---

---

# UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

# FORM 10-K

(Mark One)

|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

# For the fiscal year
ended:

# December 31, 2005

# OR

|o | 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

REMINGTON ARMS COMPANY, INC.
(Exact name of registrant as specified in its charter)

|Delaware
(State or other jurisdiction of incorporation or organization) | 51-0350935
(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)

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

Indicate
by check mark it the registrant is a wel-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes
o          
No  x

Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes
x          
No  o

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

Yes
o          
No x

Indicate
by check mark if disclosure of deliquent 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.

Indicate
by check mark whether the registrant is a large accelerated filer, ;an accelerated filer or a non-accelerated filer.

Large accelerated filer
o          
Accelerated filer  o     
Non-accelerated filer  x

Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes
o          
No  x

At
March 23, 2006, the number of shares outstanding of each of the issuers classes of
common stock is as follows:  1,000 shares of Class A Common Stock, par value $.01 per
share.

# DOCUMENTS INCORPORATED BY REFERENCENone



# REMINGTON ARMS
COMPANY, INC.

FORM 10-K

December 31, 2005

INDEX

|                                                                                                                                                                                       | Page No.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------
|PART I                                                                                                                                                                                 |         
|ITEM 1. BUSINESS                                                                                                                                                                       |         
|ITEM 1A. RISK FACTORS                                                                                                                                                                  |         
|ITEM 1B. UNRESOLVED STAFF COMMENTS                                                                                                                                                     |         
|ITEM 2. PROPERTIES                                                                                                                                                                     |         
|ITEM 3. LEGAL PROCEEDINGS                                                                                                                                                              |         
|ITEM 4. SUBMISSION OF MATTERS TO 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. QUANTATIVE 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 AND RELATED STOCKHOLDER MATTERS                                                           |         
|ITEM 13. CERTAIN RELATINSHIPS AND RELATED TRANSACTIONS                                                                                                                                 |         
|ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERIVCES                                                                                                                                        |         
|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 |         

---



NOTE REGARDING
FORWARD-LOOKING STATEMENTS

This
annual report on Form 10-K, including the Managements Discussion and Analysis of
Financial Condition and Results of Operations, contains statements which constitute
forward-looking statements within the meaning of the Private Securities Litigation Reform
Act of 1995, including statements relating to trends in the operations and financial
results and the business and the products of the Company, as well as other statements
including words such as anticipate, believe, plan,
estimate, expect, intend and other similar
expressions. Forward-looking statements are made based upon managements current
expectations and beliefs concerning future developments and their potential effects on the
Company. Such forward-looking statements are not guarantees of future performance. See
Managements Discussion and Analysis of Financial Condition and Results of
Operations.

---

# PART I

# Item 1. BUSINESS

References in this report to
the Company, we, us, our, and words of
similar import mean the collective reference to Remington Arms Company, Inc. and its
subsidiaries, RA Brands, L.L.C. (RA Brands), RA Factors, Inc. (RA
Factors), and Remington Steam LLC (Remington Steam), 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. We also design, manufacture and market
products with law enforcement, military, and government applications. Our 189-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 2004, 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 2004, 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, 2005, we had consolidated net sales of $410.4 million and a
net loss of $16.9 million.

The
accompanying audited consolidated financial statements of Remington include the accounts
of its wholly owned subsidiaries, RA Brands, RA Factors and Remington Steam, as well as reflect 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 collect our accounts
receivables. The accounts of the Companys parent, 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
audited consolidated financial statements and related disclosures.

A
revision to the classification of the valuation allowance among current and noncurrent
deferred tax assets and liabilities 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. In addition, we have restated our previously issued financial statements
for the years ended December 31, 2004, 2003 and 2002 to reflect the correction of a methodological
error related to our reserve for healthcare claims.  The error resulted from the use of inaccurate data
and methodologies in calculating the healthcare accrual.  See Note 3 to our audited consolidated financial statements for the
year ended December 31, 2005 appearing elsewhere
in this annual report. 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.  See Note 5 to our audited consolidated financial statements for the year ended December 31, 2005 appearing elsewhere in this annual report.

# Recent Business
Developments

In
2004, we entered into a joint venture agreement with ELSAG, Inc., an unaffiliated
third party, to form RELES.  RELES sells and services a mobile license plate reading
technology that is sold to state and local law enforcement agencies along with
certain federal agencies. The first sales of the product were made in 2005. See Note 17 to
our audited consolidated financial statements for the year ended December 31, 2005
appearing elsewhere in this annual report.

6



In
2005, we completed our first full year of the Spartan Gunworks
product line, an opening price point line of shotguns which we purchase from a foreign third party
and expanded our product offerings into certain centerfire rifles. In 2006, all
of these products will be sold solely under the Remington brand name.

In
September 2005, we entered into an amendment to our exclusive distribution rights
agreement with a technology products manufacturer for certain security products within the
United States, certain contractually defined United States territories, and Canada. This
amendment allows us to sell to the military markets in addition to the federal agency and law enforcement
markets which we initially targeted.  The financial results
associated with these products are included in the Technology Products operating segment,
which is combined with the All Other reporting segment. We began shipment of these
products in December 2005, after receiving Federal Communications Commission approval to sell the
products in the United States.

In
2006, we expect to deliver additional sourced product offerings, including over/under
shotguns, muzzleloaders, rimfire rifles, and centerfire rifles. These product offerings
are part of managements ongoing strategy to enhance our existing product lines. We
have also had internal development of new products that we expect to deliver in 2006,
including a revolutionary titanium receiver auto-loading shotgun model.

We
have historically been financed primarily by a revolving credit facility (the "Credit Facility")
provided under our credit agreement, dated as of January 24, 2003, as amended through October 14, 2005, among Remington,
RA Factors, Inc., Wachovia Bank, National Association, as Agent, and the lenders from time to time party thereto (the
"2003 Credit Agreement), governing the revolver Credit Facility and the indenture for the Companys $200.0 million
aggregate principal amount 10.5% Senior Notes due 2011 (the Notes). On March
15, 2006, we entered into an Amended and Restated Credit Agreement.  Loans and other obligations outstanding
under the 2003 Credit Agreement are governed and deemed to be outstanding under the amended and restated terms
and conditions contained in the Amended and Restated Credit Agreement.  The
Amdended and Restated Credit Agreement amended certain terms of the 2003 Credit Agreement, including by:

| |  |  |  |  |  | Increasing the maximum revolver commitment to $140.0 million from $101.0 million,
continuing to be subject to a borrowing base;
| |  |  |  | - |  | -------------------------------------------------------------------------------------------------------------------------------

| |  |  |  |  |  | Extending the stated maturity of the Credit Facility to June 30, 2010 from January 23, 2008;
| |  |  |  | - |  | --------------------------------------------------------------------------------------------

| |  |  |  |  |  | Amending certain financial covenants, including by (i) decreasing the minimum amounts of Consolidated
EBITDA (as defined in the Amended and Restated Credit Agreement) that we must maintain during certain periods
and (ii) eliminating the leverage covenant;
| |  |  |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  |  |  | Amending the definition of "Applicable Margin" so that the interest margin applicable to loans under
the Amended and Restated Credit Agreement is determined based on Consolidated EBITDA (as defined in the
Amended and Restated Credit Agreement), rather than leverage beginning in 2007; and
| |  |  |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  |  |  | Amending the minimum amounts of availability under the Amended and Restated Credit
Agreement that, if not maintained, result in the imposition of a fixed charge coverage ratio covenant.
| |  |  |  | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See
Note 14 to our audited consolidated financial statements for the year ended December 31, 2005 appearing
elsewhere in this annual report.  "Management's Discussion and Analysis of Financial Condition and Results of Operations-
Liquidity and Capital Resources-The Amended and Restated Credit Agreement," and the copy of the Amended
and Restated Credit Agreement filed as an exhibit to our Current Report on Form 8-K filed March 21, 2006, for additional
information regarding the Amended and Restated Credit Agreement.

5



# 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, licensed
          products, surveillance technology products primarily for the government, law
          enforcement and military products, 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:

|           |  | ($ in millions) |   
|---------- |  | --------------- | --
|
|           |  |                 |   
|           |  | 2003            |   
|Firearms   |  | $      181      | .3
|Ammunition |  | 157             | .1
|All Other  |  | 22              | .3
|Total      |  | $      360      | .7

See
Note 23 to our audited consolidated financial statements for the year ended December 31,
2005 appearing elsewhere in this annual report. There are no material assets owned by the
Company outside of the United States.

# NARRATIVE DESCRIPTION OF
BUSINESS BY SEGMENT

# Firearms

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 Remington and Spartan Gunworks
brand names. The Spartan Gunworks brand name is being discontinued in 2006 and
these products will utilize the Remington brand name. 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.

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 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 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.

6



Product Introductions

We
focus our product development efforts on introducing new products that satisfy the need
for specialized, high-performance firearms. In 2005, we introduced a high performance
Model 700, theXCR (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. In 2006, we have
announced the introduction of the Model 105 CTi, which is designed
to provide a lightweight and soft recoil version of our auto-loading shotgun due to its
titanium receiver. We also announced the introduction of the Model 750
Woodsmaster, a replacement of our Model 7400 wood-stocked
centerfire rifle, and a number of rifle and shotgun niche products to address growing
specialty consumer markets. Also in February 2006, we introduced several new sourced
products, including the Genesis muzzleloader, the Model
798 and Model 799 centerfire rifles, and a
reintroduction of the Parker Gun break-action shotgun.

Seasonality

We
sell a broad range of firearms products. Some models of our shotguns are intended for
target shooting, while other models are intended for government, military, and law
enforcement applications.  Sales of these products typically occur outside the core fall hunting season
(September through December). The majority of our firearms products, however, are
manufactured for hunting, target, and plinking use. Because our firearms products are
generally used during the fall hunting season, many of our 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. 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 as of the end of the 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 important. Our shotgun
products compete with products offered by O. F. Mossberg & Sons, Inc., Winchester
firearms, Browning, New England Firearms, and Beretta. Our rifles compete with products
offered by Marlin Firearms Co., Sturm, Ruger & Co., Inc., Winchester firearms,
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.  Winchester has
announced that they will close the historic Winchester rifle factory in New Haven, Connecticut
on March 31, 2006.

Manufacturing

Our
facility in Ilion, New York manufactures shotguns, rifles, powdered metal parts, extra
barrels, and gun parts, and also houses our factory 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.

Supply of Raw Materials

To
manufacture our various products, we utilize numerous raw materials, including steel,
wood, and plastics, as well as 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. In 2005, we imported the opening
price point product lines from a single foreign vendor, and in 2006, we began importing sourced
products from a few foreign vendors.  See "Risk Factors" for additional information on our sole source
supplier agreement and risks associated with this product line.

7



We
have written purchase agreements with the majority of our suppliers, some of which contain
minimum purchase requirements. See Managements Discussion and Analysis of
Financial Condition and Results of OperationsLiquidity and Capital ResourcesContractual Obligations and
Commercial Commitments. Any disruption in our relationships with any of these
vendors or reductions in the production of 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
have had long-term relationships with each of these vendors and believe that such relationships are good and
do not currently anticipate any material shortages or disruptions in supply from these vendors.
Although alternative sources exist from which we could obtain such raw materials, 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. We use commodity option
contracts to hedge against the risk of increased prices for certain materials. 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.

# Ammunition

Products

Our
ammunition product offerings consist of a comprehensive line of sporting ammunition and
ammunition reloading components, including ammunition for the government, military, and
law enforcement markets, marketed predominantly under the Remington brand name, as
well as theUMC® brand name.

We
market an extensive line of products that range 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.

8



Product Introductions

We
focus our product development efforts on introducing new products that satisfy the need
for specialized, high-performance ammunition. In 2005, we added two new cartridges to
the line, the .204 Ruger, a new centerfire varmint round, and the .17 Mach
2, a new rimfire cartridge.  We also provided the upland hunter with a
comprehensive line of pheasant shotshells that cover a broad range of performance levels
and price points. From the premium Nitro Pheasant magnum line to our general
purpose pheasant loads and our value priced Shurshot Pheasant line,
upland hunters can now select from a complete assortment of products to meet their hunting
needs, at a price point that they can afford. We also expanded our successful line of
Managed-Recoil ammunition to include additional rifle calibers and
additional specifications of lower recoil shotgun slug products for the shotgun deer
hunter. For 2006, we announced the introduction of a completely new line of high density,
high performance waterfowl ammunition under the WingmasterHD brand. This
proprietary material and manufacturing process provides tangible performance enhancements
versus previous high density shot materials and offers waterfowl hunters better on-game
performance at all ranges. Finally for 2006, we announced the introduction of our
significantly expanded Premier Gold Box rifle ammunition line to
encompass a wider variety of cartridge offerings, bullet types and bullet weights to better meet
the needs of the performance oriented big game hunter.

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, some 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

Certain
of our hunting and shooting sports products experience seasonality revolving primarily
around hunting seasons, 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.

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.

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.

We
have written purchase agreements with the majority of our suppliers, some of which contain
minimum purchase requirements. See Managements Discussion and Analysis of
Financial Condition and Results of OperationsLiquidity and Capital ResourcesContractual Obligations and
Commercial Commitments. 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
have had long-term relationships with each of these vendors and believe such relationships are good, and do not
currently anticipate any material shortages or disruptions in supply from these vendors.
Although alternative sources exist from which we could obtain such raw materials, 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.

9



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, in 2004 and 2005 our manufacturing site
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 caused
by an increase in foreign market demand for base metals and energy. 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. We use commodity options contracts to hedge against the risk of increased
prices for certain raw materials. See Managements Discussion and Analysis of
Financial Condition and Results of OperationsLiquidity and Capital
ResourcesFinancial Instruments.

# All Other Product Lines

Accessories.       
          We market hunting and shooting accessories (including gun parts, gun care and
          cleaning products, and folding and collectible knives). These items are
          manufactured by third parties.

Licensing
Income. 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,
automobiles, sporting and outdoor apparel, caps, gun cases and slings, tree stands,
wildlife feeders, sporting dog equipment, air guns, game decoys & calls, hunting and
shooting safety and security products, gun safes, 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 a standard term of
three years and 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, dated December 5, 1986, between
us and Remington Products Company, L.L.C. (Remington Products) (the
Trademark Settlement Agreement), described below in Other
Corporate InformationPatents, Trademarks, and Copyrights.

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

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 one facility located at Findlay, Ohio. Our other facility in
Ada, Oklahoma is temporarily idle due to supply limitations discussed in Note 4 to our audited
consolidated financial statements for the year ended December 31, 2005 appearing elsewhere in this annual report.
An impairment charge on goodwill, trademarks, and fixed assets was taken during the first quarter of 2005 as a result of the
Company being notified by a primary supplier of a critical raw material to the
Companys Clay Targets business that materials would not be supplied beginning in the
third quarter of 2005. See Note 4 to our audited consolidated financial statements for the
year ended December 31, 2005 appearing elsewhere in this annual report.

10



Technology
Products.We distribute surveillance security products to the federal agency, law
enforcement, and military markets. These items are manufactured by a third party and we
serve as the exclusive distributor for them in the United States, certain contractually
defined United States 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 mobile license plate reading technology to state and local
law enforcement agencies and with certain federal agencies.

# OTHER CORPORATE
INFORMATION

# Backlog Information

As
of February 28, 2006, the backlog of unfilled total orders was approximately $99.7 million
compared to $75.8 million as of February 28, 2005.

# 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 manufactured by the Company in North America are warranted to the
original purchaser to be free from defects in material and workmanship for a period of two
years commencing with the registered date of purchase by the end customer. Import products are warranted by our vendors for a period of
one year commencing with the registered date of purchase by the end customer. We also provide limited
warranties for our ammunition products. Warranty expense was $2.7 million, $2.8 million,
and $2.8 million in 2005, 2004, and 2003, respectively.

# Customer Concentration

Approximately
17% of our total 2005 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 accounted for approximately 5% in 2005, 5% in 2004, and 6% in 2003 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
(including Canada and various countries throughout Europe and Asia). 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, who market and sell principally to wholesalers, dealers and regional
chains. In 2005, approximately 70% of our sales consisted of sales made through five
manufacturers sales representative groups. These sales representatives are
prohibited from selling competing goods from other manufacturers and are paid variable

11



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.

Our
in-house sales force primarily markets our product lines directly to national accounts
(consisting mainly of mass merchants) and to federal, state and local government agencies.
In 2006, the in-house sales force began marketing to all customer accounts in our Northeast sales region,
not just national accounts.

# 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, 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 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, Spectrum Brands, Inc. (formerly Rayovac Corporation), with its September
2003 purchase of Remington Products, 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 the Trademark Settlement Agreement, 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, this 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, and employ approximately 40
individuals to work in such capacity at our Elizabethtown, Kentucky facility as of
February 28, 2006. 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

12



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 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, 2005 amounted to approximately $5.9 million, and in each of 2004 and 2003 amounted to
approximately $6.1 million.

# Regulation

The
manufacture, sale and purchase of firearms are subject to extensive federal, state and
local governmental regulation. The primary 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 declined 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.

In
addition to federal requirements, state and local laws and regulations may place
additional restrictions on gun ownership and transfer. These 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. Remington firearms are covered under several recently enacted state
regulations requiring guns to be sold with internal or external

13



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 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.

Remington
in no longer a defendant in any lawsuits brought by municipalities against participants in the firearms industry.
In addition, legislation has been enacted in approximately 34 states precluding such actions. Similar federal legislation,
entitled "The Protection of Lawful Commerce in Arms Act" was signed into law by President Bush on October 26, 2005, after
being passed by the U.S. Senate in August 2005 and by the House of Representatives in October 2005, both by two-to-one margins.
However, the court hearing the City of New York'scase agains handgun manugacturers has held that the law does not prohibit that
lawsuit; the decision is being appealed to the U.S. Court of Appeals for the Second Circuit.

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 us for
which the Sellers have accepted liability. Our obligation on these cases is not expected
to be material.

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, 2006, we employed approximately 2,200 full-time employees of whom nearly
1,950 were engaged in manufacturing, and approximately 250 of whom were engaged in sales,
general

14



administration and 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 850 hourly
employees at our plant in Ilion, New York. The collective bargaining agreement with UMWA
was renegotiated effective October 2002. This agreement expires 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. This labor agreement is terminable by
either party upon notice to the other party. Employees at our other manufacturing
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 Securities Exchange Act of 1934, as amended (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.

15



# Item 1A. RISK FACTORS

# RISK FACTORS

Our
business and operations are subject to a number of risks and uncertainties as described
below. However, the risks and uncertainties described below are not the only ones we face.
Additional risks and uncertainties that we are unaware of or that we may currently deem
immaterial, may become important factors that harm our business, financial condition,
results of operations or cash flows. If any of the following risks actually occur, our
business, financial condition or results of operations could suffer. You should read and
carefully consider each of the following risks, as well as the other information provided
elsewhere in this report.

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 insurancecosts associated with
such cases and claims, may cause us to incur significant costs.

We
are currently defending product liability litigation involving Remington brand
firearms and our ammunition products (including ammunition manufactured under the UMCand Petersnames). As of December 31, 2005, approximately 19 individual bodily
injury cases or 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. As a manufacturer of shotguns and rifles,
since 1999, we were named in three cases (none of which is pending as to us) of the
lawsuits brought by some 30 municipalities and other governmental entities, primarily
against manufacturers and sellers of handguns.

In
part because the nature and extent of liability based on the manufacture and/or sale of
allegedly defective products is uncertain, particularly as to firearms and ammunition, our
resources may not be adequate to cover pending and/or future product liability
occurrences, cases or claims, in the aggregate, and such cases and claims may have a
material adverse effect upon our business, financial condition or results of operations.
In addition, insurance coverage for these risks may not continue to be available or, if
available, we may not be able to obtain it at a reasonable cost. See
BusinessLegal Proceedings.

Our business is subject
to extensive governmental legislation and regulation that may restrict our operation,
increase our costs of operations, or adversely affect the demand for our products by
limiting the availability and/or increasing the cost of our products.

The
manufacture, sale and purchase of firearms and ammunition are subject to extensive
federal, state and local governmental regulation. Although we do not believe that current
regulations have had such an impact to date, future regulations may adversely affect our
operations by limiting the types of product that we can manufacture and/or sell, or
imposing additional costs to us or to our customers in connection with the manufacture
and/or sale of our products. Such regulations may also adversely affect demand for our
products by imposing limitations that increase the costs of our products, making it more
difficult or cumbersome for our distributors or end users to transfer and own our
products, or creating negative consumer perceptions with respect to our products.

Current
federal regulations include:

| | 
Licensing requirements for the manufacture and/or sale of firearms and ammunition.
| | ------------------------------------------------------------------------------------

| | 
A national system of instant background checks for all purchases of firearms from federal license holders, including
purchases of our firearms products and purchases from license holders at gun shows.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In
addition, 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, its distributors and its customers could be
significant, depending on the type of firearms and ballistic information included in the

16



database. Bills have also been introduced in Congress in the past several years that would
affect the manufacture and sale of ammunition, including bills to regulate the
manufacture, importation and sale of armor-piercing bullets, to prohibit the manufacture,
transfer or importation of .25 caliber, .32 caliber and 9mm handgun ammunition, and to
increase or impose new taxes on the sales of certain types of ammunition, as well as bills
addressing the use of lead in ammunition. Certain 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.

State
and local laws and regulations may place additional restrictions on gun ownership and
transfer:

| | 
Some states have recently enacted, and others are considering, legislation restricting or
prohibiting the ownership, use or sale of specified categories of firearms and ammunition.
Many states currently have mandatory waiting period laws in effect for the purchase of
firearms, including rifles and shotguns. Although there are few restrictive state or local
regulations applicable to ammunition, several jurisdictions are considering such
restrictions on a variety of bases.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
Some states have enacted regulations prohibiting the sale of firearms unless accompanied
by an internal and/or external locking device. In several states, this requirement is
imposed on both handguns and long guns. Some states are also considering mandating the
inclusion of various design features on safety grounds. Most of these regulations as
currently contemplated would be applicable only to handguns.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
To date, two states have established registries of so-called ballistic images
of ammunition fired from new guns. Although neither law mandates the
inclusion of such imaging data from long guns in their registries, these or
other states may do so 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.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We
believe that existing federal and state legislation relating to the regulation of firearms
and ammunition has not had a material adverse effect on our sales of these products.
However, the regulation of firearms and ammunition may become more restrictive in the
future and any such development might have a material adverse effect on our business,
financial condition, results of operations, or cash flows. In addition, regulatory
proposals, even if never enacted, may affect firearms or ammunition sales as a result of
consumer perceptions. See BusinessRegulation.

Environmental litigation
and regulations may restrict or increase the cost of our operations and/or impair our
financial condition.

We
are subject to a variety of federal, state and local environmental laws and regulations
which govern, among other things, the discharge of hazardous materials into the air and
water, the handling, treatment, storage and disposal of such materials, as well as
remediation of contaminated soil and groundwater. We have programs in place that monitor
compliance with those requirements and believe that 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.

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 on us of future environmental compliance requirements or of the
cost of resolution of future environmental proceedings and claims, in part because the
scope of the remedies that may be required is not certain, liability under federal
environmental laws is, under certain circumstances, joint and several in nature, and
environmental laws and regulations are subject to modifications and changes in
interpretation. Environmental regulations may become more burdensome in the future and any
such development, or discovery of unknown conditions, may require us to make material
expenditures or otherwise materially adversely affect the way we operate our business, as
well as have a material adverse effect on our results of operations, financial condition,
or cash flows. See BusinessEnvironmental Matters.

17



Unfavorable market trends
and social and political concerns could adversely affect demand for our products and our
business.

We
believe that a number of trends currently exist that are potentially significant to the
hunting and shooting sports market:

| | 
We believe that the development of rural property in many locations has curtailed or
eliminated access to private and public lands previously available for hunting and
shooting sports.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
Environmental issues, such as concern about lead in the environment, may also adversely
affect the industry.
| | --------------------------------------------------------------------------------------------------------------

| | 
Although we are a manufacturer of long guns, the trends regarding firearms regulation as
well as the pending industry litigation, and the consumer perception of such developments,
may adversely affect sales of firearms, ammunition and other shooting-related products
by such means as increasing costs of production and/or reducing the number of distribution
outlets for our products.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

These
trends may have a material adverse effect on our business by impairing industry sales of
firearms, ammunition and other shooting-related products.

Our substantial
indebtedness could have a material adverse effect on our financial health and our ability
to obtain financing in the future and to react to changes in our business.

