuits name several dozens of firearm industry participants
as defendants, and claim that the defendants distribution practices allegedly
permitted their products to enter a secondary market, from which guns can be obtained by
unauthorized users; that defendants fail to include adequate safety devices in their
firearms to prevent unauthorized use and accidental misuse; and that defendants
conduct has created a public nuisance. Plaintiffs generally seek injunctive relief and
money damages (consisting of the cost of providing certain city services and lost tax and
other revenues), and in some cases, punitive damages, as well.

Two
of these cases (City of Boston and City of St. Louis) have been dismissed
against all defendants, while the third has been limited to claims against handgun
manufacturers (City of New York).

To date, 15 municipal lawsuits have been dismissed and are no longer subject to appeal.
Three more dismissals, including that involving local California governments, are on
appeal. The remaining lawsuits are in various stages of motion practice and discovery. A
majority of states have enacted some limitation on the ability of local governments to
file such lawsuits against firearms manufacturers. In addition, similar legislation
limiting such lawsuits on a federal level has been proposed in both houses of Congress. At
the federal level, in April 2004, the House of Representatives approved legislation that
would limit lawsuits against firearms manufacturers based on the criminal or unlawful acts
of third parties. However, similar legislation pending in the Senate was recently
defeated.  New versions of those bills were introduced in February 2005.

In
2000 and 2001, Remington received and replied to civil investigative demands and
subpoenae duces tecum from the State of Connecticut and the Federal Trade
Commission (FTC). Remington, which makes only long guns, does not compete with
Smith & Wesson, which makes handguns. The materials provided to these authorities were
returned to Remington within the past year, and it is the Companys understanding
that the investigations have ended without any action being taken.

In
recognition of and support of certain legal and legislative initiatives, the shooting
sports industry established the Hunting and Shooting Sports Heritage Fundof which
the Company is a member. Contributions expensed in 2004, 2003, and 2002 were $0.5 million,
zero, and $0.8 million, respectively.

# Certain Indemnities

As
of the closing of the Acquisition in December 1993 under the Purchase Agreement, we
assumed:

| | 
 a number of specified liabilities, including certain trade payables and contractual
obligations of the Sellers;
| | ------------------------------------------------------------------------------------------------------------------

| | 
 limited financial responsibility for specified product liability claims relating to
disclosed occurrences arising prior to the Acquisition;
| | ----------------------------------------------------------------------------------------------------------------------------------------------

| | 
 limited financial responsibility for environmental claims relating to the operation of the business
prior tot he Acquisition; and
| | ------------------------------------------------------------------------------------------------------------------------------------

| | 
 liabilities for product liability claims relating to occurrences after the
Acquisition, except for claims involving discontinued products.
| | ---------------------------------------------------------------------------------------------------------------------------------------------

All
other liabilities relating to or arising out of the operation of the business prior to the
Acquisition are excluded liabilities (the Excluded Liabilities), which the
Sellers retained. The Sellers are required to indemnify Remington and its affiliates in
respect of the Excluded Liabilities, which include, among other liabilities:

| | 
 liability in excess of our limited financial responsibility for environmental claims
and disclosed product liability claims relating to pre-closing occurrences;
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
 liability for product liability litigation related to discontinued products; and
| | -----------------------------------------------------------------------------------

| | 
 certain tax liabilities, and employee and retiree compensation and benefit liabilities.
| | ------------------------------------------------------------------------------------------

The
Sellers overall liability in respect of their representations, covenants and the
Excluded Liabilities under the Purchase Agreement, excluding environmental liabilities and
product liability matters

18



relating to events occurring prior to the purchase but not disclosed, or relating to discontinued products, is limited to $324.8
 million. With a few exceptions, the Sellers representations under the Purchase Agreement have
expired. We made claims for indemnification involving product liability issues prior to
such expiration. See Legal Proceedings.

In
addition, the Sellers agreed in 1996 to indemnify us against a portion of certain product
liability costs involving various shotguns manufactured prior to 1995 and arising from
occurrences on or prior to November 30, 1999. These indemnification obligations
of the Sellers relating to product liability and environmental matters (subject to a
limited exception) are not subject to any survival period limitation, deductible or other
dollar threshold or cap. We and the Sellers are also party to separate agreements setting
forth agreed procedures for the management and disposition of environmental and product
liability claims and proceedings relating to the operation or ownership of the business
prior to the Acquisition, and are currently engaged in the joint defense of certain
product liability claims and proceedings. See Legal Proceedings.

19



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 2004.

20



# PART II

# Item 5. MARKET FOR
REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market  Information.
There  is  no  established   public  trading  market  for  either  Holding's  or
Remington's common stock.

Holders.       
          As of February 28, 2005, there were 31 holders of the outstanding common stock
          of Holding. The only holder of Remingtons common stock is Holding.

Dividends.       
          Holding did not pay any dividends during 2003 or 2004. In February 2003, Holding
          repurchased 722,981 of the outstanding shares of common stock of Holding, in an
          aggregate amount of $163.7 million, with consideration consisting of $130.8
          million in cash and $32.9 million aggregated principal amount of senior notes of
          Holding (the Holding Notes). The Clayton & Dubilier Private Equity Fund IV
          Limited Partnership (C&D Fund IV) holds all of the Holding
          Notes, which as of December 31, 2004 have a carrying value of $35.0 million. In
          connection with funding the repurchase of Holdings common stock, Remington
          paid a $100.0 million dividend to Holding. The dividends paid to Holding were
          used to repurchase common stock (see description above). Remington also paid
          dividends to Holding in an aggregate amount of $3.3 million during 2003 to fund
          interest payments on the Holding Notes. In 2004, Remington paid dividends to
          Holding in an aggregate amount of $2.2 million to fund interest payments on the
          Holding Notes.

As
Holding has no separate operations, its ability to pay dividends or interest on the
Holding Notes is dependent upon the extent to which it receives dividends or other funds
from Remington or additional capital from shareholders. The declaration and payment of
future dividends by either Remington or Holding, 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, dated as of January 24, 2003, as amended through February 8, 2005,
among Remington, Wachovia Bank, N.A., Fleet Capital Corporation, National City Commercial
Finance, Inc. and certain other lenders (the Credit Agreement), governing the
Credit Facility,and the indenture (the Indenture) for the Notes, which
currently limit the payment of cash dividends to shareholders, as well as restrictions, if
any, imposed by other indebtedness outstanding from time to time.

See
Managements Discussion and Analysis of Financial Condition and Results of
Operations  Liquidity and Capital Resources and Note 12 to our consolidated
financial statements for the year ended December 31, 2004 appearing elsewhere in this
report.

21



The
following table sets forth certain selected financial information derived from our
consolidated financial statements as audited by our independent registered public accounting firm,
PricewaterhouseCoopers LLP, for each of the years in the five-year period ended December
31, 2004. On February 9, 2004, we completed the sale of our fishing line business, and
reclassified the results as discontinued operations for all periods presented. The table
should be read in conjunction with Managements Discussion and Analysis of
Financial Condition and Results of Operations and our consolidated financial
statements and related notes and other financial information included elsewhere in this
report.

|                                                                         |  | 2000         |      | 2001         |      | 2002            |     | 2003            |      | 2004         |    
|------------------------------------------------------------------------ |  | ------------ | ---- | ------------ | ---- | --------------- | --- | --------------- | ---- | ------------ | ---
|(dollars in millions)                                                    | 
|Income Statement Data:                                                   | 
|Net Sales (1)                                                            |  | $       371  | .1   | $       365  | .7   | $       383     | .9  | $       360     | .7   | $       393  | .0 
|Sales Growth (Loss) Percentage                                           |  | (3           | .2%) | (1           | .5%) | 5               | .0% | (6              | .0%) | 9            | .0%
|Gross Profit                                                             |  | 122          | .0   | 99           | .4   | 110             | .8  | 90              | .5   | 90           | .5 
|Gross Profit Percentage                                                  |  | 32           | .9%  | 27           | .2%  | 28              | .9% | 25              | .1%  | 23           | .0%
|Operating Expenses                                                       |  | 77           | .6   | 65           | .9   | 69              | .8  | 75              | .1   | 69           | .8 
|Operating Profit                                                         |  | 44           | .4   | 33           | .5   | 41              | .0  | 15              | .4   | 20           | .7 
|Interest Expense (2)                                                     |  | 11           | .7   | 12           | .6   | 10              | .5  | 23              | .0   | 24           | .6 
|Income (Loss) from Continuing Operations before Taxes                    |  | 32           | .7   | 20           | .9   | 30              | .5  | (7              | .6)  | (3           | .9)
|Income Tax Expense (Benefit) from Continuing Operations (3)              |  | 12           | .6   | 8            | .0   | 12              | .0  | (3              | .0)  | 13           | .7 
|Income from Discontinued Operations, net of tax (4)                      |  | (0           | .2)  | 0            | .8   | 2               | .9  | 1               | .4   |              | -- 
|Gain on Disposal of Discounted Operations, net of tax (5)                |  | -            | -    | -            | -    | -               | -   | -               | -    | 13           | .6 
|Net Income (Loss)                                                        |  | 19           | .9   | 13           | .7   | 20              | .0  | (3              | .2)  | (4           | .0)
|Operating and Other Financial Data:                                      |  |              |      |              |      |                 |     |                 |      |              |    
|Depreciation and Amortization (6)                                        |  | $         16 | .4   | $         16 | .9   | $         10    | .0  | $          9    | .5   | $          9 | .2 
|Other Non-Cash Charges (7)                                               |  | 1            | .2   | 1            | .1   | 1               | .0  | 3               | .4   | 7            | .1 
|Nonrecurring and Restructuring Items (8)                                 |  | 0            | .5   | 1            | .3   | 2               | .1  | 0               | .4   | (12          | .7)
|Special Payments (9)                                                     |  | 6            | .9   | --           |      | 1               | .8  | 4               | .5   | --           |    
|Gross Capital Expenditures                                               |  | $         17 | .4   | $          4 | .2   | $          7    | .5  | $          6    | .9   | $          9 | .5 
|Other Unusual Charges (10)                                               |  |              | --   |              | --   |                 | --  |                 | 2.2  |              | -- 
|Adjusted EBITDA related to Discontinued Operations (11)                  |  | 4            | .9   | 5            | .2   | 6               | .7  | 4               | .1   | 0            | .2 
|Cash flows provided by (used in):                                        |  |              |      |              |      |                 |     |                 |      |              |    
|Operating activities                                                     |  | $         22 | .3   | $         50 | .9   | $         14    | .1  | $        (7     | .3)  | $        (11 | .8)
|Investing activities                                                     |  | (17          | .4)  | (4           | .2)  | (7              | .5) | (6              | .9)  | 35           | .1 
|Financing activities                                                     |  | (28          | .5)  | (35          | .9)  | (19             | .6) | 14              | .2   | (23          | .3)
|Balance Sheet Data (end of period):                                      |  |              |      |              |      |                 |     |                 |      |              |    
|Working Capital (12)                                                     |  | $       109  | .9   | $         91 | .1   | $         90    | .8  | $       120     | .0   | $       116  | .6 
|Total Assets                                                             |  | 361          | .9   | 332          | .1   | 334             | .6  | 362             | .3   | 351          | .6 
|Total Debt (13)                                                          |  | 157          | .0   | 115          | .3   | 101             | .1  | 230             | .5   | 203          | .5 
|Credit Facility                                                          |  | 64           | .5   | 25           | .0   | 11              | .0  | 28              | .3   | 1            | .8 
|Shareholders' Equity                                                     |  | 90           | .1   | 103          | .6   | 112             | .2  | 12              | .4   | 10           | .6 
|Consolidated EBITDA (as defined in the Indenture) and Credit Statistics: |  | 2000         |      | 2001         |      | 2002            |     | 2003            |      | 2004         |    
|Consolidated EBITDA (as defined in the Indenture) (11) (14)              |  | $         73 | .0   | $         56 | .8   | $         61    | .1  | $         39    | .5   | $         38 | .4 
|Consolidated Interest Expense (as defined in the Indenture) (15)         |  | $         13 | .6   | $         13 | .6   | $            10 | .4  | $            23 | .0   | $         22 | .8 
|Consolidated Coverage Ratio (as defined in the Indenture) (16)           |  | 5.4x         |      | 4.2x         |      | 5.9x            |     | 1.7x            |      | 1.7x         |    
|Ratio of Earnings to Fixed Charges (17)                                  |  | 3.0x         |      | 2.4x         |      | 3.7x            |     | (17)            |      | (17)         |    

22



|(1) | Presented net of federal excise taxes. Federal excise taxes were $32.5
          million, $32.1 million, $33.5 million, $31.2 million and $33.5 million for the
          years ended December 31, 2000, 2001, 2002, 2003 and 2004, respectively.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Interest expense included in discontinued operations is $3.9 million, $2.7
          million, $1.8 million, $1.8 million, and $0.1 million, for the years ended
          December 31, 2000, 2001, 2002, 2003 and 2004, respectively.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The year ended December 31, 2004, includes $15.2 million in tax expense associated with establishing
          a valuation allowance against certain deferred tax assets.  See Note 18 to the audited consolidated
          financial statements presented herein.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | On February 9, 2004, we completed the sale of our fishing line business, and
          reclassified the results as discontinued operations for all periods presented.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Reflects the Gain on Disposal of assets sold associated with the sale of
          specified assets of our fishing line business on February 9, 2004. See Note 3 to
          the audited consolidated financial statements presented herein.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Excludes amortization of deferred financing costs of $2.0 million, $1.7
          million, $1.9 million, $1.8 million and $1.9 million for the years ended 2000,
          2001, 2002, 2003 and 2004, respectively, which is included in interest expense.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Non-cash charges consist of the following: (a) for the year ended December
          31, 2000, a $0.7 million accrual for retiree benefits and a $0.5 million loss on
          disposal of assets; (b) for the year ended December 31, 2001, a $0.7 million
          accrual for retiree benefits and a $0.4 million loss on disposal of assets; (c)
          for the year ended December 31, 2002, a $0.8 million accrual for retiree
          benefits and a $0.2 million loss on disposal of assets; (d) for the year ended
          December 31, 2003, a $2.9 million retiree benefits and a $0.5 million loss on
          disposal of assets; (e) for the year ended December 31, 2004, a $6.8 million
          accrual for retiree benefits and a $0.3 million loss on disposal of assets.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Nonrecurring and restructuring expenses consist of the following: (a) for
          the year ended December 31, 2000, nonrecurring professional fees of $0.5 million
          related to establishment of subsidiaries; (b) for the year ended December 31,
          2001, $0.6 million of nonrecurring legal and professional fees and $0.7 million
          of severance and relocation costs; (c) for the year ended December 31, 2002,
          $1.4 million of Cumulative Effect of Change in Accounting Principle, net of tax,
          and $0.3 million of nonrecurring legal fees and $0.4 million associated with
          marking redeemable deferred shares to market; (d) for the year ended December
          31, 2003, $0.2 million of severance costs and $0.2 million loss on disposal of
          assets; (e) for the year ended December 31, 2004, $13.6 gain on sale of the
          fishline line business, offset by $0.2 million of severance costs, and $0.7
          million in consulting fees associated with the nonrecurring exclusive
          distribution and joint venture agreements for certain technology products.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Special payments consist of the following: (a) In April 2000, Holding
          distributed on behalf of Remington a special payment to holders of all stock
          options and deferred shares of approximately $63.93 per share, in an aggregate
          amount of $6.1 million. In October 2000, Holding distributed on behalf of
          Remington a special payment to holders of all stock options and deferred shares
          of approximately $8.00 per share, in an aggregate amount of $0.8 million. (b) In
          August 2002, Holding distributed on behalf of Remington a special payment to
          holders of all stock options and deferred shares of approximately $19.54 per
          share, in an aggregate amount of $1.8 million. (c) In February 2003, Holding
          distributed on behalf of Remington a special payment to holders of all stock
          options (in connection with the acceleration and resulting cancellation of the
          options) of approximately $220.31 per share, in an aggregate amount of $4.5
          million.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | In January 2003, $0.7 million of additional interest for early redemption of Remington's 91⁄2% Senior
          Subordinated Notes due 2003 (the Refinanced Notes) and $1.5 million for the unamortized debt acquisition
          costs were expensed related to Remington prior senior secured credit facility (the Old Facility).
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(11) | Adjusted EBITDA as presented herein has the same meaning as defined
          in Note 22 to the audited consolidated financial statements presented herein.
          Discontinued Operations relates solely to the sale of our fishing line business
          on February 9, 2004. Adjusted EBITDA related to Discontinued Operations is
          appropriately included in Consolidated EBITDA as defined in the
          Indenture for all periods presented.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(12) | Working capital presented herein as total current assets less total current
          liabilities.
|---- | --------------------------------------------------------------------------------------------------

|(13) | Consists of short-term and long-term debt, current portion of long-term
          debt, note payable to Holding and capital lease obligations.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------

|(14) | Consolidated EBITDA as presented herein is a financial measure
          that is used in the Indenture as a component of a coverage ratio that is used to
          test whether a variety of transactions are permitted. Consolidated EBITDA (as
          defined in the indenture) differs from the term EBITDA as it is
          commonly used. In addition to adjusting net income to exclude income taxes,
          interest expense, and depreciation and amortization, Consolidated EBITDA (as
          defined in the indenture) also adjusts net income by excluding items or expenses
          not typically excluded in the calculation of EBITDA. To calculate
          Consolidated EBITDA (as defined in the indenture) for the period ended December
          31, 2004, we also excluded Other Noncash Charges of $7.1 million and
          Non-Recurring and Restructuring Items of ($12.7 million). See Note 22 to the audited
          financial statements presented herein for a reconciliation of this measure to net income. The Indenture provides that, in order to enter into the following types of transactions, in addition to
          other applicable requirements, the ratio of Consolidated EBITDA (as defined in
          the Indenture) to Remingtons consolidated interest expense (subject to
          certain adjustments as provided in the Indenture) must be greater than 2.25 to
          1.00 for the four most recent quarters for which financial statements are
          available:
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

23



| |  |    The incurrence of indebtedness in addition to limited specified categories
of permitted indebtedness that are enumerated in the Indenture.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------

| |  |   Mergers and consolidations involving Remington.
| |  | --------------------------------------------------

| |  |    Dividends, investments and other restricted payments in addition to limited
specified categories of permitted restricted payments and investments that are enumerated
in the Indenture.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |     The re-designation of an unrestricted subsidiary as a restricted subsidiary
for the purposes of the Indenture.
| |  | -------------------------------------------------------------------------------------------------------------------

|(15) | "Consolidated Interest Expense" as defined in the Indenture, consists of the total interest of Remington and its
subsidiaries, net of any interest income of Remington and its subsidiaries, and includes
interest expense consisting of (a) interest expense attributable to capital leases, (b)
amortization of debt discount, (c) interest on debt of other persons guaranteed by
Remington or any of its subsidiaries, (d) non-cash interest expense, (e) the interest
portion of any deferred payment obligation and (f) commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers acceptance
financing. The definition of Consolidated Interest Expense also provides that
gross interest is to be determined after giving effect to any net payment made or received
by Remington or its subsidiaries with respect to interest rate hedging agreements. Note that Consolidated
Interest Expense excludes amortization expense associated with the Company's debt acquisition costs of $2.0 million,
$1.7 million, $1.9 million, $1.8 million, and $1.9 million for the years ended 2000, 2001, 2002, 2003, and 2004, respectively, and includes amounts reclassified to discontinued operations of $3.9 million, $2.7 million, $1.8 million,
$1.8 million, and $0.1 million for the years ended December 31, 2000, 2001, 2002, 2003 and 2004, respectively.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(16) | Consolidated Coverage Ratio as defined in the Indenture is the
          ratio of Consolidated EBITDA (as defined in the Indenture) for the four most
          recently ended quarters for which financial statements are available to
          Consolidated Interest Expense (as defined in the Indenture) for the same period.
          The Consolidated Coverage Ratio (as defined in the Indenture) is presented for
          illustrative purposes.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(17) | 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). Due to our net loss in 2004 and 2003, this ratio was
          less than 1:1. Additional earnings of $3.9 and $5.3 million in 2004 and 2003,
          respectively, would have been required to achieve a ratio of 1:1.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

24



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 our consolidated financial statements and related notes and the
other financial information appearing elsewhere in this report.

Management's  Discussion and Analysis of Financial  Condition and Results of Operations is separated into the
following sections:

| | 
 Executive Overview.
| | ----------------------

| | 
 Recent Developments and Highlights.
| | --------------------------------------

| | 
 Business Outlook.
| | --------------------

| | 
 Liquidity and Capital Resources.
| | -----------------------------------

| | 
 Results of Operations.
| | -------------------------

| | 
 Recent Accounting Pronouncements.
| | ------------------------------------

| | 
 Critical Accounting Policies and Estimates.
| | ----------------------------------------------

| | 
 Regulatory Developments.
| | ---------------------------

| | 
 Information about Forward-Looking Statements.
| | ------------------------------------------------

# Executive Overview

The
following discussion and analysis discusses the financial condition and results of
operations of Remington and its subsidiaries, RA Brands, L.L.C. and RA Factors, Inc. on a
consolidated basis, unless otherwise indicated. It also includes discussion and analysis
on Remingtons unconsolidated joint venture, Remington ELSAG Law Enforcement Systems,
L.L.C., to the extent it is deemed significant.

We
were organized in our present form in connection with the acquisition of our current
business from DuPont in 1993. Remington and Holding are Delaware corporations organized at
the direction of CD&R for the purposes of making the Acquisition. Holding has no
operations and its only significant asset is its investment in Remington. Holding also has
$32.9 million aggregate principal amount of senior notes due to CD&R which were
created during the recapitalization of Holding in February 2003, which as of year end are
outstanding at a value of $35.0 million, inclusive of accrued interest. C&D Fund IV
holds all of the Holding Notes. RA Brands, L.L.C. and RA Factors, Inc. are wholly owned
subsidiaries of Remington. RA Brands, L.L.C. acts as a holding company for our
intellectual property and other intangible assets, and RA Factors, Inc. acts as a
factoring subsidiary for our receivables.

We
evaluate our business primarily on Adjusted EBITDA (as defined in Note 22 to our audited
consolidated financial statements included in this report, to which we refer you) results
from two core segments, firearms and ammunition, with support from our other operating
segments, primarily Accessories and Clay Targets. As part of this evaluation, we focus on
managing inventory and payables through, among other things, production management and
expense control. These segments allow us to focus our strategies and initiatives on growth
opportunities primarily focused on the hunting and shooting sports marketplace.

We
are committed to refining our core businesses and positioning ourselves to take advantage
of opportunities to strategically grow the company. As we regularly evaluate our overall
business, we look for new products in the hunting, shooting, accessories, law enforcement,
government, and military areas that compliment our core strategies, which may include
direct product sourcing, licensing, acquisition or other business ventures.

Finally,
in order to be well positioned for growth, we recognize the need to protect our
competitive position with the introduction of new and innovative, high quality products to
support our customers and consumers.

We
commenced certain growth initiatives during 2004. These growth initiatives include the
following:

| |  | In June 2004, we delivered our first sales of the Spartan Gunworks product line, an
opening price point line of shotguns.
| | - | -------------------------------------------------------------------------------------------------------------------------

| |  | On July 19, 2004, we entered into a ten year exclusive distribution rights agreement with
a technology products manufacturer for certain security products within the United States,
certain of its territories, and Canada, that required the payment of $0.5 million. We
expect to sell these security products to the federal agency and law enforcement markets.
We incurred expenses associated with the initial launching of these products during 2004
for distribution, selling, marketing, administrative, and transaction costs, and included
the related financial results in the newly formed Technology Products operating segment,
which is combined with the All Other reporting segment in 2004. At year-end December 31,
2004, we expensed $0.8 million pursuant to this agreement (including the above mentioned
$0.5 million one time payment).
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

25



| |  | On August 4, 2004, we entered into a joint venture agreement with ELSAG, Inc., an
unaffiliated third party, to form RELES.  RELES will sell and service a license plate
reading technology that is expected to be sold to state and local law enforcement
agencies along with certain federal agencies. The venture gives us a 50% ownership
interest.  The agreement calls for each member to provide 50% of required
capital investments and receive 50% of distributions, with a maximum
contribution amount of $1.5 million by each party.  In addition, we
will provide certain administrative support functions, while ELSAG,
Inc. will provide product technology support. On October 15, 2004, we made our
initial contribution to the venture of approximately $0.3 million. On February 1, 2005, we
made an additional contribution of approximately $0.2 million.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
connection with our growth initiatives, including those in our core businesses, we
expensed approximately $2.8 million during the year ended December 31, 2004.

The
sale of firearms and ammunition depends upon a number of factors related to the level of
consumer spending, including the general state of the economy and the willingness of
consumers to spend on discretionary items. Historically, the general level of economic
activity has significantly affected the demand for sporting goods products in the
firearms, ammunition, and related markets. As economic activity gains momentum, confidence
and discretionary spending by consumers has historically improved. See further discussion
in Business Outlook below.

Management
believes that we have successfully maintained the strength of our brand and our
market-leading positions in our primary product categories, and that we remain poised to
take advantage of any significant improvement in the demand environment. We have engaged
in selective efforts to stimulate demand for our products, through targeted new product
introductions and promotions in selected product categories.

Although
we believe that regulation of firearms and ammunition, and consumer concerns about such
regulation, have not had a material adverse influence on the market for our firearms
and ammunition products for the periods presented herein, there can be no assurance that
the regulation of firearms and ammunition will not become more restrictive in the future
or that any such development would not adversely affect these markets.

Our
revenues are derived primarily from sales of firearms and ammunition products. Firearms
and ammunition accounted for approximately 94% of our sales in each of 2004 and 2003, and
93% of our sales in 2002. We are the only domestic manufacturer of both firearms and
ammunition. Our other product lines include firearm-related accessories, security products
primarily for the law enforcement and federal agency markets, and the manufacture and
marketing of clay targets and powdered metal products. Our sales are generally seasonal
due to the need to meet customer requirements for hunting/shooting sports products during
the core fall hunting season (September through December), although certain segments of
our business, including certain models of our shotguns and several types of ammunition
intended for target shooting and pistol and revolver, as well as certain governmental,
military and law enforcement products, are not seasonal. During 2004 and as discussed
during our previous quarterly filings, we have seen our seasonality compress to later in
the fall hunting seasons. Sales in the third quarter are generally higher than sales in
other quarters and in the current year sales in the fourth quarter, including those on
extended terms, were also higher than historical levels. See further discussion in
Seasonality below.

# Recent Developments and
Highlights

On
February 9, 2004, we sold specified assets related to our fishing line business, including
fixed assets, inventories, and intellectual property for $44.0 million in cash. As a
result of the sale, the results of those operations have been included in discontinued
operations and prior periods have been reclassified to conform to the current year
presentation. Management believes that the Stren transaction provides Remington with
significant flexibility to pursue a number of strategic alternatives. Associated with
these strategic alternatives include the previously mentioned growth initiatives. See
further discussion above in the Executive Overview section.

A
number of current trends are potentially significant to the hunting and shooting sports
market.

| |  | We believe that economic conditions have caused customers (dealers,
chains and wholesalers) to defer purchases
of our products until later in the core fall hunting season (September through December)
and to utilize lower inventory levels than during prior periods. This overall trend in
demand continues to date, and there can be no assurance that such trends will not
continue.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | We believe that hunting and shooting safety is an important issue that affects sales of
firearms, ammunition and other shooting-related products. We have focused on safety
education. Such instruction is also provided through an interactive safety training course
on our Internet web site, at www.remington.com. We also provide substantial amounts of
information regarding our products, their safe use and handling, and general shooting and
outdoors information on our website. We also work through industry trade groups and hunter
safety organizations to teach both novices and experienced gun owners the safe use, care
and handling of firearms. Since early 2000, a majority of the firearms that we have
shipped have included a locking mechanism.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

26



| |  | Environmental issues, such as concern about lead in the environment, may adversely affect
the industry. We have developed multiple lines of shotshells that use steel shot instead
of the industry standard lead shot and to meet Government mandated requirements for
migratory waterfowl hunting.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | We believe that the number of private hunting facilities is increasing, as is the
availability of alternatives to traditional hunting activities, such as sporting clays and
other target sports. On the other hand, we believe that the development of rural property
in many locations has curtailed or eliminated access by hunters to private and public
lands.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | We believe that trends regarding firearms regulatory proposals, as well as pending
municipal litigation (or consumer perceptions of these developments) could adversely
affect the firearms and ammunition market. We produce firearms and ammunition that are
used by hunters and sporting enthusiasts, and to a lesser extent, by law enforcement
agencies. We do not produce assault weapons as defined in the federal law
enacted in 1994. We do not produce handguns and no Remington brand handguns (as
that term is conventionally used) have been produced since before World War II. We do,
however, produce handgun ammunition.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Although
we believe that these trends have not had a material adverse effect on our business in the
past, there can be no assurance that they will not do so in the future, or that industry
sales (or the number of retail outlets available for such sales) of firearms, ammunition
and other shooting-related products will not decline.

# Business Outlook

General Economy

The
general economic environment is uncertain, as a result of mixed levels of consumer
spending, low levels of wage growth, inflationary pressures from higher energy and fuel
costs, and an uncertain geopolitical environment; with the resulting negative impact on
consumer confidence. We also note that since the beginning of 2004, the Federal Reserve
has adopted a monetary policy that includes raising the short term rate of interest.
Management notes that a rising interest rate environment could have a potentially adverse
impact on consumer spending. Our business is also affected by the general environment of
rising commodity prices such as lead, zinc and steel that have been experienced since the beginning of 2004.
Specifically, the spot prices for lead and copper, which we primarily hedge through commodity contracts, increased by
approximately 34% and 38%, respectively, for the period from December 31, 2003 to December
31, 2004. See Quantitative and Qualitative Disclosures About Market Risk. The
volatile nature of the current economic and geopolitical environment makes it difficult to
forecast whether any of these trends will continue, and we can provide no assurance that
these trends will not continue.