We
have a significant amount of debt. On December 31, 2005, we had approximately $221.7
million of debt outstanding and our interest expense for the year ended December 31, 2005
was approximately $26.4 million. Our significant amount of debt could limit our ability to
satisfy our obligations, limit our ability to operate our business and impair our
competitive position. For example, it could:

| | 
make it more difficult for us to satisfy our obligations under the Notes and to the
lenders under the Amended and Restated Credit Agreement;
| | ----------------------------------------------------------------------------------------------------------------------------------------------

| | 
increase our vulnerability to adverse economic and general industry conditions, including
interest rate fluctuations, because a significant portion of our borrowings are and will
continue to be at variable rates of interest;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
require us to dedicate a substantial portion of our cash flow from operations to payments
on our debt, which would reduce the availability of our cash flow from operations to fund
working capital, capital expenditures or other general corporate purposes;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 
limit our flexibility in planning for, or reacting to, changes in our business and
industry;  place us at a disadvantage compared to competitors that have
proportionately less debt; and  limit our ability to borrow additional debt or
equity financing due to applicable financial and restrictive
covenants in our debt.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The
agreements and instruments governing our debt place specified limitations on incurrence of
additional debt. Despite current indebtedness levels, we and our subsidiaries may be able
to incur substantial additional indebtedness in the future. However, if new debt is added
to our and our subsidiaries current debt levels, the related risks would intensify.

Our ability to generate
the significant amount of cash needed to make payments on and repay the Notes and our
other debt and to operate our business depends on many factors beyond our control.

Payments on our debt and the funding of working capital needs and planned capital
expenditures will depend on our ability to generate cash and secure financing in the
future. This ability, to an extent, is subject to general economic, financial,
competitive, legislative, regulatory and other factors beyond our control. If our business
does not generate sufficient cash flow from operations, and sufficient future borrowings
are not available to us under our Amended and Restated Credit Agreement or from other
sources of financing, we may not be able to repay the Notes or our other debt, operate our
business or fund

18



our other liquidity needs. We may not be able to obtain additional
financing, particularly because of our anticipated high levels of debt and the debt
incurrence restrictions imposed by the agreements governing our debt. If we cannot meet or
refinance our obligations when they are due, this may lead us to sell assets, reduce capital
expenditures or take other actions which could have a material adverse effect on us.

The agreements and
instruments governing our debt contain restrictions and limitations which could
significantly impact the holders of the Notes and our ability to operate our business.

The
Amended and Restated Credit Agreement and the indenture governing the Notes contain a
number of significant covenants that could adversely impact the holders of the Notes and
our business by limiting our ability to obtain future financing, make acquisitions or
needed capital expenditures, withstand a future downturn in our business or the economy in
general, conduct operations or otherwise take advantage of business opportunities that may
arise. These covenants, among other things, restrict our ability and the ability of our
subsidiaries to:

| | 
pay dividends or make other distributions;
| | --------------------------------------------

| | 
make certain investments or
acquisitions;
| | -------------------------------------------

| | 
enter into transactions with affiliates;
| | ------------------------------------------

| | 
dispose of assets or
enter into business combinations;
| | --------------------------------------------------------

| | 
incur or guarantee additional debt;
| | -------------------------------------

| | 
issue equity;
| | ---------------

| | 
repurchase or redeem equity interests and debt;
| | -------------------------------------------------

| | 
repurchase or redeem equity interests and debt;
| | -------------------------------------------------

| | 
create or permit to exist certain liens; and
| | ----------------------------------------------

| | 
pledge assets.
| | ----------------

Furthermore,
the Amended and Restated Credit Agreement requires us to meet specified financial
covenants. Our ability to comply with these provisions may be affected by events beyond
our control. The breach of any of these covenants will result in a default under the
Amended and Restated Credit Agreement, which could place us in default under the indenture
governing the Notes.

If we default under our
Amended and Restated Credit Agreement, we may not have the ability to make payments on
our indebtedness.

In
the event of a default under our Amended and Restated Credit Agreement, the lenders could
elect to declare all amounts borrowed, together with accrued and unpaid interest and other
fees, to be due and payable. If such an acceleration occurs, thereby causing an
acceleration of amounts outstanding under the Notes, we may not be able to repay the
amounts due under our Amended and Restated Credit Agreement or the Notes. This could have
serious consequences to the holders of the Notes and to our financial condition and
results of operations, and could cause us to become bankrupt or insolvent.

Our business is affected
by seasonal fluctuations in business; inventory management practices have had an effect
on our business.

Many
of our firearms products are purchased in anticipation of use during the fall hunting
season. In an effort to reduce the effect of seasonality on our business, we allow these
products to be purchased under an early order or dating plan. Under the dating
plan, a distributor may purchase these products beginning in December (the start of our
dating plan year) and pay for them on extended terms. 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. Beginning in 2000, as a competitive measure, we began offering extended
payment terms on select ammunition purchases. During the fourth quarters of 2004 and 2005,
we noted increasing use of extended payments terms. We attribute such use to the apparent
condensed seasonality taking place

19



within the markets in which we participate. Use of the
dating plan and the extended payment terms results in significant deferral of collection
of accounts receivable until the latter part of the year.

In
addition, 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
seasons (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.

As
a result of the seasonal nature of our sales, the extended payment terms under our dating
plan billing practices, and our customers inventory management practices, our
working capital financing needs may significantly exceed cash provided by operations
during certain periods in a year.

Decreases in consumer
confidence and spending and/or significant increases in commodity and energy prices could
have a material impact on the consolidated financial position, results of operations,
or cash flows of the Company.

The
general economic environment appears to be increasingly volatile and uncertain, as a
result of lower levels of consumer spending, lower consumer confidence, inflationary
pressures from higher energy and fuel costs, and an uncertain geopolitical environment,
offset by current moderate growth in national Gross Domestic Product. In addition, since
the beginning of 2004, the Federal Reserve has adopted a monetary policy that includes
raising the short term rates of interest. A rising interest rate environment could have a
potentially continuing adverse impact on consumer spending. Our business has also been
affected by the general environment of rising commodity prices for raw materials such as
lead, copper, zinc and steel, as well as rising energy costs, that have been experienced
since the beginning of 2004. We can provide no assurance that these economic trends will
not continue.

We may be unable to realize price increases
from our customers.

We are evaluating
our prices to our customers in light of the recently experienced increases in commodity and energy costs.  We attempt to raise
our prices in concert with our cost increases.  However, we can provide no assurance that these economic trends will not
continue nor can we provide any assurance that we will be able to realize price increases from our customers in a
commensurate level with our increased costs.

A substantial amount of our
business comes from one national account customer. A substantial portion of
our accounts receivable are concentrated with two customers. Loss of business from these
customers could adversely affect our revenues, operating results, and statements of cash
flows.

Our
in-house sales force markets our products directly to national accounts (consisting
primarily of mass merchandisers) and to federal, state and local government agencies.
Approximately 17% of our total 2005 sales and 9% of our December 31, 2005 accounts receivable balance
consisted of sales made to one national account,
Wal-Mart. Our sales to Wal-Mart are generally not governed by a written agreement. In the
event that Wal-Mart significantly reduces or terminates its purchases of firearms and/or
ammunition from us, our revenue could be adversely affected.

Wal-Mart
together with another customer accounts for approximately 27% of our accounts receivable.  This
other customer, due to the timing of their purchasing, usually maintains significant
amounts of accounts receivable at the end of our fiscal year. In the event that this
customer incurs financial difficultly and is unable to pay its account in full, our cash
flows and operating results could be adversely affected.

We are dependent on a number of
key suppliers. Loss or damage to our relationships with these suppliers could have a
material adverse effect on our business, financial condition, results of operations and
cash flows.

To
manufacture our various products, we use many raw materials, including steel, lead, brass,
zinc, plastics and wood, as well as manufactured parts purchased from independent
manufacturers. An extended

20



interruption in the supply of these or other raw materials or
in the supply of suitable substitute materials would disrupt our operations, which could
have a material adverse effect on our business, financial condition and results of
operations. Furthermore, we may incur additional costs in sourcing raw materials from
alternative producers.

For
a number of our raw materials, we rely on one or a few suppliers. Alternative sources,
many of which are foreign, exist for each of these materials. We do not, however,
currently have significant supply relationships with any of these alternative sources. We
cannot estimate with any certainty the length of time that would be required to establish
alternative supply relationships, or whether the quantity or quality of materials that
could be so obtained would be sufficient.

We purchase a limited number of
foreign manufactured firearms products through a third party supplier as part of our
strategy to grow revenues and improve profitability, which exposes us to additional
uncertainties. In 2006, we have increased the number of product offerings by expanding the
number of suppliers.

We introduced an opening price point
line known as Spartan Gunworks in June 2004 and expanded the line in 2005 with additional
product offerings. This product line made by a foreign manufacturer, imported by a third
party and then resold by us will now be sold under the Remingtonbrand.
In 2006, we will be increasing the number of different types of product
offerings by expanding the number of foreign suppliers from whom we buy products.

Our dependence on foreign suppliers
means, in part, that we may be affected by declines in the relative value of the U.S.
dollar to foreign currencies.  Although all of our purchases of foreign products are negotiated and paid
for in U.S. dollars, declines in the applicable foreign currency and currency exchange rates might
negatively affect the profitability and business prospects of our foreign manufacturer. This,
in turn, might cause such supplier to demand higher prices for merchandise, hold up
merchandise shipments to us, or discontinue selling to us, any of which could ultimately
reduce our sales or increase our costs.

We
are also subject to other risks and uncertainties associated with changing economic and
political conditions in foreign countries. These risks and uncertainties include import
duties and quotas, disruptions or delays in product deliveries, our suppliers' on-going quality controls,
work stoppages, economic uncertainties (including inflation), foreign
government regulations, political unrest and trade restrictions. Any event causing a
disruption or delay of imports from our foreign manufacturers, including the imposition of
additional import restrictions, restrictions on the transfer of funds and/or increased
tariffs or quotas, or both, could increase the cost or reduce the supply of merchandise
available to us and adversely affect our business, financial condition, results of
operations, or cash flows.

Labor constraints may
have an adverse affect on our ability to restructure our business or to maintain our
current operating results and statement of cash flows.

Approximately
850 of the hourly employees in our Ilion, New York firearms manufacturing plant are
represented by the United Mine Workers of America (UMWA) and covered by a
collective bargaining agreement. The agreement with the UMWA (which expires in September
2007) provides for contractual wage and benefits levels throughout the term of the
contract. This agreement restricts our ability to manufacture or
source certain product lines at or from locations other than our Ilion, New York
manufacturing plant during the term of the agreement. This agreement may also limit our
ability to change local work rules and practices to encourage flexible manufacturing and
other efficiency-related improvements. Accordingly, our ability
to successfully implement certain product line changes and other planned cost savings
initiatives set forth by management may be impeded. There is also no guarantee that we will be able to
negotiate a new of our collective bargaining agreement on substantially similar terms to
the existing agreement.  This could have a negative impact on our results of operations,
financial condition, and cash flows.

21



If we are unable to
retain key management personnel, our business could be adversely effected.

Our
success is dependent to a large degree upon the continued service of our executive
management team. We have entered into employment agreements with certain of our
executives. See Executive CompensationExecutive Employment Agreements.
The loss of any member of our executive management team could have a material adverse effect
on our business, financial condition and results of operations.

We may not be able to
compete successfully within our highly competitive markets, which could adversely affect
our business, financial condition, or cash flows.

The
markets in which we operate are highly competitive. Product image, quality and innovation
are the primary competitive factors in the firearms industry. Product differentiation
exists to a much lesser extent in the ammunition industry, where price is the primary
competitive factor. Reductions in price by our competitors in the ammunition industry
could force us to reduce prices or otherwise alter terms of sale as a competitive measure,
which could adversely affect our business and financial condition.

Our
competitors vary by product line. Some of our competitors are subsidiaries of large
corporations with substantially greater financial resources than us. Although we believe
that we compete effectively with all of our present competitors, we may not continue to do
so, and our ability to compete could be adversely affected by our leveraged condition. See
BusinessCompetition.

Our business is subject
to economic, market and other factors beyond our control or ability to predict.

The
sale of hunting and shooting sports products depends upon a number of factors related to
the level of consumer spending, including the general state of the economy and the
willingness of consumers to spend on discretionary items. Historically, the general level
of economic activity has significantly affected the demand for sporting goods products in
the hunting and shooting sports and related markets. As economic activity slows, consumer
confidence and discretionary spending by consumers declines. Competitive pressures arising
from any significant or prolonged economic downturn could have a material adverse impact
on our financial condition and results of operations, and such impact could be intensified
by our leveraged condition.

Moreover,
additional risks and uncertainties not currently known to us or that we currently deem to
be immaterial may also materially and adversely affect our business and operations. These
risks and uncertainties include, but are not limited to, weather and other Acts of God
that could result in the loss or destruction of warehoused inventory and stoppages in our
ability to manufacture our key products for a sustained period of time.

Worse-than-assumed economic and
demographic experience for our postretirement benefit plans (e.g., discount rates,
investment returns, health care cost trends) could negatively impact our operating
results, financial condition, and statement of cash flows.

We
sponsor plans to provide postretirement pension and health care for our retired employees.
The measurement of our obligations, costs and liabilities associated with these benefits,
requires that we estimate the present values of projected future payments to all
participants. We use many assumptions in calculating these estimates, including discount
rates, investment returns on designated plan assets, health care cost trends, and
demographic experience (e.g., mortality and retirement rates). To the extent that actual
results are less favorable than our assumptions there could be a substantial adverse
impact on our results of operations, financial condition, and cash flows.

We have controlling
shareholders, who may have interests that conflict with investors interests.

The
Bruckmann, Rosser, Sherrill & Co. II, L.P. (the BRS Fund) presently owns
60.7% and the Clayton & Dubilier Private Equity Fund IV Limited Partnership (the
CDR Fund) presently owns 12.8% (and by proxy controls the votes of 26.3%) of the
outstanding common stock of Holding on a fully-diluted basis including all options and
deferred shares. Holding in turn owns 100% of the outstanding capital stock of Remington.
Accordingly, the BRS Fund and the CDR Fund exercise significant influence over our board

22



of directors and business and operations.
See "Directors and Executive Officers of the Registrant -
Shareholders' Agreement.  The interests of the BRS Fund, the CDR Fund and their
affiliates could conflict with the interests of the holders of our indebtedness. For
example, if we encounter financial difficulties or are unable to pay our debts as they
mature, their interests might conflict with the interests of the holders
of our indebtedness. The BRS Fund, the CDR Fund and their affiliates also may have an interest
in pursuing acquisitions, divestitures, financings or other transactions that, in their
judgment, could enhance their investment, even though such transactions might
involve risks to the holders of our indebtedness.

Our joint venture RELES
may require additional funding in order to continue its operations.

RELES
has received funding commitments from us of $1.3 million from inception through December
31, 2005. The joint venture has yet to operate in a positive cash flow position. We
made the final required funding payment of $0.2 million on March 15, 2006. As
a result, we may commit to additional funding requirements if we believe that doing so
would result in a positive cash flow venture. Any future commitments would be limited to
amounts available for investment under the terms of our indenture for the Notes and the
Amended and Restated Credit Agreement.

An increase in revenues
to the government, law enforcement, and military sales channels could result in increased
uncertainty to the timing of our sales revenues.

Government,
law enforcement, and military sales channels are typically in the form of contract sales
arrangements. We are exposed to these channels through our sale of certain firearms and
ammunition products, as well as our distribution of surveillance security technology
products. An increasing percentage of our sales revenues could therefore be subject to
contract negotiations. This trend could cause sales revenue amounts to be increasingly
volatile and uncertain with respect to the timing of orders.

23



# Item 1B. UNRESOLVED
STAFF COMMENTS

Not applicable.

24



# 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.
The Ada, Oklahoma facility is temporarily idle due to supply limitations discussed in
Note 4 to our audited consolidated financial statements for the year ended December 31,
2005 contained elsewhere in this annual report.

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 as collateral for our obligations under the
Amended and Restated Credit Agreement.

We
lease a facility from and contract for distribution services with major third
party contractors, which impacts distribution for all of our reporting segments.  We also lease
a facility in Rockville, Maryland for our Technologies Products division, which is
included in our All Other reporting segment.

25



# Item 3.  LEGAL PROCEEDINGS

Under
the terms of the 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, 2005 through November 30, 2006 and provides for certain self-insured retention
amounts per occurrence. It also includes a limited batch clause provision. Applicable to
our primary Products policy, this allows that a single retention be assessed when the same
defects manufactured in a common lot or batch results in multiple injuries or damages to
third parties. The policy excludes from coverage any pollution-related liability. Based in
part on the nature of our products, and the impact on the insurance market of September
11, 2001 and more recent weather-related and other events, 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, 2005, 19 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, 2005, one involves matters for which the Sellers retained liability
and are required to indemnify us. The remaining 18 pending cases involve post-Acquisition
occurrences for which we bear responsibility under the Purchase Agreement; the Sellers
have some responsibility for the costs of 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 million. Of the 18 individual post-Acquisition
claims pending as of December 31, 2005, claimants purport

26



to seek approximately $22.3
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, 2005, our accrual for product liability cases and claims was $10.1 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.).
Two of these cases (City of Boston

27



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). Remington is therefore not a defendant in
any pending municipal litigation.

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.

To date, most municipal lawsuits have been dismissed and are no longer subject to appeal,
including that involving local California governments. The three remaining lawsuits are in
various stages of motion practice, discovery, and trial preparation. 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, most recently by the House
of Representatives on October 20, 2005. President Bush signed the Protection of Lawful
Commerce in Arms Act on October 26, 2005. However, the court hearing the City of New
Yorks case against handgun manufacturers has held that the law does not prohibit
that lawsuit; the decision is being appealed to the U.S. Court of Appeals for the Second
Circuit.

# 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 to the 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 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.

28



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.

29



# Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On
November 9, 2005, the Companys shareholder voted to appoint Grant Thornton LLP,
replacing PricewaterhouseCoopers LLP, as the Companys independent registered public accounting firm, as disclosed in the
Companys Form 8-K filed on November 15, 2005 with the SEC. There were no other
matters ubmitted to a vote of the Companys shareholder during the fourth quarter of
2005.

30



# 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, 2006, there were 24 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 2004 or 2005 and Remington did not pay
          any dividends during 2005. In 2004, Remington paid dividends to Holding in an
          aggregate amount of $2.2 million to fund interest payments on the $32.9 million
          aggregate principal amount of senior notes of Holding (the Holding
          Notes). The CDR Fund holds all of 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 its 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 (in the case of Remington) to the restrictions set forth in
the Amended and Restated Credit Agreement, and the indenture for the Notes, which
currently limit the payment of cash dividends by Remington to its shareholder, 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 14 to our audited
consolidated financial statements for the year ended December 31, 2005 appearing elsewhere
in this annual report.

31



# Item 6. SELECTED FINANCIAL DATA

The
following table sets forth certain selected financial information derived from our audited
consolidated financial statements as audited by our independent registered public
accounting firms, Grant Thornton LLP for data for the one-year period ended December 31,
2005, and PricewaterhouseCoopers LLP, for each of the years in the four-year period ended
December 31, 2004. On February 9, 2004, we completed the sale of our fishing line
business, and the results are reflected as discontinued operations for all periods
presented. See Notes 5 to our audited consolidated financial statements for the year ended December 31,
2005 appearing elsewhere in this annual report. The table should be read in conjunction
with Managements Discussion and Analysis of Financial Condition and Results of
Operations and our audited consolidated financial statements and related notes and
other financial information included elsewhere in this report.

|                                                       | Year Ended December 31, | 
|------------------------------------------------------ | ----------------------- | 
|
|
|
|
|Income Statement Data:                                 |                         | 
|Net Sales (1)                                          |                         | 
|Sales Growth (Loss) Percentage                         |                         | 
|Gross Profit                                           |                         | 
|Gross Profit Percentage                                |                         | 
|Operating Expenses                                     |                         | 
|Impairment Charges (2)                                 |                         | 
|Operating Profit                                       |                         | 
|Interest Expense (3)                                   |                         | 
|Income (Loss) from Continuing Operations before Taxes  |                         | 
|and Equity in Losses from Unconsolidated Joint Venture |                         | 
|Income Tax Expense (Benefit) from Continuing           |                         | 
|Operations (4)                                         |                         | 
|Income from Discontinued Operations, net of tax (5)    |                         | 
|Gain on Disposal of Discontinued Operations, net of    |                         | 
|tax (6)                                                |                         | 
|Net Income (Loss)                                      |                         | 
|                                                       |                         | 
|Operating and Other Financial Data:                    |                         | 
|Depreciation and Amortization (7)                      |                         | 
|Other Non-Cash Charges (8)                             |                         | 
|Nonrecurring and Restructuring Items (9)               |                         | 
|Special Payments (10)                                  |                         | 
|Equity in Loss for Unconsolidated Joint Venture        |                         | 
|Gross Capital Expenditures                             |                         | 
|Other Unusual Charges (11)                             |                         | 
|Adjusted EBITDA related to Discontinued Operations     |                         | 
|(12)                                                   |                         | 
|Cash flows provided by (used in):                      |                         | 
|Operating activities                                   |                         | 
|Investing activities                                   |                         | 
|Financing activities                                   |                         | 
|                                                       |                         | 
|Balance Sheet Data (end of period):                    |                         | 
|Working Capital (13)                                   |                         | 
|Total Assets                                           |                         | 
|Total Debt (14)                                        |                         | 
|Credit Facility                                        |                         | 
|Shareholders Equity (Defecit)                         |                         | 

32



|Consolidated EBITDA (as defined in the Indenture)
    and Credit Statistics: | 2001 |  | 2002 |      | 2003 |   | 2004 |   | 2005 |     
|---------------------------------------------------------------------------- | ---- |  | ---- | ---- | ---- | - | ---- | - | ---- | ----
|Consolidated EBITDA (as defined in the Indenture)                            |      |  |      |      |      |   |      |   |      |     
|(12) (15)                                                                    |      |  | $    | 56.8 |      | $ | 60.7 |   | $    | 39.6
|                                                                             |      |  |      |      |      |   |      |   |      |     
|Consolidated Interest Expense (as defined in the                             |      | 
|Indenture) (16)                                                              |      |  | $    | 13.6 |      | $ | 10.4 |   | $    | 23.0
|Consolidated Coverage Ratio (as defined in the                               |      | 
|Indenture) (17)                                                              |      |  |      | 4.2  | x    |   | 5.8  | x |      | 1.7 
|Ratio of Earnings to Fixed Charges (18)                                      |      |  |      | 2.6  | x    |   | 3.8  | x |      | (17 
|                                                                             |      |  |      |      |      |   |      |   |      |     

---

|(A) |  | We have restated our previously issued financial statements for the years ended December 31, 2004, 2003, and
        2002 to reflect the correction of a methodological error related to our reserve for healthcare claims.  The error
        resulted from the use of inaccurate data and methodologies in calculating the healthcare accrual.  For a
        discussion of the restatement adjustment, see Managements Discussion and Analysis of Financial Condition and
        Results of Operations - Restatement of Previously Issued Financial Statements and Note 3 to our audited consolidated financial
        statements for the year ended December 31, 2005 appearing elsewhere in this annual report.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(1) |  | Presented net of federal excise taxes. Federal excise taxes were $32.1 million,
          $33.5 million, $31.2 million, $33.5 million and $34.0 million for the years
          ended December 31, 2001, 2002, 2003, 2004 and 2005, respectively.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | These impairment charges in 2005 are associated with the write-down in goodwill,
          trademarks, and fixed assets of the Clay Targets reporting unit and with the
          write-down in certain embellishing fixed assets in the Firearms reporting unit.
          See Note 5 to our audited consolidated financial statements for the year ended
          December 31, 2005 appearing elsewhere in this annual report.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | Interest expense included in discontinued operations is $2.7 million, $1.8
          million, $1.8 million, $0.1 million, and zero, for the years ended December 31,
          2001, 2002, 2003, 2004 and 2005, respectively.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | The year ended December 31, 2004 and 2005, includes $15.5 million and $0.4
          million in tax expense associated with recording a valuation allowance against
          certain deferred tax assets. See Note 20 to the audited consolidated financial
          statements for the year ended December 31, 2005 appearing elsewhere in this annual report.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) |  | On February 9, 2004, we completed the sale of our fishing line business, and
          the results are reflected as discontinued operations for all periods presented.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) |  | 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 5 to
          the audited consolidated financial statements appearing elsewhere in this annual
          report.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) |  | Excludes amortization of deferred financing costs of $1.7 million, $1.9 million,
          $1.8 million, $1.9 million and $1.7 million for the years ended 2001, 2002,
          2003, 2004 and 2005, respectively, which is included in interest expense.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) |  | Non-cash charges consist of the following: (a) 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; (b) 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; (c)
          for the year ended December 31, 2003, a $2.9 million retiree benefits and a $0.5
          million loss on disposal of assets; (d) for the year ended December 31, 2004, a
          $7.1 million accrual for retiree benefits and a $0.3 million loss on disposal of
          assets; (e) for the year ended December 31, 2005, a $5.6 million accrual for
          retiree benefits and a $0.4 million loss on disposal of assets.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) |  | Nonrecurring and restructuring expenses consist of the following: (a) 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; (b) 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;
          (c) for the year ended December 31, 2003, $0.2 million of severance costs and
          $0.2 million loss on disposal of assets; (d) for the year ended December 31,
          2004, $13.6 million 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; (e) for the year ended December 31, 2005, $0.6 million of
          severance charges, $0.3 million associated with the exclusive distribution
          agreement, a write-off of debt issuance costs of $0.5 million associated with
          the permanent reduction in borrowing capacity, $1.0 million associated with the
          write-down in certain embellishing fixed assets in the Firearms reporting unit,
          and impairment charges of $3.7 million associated with the write-down in
          goodwill, trademarks, and fixed assets of the Clay Targets reporting unit,
          offset by $1.2 million gain associated with the settlement of a contract in the
          Firearms reporting unit.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

33



|(10) |  | Special payments consist of the following: (a) 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. (b) 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.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(11) |  | In January 2003, $0.7 million of additional interest for early redemption of
          Remingtons 9 1⁄2% Senior Subordinated Notes due 2003 (the
          Refinanced Notes) and $1.5 million for the unamortized debt issuance
          costs were expensed related to Remington prior senior secured credit facility
          (the Old Credit Facility).
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(12) |  | Adjusted EBITDA as presented herein has the same meaning as defined
          in Note 23 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 the Notes for all periods presented.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(13) |  | Working capital presented herein as total current assets less total current
          liabilities.
|---- |  | --------------------------------------------------------------------------------------------------

|(14) |  | Consists of short-term and long-term debt, current
          portion of long-term debt, note payable to Holding and capital
          lease obligations.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------

|(15) |  | Consolidated EBITDA as presented herein is a financial measure
               that is used in the indenture for the Notes 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 for the Notes) 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 for the Notes) 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 Notes) for the period ended December 31, 2004, we also
               excluded Other Noncash Charges of $6.0 million and Non-Recurring and
               Restructuring Items of $4.9 million. See Note 23 to the audited consolidated
               financial statements for the year ended December 31, 2005 appearing elsewhere in this annual report for a
               reconciliation of this measure to net income. Consolidated EBITDA is not a
               measure of performance defined in accordance with accounting principles
               generally accepted in the United States. However, we believe that Consolidated
               EBITDA is useful to investors in evaluating our performance because it is a
               commonly used financial analysis tool for measuring and comparing companies in
               our industry in areas of operating performance. Consolidated EBITDA should not
               be considered as an alternative to net income as an indicator of our performance
               or as an alternative to net cash provided by operating activities as a measure
               of liquidity and may not be comparable to similarly titled measures used by
               other companies. The indenture for the Notes 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 for
               the Notes) to Remingtons consolidated interest expense (subject to certain
               adjustments as provided in the indenture for the Notes) must be greater than
               2.25 to 1.00 for the four most recent quarters for which financial statements
               are available:
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| |   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 for the Notes.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

34



|(16) |  | Consolidated Interest Expense as defined in the indenture for
               the Notes, consists of the total interest expense 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 $1.7 million, $1.9 million,
               $1.8 million, $1.9 million and $1.8 million for the years ended 2001, 2002,
               2003, 2004 and 2005, respectively, and includes amounts reclassified to
               discontinued operations of $2.7 million, $1.8 million, $1.8 million, $0.1
               million, and zero, for the years ended December 31, 2001, 2002, 2003, 2004 and
               2005, respectively.
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(17) |  | Consolidated Coverage Ratio as defined in the indenture for
               the Notes is the ratio of Consolidated EBITDA (as defined in the indenture for
               the Notes) for the four most recently ended quarters for which financial
               statements are available to Consolidated Interest Expense (as defined in the
               indenture for the Notes) for the same period. The Consolidated Coverage Ratio
               (as defined in the indenture for the Notes) is presented for illustrative
               purposes.
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(18) |  | 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 losses in 2003, 2004, and 2005, this
               ratio was less than 1:1. Additional earnings of $7.5 million, $3.7 million and
               $16.4 million in 2003, 2004 and 2005, respectively, would have been required to
               achieve a ratio of 1:1.
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

35



# 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 audited consolidated financial statements and related notes and the
other financial information appearing elsewhere in this annual report.

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

| |   Restatement of Previously Issued Financial Statements.
| | ---------------------------------------------------------

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

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

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

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

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

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

| |    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 and RA Factors on a consolidated
basis, unless otherwise indicated. It also includes discussion and analysis on
Remingtons unconsolidated joint venture, RELES, 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 the CDR Fund (the "Holding Notes") which were
created during the recapitalization of Holding in February 2003, which as of year end are
outstanding at a value of $39.8 million, inclusive of accrued interest. The CDR Fund holds all
of the Holding Notes. RA Brands and RA Factors are wholly owned subsidiaries of Remington.
RA Brands acts as a holding company for our intellectual property and other intangible
assets, and RA Factors is a subsidiary that primarily exists to collect our receivables.

We
evaluate our business primarily on Adjusted EBITDA (as described in Note 23 to our audited
consolidated financial statements for the year ended December 31, 2005 appearing elsewhere in this annual report) from two
core segments, Firearms and Ammunition, and to a lesser degree on other operating segments
organized within the All Other reporting segment, consisting of Accessories, Licensing Income,
Clay Targets, Powder Metal Products, and Technology Products. 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 both the hunting and shooting
sports and military/government/law enforcement marketplaces.

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 complement our core strategies, which may include
direct product sourcing, licensing, acquisitions 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, innovative, high quality, and cost
effective products to support our customers and consumers. As a result of the market
polarization trends we have identified in Industry below, we began augmenting
our already existing product lines in 2004 with import product lines, and we will continue
to enhance our existing product lines both through the internal development of new
products and the further sourcing of product during fiscal year 2006.

We
undertook certain growth initiatives beginning in 2004, including
the following:

36



| |  |  |  |  |  | In June 2004, we delivered our first sales of the Spartan Gunworks product line, an
opening price point line imported from overseas initially consisting of shotguns. We have
since expanded this line with additional product offerings, including rifles. In 2006,
all of these products will be sold solely under the Remingtonbrand name.
| |  |  |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  |  |  | In July 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 contractually defined United States territories, and Canada. We sell these
security products to the federal agency and law enforcement markets. In September 2005, we
amended this agreement to include distribution to certain military markets. We have
included related financial results in the Technology Products operating segment, which is
combined within the All Other reporting segment.
| |  |  |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  |  |  | In August 2004, we entered into a joint venture agreement with ELSAG, Inc., an
unaffiliated third party, to form RELES.  RELES sells and services a mobile license
plate reading technology that is sold to state and local law enforcement agencies
along with certain federal agencies. We own 50% of the joint venture.  The joint
venture 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 provide certain
administrative support functions, while ELSAG, Inc. provides product
technology support. The Company made contributions to RELES in 2005 in the amount of $1.0
million, bringing its total contributions from inception through December 31, 2005 to $1.3
million. The final payment of $0.2 million was paid on March 15, 2006, and, accordingly,
the Company has no more commitments to fund RELES, although we may decide to do so in the
future. There have been no significant revenues associated with RELES during any
period.
| |  |  |  | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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
continues to believe 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.

We
have continued to experience increasing costs related to materials and energy (including
lead, copper, steel, fuel, and utilities) for which we have no historical comparison. We
can provide no assurance that these economic trends will not continue. Management has
initiated significant price increases in an attempt to offset these costs and will
continue to evaluate the need for future price increases in light of these trends and the
Companys competitive landscape.

Although
we believe that regulation of firearms and ammunition, and consumer concerns about such
regulation, have not had a significant 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 will not adversely affect these markets.

# Restatement of Previously Issued Financial Statements

We have restated our previously
issued financial statements for the years ended December 31, 2004, 2003, and 2002 on Form 10-K/A filed with the Securities
Exchange Commission on August 8, 2005 (the Form 10-K/A) to reflect the correction of a methodological error related to our reserve
for potential healthcare claims.  On July 15, 2005 through discussions by management and the audit committee, we determined that an
error existed in the calculation of our health care accrual included in previously issued financial statements.  The error resulted
from the use of inaccurate data and methodologies in calculating the healthcare accrual.  All amounts referenced in this Annual Report
for 2005 reflect relevant amounts on a restated basis, consistent with the restated amounts reported on Form 10-K/A.  See Note 3 to
the accompanying audited consolidated financials for the year ended December 31, 2005 appearing elsewhere in this annual report.

37



# Developments and
Highlights

On
February 9, 2004, Remington and RA Brands sold specified assets related to our fishing
line business, including fixed assets, inventories, and intellectual property to Pure
Fishing, Inc. and its wholly-owned subsidiaries Pure Fishing I, LLC and Pure Fishing II,
LLC, for $44.0 million in cash (the Stren transaction). 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. On March 15, 2006, we entered into an Amended
and Restated Credit Agreement which replaced the 2003 Credit Agreement.  See further discussion in the
"Liquidity and Capital Resources" section below.

A
number of matters 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 as providing an interactive safety training course
on our Internet web site, at www.remington.com. In addition, we 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.
| |  |  |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  |  |  | Environmental issues, such as concern about lead in the environment, may adversely affect
the industry. We have developed multiple lines of shotshells that use materials other than
lead 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 handguns (as that term is
conventionally used) bearing the Remington brand have been produced since before
World War II. We do, however, produce handgun ammunition.
| |  |  |  | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Although
we believe that these matters 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 appears to be increasingly volatile and uncertain, as a
result of lower levels of consumer spending, lower consumer confidence, inflationary
pressures from higher energy and fuel costs, and an uncertain geopolitical environment,
offset by current moderate growth in national Gross Domestic Product. In addition, since
the beginning of 2004, the Federal Reserve has adopted a monetary policy that includes
raising the short term rates of interest. This continuing rising interest rate environment could have a
potentially continuing adverse impact

38



on consumer spending. Our business has also been
affected by the general environment of rising commodity prices for raw materials such as
lead, copper, and steel, as well as rising energy costs, that have been experienced since
the beginning of 2004. See Item 7A Quantitative and Qualitative Disclosures About
Market Risk. We can provide no assurance that these economic trends will not
continue. Decreases in consumer confidence and spending and/or significant increases in
commodity and energy prices could have a material impact on the consolidated financial
position, results of operations, or cash flows of the Company.

Industry

As
discussed above, the consumer products environment appears to be softening due to
lower consumer spending, lower consumer confidence, and inflationary pressures
primarily from higher energy costs. Further, the retail and consumer products industries
in which we participate (mainly, firearms and ammunition) are continuing 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 and unaffected by weaker economic conditions
while lower end retailers and consumers are generally selling and buying, respectively,
opening price point products. Because of this trend, management began augmenting our
already existing product lines in 2004 with import product lines, and we will continue to
enhance our existing product lines both through the internal development of new products
and the sourcing of product during fiscal year 2006. 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 to later in the year.

Remington
is no longer a defendant in any lawsuits brought by municipalities against participants in
the firearms industry, as described in Legal Proceedings. In addition,
legislation has been enacted in approximately 34 states precluding such actions. Similar
federal legislation, entitled The Protection of Lawful Commerce in Arms Act
was signed into law by President Bush on October 26, 2005, after being passed by the U.S.
Senate in August 2005 and by the House of Representatives in October 2005, both by
two-to-one margins. However, the court hearing the City of New York'scase against handgun
manufacturers has held that the law does not prohibit that lawsuit; the decision is being appealed
to the U.S. Court of Appeals for the Second Circuit.

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.

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) the introduction and subsequent expansion of sourced product offerings, 2) the exclusive distribution agreement with a
technology products manufacturer, and 3) the joint venture agreement with ELSAG, Inc. See
-Executive Overview. Our growth initiatives also included
investments in our accessories and government, military, and law enforcement divisions.  However,
in the third quarter of 2005 we reduced our investment in accessories and moved more towards licensing
of products. 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.

39



Seasonality

We
produce and market a broad range of firearms and ammunition products. Sales of some of our
products occur outside the core fall hunting season (September through December). These
products consist of several models of our shotguns and several types of ammunition that
are intended for target shooting. In addition, these non-seasonal products include certain
types of ammunition, primarily the pistol and revolver use, as well as ammunition with
government, military, and law enforcement applications. 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. We believe that these dating plans
have partially offset the seasonality of the Companys business, although seasonality
has become more pronounced overall.

As
a result of the seasonal nature of our sales, the extended payment terms under our dating
plan billing practices, and the aforementioned increasingly extreme and condensed
seasonality, 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. As a result, our working capital financing needs tend
to be greatest during the spring and summer months, decreasing during the fall and
reaching their lowest points during the winter. We continue to see our seasonality
compress to later in the fall hunting season. Sales in the third quarter of 2005 were
higher than sales in other quarters, as historically experienced, and sales in the fourth
quarter of 2005, including those on extended terms, were also higher than the prior year
as well as historical levels. Accordingly, we expect more of our accounts receivable
balance to remain outstanding until the last half of the year as compared to previous
years

# Liquidity and Capital
Resources

Overview

We
have historically been financed primarily by our 2003 Credit Agreement, governing the
Credit Facility, and the indenture for the Notes. On March 15, 2006, we entered into the
Amended and Restated Credit Agreement which replaces the 2003 Credit Agreement.  Loans and other
obligations outstanding under the 2003 Credit Agreement are governed and deemed to be outstanding
under the amended and restated terms and conditions contained in the Amended and Restated Credit Agreement.
The Amended and Restated Credit
Agreement amended certain terms of the 2003 Credit Agreement, including by:

| |  |  |  |  |  | Increasing the maximum revolver commitment of $140.0 million from $101.0 million, continuing
to be subject to a borrowing base;
| |  |  |  | - |  | -------------------------------------------------------------------------------------------------------------------------------

| |  |  |  |  |  | Extending the stated maturity of the Credit Facility to June 30, 2010 from January 23, 2008;
| |  |  |  | - |  | --------------------------------------------------------------------------------------------

| |  |  |  |  |  | Amending certain financial covenants, including by (i) decreasing the minimum amounts of Consolidated
EBITDA (as defined in the Amended and Restated Credit Agreement) that we must maintain during certain periods and (ii) eliminating the
leverage covenant;
| |  |  |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  |  |  | Amending the definition of "Applicable Margin" so that the interest margin applicable to loans
under the Amended and Restated Credit Agreement is determined based on Consolidated EBITDA (as defined
in the Amended and Restated Credit Agreement), rather than leverage, beginning in 2007; and
| |  |  |  | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  |  |  | Amending the minimum amounts of availability under the Amended and Restated Credit Agreement that, if not
maintained, result in the imposition of a fixed charge coverage ratio covenant.
| |  |  |  | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See Note 14 to our audited
consolidated financial statements for the year ended December 31, 2005 appearing elsewhere in this annual report and the copy of the
Amended and Restated Credit Agreement filed as an exhibit to our Current Report on Form 8-K on March 21, 2006, for additional
information regarding the Amended and Restated Credit Agreement.

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

40



capital needs from time to time with
borrowings under our 2003 Credit Agreement. We believe that we will be
able to meet our debt service obligations, fund our operating requirements, and make
dividend payments (subject to restrictions in the Amended and Restated Credit Agreement and the indenture for the Notes)
in the future with cash flow from operations and borrowings under our
Credit Facility prior to the maturity of the Amended and Restated Credit Agreement in
2010, although no assurance can be given in this regard. At present, we do not have the ability to make any
dividend payments due to restrictions placed upon us by the Amended and Restated Credit Agreement and the
indenture for the Notes.  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, 2005, we had outstanding approximately $221.7 million
of indebtedness, consisting of approximately $200.0 million aggregate principal amount of
the Notes, $19.4 million in borrowings under the 2003 Credit Agreement, $1.3 million
in capital lease obligations and a $1.0 million note payable to Holding. As of December
31, 2005, we also had aggregate letters of credit outstanding of $5.1 million.

With
respect to other significant cash outlays, we contributed $7.1 million to plan assets
under our funded defined-benefit pension plan during 2005, and expect to contribute
approximately $8.0 million to these same plan assets in 2006.

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 Amended and Restated Credit Agreement, 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 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 for the Notes permits repurchases of the Notes on the open market,
subject to limitations that may be contained in the Amended and Restated Credit Agreement
and the indenture for the Notes.

The Amended and Restated Credit Agreement

On
March 15, 2006, we entered into the Amended and Restated Credit Agreement that amended our
2003 Credit Agreement. Our Amended and Restated Credit Agreement provides up to $140.0
million of borrowing capacity under an asset-based senior secured revolving credit
facility through June 30, 2010. Amounts available under the Amended and Restated Credit
Agreement are subject to a borrowing base limitation based on certain percentages of
eligible accounts receivable and eligible inventory in addition to minimum availability
requirements as described below. The terms of the Amended and Restated Credit Agreement do
not permit us to borrow against accounts receivable on certain extended terms, which as
highlighted above in Seasonality were higher at the end of 2005 than the prior
year as well as historical levels. The Amended and Restated Credit Agreement also includes
a letter of credit sub-facility of up to $15.0 million. As of December 31, 2005,
approximately $23.7 million in additional borrowings beyond the minimum
availability requirements were available as determined pursuant to the 2003 Credit
Agreement, which provided a maximum revolving commitment of $101.0 million.

Key
terms of the Amended and Restated Credit Agreement include the following:

|(1) |  | The Company is required to maintain a specified minimum amount of availability
               during the period ending on the earlier of (i) March 31, 2009 and (ii) such date
               as the Company may determine (such period, the "Availability Test Period.") For any period during the Availability Test
               Period when such minimum availability requirement is not met, the Company must
               maintain 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 minimum fixed charge
               coverage ratio.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

41



|(2) |  | The Company is required to maintain specified minimum
               levels of Consolidated EBITDA (as defined in the Amended and Restated Credit
               Agreement) and determined on a rolling four quarter basis during the Availability Test Period.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | All of Remingtons domestic subsidiaries (other than Remington Steam, LLC) are either
               co-borrowers under, or guarantors of, the Amended and Restated Credit Agreement.
               The Amended and Restated Credit Agreement is collateralized by substantially all
               of the Companys real and personal property, including without limitation all of
               the capital stock of the Companys domestic subsidiaries and 65% of the capital
                stock of the Companys future foreign subsidiaries, if any.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Amounts outstanding under the Amended and Restated Credit Agreement bear
               interest at a rate equal to, at the Companys option, (1) an alternate base
               rate plus 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 (based on Consolidated EBITDA) at various times during the term of the
               Amended and Restated Credit Agreement.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) |  | The Amended and Restated Credit Agreement 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. The Amended and Restated Credit Agreement allows for
               capital expenditures up to $23.5 million in the 2006 fiscal year including
               unused capacity carried over from 2005.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|(7) |  | The Amended and Restated Credit Agreement contains customary events of default.
|--- |  | -------------------------------------------------------------------------------

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

|(9) |  | The Amended and Restated Credit Agreement 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, 2005 was 1.50%
and 3.00%, respectively. The weighted average interest rate under the Companys
2003 Credit Agreement was 6.70% and 4.90% for the year to date periods ended December
31, 2005 and 2004, respectively.

Capital & Operating
Leases and Other Long-Term Obligations

We
maintain capital leases mainly for computer equipment. We have one operating lease which expires in 2010, the lease for our Memphis warehouse. We also
maintain contracts including, among other things, a services contract with our third party
warehouse provider.

42



Cash Flows and Working Capital

Net
cash used in operating activities was $6.0 millionand $11.8 millionfor the
fiscal years ended December 31, 2005 and 2004, respectively.The $5.8 million
decrease in cash used in operating activities for the twelve months ended December 31,
2005 compared to the same period ended December 31, 2004 resulted primarily from lower
increases of accounts receivable, and higher increases of other accrued liabilities and
income taxes payable, offset by lower increases in accounts payable.Our net loss
in the current year of $16.9 million would have compared to a net loss of $17.7 million in
2004, but for the gain on sale of our fishing line assets in 2004.Specifically,
the reasons associated with these changes are summarized as follows:

| |  |  |  |  |  | Accounts Receivable increased by $11.0 million over the twelve months ended December 31,
2005 compared to an increase of $14.1 million over the twelve months ended December 31,
2004. The increase in accounts receivable over 2004 is primarily related to higher sales
in the third and fourth quarters of 2005 as compared to 2004. However, the rate of
increase was lower in 2005 primarily due to higher collections in 2005 than in 2004.
| |  |  |  | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  |  |  | Other accrued and long-term liabilities increased by $5.9 million in the twelve months
ended December 31, 2005 compared to an increase of $3.2 million in the twelve months ended
December 31, 2004, primarily as a result of higher pension costs associated primarily with
the decrease in discount rate for the year ended December 31, 2005.
| |  |  |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  |  |  | Income taxes payable increased by $0.6 million in the twelve months ended December 31,
2005 compared to a decrease of $1.7 million in the twelve months ended December 31, 2004,
primarily due to the receipt of an income tax refund in 2005.
| |  |  |  | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  |  |  | Accounts payable increased by $0.5 million in the twelve months ended December 31, 2005
compared to an increase of $4.4 million in the twelve months ended December 31, 2004,
primarily as a result of a reduction in purchasing volume at the end of 2003 associated
with the December shutdown at one of our plants. The impact of the reduction in purchasing
volume was mitigated somewhat by higher overall costs of materials in 2005.
| |  |  |  | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Net
cash used in investing activities for the fiscal year ended December 31, 2005 was $11.1
million and net cash provided by investing activities in the fiscal year ended December
31, 2004 was $35.1 million. The $46.2 million change in cash used in/provided by investing
activities resulted from net cash proceeds of $42.8 million received in 2004 from the sale
of our fishing line business, combined with $0.4 million of cash proceeds on sale of
property, plant and equipment in 2004, in conjunction with an increase in capital
expenditures in 2005 of $1.6 million and an increase in cash contributions to our
unconsolidated joint venture in 2005 of $0.7 million.The $9.4 million and $7.8
million of cash capital expenditures for investing activities in the fiscal years ended
2005 and 2004, 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 provided by financing activities for the fiscal year ended December 31, 2005 was
$17.2 million and net cash used in financing activities was $23.3 million during the
fiscal year ended December 31, 2004.The $40.5 million change in cash used in/provided by
financing activities from the year ended December 31, 2005 compared to the year ended
December 31, 2004 primarily resulted from approximately $44.1 million of higher borrowing
needs under the Credit Facility, primarily due to the cash proceeds associated with the
sale of our fishing line business in the prior year which did not recur, offset by a
smaller reduction in the book overdraft of $4.4 million in the current year.

Dividend Policy

The
declaration and payment of dividends, if any, will be at the sole discretion of the Board
of Directors of the Company, subject to the restrictions set forth in the Amended and
Restated Credit Agreement and the indenture for the Notes, which currently restrict the
payment of dividends by the Company to Holding. We expect to make future dividend payments
to Holding based on available cash flows as and to the extent permitted by the Amended and
Restated Credit Agreement 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.  There were no dividends paid in 2005.  At present, we do not have the
ability to make any dividend payments due to restrictions placed upon us by the Amended and Restated
Credit Agreement and the indenture for the Notes.

43



Capital Expenditures

Gross
capital expenditures for the year ended December 31, 2005 were $10.1 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 2006 to be in a range of $7.0 million to $9.0 million. Our Amended and
Restated Credit Agreement allows for capital expenditures of up to $23.5 million in
2006 including unused capacity carried over from previous years.

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.

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 manufacture in the
United States. 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, 2005:

|                                                      | 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 (a)               |                       
|Due to RACI Holding, Inc.                             |                       
|Capital Lease Obligations                             |                       
|Operating Lease Obligations                           |                       
|Other Long-term and Purchase Obligations (b)          |                       
|Total Contractual Cash Obligations                    |                       
|Other Commercial Commitments:                         |                       
|Standby Letters of Credit                             |                       
|Total Commercial Commitments                          |                       

| |  |  |  | (a) |  | As of December 31, 2005, these borrowings under the 2003 Credit Agreement matured in 2008.  As
of March 23, 2006, the terms of this obligation have been modified under the Amended and Restated Credit
Agreement, which matures on June 30, 2010.
| |  |  |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | (b) |  | Other Long-term Purchase Obligations includes minimum obligations due under the various contracts,
including a services contract with our third party warehouse provider, and minimum purchases associated
with certain materials necessary for the manufacturing process.
| |  |  |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

44



# 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, 2005 to the year
ended December 31, 2004 and the year ended December 31, 2004 to the year ended
December 31, 2003.