Industry

The
consumer products environment appears to be uncertain based upon the previously mentioned
mixed consumer spending, low levels of wage growth, inflationary pressures from higher
energy costs, and a trend of lower than expected same-store retail sales growth. Further,
management notes that the retail and consumer products industries in which we participate
(mainly, firearms and ammunition) continue to experience two specific trends  market
polarization and condensed seasonality. The market polarization appears to primarily be a
function of demand from higher end retailers and consumers being relatively inelastic with
respect to weaker economic conditions while lower end retailers and consumers are
generally selling and buying, respectively, opening price point products. The condensed
seasonality appears to primarily be a function of a pronounced customer effort to
aggressively manage inventory turns. Management believes that such conditions have caused
customers (dealers, chains and wholesalers) to defer purchases of our products
and to utilize lower inventory levels than during prior periods.

Remington

Our
current business environment is uncertain and has been affected by market polarization,
condensed seasonality, increased commodity costs, and mixed consumer spending levels.
Management does not have any reason to believe that these trends and uncertainties are
permanent characteristics of the markets for our products or the general economy, and
believes that positive changes in these trends and an improvement in general economic
conditions may result in increased demand for the Companys products or otherwise
improve the Companys results of operations or cash flows. However, management
continues to evaluate these trends and uncertainties and cannot assure that they will
improve or that any such improvement will increase demand for the Companys products
or otherwise positively impact the Companys results of operations or cash flows.

27



Managements
near-term strategy in light of the environment noted above has been to contain costs,
manage inventory levels to meet customer needs and to preserve liquidity, while pursuing
growth initiatives in markets we believe show potential future profitable growth. Our efforts
to pursue growth initiatives resulted in the three previously mentioned actions: 1)
Spartan Gunworks by Remington, 2) the exclusive distribution agreement, and 3) the joint
venture agreement. Our growth initiatives also included investments in our Accessories and
government, military, and law enforcement divisions. We have also engaged in selective
efforts to stimulate demand for our products, through targeted product introductions and
promotions in selected product categories. Management believes that we have successfully
maintained the strength of our brand and our market-leading positions in our primary
product categories, and that we remain poised to take advantage of any significant
improvement in the demand environment.

Seasonality

We
produce and market a broad range of firearms and ammunition products. Several models of
our shotguns and several types of ammunition are intended for target shooting and pistol
and revolver, as well as government, military, and law enforcement applications, sales of
which generally occur outside the core fall hunting season (September through December).
The majority of our firearms and ammunition products, however, are manufactured for
hunting use. As a result, the majority of the sales of our products are seasonal and
concentrated toward the fall hunting season. We follow the industry practice of selling
firearms pursuant to a dating plan allowing the customer to buy the products
commencing at the beginning of our dating plan periods and pay for them on extended terms.
As a competitive measure, we also offer extended payment terms on select ammunition
categories. Cash discounts for firearms and ammunition amounting to $6.8 million, $5.8
million, and $6.7 million were given in 2004, 2003, and 2002, respectively. We believe
that these dating plans have partially offset the seasonality of the Companys
business.

As
a result of the seasonal nature of our sales and the extended payment terms under our
dating plan billing practices, our working capital financing needs generally have
significantly exceeded cash provided by operations during certain parts of the year, until
certain of our extended accounts receivable are collected in the third quarter. As a
result, our working capital financing needs tend to be greatest during the late winter and
early summer months, decreasing during the fall and reaching their lowest points during
the early winter. During 2004 and as discussed during our previous quarterly filings, we
have seen our seasonality compress to later in the fall hunting seasons. Sales in the
third quarter are generally higher than sales in other quarters and in the current year
sales in the fourth quarter, including those on extended terms, were also higher than
historical levels.

# Liquidity and Capital
Resources

Overview

We
have historically funded expenditures for operations, administrative expenses, capital
expenditures, debt service obligations and dividend payments with internally generated
funds from operations, and satisfied working capital needs from time to time with
borrowings under our Credit Facility. We believe that we will be able to meet our debt
service obligations, fund our operating requirements, and make dividend payments in the
future with cash flow from operations and borrowings under our Credit Facility prior to
the maturity of the Credit Facility in 2008, although no assurance can be given in this
regard. We continue to focus on managing inventory levels to keep them in line with sales
projections and management of accounts payable.

Liquidity

As of December 31, 2004, we had outstanding approximately $203.5 million
of indebtedness, consisting of approximately $200.0 million aggregate principal amount of
the notes, $1.8 million in borrowings under the Credit Facility, $0.8 million in capital
lease obligations and a $0.9 million note payable to Holding. As of December 31, 2004, we
also had aggregate letters of credit outstanding of $4.9 million.

Our
Credit Facility, as amended, provides for aggregate borrowings of up to $101.0 million,
subject to borrowing base and other limitations, under a revolving credit facility through
January 23, 2008. As of December 31, 2004 approximately $44.4 million in additional
borrowings were available as determined pursuant to the Credit Facility, as amended
through February 9, 2004. At present, the principal sources of liquidity for our business
and operating needs continue to be internally generated funds from operations and
borrowings under the Credit Facility. We believe that we will be able to meet our debt
service obligations and fund our operating requirements with cash flow from operations and
borrowings under the Credit Facility, although no assurance can be given in this regard.
We also evaluate on a regular basis whether or not we will be able to pay prospective
dividends to Holding (which are primarily used by Holding to pay interest on the Holding
Notes), subject to the restrictions and covenants imposed upon us by our Credit Facility
and the indenture for the Notes. See Dividend

28



Policy. In addition, we continue to focus on managing working capital through, among other things, inventory management,
cash management, and expense control.

As
a result of plan performance and Internal Revenue Service Code and Regulations, we will be
required to make contributions of approximately $7.1 million to plan assets under our
defined benefit pension plan which will be made in installments throughout 2005. We made
contributions of approximately $6.4 million to plan assets under our defined-benefits
pension plan during 2004.

In
addition, as previously mentioned, we incurred a total of $0.8 million in expenses in 2004
associated with the exclusive distribution agreement signed in July 2004, as well as $0.3
million expenses in 2004 associated with the joint venture agreement signed in August
2004. Combined with our growth initiatives in our Accessories, Government/Law
Enforcement/Military, and Spartan Gunworks, our total growth initiatives expenses incurred
in 2004 was $2.8 million.

As
a result of the sale of our fishing line business on February 9, 2004, we applied $43.0
million in initial cash proceeds upon the closing of such sale, and on May 12, 2004, we
applied an additional $1.0 million in proceeds released from escrow, in each case against
our outstanding Credit Facility balances at those times. We made necessary
tax payments related to the sale consistent with our normal quarterly schedule. The gain
that was recorded in 2004 on the sale of discontinued operations was approximately $13.6
million, net of income taxes. The gain of approximately $13.6 millionreflects the
release of the $1.0 million escrow amount and adjustments to the estimates of costs
associated with the sale based on remaining obligations with respect to the sale as of
December 31, 2004. Our after-tax proceeds on the transaction were approximately $29.0
million. A portion of these proceeds was not reinvested within one year, resulting in our
fourth amendment to the Credit Facility on February 8, 2005, as explained below. See
Credit Facility.

As
previously discussed, our continuing efforts to strategically grow the company may result
in direct product sourcing, licensing, acquisitions or other business ventures, financing
for which may be available under our Credit Facility as a result of the sale of the
fishing line business, to the extent permitted under the indenture for our Notes. See
growth initiatives discussion in the Executive Overview section.

101⁄2% Senior Notes
due 2011

The
Notes were initially issued on January 24, 2003 in an aggregate principal amount of $200.0
million. The Notes are senior unsecured obligations of Remington guaranteed by each of
Remingtons existing domestic subsidiaries. The indenture for the Notes contains
restrictive covenants that, among other things, limit the incurrence of debt by Remington
and its subsidiaries, the payment of dividends to Holding, the use of proceeds of
specified asset sales and transactions with affiliates.

In
addition, the Indenture permits repurchases of the Notes on the open market, subject to
limitations that may be contained in the Credit Facility and the Indenture. As disclosed
in the Companys 8-K filing on February 11, 2005, the Company obtained the consent of
the requisite lenders under the Credit Facility to one or more such purchases of Notes in
an aggregate amount of up to $5.0 million on or before December 31, 2005, subject to
compliance with specified conditions for the purchases.

Credit Facility

On
February 8, 2005, in connection with the passage of the one year requirement to invest in
productive assets, we entered into a fourth amendment under the Credit Facility primarily to permanently reduce our
commitments under the Credit Agreement from $125.0 million to $101.0 million and to amend the availablity requirements.
See Note 12 to the accomanying audited financial statements for additional details regarding the fourth amendment.
As a result of the reduction in borrowing capacity, and in accordance with Emerging Issues Task Force No. 9814 (EITF 9814),
we reduced our debt acquisition costs by $0.5 million upon signing of the fourth amendment to the Credit Facility in
February 2005, the expense for which will be recorded in the Other Expense line item on the Company's Statement of Operations.

Our
Credit Facility, as amended, provides $101.0 million of revolving credit agreements under
an asset-based senior secured revolving credit facility. Amounts available under the
Credit Facility are subject to a borrowing base limitation based on certain percentages of
eligible accounts receivable and eligible inventory and an amortizing balance related to
eligible machinery and equipment in addition to a minimum availability requirement as
described below. The Credit Facility also includes a letter of credit subfacility of up to
$15.0 million.

As
a result of our financial performance the Credit Facility was amended on two separate
occasions during 2003. These amendments limit our borrowing capacity by creating a minimum
availability restriction through the earlier of (i) March 30,

29



2006 and (ii) subject to meeting specified financial targets, such date as the Company may determine (such period,
the Availability Test Period). In addition, during the Availability Test
Period, the Company must maintain specified minimum rolling four quarter levels of
Consolidated EBITDA (as defined in the Credit Facility).

Pursuant
to the foregoing amendments, key terms of the Credit Facility, as amended, now include the
following:

| | (1) | The minimum amount of availability required to be maintained during the
               Availability Test Period is $20.0 million (except during any single period of up
               to 60 consecutive days from June through September of each year during the
               Availability Test Period, when such minimum availability requirement is $10.0
               million). For any period during the Availability Test Period when such minimum
               availability requirement is not met, the Company must maintain (i) a maximum
               leverage ratio of 6.0 to 1.0 and (ii) a minimum fixed charge coverage ratio of
               1.1 to 1.0. So long as the minimum availability requirement is met during the
               Availability Test Period, there is no requirement for the Company to meet the
               maximum leverage ratio or the minimum fixed charge coverage ratio.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | The Company is required to maintain specified minimum rolling four quarter
               levels of Consolidated EBITDA (as defined in the Credit Facility) during the
               Availability Test Period.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | All of Remingtons existing and future domestic subsidiaries are either
               co-borrowers under, or guarantors of, the facility. The Credit Facility is
               secured by substantially all of our real and personal property, including
               without limitation the capital stock of our subsidiaries.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Amounts outstanding under the Credit Facility bear interest at a rate equal to,
               at our option, (1) an alternate base rate plus applicable margin, (2) a reserve
               adjusted LIBOR rate plus an applicable margin. These margins are subject to
               periodic adjustment based on certain levels of financial performance at various
               times during the term of the Credit Facility.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | The Credit Facility contains limitations on capital expenditures exceeding $12.5
               million during any fiscal year, adjusted upward for any previously unspent
               amounts in prior years that were less than the annual $12.5 million limitation.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | The Credit Facility contains limitations on indebtedness, liens, investments,
               mergers and other acquisitions, asset dispositions, transactions with
               affiliates, and dividends and other distributions.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (7) | The Credit Facility contains customary events of default.
| | --- | ---------------------------------------------------------

| | (8) | The Company is required to pay certain fees in connection with the Credit
               Facility, including (1) letter of credit fees, (2) agency fees and (3) an unused
               commitment fee of 0.375% which is payable if the average Credit Facility balance
               is 50% or more of the aggregate revolving commitments in effect on the first day
               of such month, subject to adjustment upward to 0.500% if the average outstanding
               Credit Facility balance for any month is less than 50% of the aggregate
               revolving commitments in effect on the first day of such month.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (9) | The Credit Facility contains other customary affirmative and negative covenants:
               including but not limited to those listed above.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------

As
of December 31, 2004 we were in compliance with our financial covenants under the Credit
Facility, as amended, and expect to continue to be in compliance with such financial
covenants. However, there can be no assurance that we will continue to be in compliance.

The
interest rate margin for the ABR and the Euro-Dollar loans at December 31, 2004 was 1.50%
and 3.00%, respectively. The weighted average interest rate under the Companys
Credit Facility was 4.90% and4.02%for the year to date periods ended
December 31, 2004 and 2003, respectively.

Cash Flows and Working
Capital

Net
cash used in operating activities was $11.8 million and $7.3 million for the fiscal
fiscal years ended December 31, 2004 and 2003, respectively.The $4.5 million
increase in cash used in operating activities for the twelve months ended December

30



31, 2004 compared to the same period ended December 31, 2003 resulted primarily from higher
levels of accounts receivable and inventory, offset by changes in deferred taxes, higher
accrued liabilities and retiree benefits.The sale of the fishing line business
also affected net cash used in operating activities.Specifically, the reasons
associated with these changes are summarized as follows:

| |  | Inventory increased by $6.9 million over the twelve months ended December 31, 2004 compared to an increase
of $0.1 million over the twelve months ended December 31, 2003. The increase in inventory
over prior year is primarily related to higher production costs in the current year, new
product offerings in 2004 (primarily Spartan Gunworks), as well as a plant shutdown in the
prior year.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Accounts Receivable increased by $14.1 million over the twelve months ended December 31,
2004 compared to an increase of $8.5 million over the twelve months ended December 31,
2003, primarily due to higher sales in the third and fourth quarters of 2004 as compared
to the prior year periods.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Deferred tax liabilities increased by $18.0 million over the twelve months ended December
31, 2004 compared to a decrease of $1.1 million over the twelve months ended December 31,
2003, primarily due to recording a valuation allowance of approximately $15.2 million.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Other accrued and long-term liabilities increased by $2.0 million in the twelve months
ended December 31, 2004 compared to a decrease of $1.7 million in the twelve months ended
December 31, 2003, primarily as a result of timing of excise taxes payments and higher
pension liabilities for the year ended December 31, 2004,combined with the payment
of the incentive compensation and transaction fee accruals during the year ended December
31, 2003.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The provision for retiree benefits increased primarily due to higher pension and
postretirement benefit expense as compared to required cash contributions during 2004 as
compared to 2003. See Note 11 to the accompanying audited financial statements for an
understanding of our benefit plan obligations.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The sale of the fishing line business on February 9, 2004 resulted in an increase in net
income due to a gain (net of taxes) on the sale of $13.6 million. This adjustment, in
combination with other adjustments for accruals and taxes associated with the sale are
included in other accrued and long-term liabilities and income taxes payable. The amount
of the cash proceeds from the sale was included in investing activities as indicated
below.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Net
cash provided by investing activities for the fiscal year ended December 31, 2004 was
$35.1 million and net cash used in investing activities in the fiscal year ended December
31, 2003 was $6.9 million. Net cash proceeds of $42.8 million received from the sale of
our fishing line business in 2004, combined with $0.4 million of cash proceeds on sale of
property, plant and equipment resulted in the increase, slightly offset by $7.8 million in
cash capital expenditures and the $0.3 million investment in our unconsolidated joint
venture.The $7.8 million and $6.8 million of cash capital expenditures for
investing activities in the fiscal years ended 2004 and 2003, respectively, consisted of
capital expenditures primarily used both fornew equipment related to the
manufacture of firearms and ammunition, as well as maintenance of existing facilities.

Net
cash used in financing activities for the fiscal year ended December 31, 2004 was $23.3
million and net cash provided by financing activities was $14.2 million during the fiscal
year ended December 31, 2003.The $37.5 million decrease in cash provided by
financing activities from the year ended December 31, 2004 compared to the year ended
December 31, 2003 primarily resulted from approximately $43.8 million of lower borrowing
needs under the Credit Facility, primarily due to the cash proceeds associated with the
sale of our fishing line business in the current year, as well as debt issuance costs
associated with our refinancing transaction in the prior year.

Dividend Policy

The
declaration and payment of 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 Facility and the indenture for the Notes, which currently restrict the payment of
dividends to shareholders. We expect to make future dividend payments to Holding based on
available cash flows as and to the extent permitted by the Credit Facility and the
indenture for the Notes. During the year ended December 31, 2004, the Board of Directors
of the Company declared and the Company paid $2.2 million of dividends to Holding.

Capital Expenditures

Gross
capital expenditures for the year ended December 31, 2004 were $9.5 million, consisting
primarily of capital expenditures both for new equipment related to the manufacture of
firearms and ammunition, as well as maintenance of existing facilities. We expect capital
expenditures for 2005 to be in a range of $9.0 million to $11.0 million. Our Credit
Facility allows for capital expenditures up to $21.1 million in 2005 including unused
capacity carried over from previous years.

31



Contractual
Obligations and Commercial Commitments

We
have various purchase commitments for services incidental to the ordinary conduct of
business, including, among other things, a services contract with our third party
warehouse provider and commitments to our joint venture RELES. We do not believe such
commitments are at prices in excess of current market prices. Included in those purchase
commitments are purchase contracts with certain raw materials suppliers, for periods
ranging from one to seven years, some of which contain firm commitments to purchase
minimum specified quantities. However, such contracts had no material impact on our
financial condition, results of operations, or cash flows during the reporting periods
presented herein.

In
recognition of and support of certain legal and legislative initiatives, the shooting
sports industry established the Hunting and Shooting Sports Heritage Fundof which
the Company is a member. Contributions expensed in 2004, 2003, and 2002 were $0.5 million,
zero, and $0.8 million, respectively.

We
support service and repair facilities for all of our firearm products in order to meet the
service needs of our distributors, customers and consumers nationwide. We provide consumer
warranties against manufacturing defects in all firearm products we sell worldwide,
with the exception of the Spartan Gunworks product line which is warranted by its third
party vendor. Estimated future warranty costs are accrued at the time of sale. Product
modifications or corrections are voluntary steps taken by us to assure proper usage or
performance of a product by consumers. The cost associated with product modifications and
or corrections are recognized in accordance with SFAS No. 5, Accounting for Contingencies,
and charged to operations. The cost of these programs is not expected to have a material
adverse impact on our operations, liquidity or capital resources.

The
following represents our contractual obligations and other commercial commitments as of
December 31, 2004:

|                                                      | Payments Due By Period
|----------------------------------------------------- | ----------------------
|
|
|
|
|Contractual Obligations:                              |                       
|10 1/2% Senior Notes due 2011                         |                       
|Expected interest payments associated with the Senior |                       
|Notes due 2011                                        |                       
|Required pension contributions                        |                       
|Working Capital Facility Borrowings                   |                       
|Due to RACI Holding, Inc.                             |                       
|Capital Lease Obligations                             |                       
|Operating Lease Obligations                           |                       
|Other Long-term and Purchase Obligations              |                       
|Total Contractual Cash Obligations                    |                       
|Other Commercial Commitments:                         |                       
|Standby Letters of Credit                             |                       
|Total Commercial Commitments                          |                       

# Results of Operations

The
following table shows, for the periods indicated, the percentage relationships to net
sales of selected financial data. Our managements discussion and analysis of our
results of operations compares results for the year ended December 31, 2004 to the year
ended December 31, 2003 and the year ended December 31, 2003 to the year ended
December 31, 2002.

|                                             | Year Ended December 31,
|-------------------------------------------- | -----------------------
|                                             |                        
|Net Sales                                    |                        
|Cost of Goods Sold                           |                        
|Gross Profit                                 |                        
|Operating Expenses                           |                        
|Operating Profit                             |                        
|Net Income/(Loss) from Continuing Operations |                        

32



Year Ended December 31, 2004 as Compared to Year Ended December 31, 2003

Net
Sales.    The following table compares net sales by reporting
segment for each of the years ended December 31, 2004 and 2003:

|             | Twelve months ended December 31,
|------------ | --------------------------------
|
|
|
|Firearms     |                                 
|Ammunition   |                                 
|All Other    |                                 
|Consolidated |                                 

Firearms

Management  believes that the increase in net sales of $12.1 million for the year ended  December 31, 2004
over the prior-year period resulted from:

| |  | higher sales volumes of existing shotguns and higher margin rifles; and
| | - | -----------------------------------------------------------------------

| |  | shipments of our opening price point shotguns; partially offset by
| | - | ------------------------------------------------------------------

| |  | price loss of $0.8 million related primarily to the sale of discontinued product.
| | - | ---------------------------------------------------------------------------------

Ammunition

Management  believes the increase in net sales of $19.0 million for the year ended  December 31, 2004 over
         the prior-year period is due primarily to:

| |  | higher sales volumes of shotshell ammunition and lower margin centerfire ammunition; as well as
| | - | -----------------------------------------------------------------------------------------------

| |  | higher sales volumes of higher margin centerfire rifle ammunition; partially offset by
| | - | --------------------------------------------------------------------------------------

| |  | price loss of $0.8 million associated  primarily with the sale of discontinued product,  higher volume rebates
               and higher volumes of product sold on terms.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

All Other (including Accessories, Clay Targets, Powdered Metal Products, and Technology Products)

Management  believes the  increase in net sales of $1.2 million for the year ended  December 31, 2004 over
the prior-year period, predominantly in the Accessories line of business, of $1.1 million, is due primarily to:

| |  | higher  sales of knives,  and new  products in the  cleaning  product  and  shooting  glasses  categories;
partially offset by
| | - | ------------------------------------------------------------------------------------------------------------------------------

| |  | lower sales of gun safes.
| | - | -------------------------

Cost of Goods Sold.The table below depicts the cost of goods sold by reporting segment for the years
ended December 31, 2004 and 2003:

|             | Twelve months ended December 31,
|------------ | --------------------------------
|
|
|
|Firearms     |                                 
|Ammunition   |                                 
|All Other    |                                 
|Consolidated |                                 

Firearms

Management  believes  the  increase  of $10.8  million  for the year  ended  December  31,  2004  over the
prior-year period is due primarily to:

| |  | higher sales volumes of existing shotguns, higher margin rifles, and new opening price point shotguns;
| | - | ------------------------------------------------------------------------------------------------------

| |  | higher pension and post retirement employee benefits expenses; and
| | - | ------------------------------------------------------------------

| |  | price loss of $0.8 million as explained in "Net Sales" above; partially offset by
| | - | ---------------------------------------------------------------------------------

33



| |  | lower  manufacturing  variances  as compared to the prior year period  primarily  due to the impact of the
              Ilion plant  shutdown at the end of 2003 ($2.8  million of period  expenses  in 2003;  compounded  by
              fewer variances rolled out in early 2004 as compared to the first half of 2003);
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Ammunition

Management  believes  the  increase  of $21.0  million  for the year  ended  December  31,  2004  over the
prior-year period is due primarily to:

| |  | higher sales of lower margin ammunition, mainly shotshell and certain centerfire categories of ammunition;
| | - | ----------------------------------------------------------------------------------------------------------

| |  | price loss of $0.8 million as explained in "Net Sales" above;
| | - | -------------------------------------------------------------

| |  | higher pension and post retirement employee benefits expenses; and
| | - | ------------------------------------------------------------------

| |  | higher levels of  unfavorable  manufacturing  variances  recognized  resulting  primarily from higher than expected commodity costs; partially offset by
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | realized gains from settlement of our copper and lead option contracts
| | - | ----------------------------------------------------------------------

All Other (including Accessories, Clay Targets, Powdered Metal Products and Technology Products)

Management  believes  the  increase  of $0.5  million  for the  year  ended  December  31,  2004  over the
prior-year period, predominantly in the Accessories business, which increased $0.8 million, is due primarily to:

| |  | higher sales volumes of knives; combined with
| | - | ---------------------------------------------

| |  | sales of new  products in 2004  (primarily  shooting  glasses and  cleaning  products)  and their  related
rollout of costs; partially offset by
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------

| |  | lower overall sales volumes of gun safes and black powder accessories products.
| | - | -------------------------------------------------------------------------------

Operating Expenses.Operating expenses consist of selling, general and administrative expense,
research and development expense and other expense.

|             | Twelve months ended December 31,
|------------ | --------------------------------
|
|
|
|SG&A         |                                 
|R&D          |                                 
|Other        |                                 
|Consolidated |                                 

The increase in
selling,  general,  and  administrative  expense between the two year-to-date  periods was
primarily  attributable to higher  distribution  and commissions  costs  associated with higher sales volumes,  and
higher costs associated with the previously  mentioned growth initiatives,  offset by lower product liability costs
associated with favorable experience.

The decrease in other
expense was  primarily  due to $6.7 million of other  unusual  charges  incurred in
connection  with the first quarter 2003  recapitalization  transactions,  offset by the  previously  mentioned $0.5
million associated with the exclusive  distribution  agreement  payment.  The $6.7 million of other unusual charges
is  comprised  of $4.5 million  related to the  acceleration  and  subsequent  cancellation  of options to purchase
common  stock of Holding,  $0.7  million of  additional  interest  expense  representing  a call  premium for early
redemption of the Refinanced  Notes,  and $1.5 million  expensed for the unamortized debt issuance costs related to
our prior revolving credit facility.

Interest Expense.
    Interest expense for the year ended December 31, 2004 was $24.6 million, an increase
of $1.6 million from the same period in 2003. Interest expense excludes $0.1 million and $1.8 million, for the
years ended December 31, 2004 and 2003, respectively, which was reclassified to discontinued operations.

The increase in interest
expense during 2004 resulted  primarily from higher expense on the Notes of $0.7
million  associated  with a full year  outstanding  in 2004 as compared to 2003 and higher  expense of $0.1 million
associated  with higher  interest  rates  compared to the  interest  expense on the  Refinanced  Notes in 2003.  In
addition,  interest  expense in connection with the Credit Facility was lower than in 2003,  primarily due to lower
overall  average  borrowings on the Credit  Facility of $1.0 million due to the sale of the fishing line  business,
offset by $0.2 million associated with higher interest rates.

Taxes.    
Our effective tax rate relating to continuing operations is (39.5%), excluding the impact of
recording the valuation allowance, which increased the rate to 351.5%, for the year ended December
31, 2004. The change to 351.5% from

34



(39.5%)for the same period in 2003 is primarily attributable to the valuation allowance
established on deferred tax assets referred to below. We have utilized a 42% effective tax rate in calculating
the net gain on the sale of certain assets in the fishing line business. This rate differs from the continuing
operations rate primarily due to permanent differences related to goodwill associated with the fishline
business.

We are currently subject
to ongoing audits by various state tax authorities.  Depending on the outcome
of these audits, we may be required to pay additional taxes.  However, we do not believe that any additional
taxes and related interest or penalties would have a material impact on Remington's financial position, results of operations,
or cash flows.  We have reserved amounts which we believe will be sufficient for any adverse outcome.  The timing
of any such payment is uncertain.

As of December 31, 2004, a
valuation allowance of approximately $15.2 million has been established against deferred tax assets as a charge against
earnings in accordance with the provisions of Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes(SFAS No. 109). Realization of the deferred tax assets is largely dependent upon future
profitable operations, if any, and the reversals of existing taxable temporary differences. As a result of pre-tax losses from
continuing operations and future taxable income expected to arise primarily from the reversal of and creation of temporary
differences for the foreseeable future, we determined that in accordance with SFAS No. 109, it is not appropriate to continue
to recognize these deferred tax assets. Although there can be no assurance that such events will occur, the valuation allowance
may be reversed in future periods to the extent that the related deferred income tax assets no longer require a valuation
allowance under the provisions of SFAS No. 109.

On October 22, 2004,
President Bush signed the American Jobs Creation Act of 2004 (the "Jobs Act") into
law.  The Jobs Act includes provisions that, based on our level of profitability, may materially affect the
Company's accounting for income taxes including a possible increase in its effective tax rate and changes in its
deferred assets and liabilities.  The Company is currently assessing the impact of the Jobs Act based on further
clarification of the Jobs Act.

Discontinued
Operations.On February 6, 2004, we entered into the Stren Asset Purchase Agreement
pursuant to which we sold to the Purchasers certain specific assets relating to our fishing line business,
effective as of February 9, 2004. The fishing line business had been a part of the All Other reporting segment.

The purchase price paid to us,
based on the fair market value of the assets sold, was $44.0 million in
cash. The assets sold had a net book value of approximately $17.9 million and we retained net working capital of
$1.7 million of accounts receivable and accounts payable. The net gain that was recorded during the first quarter
of 2004 on the disposal of discontinued operations is $13.6 million, net of income taxes.

The following represents
a summary of key components of income from discontinued operations:

|                                  | December 31, | December 31, | December 31,
|--------------------------------- | ------------ | ------------ | ------------
|Discontinued Operations:          |              | 2004         |             
|Net Sales                         |              | $         3  | .3          
|Pre-tax operating results         |              | 0            | .2          
|Interest Expense Allocation       |              | 0            | .1          
|Income from operations, after tax |              | --           |             

| | In
the transaction described above, certain specified assets of $18.0 million and $16.4
million at December 31,2003 and 2002, respectively, were
reclassified to Assets Held for Sale in the consolidated balance sheet. Additionally,
amounts related to the operations for the years ended December 31, 2003 have been
reclassed in the accompanying statement of operations as discontinued operations.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                        | December 31,
|--------------------------------------- | ------------
|Assets Held for Sale:                   |             
|Inventories                             |             
|PP&E                                    |             
|Intangibles                             |             
|Total Assets of Discontinued Operations |             

35



Year Ended December 31, 2003 as Compared to Year Ended December 31, 2002

Net
Sales.    The following table compares sales by reporting segment
for each of the years ended December 31, 2003 and 2002:

|             |  |          |    |     | $   | %       
|------------ |  | -------- | -- | --- | --- | --------
|
|
|             |  |          |    |     |     |         
|Firearms     |  | $    181 | .3 | 50  | .3% | $    194
|Ammunition   |  | 157      | .1 | 43  | .5  | 163     
|All Other    |  | 22       | .3 | 6   | .2  | 26      
|Consolidated |  | $    360 | .7 | 100 | %   | $    383

Management believes that the decline in consolidated sales was attributable to several factors
primarily including but not limited to general economic weakness combined with soft
consumer demand across most product categories, customer inventory reductions, and harsh
weather on the East Coast of the U.S. during the first half of 2003.

The
decrease in Firearms net sales from 2002 to 2003 is primarily due to lower sales volumes
in centerfire rifles and shotguns,slightly offset by an increase in sales volumes
of rimfire rifles and price increases of $1.5 million.

The
decrease in Ammunition net sales from 2002 to 2003 is primarily attributable to lower
sales volumes in all ammunition categories.

The
decrease in net sales in the All Other segment, including accessories, targets, and
powdered metal products, from 2002 to 2003 is primarily attributable to lower overall
sales volumes in all product lines, especially accessories (primarily gun safes and gun
parts).

Cost of Goods Sold.    The table below depicts the cost of goods
sold by reporting segment for the years ended December 31, 2003 and 2002:

|             |  |          |    |    | $   | %       
|------------ |  | -------- | -- | -- | --- | --------
|
|
|Firearms     |  | $    133 | .2 | 73 | .4% | $    134
|Ammunition   |  | 120      | .0 | 76 | .4  | 120     
|All Other    |  | 17       | .0 | 76 | .2  | 18      
|Consolidated |  | $    270 | .2 | 74 | .9% | $    273

The
decrease in cost of goods sold for firearms from 2002 to 2003 is primarily due to lower
overall sales volumes of centerfire rifles and shotguns. As a percentage of sales, the
increase in cost of goods sold is primarily due to lower sales volumes of high margin
products, combined with higher pension and post retirement employee benefits expenses,
recognition of unfavorable manufacturing variances of $1.8 million caused by manufacturing
inefficiencies, and unplanned shutdown expenses of $2.8 million, partially offset by lower
inventory reserves and a reduction of scrap costs at our Ilion, New York firearms plant of
$1.7 million. The shutdowns were taken in 2003 in an effort to manage inventory levels and
working capital.

The
decrease in cost of goods sold for ammunition from 2002 to 2003 is due to lower overall
sales volumes of ammunition. As a percentage of sales, the increase in the cost of goods
sold is primarily due to lower sales volumes of high margin products, higher pension and
post retirement employee benefits expenses, combined with unplanned shutdown expenses of
$1.0 million at our Lonoke, Arkansas ammunition plant and a reduction in favorable
manufacturing variances of $3.9 million, (which includes approximately $1.3 million less
of favorable variances due to increased commodity pricing as compared to 2002,) and
inefficiencies caused by lower production levels. The shutdowns were taken in 2003 in an
effort to manage inventory levels and working capital.

The
decrease in the cost of goods sold for the all other segment from 2002 to 2003 is
primarily due to lower sales volumes of accessories (primarily gun safes and gun parts).
As a percentage of sales, the increase in the cost of goods sold is

36



primarily due to lower sales volumes of higher margin accessories products and inefficiencies in the manufacture
of powdered metal products.

Operating
Expenses.    Operating expenses consist of selling, general and
administrative expense, research and development expense and other expense.

|                   |  |         | Increase/ | Increase/
|------------------ |  | ------- | --------- | ---------
|
|Operating Expenses |  |         |           |          
|SG&A               |  | $    61 | .9        | $    61  
|R&D                |  | 6       | .1        | 6        
|Other              |  | 7       | .1        | 2        
|Consolidated       |  | $    75 | .1        | $    69  

The
increase in selling, general, and administrative expenses between the two periods was primarily
attributable to increased expenditures for product liability of $3.6 million and higher marketing expenses
combined with a reduction in licensing income of $0.6 million, offset by lower incentive compensation expense of
$3.9 million. Research and development expenses were $6.1 million in 2003, unchanged from 2002 and are related to
testing and development of existing and new products.

The
increase in other expenses was primarily due to other unusual charges incurred in connection with the
first quarter 2003 recapitalization transactions, which includes $4.5 million related to the acceleration and
subsequent cancellation of options to purchase common stock of Holding, $0.7 million of additional interest
expense representing a call premium for early redemption of the Refinanced Notes, and $1.5 million expensed for
unamortized debt issuance costs related to the Old Credit Facility, partially offset by the special payment of
$1.8 million that occurred in 2002.

Interest Expense.    Interest expense in 2003 was $24.8 million, an increase of $12.5 million, or 101.6%,
from $12.3 million in 2002. Interest expense includes $1.8 million in both 2003 and 2002 that was reclassified to
discontinued operations. The increase in interest expense was primarily the result of $10.1 million resulting
from higher overall borrowings and $1.9 million related to higher interest rates on the Notes as compared to the
Refinanced Notes.

Taxes.    The Company's effective tax rate is (39.5%). The Company has finalized its examination by the
Internal Revenue Service for tax years 2000 and 2001 and the outcome of the examination did not have a
significant impact on the financial position, results of operations or cash flows of the Company.

Recent Accounting Pronouncements

In May 2004,
the FASB issued Financial Staff Position (FSP) SFAS No. 106-2 "Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003" (the "Act"),
which is effective as of the first interim period beginning after June 15, 2004. On December 8, 2003, President
Bush signed the Act into law, which introduces a prescription drug benefit under Medicare as well as a federal
subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially
equivalent to that provided under the Act. FSP SFAS No. 106-2 supersedes FSP FAS 106-1, and clarifies accounting
guidance for the Act's subsidy provisions given to health care plan sponsors who provide specified levels of
postretirement healthcare benefits. We have adopted the Act and the Act had no material impact on our
consolidated financial condition and consolidated results of operations.

In November 2004,
the FASB issued Statement of Financial Accounting Standards No. 151, Inventory Costs, an
amendment of ARB No. 43, Chapter 4("SFAS 151"). This Statement clarifies the types of costs that should be
expensed rather than capitalized as inventory. SFAS 151 clarifies the circumstances under which fixed overhead
costs associated with operating facilities involved in inventory processing should be capitalized. The
provisions of SFAS 151 are effective for fiscal years beginning after June 15, 2005 and we expect to adopt this
standard in fiscal 2006. We have not determined the impact, if any, that this statement will have on our
consolidated financial statements.

In November 2004,
the FASB issued Financial Staff Position (FSP) SFAS No. 109-1 "Application of FASB
Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided
by the American Jobs Creation Act of 2004" ("FSP 109-1").  FSP 109-1 requires that any tax deductions received
from the Jobs Act associated with "qualified production activities income" should be treated as a special
deduction in the Company's SFAS 109

37



calculation.  The Jobs Act and its related deductions are not effective for
the Company until fiscal 2005.  We have adopted FSP 109-1 as of December 31, 2004.

In December 2004,
the FASB issued Statement of Financial Accounting Standards No. 153, Exchanges of
Nonmonetary Assets, an amendment of APB Opinion No. 29("SFAS 153"). SFAS 153 eliminates the exception from fair
value measurement for nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB Opinion No.
29, Accounting for Nonmonetary Transactions("APB 29"), and replaces it with an exception for exchanges that do
not have commercial substance. SFAS 153 specifies that a nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 153 is
effective for the fiscal periods beginning after June 15, 2005 and we will adopt this standard in fiscal 2006.
We have not determined the impact, if any, that this statement will have on our consolidated financial
statements.

In December 2004,
the FASB issued Statement of Financial Accounting Standards No. 123R, Share-Based Payment("SFAS 123R"). This Statement focuses primarily on accounting for transactions in which an entity obtains
employee services in share-based payment transactions. SFAS 123R requires a public entity to measure the cost of
employee services received in exchange for an award of equity instruments based on the grant-date fair value of
the award (with limited exceptions). That cost will be recognized over the period during which an employee is
required to provide service in exchange for the award. This statement is effective as of the beginning of the
first interim or annual reporting period that begins after June 15, 2005 and we will adopt the standard in the
third quarter of 2005. We have not determined the impact, if any, that this statement will have on our
consolidated financial statements.

Critical Accounting Policies and Estimates

Our discussion and
analysis of our financial condition and results of operations are based upon our
consolidated financial statements, which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure
of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to
inventories, supplies, accounts receivable, warranties, long-lived assets, product liability, revenue recognition
(inclusive of cash discounts, rebates, and sales returns), advertising and promotional costs, self-insurance,
pension and post-retirement benefits, deferred tax assets, and goodwill. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. As noted below, in some cases, our estimates are also based in part on
the findings of independent advisors. Actual results may differ from these estimates under different assumptions
or conditions.

Management has addressed and reviewed our critical accounting policies and considers them appropriate. We
believe the following critical policies utilize significant judgments and estimates used in the preparation of
our consolidated financial statements:

Revenue recognition.    Sales, net of an estimate for discounts,
returns and allowances, and related cost of sales are recorded when goods are shipped, at which time risk of loss and title transfers to the customer. We
continually evaluate our sales terms against criteria outlined in SEC Staff Accounting Bulletin 104, Revenue
Recognition, which supercedes SAB 101, Revenue Recognition in Financial Statements. We follow the industry
practice of selling firearms pursuant to a "dating" plan allowing the customer to purchase these products
commencing in December (the start of our dating plan year) and to pay for them on extended terms. Discounts are
offered for early payment under this plan. We believe 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. We believe that the dating plan helps facilitate a more efficient manufacturing schedule. As a
competitive measure, we also offer extended terms on select ammunition purchases. However, use of the dating
plans also results in significant deferral of collection of accounts receivable until the latter part of the
year. Customers do not have the right to return unsold product. Management uses historical trend information as
well as other economic data to estimate future discounts, returns, rebates and allowances.

Allowance for doubtful accounts.    We maintain an allowance for doubtful receivables for estimated losses
resulting from the inability of our trade customers to make required payments. We provide an allowance for
specific customer accounts where collection is doubtful and also provide an allowance for customer deductions
based on historical collection and write-off experience. Additional allowances would be required if the financial
conditions of our customers deteriorated.

Inventories.    Our inventories are valued at the lower of cost or market. We evaluate the quantities of
inventory held against past and future demand and market conditions to determine excess or slow moving inventory.
For those units of

38



inventory identified, we estimate their market value based on current and
projected selling prices. If the projected market value is less than cost, we provide an allowance to reflect the lower value of
that inventory. This methodology recognizes projected inventory losses at the time such losses are evident rather
than at the time goods are actually sold.

Property, Plant and Equipment.    Property, plant and equipment are stated at cost less accumulated depreciation. 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. In accordance with Statement of Financial Accounting Standard No.
144, Accounting for the Impairment or Disposal of LongLived Assets(SFAS 144), 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 resulting from the use of the asset over the remaining
life of the asset. If these projected cash flows are less than the carrying amount of the asset, an impairment loss is recognized, resulting
in a writedown of property, plant and equipment with a corresponding charge to operating income. Any impairment loss is 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 operations, included in the other
income and expenses.

Interest is capitalized in connection with the construction
of major projects. The capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset's useful life.

Goodwill, Goodwill Impairmant, Intangible Assets and Debt Issuance Costs.Prior to January 1, 2002, intangibles consisting primarily
of goodwill, trade names and trademarks, were amortized on a straightline basis over their estimated useful lives of 40 years. The Company
adopted the provisions of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets(SFAS 142) on January 1,
2002 and has accounted for its goodwill, intangible assets, and debt issuances costs pursuant to SFAS 142 since that time. Accordingly,
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 resulting from the use of the asset associated with the identified reporting
unit. If these projected cash flows are less than the carrying amount of the goodwill, an impairment loss is recognized, resulting in a writedown
of goodwill with a corresponding charge to operating income. The impairment loss is 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. Debt issuance costs are amortized over the life of the related debt or amendment.

Reserves for product liability.
    We provide 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. Estimates for accruals for product liability matters are based on historical patterns of the
number of occurrences, costs incurred and a range of potential outcomes. We also utilize independent advisors to
assist in analyzing the adequacy of such reserves. Due to the inherently unpredictable nature of litigation,
actual results will likely differ from estimates.

Warranty accrual.    We provide consumer warranties against manufacturing defects in all firearm products
we sell in North America. Estimated future warranty costs are accrued at the time of sale, using the percentage
of actual historical repairs to shipments for the same period, which is included in other accrued liabilities.
Product modifications or corrections are voluntary steps taken to assure proper usage or performance of a product
by consumers. The cost associated with product modifications and or corrections are recognized in accordance with
Statement of Financial Accounting Standard No. 5, Accounting for Contingencies, and charged to operations.

Employee Benefit Plans.
    We have defined benefit plans that cover a significant portion of our salaried
and hourly paid employees. For the year ended December 31, 2004, we had $12.0 million of net pension benefit
expense derived from our defined benefit plans. We derive pension benefit expense from an actuarial calculation
based on the defined benefit plans' provisions and management's assumptions regarding discount rate, rate of
increase in compensation levels and expected long-term rate of return on assets. Management determines the
expected long-term rate of return on plan assets based upon historical actual asset returns and the expectations
of asset returns over the expected period to fund participant benefits based on the current investment mix of our
plans. We note that in 2004 we had returns on Plan assets of approximately 8% as compared to an assumption of
8%. Management sets the discount rate based on the yield of high quality fixed income investments expected to be
available in the future when cash flows are paid. The rate of increase in compensation levels is established
based on management's expectations of current and foreseeable future increases in compensation. In addition,



management also consults with independent actuaries in determining
these assumptions. At year end December 31, 2004, we had an additional minimum liability with respect to our defined benefit plans.
See Note 11 for more information on our employee benefit plans.

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

Reserves for workers compensation liability.
    We provide for estimated medical and indemnity compensation
costs related to workers compensation liabilities when it becomes probable that a liability has been incurred and
reasonable estimates of such costs are available. Estimates for accruals for workers compensation liability
matters are based on historical patterns of the number of occurrences, costs incurred and a range of potential
outcomes. We also utilize independent advisors to assist in analyzing the adequacy of such reserves.

Income Taxes.    Income tax expense is based on pretax financial accounting income. The Company recognizes deferred
tax assets and liabilites 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, in conjunction with Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes(SFAS 109). A valuation allowance is recorded
when it is more likely than not that the deferred tax asset will not be realized. Because the Company files its income taxes in a consolidated
tax return with Holding, the cash taxes paid or received supplemental cash flow disclosure reflects the total impact of any
cash taxes paid or received on behalf of Holding.

Unconsolidated Joint Venture.    Our unconsolidated joint venture is accounted for under the equity method of
accounting in accordance with Accounting Principles Board Opinion No. 18, The Equity Method of Accounting for
Investments in Common Stock("APB 18"). Equity method accounting was determined based upon the provisions of
FASB Interpretation No. 46R, Consolidation of Variable Interest Entities (revised December 2003) - an
interpretation of ARB No. 51("FIN 46R"), as the joint venture is a variable interest entity for which the
Company was not the primary beneficiary. Accordingly, the Company recognizes an investment on its statement of
financial position at the carrying value of the Company's cumulative cash contributions to the joint venture,
adjusted for the Company's cumulative equity in earnings (loss) (recorded in the "Other Noncurrent Assets" line),
and the Company's 50% share of the joint venture's equity in earnings (loss), or operating results, are recorded
net of tax in the statement of operations (recorded in the "Equity in Earnings (Loss) from Unconsolidated Joint
Venture, net of tax" line).

Information Concerning Forward-Looking Statements

The statements
contained in this report (other than our consolidated financial statements and other
statements of historical fact) are forward-looking statements, including, without limitation (i) the statement in
"Business--Market Trends" that we believe that hunting safety issues may affect sales of firearms, ammunition and
other shooting-related products; (ii) the statement in "Business--Regulation" that we believe 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; (iii) the statement in "Business--Supply of Raw
Materials" that we believe we have a good relationship with our vendors and do not currently anticipate material
shortages or disruptions in supply from these vendors; (iv) the statement in "Business-- Supply of Raw Materials"
that we believe we have a good relationship with our stamped parts supplier and do not currently anticipate any
material shortages or disruption in supply of these stamped parts; (v) the statement in "Business--Environmental
Matters" concerning our 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 our
business; (vi) other statements as to management's or our expectations and beliefs presented in "Business;" (vii)
the statement in "--Recent Developments and highlights" that current and continuing trends are not expected to
have a material adverse effect upon our financial condition, results of operations or cash flows, (viii) the statement in
"--Liquidity and Capital Resources--Capital Expenditures" that we anticipate year 2005 capital expenditures of
$9.0 million to $11.0 million; (ix) the statements in "--Liquidity and Capital Resources--Overview" concerning our
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 Working Capital Facility and;
(x) the statements in "--Product Liability" concerning (a) our belief that product liability cases and claims
involving occurrences arising prior to the Acquisition are not likely to have a material adverse effect upon our
financial condition or results or operations, (b) our belief that the outcome of all pending product liability
cases and claims will not have a material adverse effect upon our financial condition or result of operations and
(c) management's estimates concerning our claims relating to occurrences arising during 2004, 2003 and 2002 and
the time period during which the amount of our self insured retention will be paid out; (xi) the statement in
"Quantitative and Qualitative Disclosures About

40



Market Risk" that we believe that a significant changes in
commodity pricing could have a material adverse impact on our consolidated financial position, results of
operations, future earnings, fair value or cash flows (xii) other statements as to management's or our
expectations and beliefs presented in this "Management's Discussion and Analysis of Financial Condition and
Results of Operations;" (xiii) the statements in "Legal Proceedings" concerning (a) our belief that the Company's current
product liability insurance coverage for personal injury and property damage is adequate for its needs, (b) our
belief that although we anticipate that we 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 our financial conditions or results of operations and (c) our anticipation that we, as well
as other manufacturers of firearm or ammunition products, will continue to be involved in product liability cases
and claims in the future and (xiv) other statements as to management's or our 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 us.  There can be no assurance that future
developments will be in accordance with management's expectations or that the effect of future developments on us
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--Firearms", "--Ammunition",
"--Marketing and Distribution," "--Patents and Trademarks" and "--Environmental Matters" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations--Executive Overview," "--Taxes,"
"--Liquidity and Capital Resources," "--Product Liability," and "Legal Proceedings"), or in our other Securities
and Exchange Commission filings, could affect (and in some cases have affected) our actual results and could
cause such results to differ materially from estimates or expectations reflected in such forward-looking
statements.

| |  | Our 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 our 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 our control  including  the  responses of  competitors,  changes in customer  inventory
     management  practices,  changes in customer buying patterns,  regulatory  developments and increased operating
     costs.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

| |  | We face  significant  competition.  Our  competitors
vary  according  to product  line.  Certain of these
     competitors are subsidiaries of large  corporations with  substantially  greater financial  resources than us.
     There can be no assurance that we will continue to compete  effectively  with all of our present  competition,
     and our ability to so compete could be adversely affected by its leveraged condition.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Sales  made to  Wal-Mart  Stores,  Inc.  ("Wal-Mart")
accounted  for  approximately  16% of our total net
     revenues in 2004 and 8% of the accounts  receivable  balance as of December  31,  2004.  Our sales to Wal-Mart
     are  not  governed  by  a  written  contract  between  the  parties.  In  the  event  that  Wal-Mart  were  to
     significantly  reduce or  terminate  its  purchases  of  firearms  and/or  ammunition  from us, our  financial
     condition or results of operations could be adversely affected.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

41



| |  | We  utilize  numerous  raw  materials,  including  steel,
lead,  brass,  plastics  and  wood,  as well as
     manufactured  parts,  which are purchased  from one or a few  suppliers.  Any  disruption in our  relationship
     with these suppliers could increase the cost of operations.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 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 we do not believe that existing federal and state  legislation  relating to the regulation
     of  firearms  and  ammunition  has had a material  adverse  effect on our sales  from 2002  through  2004,  no
     assurance can be given that more  restrictive  regulations,  if proposed or enacted,  will not have a material
     adverse effect on us in the future.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | As a  manufacturer  of  firearms,  we have 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.  Our  insurance
     coverage  regarding such claims may be limited.  In the event that  additional such lawsuits were filed, or if
     certain legal  theories  advanced by  plaintiffs  were to be generally  accepted by the courts,  our financial
     condition and results of operations could be adversely affected.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

While we periodically
reassess 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 our quarterly and annual reports we do not intend to review or revise any
particular forward-looking statement referenced in this report in light of future events.

Product Liability

For information
concerning product liability cases and claims involving us, see "Business--Legal
Proceedings". Because our assumption of financial responsibility for certain product liability cases and claims
involving pre-Acquisition occurrences was limited to an amount that has now been fully paid, with the Sellers
retaining liability in excess of that amount and indemnifying us in respect thereof, and because of the passage
of time, we believe that product liability cases and claims involving occurrences arising prior to the
Acquisition are not likely to have a material adverse effect upon our financial condition, results of operations,
or cash flows. See "Business--Certain Indemnities".

While it is difficult
to forecast the outcome of litigation, we do 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, our accruals for the uninsured
costs of such cases and claims and the Sellers' agreement to bear partial responsibility for certain
post-Acquisition shotgun-related product liability costs, as well as the type of firearms products we make), that
the outcome of all pending product liability cases and claims will be likely to have a material adverse effect
upon our financial condition, results of operations, or cash flows. However, in part because of the uncertainty
as to the nature and extent of manufacturer responsibility for product liability allegations, especially as to
firearms, as well as the potential nature of firearms-related injuries, there can be no assurance that our
resources will be adequate to cover both pending and 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 our
products, we anticipate that we will continue to be involved in product liability cases and claims in the future.

Since December 1, 1993,
we have maintained insurance coverage for product liability claims for personal
injury or property damage relating to occurrences after the Acquisition, subject to certain self-insured
retentions on a per-occurrence basis. The current insurance policy extends through November 30, 2005. Certain of
our current excess insurance coverage expressly excludes actions brought by municipalities as described in
"Business--Legal Proceedings". We paid $2.8 million, $3.2 million, and $4.4 million in legal fees and settlements
in connection with product liability cases and claims in the years ended December 31, 2004, 2003 and 2002,
respectively, excluding insurance costs. At December 31, 2004, our accrual for product liability cases and claims
was $13.4 million. The amount of our accrual for product liability cases and claims is based upon estimates
developed as follows.  We establish reserves for anticipated defense and disposition costs to us of those pending
cases and claims for which we are financially responsible. Based on those estimates and an actuarial analysis of
actual defense and disposition costs incurred by us with respect to product liability cases and claims in recent
years, we determine the estimated defense and disposition costs for unasserted product liability cases and
claims. We combine the estimated defense and disposition costs for both pending and unasserted cases and claims
to determine the amount of our accrual for product liability cases and claims. It is reasonably possible that
future claims experience could result in further increases or decreases in the reporting period in which such
information becomes available. We believe that our accruals for losses relating to such cases and claims are
adequate. Our accruals for losses relating to product liability cases and claims include accruals for all
probable losses the amount of which can be reasonably estimated. Based on the 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, our 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 well as the type of firearms products that we make), we do not believe with respect
to product liability cases and claims that any reasonably possible loss exceeding amounts already recognized
through our accruals has been incurred.

Because our
assumption of financial responsibility for certain product liability cases and claims involving
pre-Acquisition occurrences was limited to an amount that has now been fully paid, with the Sellers retaining
liability in excess of that amount and indemnifying us in respect of such liabilities, and because of our
accruals with respect to such cases and claims, we believe that product liability cases and claims involving
occurrences arising prior to the Acquisition are not likely to have a material adverse effect upon our financial
condition, results of operations, or cash flows. Moreover, although it is difficult to forecast the outcome of
litigation, we do 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, our 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 well as
the type of firearms products that we make), that the outcome of all pending post-Acquisition product liability
cases and claims will be likely to have a material adverse effect upon our financial condition, results of
operations, or cash flows. Nonetheless, in part because the nature and extent of liability based on the
manufacture and/or sale of allegedly defective products (particularly as to firearms and ammunition) is
uncertain, there can be no assurance that our resources will be adequate to cover pending and future product
liability occurrences, cases or claims, in the aggregate, or that a material adverse effect upon our financial
condition, results of operations, or cash flows will not result therefrom. Because of the nature of our products,
we anticipate that we will continue to be involved in product liability litigation in the future. Because of the
potential nature of injuries relating to firearms and ammunition, certain public perceptions of our products, and
recent efforts to expand liability of manufacturers of firearms and ammunition, product liability cases and
claims, and insurance costs associated with such cases and claims, may cause us to incur significant costs.

43



Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to
market risk in the normal  course of our  business  operations  due to our  purchases of
certain  commodities  and our ongoing  investing  and financing  activities.  The risk of loss can be assessed from
the perspective of adverse changes in fair values,  cash flows and future earnings.  We have  established  policies
and  procedures  governing our management of market risks and the use of financial  instruments to manage  exposure
to such risks.

Certain of our
financial  instruments  are subject to interest rate risk. As of December 31, 2004, we had
long-term  borrowings of $202.9  million  ($230.0  million at December 31, 2003 and $100.1  million at December 31,
2002) of which $1.8  million  ($28.3  million at December  31, 2003 and $11.0  million at  December  31,  2002) was
issued at variable  rates.  Assuming no changes in the $19.2 million of monthly average  variable-rate  debt levels
from  year-end  2004,  we estimate  that a  hypothetical  change of 100 basis  points in the LIBOR and ABR interest
rates from year-end 2003 would impact interest  expense by $0.2 million on an annualized  pretax basis. We were not
a party to any interest rate cap or other protection  arrangements  with respect to our variable rate  indebtedness
as of December 31, 2004, 2003, or 2002.

The estimated
value of our debt at December 31, 2004 was $187.5  million  compared to a carrying value of
$203.5 million.  The  estimated  value and carrying  value of our debt at December 31, 2003 was $240.5  million and
$230.5 million,  respectively.  All fixed rate indebtedness was valued based on current market quotes. All variable
rate indebtedness is assumed at market.

We use commodity
options  contracts to hedge against the risk of increased  prices for lead and copper to
be used in the  manufacture of our products.  The amounts of premiums paid for commodity  contracts  outstanding at
December  31,  2004,  2003,  and 2002  were  $1.1  million,  $0.7  million,  and  $0.6  million,  respectively.  At
December 31, 2004,  2003 and 2002, the market value of our outstanding  contracts  relating to firm commitments and
anticipated  purchases up to one year from the respective  date was $3.3 million,  $2.8 million,  and $0.2 million,
respectively,  as determined  with the assistance of a third party.  Assuming a  hypothetical  10% increase in lead
and copper  commodity  prices which are currently  hedged,  we would  experience an approximate  $3.1 million ($1.9
million at  December  31,  2003)  increase in our cost of related  inventory  purchased,  which would be  partially
offset by an  approximate  $1.7  million  ($1.5  million at  December  31,  2003)  increase in the value of related
hedging  instruments.  The  increase  in exposure  as  compared  to the prior year can be associated with higher
premiums  paid, higher  overall  strike  prices on the  Company's  hedging  contracts, and changes in percentage
hedged due to fluctuating production levels.  With the volatility of pricing the Company has experienced,  we believe
that significant  changes in commodity pricing could have a future material impact on our consolidated financial position,
results of operations,  or cash flows of the Company.

We  also  purchase
steel  supplies  for use in the  manufacture  of  certain  firearms,  ammunition,  and
accessory  products.  The price of steel has recently risen due to the increasing demand from China compounded by a
weak US dollar and iron ore shortages.  Assuming a hypothetical  10% increase in steel prices,  we would experience
an  approximate  $0.6 million (an  approximate  $0.6 million at December 31, 2003)  increase in our cost of related
inventory purchased.

We believe that we
do not have a material exposure to fluctuations in foreign currencies.

We do not hold or issue financial
instruments for speculative purposes.