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

Year Ended December 31, 2005 as Compared to Year Ended December 31, 2004 (Restated)

Net
Sales.    The following table compares net sales by reporting
segment for each of the years ended December 31, 2005 and 2004:

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

Firearms

Management  believes that the increase in net sales of $8.8 million for the year ended  December 31, 2005
over the prior-year period resulted from:

| |  | higher sales volumes of international sourced products (primarily Spartan Gunworks shotguns); and
| | - | -------------------------------------------------------------------------------------------------

| |  | higher sales volumes of centerfire rifles; partially offset by
| | - | --------------------------------------------------------------

| |  | lower sales volumes of shotguns; and
| | - | ------------------------------------

| |  | $1.1 millin related primarily to higher accrued discounts in the current year.
| | - | ------------------------------------------------------------------------------

Ammunition

Management  believes the increase in net sales of $8.4 million for the year ended  December 31, 2005 over
         the prior-year period is due primarily to:

| |  | approximately $7.8 milion in increased sales associated with higher pricing for ammunition
products; and
| | - | --------------------------------------------------------------------------------------------------------

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

| |  | lower sales volumes of shotshell ammunition.
| | - | --------------------------------------------

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

Management  believes the  increase in net sales of $0.2 million for the year ended  December 31, 2005 over
the prior-year period, predominantly in the Accessories , Powdered Metal Products, and Technology Products lines of business, which increased
$1.7 million, and which offset by lower sales of $1.5 million in the Clay Targets business, is due primarily to:

45



| |  | initial shipments of our surveillance security products; and
| | - | ------------------------------------------------------------

| |  | higher sales of powdered metal products and gun care products; partially offet by
| | - | ---------------------------------------------------------------------------------

| |  | lower sales of clay targets due to the supply limitation discussed in Note 4 to the consolidated audited
financial statements presented herein.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------

Cost of Goods Sold.The table below depicts the cost of goods sold by reporting segment for the years
ended December 31, 2005 and 2004:

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

Firearms

Management  believes  the  increase  of $10.7  million  for the year  ended  December  31,  2005  over the
prior-year period is due primarily to:

| |  | higher sales volumes of centerfire rifles;
| | - | ------------------------------------------

| |  | higher manufacturing costs associated with energy and utilities; and
| | - | --------------------------------------------------------------------

| |  | higher sales volumes of international sourced product (primarily Spartan Gunworks shotguns); partially offset by
| | - | ----------------------------------------------------------------------------------------------------------------

| |  | lower sales volumes of shotguns
| | - | -------------------------------

Ammunition

Management  believes  the  increase  of $11.3  million  for the year  ended  December  31,  2005  over the
prior-year period is due primarily to:

| |  | higher materials costs associated primarily with lead, copper, and zinc commodities;
| | - | ------------------------------------------------------------------------------------

| |  | higher manufacturing costs associated with energy and utilities; and
| | - | --------------------------------------------------------------------

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

| |  | lower sales volumes of shotshell ammunition; and
| | - | ------------------------------------------------

| |  | net realized gain from settlement of our copper and lead option contracts which partially offset the previosly mentioned higher material costs.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------

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

Management  believes  the  increase  of $0.4  million  for the  year  ended  December  31,  2005  over the
prior-year period, predominantly in the Accessories, Powdered Metal Products, and Technology Products businesses, which increased $1.2 million, and which was offset
by lower costs in Clay Targets business, is due primarily to:

| |  | initial shipments of our surveillance security products;
| | - | --------------------------------------------------------

| |  | higher sales of powdered metal products and gun care products; partially offset by
| | - | ----------------------------------------------------------------------------------

| |  | lower sales of clay targets due to the supply limitation discussed in Note 4 to the consolidated audited financial statements presented herein.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------

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

46



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

The
increase of $4.9 million in operating expenses for the year
ended December 31, 2005 compared to the same period in 2004 was primarily attributable to
impairment charges associated with the Clay Targets business unit and the firearms
equipment as explained in Note 4 to the audited consolidated financial statements for the
year ended December 31, 2005 appearing elsewhere in this annual report, higher
distribution costs associated with both fuel surcharges and higher sales volumes, and
higher costs associated with the previously mentioned growth initiatives, offset by a gain
on settlement of a contract described in Note 19 to the audited consolidated financial
statements presented herein, and lower marketing costs associated with cost containment
strategies employed by management.

Interest
Expense. Interest expense for the year ended December 31, 2005 was $26.4
million,an increase of$1.8 million from the same period in 2004.The increase in interest expense during 2005 resulted primarily from higher borrowings
on the Credit Facility of $1.1 million, as well as higher interest rates on the Credit
Facility of $0.7 million. Interest expense excludes zero and $0.1 million, for the years
ended December 31, 2005 and 2004, respectively, which was reclassified to discontinued
operations.

Taxes.
          Our effective tax rate relating to continuing operations is 2.4% for the year
          ended December 31, 2005. The change to 2.4% from 378.5% for the same period in
          2004 is primarily attributable to the valuation allowance established in 2004 on
          deferred tax assets referred to below.

As of December 31, 2005, a valuation
allowance of approximately $25.6 million has been established against deferred tax assets
in accordance with the provisions of Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS No.
109) as compared to the $15.5 million reserve that existed as of December 31, 2004.
The $10.1 million net increase in the valuation allowance consisted of an increase of $8.7 million taken
as a charge against earnings primarily related to the $5.9 million increase in net deferred tax assets in 2005 for which
the benefits may not be realized and an increase of $2.8 million due to change in the realizability
of the valuation allowance due to the carryback of the 2005 tax loss recovering the federal income taxes previously paid in the carryback period.
The $1.4 million was recorded against equity as a component of other
comprehensive income directly related to the increase in the minimum
pension liability. The income tax benefits related to the current year net
operating loss are offset by the valuation allowance as the realization of these tax
benefits is not certain.  Therefore, the income tax expense in the statements of
operations primarily reflects state income taxes and the change in the realizability of the valuation allowance.

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.

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, related interest or penalties. 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.

47



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.
The Company has assessed the impact of the Jobs Act and has determined it
had no impact on 2004 or 2005 due to the Companys operating performance.

Discontinued Operations.

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

|                                  | December 31, | December 31,
|--------------------------------- | ------------ | ------------
|Discontinued Operations:          |              | 2005        
|Net Sales                         |              | $         --
|Pre-tax operating results         |              | (0          
|Interest Expense Allocation       |              | --          
|Income from operations, after tax |              | (0          

Year Ended December 31, 2004 (Restated) as Compared to Year Ended December 31, 2003 (Restated)

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

|             |  |          |    |     | $   | %       
|------------ |  | -------- | -- | --- | --- | --------
|
|
|             |  |          |    |     |     |         
|Firearms     |  | $    193 | .4 | 49  | .2% | $    181
|Ammunition   |  | 176      | .1 | 44  | .8  | 157     
|All Other    |  | 23       | .5 | 6   | .0  | 22      
|Consolidated |  | $    393 | .0 | 100 | %   | $    360

Firearms

Management  believes  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; and
| | - | ----------------------------------------------------------------------------------------

| |  | 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 volume of products 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 glases categories; partially offset by
| | - | --------------------------------------------------------------------------------------------------------------------

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

48



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:

|             |  |          |    |    | $   | %       
|------------ |  | -------- | -- | -- | --- | --------
|
|
|Firearms     |  | $    144 | .0 | 74 | .5% | $    133
|Ammunition   |  | 141      | .0 | 80 | .1  | 120     
|All Other    |  | 17       | .5 | 74 | .2  | 17      
|Consolidated |  | $    302 | .5 | 77 | .0% | $    270

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
| | - | ---------------------------------------------------------------------------------

| |  | lower manufacturing variances as compared to the prior year period primarily due to the impact of the Ilion plant shutdown a 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 vaiances 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; partialy 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.

|                   |  |         | Increase/ | Increase/
|------------------ |  | ------- | --------- | ---------
|
|Operating Expenses |  |         |           |          
|SG&A               |  | $    65 | .1        | $    64  
|R&D                |  | 6       | .1        | 6        
|Other              |  | (1      | .6)       | 4        
|Consolidated       |  | $    69 | .6        | $    75  

49



The
increase of $0.9 million in selling, general, and administrative expense for the year ended December 31, 2004
compared to the same period in 2003 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 2003 Credit Agreement was lower than in 2003, primarily due to lower overall
average borrowings on the 2003 Credit Agreement 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
          378.5%, for the year ended December 31, 2004. The change to 378.5% from (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.

As
of December 31, 2004, a valuation allowance of approximately $15.5 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.

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, related interest or penalties. 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.

Discontinued
Operations. On February 6, 2004, Remington and its wholly-owned subsidiary RA
Brands entered into an Asset Purchase Agreement with Pure Fishing, Inc. and its
wholly-owned subsidiaries Pure Fishing I, LLC and Pure Fishing II, LLC (collectively, the
Purchasers) (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 was $13.6 million, net of income taxes.

50



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

|                                  | December 31, | December 31,
|--------------------------------- | ------------ | ------------
|Discontinued Operations:          |              | 2004        
|Net Sales                         |              | $         1 
|Pre-tax operating results         |              | 0           
|Interest Expense Allocation       |              | 0           
|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, are classified as Assets Held for
Sale in the consolidated balance sheet. Additionally, amounts related to the operations
for the years ended December 31, 2003 have been reflected in the accompanying statement of
operations as discontinued operations.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

# Recent Accounting
Pronouncements

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 adopted this standard as of January 1, 2006. The adoption of this Statement
had no material impact on the Companys 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. In March 2005, the Securities and Exchange Commission
(SEC) released SEC Staff Accounting Bulletin No. 107, Share-Based
Payment(SAB 107), which contains interpretive guidance related to the
interaction between SFAS 123R and certain SEC rules and regulations, as well as
provides the Staffs views regarding the valuation of share-based payment
transactions.  Because the Company is a debt registrant, it is considered a nonpublic
company in accordance with SFAS 123R. In addition, because the management shares
underlying managements stock options are accounted for by Holding as liabilities
under Statement of Financial Accounting Standards No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity(SFAS
150), the stock options are considered liabilities under SFAS 123R. Since the
Company is nonpublic and the stock options are considered liabilities, the Company is
permitted to choose its valuation approach as a matter of accounting policy. The Company
has elected to account for its stock options using the intrinsic value method. SFAS 123R
requires the Company to make this valuation at each balance sheet date
and record any gain or loss in the Companys statement of operations.

As
permitted by SFAS 123, the Company currently accounts for share-based payments to
employees using APB 25s intrinsic value method and, as such, generally recognizes no
compensation cost for employee stock options. Accordingly, the adoption of SFAS
123Rs fair value method, if applicable, would have an impact on the Companys
results of operations, although it will have no impact on the Companys overall
financial position. The prospective impact of SFAS 123R cannot be predicted at this time
because it will depend in part on levels of share-based payments granted in the future.
The Company adopted this standard as of January 1, 2006. The adoption of this Statement
had no material impact on the Companys consolidated financial statements.

In
March 2005, the FASB issued FASB Interpretation No. 47, Accounting for Conditional
Asset Retirement Obligations  an interpretation of FASB Statement No. 143(FIN 47), which clarifies the impact that uncertainty surrounding the
timing or method of settling an obligation should have on accounting for that obligation
under Statement of Financial Accounting Standards No. 143, Accounting for
Asset Retirement Obligations (SFAS 143). FIN 47 is effective no later
than the end of the fiscal year ending after December 15, 2005, or December 31,
2005 for calendar year companies. The Company adopted this standard as of December 31,
2005. The adoption of this Statement had no impact on the Companys consolidated
financial statements.

51



In
May 2005, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standard No. 154, Accounting Changes and Error Corrections(SFAS 154). SFAS 154 replaces Accounting Principles Board
Opinion No. 20 (APB 20), Accounting Changes,and Statement of
Financial Accounting Standard No. 3, Reporting Accounting Changes in Interim
Financial Statements,and changes the requirements for the accounting for and
reporting of a change in accounting principle. Previously, APB 20 required that most
voluntary changes in accounting principle be recognized by including in net income of the
period of the change the cumulative effect of changing to the new accounting principle.
SFAS 154 requires retrospective application to prior periods financial
statements of direct effects of changes in accounting principle, unless it is
impracticable to determine either the period-specific effects or the cumulative effect of
the change. SFAS 154 carries forward without change the guidance for reporting the
correction of an error in previously issued financial statements and a change in
accounting estimate. SFAS 154 is effective for accounting changes and corrections of
errors made in fiscal years beginning after December 15, 2005. The Company has
accounted for the restatement described in Note 3 to our audited consolidated financial
statements for the year ended December 31, 2005 appearing elsewhere in this annual report
in accordance with the current guidance of APB 20. The Company adopted this standard as of
January 1, 2006. The adoption of this Statement had no impact on the Companys
consolidated financial statements.

52



# Critical Accounting
Policies and Estimates

Our
discussion and analysis of our financial condition, results of operations, and cash flows
are based upon our audited 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 audited 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. 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 and fourth quarters. 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 product classes of 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.

53



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 IntangibleAssets (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. Each year the Company tests for impaitment of goodwill according to a two-step approach.  In the first step,
the Company estimates the fair values of its reporting units using the present value of future cash flows approach, subject to a
comparison for reasonableness to its market capitalization at the date of valuation.  If the carrying amount exceeds the fair value, the
second step of the goodwill impairment test is performed to measure the amount of the impairment loss, if any.  In the second step the implied fair
value of the goodwill is estimated as the fair value of the reporting unit used in the first step less the fair values of all other net
tangible and intangible assets of the reporting unit.  If the carrying amount of the goodwill exceeds its implied fair market value, an
impairment loss is recognized in an amount equal to that excess, not to exceed the carrying amount of the goodwill.  In addition, goodwill of a reporting
unit is tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce fair
value of a reporting unit below its carrying value.  For other intangible assets, the impairment test consists of a comparison of the fair
value of the intangible assets to their carrying amount.  The Company used 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 of 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, 2005, we had $11.5
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 2005 we had returns on Plan assets of approximately 6% 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, 2005, we had an additional minimum liability with respect to our
defined benefit plans. See Note 13 to our audited consolidated financial statements for
the year ended December 31, 2005 appearing elsewhere in this annual report 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 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.

54



Unconsolidated
Joint Venture. Our unconsolidated joint venture, RELES, 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 in the statement of operations (recorded in the
Equity in Earnings (Loss) from Unconsolidated Joint Venture line).

Information
Concerning Forward-Looking Statements

This
Managements Discussion and Analysis of Financial Condition and Results of Operations
contains statements which constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, including statements relating to trends
in the operations and financial results and the business and the products of the Company,
as well as other statements including words such as anticipate,
believe, plan, estimate, expect,
intend and other similar expressions.

Forward-looking
statements are made based upon managements current expectations and beliefs
concerning future developments and their potential effects on the Company. Such
forward-looking statements are not guarantees of future performance. The following
important factors, and those important factors described elsewhere in this annual report,
including the matters set forth in Risk Factors,
or in our other SEC 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 our
obligations with respect to our 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
our 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.
| |  |  | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

55



| |  |  |  |  | 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 our leveraged condition.
| |  |  | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  |  | Sales made to Wal-Mart accounted for approximately 17% of our total net revenues in 2005
and 9% of the accounts receivable balance as of December 31, 2005. 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.
| |  |  | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  |  | 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 2003 through 2005, 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 were 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.
| |  |  | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Any
forward-looking statement speaks only as of the date on which it is made, and we undertake
no obligation to update any forward-looking statement to reflect events or circumstances
after the date on which the statement is made or to reflect the occurrence of
unanticipated events. Except as required by law, we undertake no obligation to publicly
revise our forward-looking statements to reflect events or circumstances that arise after
the date of this annual report that include forward-looking statements.

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, 2006. Certain of our current excess insurance coverage
expressly excludes actions brought by municipalities as described in
BusinessLegal Proceedings. We paid $1.5 million, $2.8 million, and $3.2
million in legal fees and settlements in connection with product liability cases and
claims in the years ended December 31, 2005, 2004 and 2003, respectively, excluding
insurance costs. At December 31, 2005, our accrual for product liability cases and claims

56



was $10.1 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.

57



# 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, 2005,
we had long-term borrowings of $221.3 million($202.9 million at December 31, 2004
and $230.0 million at December 31, 2003) of which $19.4 million ($1.8 million at December
31, 2004 and $28.3 million at December 31, 2003) was issued at variable rates. Assuming no
changes in the $46.4 million of monthly average variable-rate debt levels from year-end
2005, we estimate that a hypothetical change of 100 basis points in the LIBOR and ABR
interest rates from year-end 2004 would impact interest expense by $0.5 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, 2005, 2004,
or 2003.

The
estimated value of our debt at December 31, 2005 was $198.6 million compared to a carrying
value of $221.7 million. The estimated value and carrying value of our debt at
December 31, 2004 was $187.5 million and $203.5 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, 2005, 2004, and 2003 were $1.3 million,
$1.1 million, and $0.7 million, respectively. At December 31, 2005, 2004 and
2003, the market value of our outstanding contracts relating to firm commitments and
anticipated purchases up to one year from the respective date was $5.6 million, $3.3
million, and $2.8 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 $3.7 million ($3.1 millionat
December 31, 2004) increase in our cost of related inventory purchased, which would be
partially offset by an approximate $2.9 million ($1.7 million at December 31, 2004)
increase in the value of related hedging instruments. The decrease in exposure as compared
to the prior year can be associated with higher volume of hedging as a percent of lead and
copper purchases, and to a lesser extent due to more contracts closer to being
in-the-money, offset by higher premiums paid associated with additional hedging activity
in the current year compared to the prior year. 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 $0.8 million (an
approximate $0.6 million at December 31, 2004) 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.

58



# Item 8. FINANCIAL
STATEMENTS AND SUPPLEMENTAL DATA

# Reports of Independent
Registered Public Accounting Firms

To the Board of Directors

Remington Arms Company,
Inc. and Subsidiaries:

We have audited the accompanying
consolidated balance sheet of Remington Arms Company, Inc. (a Delaware corporation) and
Subsidiaries as of December 31, 2005, and the related consolidated statements of
operations, shareholders equity (deficit) and comprehensive income (loss), and cash
flows for the year then ended. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit 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. The Company is not
required to have, nor were we engaged to perform, an audit of its control over
financial reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Companys internal control over financial reporting. Accordingly, we express no
such opinion. An audit also 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, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects, the
financial position of Remington Arms Company, Inc. and subsidiaries as of December 31,
2005, and the results of their operations and their cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of America.

Our audit was conducted for the
purpose of forming an opinion on the basic financial statements taken as a whole. The
schedule titled Schedule II  Valuation and Qualifying Accounts is
presented for purposes of additional analysis and is not a required part of the basic
financial statements. The information in this schedule for the year ended December 31, 2005, has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, is fairly stated in
all material respects in relation to the basic financial statements taken as a whole.

/s/ GRANT THORNTON LLP

Greensboro, North Carolina
March 30, 2006

59



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

In our opinion, the consolidated balance sheet as of December 31, 2004 and the
related consolidated statements of operations, of cash flows and of shareholder's equity (deficit) and comprehensive income (loss)
for each of the two years in the period ended December 31, 2004 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 two 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 as of December 31, 2004 and 2003, and for each of the two years in the
period ended December 31, 2004, 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 3 to the
consolidated financial statements, the Company restated its previously issued
financial statements as of and for the years ended December 31, 2004 and 2003.

/s/
PricewaterhouseCoopers LLP
Greensboro, North Carolina

March 11, 2005, except for Note 3, for which the date is July 28, 2005



60



Remington Arms Company,
Inc.Consolidated Balance Sheets
(Dollars in Millions, Except Per Share Data)

|                                           |                   |  | Restated          |       
|------------------------------------------ | ----------------- |  | ----------------- | ------
|                                           | December 31, 2005 |  | December 31, 2004 |       
|ASSETS                                     |                   |  |                   |       
|Current Assets                             |                   | 
|Cash and Cash Equivalents                  |                   |  | $                 | 0.5   
|Accounts Receivable Trade - net            |                   |  |                   | 92.2  
|Inventories - net                          |                   |  |                   | 99.3  
|Supplies                                   |                   |  |                   | 7.9   
|Prepaid Expenses and Other Current Assets  |                   |  |                   | 12.3  
|Deferred Tax Assets                        |                   |  |                   | 0.8   
|                                           |                   |  |                   |       
|Total Current Assets                       |                   |  |                   | 213.0 
|                                           |                   | 
|Property, Plant and Equipment - net        |                   |  |                   | 73.9  
|Goodwill and Intangibles - net             |                   |  |                   | 59.1  
|Debt Issuance Costs - net                  |                   |  |                   | 6.5   
|Other Noncurrent Assets                    |                   |  |                   | 10.8  
|                                           |                   |  |                   |       
|Total Assets                               |                   |  | $                 | 363.3 
|                                           |                   |  |                   |       
|                                           |                   | 
|LIABILITIES AND SHAREHOLDERS EQUITY       |                   | 
|Current Liabilities                        |                   | 
|Accounts Payable                           |                   |  | $                 | 25.0  
|Book Overdraft                             |                   |  |                   | 8.9   
|Current Portion of Long-Term Debt          |                   |  |                   | 0.4   
|Current Portion of Product Liability       |                   |  |                   | 2.5   
|Income Taxes Payable                       |                   |  |                   | 1.4   
|Other Accrued Liabilities                  |                   |  |                   | 38.4  
|                                           |                   |  |                   |       
|Total Current Liabilities                  |                   |  |                   | 76.6  
|                                           |                   | 
|Long-Term Debt, net of Current Portion     |                   |  |                   | 221.3 
|Retiree Benefits, net of Current Portion   |                   |  |                   | 58.0  
|Product Liability, net of Current Portion  |                   |  |                   | 7.6   
|Deferred Tax Liabilities                   |                   |  |                   | 8.9   
|Other Long-Term Liabilities                |                   |  |                   | 2.0   
|                                           |                   |  |                   |       
|Total Liabilities                          |                   |  |                   | 374.4 
|                                           |                   |  |                   |       
|                                           |                   | 
|Commitments and Contingencies              |                   | 
|                                           |                   | 
|Shareholders Equity                       |                   | 
|Total Shareholders Equity                 |                   |  |                   | (11.1)
|                                           |                   |  |                   |       
|Total Liabilities and Shareholders Equity |                   |  | $                 | 363.3 
|                                           |                   |  |                   |       

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

61



Remington Arms Company,
Inc.Consolidated Statements of
Operations (Dollars in
Millions)

|                                                                                                    |                         | 
|--------------------------------------------------------------------------------------------------- | ----------------------- | 
|                                                                                                    | Year Ended December 31, | 
|                                                                                                    | 2005                    | 
|                                                                                                    |                         | 
|Net Sales                                                                                           |                         | 
|                                                                                                    |                         | 
|Cost of Goods Sold                                                                                  |                         | 
|                                                                                                    |                         | 
|                                                                                                    |                         | 
|Gross Profit                                                                                        |                         | 
|                                                                                                    |                         | 
|Selling, General and Administrative Expenses                                                        |                         | 
|                                                                                                    |                         | 
|Research and Development Expenses                                                                   |                         | 
|                                                                                                    |                         | 
|Impairment Charges                                                                                  |                         | 
|                                                                                                    |                         | 
|Other Income                                                                                        |                         | 
|                                                                                                    |                         | 
|Other Unusual Charges                                                                               |                         | 
|                                                                                                    |                         | 
|Operating Profit                                                                                    |                         | 
|                                                                                                    |                         | 
|Interest Expense                                                                                    |                         | 
|                                                                                                    |                         | 
|Loss from Continuing Operations before Income                                                       |                         | 
|Taxes and Equity in Losses from Unconsolidated                                                      |                         | 
|Joint Venture                                                                                       |                         | 
|                                                                                                    |                         | 
|Income Tax Expense (Benefit)                                                                        |                         | 
|                                                                                                    |                         | 
|Equity in Losses from Unconsolidated Joint Venture                                                  |                         | 
|                                                                                                    |                         | 
|                                                                                                    |                         | 
|Net Loss from Continuing Operations                                                                 |                         | 
|                                                                                                    |                         | 
|(Loss) Income from Discontinued Operations, net of tax expense of zero, $0.1 and $0.9, respectively |                         | 
|                                                                                                    |                         | 
|                                                                                                    |                         | 
|Gain on Sale of Assets, net of tax expense of $9.8                                                  |                         | 
|                                                                                                    |                         | 
|Net Loss                                                                                            |                         | 
|                                                                                                    |                         | 

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

62



Remington Arms Company,
Inc.Consolidated Statements of Cash Flows
(Dollars in Millions)

|                                                               |                           | 
|-------------------------------------------------------------- | ------------------------- | 
|                                                               | Year-To-Date December 31, | 
|                                                               | 2004                      | 
|Operating Activities                                           |                           | 
|Net Loss                                                       |                           | 
|Adjustments to reconcile Net Loss to Net Cash                  |                           | 
|used in Operating Activities:                                  |                           | 
|Depreciation and Amortization of Deferred Financing Costs      |                           | 
|Equity in Losses from Unconsolidated Joint Venture             |                           | 
|Gain on Sale of Assets Held for Sale                           |                           | 
|Pension Plan Contributions                                     |                           | 
|Pension Plan Expense                                           |                           | 
|Provision of 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 and Long-Term Assets        |                           | 
|Accounts Payable                                               |                           | 
|Product Liabilities                                            |                           | 
|Income Taxes Payable                                           |                           | 
|Other Accrued and Long-Term Liabilities                        |                           | 
|                                                               |                           | 
|Net Cash used in Operating Activities                          |                           | 
|Net Cash provided by (used in) Discontinued Operations         |                           | 
|                                                               |                           | 
|Net Cash used in 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            |                           | 
|Premiums paid for Company Owned Life Insurance                 |                           | 
|Cash Contribution to Unconsolidated Joint Venture              |                           | 
|                                                               |                           | 
|Net Cash provided by (used in) Investing Activities            |                           | 
|Net Cash used in Discontinued Operations                       |                           | 
|                                                               |                           | 
|Net Cash (used in) provided by  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 Contribution from RACI Holding, Inc.                   |                           | 
|Cash Contribution 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 provided by (used in) Financing Activities            |                           | 
|                                                               |                           | 
|                                                               |                           | 
|Change in Cash and Cash Equivalents                            |                           | 
|Cash and Cash Equivalents at Beginning of Year                 |                           | 
|                                                               |                           | 
|Cash and Cash Equivalents at End of Year                       |                           | 
|                                                               |                           | 

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

63



Remington Arms Company,
Inc.Consolidated Statements of Cash Flows - continued
(Dollars in Millions)

|Supplemental Cash Flow Information:                     |  | 
|------------------------------------------------------- |  | 
|Cash Paid During the Year for:                          |  | 
|Interest                                                |  | 
|Income Taxes                                            |  | 
|Previously accrued Capital Expenditures                 |  | 
|Noncash Financing and Investing Activities:             |  | 
|Vendor Financed Fixed Assets Capitalized                |  | 
|Change in Accrued Capital Expenditures                  |  | 
|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.