44



Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors 
of Remington Arms Company, Inc. and Subsidiaries:

In our opinion, the consolidated financial statements listed
in the index appearing in Item 15 (a) (1) present
fairly, in all material respects, the financial position of Remington Arms Company, Inc. and its subsidiaries at
December 31, 2004 and December 31, 2003, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 2004 in conformity with accounting principles generally
accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed
in the index appearing in Item 15 (a) (2) presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial statements. These financial statements
and financial statement schedule are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our
audits of these statements in accordance with the Standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 8 to the consolidated financial statements, the Company changed its accounting policy for
goodwill amortization in 2002./s/ PricewaterhouseCoopers LLP
Greensboro, North Carolina
March 11, 2005

45



|Remington Arms Company, Inc.              
|------------------------------------------
|
|
|                                          
|
|                                          
|ASSETS                                    
|Current Assets                            
|Cash and Cash Equivalents                 
|Accounts Receivable Trade - net           
|Inventories - net                         
|Supplies                                  
|Prepaid Expenses and Other Current Assets 
|Deferred Tax Assets                       
|                                          
|Total Current Assets                      
|Property, Plant and Equipment - net       
|Goodwill and Intangibles                  
|Debt Issuance Costs - net                 
|Other Noncurrent Assets                   
|Assets Held for Sale                      
|                                          
|Total Assets                              
|                                          
|LIABILITIES AND SHAREHOLDER'S EQUITY      
|Current Liabilities                       
|Accounts Payable                          
|Book Overdraft                            
|Current Portion of Long-Term Debt         
|Current Portion of Product Liability      
|Income Taxes Payable                      
|Deferred Tax Liabilities                  
|Other Accrued Liabilities                 
|                                          
|Total Current Liabilities                 
|Long-Term Debt, net of Current Portion    
|Retiree Benefits                          
|Product Liability, net of Current Portion 
|Deferred Tax Liabilities                  
|Other Long-Term Liabilities               
|                                          
|Total Liabilities                         
|                                          
|Commitments and Contingencies             
|Shareholder's Equity                      
|Total Shareholder's Equity                
|                                          
|Total Liabilities and Shareholder's Equity
|                                          

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

46



|Remington Arms Company, Inc.                                                
|----------------------------------------------------------------------------
|
|
|                                                                            
|                                                                            
|
|
|                                                                            
|                                                                            
|Net Sales                                                                   
|Cost of Goods Sold                                                          
|                                                                            
|Gross Profit                                                                
|Selling, General and Administrative Expenses                                
|Research and Development Expenses                                           
|Other Income                                                                
|Other Unusual Charges                                                       
|                                                                            
|Operating Profit                                                            
|Interest Expense                                                            
|                                                                            
|Income (Loss) from Continuing Operations before Income Taxes, Equity        
|in (Earnings) Losses from Unconsolidated Joint Venture and Sale of Assets   
|Income Tax Expense (Benefit)                                                
|Equity in (Earnings) Losses from Unconsolidated Joint Venture, net of tax   
|                                                                            
|Net (Loss) Income from Continuing Operations before                         
|change in Accounting Principle                                              
|Income from Discontinued Operations, net of tax expense of $0.1, $0.9 and   
|$1.9, respectively                                                          
|Gain on Sale of Assets, net of tax expense of $9.8                          
|                                                                            
|Net Income (Loss) before change in Accounting Principle                     
|Cumulative effect of change in Accounting Principle, net of $1.0 tax benefit
|                                                                            
|Net Income (Loss)                                                           
|                                                                            

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

47



|Remington Arms Company, Inc.                                  
|--------------------------------------------------------------
|
|
|                                                              
|
|                                                              
|
|                                                              
|Operating Activities                                          
|Net Income (Loss)                                             
|Adjustments to reconcile Net Income (Loss) to Net Cash        
|(used in) provided by Operating Activities:                   
|Depreciation and Amortization of Deferred Financing Costs     
|Gain on Sale of Assets Held for Sale                          
|Provision for Retiree Benefits                                
|Provision (Benefit) for Deferred Income Taxes, net            
|Other Non-cash charges                                        
|Changes in Operating Assets and Liabilities:                  
|Accounts Receivable Trade - net                               
|Inventories                                                   
|Supplies                                                      
|Prepaid Expenses and Other Current Assets                     
|Other Noncurrent Assets                                       
|Accounts Payable                                              
|Product Liabilities                                           
|Income Taxes Payable                                          
|Other Accrued and Long-Term Liabilities                       
|                                                              
|Net Cash (used in) provided by Operating Activities           
|Net Cash provided by (used in) Discontinued Operations        
|                                                              
|Net Cash (used in) provided by Operating Activities           
|                                                              
|                                                              
|Investing Activities                                          
|Proceeds from Sale of Assets, net of Transaction costs of $1.2
|Purchase of Property, Plant and Equipment                     
|Proceeds from Sale of Property, Plant and Equipment           
|Cash Contribution to Unconsolidated Joint Venture             
|                                                              
|Net Cash provided by (used in) Investing Activities           
|Net Cash used in Discontinued Operations                      
|                                                              
|Net Cash provided by (used in) Investing Activities           
|                                                              
|                                                              
|Financing Activities                                          
|Proceeds from Revolving Credit Facility                       
|Payments on Revolving Credit Facility                         
|Cash Dividends Paid                                           
|Proceeds from Issuance of Long-Term Debt                      
|Principal Payments on Long-Term Debt                          
|Capital Contributions from RACI Holding, Inc.                 
|Amount Paid on Behalf of RACI Holding, Inc.                   
|Proceeds from Borrowings on Short-Term Debt                   
|Principal Payments on Short-Term Debt                         
|Change in Book Overdraft                                      
|Debt Issuance Costs                                           
|                                                              
|Net Cash (used in) provided by Financing Activities           
|                                                              
|                                                              
|Decrease in Cash and Cash Equivalents                         
|Cash and Cash Equivalents at Beginning of Period              
|                                                              
|                                                              
|Cash and Cash Equivalents at End of Period                    
|                                                              
|                                                              
|Supplemental Cash Flow Information:                           
|Cash Paid During the Year for:                                
|Interest                                                      
|Income Taxes                                                  
|Noncash Financing and Investing Activities:                   
|Vendor Financed Fixed Assets Capitalized                      
|Change in Capital Expenditures Capitalized                    
|Issuance of Deferred Shares in Lieu of Bonus                  
|Payment Made to Vendors on Behalf of RACI Holding, Inc.       
|Capital Lease Obligations Incurred                            
|Conversion of Parent Company Note to equity                   

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

48



|Remington Arms Company, Inc.                                         
|---------------------------------------------------------------------
|
|
|                                                                     
|
|                                                                     
|Balance, December 31, 2001                                           
|                                                                     
|Comprehensive Income:                                                
|Net Income                                                           
|Other comprehensive income:                                          
|Minimum pension liability, net of tax effect                of ($2.4)
|Net derivative losses, net of tax effect                 of ($0.2)   
|Net derivative losses, reclassified as                               
|earnings, net of tax effect of $0.1                                  
|                                                                     
|Total Comprehensive Income                                           
|                                                                     
|Cash Dividends Paid                                                  
|Contributions from RACI Holding, Inc.                                
|                                                                     
|Balance, December 31, 2002                                           
|                                                                     
|Comprehensive Loss:                                                  
|Net Loss                                                             
|Other comprehensive income:                                          
|Minimum pension liability, net of tax effect                 of $0.7 
|Net derivative gains, net of tax effect of $0.9                      
|Net derivative losses, reclassified as                               
|earnings, net of tax effect of $0.2                                  
|                                                                     
|Total Comprehensive Loss                                             
|                                                                     
|Contributions from RACI Holding, Inc.                                
|Payment made to vendors on behalf of RACI                            
|Holding, Inc.                                                        
|Cash Dividends Paid                                                  
|                                                                     
|Balance, December 31, 2003                                           
|                                                                     
|Comprehensive Loss:                                                  
|Net Loss                                                             
|Other comprehensive income:                                          
|Minimum pension liability, net of tax effect                of $0.6  
|Net derivative gains, net of tax effect of $2.1                      
|Net derivative gains reclassified                                    
|as earnings, net of tax effect of ($1.5)                             
|                                                                     
|Total Comprehensive Loss                                             
|                                                                     
|Cash Dividends Paid                                                  
|Contributions from RACI Holding, Inc.                                
|Amount Paid on Behalf of                                             
|RACI Holding, Inc.                                                   
|                                                                     
|Balance, December 31, 2004                                           
|                                                                     

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

49



# REMINGTON ARMS COMPANY, INC.

# NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

# (dollars in millions, except per share data)

Note 1--Basis of Presentation

The accompanying
consolidated financial statements of Remington Arms Company, Inc. ("Remington") include
the accounts of its wholly owned subsidiaries, RA Brands, L.L.C. ("RA Brands") and RA Factors, Inc. (together
with Remington, the "Company"), as well as reflecting the impact of the Company's unconsolidated 50% joint
venture interest in Remington ELSAG Law Enforcement Systems, LLC ("RELES"). All significant intercompany accounts
and transactions have been eliminated. The accounts of the Company's parent, RACI Holding, Inc. ("Holding"),
which owns 100% of the issued and outstanding common stock of Remington, are not presented herein. Significant
transactions between the Company and Holding and the related balances are reflected in the consolidated financial
statements and related disclosures.

A revision to the classification
of licensing income from selling, general, and administrative expense to other income
was made to financial information from prior periods to conform with the current presentation format.  The
change in classification did not have a material impact on any previously reported financial condition, results of
operations or cash flows of the Company.  (See Note 4, Advertising and Promotions, for amounts).  In addition, as a result of the
sale of specified assets of the fishing line business on February 9, 2004, the results of these operations have been included in
discontinued operations and results from prior periods have been classified accordingly (See Note 3).

Note 2--Description of the Business

The Company is
engaged in the design, manufacture and sale of primarily sporting goods products for the
hunting/shooting sports and related markets, as well as certain federal agency, law enforcement, and military
products. The Company is also engaged in the business of selling surveillance technology products to the federal agency and law
enforcement markets. In addition, the Company is partnered in a joint venture to sell advanced license plate reading technology products to
state and local law enforcement agencies along with certain federal agencies. The Company's product lines
consist of firearms, ammunition, hunting/gun care accessories, clay targets, powdered metal products, and
technology and security products sold under the Remington name and other labels.

Note 3--Discontinued Operations

On February 6, 2004,  Remington and its  wholly-owned  subsidiary RA Brands entered into an Asset Purchase
Agreement (the "Stren Asset Purchase  Agreement") with Pure Fishing,  Inc. and its wholly-owned  subsidiaries  Pure
Fishing I, LLC and Pure  Fishing II, LLC  (collectively,  the  "Purchasers"),  pursuant to which  Remington  and RA
Brands sold to the Purchasers  certain  specified assets relating to Remington's  fishing line business,  effective
as of February 9, 2004.  The assets sold  consisted of  specified  machinery  and  equipment,  inventory,  purchase
orders  and other  contracts,  trademarks,  tradenames  and  other  intellectual  property,  records,  claims,  and
goodwill,  in each  case  relating  to  Remington's  fishing  line  business,  which had been part of the All Other
reporting segment.

The purchase  price paid to Remington  and RA Brands for the assets sold was $44.0 in cash,  $1.0 of which
was placed into escrow as security  for certain  post-closing  obligations  to procure  certain  materials  for the
Purchasers.  On May 12, 2004,  the amount placed into escrow of $1.0 was paid to Remington by the  Purchasers.  The
Company  applied the $43.0 in cash  proceeds to pay down the then  outstanding  balance  under  Remington's  senior
secured  revolving  credit  facility  (the "Credit  Facility")  on February 9, 2004,  and the $1.0 in cash proceeds
released from escrow were used to pay down Remington's  then  outstanding  Credit Facility balance on May 12, 2004.
The  assets  sold had a net book  value of  approximately  $17.9 and  Remington  retained  net  working  capital of
approximately  $1.7. The gain that was recorded in 2004 on the sale of  discontinued  operations was  approximately
$13.6,  net of income taxes.  The gain of  approximately  $13.6  reflects the release of the $1.0 escrow amount and
adjustments to the estimates of costs  associated with the sale based on remaining  obligations with respect to the
sale as of December 31, 2004.

Pursuant to the Stren Asset  Purchase  Agreement,  Remington  agreed not to compete with the Purchasers in the
fishing  line  business  for a period of five  years,  and also  agreed to  provide  the  Purchasers  with  certain
transitional  services and other  services and rights  relating to the sale of  Remington's  fishing line business,
which have been completed.

50



The following represents a summary of key components of income from discontinued operations:

|                                  | December 31, | December 31, | December 31,
|--------------------------------- | ------------ | ------------ | ------------
|Discontinued Operations:          |              | 2004         |             
|Net Sales                         |              | $         3  | .3          
|Pre-tax operating results         |              | 0            | .2          
|Interest expense allocation       |              | 0            | .1          
|Income from operations, after tax |              | --           |             

Included in income from discontinued operations is an allocation of interest expense of $0.1, $1.8, and $1.8
for the years ended December 31, 2004, 2003, and 2002, respectively. The interest expense allocation is based on
the Company being required to make a payment of $43.0 against its outstanding borrowings under the revolving
Credit Facility with the proceeds received at the closing of the transaction on February 9, 2004. The interest
expense allocation was computed by taking the $43.0 revolver balance required to be paid down at the time of the
sale closing, multiplied by the weighted average interest rate through February 9, 2004 for 2004, and for the
years ended 2003 and 2002. The Stren business has historically allocated interest expense (approximately $0.2
annually) as a result of actual working capital balances for the fishline business during each of the full years
in the mentioned period.

In the aforementioned transaction, certain specified assets of $18.0 at December 31, 2003 were reclassified
to assets held for sale in the consolidated balance sheet.  The assets were sold on February 9, 2004.

|                                        | December 31,
|--------------------------------------- | ------------
|Assets Held for Sale:                   |             
|Inventories, net                        |             
|PP&E                                    |             
|Intangibles                             |             
|Total Assets of Discontinued Operations |             

Note 4--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. Inventory costs associated with Semi-Finished Products and Finished Products
include material, labor, and overhead; while costs associated with Raw Materials include only material. The
Company provides inventory allowances for any excess and obsolete inventories.

Supplies:

The cost of supplies is determined by the average cost method adjusted to the lower of cost and market.

Service and Warranty:

The Company supports service and repair facilities for all of its firearm products, with the exception of
the Spartan Gunworks product line, which is serviced and repaired by its third party vendor, in order to meet the
service needs of its distributors, customers and consumers worldwide. The Company provides consumer warranties
against manufacturing defects in all firearm products it sells in North America. Estimated future warranty costs
are accrued at the time of sale. Product modifications or corrections are voluntary steps taken by the Company to
assure proper usage or performance of a product by consumers. The cost associated with product modifications
and/or corrections is recognized in accordance with Statement of Financial Accounting Standard No. 5, Accounting
for Contingencies("SFAS 5"), and charged to operations.

51



Property, Plant and Equipment:

Property, plant and equipment are stated at cost less accumulated depreciation. 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. In accordance with
Statement of Financial Accounting Standard No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets("SFAS 144"), 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 resulting from the use of the asset over the remaining life of
the asset. If these projected cash flows are less than the carrying amount of the asset, an impairment loss is
recognized, resulting in a write-down of property, plant and equipment with a corresponding charge to operating
income. Any impairment loss is 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. There were no significant assets deemed impaired as of December 31,
2004, 2003 and 2002.

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 operations, included in the other income and expenses.

Interest is capitalized in connection with the construction of major projects. The capitalized interest is
recorded as part of the asset to which it relates and is amortized over the asset's useful life. There was no
capitalized interest in 2004 or 2003. Approximately $0.1 of interest was capitalized in 2002.

Goodwill, Goodwill Impairment, Intangible Assets and Debt Issuance Costs:

Prior to January 1, 2002, intangibles, consisting primarily of goodwill, trade names and trademarks, were
amortized on a straight-line basis over their estimated useful lives of 40 years. The Company adopted the
provisions of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets("SFAS
142") on January 1, 2002 and has accounted for its goodwill, intangible assets, and debt issuances costs pursuant
to SFAS 142 since that time. Accordingly, 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 resulting from the use of the asset associated with the
identified reporting unit. If these projected cash flows are less than the carrying amount of the goodwill, an
impairment loss is recognized, resulting in a write-down of goodwill with a corresponding charge to operating
income. The impairment loss is 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. Debt issuance costs are amortized over the life of the related debt or
amendment.

Amortization expense for debt issuance costs in 2004, 2003, and 2002 was $1.9, $1.8, and $1.9,
respectively, and is expected to be approximately $1.8 in 2005, $1.7 in 2006, $1.6 in 2007, $1.1 in 2008 and $1.0
in 2009.

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 risks and are considered
hedges when certain criteria are met.

All of the Company's commodity futures contracts are accounted for as cash flow hedges under Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities("SFAS
133"), as amended by Statement of Financial Accounting Standards No. 138, Accounting for Certain Derivative
Instruments and Certain Hedging Activities - an amendment of FASB Statement No. 133("SFAS 138") and Statement of
Financial Accounting Standards No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging
Activities("SFAS 149"). SFAS 133, as amended requires that all derivative instruments be reported on the
balance sheet at fair value and establishes criteria for designation and effectiveness of hedging relationships.
The fair value of the Company's cash flow hedges at the time of purchase are recorded on the balance sheet in the
Prepaid Expenses and Other Current Assets line, and are marked to fair value at each balance sheet date. Gains
and losses associated with these changes in fair value are recorded on the balance sheet as other

52



comprehensive income and recognized in the statement of operations as a
component of the cost of the related inventory when the inventory is sold.

To the extent that the Company's cash flow hedges are deemed ineffective, under the criterion of FAS 133,
as amended, at hedging the commodity price risk, the portion of ineffectiveness would be required to be
recognized in the statement of operations immediately.  No ineffectiveness has been recorded in 2004, 2003, or
2002.

Market values of financial instruments were estimated in accordance with Statement of Financial Accounting
Standards No. 107, Disclosures about Fair Value of Financial Instruments("SFAS 107"), and are 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. See Note 21 and Item 7A "Quantitative and Qualitative Disclosures about Market Risk."

Stock Options:

All stock purchase
and option plans outstanding are associated with common shares of Holding.  Based on the provisions of Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation("SFAS 123") as amended by Statement of
Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation("SFAS 148"), Holding is
considered a principal stockholder of the Company that grants or otherwise transfers directly stockbased compensation to employees
of the Company.  Accordingly, the Company is required to account and disclose for these stockbased compensation
agreements in accordance with the provisions of FAS 123.

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 123, as amended, based on the fair
value of such options at the grant dates thereof in 2004, 2003 and 2002, the Company's net income and income per
share on a pro forma basis would have been as follows:

|           |  | 2004 |                                                                          | 2003 | 2002
|---------- |  | ---- | ------------------------------------------------------------------------ | ---- | ----
|           |  |      |                                                                          |      |     
|Net Income |  |      | As Reported                                                              |      |     
|Add:       |  |      | Stock-based employee compensation expense included in                    |      |     
|           |  |      | reported net income, net of related tax effects                          |      |     
|Deduct:    |  |      | Total stock-based employee compensation expense determined               |      |     
|           |  |      | under fair value based method for all awards, net of related tax effects |      |     
|           |  |      |                                                                          |      |     
|Net Income |  |      | Pro forma                                                                |      |     
|           |  |      |                                                                          |      |     

In February 2003,  Holding  distributed  on behalf of Remington a special  payment to holders of all stock
options (in connection with the  acceleration and resulting  cancellation of the options) of approximately  $220.31
per share,  in an aggregate  amount of $4.5,  which is $2.7, net of tax, as accounted for under APB Opinion No. 25.
The  expense to be  recorded  for 2003 under SFAS No. 123 would  have been  approximately  $1.8.  The  compensation
expense  associated  with these  options would have been recorded in prior years under SFAS 123, as amended by SFAS
148.

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:

|                                      | 2003 | 2002
|------------------------------------- | ---- | ----
|Risk Free Interest Rate               |      | 3   
|Dividend Yields                       |      | 0   
|Volatility Factor                     |      | 0   
|Weighted Average Expected Option Life |      | 0.8 

There
were no option grants in 2004 and therefore assumption disclosures for that period are not
applicable.

53



Income Taxes:

Income tax expense is based on pretax financial accounting income. The Company recognizes
deferred tax assets and liabilities 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, in conjunction with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes(SFAS
109). A valuation allowance is recorded when it is more likely than not that the deferred tax asset will not be realized. Because the Company files its income taxes in a
consolidated tax

return with Holding, the cash taxes paid or received supplemental cash flow disclosure
reflects the total impact of any cash taxes paid or received on behalf of Holding.

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 in accordance with Statement of Financial Accounting Standards
No. 5, Accounting for Contingencies(SFAS 5). 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, 2005. Product liabilities are recorded at the Companys most probable exposure in accordance with SFAS 5, including consideration of historical payment
experience and the self insured retention insurance. For the year ended December 31, 2004, there were no recoveries recorded. For the years ended December 31, 2003 and 2002, there
were recoveries totaling $1.0, and $2.7, respectively, which represented claims paid in excess of the self-insured retention amounts. The Companys estimate of its liability
for product liability cases and claims outstanding at December 31, 2004 and 2003 is $13.4 and $15.2, respectively. Management uses independent advisors in their determination of the
accrual. The Company made total product liability payments in 2004, 2003, and 2002 of $2.8, $3.2, and $4.4, respectively (including pre-Acquisition occurrences for which the
Company assumed responsibility). See Note 17.

Revenue Recognition:

Sales, net of an estimate for discounts, returns, rebates and allowances, and related cost of
sales are recorded in income when goods are shipped at which time risk of loss and title transfers to the customer in accordance with Staff Accounting Bulletin No. 101, Revenue
Recognition in Financial Statements (SAB 101) as amended by Staff Accounting Bulletin No. 104, Revenue Recognition (SAB 104). Sales are
presented net of Federal Excise Taxes of $33.5, $31.2 and $33.5 for the years ended December 31, 2004, 2003 and 2002, respectively.

The Company follows the industry practice of selling firearms pursuant to a dating
plan allowing the customer 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. 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 and fourth
quarters. The Company believes that the dating plan helps facilitate a more efficient manufacturing schedule. As a competitive measure, the Company also offers extended terms
on select ammunition purchases. Use of the dating plans, however, also results in significant deferral of collection of accounts receivable until the latter part of the
year. Customers do not have the right to return unsold products.

Shipping and Handling Costs:

Shipping and handling costs included in Selling, General and Administrative expense are expensed as
incurred. In 2004, 2003 and 2002 shipping and handling costs totaled $10.9, $9.4 and $9.5,
respectively.

Advertising and Promotions:

Advertising and promotional costs including print ads, commercials, catalogs, brochures and co-op are
expensed during the year incurred. Advertising and promotional costs totaled $11.7 in 2004, $11.4 in 2003 and $10.8 in 2002. The Company licenses certain of its brands and
trademarks. The income from such licensing was $2.6, $2.4 and $2.9 in 2004, 2003 and 2002, respectively, which is reflected in Other (Income) Expense.

54

Research and Development Costs:

Internal research and development costs including salaries, administrative expenses, building costs
of our research and development facility, and related project expenses are expensed as incurred.  Research and development costs totaled $6.1 in each of the years ended 2004, 2003 and 2002.

Self-Insurance:

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

Pension and Postretirement:

The Company accounts for its pension and supplemental employee retirement plans under
Statement of Financial Accounting Standards No. 87, Employers Accounting for Pensions (SFAS 87) and Statement of Financial Accounting Standards No. 88,
Employers Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits (SFAS 88). The Company accounts for its
postretirement plan under Statement of Financial Accounting Standards No. 106, Employers Accounting for Postretirement Benefits Other Than Pensions(SFAS 106). Unrecognized prior service costs are amortized over the estimated remaining service lives of employees. The unrecognized net gain or loss
resulting from changes in the amount of either the projected benefit obligation or plan assets from experience different from that assumed is amortized over five years. The
disclosures associated with the Companys pension and postretirement plans are made under the provisions of Statement of Financial Standards No. 132R, Employers
Disclosures about Pension and Other Postretirement Benefits, an update of FASB Statements No. 87, 88, and 106 (SFAS 132R).

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.

Unconsolidated Joint Venture:

Our unconsolidated joint venture is accounted for under the equity method of accounting in
accordance with Accounting Principles Board Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock(APB 18). Equity method
accounting was determined based upon the provisions of FASB Interpretation No. 46R, Consolidation of Variable Interest Entities (revised December 2003)  an
interpretation of ARB No. 51 (FIN 46R), as the joint venture is a variable interest entity for which the Company was not the primary beneficiary. Accordingly, the
Company recognizes an investment on its statement of financial position at the carrying value of the Companys cumulative cash contributions to the joint venture, adjusted
for the Companys cumulative equity in earnings (recorded in the Other Noncurrent Assets line), and the Companys 50% share of the joint
ventures equity in earnings (loss), or operating results, are recorded net of tax in the statement of operations (recorded in the Equity in Earnings (Loss) from
Unconsolidated Joint Venture, net of tax line).

Recent Accounting Pronouncements:

In May 2004, the FASB issued Financial Staff Position (FSP) SFAS No. 106-2 Accounting and Disclosure Requirements Related to the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (the Act), which is effective as of the first interim period beginning after June 15, 2004. On December 8, 2003,
President Bush signed the Act into law, which introduces a prescription drug benefit under Medicare as well as a federal subsidy to sponsors of retiree health care benefit plans
that provide a benefit that is at least actuarially equivalent to that provided under the Act. FSP SFAS No. 106-2 supersedes FSP FAS 106-1, and clarifies accounting guidance for
the Acts subsidy provisions given to health care plan sponsors who provide specified levels of postretirement healthcare benefits. The Company has adopted the Act and the Act
had no material impact on its consolidated financial condition and consolidated results of operations.

55



In November 2004, the FASB issued Statement of Financial Accounting Standards No. 151,
Inventory Costs, an amendment of ARB No. 43, Chapter 4 (SFAS 151). This Statement clarifies the types of costs that should be expensed rather than capitalized as
inventory. SFAS 151 clarifies the circumstances under which fixed overhead costs associated with operating facilities involved in inventory processing should be
capitalized. The provisions of SFAS 151 are effective for fiscal years beginning after June 15, 2005 and the Company will adopt this standard in fiscal 2006. The Company has not
determined the impact, if any, that this statement will have on its consolidated financial statements.

In November 2004, the FASB issued Financial Staff Position (FSP) SFAS No. 109-1
Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of
2004 (FSP 109-1). FSP 109-1 requires that any tax deductions received from the American Jobs Creation Act of 2004 (Jobs Act) associated with
qualified production activities income should be treated as a special deduction in the Companys SFAS 109 calculation. The Jobs Act and its related
deductions are not effective for the Company until fiscal 2005. The Company has adopted FSP 109-1 as of December 31, 2004.

In December 2004, the FASB issued Statement of Financial Accounting Standards No. 153,
Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29 (SFAS 153). SFAS 153 eliminates the exception from fair value measurement for nonmonetary
exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29, Accounting for Nonmonetary Transactions (APB 29), and replaces it with
an exception for exchanges that do not have commercial substance. SFAS 153 specifies that a nonmonetary exchange has commercial substance if the future cash flows of the entity are
expected to change significantly as a result of the exchange. SFAS 153 is effective for the fiscal periods beginning after June 15, 2005 and the Company will adopt this standard
in fiscal 2006. The Company has not determined the impact, if any, that this statement will have on its consolidated financial statements.

In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123R,
Share-Based Payment(SFAS 123R). This Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based
payment transactions. SFAS 123R requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date
fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award.
This statement is effective as of the beginning of the first interim or annual reporting period that begins after June 15, 2005 and the Company will adopt the standard in the
third quarter of 2005. The Company has not determined the impact, if any, that this statement will have on its consolidated financial statements.

# Note 5Concentrations of Credit Risk

Concentrations of credit risk with respect to trade accounts receivable are generally insignificant,
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.
Recoveries, net of any bad debt expense, were ($0.1), ($0.7) and ($0.3) for years 2004, 2003 and 2002, respectively. The allowance for doubtful accounts amounted to $0.5 as of
December 31, 2004 and 2003.

Sales to the Companys largest customer, Walmart, comprised approximately 16% of sales in
2004, 19% of sales in 2003 and 22% of sales in 2002. The accounts receivable balance from Walmart comprised approximately 8% and 14% at December 31, 2004 and 2003, respectively; no
other customer accounted for sales equal to or greater than 10% of sales for the years presented.

At December 31, 2004, two other customers comprised approximately 20% and 10%, respectively,
of the outstanding accounts receivable balance. No other customers accounted for accounts receivable greater than 10% at December 31, 2004.

56



# Note 6Inventories

At December 31, Inventories consist of the following:

|                       |  |            
|---------------------- |  | -----------
|                       |  | 2004       
|Raw Materials          |  | $        17
|Semi-Finished Products |  | 19         
|Finished Products      |  | 55         
|Total                  |  | $        92

# Note 7Property, Plant and Equipment

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

|                               |  |             
|------------------------------ |  | ------------
|                               |  | 2004        
|Land                           |  | $          1
|Building and Improvements      |  | 26          
|Leased Assets                  |  | 4           
|Machinery and Equipment        |  | 146         
|Construction in Progress       |  | 7           
|Subtotal                       |  | 185         
|Less: Accumulated Depreciation |  | (110        
|Total                          |  | $         75

Depreciation expense for the years ended December 31, 2004, 2003 and 2002 was $9.2, $9.5, and $10.0,
respectively.  Accumulated depreciation on capital leases was $4.5 and $4.1 as of December 31,
2004 and 2003, respectively.

Note 8--Goodwill and Other Intangible Assets

Effective January 1, 2002 the Company adopted Statement of Financial Accounting Standard No. 142 ("SFAS
142"), Goodwill and Other Intangible Assets, which requires goodwill and other intangible assets with indefinite
lives acquired in a business combination before July 1, 2001 not be amortized. The Statement further requires
that the fair value of goodwill and other intangible assets with indefinite lives be tested for impairment upon
adoption of the standard and annually thereafter or upon an occurrence of certain events.

The Company continues to monitor one of the business units in the All Other reporting segment which had a
carrying value of $3.4 at September 30, 2004, when management's SFAS 142 analysis showed no impairment. It is
reasonably possible the Company could be required to recognize an impairment if an adverse trend of profitability
were to occur. No impairment provision was necessary for December 31, 2004, 2003, and 2002.

Goodwill and Trademarks of $5.9 and $5.6, respectively, were reclassified to Assets Held for Sale in
2003. The carrying amount of goodwill and trademarks attributable to each reporting segment are outlined in the
following tables:

|           |  |              
|---------- |  | -------------
|           |  | December  31,
|Goodwill   |  | 2004         
|Firearms   |  | $        12  
|Ammunition |  | 5            
|All Other  |  | 2            
|Total      |  | $        20  
|           |  | December  31,
|Trademarks |  | 2004         
|Firearms   |  | $        20  
|Ammunition |  | 19           
|All Other  |  | 2            
|Total      |  | $        41  

57



Note 9--Other Accrued Liabilities

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

|                     |  |            
|-------------------- |  | -----------
|                     |  | 2004       
|Marketing            |  | $         6
|Healthcare Costs     |  | 6          
|Retiree Benefits     |  | 7          
|Workers Compensation |  | 3          
|Other                |  | 11         
|Total                |  | $        34

Note 10--Warranty Accrual

The Company provides consumer warranties against manufacturing defects on all firearm products it sells in
North America, with the exception of the Spartan Gunworks product line, which is warranted by its third party
vendor. Estimated future warranty costs are accrued at the time of sale, using the percentage of actual
historical repairs to shipments for the same period, which is included in other accrued liabilities. Product
modifications or corrections are voluntary steps taken by the Company to assure proper usage or performance of a
product by consumers. The cost associated with product modifications and or corrections are recognized in
accordance with Statement of Financial Accounting Standard No. 5, Accounting for Contingencies, and charged to
operations. Activity in the warranty accrual consisted of the following at:

|                       |  |             
|---------------------- |  | ------------
|                       |  | 2004        
|Balance at January 1   |  | $          0
|Current period accrual |  | 2           
|Current period charges |  | (2          
|Balance at December 31 |  | $          0

In addition to our warranty accrual, we have a nationwide product safety program under which we offer to
clean, inspect and modify certain bolt action centerfire firearms manufactured prior to 1982 to remove the
bolt-lock feature. As of December 31, 2004, our accrual for the costs of the product safety program was less than
$0.1.