64



Remington Arms Company,
Inc.Consolidated Statement of Shareholders Equity (Accumulated
Deficit) and Comprehensive Income (Loss)
(Dollars in Millions)

|                                                        | Paid-in
Capital |  | Accumulated
Other
Comprehensive
Income (Loss) |      | Retained
Earnings
(Accumulated
Deficit) |   | Total
Shareholders
Equity |  
|------------------------------------------------------- | --------------- |  | --------------------------------------------- | ---- | --------------------------------------- | - | -------------------------- | -
|Balance, December 31, 2002, Restated                    |                 |  | $                                             | 82.6 |                                         | $ | (4.1                       | )
|                                                        |                 |  |                                               |      |                                         |   |                            |  
|Comprehensive Loss:                                     |                 | 
|Net Loss (Restated)                                     |                 |  |                                               |     |                                         |   |                           |  
|Other comprehensive income:                             |                 | 
|Minimum pension liability, net of tax effect of $0.7    |                 |  |                                               |     |                                         |   | 1.2                        |  
|Net derivative losses, net of tax effect of $0.9        |                 |  |                                               |     |                                         |   | 1.4                        |  
|Net derivative losses, reclassified as                  |                 | 
|earnings, net of tax effect of $0.2                     |                 |  |                                               |     |                                         |   | 0.3                        |  
|                                                        |                 |  |                                               |      |                                         |   |                            |  
|Total Comprehensive Loss                                |                 |  |                                               |     |                                         |   | 2.9                        |  
|                                                        |                 |  |                                               |      |                                         |   |                            |  
|Capital Contribution from RACI Holding, Inc.            |                 |  |                                               | 4.8  |                                         |   |                           |  
|Payment made to vendors on behalf of RACI Holding, Inc. |                 |  |                                               | (1.0 | )                                       |   |                           |  
|Cash Dividends Paid                                     |                 |  |                                               |     |                                         |   |                           |  
|                                                        |                 |  |                                               |      |                                         |   |                            |  
|Balance, December 31, 2003, Restated                    |                 |  |                                               | 86.4 |                                         |   | (1.2                       | )
|                                                        |                 |  |                                               |      |                                         |   |                            |  
|Comprehensive Income:                                   |                 | 
|Net Loss (Restated)                                     |                 |  |                                               |     |                                         |   |                           |  
|Other comprehensive income:                             |                 | 
|Minimum pension liability, net of tax effect of $0.6    |                 |  |                                               |     |                                         |   | 0.9                        |  
|Net derivative gains, net of tax effect of $2.1         |                 |  |                                               |     |                                         |   | 3.4                        |  
|Net derivative losses, reclassified as                  |                 | 
|earnings, net of tax effect of ($1.5)                   |                 |  |                                               |     |                                         |   | (2.5                       | )
|                                                        |                 |  |                                               |      |                                         |   |                            |  
|Total Comprehensive Loss                                |                 |  |                                               |     |                                         |   | 1.8                        |  
|                                                        |                 |  |                                               |      |                                         |   |                            |  
|Cash Dividends Paid                                     |                 |  |                                               |     |                                         |   |                           |  
|Capital Contribution from RACI Holding, Inc.            |                 |  |                                               | 3.2  |                                         |   |                           |  
|Amount paid on Behalf of RACI Holding, Inc.             |                 |  |                                               | (0.6 | )                                       |   |                           |  
|                                                        |                 |  |                                               |      |                                         |   |                            |  
|Balance, December 31, 2004, Restated                    |                 |  |                                               | 89.0 |                                         |   | 0.6                        |  
|                                                        |                 |  |                                               |      |                                         |   |                            |  
|                                                        |                 | 
|Comprehensive Loss:                                     |                 | 
|Net Loss                                                |                 |  |                                               |     |                                         |   |                           |  
|Other comprehensive income:                             |                 | 
|Minimum pension liability, net of tax effect of $(0.7)  |                 |  |                                               |     |                                         |   | (5.2                       | )
|Net derivative gains, net of tax effect of $2.0         |                 |  |                                               |     |                                         |   | 3.2                        |  
|Net derivative gains reclassified                       |                 | 
|as earnings, net of tax effect of ($1.4)                |                 |  |                                               |     |                                         |   | (2.2                       | )
|                                                        |                 |  |                                               |      |                                         |   |                            |  
|Total Comprehensive Loss                                |                 |  |                                               |     |                                         |   | (4.2                       | )
|                                                        |                 |  |                                               |      |                                         |   |                            |  
|                                                        |                 | 
|Cash Contribution from RACI Holding, Inc.               |                 |  |                                               | 0.1  |                                         |   |                           |  
|Balance, December 31, 2005                              |                 |  | $                                             | 89.1 |                                         | $ | (3.6                       | )
|                                                        |                 |  |                                               |      |                                         |   |                            |  

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

65



# REMINGTON ARMSCOMPANY, 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), RA Factors, Inc. (RA Factors) and Remington Steam, LLC
(Remington Steam), (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 1,000 shares authorized, issued and outstanding of
Remington common stock (at par value of $0.01 per share), are not presented herein.  Significant transactions
between and Holding and the related balances are reflected in the consolidated financial statements and related disclosures.

A
revision to the classification of the valuation allowance among current and noncurrent
deferred tax assets and liabilities was made to financial information from prior periods
to conform with the presentation format at December 31, 2005. This change in
classification did not have a material impact on any previously reported financial
condition, results of operations or cash flows of the Company. 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 for all periods presented (See Note 5).

Note 2Description of the
Business

The
Company is engaged in the design, manufacture, import and sale of primarily sporting goods
products for the hunting/shooting sports and related markets. The Company also designs,
manufactures and sells certain products to certain federal agency, law enforcement, and
military markets including the firearms, ammunition, and surveillance technology products.
In addition, the Company is partnered in a joint venture to sell advanced mobile 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, licensed products, powdered metal
products, and technology and security products sold under the Remington name and
other labels. The Companys products are distributed throughout the United States and
in over 55 other countries (including Canada, Europe, and Asia). In the
United States, Remington products are distributed primarily through a network
of wholesalers and retailers who purchase the product directly from the Company for resale
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.

# Note 3Restatement
of Previously Issued Financial Statements

The
Company restated its previously issued financial statements for the years ended
December 31, 2004 and 2003 to reflect the correction of a methodological error related to
its reserve for potential healthcare claims. The error resulted from the use of inaccurate
data and methodologies in calculating the health care accrual.

All
amounts presented herein have been restated from the amounts originally reported. The table below sets forth the effect of the
adjustments for the years ended December 31, 2004 and 2003:

Restated Consolidated
Balance Sheet and Consolidated Statement of Shareholder's Equity and Comprehensive Imcoem (Loss Amounts)

|                              |  | 2004                  
|----------------------------- |  | ----------------------
|                              |  | As Originally Reported
|Deferred Tax Assets (current) |  | $0.0                  
|Total Current Assets          |  | 190.5                 
|Other Accrued Liabilities     |  | 34.3                  
|Total Current Liabilities     |  | 73.9                  
|Accumulated Deficit           |  | (79.0)                
|Total Shareholder's Equity    |  | 10.6                  

66



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

Restated Consolidated Statements of Operations Amounts

|                                                                                                                                             | 2004 |        |  | 2003  
|-------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ------ |  | ------
|
|Selling, General and Administrative Expenses                                                                                                 |      | $65.3  |  | $65.1 
|Operating Profit                                                                                                                             |      | 20.7   |  | 20.9  
|Loss from Continuing Operations    before Income Taxes, Equity in    Losses from Unconsolidated Joint Venture
    and Gain on Sale of Assets |      | (3.9)  |  | (3.7) 
|Income Tax Expense (Benefit)                                                                                                                 |      | 13.7   |  | 14.0  
|Net Loss from Continuing Operations                                                                                                          |      | (17.6) |  | (17.7)
|Net Loss                                                                                                                                     |      | ($4.0) |  | ($4.1)

For information on the effect
of the restatement on interim periods in 2004 and in the first quarter of 2005, see Note 25.

Restated Consolidated Statements of Cash Flows Amounts

|                                                   | 2004 |        |  | 2003  
|-------------------------------------------------- | ---- | ------ |  | ------
|
|Net Loss                                           |      | ($4.0) |  | ($4.1)
|Provision (Benefit) for Deferred Income Taxes, net |      | 18.0   |  | 18.4  
|Other Accrued and Long-Term Liabilites             |      | (2.0)  |  | (1.7) 

# Note 4  Impairment
Charges

As
of March 31, 2005, the Company performed an evaluation for impairment on its goodwill,
trademarks, and fixed assets for the Clay Targets reporting unit and recorded associated
impairment charges of $3.7 in the accompanying consolidated statement of operations, which
were composed of goodwill impairment of $2.9, indefinite-lived trademark impairment of
$0.7, and property and equipment impairment of $0.1. The Clay Targets reporting unit is
included in the All Other reporting segment in Note 23. The evaluation resulted from the
Company being notified by the primary supplier of a critical raw material to the
Companys Clay Targets business that materials would not be supplied beginning in the
third quarter of 2005. No alternative supplier has currently been located. Management
considered the loss of the supplier a change in the business climate that created a
specific triggering event necessitating such a review. The impairment of
trademarks with respect to the Clay Targets reporting unit was assessed in accordance with
the provisions of Statement of Financial Accounting Standards No. 142, Goodwill and
Other Intangible Assets (SFAS 142). The impairment test required us to
estimate the fair value of our trademarks. We tested these trademarks at the reporting
unit level. We estimated fair value using a discounted cash flow model. Under this model,
we utilized estimated revenue and cash flow forecasts, as well as assumptions of terminal
value, together with an applicable discount rate, to determine fair value. We then
compared the carrying value of the trademark to its fair value. Since the fair value of
the trademark was less than its carrying value, the difference of $0.7 was the impairment
charge recorded.

67



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

The
impairment for property and equipment assets with respect to the Clay Targets reporting
unit was assessed in accordance with the provisions of Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets
(SFAS 144). We operate the Clay Targets reporting unit with two plant
locations; therefore, we performed our testing of the asset groups at the plant level, as
this is the lowest level for which identifiable cash flows are available. In performing
the test, we determined that the total of the expected future undiscounted cash flows
directly related to the existing service potential of the asset group for one of the plant
locations was less than the carrying value of that asset group; therefore, the analysis
indicated an impairment charge for this plant location. Fair value for this plant location
was determined using a market approach for the associated building and land, and a
remaining utility approach for the equipment. The impairment charge of $0.1 represented
the difference between the fair value of the asset group and its carrying value.

The
impairment of goodwill with respect to the Clay Targets reporting unit was assessed in
accordance with the provisions of SFAS 142. SFAS 142 indicates that if other types of
assets (in addition to goodwill) of a reporting unit are being tested for impairment at
the same time as goodwill, then those assets are to be tested for impairment prior to
performing the goodwill impairment testing. Accordingly, in accordance with SFAS 142 the
impairment charges noted above reduced the carrying value of the Clay Targets reporting
unit when performing the impairment test for goodwill. The goodwill impairment test
required us to estimate the fair value of our overall business enterprise at the reporting
unit level. We estimated fair value using a discounted cash flow model. Under this model,
we utilized estimated revenue and cash flow forecasts, as well as assumptions of terminal
value, together with an applicable discount rate, to determine fair value. We then
compared the carrying value of the Clay Targets reporting unit to its fair value. Since
the fair value of the Clay Targets reporting unit was less than the carrying value of goodwill, an impairment charge of
$2.9, associated with the remaining balance of goodwill for the Clay Targets reporting
unit, was recorded in accordance with the provisions of SFAS 142.

The
impairment charges noted above are estimates that have yet to be finalized as management
is currently evaluating its options for the Clay Targets reporting unit, including seeking
another supplier. Such estimates are recorded based upon the provisions of the above
referenced statements as well as Statement of Financial Accounting Standard No. 5,
Accounting for Contingencies (SFAS 5). Accordingly, these estimated
amounts may change in subsequent periods and other charges may be necessary based on the
outcome of this ongoing evaluation. At December 31, 2005, the remaining carrying value
associated with the Clay Targets reporting unit for trademarks, property and equipment are
$1.9.

As
of December 31, 2005, the Company performed an additional evaluation for impairment in
accordance with its policy and FAS 144 on certain of its fixed assets in the Firearms
reporting unit and recorded associated impairment charges of $1.0 in the accompanying
statement of operations. The Firearms reporting unit is its own reporting segment, see
Note 23. The evaluation was triggered from the Company completing its budget process for
the fiscal 2006 year and determining that certain assets would have a decline in the
extent and manner in which they are currently being used due to changes in product
offerings. Management compared the expected undiscounted cash flows from the fixed assets
with the carrying value of these same fixed assets, and concluded that impairment existed.
The resulting impairment charge was determined by the difference between the fair value
estimated using a discounted cash flow model and the carrying value of the fixed assets.

# Note 5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 agreement (as amended, the 2003 Credit Agreement)
on February 9, 2004, and the $1.0 in cash proceeds released from escrow were used to pay
down Remingtons then outstanding 2003 Credit Agreement 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.

68



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

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.

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

|                                         | Year Ended December 31,
|---------------------------------------- | -----------------------
|                                         |                        
|Net Sales                                |                        
|Pre-tax operating results                |                        
|Interest expense allocation              |                        
|(Loss) Income from operations, after tax |                        

Included
in income from discontinued operations is an allocation of interest expense of zero, $0.1,
and $1.8 for the years ended December 31, 2005, 2004, and 2003, 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 2003 Credit Agreement 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 2004 and 2003. 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.

# Note 6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 Gunworksproduct line, which is serviced and repaired by
the Company's third party vendor, in order to meet the service needs of its distributors, customers
and consumers worldwide. Effective in 2006, the Spartan Gunworks
brand name is being discontinued and these products will utilize the Remington
brand name. However, the service and warranty arrangement associated with these firearm
products will continue to reside with the Companys third party vendor.

The
Company provides consumer warranties against manufacturing defects in all firearm products
manufactured in the United States. 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.

69



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

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 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 or 2003. See Note 4 for
impairment charges incurred in 2005.

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, net line item on the consolidated statement of operations.

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. Capitalized interest in 2005 was less than $0.1. There was no
capitalized interest in 2004 or 2003.

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

Management
assesses goodwill for impairment whenever facts and circumstances indicate that the
carrying amount may not be fully recoverable. Each year the Company tests for impairment of goodwill according to a two-step approach.  In the first step,
the Company estimates the fair values of its reporting units using the present value of future cash flows approach, subject to a
comparison for reasonableness to its market capitalization at the date of valuation.  If the carrying amount exceeds the fair value, the
second step of the goodwill impairment test is performed to measure the amount of the impairment loss, if any.  In the second step the implied fair
value of the goodwill is estimated as the fair value of the reporting unit used in the first step less the fair values of all other net
tangible and intangible assets of the reporting unit.  If the carrying amount of the goodwill exceeds its implied fair market value, an
impairment loss is recognized in an amount equal to that excess, not to exceed the carrying amount of the goodwill.  In addition, goodwill of a reporting
unit is tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce fair
value of a reporting unit below its carrying value.  For other intangible assets, the impairment test consists of a comparison of the fair
value of the intangible assets to their carrying amount.  The Company uses a discount rate equal to its average
cost of funds to discount the expected future cash folws. There were no assets deemed
impaired as of December 31, 2004 and 2003.  See Note 4 for impairment charges incurred in 2005.

Debt
issuance costs are amortized over the life of the related debt or amendment. Amortization
expense for debt issuance costs in 2005, 2004, and 2003 was $1.8, $1.9, and $1.8,
respectively, and is estimated to be approximately $1.5 in 2006, $1.4 in 2007, $1.4 in
2008, $1.4 in 2009 and $1.2 in 2010 based upon the provisions of the Amended and Restated Credit
Agreement as described in Note 14.

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.

70



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

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.
Unrealized gains and losses associated with these changes in fair value are recorded on
the balance sheet as other comprehensive income and recognized in the statement of
operations as a component of cost of goods sold when the related inventory is sold and
associated revenue is recognized.

To
the extent that the Companys cash flow hedges are deemed ineffective, under the
criterion of SFAS 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 2005, 2004, or 2003.

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 22.

Stock
Options:

All
stock purchase and option plans outstanding are associated with common shares of Holding.
Based on the disclosure-only 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, directors, and owners of the Company. Accordingly, the Company
has elected to account and disclose for these stock-based compensation agreements in
accordance with the disclosure-only provisions of SFAS 123, as amended by SFAS 148. The
Company, therefore, accounts for the stock options using the intrinsic value method at the
date of grant as permitted by SFAS 123 and Accounting Principles Board Opinion No. 25
(APB 25).

Since
options have been granted at an option exercise price equal to the estimated fair value of
the underlying Common Stock at the time of grant, 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 by SFAS 148,
based on the fair value of such options at the grant dates thereof in 2005, 2004 and 2003,
the Companys net loss on a pro forma basis would have been as follows:

|           |  | 2005 |                                                                          | 2004 As Restated | 2003 As Restated
|---------- |  | ---- | ------------------------------------------------------------------------ | ---------------- | ----------------
|           |  |      |                                                                          |                  |                 
|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 of vesting and resulting
cancellation of all then-outstanding 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 25. The
expense to be recorded for 2003 under SFAS 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:

71



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

|                                      | 
|------------------------------------- | 
|                                      | 
|Risk Free Interest Rate               | 
|Dividend Yields                       | 
|Volatility Factor                     | 
|Weighted Average Expected Option Life | 

There
were no option grants in 2005 and 2004 and therefore assumption disclosures for those
periods are not applicable.

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.

The
Company has a tax sharing agreement among Holding and its subsidiaries providing 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 contribute the amount of tax benefits as a contribution
of capital to the Company. 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 for the Company, as well as
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, 2006. Product liabilities are recorded at the Companys best
estimate of the most probable exposure in accordance with SFAS 5, including consideration
of historical payment experience and the self insured retention insurance. For the years
ended December 31, 2005 and 2004, there were no recoveries recorded. For the year ended
December 31, 2003, there were recoveries totaling $1.0, 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, 2005 and 2004 is $10.1
and $13.4, respectively. Management uses independent advisors in their determination of
the accrual. The Company made total payments in 2005, 2004, and 2003 of $1.5, $2.8, and
$3.2, respectively (including pre-Acquisition occurrences for which the Company assumed
responsibility) related to defense and settlement costs. See Note 19.

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 $34.0, $33.5 and $31.2 for the years ended
December 31, 2005, 2004 and 2003, respectively.

The
Company follows the industry practice of selling firearms in certain sales distribution
channels 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 and accordingly
helps facilitate a more efficient manufacturing schedule. 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. 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.

72



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

Shipping
and Handling Costs:

Shipping
and handling costs are included in Selling, General and Administrative expense and are
expensed as incurred. In 2005, 2004 and 2003 shipping and handling costs totaled $12.4,
$10.9 and $9.4, 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 $10.5 in
2005, $11.7 in 2004 and $11.4 in 2003. The Company licenses certain of its brands and
trademarks. The income from such licensing was $2.6, $2.6 and $2.4 in 2005, 2004 and 2003,
respectively, which is reflected in Other Income, net.

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 $5.9 in the year ended 2005 and $6.1 in
each of the years ended 2004 and 2003.

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).

Comprehensive
Income (Loss):

The
components of accumulated other comprehensive income (loss) are as follows:

|                                            |  |       
|------------------------------------------- |  | ------
|                                            |  | 2005  
|Fair market value of financial instruments  |  | $3.3  
|Additional minimum pension plan liabilities |  | (6.9) 
|Total                                       |  | $(3.6)

Use
of Estimates:

The
preparation of consolidated financial statements in conformity with accounting principles
generally accepted in the United States 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.

73



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

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 consolidated balance sheet 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, or operating results, are recorded in the statement of operations
(recorded in the Equity in Losses from Unconsolidated Joint Venture, line).

Recent
Accounting Pronouncements:

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 adopted this standard as of January 1, 2006. The adoption of
this statement had no material impact on the Companys 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. In March 2005, the Securities and Exchange Commission
(SEC) released SEC Staff Accounting Bulletin No. 107, Share-Based
Payment (SAB 107), which contains interpretive guidance related to the
interaction between SFAS 123R and certain SEC rules and regulations, as well as
provides the Staffs views regarding the valuation of share-based payment
transactions.  Because the Company is a debt registrant, it is considered a nonpublic
company in accordance with SFAS 123R. In addition, because the management shares
underlying managements stock options are accounted for by Holding as liabilities
under Statement of Financial Accounting Standards No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity (SFAS
150), the stock options are considered liabilities under SFAS 123R. Since the
Company is nonpublic and the stock options are considered liabilities, the Company is
permitted to choose its valuation approach as a matter of accounting policy. The Company
has elected to account for its stock options using the intrinsic value method. SFAS 123R
requires the Company to make this valuation at each balance sheet date and record any gain
or loss in the Companys consolidated statement of operations.

As
permitted by SFAS 123, the Company accounted for share-based payments to employees prior
to 123R using APB 25s intrinsic value method and, as such, generally recognized no
compensation cost for employee stock options. Accordingly, the adoption of SFAS
123Rs intrinsic value method on a quarterly basis will have an impact on the
Companys results of operations, although it will have no impact on the
Companys overall financial position. The prospective impact of SFAS 123R cannot be
predicted at this time because it will depend in part on levels of share-based payments
granted in the future. The Company adopted this standard as of January 1, 2006. The
adoption of this statement had no material impact on the Companys consolidated
financial statements.

In
March 2005, the FASB issued FASB Interpretation No. 47, Accounting for Conditional
Asset Retirement Obligations  an interpretation of FASB Statement No. 143(FIN 47), which clarifies the impact that uncertainty surrounding the
timing or method of settling an obligation should have on accounting for that obligation
under Statement of Financial Accounting Standards No. 143, Accounting for
Asset Retirement Obligations (SFAS 143). FIN 47 is effective no later
than the end of the fiscal year ending after December 15, 2005, or December 31,
2005 for calendar year companies. The Company adopted this standard as of December 31,
2005. The adoption of this statement had no impact on the Companys consolidated
financial statements.

In
May 2005, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards No. 154, Accounting Changes and Error Corrections(SFAS 154). SFAS 154 replaces Accounting Principles Board
Opinion No. 20 (APB 20), Accounting Changes,and Statement of
Financial Accounting Standard No. 3, Reporting Accounting Changes in Interim
Financial Statements,and changes the requirements for the accounting for and
reporting of a change in accounting principle. Previously, APB 20 required that most
voluntary changes in accounting principle be recognized by including in net income of the
period of the change the cumulative effect of changing to the new accounting principle.
SFAS 154 requires retrospective application to prior periods financial
statements of direct effects of changes in accounting principle, unless it is
impracticable to determine either the period-specific effects or the cumulative effect of
the change. SFAS 154 carries forward without change the guidance for reporting the
correction of an error in previously issued financial statements and a change in
accounting estimate. SFAS 154 is effective for accounting changes and corrections of
errors made in fiscal years beginning after December 15, 2005. The Company has
accounted for the restatement described in Note 3 in accordance with the current guidance
of APB 20. The Company adopted this standard as of January 1, 2006. The adoption of this
statement had no impact on the Companys consolidated financial statements.

74



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

# Note
7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 and, in most cases,
financial condition before extending credit. An allowance for doubtful accounts is
established 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), ($0.1) and ($0.7) for years 2005, 2004 and 2003, respectively. The allowance for
doubtful accounts amounted to $0.5 as of December 31, 2005 and 2004.

Sales
to the Companys largest customer, Wal-Mart, comprised approximately 17% of sales in
2005, 16% of sales in 2004 and 19% of sales in 2003. The accounts receivable balance from
Wal-Mart comprised approximately 9% and 8% at December 31, 2005 and 2004, respectively; no
other customer accounted for sales equal to or greater than 10% of sales for the years
presented.

At
December 31, 2005, one other customer comprised approximately 18% of the outstanding
accounts receivable balance. No other customers accounted for accounts receivable greater
than 10% at December 31, 2005. 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.

# Note 8Inventories

At
December 31, Inventories consist of the following:

|                       |  |      
|---------------------- |  | -----
|                       |  | 2005 
|Raw Materials          |  | $21.2
|Semi-Finished Products |  | 22.7 
|Finished Products      |  | 55.4 
|Total                  |  | $99.3

# Note 9Property,
Plant and Equipment

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

|                               |  |        
|------------------------------ |  | -------
|                               |  | 2005   
|Land                           |  | $1.5   
|Building and Improvements      |  | 26.3   
|Leased Under Capital Leases    |  | 5.7    
|Machinery and Equipment        |  | 145.3  
|Construction in Progress       |  | 8.6    
|Subtotal                       |  | 187.4  
|Less: Accumulated Depreciation |  | (113.5)
|Total                          |  | $73.9  

Depreciation
expense for the years ended December 31, 2005, 2004 and 2003 was $9.6, $9.2, and $9.5,
respectively. Accumulated depreciation on assets leased under capital leases was $4.6 and $4.5 as of December
31, 2005 and 2004, respectively.

75



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

# Note 10Goodwill
and Other Intangible Assets

As
disclosed in Note 4, the Company recorded impairment charges related to goodwill and
trademarks associated with its Clay Targets business in March 2005. No other impairment
provisions were necessary during 2005, 2004 or 2003.

The carrying amount of goodwill and trademarks attributable to each reporting segment are
outlined in the following tables:

|           |  |             
|---------- |  | ------------
|           |  |             
|           |  | December 31,
|Goodwill   |  | 2005        
|Firearms   |  | $12.8       
|Ammunition |  | 5.2         
|All Other  |  | --          
|Total      |  | $18.0       
|           |  | December 31,
|Trademarks |  | 2005        
|Firearms   |  | $20.4       
|Ammunition |  | 19.4        
|All Other  |  | 1.3         
|Total      |  | $41.1       

# Note 11Other
Accrued Liabilities

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

|                     |  |      
|-------------------- |  | -----
|                     |  | 2005 
|Marketing            |  | $7.2 
|Healthcare Costs     |  | 6.7  
|Retiree Benefits     |  | 8.0  
|Workers Compensation |  | 3.6  
|Other                |  | 12.9 
|Total                |  | $38.4

# Note 12Warranty
Accrual

The
Company provides consumer warranties against manufacturing defects on all firearm products
manufactured in the United States. 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 SFAS 5, and charged to operations. Activity
in the warranty accrual consisted of the following at:

|                        |  |      
|----------------------- |  | -----
|                        |  | 2005 
|Balance at January 1    |  | $0.8 
|Current period accruals |  | 2.7  
|Current period charges  |  | (2.7)
|Balance at December 31  |  | $0.8 

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, 2005 and 2004, our
accrual for the costs of the product safety program was less than $0.1.

76



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

# Note 13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:

| |  | 2005 |                                         | 2004 | 
| |  | ---- | --------------------------------------- | ---- | 
| |  |      | Benefit Obligation at Beginning of Year |      | 
| |  |      | Service Cost                            |      | 
| |  |      | Interest Cost                           |      | 
| |  |      | Plan Amendments                         |      | 
| |  |      | Actuarial Assumption Changes            |      | 
| |  |      | Actuarial (Gain)/Loss                   |      | 
| |  |      | Benefits Paid                           |      | 
| |  |      |                                         |      | 
| |  |      | Benefit Obligation at End of Year       |      | 
| |  |      |                                         |      | 

# Change in Plan Assets:

| |  | 2005 |                                                | 2004 | 
| |  | ---- | ---------------------------------------------- | ---- | 
| |  |      | Fair Value of Plan Assets at Beginning of Year |      | 
| |  |      | Actual Return on Plan Assets                   |      | 
| |  |      | Employer Contributions                         |      | 
| |  |      | Benefits Paid and Expenses                     |      | 
| |  |      |                                                |      | 
| |  |      | Fair Value of Plan Assets at End of Year       |      | 
| |  |      |                                                |      | 

| |  | 2005 |                                                              | 2004 | 
| |  | ---- | ------------------------------------------------------------ | ---- | 
| |  |      | Funded Status                                                |      | 
| |  |      | Unamortized Prior Service Cost                               |      | 
| |  |      | Unrecognized Net Actuarial Loss                              |      | 
| |  |      |                                                              |      | 
| |  |      | Net amount recognized in the statement of financial position |      | 
| |  |      |                                                              |      | 

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

| |  | 2005 |                                        | 2004 | 
| |  | ---- | -------------------------------------- | ---- | 
| |  |      | Accrued Benefit Liability              |      | 
| |  |      | Intangible Asset                       |      | 
| |  |      | Accumulated other comprehensive income |      | 
| |  |      |                                        |      | 
| |  |      | Net Amount Recognized                  |      | 
| |  |      |                                        |      | 

The
accrued benefit liability is recorded ont he consolidated balabce sheet in the "Retiree Benefits, net of Current
Portion," as well as in the "Other Accrued Liabilites" line item as described in Note 11.

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:

| |  | 2005 |                                | 2004 | 
| |  | ---- | ------------------------------ | ---- | 
| |  |      | Projected benefit obligation   |      | 
| |  |      | Accumulated benefit obligation |      | 
| |  |      | Fair value of plan assets      |      | 

77



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

# Components of Net
Periodic Pension Cost:

| |  | 2005 |                                    | 2004 |  | 2003 |     
| |  | ---- | ---------------------------------- | ---- |  | ---- | ----
| |  |      | Service Cost                       |      |  | $    | 5.0 
| |  |      | Interest Cost                      |      |  |      | 9.5 
| |  |      | Expected Return on Assets          |      |  |      | (8.7
| |  |      | Amortization of Prior Service Cost |      |  |      | (0.2
| |  |      | Recognized Net Actuarial Loss      |      |  |      | 5.9 
| |  |      |                                    |      |  |      |     
| |  |      | Net Periodic Pension Cost          |      |  | $    | 11.5
| |  |      |                                    |      |  |      |     

| |  | 2005 |                                                             | 2004 |  | 2003 |     
| |  | ---- | ----------------------------------------------------------- | ---- |  | ---- | ----
| |  |      | Weighted average assumptions used to determine net periodic |      |  |      |     
| |  |      | benefit cost for years ended December 31:                   |      | 
| |  |      | Discount Rate                                               |      |  |      | 6.00
| |  |      | 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:                                 |      | 
| |  |      | Discount Rate                                               |      |  |      | 5.75
| |  |      | Rate of Compensation Increase                               |      |  |      | 4.00

On
October 11, 2005, the Board of Directors of the Company, upon the recommendation of the
Companys Benefit and Investment Committee, approved an amendment to the
Companys Plan to be effective January 1, 2006. As a result of the amendment to the
Plan, effective January 1, 2006 for certain employees of the Company, including certain of
the Companys Named Executive Officers included in the Plan, the future benefit
calculation has been modified beginning after January 1, 2006. However, no
participants final benefit will be less than the amount earned as of December 31,
2005. The impact of this amendment is reflected in the disclosures above.

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
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, 2005, and 2004, by asset category
are as follows:

| |  | TargetAllocations |                                  | ActualAllocations | 
| |  | ----------------- | -------------------------------- | ----------------- | 
|
| |  |                   | Asset Category:                  |                   | 
| |  |                   | Domestic equity funds            |                   | 
| |  |                   | International equity funds       |                   | 
| |  |                   | Domestic fixed income funds      |                   | 
| |  |                   | International fixed income funds |                   | 
| |  |                   | Cash and cash equivalents        |                   | 
| |  |                   |                                  |                   | 
| |  |                   | Total                            |                   | 
| |  |                   |                                  |                   | 

78



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

# Anticipated
Contributions:

The
Company expects to make cash contributions of approximately $8.0 to the Plan in 2006.

Estimated
Future Benefit Payments Following is a summary, as of December 31, 2005, of the
estimated future benefit payments from the Plans to our retirees in each of the next five fiscal
years and in the aggregate for five fiscal years thereafter.

| |  | 2005
| |  | ----
| |  |     
| |  |     
| |  |     
| |  |     
| |  |     
| |  |     

# Savings Plans:

Prior
to January 1, 2006, the Company sponsored a qualified defined contribution plan and
matched 50% of a participants contributions up to a maximum of 6% of a
participants compensation. All employees hired after May 31, 1996 were also eligible
for a discretionary contribution. The Companys matching expense and contribution to
this plan was approximately $1.5 in 2005, and approximately $1.4 in both 2004 and 2003.

Effective
January 1, 2006, the Company opened a second qualified defined contribution plan that
matches the first 4% of a participants contributions of a participants
compensation (the 401(k) Plan). The 401(k) Plan includes certain employees of
the Company, including certain of the Companys Named Executive Officers included in
the Defined Benefit Plan. The existing qualified defined contribution plan that matches
50% of a participants contributions up to a maximum of 6% of a participants
compensation remains for all employees not included in the 401(k) Plan.

Effective
January 1, 1998, the Company adopted a non-qualified defined contribution plan. The
Companys matching expense and contribution was $0.2 in 2005, and approximately $0.1
in both 2004 and 2003.

# 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:

| |  | 2005 |                                         | 2004 | 
| |  | ---- | --------------------------------------- | ---- | 
| |  |      | Benefit Obligation at Beginning of Year |      | 
| |  |      | Service Cost                            |      | 
| |  |      | Interest Cost                           |      | 
| |  |      | Amendments                              |      | 
| |  |      | Actuarial Loss                          |      | 
| |  |      | Benefits Paid                           |      | 
| |  |      |                                         |      | 
| |  |      | Benefit Obligation at End of Year       |      | 
| |  |      |                                         |      | 

# Accrued Benefit Cost:

| |  | 2005 |                                           | 2004 | 
| |  | ---- | ----------------------------------------- | ---- | 
| |  |      | Funded Status                             |      | 
| |  |      | Unrecognized Net Actuarial loss           |      | 
| |  |      | Unrecognized Prior Service Cost           |      | 
| |  |      |                                           |      | 
| |  |      | Accrued Postretirement Benefit Obligation |      | 
| |  |      |                                           |      | 

79



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

The accrued
postretirement benefit obligation is recorded on the consolidated balance sheet in the "Retiree Benefits net of Current Portion" line.

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

| |  | 2005 |                               | 2004 |  | 2003 |    
| |  | ---- | ----------------------------- | ---- |  | ---- | ---
| |  |      | Service Cost                  |      |  | $    | 0.6
| |  |      | Interest Cost                 |      |  |      | 1.3
| |  |      | Net Amortization and Deferral |      |  |      | -  
| |  |      |                               |      |  |      |    
| |  |      | Net Periodic Benefit Cost     |      |  | $    | 1.9
| |  |      |                               |      |  |      |    

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

| |  | 2005 | 2004                          | 2003
| |  | ---- | ----------------------------- | ----
| |  |      | Discount Rate                 |     
| |  |      | Rate of compensation increase |     

# Assumed Healthcare cost
trend rates at December 31:

| |  | 2005 | 2004                                                                              | 2003
| |  | ---- | --------------------------------------------------------------------------------- | ----
| |  |      | Healthcare cost trend rate assumed for next year                                  |     
| |  |      | Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) |     
| |  |      | Year that the rate reaches the ultimate trend rate                                |     

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

| |  | 2005 | 2004                         
| |  | ---- | -----------------------------
| |  |      | Discount Rate                
| |  |      | Rate of compensation increase

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:

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

Estimated
Future Benefit Payments Following is a summary, as of December 31, 2005, 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           
| |  | 2010           
| |  | Years 2011-2015

80



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

# Note 14Debt

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

| |  | 2005 |                                     | 2004 | 
| |  | ---- | ----------------------------------- | ---- | 
| |  |      | Revolving Credit Facility           |      | 
| |  |      | 10.5% Senior Notes due 2011         |      | 
| |  |      | Capital Lease Obligations (Note 13) |      | 
| |  |      | Due to RACI Holding, Inc.           |      | 
| |  |      |                                     |      | 
| |  |      | Subtotal                            |      | 
| |  |      | Less: Current Portion               |      | 
| |  |      |                                     |      | 
| |  |      | Total                               |      | 
| |  |      |                                     |      | 

On
March 15, 2006, the Company entered into the Amended and Restated Credit Agreement (the
Amended and Restated Credit Agreement), which replaces the 2003 Credit
Agreement.  Loans and other obligations outstanding under the 2003 Credit Agreement are governed
and deemed to be outstanding under the amended and restated terms and conditions contained in the
Amended and Restated Credit Agreement.  The Amended and Restated Credit Agreement amended certain
terms of the 2003 Credit Agreement, including by;

| |  |  |  |  |  | Increasing the maximum revolver commitment of $140.0 million from $101.0 million, continuing to be
subject to a borrowing base;
| |  |  |  | - |  | -------------------------------------------------------------------------------------------------------------------------------

| |  |  |  |  |  | Extending the stated maturity of the Credit Facility to June 30, 2010 from January 23, 2008;.
| |  |  |  | - |  | ---------------------------------------------------------------------------------------------

| |  |  |  |  |  | Amended certain financial covenants, including by (i) decreasing the minumum amounts of Consolidated
EBITDA (as defined in the Amended and Restated Credit Agreement) that we must maintain during certain
periods and (ii) eliminating the leverage covenant;
| |  |  |  | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  |  |  | Amending the definition of "Applicable Margin" so that the interest margin applicable to loans under
the Amended and Restated Credit Agreement is determined based on Consolidated EBITDA (as defined in the Amended
and Restated Credit Agreement) rather than leverage, beginning in 2007; and
| |  |  |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  |  |  | Amending the minimum amounts of availibility under that Amended and Restatement Credit Agreement that, if
not maintained, result in the imposition of a fixed charge coverage ratio covenant.
| |  |  |  | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Fees estimated of approximately $0.6 were capitalized in March 2006 as debt issuance costs
and will be amortized over the life of the Amended and
Restated Credit Agreement.

The
Companys Amended and Restated Credit Agreement provides up to $140.0 of borrowings
under an asset-based senior secured revolving credit facility through June 30, 2010.
Amounts available under the Amended and Restated Credit Agreement are subject to a
borrowing base limitation based on certain percentages of eligible accounts receivable and
eligible inventory in addition to the minimum availability requirement described below.
The Amended and Restated Credit Agreement also includes a letter of credit sub-facility of up to $15.0, of
which the Company has aggregate outstanding letters of credit of $5.1 as of December 31,
2005.

On
February 8, 2005, in connection with the passage of the one year requirement under the
indenture governing the Notes referred to below to apply an amount equal to net proceeds
from the sale of the fishing line business to permanently repay debt or reinvest in
specified assets, the Company entered into a fourth amendment to the 2003 Credit
Agreement, primarily to permanently reduce its commitments under the 2003 Credit
Agreement from $125.0 to $101.0 and to amend the availability 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 2003 Credit
Agreement in February 2005, the expense for which was recorded as Other Income on the
Companys accompanying statement of operations.

On
October 14, 2005, the Company entered into a fifth amendment, effective as of September 30, 2005, to the 2003
Credit Agreement to amend 2005 minimum EBITDA requirements, develop new minimum EBITDA requirements from
January 1 through September 30, 2006, and extend the use of the availability test period from March 31, 2006
to January 1, 2007.  A fee of less than $0.1 was capitalized in October as debt acquisition costs and is being
amortized for fifteen months, which is the life of the amendment.  Absent the fifth amendment, the Company would
have been in violation of its minimum

81



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

EBITDA requirements as of September 30, 2005.  The Company
therefore assessed the classification of its outstanding borrowings under the 2003 Credit Agreement in accordance with
the provisions of Emerging Issues Task Force 86-30, "Classifications of Obligations When a Violation is Waived by the Creditor"
("EITF 86-30").  While there can be no assurances, management believed based on current projections that the Company
would be in compliance with its debt covenants during the next twelve months and, accordingly, classified the outstanding borrowings
under the 2003 Credit Agreement as long term in the third and fourth quarters of 2005.

Under the Amended
and Restated Credit Agreement at
March 31, 2009, the Company will revert back to the requirement of being in compliance
with its original fixed charge coverage ratio that existed prior to the second amendment to the
2003 Credit Agreement in October 2003. Management believes that when the covenants
revert on March 31, 2009, the Company could be in violation of such covenants and may need
to seek measures for maintaining compliance such as further amendments to the Amended and
Restated Credit Agreement, which management has obtained in the past with cooperation and
assistance from its lending group. Management cannot give any assurance, however, that
such future amendments, if needed, can be obtained, and no assurance has been provided
from the Companys lenders that the lenders will agree to any further modifications
or amendments to the Companys Amended and Restated Credit Agreement. If the Company
was to fail to obtain such modifications, management may be required to seek and obtain
alternative financing and no assurances can be given that the Company could do so, and if
it did, no assurances could be given that such alternative financing would be on similar
terms to the Companys Amended and Restated Credit Agreement.

Key
terms of the Amended and Restated Credit Agreement now include the following:

|(1) |  | The Company is required to maintain a specified minimum amount of availability during
               the period ending on the earlier of (i) March 31, 2009 and (ii) such date as the Company
               may determine (such period, the "Availability Test Period"). For any period during the Availability Test
               Period when such minimum availability requirement is not met, the Company must
               maintain 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 minimum fixed charge coverage ratio.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | The Company is required to maintain specified minimum levels of Consolidated EBITDA (as defined
               in the Amended and Restated Credit Agreement) and determined a rolling four quarter basis
               during the Availability Test Period.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) |  | All of Remingtons domestic subsidiaries (other than Remington Steam)
               are either co-borrowers under, or guarantors of, the Amended and Restated Credit Agreement.
               The Amended and Restated Credit Agreement is collateralized by substantially all
               of the Companys real and personal property, including without limitation all of
               the capital stock of the Companys domestic subsidiaries and 65% of the capital stock of the
                Company's future foreign subsidiaries, if any.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Amounts outstanding under the Amended and Restated Credit Agreement bear
               interest at a rate equal to, at the Companys option, (1) an alternate base
               rate plus 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 (based on Consolidated EBITDA) at various times during the term of the
               Amended and Restated Credit Agreement.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) |  | The Amended and Restated Credit Agreement 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. The Amended and Restated Credit Agreement allows for capital
               expenditures up to $23.5 in the 2006 fiscal year including unused capacity
               carried over from 2005.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|(7) |  | The Amended and Restated Credit Agreement contains customary events of default.
|--- |  | -------------------------------------------------------------------------------

82



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

|(8) |  | The Company is required to pay certain fees in connection with the Amended and
               Restated Credit Agreement, including (1) letter of credit fees, (2) agency fees
               and (3) an unused commitment fee of 0.375% is payable if the average revolver
               facility balance is 50% or more of the aggregate Revolver 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 Amended and Restated Credit Agreement 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, 2005 is 1.50%
and 3.00%, respectively. The weighted average interest rate under the Companys
2003 Credit Agreement was 6.70% and4.90%for the year ended December
31, 2005 and 2004, respectively.

As
of December 31, 2005 approximately $23.7 in additional borrowing capacity was available as
determined pursuant to the 2003 Credit Agreement.

The
Companys $200.0 aggregate principal amount 10.5% Senior Notes due 2011 (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 thereafter. 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 that are contractually pari passuwith all existing and
future senior indebtedness, if any, of the Company, but are effectively subordinate to
secured indebtedness, including its indebtedness under the Amended and Restated Credit
Agreement to the extent of the assets securing such indebtedness.

The
indenture for the Notes and the Amended and Restated Credit Agreement contain various
restrictions on the Companys ability to incur debt, pay dividends and enter into
certain other transactions. In addition, the indenture for the Notes permits repurchases
of the Notes on the open market, subject to limitations that may be contained in the
Amended and Restated Credit Agreement.

# Note 15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, 2005, are
as follows:

|                                                     |  |        
|---------------------------------------------------- |  | -------
|                                                     |  |        
|                                                     |  | Capital
|                                                     |  | Leases 
|Minimum Lease Payments for Years Ending December 31: | 
|2006                                                 |  | $0.4   
|2007                                                 |  | 0.4    
|2008                                                 |  | 0.4    
|2009                                                 |  | 0.2    
|2010                                                 |  | 0.1    
|Thereafter                                           |  | --     
|Total Minimum Lease Payments                         |  | 1.5    
|Less: Amount representing interest                   |  | 0.1    
|Present Value of Net Minimum Lease Payments          |  | $1.4   

Rental
expenses for operating leases for 2005, 2004 and 2003 were $1.8, $1.8 and $1.6. The
Company leases a portion of its equipment under operating leases that expire at various
dates through 2011.

83



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

# Note 16Stock
Purchase and Option Plans

As
of December 31, 2005, 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, 2005, 2,230 redeemable shares of Class A Common Stock, 6,637 redeemable
deferred shares of Class A Common Stock and 427 matching options have been issued under
the 1999 Stock Incentive Plan. Options to purchase 12,478 shares of Class A Common Stock
have been granted under the 2003 Stock Option Plan.  As previously disclosed in the Company's
Form 8-K filed on February 28, 2006 under the Exchange Act, the Company's former Chief Operating Officer Ronald
H. Bristol II resigned from his employment with the Company effective February 28, 2006.  On February 28, 2006, Mr. Bristol entered into an
agreement whereby his outstanding 2,270 options were cancelled, and his 781 deferred shares and 141
redeemable shares were converted into Class A Common Stock of Holding.

At
December 31, 2005, management has assessed the fair value of Common Stock to be
approximately $160.00 per share with the assistance of a third party valuation.

At
December 31, 2005 options to purchase 12,905 shares of Common Stock were outstanding, at a
per share exercise price of $220.31, of which 284 options were exercisable. Subject to the
continued service of any option-holder, 143 of the options vest within the next year;
6,239 of the options vest ratably in June 2007 and 2008, respectively; and 6,239 of the
options vest in June 2012. 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:

|                            | 2005 |  | 2004 |        | 2003 |  
|--------------------------- | ---- |  | ---- | ------ | ---- | -
|
|                            |      | 
|Outstanding at January 1,   |      |  |      | 14,114 |      | $
|Granted                     |      |  |      |       |      |  
|Exercised                   |      |  |      |       |      |  
|Cancelled/Forfeited         |      |  |      | 1,209  |      | $
|                            |      |  |      |        |      |  
|Outstanding at December 31, |      |  |      | 12,905 |      | $
|                            |      |  |      |        |      |  
|Exercisable at December 31, |      |  |      | 284    |      | $
|                            |      |  |      |        |      |  
|Weighted Average            |      | 
|Fair Value Options Granted  |      |  |      | NA     |      |  
|                            |      |  |      |        |      |  

The
exercise price of all outstanding options at December 31, 2005 is $220.31, and the
weighted average contractual life on the unvested options outstanding at December 31, 2005
is estimated to be 4.2 years. Included in the 12,905 options above are 427 options that
were granted in 2004 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 12,478 shares of Common Stock, the
Company has adopted the disclosure-only provisions of SFAS No. 123, as amended by SFAS No.
148, Accounting for Stock-Based Compensation. On January 1, 2006, the Company
adopted Statement of Financial Accounting Standards No. 123R, Share Based Payment
(SFAS 123R). See Note 6, Summary of Significant Accounting
Policies.

# Note 17Investment
in Unconsolidated Joint Venture

In
2004, the Company entered into a joint venture agreement with ELSAG, Inc., an
unaffiliated third party, to form RELES.  RELES sells and services a mobile license
plate reading technology sold to state and local law enforcement agencies along with
certain federal agencies. The agreement provides Remington a 50% ownership
interest.  The agreement calls for each member to invest 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.
 As a result of certain administrative support functions provided by Remington, the
Company has a receivable from RELES at December 31, 2005 of $0.1.