Note 11--Retiree Benefits

Pension Plans:

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

Change in Benefit Obligation:

|                                        |  |            
|--------------------------------------- |  | -----------
|                                        |  | 2004       
|Benefit Obligation at Beginning of Year |  | $       147
|Service Cost                            |  | 5          
|Interest Cost                           |  | 9          
|Actuarial Assumption Changes            |  | 5          
|Actuarial (Gain)/Loss                   |  | (1         
|Benefits Paid                           |  | (3         
|Benefit Obligation at End of Year       |  | $       161

58



Change in Plan Assets:

|                                               |  |             
|---------------------------------------------- |  | ------------
|                                               |  | 2004        
|Fair Value of Plan Assets at Beginning of Year |  | $         97
|Actual Return on Plan Assets                   |  | 9           
|Employer Contributions                         |  | 6           
|Benefits Paid(Expenses)                        |  | (3          
|Fair Value of Plan Assets at End of Year       |  | $       109 

|                                                             |  |           
|------------------------------------------------------------ |  | ----------
|                                                             |  | 2004      
|Funded Status                                                |  | $      (51
|Unamortized Prior Service Cost                               |  | (1        
|Unrecognized Net Actuarial Loss                              |  | 27        
|Net amount recognized in the statement of financial position |  | $      (26

Amounts recognized in the statement of financial position as of December 31 consist of:

|                                       |  |           
|-------------------------------------- |  | ----------
|                                       |  | 2004      
|Accrued Benefit Liability              |  | $      (29
|Intangible Asset                       |  | 0         
|Accumulated other comprehensive income |  | 3         
|Net Amount Recognized                  |  | $      (26

The following is certain information about our pension plans that have accumulated benefit obligations in
excess of the fair value of their plan assets as of December 31:

|                               |  |           
|------------------------------ |  | ----------
|                               |  | 2004      
|Projected benefit obligation   |  | $      161
|Accumulated benefit obligation |  | 138       
|Fair value of plan assets      |  | 109       

Components of Net Periodic Pension Cost:

|                                   |  |              |    
|---------------------------------- |  | ------------ | ---
|                                   |  | 2004         |    
|Service Cost                       |  | $          5 | .0 
|Interest Cost                      |  | 9            | .1 
|Expected Return on Assets          |  | (8           | .0)
|Amortization of Prior Service Cost |  | (0           | .2)
|Recognized Net Actuarial Loss      |  | 6            | .1 
|Net Periodic Pension Cost          |  | $         12 | .0 

Weighted average assumptions used to determine net periodic pension cost
              for years ended December 31:

|                                         |  |      |     
|---------------------------------------- |  | ---- | ----
|                                         |  | 2004 |     
|Discount Rate                            |  | 6    | .25%
|Expected Long-Term return on plan assets |  | 8    | .00 
|Rate of Compensation Increase            |  | 4    | .00 

Weighted average assumptions used to determine benefit obligations at
              December 31:

|                              |  |      |     
|----------------------------- |  | ---- | ----
|                              |  | 2004 |     
|Discount Rate                 |  | 6    | .00%
|Rate of Compensation Increase |  | 4    | .00 

It is our policy to review the pension assumptions annually.  Pension benefit income or expense is
determined using assumptions as of the beginning of the year, while the funded status is determined using
assumptions as of the end of the year. The assumptions are determined by management and established at the
respective balance sheet date using the

59



following principles: (1) The expected long-term rate of return on plan
assets is established based upon historical actual asset returns and the expectations of asset returns over the
expected period to fund participant benefits based on the current investment mix of the Plan; (2) The discount
rate is set based on the yield of high quality fixed income investments expected to be available in the future
when cash flows are paid; and (3) The rate of increase in compensation levels is established based on the
management's expectations of current and foreseeable future increases in total eligible compensation, while
maintaining a consistent inflation component for all economic assumptions.  In addition management considers
advice from independent actuaries on each of these three assumptions.

Our investment strategy for Plan assets is based on the long-term growth of principle while attempting
to mitigate overall risk to ensure that funds are available to pay benefit obligations.  The Plan has adopted a
strategic asset allocation designed to meet the Plan's long-term obligations.  The Plan's assets are invested in
a variety of investment classes, including domestic and international equities, domestic and international fixed
income securities and other investments.  Allowable investment structures include mutual funds, separate
accounts, commingled funds, and collective trust funds.  Prohibited investments include commodities, private
placements, and derivative instruments used solely for leverage.

The Plan weighted average asset allocations at December 31, 2004, and 2003, by asset category are as
follows:

|                                 |  |      |             |     
|-------------------------------- |  | ---- | ----------- | ----
|                                 |  |      | Target      |     
|                                 |  |      | Allocations |     
|                                 |  | 2004 |             | 2003
|Asset Category:                  |  |      |             |     
|Domestic equity funds            |  | 40   | .0%         | 40  
|International equity funds       |  | 10   | .0          | 10  
|Domestic fixed income funds      |  | 40   | .0          | 40  
|International fixed income funds |  | 10   | .0          | 10  
|Cash and cash equivalents        |  | --   |             | --  
|Total                            |  | 100  | .0%         | 100 

# Anticipated Contributions:

The Company expects to make cash contributions of approximately
$7.1 to the Plan in 2005.          Estimated Future Benefit Payments  Following is a summary, as of December 31,
2004, of the estimated future benefit payments for our pension plans in each of the next five
fiscal years and in the aggregate for five fiscal years thereafter.

|                | 
|--------------- | 
|                | 
|2005            | 
|2006            | 
|2007            | 
|2008            | 
|2009            | 
|Years 2010-2014 | 

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 matching expense and contribution to this plan was approximately
$1.4 in each of 2004, 2003, and 2002.

Effective January 1, 1998, the Company adopted a non-qualified defined contribution plan. The Company's
matching expense and contribution was $0.1 in each of 2004, 2003 and 2002.

60



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:

|                                        |  |             
|--------------------------------------- |  | ------------
|                                        |  | 2004        
|Benefit Obligation at Beginning of Year |  | $         21
|Service Cost                            |  | 0           
|Interest Cost                           |  | 1           
|Plan Participants' Contributions        |  | --          
|Amendments                              |  | (0          
|Actuarial Loss/(Gain)                   |  | 0           
|Benefits Paid                           |  | (0          
|Benefit Obligation at End of Year       |  | $         21

Accrued Benefit Cost:

|                                          |  |           
|----------------------------------------- |  | ----------
|                                          |  | 2004      
|Funded Status                             |  | $      (21
|Unrecognized Net Actuarial (Gain)/loss    |  | 3         
|Unrecognized Prior Service Cost           |  | (5        
|Accrued Postretirement Benefit Obligation |  | $      (23

Components of Net Periodic Benefit Cost for the year ended December 31:

|                                      |  |             |   
|------------------------------------- |  | ----------- | --
|                                      |  | 2004        |   
|Service Cost                          |  | $         0 | .6
|Interest Cost                         |  | 1           | .3
|Net Amortization and Deferral         |  | 0           | .3
|Net Periodic Benefit Income/(Expense) |  | $         2 | .2

Weighted average assumptions used to determine net periodic benefit
cost for years ended December 31:

|                              |  |      |     
|----------------------------- |  | ---- | ----
|                              |  | 2004 |     
|Discount Rate                 |  | 6    | .25%
|Rate of compensation increase |  | 4    | .00%

Assumed Healthcare cost trend rates at December 31:

|                                                                                  |  |       | 
|--------------------------------------------------------------------------------- |  | ----- | 
|                                                                                  |  | 2004  | 
|Healthcare cost trend rate assumed for next year                                  |  | 8.05% | 
|Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) |  | 3.25% | 
|Year that the rate reaches the ultimate trend rate                                |  | 2011  | 

Weighted average assumptions used to determine benefit obligations at December 31:

|                              |  |       | 
|----------------------------- |  | ----- | 
|                              |  | 2004  | 
|Discount Rate                 |  | 6.00% | 
|Rate of compensation increase |  | 4.0%  | 

Assumed health care cost trend rates have a significant effect on the amounts reported for
the health care plans.  A one-percentage point change in assumed health care cost trend rates would have the following effects:

61



|                                                        |  |             
|------------------------------------------------------- |  | ------------
|                                                        |  | 1-Percentage
|                                                        |  | Point       
|                                                        |  | Increase    
|Effect on total of service and interest cost            |  | $0          
|Effect on accumulated postretirement benefit obligation |  | 1           

Estimated Future Benefit Payments
-- Following is a summary, as of December 31, 2004, of the estimated
future benefit payments for our postretirement benefit plan in each of the next five fiscal years and in the
aggregate for five fiscal years thereafter.

|                | 
|--------------- | 
|                | 
|2005            | 
|2006            | 
|2007            | 
|2008            | 
|2009            | 
|Years 2010-2014 | 

Note 12--Debt

At December 31, long-term debt consisted of the following:

|                                         |  |            
|---------------------------------------- |  | -----------
|                                         |  | 2004       
|Revolving Credit Facility                |  | $         1
|10.5% Senior Subordinated Notes due 2011 |  | 200        
|Capital Lease Obligations (Note 13)      |  | 0          
|Due to RACI Holding, Inc                 |  | 0          
|Subtotal                                 |  | 203        
|Less: Current Portion                    |  | 0          
|Total                                    |  | $      202 

On February 8, 2005, in
connection with the passage of the one year requirement under the indenture governing the Notes referred to below to invest
proceeds from the sale of the fishing line business in productive assets, the Company entered into a fourth amendment under
the Credit Facility primarily to permanently reduce its commitments under the Credit Agreement from $125.0 million
to $101.0 million and to amend the availibility requirements as indicated below.  As a result of the reduction in borrowing capacity, and in accordance with
Emerging Issues Task Force No. 98-14 ("EITF 98-14"), the Company reduced its debt acquisition costs by $0.5 upon
signing of the fourth amendment to the Credit Facility in February 2005, the expense for which will be recorded in
the Other Expense line item on the Company's Statement of Operations.

The Company's Credit
Facility,  as amended,  provides up to $101.0 of borrowings under an asset-based  senior
secured  revolving  credit  facility  through  January 23, 2008.  Amounts  available  under the Credit Facility are
subject to a borrowing base limitation based on certain  percentages of eligible  accounts  receivable and eligible
inventory  and other  limitations.  The Credit  Facility  also  includes a letter of credit  sub-facility  of up to
$15.0.

As a result  of the
Company's  financial  performance  the  Credit  Facility  was  amended  on two  separate
occasions during 2003. These amendments limit the Company's  borrowing capacity by creating a minimum  availability
restriction  through the earlier of (i) March 30, 2006 and (ii)  subject to meeting  specified  financial  targets,
such date as the Company may determine  (such period,  the  "Availability  Test Period").  In addition,  during the
Availability Test Period,  the Company must maintain  specified minimum rolling four quarter levels of Consolidated
EBITDA (as defined in the Credit Facility).

Pursuant to the
foregoing amendments, key terms of the Credit Facility, as amended, now include the
following:

| | (1) | The minimum
amount of  availability  required to be  maintained  during the  Availability  Test Period is
                        $20.0  (except  during any single  period of up to 60  consecutive  days from June  through
                        September  of  each  year  during  the   Availability   Test  Period,   when  such  minimum
                        availability  requirement  is $10.0). For any period during the  Availability  Test Period
                        when such minimum  availability  requirement  is not met,  the Company must  maintain (i) a
                        maximum  leverage  ratio of 6.0 to 1.0 and (ii) a minimum  fixed charge  coverage  ratio of
                        1.1  to  1.0.  So  long  as  the  minimum  availability   requirement  is  met  during  the
                        Availability  Test  Period,  there is no  requirement  for the  Company to meet the maximum
                        leverage ratio or the minimum fixed charge coverage ratio.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

62



| | (2) | The Company is
required to maintain  specified minimum rolling four quarter levels of Consolidated  EBITDA(as defined in the Credit Facility)
during the Availability Test Period.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | All  of  Remington's  existing  and  future  domestic  subsidiaries
                        are  either  co-borrowers  under,  or guarantors of, the Credit  Facility.  The Credit Facility is
                        secured by  substantially  all of the Company's  real and personal  property,  including  without
                        limitation  the capital stock of the Company's subsidiaries.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Amounts  outstanding  under the  Credit  Facility  bear  interest
at a rate  equal to, at the  Company's option,  (1) an alternate base rate plus an applicable  margin,  or (2) a reserve
adjusted LIBOR rate plus an  applicable  margin.  These  margins are subject to periodic  adjustment based on certain  levels of
financial  performance  at various times during the term of the Credit Facility.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | The Credit Facility contains limitations on capital  expenditures  exceeding $12.5
during any fiscal year,adjusted  upward for any previously  unspent amounts in prior years that were less than the annual $12.5 limitation.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | The  Credit Facility  contains  limitations  on  indebtedness,  liens,
investments,  mergers  and  other acquisitions,  asset  dispositions,  transactions with affiliates,  and dividends and other distributions.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (7) | The Credit
Facility contains customary events of default.
| | --- | ---------------------------------------------------------

| | (8) | The Company is required to pay certain fees in connection with the
Credit  Facility,  including (1) letter of credit  fees,  (2)  agency  fees and (3) an  unused  commitment  fee of 0.375%  which is
payable  if  the  average  outstanding  Credit  Facility  balance  is 50%  or  more  of the aggregate  revolving
commitments  in effect on the first  day of such  month,  subject  to adjustment  upward to 0.500% if the average  outstanding  Credit  Facility  balance for any
                        month is less than 50% of the aggregate  revolving  commitments  in effect on the first day
                        of such month.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (9) | (The Credit
Facility  contains  other  customary  affirmative  and negative  covenants:  including but not
                        limited to those listed above.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------

The interest
rate margin for the ABR and the Euro-Dollar loans at December 31, 2004 is 1.50% and 3.00%,
respectively. The weighted average interest rate under the Company's Credit Facility was 4.90% and 4.02% for the
year ended December 31, 2004 and 2003, respectively.

Loans under the
Credit Facility mature on January 23, 2008. Commitment fees in 2004 were $0.5. The
occurrence of certain changes in control is an event of default under the credit agreement for the Credit
Facility and mandatory prepayments of borrowings may be required.

As of December 31,
2004 the Company was in compliance  with the  financial  covenants and expects to continue
to be in compliance with the financial covenants under the Credit Facility,  as amended.  However,  there can be no
assurance that the Company will continue to be in compliance.

The initial issuance
and sale of the Company's  $200.0 aggregate  principal amount 10.5% Senior Notes due 2011
(the  "Notes")  was  completed  in a private  offering  on January 24,  2003.  A portion of the  proceeds  from the
issuance of the Notes was used for the redemption of all of the Company's 9.5% Senior  Subordinated  Notes due 2003
(the  "Refinanced  Notes"),  at a redemption  price equal to 100% of the aggregate  principal  amount of Refinanced
Notes then outstanding of $86.9,  plus accrued and unpaid  interest.  The Notes are redeemable at the option of the
Company,  in whole or in part, any time on or after  February 1, 2007.  The redemption  price ranges from 105.3% of
the  principal  amount  in 2007 to 100% in the year  2009 and

63



thereafter.  The  Notes  may also be  redeemed  with
proceeds of specified  types of equity  offerings  prior to 2007, at a redemption  price of 110.5% of the principal
amount.  In the event of a change in  control,  the Notes may be  tendered  at the  option of the  holders  for the
principal  amount plus  applicable  interest and premium at that date. The Notes are unsecured  senior  obligations
of the Company,  ranking  equal in right of payment with all existing and future  senior  indebtedness,  if any, of
the Company, including its indebtedness under the Credit Facility.

The indenture for
the Notes and the Credit  Facility  contain various  restrictions on the Company's  ability
to incur debt,  pay  dividends  and enter into certain  other  transactions.  In addition,  the  Indenture  permits
repurchases of the Notes on the open market,  subject to limitations  that may be contained in the Credit  Facility
and the  Indenture.  As  disclosed in the  Company's  8-K filing on February  11,  2005,  the Company  obtained the
consent of the requisite  lenders under the Credit  Facility to one or more such purchases of Notes in an aggregate
amount of up to $5.0 on or before  December 31, 2005,  subject to  compliance  with  specified  conditions  for the
purchases.

The principal
payments of capital lease obligations outstanding at December 31, 2004, for the next three
years are $0.8, $0.3 and zero respectively.

Note 13--Leases

Future minimum
lease payments under capital leases and noncancellable operating leases, together with the present value of
the net minimum capital lease payments at December 31, 2004, are as follows:

|                                                     |  |      
|---------------------------------------------------- |  | -----
|                                                     |  |      
|                                                     |  |      
|Minimum Lease Payments for Years Ending December 31: |  |      
|2005                                                 |  | $   0
|2006                                                 |  | 0    
|2007                                                 |  | --   
|2008                                                 |  | --   
|2009                                                 |  | --   
|Thereafter                                           |  | --   
|Total Minimum Lease Payments                         |  | 1    
|Less: Amount representing interest                   |  | 0    
|Present Value of Net Minimum Lease Payments          |  | $   0

Rental expenses
for operating leases for 2004, 2003 and 2002 were $1.8, $1.6 and $1.6.

Note 14--Stock Purchase and Option Plans

As of December 31,
2004,  Holding has reserved  39,615 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 RACI Holding,  Inc. Stock
Incentive  Plan (the "1999 Stock  Incentive  Plan") and the RACI  Holding,  Inc.  2003 Stock Option Plan (the "2003
Stock Option Plan").

As of December 31,
2004,  1,755  redeemable  shares of Class A Common  Stock,  6,938  redeemable  deferred
shares of Class A Common Stock and 728  matching  options  have been issued  under the 1999 Stock  Incentive  Plan.
Options to purchase 13,386 shares of Class A Common Stock have been granted under the 2003 Stock Option Plan.

At December 31, 2004,
 management has assessed the fair value of Common Stock to be approximately  $225.00
per share with the assistance of a third party valuation.

At December 31, 2004
options to purchase 14,114 shares of Common Stock were outstanding, at a per share
exercise price of $220.31, of which 242 options were exercisable. Subject to the continued service of any
option-holder, 728 of the options vest ratably on the first, second and third anniversaries of the options' grant
date; 6,693 of the options vest ratably on the fourth and fifth anniversaries of the options' grant date; and
6,693 of the options vest ratably on the first, second and third anniversaries of the options' grant date,
provided that the annual performance target is achieved in each of the related three years or, if the annual
performance target for a particular year is not met, but the cumulative performance target for the

64



subsequent year is met, a proportionate amount of such options vest.
If the performance targets are not achieved, subject to the continued service of any option holder, the options will vest on the ninth anniversary of the grant date.
The vesting of options may be accelerated upon the occurrence of certain events specified in the plans 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 1999 Stock Incentive Plan and the 2003
Stock Option Plan:

|                            | 2004 | 2003 | 2002  
|--------------------------- | ---- | ---- | ------
|
|Outstanding at January 1,   |      |      | 15,138
|Granted                     |      |      | -     
|Exercised                   |      |      | -     
|Cancelled/Forfeited         |      |      | 1,024 
|                            |      |      |       
|Outstanding at December 31, |      |      | 14,114
|                            |      |      |       
|Exercisable at December 31, |      |      | 242   
|                            |      |      |       
|                            |      |      |       
|Weighted Average            |      |      |       
|Fair Value Options Granted  |      |      | $12.20

The exercise price of all outstanding options at December 31, 2004 is $220.31, and the weighted average
contractual life on the unvested options outstanding at December 31, 2004 is estimated to be 3.6 years.  Included
in the 14,114 options above are 1,099 options that were granted in 2003 which are accounted for under FIN 44,
"Accounting for Certain Transactions involving Stock Compensation". If the market value of class A common stock
increases, Holding is required to recognize as expense, which will be pushed down to the Company since the
holders of the options are employees of the Company, the incremental difference above the grant value. For the
remaining 13,015 shares of stock, the Company has adopted the disclosure-only provisions of SFAS No. 123, as
amended by SFAS No. 148, "Accounting for Stock-Based Compensation."  See Note 4, "Summary of Significant
Accounting Policies".

Note 15--Investment in Unconsolidated Joint Venture

In August 2004, the
Company entered into a joint venture agreement with ELSAG, Inc., an unaffiliated
third party, to form Remington ELSAG Law Enforcement Systems, LLC ("RELES").  RELES sells and services a
license plate reading technology sold to state and local law enforcement agencies along
with certain federal agencies. The  agreement gives Remington a 50% ownership interest.  The agreement calls for
each member to provide 50% of required capital investments and receive 50% of distributions, with a maximum
contribution amount of $1.5 by each party.  In addition, Remington provides certain administrative support
functions, while ELSAG, Inc. provides product technology support.

Management has assessed the
acounting treatment of RELES under the provisions of FIN 46R and APB 18, and has
concluded that RELES is a variable interest entity.  However, as the Company is not the primary beneficiary,
RELES is accounted for under the equity method of accounting.  Accordingly, an investment is recognized on the
Company's balance sheet at the carrying value of the Company's cumulative cash contributions to RELES adjusted
for the Company's cumulative equity in earnings (loss) recorded on the Company's income statement (in the "Other
Noncurrent Assets" line), and the Company's 50% share of RELES's operating results will be recorded in the
Company's income statement (in the "Equity in Earnings (Loss) from Unconsolidated Joint Venture, net of tax" line)
during each period that RELES produces financial results.

On October 15, 2004, the Company
made its initial cash contribution of approximately $0.3.  There were
no revenues in 2004 associated with RELES.  As of year end, the following balances resulted:

|Account                                                                           | December 31, 2004
|--------------------------------------------------------------------------------- | -----------------
|Investment in Unconsolidated Joint Venture                                        |                  
|Equity in (Earnings) Losses from Unconsolidated Joint Venture, net of tax of $0.1 |                  

Through February 28, 2005, the Company has made a total of $0.5 in cumulative cash contributions to
RELES.

65



Note 16--RACI Holding Recapitalization Transactions

In the first quarter of 2003, Remington completed transactions related to the recapitalization of Holding:

(1)    A private offering of $200.0 principal amount of Notes, completed in January 2003. In the event of a change in
     control, the Notes may be tendered at the option of the holders for the principal amount plus applicable interest and
     premium at that date.

(2)    The refinancing by Remington of substantially all of its existing indebtedness through (i) the repayment of all
     amounts outstanding under Remington's prior senior secured credit agreement ("the Old Credit Agreement") concurrently
     with the termination of all commitments thereunder, and (ii) the redemption of all of the Refinanced Notes at a
     redemption price equal to 100% of the aggregate principal amount of Refinanced Notes then outstanding of $86.9, plus
     accrued and unpaid interest and (iii) the closing by Remington of a new Credit Facility, under which up to $125.0 of
     revolving credit commitments are available, subject to borrowing base and other limitations. The refinancing occurred
     in January 2003.

(3)    The issuance and sale by Holding, for $30.8, of 140,044 shares of common stock of Holding to Bruckmann, Rosser,
     Sherrill & Co. II, L.P. (the "BRS Fund") and others, in February 2003.

(4)    The distribution of 15,970 shares of common stock of Holding in respect of 15,970 deferred shares of Holding, the
     repurchase by Holding of 722,981 of the outstanding shares of common stock of Holding and the cancellation of 64,144
     options in respect of common stock of Holding, in an aggregate amount of approximately $163.7, consisting of $130.8
     million in cash and $32.9 aggregate principal amount of senior notes of Holding, or the Holding Notes.  As of
     December 31, 2004, the Holding Notes had a carrying value of $35.0. The Clayton & Dubilier Private Equity Fund IV
     Limited Partnership holds all of the Holding Notes. Remington made a $100.0 dividend to Holding in connection with
     the funding of the repurchase. The repurchase occurred in February 2003.

Note 17--Commitments and Contingencies

Purchase Commitments

The Company has various purchase commitments, approximating $10.4 for 2005, $3.7 for 2006, $2.0 for 2007,
$0.2 for 2008, and $0.2 for 2009, for services incidental to the ordinary conduct of business, including, among
other things, a services contract with its third party warehouse provider and commitments to the Company's joint
venture RELES. Such commitments are not at prices in excess of current market prices. Included in the purchase
commitment amount are the Company's purchase contracts with certain raw materials suppliers, for periods ranging
from one to seven years, some of which contain firm commitments to purchase minimum specified quantities.
However, such contracts had no significant impact on the Company's financial condition, results of operations, or
cash flows during the reporting periods presented herein.

Product Liability Litigation

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

Since December 1, 1993, the Company has maintained insurance coverage for product liability claims subject
to certain self-insured retentions both on a per-occurrence basis and in the aggregate for personal injury or
property damage relating to occurrences arising after the Acquisition. The Company believes that its current
product liability insurance coverage for personal injury and property damage is adequate for its needs. The
Company's current product liability insurance policy provides for a self-insured retention of $0.5 per occurrence
up to the first $2.0 in claims, after which the self-insured retention

66



increases to $0.8 per occurence. The
current policy period runs from December 1, 2004 through November 30, 2005. 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 policy excludes from coverage any pollution-related
liability. Based in part on the nature of the Company's products, and the impact on the insurance market of the
events of September 11, 2001, there can be no assurance that the Company will be able to obtain adequate product
liability insurance coverage upon the expiration of the current policy. Certain of the Company's current excess
insurance coverage expressly does not apply to actions brought by municipalities.

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, 2004, 17 individual bodily injury cases and claims were pending, primarily alleging defective
product design or manufacture, or failure to provide adequate warnings; some of these cases seek punitive as well
as compensatory damages. The Company has previously disposed of a number of other cases involving
post-Acquisition occurrences by settlement. Of the individual cases pending as of December 31, 2004, five involve
matters for which the Sellers retained liability and are required to indemnify the Company. The remaining 12
pending cases involve post-Acquisition occurrences for which the Company bears responsibility under the Purchase
Agreement; the Sellers have some responsibility for the costs of one of these cases involving certain shotguns.

Municipal Litigation

In addition to these individual cases, as a manufacturer of shotguns and rifles, Remington was named in
only three of the actions brought by approximately 30 municipalities, primarily against manufacturers,
distributors and sellers of handguns: (i) City of Boston, et al. v. Smith & Wesson, et al., No. 99-2590 (Suffolk
Super Ct.); (ii) City of St. Louis, Missouri v. Henry Cernicek, et al., No. 992-01209 (Cir. Ct. St. Louis) & 00
Civil 1895 (U.S. Dist. Ct. E.D. Missouri); and (iii) City of New York, et al. v. B.L. Jennings, Inc., et al., 00
Civil 3641 (JBW) (U.S. Dist. Ct. E.D.N.Y.). As a general matter, these lawsuits name several dozens of firearm
industry participants as defendants and claim that the defendants' distribution practices allegedly permitted
their products to enter a secondary market, from which guns can be obtained by unauthorized users; that
defendants fail to include adequate safety devices in their firearms to prevent unauthorized use and accidental
misuse; and that defendants' conduct has created a public nuisance. Plaintiffs generally seek injunctive relief
and money damages (consisting of the cost of providing certain city services and lost tax and other revenues),
and in some cases, punitive damages as well.

Two of these cases (City of Bostonand City of St. Louis) have been dismissed against all defendants,
while the third has been limited to claims against handgun manufacturers (City of New York).

To date, 15 municipal lawsuits have been dismissed and are no longer subject to appeal. Three more
dismissals, including that involving local California governments, are on appeal. The remaining lawsuits are in
various stages of motion practice and discovery. A majority of states have enacted some limitation on the ability
of local governments to file such lawsuits against firearms manufacturers. In addition, similar legislation
limiting such lawsuits on a federal level has been proposed in both houses of Congress. At the federal level, in
April 2004, the House of Representatives approved legislation that would limit lawsuits against firearms
manufacturers based on the criminal or unlawful acts of third parties. However, similar legislation pending in
the Senate was recently defeated, and it is not certain whether it will be resubmitted this term. New versions of
those bills were introduced in February 2005.

In 2000 and 2001, Remington received and replied to civil investigative demands and subpoenae duces
tecumfrom the State of Connecticut and the Federal Trade Commission ("FTC"). Remington, which makes only long
guns, does not compete with Smith & Wesson, which makes handguns. The materials provided to these authorities
were returned to

Remington within the past year, and it is the Company's understanding that the
investigations have ended without any action being taken.

In recognition of a
nd support of certain legal and legislative initiatives, the shooting sports industry
established the Hunting and Shooting Sports Heritage Fundof which the Company is a member. Contributions
expensed in 2004, 2003, and 2002 were $0.5, zero, and $0.8, respectively.

67



Litigation Outlook

Because the Company's a
ssumption of financial responsibility for certain product liability cases and claims
involving pre-Acquisition occurrences was limited to an amount that has now been fully paid, with the Sellers
retaining liability in excess of that amount and indemnifying the Company in respect of such liabilities, 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, results of operations, or cash flows of the Company.
Moreover, although it is difficult to forecast the outcome of litigation, the Company does not believe, in light
of relevant circumstances (including the current availability of insurance for personal injury and property
damage with respect to cases and claims involving occurrences arising after the Acquisition, the Company's
accruals for the uninsured costs of such cases and claims and the Sellers' agreement to be responsible for a
portion of certain post-Acquisition shotgun-related product liability costs, as 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, results of operations, or
cash flows of the Company. Nonetheless, in part because the nature and extent of liability based on the
manufacture and/or sale of allegedly defective products (particularly as to firearms and ammunition) is
uncertain, there can be no assurance that the Company's resources will be adequate to cover pending and future
product liability occurrences, cases or claims, in the aggregate, or that a material adverse effect upon our
financial condition, results of operations, or cash flows 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.

At December 31, 2004
and 2003, the Company's accrual for product liability cases and claims was $13.4 and
$15.2, respectively. The amount of the Company's accrual for product liability cases and claims is based upon
estimates developed as follows. We establish reserves for anticipated defense and disposition costs to us of
those pending cases and claims for which we are financially responsible. Based on those estimates and an
actuarial analysis of actual defense and disposition costs incurred by the Company with respect to product
liability cases and claims in recent years, the Company determines estimated defense and disposition costs for
unasserted product liability cases and claims. The Company combines the estimated defense and disposition costs
for both pending and unasserted cases and claims to determine the amount of the Company's accrual for product
liability cases and claims. It is reasonably possible additional experience could result in further increases or
decreases in the period in which such information is made available. The Company believes that its accruals for
such liability are adequate. The Company's accruals for losses relating to product liability cases and claims
includes accruals for all probable losses the amount of which can be reasonably estimated. Based on the relevant
circumstances (including the current availability of insurance for personal injury and property damage with
respect to cases and claims involving occurrences arising after the Acquisition, the Company's accruals for the
uninsured costs of such cases and claims and the Sellers' agreement to be responsible for a portion of certain
post-Acquisition shotgun-related product liability costs, as well as the type of firearms products made by the
Company), the Company does not believe with respect to product liability cases and claims that any reasonably
possible loss exceeding amounts already recognized through the Company's accruals has been incurred.