84



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

Management
has assessed the accounting treatment of RELES under the provisions of FASB Interpretation
No. 46R, Consolidation of Variable Interest Entities (revised December 2003)  an
interpretation of ARB No. 51(FIN 46R), and APB 18, The Equity Method
of Accounting for Investments in Common Stock(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 (included in Other
Noncurrent Assets) 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 statement of operations, and the Companys 50%
share of RELESs operating results is recorded in the Companys statement of
operations (included in Equity in (Earnings) Loss from Unconsolidated Joint Venture)
during each period that RELES produces financial results.

The
contribution total paid by the Company to RELES in 2005 was $1.0. There have been no
significant revenues associated with RELES during any period.

The
following summarizes the Companys investment account balance associated with RELES
at:

|                                           |  |                  
|------------------------------------------ |  | -----------------
|                                           |  | December 31, 2005
|Account                                    | 
|Investment in Unconsolidated Joint Venture |  | $0.2             
|Equity in Losses from Unconsolidated Joint | 
|Venture                                    |  | 1.0              

Through
December 31, 2005, the Company has made a total of $1.3 in cumulative cash contributions
to RELES. The final payment of $0.2 was paid on March 15, 2006, and accordingly the
Company has no more commitments to fund RELES, although the Company may do so.

# Note 18RACI
Holding Recapitalization Transactions

In the
first quarter of 2003, Remington completed transactions related to the recapitalization of
Holding, resulting in the current capital structure of the Company and Holding:

|(1) |  | A private offering of $200.0 principal amount of Notes due in January
          2011. See Note 14.
|--- |  | --------------------------------------------------------------------------------------------------

|(2) |  | The closing by Remington of a credit facility expiring in January 2008, the
          2003 Credit Agreement. See Note 14.
|--- |  | -------------------------------------------------------------------------------------------------------------------------

|(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.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | The issuance of $32.9 aggregate principal amount of senior notes of
          Holding (the Holding Notes). As of December 31, 2005, the Holding
          Notes had a carrying value of $39.8 due to accrued unpaid interest. The Clayton
          & Dubilier Private Equity Fund IV Limited Partnership (the Fund)
          holds all of the Holding Notes. The Company made a $100.0 dividend to Holding in
          connection with the funding of the repurchase of 722,981 shares of common stock
          and the cancellation of 64,144 options in respect of common stock of Holding.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Note 19Commitments
and Contingencies

# Purchase Commitments

The
Company has various purchase commitments, approximating $7.5 for 2006, $2.0 for 2007, $1.0
for 2008, $0.6 for 2009 and $0.5 for 2010, 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. During the fourth quarter of 2005,
the Company entered into a settlement of a contract in the Firearms reporting segment,
recognizing a $1.2 gain in the accompanying statement of operations included in the Other
Income, net line item. That contract would otherwise have expired in 2012. The Company has
leased equipment that allows the Company to manufacture its own steam supply as a result
of the contract settlement and accordingly is no longer dependent on a third party for
this manufacturing requirement. Otherwise, such contracts had no significant impact on the
Companys financial condition, results of operations, or cash flows during the
reporting periods presented herein.

85



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

# 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, 2005 through November 30, 2006 and provides for a self-insured retention of
certain self-insured retention amounts per occurrence. It also includes a limited batch
clause provision. Applicable to our primary Products policy, this allows that a single
retention be assessed when the same defects manufactured in a common lot or batch results
in multiple injuries or damages to third parties. The policy excludes from coverage any
pollution-related liability. Based in part on the nature of our products, and the impact
on the insurance market of September 11, 2001 and more recent weather-related and other
events, 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, 2005, approximately 19 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, 2005, one involves a matter for
which the Sellers retained liability and are required to indemnify us by a federal
district court jury in Utica, New York, in the trial of a discontinued product matter. The
remaining approximately 18 pending cases involve post-Acquisition occurrences for which we
bear responsibility under the Purchase Agreement; the Sellers have some responsibility for
the costs of 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 $0.1 to more than $10.0, while demands or punitive damages may range from less
than $0.5, to as much as $100.0. Of the 18 individual post-Acquisition claims pending as
of December 31, 2005, where specific initial demands have been made, claimants purport to
seek approximately $22.3 in compensatory and an unspecified amount in 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,
typically are reduced significantly as a case proceeds. The Company believes that its
accruals for product liability cases and claims are a superior quantitative measure of the
cost to it of product liability cases and claims.

Municipal
Litigation

In
addition to the 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.). 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). Remington is therefore not a defendant in any pending municipal
action.

As
a general matter, these lawsuits named 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.

86



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

To date, most municipal lawsuits have been dismissed and are no longer subject to appeal,
including that involving local California governments. The remaining lawsuits are in
various stages of motion practice, discovery, and trial preparation. 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 passed in both houses of Congress, most recently by the House of
Representatives on October 20, 2005. President Bush signed the Protection of Lawful
Commerce in Arms Act on October 26, 2005. However, the court hearing the City of New
Yorks case against handgun manufacturers has held that the law does not prohibit
that lawsuit; the decision is being appealed to the U.S. Court of Appeals for the Second
Circuit.

# 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 to the
           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 relating to events occurring prior to the purchase but not
disclosed, or relating to discontinued products, is limited to $324.8. 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.

# Litigation Outlook

Because
the Companys assumption of financial responsibility for certain product liability
cases and claims involving pre-Acquisition occurrences was limited to an amount that has
now been fully paid, with the Sellers retaining liability in excess of that amount and
indemnifying the Company in respect 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.

87



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

At
December 31, 2005 and 2004, the Companys accrual for product liability cases and
claims was $10.1 and $13.4, 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 losses relating to such cases and
claims 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.

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.

# 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.

88



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

# Note 20Income Taxes

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

|         |  |        | 
|-------- |  | ------ | 
|Federal: |  | 2005   | 
|Current  |  | ($2.4) | 
|Deferred |  | 2.9    | 
|State:   | 
|Current  |  | --     | 
|Deferred |  | (0.1)  | 
|         |  | $0.4   | 

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

|                                             | 2005 | 2004As Restated
|-------------------------------------------- | ---- | ---------------
|
|Deferred tax assets:                         |      |                
|Accrued employee and retiree benefits        |      | $          3   
|Product, environmental and other liabilities |      | 1              
|Receivables and inventory                    |      | 3              
|Other comprehensive income                   |      | --             
|Federal tax credits                          |      | --             
|State tax credits                            |      | --             
|Net operating losses                         |      | --             
|Total deferred tax assets                    |      | 8              
|Valuation allowance                          |      | (5             
|Net deferred tax asset                       |      | 2              
|Deferred tax liabilities:                    |      |                
|Property, plant and equipment                |      | -              
|Intangibles                                  |      | --             
|Other comprehensive income                   |      | (2             
|Total deferred tax liabilities               |      | (2             
|Net deferred tax asset (liability)           |      | $         0    

As of December 31, 2005, a valuation
allowance of approximately $25.6 has been established against deferred tax assets in
accordance with the provisions of Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes (SFAS No. 109) as compared to the $15.5
reserve that existed as of December 31, 2004.  The $10.1 net increase in the
valuation allowance consisted of an increase of $8.7 taken as a charge against earnings,
primarily related to the $5.9 increase in net deferred tax assets in 2005 for which the benefits may
not be realized and an increase of $2.8 due to a change in the realizability  of the valuation allowance
due to the carryback of the 2005 tax loss recovering the federal income taxes previously paid in the
carryback period.  The $1.4 was recorded against equity as a component of other comprehensive income
directly related to the increase in the minimum pension liability. The income
tax benefits related to the current year net operating loss are offset by the valuation
allowance as the realization of these tax benefits is not certain.  Therefore, the
income tax expense in the statements of operations primarily reflects state income taxes
and the change in the realizability of the valuation allowance.

89



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

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
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.

Income
tax payments were approximately zero, $5.6, and $1.8 in 2005, 2004 and 2003, respectively.
In 2005, there were tax refunds of approximately $2.4.

At
December 31, 2005 the Company has various losses, credit and other carry-forwards
available to reduce future taxable income and tax thereon. The carry-forwards, as well as
the related tax benefits associated with the carry-forwards, will expire as follows:

|                |  |                 | 
|--------------- |  | --------------- | 
|Expiration      |  | US Federal loss | 
|                |  | carry-forwards  | 
|1 - 5 years     |  | $  --           | 
|6 - 20 years    |  | --              | 
|Beyond 20 years |  | 0.4             | 
|Total           |  | $   0.4         | 

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

|                                                        |  |      |     
|------------------------------------------------------- |  | ---- | ----
|                                                        |  | 2005 |     
|Federal statutory rate                                  |  | (35  | .0)%
|State income taxes, net of Federal benefits             |  | 0    | .4  
|Permanent differences                                   |  | 3    | .6  
|State tax net operating losses, net of Federal benefits |  | (10  | .0) 
|State tax credits, net of Federal benefits              |  | (4   | .4) 
|Increase in valuation allowance                         |  | 53   | .4  
|Federal tax credits                                     |  | (2   | .3) 
|Other                                                   |  | (3   | .3) 
|Effective income tax rate                               |  | 2    | .4% 

The
Company is currently subject to ongoing audits by various state tax authorities. Depending
on the outcome of these audits, the Company may be required to pay additional taxes, related penalties or interest.
However, management does not believe that any additional taxes and related interest or
penalties would have a material impact on the Companys financial position, results
of operations, or cash flows.

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.
The Company has assessed the impact of the Jobs Act and has determined it
had no impact on 2004 or 2005 due to the Companys operating performance.

# Note 21Related
Party Transactions

BRSE, L.L.C.,
the general partner of the BRS Fund, which owned 60.7% of the outstanding Common Stock of
Holding at December 31, 2005 as calculated on a fully diluted basis, is a private investment fund managed by Bruckmann, Rosser,
Sherrill & Co. L.L.C. (BRS). The CDR Fund, which owned 12.8% of the outstanding
Common Stock of Holding at December 31, 2005 (and through proxy controled 26.3% of the
voting rights), is a private investment fund managed by Clayton, Dubilier & Rice, Inc.
(CD&R). CD&R also holds the Holding Notes. 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 2005, 2004 and 2003. Fees and expenses paid to BRS were $0.5 in 2005, 2004 and
2003.

90



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

Remington
paid fees to the law firm of Debevoise & Plimpton LLP during 2005 for legal services
rendered. Franci J. Blassberg, Esq., a member of Debevoise&Plimpton LLP,
is married to Joseph L. Rice, III, who is Chairman, director and stockholder of CD&R and a general
partner of Associates IV.  Fees and expenses
paid to Debevoise & Plimpton LLP for 2005, 2004, and 2003 were $0.4, $0.5, and $2.8. 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 recapitalization, the 64,144
outstanding options to purchase common stock of Holding were accelerated with respect to vesting
and these options were subsequently
cancelled, which resulted in $4.5 of other compensation expense based on the difference in
the price paid for the acceleration of the vesting 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 debt issuance costs 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.

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 Company
filed a Form 8-K on November 19, 2004 disclosing this event. On November 30, 2004, the
Company paid the amount on behalf of Holding to settle the amount owed.

During
2003, Holding paid $1.0 to vendors on behalf of the Company associated with the
recapitalization of the Company in February 2003 as described in Note 18. The fees paid
were primarily associated with legal and accounting costs in connection with the equity
recapitalization transactions. The fees are appropriately treated as a reduction in
capital as equity has no maturity date, as compared to the debt issuance costs which are
capitalized and amortized over the life of the debt instrument.

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.

During
2005, Holding contributed to the Company $0.1 associated with cash reserves at Holding
that were transferred to the Company.

As
of December 31, 2005, $1.0 is due to RACI Holding, Inc. which represents three notes
established in connection with a Kentucky tax credits program.

# Note 22Financial
Instruments

The
estimated fair value of the Companys debt at December 31, 2005 was $198.6 compared
to a carrying value of $221.7. The estimated fair value and the carrying value of the
Companys debt at December 31, 2004 was $187.5 and $203.5, respectively. The
estimated fair value of long-term debt is primarily based upon quoted market prices for
the Companys Notes, and based upon carrying value for the Companys short term
indebtedness and its variable-rate Credit Facility.

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, 2005 the fair value of the
Companys outstanding derivative contracts relating to firm commitments and expected
purchases (aggregate notional amount 40.7 million pounds of copper and lead) up to one
year from such date was $5.6 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 $2.2, $2.5, and ($0.3) on derivative instruments were reclassified to cost of
goods sold from accumulated other comprehensive income (loss) based on inventory turns,
during the year-to-date periods ended December 31, 2005, 2004, and 2003,
respectively.

91



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

# Note 23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, licensed products, and the distribution of security products to
the federal agency, law enforcement, and military markets. Other reconciling items include
corporate, other assets not allocated to the individual segments and discontinued
operations. The chief operating decision maker is the president and chief executive
officer.

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. Adjusted EBITDA is not a measure of performance defined in
accordance with accounting principles generally accepted in the United States. However,
management believes that Adjusted EBITDA is useful to investors in evaluating the
Companys performance because it is a commonly used financial analysis tool for
measuring and comparing companies in the Companys industry in areas of operating
performance. Adjusted EBITDA should not be considered as an alternative to net income as
an indicator of the Companys performance or as an alternative to net cash provided
by operating activities as a measure of liquidity and may not be comparable to similarly
titled measures used by other companies.

Reportable
segments were separately identified based on segment revenue, Adjusted EBITDA and assets.
Firearms accounted for approximately 49%, 49%, and 50% of our net sales in 2005, 2004 and
2003, respectively, and ammunition accounted for approximately 45%, 45%, and 44% of our
net sales in each of 2005, 2004, and 2003, respectively. The Company has no material
intersegment revenue.

# Information on Segments:

| |  | 2005 |                              | 2004 |  | 2003 |      
| |  | ---- | ---------------------------- | ---- |  | ---- | -----
| |  |      | Net Sales:                   |      |  |      |      
| |  |      | Firearms                     |      |  | $    | 202.2
| |  |      | Ammunition                   |      |  |      | 184.5
| |  |      | All Other                    |      |  |      | 23.7 
| |  |      |                              |      |  |      |      
| |  |      | Consolidated Net Sales       |      |  | $    | 410.4
| |  |      |                              |      |  |      |      
| |  |     
| |  |      | Adjusted EBITDA:             |      | 
| |  |      | Firearms                     |      |  | $    | 21.4 
| |  |      | Ammunition                   |      |  |      | 6.6  
| |  |      | All Other                    |      |  |      | 3.1  
| |  |      | Other Reconciling Items      |      |  |      | 0.3  
| |  |      |                              |      |  |      |      
| |  |      | Consolidated Adjusted EBITDA |      |  | $    | 31.4 
| |  |      |                              |      |  |      |      

92



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 

# Reconciliation of
Loss from Operations to Adjusted EBITDA

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

|(A) |  | Excludes amortization of deferred debt issuance costs of $1.8, $1.9 and
          $1.8, in 2005, 2004 and 2003, respectively, which is included in interest
          expense.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(B) |  | Amounts include interest expense of zero, $0.1, and $1.8, and income tax expense
          of zero, $0.1, and $0.9, in 2005, 2004 and 2003, respectively, which was
          reclassified to discontinued operations.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(C) |  | Non-cash charges consist of the following: (i) for the year ended December
          31, 2003, a $2.9 accrual for retiree benefits and a $0.5 loss on disposal of
          assets; (ii) for the year ended December 31, 2004, a $7.1 accrual for retiree
          benefits and a $0.3 loss on disposal of assets; and (iii) for the year ended
          December 31, 2005, a $5.6 accrual for retiree benefits and a $0.4 loss on
          disposal of assets.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(D) |  | Nonrecurring and restructuring expenses consist of the following: (i) for
          the year ended December 31, 2003, $0.2 of severance costs and $0.2 loss on
          disposal of assets; (ii) 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 and
          (iii) for the year ended December 31, 2005, $0.6 for severance charges, $0.3 for
          fees associated with an exclusive distribution agreement, a write-off of debt
          issuance costs of $0.5 associated with the permanent reduction in borrowing
          capacity, $1.0 associated with the write-down in embellishing fixed assets in
          the Firearms reporting unit, and impairment charges of $3.7 associated with the
          write-down in goodwill, trademarks, and fixed assets of the Clay Targets
          reporting unit, offset by $1.2 gain associated with the settlement of a contract
          in the Firearms reporting unit.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(E) |  | 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.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

93



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

# Geographic Information:

| |  | 2005 |                       | 2004 |  | 2003 |      
| |  | ---- | --------------------- | ---- |  | ---- | -----
| |  |      | Net Sales:            |      |  |      |      
| |  |      | Domestic              |      |  | $    | 388.0
| |  |      | Foreign               |      |  |      | 22.4 
| |  |      |                       |      |  |      |      
| |  |      | Consolidated Net Sale |      |  | $    | 410.4
| |  |      |                       |      |  |      |      

There
are no material assets owned by the Company outside the United States. Approximately 17%
of the Companys net sales in 2005, 16% in 2004, and 19% in 2003 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.

94



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

# Note 24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 $39.8 aggregate principal
amount, including accrued interest, of senior notes due in 2010 and 2011 which were
created during the recapitalization of Holding in February 2003.

# REMINGTON ARMS
COMPANY, INC. CONDENSED CONSOLIDATING BALANCE SHEET December 31, 2005

|                                           | Remington | Combined
GuarantorSubsidiaries | Eliminations | Remington
Arms Co. andSubsidiaries
|------------------------------------------ | --------- | ------------------------------ | ------------ | ----------------------------------
|ASSETS                                     |           |                                |              |                                   
|Current Assets                             |           |                                | $            | 114.9                             
|Receivable from Remington, Net             |           |                                |              |                                  
|Equity method investment in subsidiaries   |           |                                |              | 231.6                             
|Noncurrent Assets                          |           |                                |              | 106.9                             
|                                           |           |                                |              |                                   
|Total Assets                               |           |                                | $            | 453.4                             
|                                           |           |                                |              |                                   
|LIABILITIES AND SHAREHOLDERS EQUITY       |           |                               
|Current Liabilities                        |           |                                | $            | 43.9                              
|Payable to RACI Holding, Inc., Net         |           |                                |              | 1.0                               
|Payable to RA Brands, L.L.C., Net          |           |                                |              | 75.7                              
|Payable to RA Factors, Inc., Net           |           |                                |              | 53.9                              
|Noncurrent Liabilities                     |           |                                |              | 290.0                             
|Shareholders Equity                       |           |                                |              | (11.1                             
|                                           |           |                                |              |                                   
|Total Liabilities and Shareholders Equity |           |                                | $            | 453.4                             
|                                           |           |                                |              |                                   

95



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

# REMINGTON ARMS
COMPANY, INC. CONDENSED CONSOLIDATING BALANCE SHEET December 31, 2004  (Restated)

|                                           | Remington | Combined
GuarantorSubsidiaries | Eliminations | Remington
Arms Co. andSubsidiaries
|------------------------------------------ | --------- | ------------------------------ | ------------ | ----------------------------------
|ASSETS                                     |           |                                |              |                                   
|Current Assets                             |           |                                | $            | 108.4                             
|Receivable from Remington, Net             |           |                                |              |                                  
|Equity method investment in subsidiaries   |           |                                |              | 210.2                             
|Noncurrent Assets                          |           |                                |              | 122.9                             
|                                           |           |                                |              |                                   
|Total Assets                               |           |                                | $            | 441.5                             
|                                           |           |                                |              |                                   
|                                           |           |                               
|LIABILITIES AND SHAREHOLDERS EQUITY       |           |                               
|Current Liabilities                        |           |                                | $            | 39.9                              
|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                     |           |                                |              | 270.5                             
|Shareholders Equity                       |           |                                |              | 9.9                               
|                                           |           |                                |              |                                   
|Total Liabilities and Shareholders Equity |           |                                | $            | 441.5                             
|                                           |           |                                |              |                                   

96



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

# REMINGTON ARMS
COMPANY, INC. CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

|Year EndedDecember 31, 2005  | Remington | Combined
GuarantorSubsidiaries | Eliminations | Remington
Arms Co. andSubsidiaries
|---------------------------- | --------- | ------------------------------ | ------------ | ----------------------------------
|Sales                        |           |                                | $            | 410.4                             
|Gross Profit                 |           |                                |              | 85.5                              
|Subsidiary Income (Expense)  |           |                                |              | (28.0                             
|Income from Equity Investees |           |                                |              | 21.4                              
|Net (Loss) Income            |           |                                |              | (16.9                             

|Year EndedDecember 31, 2004 (Restated) | Remington | Combined
GuarantorSubsidiaries | Eliminations | Remington
Arms Co. andSubsidiaries
|-------------------------------------- | --------- | ------------------------------ | ------------ | ----------------------------------
|Sales                                  |           |                                | $            | 393.0                             
|Gross Profit                           |           |                                |              | 90.5                              
|Subsidiary Income (Expense)            |           |                                |              | (26.7                             
|Income from Equity Investees           |           |                                |              | 23.5                              
|Net (Loss) Income                      |           |                                |              | (4.1                              

|Year EndedDecember 31, 2003 (Restated) | Remington | Combined
GuarantorSubsidiaries | Eliminations | Remington
Arms Co. andSubsidiaries
|-------------------------------------- | --------- | ------------------------------ | ------------ | ----------------------------------
|Sales                                  |           |                                | $            | 360.7                             
|Gross Profit                           |           |                                |              | 90.5                              
|Subsidiary Income (Expense)            |           |                                |              | (25.7                             
|Income from Equity Investees           |           |                                |              | 11.2                              
|Net (Loss) Income                      |           |                                |              | (3.2                              

97



# REMINGTON ARMS
COMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued) (dollars in millions, except per share
data)

# REMINGTON ARMS
COMPANY, INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS December
31, 2005

|                                                  | Remington |  | Combined
GuarantorSubsidiaries |       | Eliminations |   | Remington
Arms Co. andSubsidiaries | 
|------------------------------------------------- | --------- |  | ------------------------------ | ----- | ------------ | - | ---------------------------------- | 
|Operating Activities                              |           |  |                                |       |              |   |                                    | 
|Net Cash Used in Operating Activities             |           |  | $                              | (6.0  | )            | $ |                                   | 
|                                                  |           |  |                                |       |              |   |                                    | 
|Investing Activities                              |           | 
|Purchase of Property, Plant &Equipment            |           |  |                                | (9.4  | )            |   |                                   | 
|Premiums Paid for Company Owned Life Insurance    |           |  |                                | (0.7  | )            |   |                                   | 
|Cash Contribution to Unconsolidated Joint Venture |           |  |                                | (1.0  | )            |   |                                   | 
|                                                  |           |  |                                |       |              |   |                                    | 
|Net Cash Used in Investing Activities             |           |  |                                | (11.1 | )            |   |                                   | 
|                                                  |           |  |                                |       |              |   |                                    | 
|Financing Activities                              |           | 
|Net Borrowings on Revolving Credit Facility       |           |  |                                | 17.6  |              |   |                                   | 
|Principal Borrowings on Long-Term Debt            |           |  |                                | 0.6   |              |   |                                   | 
|Cash Contribution from RACI Holding, Inc.         |           |  |                                | 0.1   |              |   |                                   | 
|Change in Book Overdraft                          |           |  |                                | (1.1  | )            |   |                                   | 
|                                                  |           |  |                                |       |              |   |                                    | 
|Net Cash Provided by Financing Activities         |           |  |                                | 17.2  |              |   |                                   | 
|                                                  |           |  |                                |       |              |   |                                    | 
|Change in Cash and Cash Equivalents               |           |  |                                | 0.1   |              |   |                                   | 
|Cash and Cash Equivalents at Beginning of Year    |           |  |                                | 0.4   |              |   |                                   | 
|                                                  |           |  |                                |       |              |   |                                    | 
|Cash and Cash Equivalents at End of Year          |           |  | $                              | 0.5   |              | $ |                                   | 
|                                                  |           |  |                                |       |              |   |                                    | 

98



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

# REMINGTON ARMS
COMPANY, INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS December
31, 2004 (Restated)

|                                                  | Remington | Combined
GuarantorSubsidiaries | Eliminations | Remington
Arms Co. andSubsidiaries
|------------------------------------------------- | --------- | ------------------------------ | ------------ | ----------------------------------
|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                              
|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                              
|                                                  |           |                                |              |                                   
|                                                  |           |                               
|Financing Activities                              |           |                               
|Net Payments on Revolving Credit Facility         |           |                                |              | (26.5                             
|Cash Dividends Paid                               |           |                                |              | (2.2                              
|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                              
|Decrease Book Overdraft                           |           |                                |              | 3.3                               
|                                                  |           |                                |              |                                   
|Net Cash Used in Financing Activities             |           |                                |              | (23.3                             
|                                                  |           |                                |              |                                   
|                                                  |           |                               
|Increase (Decrease) in Cash and Cash Equivalents  |           |                                |              |                                  
|Cash and Cash Equivalents at Beginning of Period  |           |                                |              | 0.4                               
|                                                  |           |                                |              |                                   
|Cash and Cash Equivalents at End of Year          |           |                                | $            | 0.4                               
|                                                  |           |                                |              |                                   