Environmental

The Company does not expect current environmental regulations to have a material adverse effect on the
financial condition or results of operations. 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. The Company has not
identified any loss contingencies with respect to environmental remediation costs the realization of which the
Company believes to be reasonably possible.

68



Note 18--Income Taxes

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

|         |  |              |    
|-------- |  | ------------ | ---
|         |  | 2004         |    
|Federal: |  |              |    
|Current  |  | $         (5 | .2)
|Deferred |  | 17           | .1 
|State:   |  |              |    
|Current  |  | 0            | .2 
|Deferred |  | 1            | .6 
|         |  | $         13 | .7 

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

|                                             | 2004 | 2003        
|-------------------------------------------- | ---- | ------------
|
|Deferred tax assets:                         |      |             
|Accrued employee and retiree benefits        |      | $          3
|Product, environmental and other liabilities |      | 1           
|Receivables and inventory                    |      | 3           
|Capitalized expenses                         |      | --          
|Other comprehensive income                   |      | --          
|State tax credits                            |      | 0           
|Net operating losses                         |      | --          
|Total deferred tax assets                    |      | $          8
|Valuation allowance                          |      | (8          
|Net deferred tax asset                       |      | $         --
|Deferred tax liabilities:                    |      |             
|Property, plant and equipment                |      | $          -
|Intangibles                                  |      | --          
|Other comprehensive income                   |      | (1          
|Total deferred tax liabilities               |      | $         (1
|Net deferred tax liability                   |      | $         (1

As of December 31, 2004, a
valuation allowance of approximately $15.2 has been established against deferred tax assets as a charge against earnings in
accordance with the provisions of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes(SFAS
No. 109). Realization of the deferred tax assets is largely dependent upon future profitable operations, if any, and the
reversals of existing taxable temporary differences. As a result of pre-tax losses from continuing operations and future
taxable income expected to arise primarily from the reversal of and creation of temporary differences for the foreseeable future, the Company
determined that in accordance with SFAS No. 109, it is not appropriate to continue to recognize these deferred tax assets. Although there can be no
assurance that such events will occur, the valuation allowance may be reversed in future periods to the extent that the related
deferred income tax assets nolonger require a valuation allowance under the provisions of SFAS No. 109.

Income tax payments were
approximately $5.6, $1.8 and $8.5 in 2004, 2003 and 2002, respectively.

At December 31, 2004 the Company
has state tax credit carry-forwards of $0.7 for tax purposes; of which
$0.1 expire between 2005 and 2018; and $0.6 may be carried forward until utilized.

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

69



|                                                     |  |      |     
|---------------------------------------------------- |  | ---- | ----
|                                                     |  | 2004 |     
|Federal statutory rate                               |  | (35  | .0)%
|State income taxes, net of Federal benefits          |  | (1   | .3) 
|Permanent differences                                |  | 0    | .6  
|Change in valuation allowance on deferred tax assets |  | 391  | .0  
|Other                                                |  | (3   | .8) 
|Effective income tax rate                            |  | 351  | .5% 

Note 19- Issuance of Holding Redeemable Deferred Shares and Options

In June 2003, certain current members of management were granted 6,693 service options and 6,693
performance options to purchase a total of 13,386 shares of Common Stock, under the RACI Holding, Inc. 2003 Stock
Option Plan at an exercise price of $220.31 per share.  One half of the service options vest and become
exercisable on each of the fourth and fifth anniversaries of the grant date.  One third of the performance
options vest and become exercisable on each of the first three anniversaries of the grant date, provided that the
annual adjusted EBITDA target of $60.0 or greater is achieved in each of the three years.  Alternatively, if the
annual adjusted EBITDA target for a particular year is not met, but the cumulative adjusted EBITDA target for the
subsequent year is met, a proportionate amount of the options vest.  The cumulative adjusted EBITDA targets for
the second and third years are $120.0 and $180.0, respectively.  If the adjusted EBITDA targets are not achieved,
the performance options vest on the ninth anniversary of the grant date.  The performance options issued in 2003
have not vested, as the Company has failed to meet the annual adjusted EBITDA target for 2003 and 2004.

No redeemable deferred shares or options were issued or granted in 2004.

Note 20--Related Party Transactions

BRSE, L.L.C. is the general
partner of the BRS Fund, which owned 67.2% of the outstanding Common Stock of
Holding at December 31, 2004, is a private investment fund managed by Bruckmann, Rosser, Sherrill & Co. L.L.C.
("BRS").  The Clayton & Dubilier Private Equity Fund IV Limited Partnership ("C&D Fund IV"), which owned 14.2% of
the outstanding Common Stock of Holding at December 31, 2004, is a private investment fund managed by Clayton,
Dubilier & Rice, Inc. ("CD&R"). Both BRS and CD&R receive an annual fee for management and financial consulting
services provided to the Company and reimbursement of related expenses. Fees and expenses paid to CD&R were $0.6
in 2004, 2003 and 2002. Fees and expenses paid to BRS were $0.5 in 2004 and 2003. BRS did not receive any
payments prior to 2003.

Remington paid fees to
the law firm of Debevoise & Plimpton LLP during 2004 for legal services rendered.
Franci J. Blassberg, Esq., a member of Debevoise & Plimpton LLP, is married to Joseph L. Rice, III, a general
partner of Associates IV. Fees and expenses paid to Debevoise & Plimpton LLP for 2004, 2003, and 2002 were $0.5,
$2.8, and $1.5.  A portion of the 2003 fees and expenses consisted of fees and expenses related to the Transaction
and the offering of the old notes.

On January 24, 2003,
the Company declared and paid a $100.0 dividend to all shareholders of record in
connection with the funding of the repurchase by Holding of Holding Common Stock completed on February 12, 2003.
In connection with the re-capitalization, 64,144 outstanding options to purchase common stock of Holding were
accelerated and subsequently cancelled, which resulted in $4.5 of other compensation expense based on the
difference in the price paid for the acceleration of the options and the exercise price of the then outstanding
options.  Holding contributed capital of $4.5 in cash to pay for the impact of the cancellation.  As a result of
refinancing the Old Credit Facility for the Credit Facility on January 24, 2003, $1.5 of remaining unamortized
financing fees were expensed. The Company also paid additional interest of $0.7 for the early redemption of the
Refinanced Notes.  All of the above, except for $100.0 dividend to Holding, were recorded in Other Unusual
Charges in the accompanying statement of operations.

In March 2003,
Holding contributed to the Company an outstanding receivable of $0.3 owed by the Company
to Holding as a result of the issuance of redeemable deferred shares.  The contribution has been recorded as an
additional capital contribution.

In 2003, the Board of Directors of the Company declared and paid dividends of $3.3 to Holding.

70



In 2004, the Board of Directors of the Company declared and paid dividends of $2.2 to Holding.

On September 30, 2004,
Holding contributed to the Company $0.6 in anticipation of a payout to retire
Holding deferred and common shares owed to a Named Executive Officer.  The event was filed through a Form 8-K on
November 19, 2004.  On November 30, 2004, the Company paid the amount on behalf of Holding to settle the amount
owed.

During 2004, Holding
contributed to the Company $3.2 associated with  tax benefits provided to the Company.  The tax sharing agreement among Holding and its subsidiaries provides
that consolidated federal and state tax liabilities are allocated among the members with positive taxable income.  Therefore, the agreement does not provide for payment to Holding for losses that are availed of by the profitable members of the affiliated
group.  Accordingly, Holding is deemed to have contributed the amount of the tax benefits as a contribution of capital to the Company.

As of December 31, 2004, $0.9
is due to RACI Holding, Inc. which represents three notes established in
connection with a Kentucky tax credits program.

Note 21--Financial Instruments

The estimated value of the Company's
debt at December 31, 2004 was $187.5 compared to a carrying value of
$203.5. The estimated value and the carrying value of the Company's debt at December 31, 2003 was $240.5 and
$230.5, respectively.

The Company purchases copper and
lead options contracts to hedge against price fluctuations of expected
commodity purchases. The options contracts limit the unfavorable effect that price increases will have on metal
purchases. At December 31, 2004 the fair value of the Company's outstanding derivative contracts relating to firm
commitments and expected purchases (aggregate notional amount 36.5 million pounds of copper and lead) up to one
year from such date was $3.3 as determined with the assistance of a third party, which is recorded in prepaid
expenses and other current assets. Net gains/(losses) on a net-of-tax basis of $2.5, ($0.3), and ($0.2) on
derivative instruments were reclassified to cost of sales from accumulated other comprehensive income (loss)
based on inventory turns, during the year-to-date periods ended December 31, 2004, 2003, and 2002, respectively.

Note 22--Segment Information

The Company identifies its
reportable segments in accordance with Statement of Financial Accounting
Standards No. 131, Disclosures about Segments of an Enterprise and Related Information("SFAS 131"). Based upon
SFAS 131, the Company's business is classified into three reportable segments: Firearms, which designs,
manufactures, and markets recreational shotguns and rifles; Ammunition, which designs, manufactures and markets
sporting ammunition and ammunition reloading components; and All Other, which includes accessory related gun
products, the manufacture and marketing of clay targets and powdered metal products, and the distribution of
surveillance security products to the federal agency and law enforcement markets. Other reconciling items include corporate,
other assets not allocated to the individual segments, assets held for sale and discontinued operations.

The Company primarily evaluates the performance of its segments and allocates resources to them based on
Adjusted EBITDA. Adjusted EBITDA differs from the term "EBITDA" as it is commonly used, and is substantially
similar to the measure "Consolidated EBITDA" that is used in the indenture for the Notes. In addition to
adjusting net income to exclude income taxes, interest expense, and depreciation and amortization, Adjusted
EBITDA also adjusts net income by excluding items or expenses not typically excluded in the calculation of
"EBITDA", such as noncash items, gain or loss on asset sales or write-offs, extraordinary, unusual or nonrecurring
items, and certain "special payments" to Remington employees who hold options and deferred shares in respect of
Holding common stock, consisting of amounts that are treated as compensation expense by Remington and are paid in
connection with payments of dividends to holders of Holding common stock.

The chief operating decision maker is the president and chief executive officer. Reportable segments were
separately identified based on segment revenue, Adjusted EBITDA and assets. Firearms accounted for approximately
49%, 50%, and 51% of our net sales in 2004, 2003 and 2002, respectively, and ammunition accounted for
approximately 45%, 44%, and 43% of our net sales in each of 2004, 2003, and 2002, respectively. The Company has
no material intersegment revenue.

71



Information on Segments:

|                                        |  |              |    
|--------------------------------------- |  | ------------ | ---
|                                        |  | 2004         |    
|Net Sales:                              |  |              |    
|Firearms                                |  | $       193  | .4 
|Ammunition                              |  | 176          | .1 
|All Other                               |  | 23           | .5 
|Consolidated Net Sales                  |  | $       393  | .0 
|Adjusted EBITDA:                        |  |              |    
|Firearms                                |  | $         25 | .8 
|Ammunition                              |  | 11           | .3 
|All Other                               |  | 4            | .0 
|Other Reconciling Items                 |  | (2           | .7)
|Consolidated Adjusted EBITDA            |  | $         38 | .4 
|Assets:                                 |  |              |    
|Firearms                                |  | $       137  | .8 
|Ammunition                              |  | 110          | .4 
|All Other                               |  | 12           | .8 
|Other Reconciling Items                 |  | 90           | .6 
|Consolidated Assets                     |  | $       351  | .6 
|Gross Capital Expenditures:             |  |              |    
|Firearms                                |  | $          4 | .8 
|Ammunition                              |  | 3            | .8 
|All Other                               |  | 0            | .2 
|Other Reconciling Items                 |  | 0            | .7 
|Gross Consolidated Capital Expenditures |  | $          9 | .5 

# Reconciliation of Income (Loss) from Operations to Adjusted EBITDA

|                                          | Year ended December 31,
|----------------------------------------- | -----------------------
|
|Adjusted EBITDA                           |                        
|Adjustments:                              |                        
|Depreciation & Amortization (A)           |                        
|Interest Expense(B)                       |                        
|Other noncash charges (C)                 |                        
|Non-recurring and Restructuring Items (D) |                        
|Other Unusual Charges(F)                  |                        
|Special Payment (E)                       |                        
|Income Taxes(B)                           |                        
|Net Income (Loss)                         |                        

(A)    Excludes amortization of deferred financing costs of $1.9, $1.8 and $1.9, in 2004, 2003 and 2002, respectively, which
     is included in interest expense.

(B)    Amounts include interest expense of $0.1, $1.8, and $1.8, and income tax expense of $0.1, $0.9, and $1.9, in 2004,
     2003 and 2002, respectively which was reclassified to discontinued operations.

(C)    Non-cash charges consist of the following: (i) for the year ended December 31, 2002, a $0.8 accrual for retiree
     benefits and a $0.2 loss on disposal of assets; (ii) for the year ended December 31, 2003, a $2.9 accrual for retiree
     benefits and a $0.5 loss on disposal of assets; and (iii) for the year ended December 31, 2004, a $6.8 accrual for
     retiree benefits and a $0.3 loss on disposal of assets.

(D)    Nonrecurring and restructuring expenses consist of the following: (i) for the year ended December 31, 2002, $0.3 of

72



nonrecurring legal fees, $0.4 associated with marking redeemable deferred shares to market, and $1.4 of Cumulative
     Effect of Change in Accounting Principle, net of tax; (ii) for the year ended December 31, 2003, $0.2 of severance
     costs and $0.2 loss on disposal of assets; and (iii) for the year ended December 31, 2004, $13.6 gain from the
     disposal of discontinued operations; offset by $0.7 from the fees associated with an exclusive distribution agreement
     and $0.2 for accrued severance.

(E)    In August 2002, Holding distributed on behalf of Remington a special payment to holders of all stock options and
     deferred shares of approximately $19.54 per share, in an aggregate amount of $1.8. This special payment was treated
     as compensation expense by Remington since the holders were employees and directors of the Company.

(F)    In February 2003, Holding distributed on behalf of Remington a special payment to holders of all stock options (in
     connection with the acceleration and resulting cancellation of the options) of approximately $220.31 per share, in an
     aggregate amount of $4.5, $0.7 of additional interest for early redemption of the Refinanced Notes, and $1.5 expensed
     for the unamortized debt acquisition cost related to the Old Credit Facility.

Geographic Information:

|                       |  |            |   
|---------------------- |  | ---------- | --
|                       |  | 2004       |   
|Net Sales:             |  |            |   
|Domestic               |  | $      373 | .1
|Foreign                |  | 19         | .9
|Consolidated Net Sales |  | $      393 | .0

There are no material assets owned by the Company outside the United States.  Approximately 16% of the
Company's net sales in 2004, 19% of the Company's net sales in 2003, and 22% of the Company's net sales in 2002
consisted of sales made to a single customer. This customer affects sales to both our Firearms and Ammunition
segments.  The Company's sales to this customer are not 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.

73



Note 23--Financial Position and Results of Operations of Remington Arms Company, Inc.

The following condensed consolidating financial data provides information regarding the financial position
and results of operations of Remington Arms Co, Inc., including Remington's 100% owned subsidiaries, RA Brands,
L.L.C., and RA Factors, Inc. Separate financial statements of Holding, Remington's sole shareholder, are not
presented because management has determined that they would not be material to holders of the Company's public
securities, the Notes. Holding is not a guarantor of the Notes. The Notes are fully and unconditionally
guaranteed on a joint and several basis by all of Remington's subsidiaries. Holding does not have any significant
independent operations or assets other than its ownership interest in Remington. Holding has $35.0 aggregate
principal amount, including accrued interest, of senior notes due in 2011 and 2012 which were created during the
recapitalization of Holding in February 2003.

# REMINGTON ARMS COMPANY, INC.

# CONDENSED CONSOLIDATING BALANCE SHEET

# December 31, 2004

|                                           | Remington | Combined  Guarantor Subsidiaries | Eliminations | Remington  Arms Co. and Subsidiaries
|------------------------------------------ | --------- | -------------------------------- | ------------ | ------------------------------------
|ASSETS                                     |           |                                  |              |                                     
|Current Assets                             |           | $    105                         | .6           | $      84                           
|Receivable from Remington, Net             |           | --                               |              | 120                                 
|Equity method investment in subsidiaries   |           | 210                              | .2           | --                                  
|Noncurrent Assets                          |           | 122                              | .9           | 38                                  
|Total Assets                               |           | $    438                         | .7           | $    243                            
|LIABILITIES AND SHAREHOLDER'S EQUITY       |           |                                  |              |                                     
|Current Liabilities                        |           | $      40                        | .7           | $      33                           
|Payable to RACI Holding, Inc., Net         |           | 0                                | .9           | --                                  
|Payable to RA Brands, L.L.C., Net          |           | 64                               | .4           | --                                  
|Payable to RA Factors, Inc., Net           |           | 55                               | .9           | --                                  
|Noncurrent Liabilities                     |           | 266                              | .4           | --                                  
|Shareholder's Equity                       |           | 10                               | .4           | 210                                 
|Total Liabilities and Shareholder's Equity |           | $    438                         | .7           | $    243                            

74



# REMINGTON ARMS COMPANY, INC.

# CONDENSED CONSOLIDATING BALANCE SHEET

# December 31, 2003

|                                           | Remington | Combined  Guarantor Subsidiaries | Eliminations | Remington  Arms Co. and Subsidiaries
|------------------------------------------ | --------- | -------------------------------- | ------------ | ------------------------------------
|ASSETS                                     |           |                                  |              |                                     
|Current Assets                             |           | $    110                         | .4           | $      70                           
|Receivable from Remington, Net             |           | --                               |              | 118                                 
|Equity method investment in subsidiaries   |           | 213                              | .1           | --                                  
|Noncurrent Assets                          |           | 131                              | .8           | 49                                  
|Total Assets                               |           | 455                              | .3           | 239                                 
|LIABILITIES AND SHAREHOLDER'S EQUITY       |           |                                  |              |                                     
|Current Liabilities                        |           | $      40                        | .7           | $      20                           
|Payable to RACI Holding, Inc. Net          |           | 0                                | .9           | --                                  
|Payable to RA Brands, L.L.C., Net          |           | 58                               | .3           | --                                  
|Payable to RA Factors, Inc., Net           |           | 60                               | .6           | --                                  
|Noncurrent Liabilities                     |           | 282                              | .4           | 5                                   
|Shareholder's Equity                       |           | 12                               | .4           | 213                                 
|Total Liabilities and Shareholder's Equity |           | $    455                         | .3           | $    239                            

75



# REMINGTON ARMS COMPANY, INC.

# CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

|                             | Remington | Combined  Guarantor Subsidiaries | Eliminations | Remington  Arms Co. and Subsidiaries
|---------------------------- | --------- | -------------------------------- | ------------ | ------------------------------------
|Year Ended                   |           |                                  |              |                                     
|December 31, 2004            |           |                                  |              |                                     
|Sales                        |           | $     393                        | .0           | $--                                 
|Gross Profit                 |           | 90                               | .5           | --                                  
|Subsidiary Income (Expense)  |           | (26                              | .7)          | 26.7                                
|Income from Equity Investees |           | 23                               | .5           | --                                  
|Net Income                   |           | (4                               | .0)          | 23.5                                

|                             | Remington | Combined  Guarantor Subsidiaries | Eliminations | Remington  Arms Co. and Subsidiaries
|---------------------------- | --------- | -------------------------------- | ------------ | ------------------------------------
|Year Ended                   |           |                                  |              |                                     
|December 31, 2003            |           |                                  |              |                                     
|Sales                        |           | $     360                        | .7           | $--                                 
|Gross Profit                 |           | 90                               | .5           | --                                  
|Subsidiary Income (Expense)  |           | (25                              | .7)          | 25.7                                
|Income from Equity Investees |           | 11                               | .2           | --                                  
|Net (Loss) Income            |           | (3                               | .2)          | 11.2                                

|                             | Remington | Combined  Guarantor Subsidiaries | Eliminations | Remington  Arms Co. and Subsidiaries
|---------------------------- | --------- | -------------------------------- | ------------ | ------------------------------------
|Year Ended                   |           |                                  |              |                                     
|December 31, 2002            |           |                                  |              |                                     
|Sales                        |           | $     383                        | .9           | $--                                 
|Gross Profit                 |           | 110                              | .8           | --                                  
|Subsidiary Income (Expense)  |           | (38                              | .1)          | 38.1                                
|Income from Equity Investees |           | 22                               | .3           | --                                  
|Net Income                   |           | 20                               | .0           | 22.3                                

76



# REMINGTON ARMS COMPANY, INC.

# CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

# December 31, 2004

|                                                  | Remington | Combined  Guarantor Subsidiaries | Eliminations | Remington  Arms Co. and Subsidiaries
|------------------------------------------------- | --------- | -------------------------------- | ------------ | ------------------------------------
|Operating Activities                              |           |                                  |              |                                     
|Net Cash Used in Operating Activities             |           | $  (11                           | .9)          | $     --                            
|Net Cash Provided by Discontinued Operations      |           | 0                                | .1           | --                                  
|Net Cash Used in Operating Activities             |           | (11                              | .8)          | --                                  
|Investing Activities                              |           |                                  |              |                                     
|Net Proceeds from Sale of Assets                  |           | 16                               | .3           | 26                                  
|Dividends Received                                |           | 26                               | .5           | --                                  
|Capital Expenditures                              |           | (7                               | .8)          | --                                  
|Proceeds from Sale of Property, Plant & Equipment |           | 0                                | .4           | --                                  
|Cash Contribution to Unconsolidated Joint Venture |           | (0                               | .3)          | --                                  
|Net Cash Provided by Investing Activities         |           | 35                               | .1           | 26                                  
|Financing Activities                              |           |                                  |              |                                     
|Net Payments on Revolving Credit Facility         |           | (26                              | .5)          | --                                  
|Cash Dividends Paid                               |           | (2                               | .2)          | (26                                 
|Principal Payments on Long-Term Debt              |           | (0                               | .5)          | --                                  
|Capital Contributions from RACI Holding, Inc.     |           | 3                                | .2           | --                                  
|Amount Paid on Behalf of RACI Holding, Inc        |           | (0                               | .6)          | --                                  
|Book Overdraft                                    |           | 3                                | .3           | --                                  
|Net Cash Used in Financing Activities             |           | (23                              | .3)          | (26                                 
|Increase (Decrease) in Cash and Cash Equivalents  |           | --                               |              | --                                  
|Cash and Cash Equivalents at Beginning of Period  |           | 0                                | .4           | --                                  
|Cash and Cash Equivalents at End of Period        |           | $      0                         | .4           | --                                  

77



# REMINGTON ARMS COMPANY, INC.

# CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

# December 31, 2003

|                                                 | Remington | Combined  Guarantor Subsidiaries | Eliminations | Remington  Arms Co. and Subsidiaries
|------------------------------------------------ | --------- | -------------------------------- | ------------ | ------------------------------------
|Operating Activities                             |           |                                  |              |                                     
|Net Cash Used in Operating Activities            |           | $      (7                        | .2)          | $(0.1)                              
|Investing Activities                             |           |                                  |              |                                     
|Capital Expenditures                             |           | (6                               | .9)          | --                                  
|Net Cash Used in Investing Activities            |           | (6                               | .9)          | --                                  
|Financing Activities                             |           |                                  |              |                                     
|Net Borrowings from Revolving Credit Facility    |           | 17                               | .3           | --                                  
|Cash Dividends Paid                              |           | (103                             | .3)          | --                                  
|Proceeds from Issuance of Long-Term Debt         |           | 200                              | .0           | --                                  
|Principal Payments on Long-Term Debt             |           | (87                              | .8)          | --                                  
|Capital Contributions from RACI Holding, Inc     |           | 4                                | .5           | --                                  
|Book Overdraft                                   |           | (4                               | .1)          | --                                  
|Debt Issuance Costs                              |           | (12                              | .4)          | --                                  
|Net Cash Provided by Financing Activities        |           | 14                               | .2           | --                                  
|Increase (Decrease) in Cash and Cash Equivalents |           | 0                                | .1           | (0.1)                               
|Cash and Cash Equivalents at Beginning of Period |           | 0                                | .3           | 0.1                                 
|Cash and Cash Equivalents at End of Period       |           | $        0                       | .4           | $--                                 

78



# REMINGTON ARMS COMPANY, INC.

# CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

# December 31, 2002

|                                                 | Remington | Combined  Guarantor Subsidiaries | Eliminations | Remington  Arms Co. and Subsidiaries
|------------------------------------------------ | --------- | -------------------------------- | ------------ | ------------------------------------
|Operating Activities                             |           |                                  |              |                                     
|Net Cash Provided by Operating Activities        |           | $     21                         | .2           | $--                                 
|Investing Activities                             |           |                                  |              |                                     
|Capital Expenditures                             |           | (7                               | .0)          | --                                  
|Net Cash Used in Investing Activities            |           | (7                               | .0)          | --                                  
|Financing Activities                             |           |                                  |              |                                     
|Net Payments under Revolving Credit Facility     |           | (14                              | .0)          | --                                  
|Book Overdraft                                   |           | 3                                | .0           | --                                  
|Principal Payments on Long-Term Debt             |           | (1                               | .1)          | --                                  
|Cash dividends paid                              |           | (15                              | .1)          | --                                  
|Net Cash Used by Financing Activities            |           | (27                              | .2)          | --                                  
|Increase (Decrease) in Cash and Cash Equivalents |           | (13                              | .0)          | --                                  
|Cash and Cash Equivalents at Beginning of Period |           | 13                               | .3           | 0.1                                 
|Cash and Cash Equivalents at End of Period       |           | $      0                         | .3           | $0.1                                

79



Note 24--Quarterly Financial Data (unaudited)

|2004                                           | First | Second | Third  | Fourth
|---------------------------------------------- | ----- | ------ | ------ | ------
|Net Sales                                      |       | $83    | .9     | $87   
|Gross Profit                                   |       | 19     | .5     | 16    
|Net (Loss) Income from continued operations    |       | (2     | .5)    | (4    
|Net (Loss) Income from discontinued operations |       | (0     | .2)    | 0     
|Gain on Sale of Assets                         |       | 13     | .0     | 0     
|Net Income (Loss)                              |       | 10     | .3     | (3    
|
|Net Sales (2)                                  |       | $81    | .0 (3) | $80   
|Gross Profit (2)                               |       | 21     | .4     | 19    
|Net (Loss) Income from continued operations    |       | (4     | .8)    | (1    
|Net Income from discontinued operations        |       | 0      | .6     | 0     
|Net (Loss) Income                              |       | (4     | .2)    | (1    

| | (1) | A valuation allowance of $15.2 was recorded on the Companys deferred tax
               asset in December 2004  see Note 18.
| | --- | ------------------------------------------------------------------------------------------------------------------------------

| | (2) | Previous quarters for 2003 were reclassified to include discontinued operations
                see Note 3.
| | --- | ------------------------------------------------------------------------------------------------------------

| | (3) | Sales of $4.8 were reclassified to Income from Discontinued Operations
| | --- | ----------------------------------------------------------------------

| | (4) | Sales of $4.5 were reclassified to Income from Discontinued Operations
| | --- | ----------------------------------------------------------------------

| | (5) | Sales of $3.9 were reclassified to Income from Discontinued Operations
| | --- | ----------------------------------------------------------------------

| | (6) | Sales of $3.2 were reclassified to Income from  Discontinued Operations
| | --- | -----------------------------------------------------------------------

80



Schedule II

# REMINGTON ARMS COMPANY, INC.

# Valuation and Qualifying Accounts

# Years Ended December 31, 2004, 2003, and 2002

# (Dollars in Millions)

|                                  | Balance at  Beginning of Period | Charged to  Cost and Expenses | Deductions to Reserve | Balance at  End of Period
|--------------------------------- | ------------------------------- | ----------------------------- | --------------------- | -------------------------
|Description:                      |                                
|Deducted from Asset Account:      |                                 |                               |                       |                          
|Allowance for Doubtful Accounts   |                                 |                               |                       |                          
|YEAR ENDED                        |                                 |                               |                       |                          
|December 31, 2004                 |                                 | $      (0.5)                  |                       | $                  0.0   
|YEAR ENDED                        |                                 |                               |                       |                          
|December 31, 2003                 |                                 | $      (2.1)                  |                       | $                  0.8   
|YEAR ENDED                        |                                 |                               |                       |                          
|December 31, 2002                 |                                 | $      (5.1)                  |                       | $                  0.3   
|
|Description:                      |                                 |                               |                       |                          
|Deducted from Asset Account:      |                                 |                               |                       |                          
|Inventory Reserves                |                                 |                               |                       |                          
|YEAR ENDED                        |                                 |                               |                       |                          
|December 31, 2004                 |                                 | $      (2.7)                  |                       | $                  (0.9) 
|YEAR ENDED                        |                                 |                               |                       |                          
|December 31, 2003                 |                                 | $      (2.5)                  |                       | $                  (1.8) 
|YEAR ENDED                        |                                 |                               |                       |                          
|December 31, 2002                 |                                 | $      (2.5)                  |                       | $                  (1.2) 
|
|Description:                      |                                 |                               |                       |                          
|Deducted from Asset Account:      |                                 |                               |                       |                          
|Valuation for Deferred Tax Assets |                                 |                               |                       |                          
|YEAR ENDED                        |                                 |                               |                       |                          
|December 31, 2004                 |                                 | $      0.0                    |                       | $                  (15.2)
|YEAR ENDED                        |                                 |                               |                       |                          
|December 31, 2003                 |                                 | $      0.0                    |                       | $                  0.0   
|YEAR ENDED                        |                                 |                               |                       |                          
|December 31, 2002                 |                                 | $      0.0                    |                       | $                  0.0   

81



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

82



ITEM 9A. CONTROLS AND PROCEDURES

The Company
maintains disclosure controls and procedures (as defined in Rule 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), which are designed to ensure that information required to
be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and
forms, and that such information is accumulated and communicated to the Company's management, including its Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.

As of and for the period ended December 31, 2004 (the "Evaluation Date"),
an evaluation of the effectiveness of the Company's disclosure controls and procedures was conducted under the supervision of,
and reviewed by, the Company's Chief Executive Officer and Chief Financial Officer. Based on that evaluation, the
Company's Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure
controls and procedures were effective.
being prepared.

Furthermore, there have been no significant changes that occured during the
fourth quarter of fiscal 2004 that has materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

83



ITEM 9B. OTHER INFORMATION
There are no matters to report subject to this section.

84



PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The names, ages and positions of the directors and executive officers of Remington are set forth below. All
directors are elected annually and hold office until their successors are elected and qualified, or until their
earlier removal or resignation.

|Name                          |  | Age |  | Position                                                    
|----------------------------- |  | --- |  | ------------------------------------------------------------
|Leon J. Hendrix, Jr.(a)(b)(e) |  | 63  |  | Director, Chairman                                          
|B. Charles Ames               |  | 79  |  | Director                                                    
|Michael G. Babiarz(a)(e)      |  | 39  |  | Director                                                    
|Bobby R. Brown(a)(b)(c)       |  | 72  |  | Director                                                    
|Richard A. Gilleland(b)(c)(d) |  | 60  |  | Director                                                    
|Richard E. Heckert(b)(c)(d)   |  | 81  |  | Director                                                    
|Hubbard C. Howe(c)(e)         |  | 76  |  | Director                                                    
|Thomas E. Ireland(b)(e)       |  | 55  |  | Director                                                    
|Thomas F. L'Esperance(e)      |  | 56  |  | Director                                                    
|H. Norman Schwarzkopf(b)(d)   |  | 70  |  | Director                                                    
|Stephen C. Sherrill(a)(e)     |  | 52  |  | Director                                                    
|Thomas L. Millner(a)(b)       |  | 51  |  | Director, President and Chief Executive Officer             
|Ronald H. Bristol, II         |  | 42  |  | Executive Vice President and Chief Operating Officer        
|Mark A. Little                |  | 57  |  | Executive Vice President, Chief Financial Officer, and Chief
|                              |  |     |  | Administrative Officer                                      
|Paul L. Cahan                 |  | 63  |  | Senior Vice President-Manufacturing                         
|Jay M. Bunting, Jr.           |  | 47  |  | Vice President-Sales, Marketing and Product Development -   
|                              |  |     |  | Firearms                                                    
|John M. Dwyer, Jr.            |  | 46  |  | Vice President-Sales, Marketing and Product Development -   
|                              |  |     |  | Ammunition and Clay Targets                                 
|Stephen P. Jackson, Jr.       |  | 36  |  | Vice President-Finance, Treasurer, and Corporate Secretary  

(a)        Member, Executive Committee

(b)        Member, Public Policy Committee

(c)        Member, Audit Committee

(d)        Member, Compensation Committee

(e)        Member, Benefits and Investment Committee,

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

None of our 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 and Chairman of
Remington and Holding since prior to 2000.  In November 2000, Mr. Hendrix retired as a principal of CD&R and became an
outside director and paid Chairman of Remington. From prior to 2000 until November 2000, Mr. Hendrix was a principal of CD&R.
In November 2000, Mr. Hendrix became an employee of the Company, retaining his title of Chairman. Mr. Hendrix currently serves
as a director of Keithley Instruments, NACCO Industries, Inc. and Cambrex Corp. Mr. Hendrix serves on the compensation
and corporate governance committees of Keithley Instruments.

85

B. Charles Ameswas elected to the Board of Directors of
Remington and Holding prior to 2000. Mr. Ames is a professional employee, and since prior to 2000, has been a principal of
CD&R and a general partner of Clayton & Dubilier Associates IV Limited Partnership ("Associates IV"), the general partner of
the C&D Fund.

Michael G. Babiarzwas elected to the Board of Directors of Remington and Holding prior to 2000. He has
been a principal of CD&R since prior to 2000.

Bobby R. Brownhas been a director of Remington and Holding since prior to 2000. Mr. Brown was a director
of CONSOL Inc. and CONSOL Energy Inc. from prior to 2000 to February 2000. Mr. Brown currently serves as a
director of Delta Trust and Bank and Peabody Energy, Inc. Mr. Brown serves on the compensation committee of Delta
Trust and Bank and Peabody Energy, Inc.

Richard A. Gillelandhas been a director of Remington and Holding since prior to 2000. Mr. Gilleland has
been retired since prior to 2000.

Richard E. Heckerthas been a director of Remington and Holding since prior to 2000. Mr. Heckert has been
retired since prior to 2000.

Hubbard C. Howehas been a director of Remington and Holding since prior to 2000. Mr. Howe currently serves
as a director of Western Industries Inc. and Natural Pharmaceuticals Inc.

Thomas E. Irelandhas been a director of Remington and Holding since May 2001. He has been a principal of
CD&R since prior to 2000. Mr. Ireland is also a director of CDJR Investments (LUX) S.A., a corporation in which
an investment partnership managed by CD&R has an investment.

Thomas F. L'Esperancewas elected to the Board of Remington and Holding in November 2004. From prior to
2000, he has been the Chief Executive Officer of Alliance Laundry Systems, LLC, which is a portfolio company of
Bruckmann, Rosser & Sherrill. Mr. L'Esperance currently serves as a Chairman and a director of Alliance Laundry
Systems, LLC.

H. Norman Schwarzkopfhas been a director of Remington and Holding since prior to 2000. From prior to 2000,
he has been a commentator for NBC, as well as a lecturer and author. He currently serves as a director of
IAC/InterActiveCorp.

Stephen C. Sherrillwas elected to the Board of Remington and Holding in February 2003. Since prior to
2000, he has been a managing director of BRS, of which he is a founding member. Mr. Sherrill currently serves as a
director of Alliance Laundry Systems, Inc., B&G Foods, Inc., Doane Pet Care Company, Eurofresh, Inc.,
HealthEssentials, Inc., HealthPlus Corporation, MWI Veterinary, Inc. and Galey & Lord, Inc. Mr. Sherrill serves
on the compensation committees of B&G Foods, Inc. and HealthPlus Corporation.

Thomas L. Millnerhas been President and Chief Executive Officer of Remington and Holding since prior to
2000. Mr. Millner has been a director of Remington and Holding since prior to 2000. Mr. Millner currently serves
on the Board of Directors of Stanley Furniture Co., Inc.

Ronald H. Bristol, IIjoined Remington prior to 2000, had served as Vice President and General
Manager--Firearms since prior to 2000, and became Executive Vice President and Chief Operating Officer in April
2000.

Mark A. Littlejoined Remington prior to 2000 and has served as Vice President, Chief Financial Officer and
Treasurer since prior to 2000. In April 2000, he became Executive Vice President, Chief Financial Officer and
Chief Administrative Officer.

Paul L. Cahanjoined Remington prior to 2000 and had served as Vice President and General
Manager--Ammunition since prior to 2000. In August 2001, he became Senior Vice President--Manufacturing.

Jay M. Bunting, Jr. joined Remington prior to 2000 and in January 2000 became Director of Sales. In August
2001, he became Vice President--Sales, Marketing and Product Development for Firearms and Accessories. In July
2003, he became Vice President--Sales, Marketing and Product Development for Firearms.

John M. Dwyer, Jr. joined Remington prior to 2000 as Director of Product Development--Ammunition and in July
2001 became Vice President--Sales, Marketing, and Product Development for Ammunition and Clay Targets.

Stephen P. Jackson, Jr.joined Remington in June 2003 as Vice President -Finance, Treasurer, and Corporate
Secretary. From prior to 2000, he was a Senior Manager with PricewaterhouseCoopers LLP and became partner at
PricewaterhouseCoopers LLP in July 2002.

86



Audit Committee Composition

The Company has a separately designated standing audit committee
established in accordance with Section 3(a) (58) (A) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Audit Committee,
which currently consists of Bobby R. Brown, Chairman, Richard A. Gilleland, Richard E. Heckert, and Hubbard C.
Howe, has the authority and responsibility, among other things, to recommend to the Board the selection of one or
more independent public accountants; to approve the fees paid to the independent registered public accounting firm; to
discuss with the independent registered public accounting firm the results of the annual audit and quarterly reviews;
to review and evaluate the systems of internal control over financial reporting, compliance with laws and
regulations, and operational efficiency and effectiveness; and to make reports to the Board periodically with respect
to its findings.

Audit Committee Financial Expert

Remington's board of directors has determined that in its judgment,
Bobby R. Brown qualifies as an "audit committee financial expert" in accordance with the applicable rules and regulations
of the Securities and Exchange Commission. An audit committee financial expert is a person who has (1)an understanding of
generally accepted accounting principles and financial statements;(2)the ability to assess the general application of such
principles in connection with the accounting for estimates, accruals and reserves;(3)experience preparing,
auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be
expected to be raised by the registrant's financial statements, or experience actively supervising one or more
persons engaged in such activities;(4)an understanding of internal controls over financial reporting; and (5)an
understanding of audit committee functions.

Shareholders' Agreement

In connection with the Transactions, the C&D Fund and the BRS Fund entered into a shareholders' agreement
which governs certain aspects of the relationships among Holding, Remington, the C&D Fund and the BRS Fund, and
sets forth certain arrangement with respect to the corporate governance of Remington and Holding.

Pursuant to the terms of the shareholders' agreement, Remington's board of directors must consist of the
same members as the board of directors of Holding. The shareholders' agreement further provides that the board of
directors of Holding will initially consist of twelve directors (subject to adjustment upon the occurrence of
specified events), including two nominees of the C&D Fund, two nominees of the BRS Fund, four existing directors
and four directors mutually agreed to by the C&D Fund and the BRS Fund. These rights of designation held by the
C&D Fund and the BRS Fund are keyed to specified ownership levels, and will be reduced and/or cancelled if the
C&D Fund's or the BRS Fund's ownership levels fall below thresholds specified in the shareholders' agreement.

The shareholders' agreement provides that the board may generally approve corporate actions through the
approval of a majority of the directors present at any duly convened board meeting or by unanimous written
consent of the directors without a meeting. However, the board of directors may not take certain significant
actions without the prior written approval of each shareholder owning at least 5% of Holding's common stock.
Among the board actions generally requiring such prior written approval of shareholders are:

(i) a sale of more than 50% of Holding's outstanding voting securities, a merger or business combination, a
recapitalization or a sale of all or substantially all of the assets of Holding or Remington and their
respective subsidiaries;
        (ii) the appointment or termination of the Chief Executive Officer of Holding or Remington;
        (iii) any amendment to the Certificate of Incorporation or By-Laws of Remington or Holding, or any amendment to the
shareholders' agreement;
        (iv) any increase or decrease in the number of directors of Remington or Holding;
        (v) subject to certain exceptions, any transaction between Holding or its subsidiaries, on the one hand, and any
shareholder, director or officer of Holding or any of its subsidiaries or affiliates of any such persons, on the
other hand, having a value in excess of $500,000; and
        (vi) the termination or amendment of the C&D Fund's consulting agreement or the BRS Fund's consulting agreement.

Except for items (iii) and (v), these actions will cease to require the C&D Fund's prior written approval upon
repayment in full of the Holding Notes.



The shareholders' agreement also requires enhanced voting requirements for board approval of particular
matters, including, among other things:

(i) the entry by Holding or its subsidiaries into a line of business unrelated to the existing lines of business
of Holding or Remington;
        (ii) the incurrence by Holding or its subsidiaries of indebtedness in excess of $5 million at any time outstanding;
        (iii) the acquisition or disposition by Holding or its subsidiaries of any assets outside of the ordinary course of
business, having a value in excess of $5 million;
        (iv) any voluntary liquidation or dissolution of Holding or Remington;
        (v) any issuance of shares of capital stock or securities convertible into shares of capital stock, stock
appreciation rights, profit participation interests or other similar rights of Holding or its subsidiaries to
any person, except pursuant to any management stock option plan approved by a supermajority of the board of
directors of Holding;
        (vi) subject to certain exceptions, the declaration of dividends or other distributions or repurchases or
redemptions of capital stock or options by Holding or Remington;
        (vii) the appointment or termination of senior management, other than Chief Executive Officer, of Holding or
Remington; and
        (viii) the creation of any compensation or option plan and the setting of annual compensation for any members of
senior management of Holding and its subsidiaries. Under the shareholders' agreement, the approval of these
matters will require either

(a) the affirmative vote of nine directors or
                (b) the affirmative vote of a majority of directors present at any duly convened board meeting, which
majority must include one director nominated by the C&D Fund and one director nominated by the BRS Fund
for so long as the C&D Fund or the BRS Fund, as applicable, along with certain affiliates, hold at least
5% of the then outstanding shares of common stock of Holding.

Code of Ethics

Remington has a code of ethics that applies to all employees and members of the Board of Directors. Our
code of ethics, referred to as "Business Ethics Policy and Procedures" is publicly available on our website under
Investor Relations at www.remington.com and is available in print to any stockholder who requests it. Remington
will disclose on the Investor Relations page on its website, amendments and waivers with respect to the code of
ethics that would otherwise be required to be disclosed under Item 5.05 of Form 8-K.

88



Item 11. EXECUTIVE COMPENSATION

Compensation of Executive Officers

The following table summarizes the compensation paid by Remington to its Chief Executive Officer and to
each of our four other most highly compensated executive officers (the "Named Executive Officers") during or with
respect to the 2002, 2003 and 2004 fiscal years for services in all capacities rendered to Remington for such
fiscal years.

|                                     | Annual Compensation | Long Term Compensation
|------------------------------------ | ------------------- | ----------------------
|
|
|
|Thomas L. Millner                    |                     | 2002                  
|President and Chief                  |                     | 2003                  
|Executive Officer                    |                     | 2004                  
|                                     |                     |                       
|Ronald H. Bristol, II                |                     | 2002                  
|Executive Vice President and         |                     | 2003                  
|Chief Operating Officer              |                     | 2004                  
|                                     |                     |                       
|Mark A. Little                       |                     | 2002                  
|Executive Vice President,            |                     | 2003                  
|Chief Financial Officer, Chief       |                     | 2004                  
|Administrative Officer               |                     |                       
|                                     |                     |                       
|Paul L. Cahan                        |                     | 2002                  
|Senior Vice President--Manufacturing |                     | 2003                  
|                                     |                     | 2004                  
|                                     |                     |                       
|Stephen P. Jackson, Jr               |                     | 2002                  
|Vice President--Finance, Treasurer,  |                     | 2003                  
|and Corporate Secretary              |                     | 2004                  

(1)    Excludes perquisites and other personal benefits if the aggregate amount thereof is less than the lesser of $50,000
       or 10% of the Named Executive Officer's salary and bonus.

(2)    Amount reflects premiums paid by the Company for a Disability Insurance Policy, Remington's matching contributions
       and interest on behalf of the Named Executive Officer to the Remington Savings and Investment Plans in the amounts
       of $52,463 and $26,110 for Messrs. Millner, and Little, respectively.

(3)    Amount reflects Remington's matching contributions and interest on behalf of the Named Executive Officer to the
       Remington Savings and Investment Plans in the amounts of $23,898.

(4)    Amount reflects a miscellaneous moving expense allowance of $37,734, and Remington's matching contributions and
       interest on behalf of the Named Executive Officer to the Remington Savings and Investment Plans in the amount of
       $20,468.

(5)    Amount reflects Remington's matching contributions and interest on behalf of the Named Executive Officer to the
       Remington Savings and Investment Plans in the amount of $4,176.

Option/SAR Grants in Last Fiscal Year
There were no option grants made during fiscal year 2004.

89



Aggregated Option Exercises and FY-End Option Value Table(1)

|Name                    |  | Shares  Acquired on Exercise (#) |  | Value Realized |  | Number of  Securities  Underlying  Unexercised  Options at  FY-End  Exercisable/ Unexercisable |  | Value of Unexercised  In-the-Money Options  at FY-End Exercisable/Unexercisable (1) | 
|----------------------- |  | -------------------------------- |  | -------------- |  | ---------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------- | 
|Thomas L. Millner       |  | --                               |  | --             |  | -- / 3,632                                                                                     |  | $-- / 17,034                                                                        | 
|Ronald H. Bristol, II   |  | --                               |  | --             |  | -- / 2,270                                                                                     |  | -- / 10,646                                                                         | 
|Mark A. Little          |  | --                               |  | --             |  | -- / 2,270                                                                                     |  | --/ 10,646                                                                          | 
|Paul L. Cahan           |  | --                               |  | --             |  | -- / 680                                                                                       |  | --/ 3,189                                                                           | 
|Stephen P. Jackson, Jr. |  | --                               |  | --             |  | -- / 680                                                                                       |  | --/ 3,189                                                                           | 

(1)    Calculated based on a per share price of Holding Common Stock of $225.00, the estimated fair value as of December 31,
     2004, 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. We 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.  Mssrs.
Millner, Bristol, Little, and Cahan are eligible to participate in the Pension Plans. Benefits under the
Supplemental Plan are not pre-funded; such benefits are paid by Remington when due.

Retirement benefits under the Pension Plans are generally based on an employee's years of benefit service
as computed under plan provisions. Generally, an employee's benefit service under the Pension Plans includes all
of his service with Remington and his service, if any, with DuPont prior to the Acquisition; however, eligible
employees who elected to retire from DuPont will receive retirement income from the DuPont retirement plan in
connection with the Acquisition. DuPont service is not recognized for early retirement eligibility. 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.

|        | Estimated Annual Retirement Benefits Based on Service of
|------- | --------------------------------------------------------
|
|250,000 |                                                         
|300,000 |                                                         
|350,000 |                                                         
|400,000 |                                                         
|450,000 |                                                         
|500,000 |                                                         
|550,000 |                                                         
|600,000 |                                                         
|650,000 |                                                         

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 2004. Compensation
recognized under the Pension Plans generally includes an employee's average compensation for the three highest
calendar years or the highest 36 consecutive months during the employee's final 10 years of service. Compensation
for this purpose includes overtime,

90



shift differentials and 50% of any incentive compensation award. Compensation
does not include awards and payments under any other special compensation plans, payments for severance,
relocation or other special payments.

The years of benefit service and average monthly pay (expressed as an annual amount), recognized as of
December 31, 2004, under the Pension Plans for each eligible Named Executive Officer are as follows:

|Name                  |  | Years of Service | Average Pay
|--------------------- |  | ---------------- | -----------
|Thomas L. Millner     |  | 10               | .6         
|Ronald H. Bristol, II |  | 9                | .5         
|Mark A. Little        |  | 8                | .5         
|Paul L. Cahan         |  | 9                | .7         

Under a Special Supplemental
Retirement Plan (a "Special Plan") for Paul L. Cahan, Mr. Cahan is entitled to
additional supplemental retirement benefits of (i) a lump-sum payment of $77,000, payable on the date of
commencement of benefits under the Supplemental Plan and (ii) the difference between his actual Supplemental Plan
benefit and what his Supplemental Plan benefit would be if he had received additional non-incentive compensation
in March 2003 equal to $38,000, payable at the same time and in the same form as Mr. Cahan's Supplemental Plan
benefit.  The Average Pay reflected in the table above includes Mr. Cahan's benefits under the Special Plan.

On July 25, 2001, the Board
of Directors of Remington amended the Health and Welfare Benefit Plan ("Medical
Plan") to allow outside directors under the age of 65 to participate in the Medical Plan. Presently, one outside
director is enrolled in the Medical Plan and reimburses Remington at the same cost as an active employee.

On January 23, 2002, the
Board of Directors of Remington extended medical coverage to certain key employees
and outside directors under the age of 65 (collectively, the "Participants"), which allows them to continue to
participate in the Medical Plan under certain circumstances. In the event of a change of control, or in the case
of a key Participant's retirement, resignation or termination (except in the case of termination for cause), the
Participants will be entitled to continue to participate in the Medical Plan or any successor plans, at a cost
equal to the cost for active Remington employees and on the same basis.

Effective January 1, 2001,
the Board of Directors of Remington adopted the Remington Arms Company, Inc.
Death Benefit Plan ("Death Benefit Plan") to allow employees who participate under the annual incentive
compensation plan and who are not in the Supplemental Plan or otherwise precluded by the Remington Chief
Executive Officer to receive a death benefit equal to two times the employee's base salary paid on a monthly
basis over four years.  Benefits under the Death Benefit Plan are only paid upon the death of covered
participants who are active Remington employees.  Mr. Jackson is the only Named Executive Officer covered
under the Death Benefit Plan.  A copy of the Death Benefit Plan is filed as Exhibit 10.51 to this Annual Report
on Form 10-K.

On December 15, 2004, the
Board of Directors of Remington adopted the 2005 Incentive Compensation Plan
("Incentive Compensation Plan").  Participation in the Incentive Compensation Plan includes the Company's officers
and certain other employees, including all of the Company's Named Executive Officers.  A description of the
Incentive Compensation Plan is filed as Exhibit 10.52.

Compensation of Directors

Members of
the Board of Directors of Remington who are not employees of Remington, Holding, CD&R or BRS
(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 $25,000. An additional fee of $2,000 per meeting is paid to the chairman of
each committee. All directors are reimbursed for reasonable travel and lodging expenses incurred to attend
meetings.

Executive Employment Agreements

In August 1999,
we entered into Executive Employment Agreements with Messrs. Millner, Bristol, Little and
Cahan ("Executive Officers"). The agreements provide for continued employment terms and for severance terms if
employment is terminated under certain conditions. In the event of a termination of the Executive Officer's
employment by us without "cause" (as defined in the agreement) or by such Executive Officer for "good reason" (as
defined in the agreement), the Executive Officer will receive his "base salary" (as defined in the agreement) for
a period of three years for Mr. Millner, two years for Mr. Little and one year for each of Messrs. Cahan and
Bristol, and in each such case, a pro-rata portion of incentive compensation that would have been payable for the
calendar year in which his employment terminates. Messrs. Millner and

91



Little will also receive service credit
under Remington's pension plans of three and two years, respectively. Our Executive Employment Agreements with
our Executive Officers are without a fixed term. 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 Remington established a Compensation Committee to review all compensation arrangements for executive officers of Remington.
The individuals serving on the Compensation Committee during
2004 were Richard A. Gilleland, Chairman, H. Norman Schwarzkopf, and Richard E. Heckert. Remington has also agreed
to indemnify the members of the boards employed by CD&R as well as CD&R against certain liabilities incurred
under the federal securities laws, other laws regulating our business and certain other claims and liabilities
with respect to their services for Remington.

CD&R receives an
annual fee for management and financial consulting services to us and reimbursement of
out-of-pocket expenses. In connection with the BRS Investment, the BRS Fund entered into consulting and
indemnification agreements with Holding and Remington on substantially the same terms as the existing CD&R
consulting and indemnification agreements. The consulting and indemnification agreements with the C&D Fund and
the BRS Fund provide for a $500,000 annual fee to each of the C&D Fund and the BRS Fund. Such consulting fees are
reviewed on an annual basis. The consulting fees paid to CD&R were $500,000 for 2004 and the consulting fees paid
to BRS were $500,000 for 2004.

92



Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Holding owns all of the outstanding common stock of Remington. Each share of common stock is entitled to
one vote. The following table sets forth the beneficial ownership, as of the date of this prospectus, of common
stock of Holding by each director of Remington, by all directors and executive officers of Remington 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 of Holding:

|Name of Beneficial Owner                     |  | Number of Shares |  | Percent of Class (1)
|-------------------------------------------- |  | ---------------- |  | --------------------
|Bruckmann, Rosser, Sherrill & Co. II, L.P(2) |  | 135,954          |  | 66.6%               
|The Clayton & Dubilier Private               |  |                  |  |                     
|Equity Fund IV Limited Partnership(3)        |  | 28,717           |  | 14.1%               
|Clayton & Dubilier Associates IV             |  |                  |  |                     
|Limited Partnership                          |  | 59,010           |  | 28.9%               
|B. Charles Ames(4)(5)(6)                     |  | 4,539            |  | 2.2%                
|Michael G. Babiarz(4)(6)                     |  | --               |  | --                  
|Hubbard C. Howe(6)                           |  | --               |  | --                  
|Thomas E. Ireland(4)                         |  | --               |  | --                  
|Bobby R. Brown                               |  | 900              |  | *                   
|Richard A. Gilleland                         |  | 213              |  | *                   
|Richard E. Heckert                           |  | 213              |  | *                   
|Thomas F. L'Esperance                        |  | --               |  | --                  
|H. Norman Schwarzkopf(9)                     |  | 229              |  | *                   
|Stephen C. Sherrill(7)(8)                    |  | 217              |  | *                   
|Leon J. Hendrix, Jr.(6)(10)                  |  | 1,400            |  | *                   
|Thomas L. Millner(11)                        |  | 3,762            |  | 1.8%                
|Ronald H. Bristol, II(11)                    |  | 922              |  | *                   
|Mark A. Little(11)                           |  | 1,198            |  | *                   
|Paul L. Cahan(11)                            |  | 521              |  | *                   
|Stephen P. Jackson, Jr.                      |  | --               |  | --                  
|Executive officers and directors             |  |                  |  |                     
|as a group (5)(6)(7)(8)(10)(12)              |  | 15,069           |  | 7.4%                

*   Less than 1%

(1)    For purposes of calculating the
percentage of ownership held by each beneficial owner, deferred shares and vested options are not included in the total number of shares outstanding, but are included in the number of shares owned
by such beneficial owner.

(2)    BRSE, L.L.C. ("BRSE") is
       the general partner of the BRS Fund and by virtue of such status may be deemed to be the
       beneficial owner of the shares owned by the BRS Fund. BRSE has the power to direct the BRS Fund as to the voting
       and disposition of shares held by the BRS Fund. No single person controls the voting and dispositive power of BRSE
       with respect to the shares owned by the BRS Fund. Bruce C. Bruckmann, Harold O. Rosser, Stephen C. Sherrill, Paul
       D. Kaminski and Thomas J. Baldwin are the managers of BRSE, and none of them individually has the power to direct
       or veto the voting or disposition of shares owned by the BRS Fund. BRSE expressly disclaims beneficial ownership of
       the shares owned by the BRS Fund. Each of Messrs. Bruckmann, Rosser, Sherrill, Kaminski and Baldwin expressly
       disclaims beneficial ownership of the shares owned by the BRS Fund. The business address for each of the BRS Fund
       and BRSE is 126 East 56th Street, New York, New York, 10022.

(3)      Clayton & Dubilier
       Associates IV Limited Partnership ("Associates IV") is the general partner of the C&D Fund and
       by virtue of such status may be deemed to be the beneficial owner of the shares owned by the C&D Fund. Associates
       IV has the power to direct the C&D Fund as to the voting and disposition of shares held by the C&D Fund. Includes
       26,802 shares held by limited partners of the C&D Fund, including 4,627 shares held by Mr. Ames, 4,627 shares held
       by the B. Charles Ames Family 2003 Trust, 2,314 shares held by Mr. Babiarz, 1,735 shares held by Mr. Hendrix, 578
       shares held by the Leon J. Hendrix Family 1993 Trust and 9,255 shares held by Mr. Howe, as to which Associates IV
       has both investment and dispositive power. No single person controls the voting and dispositive power of Associates
       IV with respect to the shares owned by the C&D Fund. Mr. Ames, Joseph L. Rice, III and Donald Gogel are the general
       partners of Associates IV, and none of them individually has the power to direct or veto the voting or disposition
       of shares owned by the C&D Fund. Associates IV expressly disclaims beneficial ownership of the shares owned by the
       C&D Fund, Messrs. Ames, Babiarz, Hendrix and Howe, the B. Charles Ames Family 2003 Trust and the Leon J. Hendrix
       Family 1993 Trust. Each of Messrs. Ames, Rice and Gogel expressly disclaims beneficial ownership of the shares
       owned by the C&D Fund. The business address for each of the C&D Fund and Associates IV is 270

93



Greenwich Avenue, Greenwich, Connecticut 06830.

(4)    Does not include the 28,717
       shares owned by the C&D Fund, or the 59,010 shares deemed beneficially owned by
       Associates IV. Mr. Ames may be deemed to share beneficial ownership of the shares owned of record by the C&D Fund
       by virtue of his status as a general partner of Associates IV, but each expressly disclaims such beneficial
       ownership of the shares owned by the C&D Fund and deemed beneficially owned by Associates IV. The general partners
       of Associates IV share investment and voting power with respect to securities owned by the C&D Fund but no
       individual controls such investment or voting power.

(5)      Includes shares held by the B. Charles Ames Family 2003 Trust and the B. Charles Ames TOD to B. Charles Ames Trust
       UAD August 26, 2002.

(6)    Excludes shares held by the director as to which Associates IV has both investment and dispositive power. See
       footnote (3) above.

(7)    Includes 177 shares held by Julie Frist ("Frist") and 40 shares held by Marilena Tibrea ("Tibrea") in his capacity
       as a power of attorney holder from each of Frist and Tibrea.

(8)    Does not include 135,954 shares of common stock owned by the BRS Fund. Mr. Sherrill may be deemed to
       share beneficial ownership of the shares owned of record by the BRS Fund by virtue of his status as a member and
       manager of BRSE, but he expressly disclaims such beneficial ownership of the shares owned by the BRS Fund. The
       members and managers of BRSE share investment and voting power with respect to securities owned by the BRS Fund,
       but no individual controls such investment or voting power.

(9)    All shares are held by H. Norman Schwarzkopf Revocable Trust of 1992.

(10)    Includes 256 deferred shares held by Mr. Hendrix, Director and Chairman.

(11)    Includes 3,393, 781, 1,000, and 265 deferred shares of common stock held by Messrs. Millner, Bristol, Little, and
       Cahan, respectively.

(12)    Includes 6,191 deferred shares of common stock and 165 vested options held by the directors and executive officers
       as a group.

Equity Compensation Plan Information

Table of Securities Authorized for Issuance Under Equity Compensation Plans

The  following  table sets forth the  indicated  information  regarding  our  equity  compensation  plans and
arrangements as of December 31, 2004.

|Plan category                                        |  | Class of Security |  | Number of  securities  to be issued uopn  exercise of  outstanding  options,  warrants, and rights |  | Weighted-  average  exercise price of  outstanding  options,  warrants and rights |  | Number of  securities  remaining for  future  issuance under  equity  compensation plans
|---------------------------------------------------- |  | ----------------- |  | -------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------
|Equity compensation plans approved by                |  |                   |  |                                                                                                    |  |                                                                                   |  |                                                                                         
|security holders (2003 Stock Option      Plan)       |  | Options           |  | 13,386                                                                                             |  | $220.31                                                                           |  | 2,504                                                                                   
|Equity compensation plans not approved               |  |                   |  |                                                                                                    |  |                                                                                   |  |                                                                                         
|by security holders (1999 Stock      Incentive Plan) |  | Options           |  | 728                                                                                                |  | $220.31                                                                           |  | 22,997                                                                                  
|Total                                                |  | Options           |  | 14,114                                                                                             |  | $220.31                                                                           |  | 25,501                                                                                  

(1)    Does not include 6,938 outstanding deferred shares.

(2)    Includes 6,938  outstanding  deferred  shares.  The remaining  awards may be granted as deferred shares or
     options.

Description of Equity Compensation Plans Not Approved By Security Holders

In May 1999, the board of
directors of Holding adopted the RACI  Holding Inc.  Stock  Incentive  Plan (the "1999 Stock  Incentive Plan") for the purpose of
promoting the  long-term financial  success of Holding and the Company and to  materially  increase
stockholder value by (1) motivating superior performance by participating  employees,  (2) providing employees with
an  ownership  interest  in  Holding  and (3)  enabling  Holding  and the  Company to attract  the  services  of an
outstanding  management  team. The 1999 Stock  Incentive Plan permits the grant of rights to purchase shares of the
common  stock of Holding or  deferred  shares and  options to  purchase  shares to  participating  employees.  Only
employees who made

94



irrevocable  elections to acquire  shares under the 1999 Stock  Incentive Plan prior to January
of 2003 may receive  additional  grants under the 1999 Stock  Incentive  Plan.  There are  currently  16,059 shares
remaining available for issuance under the plan.

A copy of the 1999 Stock
Incentive Plan is filed as Exhibit 10.31 to this Annual Report on Form 10-K.

Options.    
Options awarded under the plan are evidenced by an option agreement. Options may be subject to a vesting
schedule based on completion of a specified period of service or the achievement of annual EBITDA targets. Upon
exercise of an option, a participating employee is required to enter into a stock subscription agreement
containing, among other things, substantial restrictions on transfer and repurchase rights upon termination of
employment. Unless earlier terminated pursuant to the applicable option agreement, unexercised options expire on
the tenth anniversary of the grant date.

Unless the Board determines
that alternative  options  (discussed below) will be available,  upon a change in control of
Remington,  each option will be canceled  in exchange  for a payment in cash of an amount  equal to the excess,  if
any, of the price paid in the change of control  transaction  over the  exercise  price.  The  replacement  options
offered  by the  acquiror  will be  considered  alternative  options  as long  as  they:  (1)  provide  rights  and
entitlements  substantially  equivalent to or better than the rights,  terms and  conditions  applicable  under the
options;  (2) have  substantially  equivalent  economic value to the options  (determined at the time of the change
in control);  and (3) have certain terms and conditions  intended to preserve the economic value of the alternative
options to the  participating  employee in the event of an  involuntary  termination  within two years  following a
change in control.

Deferred Shares.
    Deferred shares offered under the plan are evidenced by either a deferred share award agreement or
matching deferred share award agreement, depending on whether the deferred shares are purchased by or granted to
the participating employee in connection with his or her purchase of shares or deferred shares. Generally, after
the deferral period, shares of common stock will be issued in respect of deferred shares, at which time each
holder of deferred shares would enter into a stock subscription agreement for those shares containing, among
other things, substantial restrictions on transfer and repurchase rights upon termination of employment. The
shares of common stock related to deferred shares granted will generally be issued to employees upon the earliest
of the following to occur: (1) immediately before a change of control of Remington of Holding, unless deferred shares of
the acquiror in the change of control with substantially similar terms are available and the holder of the
deferred shares has not elected prior to the change of control to receive the shares for his or her deferred
shares; (2) the expiration of any lock-up period following a public offering; (3) immediately before the record
date for a leveraged recapitalization of the issuer in which the C&D Fund has a realization event with respect to
a substantial portion of its investment and (4) the employee's termination of employment other than for cause.

95



Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Principal Shareholders

The C&D Fund, which
currently holds, on a fully diluted basis taking into account all options and deferred shares, 12.7% of the outstanding
common stock of Holding, is a private investment fund managed by Clayton,
Dubilier & Rice, Inc., or CD&R. The general partner of the C&D Fund is Associates IV. Leon J. Hendrix, Jr.,
formerly a principal of CD&R, is a director of Holding and Remington and has served as Chairman since December
1997. In November 2000, Mr. Hendrix became an employee of Remington, retaining the title of Chairman. B. Charles
Ames is a principal of CD&R, general partner of Associates IV, and a director of Remington and Holding. Michael
G. Babiarz and Thomas E. Ireland are principals and stockholders of CD&R and directors of Remington and Holding.
Hubbard C. Howe is a director of Remington and a former principal of CD&R.

The BRS Fund, which
currently owns, on a fully diluted basis taking into account all options and deferred
shares, 60.4% of the capital stock of Holding, is a private equity investment fund managed by Bruckmann, Rosser,
Sherrill & Co, Inc., or BRS. The general partner of the BRS Fund is BRSE, L.L.C. Stephen C.
Sherrill, a principal of BRS, is a director of Remington and Holding.

Pursuant to
consulting agreements Holding and Remington have entered into with CD&R and BRS, CD&R and BRS
receive annual fees for management and financial consulting services provided to us and reimbursement of
out-of-pocket expenses. Such consulting services include helping us to establish effective banking, legal and
other business relationships, and assisting management in developing and implementing strategies for improving
our operational, marketing and financial performance. The consulting agreements currently provide for annual fees
of $0.5 million to each of CD&R and BRS, which may be adjusted, subject to the approval of both the C&D Fund and
the BRS Fund, at the discretion of a majority of the directors of Remington and Holding not affiliated with CD&R
or BRS, respectively. In addition, the consulting agreements also provide that if an employee of CD&R or BRS is
appointed to an executive management position (or position of comparable responsibility) with us, the annual fee
will be increased by an amount to be determined by CD&R or BRS, the amount of such increase not to exceed 100% of
the existing annual fee in effect at that time. However, any increase in the annual fee is subject to applicable
limitations under our existing and future debt. We paid to CD&R an annual fee and expenses of $0.6
million in each of 2004, 2003, and 2002. We paid BRS an annual fee and expenses of $0.5 million in each of 2004
and 2003. The consulting agreements also provides that CD&R and BRS will perform financial advisory, investment
banking and similar services with respect to proposals for an acquisition, merger, recapitalization, or any other
similar transaction directly or indirectly involving Holding, Remington and their subsidiaries. The fee for such
services in connection with future transactions would be an amount equal to 1% of the transaction value for the
transaction to which such fee relates. The amount of the transaction fee may be increased if approved by a
majority of the directors of Remington not affiliated with CD&R or BRS, as applicable, and by both the C&D Fund
and the BRS Fund.

Holding and Remington
have entered into indemnification agreements with both CD&R and the C&D Fund and BRS
and the BRS Fund, pursuant to which Holding and Remington have agreed to indemnify CD&R, the C&D Fund, BRS and
the BRS Fund and each of their respective directors, officers, partners, employees, agents and controlling
persons, against certain liabilities arising under the federal securities laws, other laws regulating our
business and certain other claims and liabilities. The C&D Fund and Holding have entered into a registration
rights agreement that, among other things, provides the C&D Fund and will provide certain other Holding equity
holders with certain registration rights with respect to their Common Stock. The BRS Fund will also be a
beneficiary and be bound by the terms of the registration rights agreement.

We paid fees to
the law firm of Debevoise & Plimpton LLP during 2004 for legal services rendered.
Franci J. Blassberg, Esq., a member of Debevoise & Plimpton LLP, is married to Joseph L. Rice, III, a general
partner of Associates IV. Fees and expenses paid to Debevoise & Plimpton LLP for 2004, 2003, and 2002 were $0.5
million, $2.8 million, and $1.5 million, respectively.  A portion of the 2003 fees and expenses consisted of
amounts related to the Transaction and the offering of the old notes.

Stock Incentive Plans

As of December 31, 2004,
we had reserved 39,615 shares of Holding's Common Stock for issuance in accordance
with the terms of the Amended and Restated RACI Holding, Inc. Stock Incentive Plan (the "1999 Stock Incentive
Plan") and the 2003 Stock Option Plan (the "2003 Stock Option Plan"). As of December 31, 2004, 14,144 options were
granted and no shares of Common Stock have been issued under the above mentioned plans.  Currently, 6,938
redeemable deferred shares of Class A Common Stock and 1,755 redeemable shares of Class A Common Stock are
outstanding under the 1999 Stock

96



Incentive Plan. As of December 31, 2004, 2,504 shares of Common Stock remained
available for additional option grants under the 2003 Stock Option Plan.

As disclosed on
Remington's report on Form 8-K filed on November 19, 2004, Remington repurchased on behalf of Holding 2,530 of Holding
deferred shares and 77 of Holding common shares from a terminating officer at the fair market
value of $220.31 per share, as determined by an independent valuation.



Item 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

Our audit fees to PricewaterhouseCoopers LLP were $0.4 million for professional services rendered in
connection with the annual audit and quarterly reviews of the financial statements in both 2004 and 2003.  We
also had audit fees of $0.4 million for services performed related to the S-4 filing in 2003.

Audit-Related Fees

Our audit-related fees to PricewaterhouseCoopers LLP were $0.1 million for professional services
rendered in 2003 for compliance reviews of the Health Insurance Portability and Accountability Act of 1996
(HIPPA) and for the annual employee benefits plan audit.

Tax Fees

Our tax-related fees to PricewaterhouseCoopers LLP were $0.1 million for professional services rendered
in 2004 for return preparation, and state tax consulting and review.  In 2003, we had tax fees to
PricewaterhouseCoopers LLP of $0.2 million for professional services rendered in 2003 for return preparation, and
state tax consulting and review.

Other Fees

There are no fees subject to this category to report.

98



PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a) Documents filed as part of this report:

|                                                                    | Page |    
|------------------------------------------------------------------- | ---- | ---
|(1) Financial Statements                                            |      |    
|                                                                    |      |    
|Report of Independent Registered Public Accounting Firm             |      | 45 
|Consolidated Balance Sheets as of December 31, 2004 and 2003        |      | 46 
|Consolidated Statements of Operations for the years ended           |      |    
|December 31, 2004, 2003, and 2002                                   |      | 47 
|Consolidated Statements of Cash Flows for the years ended           |      |    
|December 31, 2004, 2003, and 2002                                   |      | 48 
|Consolidated Statements of Shareholder's Equity and Comprehensive   |      |    
|Income (Loss) for the years ended December 31, 2004, 2003, and 2002 |      | 49 
|Notes to the Consolidated Financial Statements                      |      | 50 
|                                                                    |      |    
|(2) Financial Statement Schedule                                    |      |    
|                                                                    |      |    
|Valuation and Qualifying Accounts                                   |      | 81 
|                                                                    |      |    
|(3) List of Exhibits                                                |      | 103
|                                                                    |      |    

99



SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized
as of March 23, 2005.

REMINGTON ARMS COMPANY, INC./s/ Thomas L. MillnerThomas L. MillnerChief Executive Officer,President and Director


`Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities indicated on March 23, 2004.

                Signature                                   Title                            Date

                                                 Chief Executive Officer,                 March 23, 2005
           /s/ Thomas L. Millner                 President and Director
-------------------------------------------
            Thomas L. Millner


                                                Executive Vice President, Chief          March 23, 2005
                                                Financial Officer, and Chief
            /s/ Mark A. Little                     Administrative Officer
-------------------------------------------
              Mark A. Little


         /s/ Leon J. Hendrix, Jr.               Chairman and Director                      March 23, 2005
-------------------------------------------
           Leon J. Hendrix, Jr.


           /s/ B. Charles Ames                   Director                                   March 23, 2005
-------------------------------------------
             B. Charles Ames


          /s/ Michael G. Babiarz                 Director                                   March 23, 2005
-------------------------------------------
            Michael G. Babiarz


            /s/ Bobby R. Brown                  Director                                   March 23, 2005
-------------------------------------------
              Bobby R. Brown


         /s/ Richard A. Gilleland               Director                                   March 23, 2005
-------------------------------------------
           Richard A. Gilleland


          /s/ Richard E. Heckert                Director                                   March 23, 2005
-------------------------------------------
            Richard E. Heckert

                                                Director                                   March 23, 2005
-------------------------------------------
             Hubbard C. Howe


          /s/ Thomas E. Ireland                 Director                                   March 23, 2005
-------------------------------------------
            Thomas E. Ireland


        /s/ Thomas F. L'Esperance               Director                                   March 23, 2005
-------------------------------------------
          Thomas F. L'Esperance`

100



`Signature                         Title                                        Date

        /s/ H. Norman Schwarzkopf               Director                                   March 23, 2005
-------------------------------------------
          H. Norman Schwarzkopf


         /s/ Stephen C. Sherrill                Director                                   March 23, 2005
-------------------------------------------
           Stephen C. Sherrill`

101



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.

102



# EXHIBIT INDEX

# Form 10-K for Fiscal Year Ended December 31, 2004

ExhibitNumber                    
                     
                      
Description of Document

| | 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 Properties, 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 by Remington and Holding, 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 by Remington and Holding, and herein incorporated reference., filed
May 3, 1996 by Remington and Holding, 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 by Remington  and Holding, 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 by Remington and Holding, 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 by Remington and Holding, and herein incorporated by reference.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.1 | Certificate of Incorporation of Remington, dated October 21, 1993, as amended on November
23, 1993; previously filed as Exhibit 3.3 to Registration Statement No. 33-74194, under
the Securities Act of 1933, as amended, filed January 14, 1994 by Remington and Holding, and herein incorporated by reference.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.2 | By-laws of Remington (contained in exhibit 10.12).
| | --- | --------------------------------------------------

| | 3.3 | Certificate of Formation of RA Brands L.L.C., dated June 29, 2000, previously filed as Exhibit 3.5 to Registration
Statement No. 333-104141, under the Securities Act of 1933, as amended, filed May 16, 2003 by Remington and Holding,
and herein incorporated by reference.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.4 | Limited Liability Company Agreement of RA Brands, L.L.C. dated June 30, 2000, previously
filed as Exhibit 3.6 to Registration Statement No. 333-104141, under the Securities Act
of 1933, as amended, filed May 16, 2003 by Remington and Holding, and herein incorporated by reference.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.5 | Certificate of Incorporation of RA Factors, Inc. dated January 2, 2001, previously filed as Exhibit 3.7 to Registration
Statement No. 333-104141, under the Securities Act of 1933, as amended, filed May 16, 2003 by Remington and Holding, and herein incorporated by reference.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3.6 | By-Laws of RA Factors, Inc., previously filed as Exhibit 3.8 to Registration Statement No. 333-104141,
under the Securities Act of 1933, as amended, filed May 16, 2003 by Remington and Holding, and herein incorporated by reference.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

103



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

| | 4.3 | 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 Holdings Annual Report on Form 10-K, filed March 30, 1998, and herein incorporated by reference.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.1 | Indenture, dated as of January 24, 2003 among Remington, RBC Holding, Inc., RA Brands, LLC, RA Factors, Inc.
and U.S. Bank National Association with respect to Remingtons 101⁄2% Senior Notes due 2011,
previously filed as Exhibit 4.7 to Registration Statement No. 333-104141, under the Securities Act of 1933,
as amended, filed March 31, 2003 by Remington and Holding, and herein incorporated by reference.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ExhibitNumberDescription of Document

| | 10.2 | Filed as Exhibit 2.1
| | ---- | --------------------

| | 10.3 | Filed as Exhibit 2.2
| | ---- | --------------------

| | 10.4 | Filed as Exhibit 2.3
| | ---- | --------------------

| | 10.5 | Filed as Exhibit 2.4
| | ---- | --------------------

| | 10.6 | Filed as Exhibit 2.5
| | ---- | --------------------

| | 10.7 | Filed as Exhibit 4.3
| | ---- | --------------------

| | 10.8 | Filed as Exhibit 4.7
| | ---- | --------------------

| | 10.9 | Investment Agreement, dated as of December 19, 2002, by and among Holding, the C&D Fund
and the BRS Fund, previously filed as Exhibit 10.9 to Registration Statement No.
333-104141, under the Securities Act of 1933, as amended, filed March 31, 2003, by
Remington and Holding, and herein incorporated by reference.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.10 | Amended and Restated Registration and Participation Agreement, dated as of February 12,
2003, by and among the BRS Fund, Holding, C&D Fund and Fund IV Distributees, and
acknowledged and consented to by Remington, previously filed as Exhibit 10.10 to
Registration Statement No. 333-104141, under the Securities Act of 1933, as amended, filed March 31,
2003 by Remington and Holding, and herein incorporated by reference.
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.11 | 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 by Remington and Holding, and herein incorporated by reference.
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.12 | Shareholders Agreement, dated as of February 12, 2003, by and among Holding, C&D Fund,
the BRS Fund and Fund IV Distributees, previously filed as Exhibit 10.12 to Registration
Statement No. 333-104141, under the Securities Act of 1933, as amended, filed March 31, 2003, by Remington and Holding,
and herein incorporated by reference.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.13 | 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 by Remington and Holding, and herein incorporated by reference.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.14 | Indemnification Agreement, dated as of February 12, 2003, among Remington, Holding, Bruckmann,
Rosser, Sherrill & Co L.L.C. and BRS Fund II, previously filed as Exhibit 10.14 to
Registration Statement No. 333-104141, under the Securities Act of 1933, as amended, filed
March 31, 2003, by Remington and Holding, and herein incorporated by reference.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

104



| | 10.15 | Second Amended and Restated Consulting Agreement, dated as of February 12, 2003, among Holding, Remington and Clayton,
Dubilier & Rice, Inc. and Bruckmann, Rosser, Sherrill & Co., L.L.C, previously filed as Exhibit 10.15 to Registration
Statement No. 333-104141, under the Securities Act of 1933, as amended, filed March 31, 2003, by Remington and Holding,
and herein incorporated by reference.
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.16 | Consulting Agreement, dated as of February 12, 2003, among Holding, Remington and Bruckmann, Rosser, Sherrill
& Co. L.L.C. and Clayton, Dubilier & Rice, Inc, previously filed as Exhibit 10.16 to Registration Statement No. 333-104141,
under the Securities Act of 1933, as amended, filed March 31, 2003, by Remington and Holding, and herein incorporated by reference.
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.17 | Credit Agreement, dated January 24, 2003, among Remington and RA Factors, Inc., Wachovia
Bank, National Association, as administrative and collateral agent, Fleet Capital
Corporation, National City Commercial Finance, Inc., and the other Financial Institutions
Parties thereto from time to time, previously filed as Exhibit 10.17 to Registration
Statement No. 333-104141, under the Securities Act of 1933, as amended, filed March 31,  2003, by
Remington and Holding, and herein incorporated by reference.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.18 | Borrower Security Agreement, dated January 24, 2003, between Remington Arms Company, Inc. and
Wachovia Bank, National Association, as administrative and collateral agent, previously
filed as Exhibit 10.18 to Registration Statement No. 333-104141, under the Securities Act
of 1933, as amended, filed March 31, 2003, by Remington and Holding, and herein incorporated by reference.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.19 | Borrower Security Agreement, dated January 24, 2003, between RA Factors, Inc. and
Wachovia Bank, National Association, as administrative and collateral agent,
previously filed as Exhibit 10.19 to Registration Statement No. 333-104141, under the
Securities Act of 1933, as amended, filed March 31, 2003, by Remington and Holding, and
herein incorporated by reference.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.20 | Subsidiary Security Agreement, dated as of January 24, 2003, between RA Brands, L.L.C. and
Wachovia Bank, National Association, as administrative and collateral agent, previously
filed as Exhibit 10.20 to Registration Statement No. 333-104141, under the Securities Act
of 1933, as amended, filed March 31, 2003, by Remington and Holding, and herein incorporated by reference.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.21 | Pledge Agreement, dated January 24, 2003, between RA Brands, L.L.C. and Wachovia Bank,
National Association, as administrative and collateral agent, previously filed as Exhibit
10.22 to Registration Statement No. 333-104141, under the Securities Act of 1933, as
amended, filed March 31, 2003, by Remington and Holding, and herein incorporated by reference.
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.22 | Pledge Agreement, dated January 24, 2003, between Remington Arms Company, Inc. and
Wachovia Bank, National Association, as administrative and collateral agent,
previously filed as Exhibit 10.23 to Registration Statement No. 333-104141, under the
Securities Act of 1933, as amended, filed March 31, 2003, by Remington and Holding, and
herein incorporated by reference.
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.23 | Pledge Agreement, dated January 24, 2003, between RACI Holding, Inc. and Wachovia Bank,
National Association, as administrative and collateral agent, previously filed as
Exhibit 10.25 to Registration Statement No. 333-104141, under the Securities Act of 1933,
as amended, filed March 31, 2003, by Remington and Holding, and herein incorporated by reference.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.24 | Patent and Trademark Security Agreement, dated January 24, 2003, between RA Brands, L.L.C.
and Wachovia Bank, National Association, as administrative and collateral agent,
previously filed as Exhibit 10.26 to Registration Statement No. 333-104141, under the
Securities Act of 1933, as amended, filed March 31, 2003, by Remington and Holding, and
herein incorporated by reference.
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

105



| | 10.25 | Subsidiary Guaranty, dated January 24, 2003, between RA Brands, L.L.C. and Wachovia Bank,
National Association, as administrative and collateral agent, previously filed as Exhibit
10.27 to Registration Statement No. 333-104141, under the Securities Act of 1933, as
amended, filed March 31, 2003, by Remington and Holding, and herein incorporated by reference.
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.26 | Contribution Agreement, dated January 24, 2003, by and among Remington Arms Company, Inc., RA Factors, Inc., RA Brands,
L.L.C., and RBC Holding, Inc., and Wachovia Bank, National Association, as administrative and collateral agent, previously
filed as Exhibit 10.29 to Registration Statement No. 333-104141, under the Securities Act of 1933, as amended, filed
March 31, 2003, by Remington and Holding, and herein incorporated by reference.
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.27 | Form of Director Stock Subscription Agreement; previously filed as Exhibit 10.2 by Holding in Form
10-Q for the quarter ended September 30, 1997, and herein incorporated by reference.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.28 | Form of Executive Employment Agreement, previously filed as Exhibit 10.38 to Registration  Statement No. 333-104141,
under the Securities Act of 1933, as amended, filed July 7, 2003, by Remington and Holding, and herein incorporated by reference.*
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.29 | Director Stock Subscription Agreement; previously filed as Exhibit 10.1 to Holdings
Quarterly Report on Form 10-Q, for the quarter ended June 30, 1999, and herein
incorporated by reference.
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.30 | Director Matching Deferred Share Award Agreement; previously filed as Exhibit 10.2 to
Holdings Quarterly Report on Form 10-Q, for the quarter ended June 30, 1999, and
herein incorporated by reference.*
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.31 | 1999 RACI, Holding, Inc. Stock Incentive Plan; previously filed as Exhibit 10.3 to the Holding's Quarterly Report
on Form 10-Q, for the quarter ended June 30, 1999, and herein incorporated by reference.*
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.32 | Form of Management Stock Subscription Agreement; previously filed as Exhibit 10.4 to
Holdings Quarterly Report on Form 10-Q, for the quarter ended June 30, 1999, and
herein incorporated by reference.*
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.33 | Form of Management Stock Subscription AgreementPerformance Option; previously filed
as Exhibit 10.5 to Holdings Quarterly Report on Form 10-Q, for the quarter
ended June 30, 1999, and herein incorporated by reference.*
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.34 | Form of Management Stock Subscription AgreementService Option; previously filed as
Exhibit 10.6 to Holdings Quarterly Report on Form 10-Q, for the quarter ended June
30, 1999, and herein incorporated by reference.*
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.35 | Form of Stock Purchase Right Deferred Share Award Agreement; previously filed as Exhibit
10.7 to Holdings Quarterly Report on Form 10-Q, for the quarter ended June 30, 1999,
and herein incorporated by reference.*
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.36 | Form of Matching Deferred Share Award Agreement; previously filed as Exhibit 10.8 to
Holdings Quarterly Report on Form 10-Q, for the quarter ended June 30, 1999, and
herein incorporated by reference.*
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.37 | Profit Based Bonus Plan; previously filed as Exhibit 10.11 to Holding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 10.46 to
Holdings Annual Report on Form 10-K, filed March 8, 2002, and herein incorporated by by reference.*
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.39 | Form of Management Stock Option Agreement; previously filed as Exhibit 10.47 to
Holdings   Annual Report on Form 10-K, filed March 8, 2002, and herein
incorporated by reference.*
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.40 | Form of Deferred Share Award Agreement; previously filed as Exhibit 10.48 to Holdings
Annual   Report on Form 10-K, filed March 8, 2002, and herein incorporated by
reference.*
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.41 | RACI Holding, Inc. 2003 Stock Option Plan, adopted June 13, 2003, previously filed as
Exhibit 10.53 to Registration Statement No. 333-104141, under the Securities Act of 1933,
as amended, filed July 7, 2003, by Remington and Holding, and herein incorporated by reference.*
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

107



| | 10.42 | Form of RACI Holding, Inc. Management Stock Option Agreement, dated as of June 13, 2003,
previously filed as Exhibit 10.54 to Registration Statement No. 333-104141, under the
Securities Act of 1933, as amended, filed July 7, 2003, by Remington and Holding, and herein incorporated by reference.*
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.43 | Form of RACI Holding, Inc. Director Stock Option Agreement, dated as of June 13, 2003,
previously, filed as Exhibit 10.55 to Registration Statement No. 333-104141, under the
Securities Act of 1933, as amended, filed July 7, 2003, by Remington and Holding, and herein incorporated by reference.*
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.44 | Form of RACI Holding, Inc. Management Stock Subscription Agreement, previously filed as
Exhibit 10.56 to Registration Statement No. 333-104141, under the Securities Act of 1933,
as amended, filed July 7, 2003, by Remington and Holding, and herein incorporated by reference.*
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.45 | Form of RACI Holding, Inc. Director Stock Subscription Agreement, previously filed as Exhibit
10.57 to Registration Statement No. 333-104141, under the Securities Act of 1933, as amended, filed July 7, 2003,
by Remington and Holding, and herein incorporated by reference.*
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.46 | First Amendment to Credit Agreement, dated June 30,
2003, by and among Remington, RA Factors, Inc., Wachovia Bank, National Association, as
Agent and Lender and other financial institutions party to the Credit Agreement,
previously filed as Exhibit 10.58 to Registration Statement No. 333-104141, under the
Securities Act of 1933, as amended, filed July 7, 2003, by Remington and Holding, and
herein incorporated by reference.* 10.47 econd Amendment to Credit Agreement, dated as of
October 31, 2003, by and among Remington, RA actors, Inc., Wachovia Bank, National
Association, as Agent and Lender and other financial institutions party to the Credit
Agreement, previously filed as Exhibit 10.59 to Registration Statement No. 333-104141,
under the Securities Act of 1933, filed November 14,2003, by Remington, and herein
incorporated by reference.
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.47 | Second Amendment to the Credit Agreement,
dated as of October 31, 2003, by and among Remington, RA Factors, Inc., Wachovia Bank, National Association,
as Agent and Lender and other financial institutions party to the Credit Agreement, previously filed as Exhibit 10.59
to Registration Statement No. 333-104141, under the Securities Act of 1933, filed November 14, 2003, by Remington,
and herein incorporated by reference.
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.48 | Third Amendment, dated as of February 9, 2004, to Credit Agreement, dated as of January 24,
2003, among Remington, RA Factors, Inc., Wachovia Bank, National Association, as Agent and
the lenders from time to time party thereto, previously filed as Exhibit 10.2 to
Registration Statement No. 333-104141 on Form 8-K, under the Securities Act of 1933, filed February 18, 2004, by Remington and Holding, and herein incorporated by reference.*
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.49 | Asset Purchase Agreement, dated February 6, 2004, among Remington Arms
Company, Inc., RA Brands, L.L.C., Pure Fishing, Inc., Pure Fishing, I, LLC and Pure
Fishing II, LLC, previously filed as Exhibit 10.1 to Remingtons report on Form 8-K,
under the Securities Act of 1933, filed February 19, 2004, and herein incorporated by reference.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.50 | Fourth Amendment, dated as of February 8, 2005, to the Credit Agreement, dated as of January 24,
2003, among Remington, RA Factors, Inc., Wachovia Bank, National Association, as Agent and
lenders from time to time party hereto, previously filed as Exhibit 10.1 to Remington's Form 8-K, under
the Securities Act of 1933, filed February 11, 2005, and herein incorporated by reference.
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.51 | Form of Death Benefit Plan. *
| | ----- | -----------------------------

| | 10.52 | Description of 2005 Incentive Compensation Plan. *
| | ----- | --------------------------------------------------

| | 10.53 | Special Supplemental Retirement Plan for Paul Cahan.*
| | ----- | -----------------------------------------------------

| | 12.1 | Statement Re: of Earnings to Fixed Charges.
| | ---- | -------------------------------------------

| | 21.1 | List of Subsidiaries.
| | ---- | ---------------------

| | 31.1 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the
             Sarbanes-Oxley Act of 2002.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------

| | 31.2 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the
             Sarbanes-Oxley Act of 2002.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------

| | 32.1 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
             Sarbanes-Oxley Act of 2002.**
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------

107



| | 32.2 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
             Sarbanes-Oxley Act of 2002.**
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------

| | 99.1 | Press Release dated February 10, 2004, previously filed as Exhibit 99.1 to Remingtons
report on Form 8-K, under the Securities Act of 1933, filed February 19, 2004, and herein incorporated by reference.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 99.2 | Form of Proxy set to security holders for 2004 annual meeting.
| | ---- | --------------------------------------------------------------

| | 99.3 | Notice of Annual Meeting and Instructions sent to security holders for 2004 annual meeting.
| | ---- | -------------------------------------------------------------------------------------------

| | * | Management contract or compensatory plan or arrangement.
| | - | --------------------------------------------------------

| | ** | The following exhibits shall not be deemed filed for purposes of Section 18 of
the Securities Exchange Act of 1934, or otherwise subject to the liability of that
Section. In addition, Exhibit No. 32.1 and Exhibit No. 32.2 shall not be deemed
incorporated into any filing under the Securities Act of 1933 or the Securities Act of
1934.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

108