99



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

# REMINGTON ARMS
COMPANY, INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS December
31, 2003

|                                                                 | Remington | Combined
GuarantorSubsidiaries | Eliminations | Remington
Arms Co. andSubsidiaries
|---------------------------------------------------------------- | --------- | ------------------------------ | ------------ | ----------------------------------
|Operating Activities                                             |           |                                |              |                                   
|Net Cash Used in Operating Activities from Continuing Operations |           |                                | $            | (5.7                              
|Net Cash Used in Operating Activities of Discontinued Operations |           |                                |              | (1.5                              
|Net Cash Used in Operating Activities                            |           |                                | $            | (7.2                              
|                                                                 |           |                                |              |                                   
|Investing Activities                                             |           |                               
|Capital Expenditures                                             |           |                                |              | (6.8                              
|Net Cash Used in Investing Activities from Continuing Operations |           |                                |              | (6.8                              
|                                                                 |           |                                |              |                                   
|Net Cash Used in Operating Activities of Discontinued Operations |           |                                |              | (0.1                              
|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                               
|Cash and Cash Equivalents at Beginning of Period                 |           |                                |              | 0.3                               
|                                                                 |           |                                |              |                                   
|Cash and Cash Equivalents at End of Period                       |           |                                | $            | 0.4                               
|                                                                 |           |                                |              |                                   

100



# REMINGTON ARMSCOMPANY, INC.

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS(Continued)
(dollars in millions, except per share data)

# Note 25Quarterly
Financial Data (unaudited)

|                                                  | AsReported | AsRestated |     |     |    
|------------------------------------------------- | ---------- | ---------- | --- | --- | ---
|
|Net Sales                                         |            | $84        | .9  | $84 | .9 
|Gross Profit                                      |            | 17         | .7  | 17  | .7 
|Net (Loss) Income from continued operations(1)(2) |            | (10        | .1) | (10 | .0)
|Net Income from discontinued operations           |            | (0         | .1) | (0  | .1)
|Net (Loss) Income(1)(2)                           |            | (10        | .2) | (10 | .1)

|                                                | AsReported | AsRestated | AsReported | AsRestated | AsReported | AsRestated | AsReported | AsRestated
|----------------------------------------------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | ----------
|
|Net Sales                                       |            | $83        | .9         | $83        | .9         | $87        | .2         | $87       
|Gross Profit                                    |            | 19         | .5         | 19         | .5         | 16         | .5         | 16        
|Net (Loss) Income from continuing operations(2) |            | (2         | .5)        | (2         | .4)        | (4         | .3)        | (4        
|Net (Loss) Income from discontinued operations  |            | (0         | .2)        | (0         | .2)        | 0          | .3         | 0         
|Gain on Sale of Assets                          |            | 13         | .0         | 13         | .0         | 0          | .5         | 0         
|Net Income (Loss)(1)                            |            | 10         | .3         | 10         | .4         | (3         | .5)        | (3        

|(1) | Impairment charges of $3.7 were recorded in the first
quarter of 2005 associated with the Clay Targets reporting unit - See Note 4.
|--- | -----------------------------------------------------------------------------------------------------------------------------------

|(2) | A valuation allowance of $15.5 was recorded on the Company's
deferred tax asset in December 2004 and was increased to $25.6 throughout 2005 ($2.6 in the first quarter, $2.6 in the second
quarter, $0.4 in the third quarter, and $3.1 in the fourth quarter, with an equity reduction in the fourth quarter of $1.4) - See Note 20.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

101



Schedule II

# REMINGTON ARMS COMPANY, INC.

# Valuation and Qualifying Accounts

# Years Ended December 31, 2005, 2004, and 2003

# (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, 2005                 |                                 | $      (0.5)                  |                       | $                  0.0   
|YEAR ENDED                        |                                 |                               |                       |                          
|December 31, 2004                 |                                 | $      (0.5)                  |                       | $                  0.0   
|YEAR ENDED                        |                                 |                               |                       |                          
|December 31, 2003                 |                                 | $      (2.1)                  |                       | $                  0.8   
|Description:                      |                                 |                               |                       |                          
|Deducted from Asset Account:      |                                 |                               |                       |                          
|Inventory Reserves                |                                 |                               |                       |                          
|YEAR ENDED                        |                                 |                               |                       |                          
|December 31, 2005                 |                                 | $      (1.6)                  |                       | $                  (1.2) 
|YEAR ENDED                        |                                 |                               |                       |                          
|December 31, 2004                 |                                 | $      (2.7)                  |                       | $                  (0.9) 
|YEAR ENDED                        |                                 |                               |                       |                          
|December 31, 2003                 |                                 | $      (2.5)                  |                       | $                  (1.8) 
|Description:                      |                                 |                               |                       |                          
|Deducted from Asset Account:      |                                 |                               |                       |                          
|Valuation for Deferred Tax Assets |                                 |                               |                       |                          
|YEAR ENDED                        |                                 |                               |                       |                          
|December 31, 2005                 |                                 | $      (15.5)                 |                       | $                  (8.7) 
|YEAR ENDED                        |                                 |                               |                       |                          
|December 31, 2004                 |                                 | $      0.0                    |                       | $                 (15.5) 
|YEAR ENDED                        |                                 |                               |                       |                          
|December 31, 2003                 |                                 | $      0.0                    |                       | $                  0.0   

102



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

On
November 9, 2005, the Companys shareholder voted to appoint Grant Thornton LLP as
the Companys independent registered public accounting firm, effective November 14, 2005, as disclosed in the
Companys Form 8-K filed on November 15, 2005 with the SEC. Grant Thornton LLP
replaced PricewaterhouseCoopers LLP as the Companys principal accountant.

There
were no other matters subject to this item to disclose.

103



Item 9A.    
            CONTROLS AND PROCEDURES

The
Company maintains disclosure controls and procedures (as defined in Rule 15d-15(e) under
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, 2005 (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 at the Evaluation Date.

Furthermore,
there have been no changes in internal control over financial reporting that occurred
during the fourth quarter of fiscal 2005 that has materially affected, or is reasonably
likely to materially affect, the Companys internal control over financial reporting.

Section
404 of the Sarbanes-Oxley Act of 2002 requires a company that is not an accelerated filer,
such as the Company, to report on the effectiveness of their internal control over
financial reporting beginning with their 2007 Annual Report on Form 10-K, which we are
required to file such report with the SEC no later than March 31, 2008. Our independent
registered public accounting firm will be required to attest to that report. Our
management has been and is continuing to work to ensure that our internal control over
financial reporting provides reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance
with GAAP.

104



# Item 9B.  
OTHER INFORMATION

There are
no matters to report subject to this section.

105



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) |  | 64  |  | Director, Chairman                                                                      
|B. Charles Ames               |  | 80  |  | Director                                                                                
|Michael G. Babiarz(a)(e)      |  | 40  |  | Director                                                                                
|Bobby R. Brown(a)(b)(c)       |  | 73  |  | Director                                                                                
|Richard A. Gilleland(b)(c)(d) |  | 61  |  | Director                                                                                
|Richard E. Heckert(b)(c)(d)   |  | 82  |  | Director                                                                                
|Hubbard C. Howe(c)(e)         |  | 77  |  | Director                                                                                
|Thomas E. Ireland(b)(e)       |  | 56  |  | Director                                                                                
|Thomas F. L'Esperance(e)      |  | 57  |  | Director                                                                                
|H. Norman Schwarzkopf(b)(d)   |  | 71  |  | Director                                                                                
|Stephen C. Sherrill(a)(e)     |  | 53  |  | Director                                                                                
|Thomas L. Millner(a)(b)       |  | 52  |  | Director, President and Chief Executive Officer                                         
|Mark A. Little                |  | 58  |  | Executive Vice President, Chief Financial Officer, and Chief                            
|                              |  |     |  | Administrative Officer                                                                  
|Paul L. Cahan                 |  | 64  |  | Senior Vice President-Engineering and Manufacturing                                     
|John M. Dwyer, Jr.            |  | 47  |  | Vice President-Sales and Marketing-                                                     
|                              |  |     |  | Ammunition and Clay Targets                                                             
|Stephen P. Jackson, Jr.       |  | 37  |  | Senior Vice President-Finance, and Service Operations, Treasurer and Corporate Secretary
|Don H. Campbell               |  | 61  |  | Vice President-Sales and Marketing-Firearms                                             

(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, employee of the Company,
and Chairman of Remington and Holding since prior to 2001.  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.

B. Charles Ameswas elected to the Board of Directors of
Remington and Holding prior to 2001. Mr. Ames has been a principal of CD&R since prior to 2001.  Mr. Ames is a director of Lexmark International, Inc.
and VMR International, Inc. and is a general partner of Associates IV.

Michael G. Babiarzwas elected to the Board of Directors of Remington and Holding prior to 2001. He has
been a principal of CD&R since prior to 2001.

106



Bobby R. Brownhas been a director of Remington and Holding since prior to 2001. 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 2001. Mr. Gilleland has
been retired since prior to 2001.

Richard E. Heckerthas been a director of Remington and Holding since prior to 2001. Mr. Heckert has been
retired since prior to 2001.

Hubbard C. Howehas been a director of Remington and Holding since prior to 2001. Mr. Howe currently serves
as a director of Western Industries Inc. and Natural Pharmaceuticals Inc., and Specialty Laboratories.

Thomas E. Irelandhas been a director of Remington and Holding since May 2001. He has been a principal of
CD&R since prior to 2001. 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
2001, 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 2001. From prior to 2001
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
2001, 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, and LazyDays RV SuperCenter.  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
2001. Mr. Millner has been a director of Remington and Holding since prior to 2001. Mr. Millner currently serves
on the Board of Directors of Stanley Furniture Co., Inc., and LazyDays RV SuperCenter.

Mark A. Littlehas been Executive Vice President, Chief Financial Officer
and Chief Administrative Officer of Remington since prior to 2001.

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

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

Stephen P. Jackson, Jr.joined Remington in June 2003 as Vice President -Finance, Treasurer, and Corporate
Secretary. In June 2005, he became Senior Vice President - Finance and Service Operations, Treasurer, and Corporate Secretary.  From prior to 2001,
he was a Senior Manager with PricewaterhouseCoopers LLP and became partner at PricewaterhouseCoopers LLP in July 2002.

Don H.Campbell joined Remington in September 2001 as Director of Sales - Ammunition and in May 2005 became
Vice President-Sales and Marketing for Firearms.  Prior to September 2001, he was Director of Sales for Baretta, USA.

107



# Audit Committee
Composition

The
Company has a separately designated standing audit committee established in accordance
with Section 3(a) (58) (A) of 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 SEC. 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

On
February 12, 2003, we completed transactions related to the recapitalization of Holding,
including the issuance and sale by Holding, for consideration of $30.8 million, of 140,044
shares of common stock of Holding to the BRS Fund and others. As part of the
recapitalization of Holding, 15,970 deferred shares of Holding were distributed as 15,970
shares of common stock of Holding, 722,981 of the outstanding shares of common stock of
Holding were repurchased and 64,144 options were accelerated and cancelled in respect of
common stock of Holding, in an aggregate amount of approximately $163.7 million,
consisting of $130.8 million in cash and $32.9 million aggregate principal amount of
senior notes of Holding Notes. The CDR Fund holds all of the Holding Notes.

In
connection with the recapitalization, the CDR Fund and the BRS Fund entered into a
shareholders agreement which governs certain aspects of the relationships among
Holding, Remington, the CDR 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 CDR Fund, two nominees of the BRS Fund, four existing directors
and four directors mutually agreed to by the CDR Fund and the BRS Fund. These rights of
designation held by the CDR Fund and the BRS Fund are keyed to specified ownership levels, and
will be reduced and/or cancelled if the CDR 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;
|---- | ------------------------------------------------------------------------------------

108



|(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 CDR Funds consulting agreement or the BRS Funds
consulting agreement.
|---- | -----------------------------------------------------------------------------------------------------------

Except for items (iii) and (v), these actions will cease to
require the CDR 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 the 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 CDR Fund and one director nominated by the BRS Fund
for so long as the CDR 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.

109



# 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 2003, 2004 and 2005
fiscal years for services in all capacities rendered to Remington for such fiscal years.

|                                                     | Annual Compensation | Long Term Compensation
|---------------------------------------------------- | ------------------- | ----------------------
|
|
|
|Thomas L. Millner                                    |                     | 2003                  
|President and Chief                                  |                     | 2004                  
|Executive Officer                                    |                     | 2005                  
|                                                     |                     |                       
|Ronald H. Bristol, II                                |                     | 2003                  
|Executive Vice President and                         |                     | 2004                  
|Chief Operating Officer                              |                     | 2005                  
|                                                     |                     |                       
|Mark A. Little                                       |                     | 2003                  
|Executive Vice President,                            |                     | 2004                  
|Chief Financial Officer, Chief                       |                     | 2005                  
|Administrative Officer                               |                     |                       
|                                                     |                     |                       
|Paul L. Cahan                                        |                     | 2003                  
|Senior Vice President--Engineering and Manufacturing |                     | 2004                  
|                                                     |                     | 2005                  
|                                                     |                     |                       
|Stephen P. Jackson, Jr                               |                     | 2003                  
|Vice President--Finance &Service Ops,                |                     | 2004                  
|Treasurer and Corporate Secretary                    |                     | 2005                  

| |  |  |  | (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.
Includes basic living expenses in Ilion, New York, including apartment rental, for Mr.
Cahan in the amount of $28,878 as he resides in Florida.
| |  |  |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | (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 $78,718 and
$43,025 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 $32,890. As previously disclosed in the Companys Form 8-K
               filed on February 28, 2006 under the Exchange Act, Mr. Bristol resigned from his
               employment with the Company effective as of such date.
| |  |  |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | (4) |  | Amount reflects reimbusement for basic living expenses (including apartment rental)
               and income taxes thereon incurred by Mr. Cahan in connection with the fulfillment of his
               duties and responsibilities with respect to the Company's operations in Ilion, New York.
               Mr. Cahan's primary residence is in Florida.
| |  |  |  | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | (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
$29,335.
| |  |  |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | (6) |  | 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
$9,074.
| |  |  |  | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Option/SAR Grants in
Last Fiscal Year

There were no option grants made
during fiscal year 2005.

110



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                                                                                     |  | $-- / --                                                                            | 
|Ronald H. Bristol, II   |  | --                               |  | --             |  | -- / 2,270                                                                                     |  | -- / --                                                                             | 
|Mark A. Little          |  | --                               |  | --             |  | -- / 2,270                                                                                     |  | --/ --                                                                              | 
|Paul L. Cahan           |  | --                               |  | --             |  | -- / 680                                                                                       |  | --/ --                                                                              | 
|Stephen P. Jackson, Jr. |  | --                               |  | --             |  | -- / 680                                                                                       |  | --/ --                                                                              | 

|(1) |  | Calculated based on a per share price of Holding Common Stock of $160.00,
          the estimated fair value as of December 31, 2005, less the exercise price for
          the option.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | As previously disclosed in the Companys Form 8-K filed on February 28,
          2006 under the Exchange Act, Mr. Bristol resigned from his employment with the
          Company effective as of such date.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Pension and Retirement
Plan

The
Remington Arms Company, Inc. Pension and Retirement Plan (the 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. In connection with his resignation from employment effective February 28, 2006,
Mr. Bristol ceased to accrue benefits under the Pension Plans as of such date.
Mr. Jackson is eligible to participate only in the Supplemental Plan.
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 |                                                         

111



The above table illustrates the estimated
annual amounts payable under the Pension Plans, inlcuding the Supplemental
Planm in the form of a straight life annuity
to employees retiring at age 65 in 2005. 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, 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, 2005, under the Pension Plans for each eligible Named
Executive Officer are as follows:

|                            |  |                 
|--------------------------- |  | ----------------
|Name                        |  | Years of Service
|Thomas L. Millner           |  | 11.6            
|Ronald H. Bristol, II (1)   |  | 10.5            
|Mark A. Little              |  | 9.5             
|Paul L. Cahan               |  | 10.7            
|Stephen P. Jackson, Jr. (2) |  | 2.5             

(1)       
As previously disclosed in the Companys Form 8-K filed on February 28, 2006 under
the Exchange Act, Mr. Bristol resigned from his employment with the Company effective as
of such date.

(2)       
Mr. Jackson is eligible to participate only in the Supplemental Plan.

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
January 23, 2002, the Board of Directors of Remington extended medical coverage to certain
key employees (including Messrs. Millner, Bristol, Little and Cahan) and outside directors under the age of 65 (collectively, the
Participants), which allows them to continue to participate in the Health and
Welfare Benefit Plan (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.

# 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.

On
July 25, 2001, the Board of Directors of Remington amended the 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.

See
also the discussion above regarding continued participation in the Medical Plan by outside
directors under age 65 and certain key employees following the occurrence of certain
specified events.

# Executive Employment
Agreements

In
August 1999, we entered into Executive Employment Agreements with Messrs. Millner, 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 Mr. Cahan, 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 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.

112



As
previously disclosed in the Companys Form 8-K filed on February 28, 2006 under the
Exchange Act, Mr. Bristol resigned from his employment with the Company effective as of
such date. Consistent with the terms of his employment agreement, Mr. Bristol will not
receive any salary continuation payments in connection with his resignation, and is
subject to the non-competition and non-solicitation provisions contained in the agreement.
Mr. Bristol is eligible to receive continued medical coverage at a cost equal to the cost for active Remington
employees and on the same basis.

# 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 2005 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 CDR Fund and the BRS Fund
provide for a $500,000 annual fee to each of the CDR 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 2005 and the consulting fees paid to BRS were $500,000 for 2005.

113



# Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

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 March
27, 2006, 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          |  | 64.3%               
|The Clayton & Dubilier Private               |  |                  |  |                     
|Equity Fund IV Limited Partnership(3)        |  | 28,717           |  | 13.6%               
|Clayton & Dubilier Associates IV             |  |                  |  |                     
|Limited Partnership                          |  | 59,010           |  | 27.9%               
|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)                      |  | 1,400            |  | *                   
|Thomas L. Millner(10)                        |  | 3,762            |  | 1.8%                
|Ronald H. Bristol, II(12)                    |  | 922              |  | *                   
|Mark A. Little(10)                           |  | 1,198            |  | *                   
|Paul L. Cahan(10)                            |  | 521              |  | *                   
|Stephen P. Jackson, Jr.                      |  | --               |  | --                  
|Executive officers and directors             |  |                  |  |                     
|as a group (5)(6)(7)(8)(11)                  |  | 14,309           |  | 6.8%                

*   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 CDR Fund and by virtue of such status may be deemed to be the
beneficial owner of the shares owned by the CDR Fund. Associates IV has the power to direct
the CDR Fund as to the voting and disposition of shares held by the CDR Fund. Includes 30,293
shares held by limited partners of the CDR 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 CDR 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 CDR Fund. Associates IV expressly disclaims beneficial ownership of the shares owned by
the CDR 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 CDR Fund. The business address for
each of the Fund and Associates IV is 270 Greenwich Avenue, Greenwich, Connecticut 06830.
| |  |  |  | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

114



| |  |  |  | (4) |  | Does not include the 28,717 shares owned by the CDR 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 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 CDR 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
CDR 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 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 3,393, 1,000, and 265 deferred shares of common stock held by
               Messrs. Millner, Little, and Cahan, respectively.
| |  |  |  | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | (11) |  | Includes 5,109 deferred shares of common stock and 130 vested options
               held by the directors and executive officers as a group.
| |  |  |  | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | (12) |  | As previously disclosed in the Companys Form 8-K filed on February 28,
               2006 under the Exchange Act, Mr. Bristol resigned from his employment with the
               Company effective as of such date.
| |  |  |  | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# 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           |  | 12,478                                                                                             |  | $220.31                                                                           |  | 3,412                                                                                   
|Equity compensation plans not approved               |  |                   |  |                                                                                                    |  |                                                                                   |  |                                                                                         
|by security holders (1999 Stock      Incentive Plan) |  | Options           |  | 427(1)                                                                                             |  | $220.31                                                                           |  | 20,287(2)                                                                               
|Total                                                |  | Options           |  | 12,905                                                                                             |  | $220.31                                                                           |  | 23,699(2)                                                                               

|(1) | Does not include 6,637 outstanding deferred shares.
|--- | ---------------------------------------------------

|(2) | Includes 6,637 outstanding deferred shares. Excludes 3,011 redeemable shares
          already issued to stockholders of Holding. Remaining awards under the 1999 Stock
          Incentive Plan may be granted only as deferred shares and remaining awards under
          the 2003 Stock Option Plan may be granted only as 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 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.

115



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 or 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 CDR 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.

116



# Item 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS

# Principal Shareholders

The
CDR Fund, which currently holds, on a fully diluted basis taking into account all options and
deferred shares, 12.8% (and by proxy controls the votes of 26.3%) 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 CDR 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 director and principal of CD&R, general partner of Associates IV,
and a director of Remington and Holding. Michael G. Babiarz is a director, principal
and stockholder of CD&R, and Thomas E. Ireland is a principal of CD&R.  Both Messrs. Babiarz and Ireland are
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, 60.7% 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 CDR 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 out-of-pocket expenses of $0.6 million in each of 2005, 2004, and 2003.
We paid BRS an annual fee and expenses of $0.5 million in each of 2005, 2004 and 2003.The consulting agreements also provide 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 CDR Fund and the BRS Fund.

Holding
and Remington have entered into indemnification agreements with both CD&R and the CDR Fund
and BRS and the BRS Fund, pursuant to which Holding and Remington have agreed to indemnify
CD&R, the CDR 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 CDR Fund and Holding have entered into a registration rights
agreement that, among other things, provides the CDR 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 2005 for legal services
rendered. Franci J. Blassberg, Esq., a member of Debevoise & Plimpton LLP,
is married to Joseph L. Rice, III, who is the Chairman, a director and a stockholder of CD&R and a general partner of
Associates IV..  Fees and expenses
paid to Debevoise & Plimpton LLP for 2005, 2004, and 2003 were $0.4 million, $0.5
million, and $2.8 million, respectively. A portion of the 2003 fees and expenses consisted
of amounts related to the Transactions and the offering of the old notes.

# Stock Incentive Plans

Currently,
we have 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). There are 427 options, 5,856 redeemable deferred shares of Class
A Common Stock and 2,089 redeemable shares of Class A Common Stock

117



outstanding under the
1999 Stock Incentive Plan, with 15,353 shares of Common Stock remaining available for
additional deferred share grants under such plan, and 10,208 options outstanding under the
2003 Stock Option Plan, with 5,682 shares of Class A Common Stock remaining available for
additional option grants under such plan.

As
disclosed on Remingtons report on Form 8-K filed 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.

118



# Item 14. PRINCIPAL
ACCOUNTING FEES AND SERVICES

# Change in Independent Registered
Public Accountanting Firm

PricewaterhouseCoopers
LLP served as the Companys auditors until November 14, 2005 on which date the
Companys shareholder voted to appoint Grant Thornton LLP. We refer you to our Form
8-K filed on November 14, 2005 for a full description of the event.

The
following presents fees for professional audit services rendered by PricewaterhouseCoopers
LLP and Grant Thornton LLP for the audit of the Companys annual financial statements
for the years ended December 31, 2004 and December 31, 2005.

# Audit Fees

Our
audit fees to Grant Thornton LLP were $0.3 million for professional services rendered in
connection with the annual audit and retrospective quarterly reviews of the financial statements in
2005.

Through
November 14, 2005, our audit fees to PricewaterhouseCoopers LLP were $0.1 million for
professional services rendered in connection with their engagement to perform the annual
audit and timely quarterly reviews of the financial statements in 2005, and were less than $0.1
million for professional services rendered in connection with the restatement of our 2004
fiscal year results on Form 10-K/A during 2005. 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 2004.

# Audit-Related Fees

There
are no fees subject to this category to report in 2005 or 2004.

# Tax Fees

Our
tax-related fees to Grant Thornton LLP were less than $0.1 million for professional
services rendered in 2005 for return preparation, and state tax consulting and review. In
2004, we had tax fees to PricewaterhouseCoopers LLP of $0.1 million for professional
services rendered in 2004 for return preparation, and state tax consulting and review.

# Other Fees

Through
November 14, 2005, our other fees to PricewaterhouseCoopers LLP were $0.1 million for
professional services rendered in 2005 for consulting services for our healthcare benefits
and retirement benefit plans. There are no other fees subject to this category to report
in 2005 or 2004.

# Audit Fee Approval

The
percentage of fees paid to PricewaterhouseCoopers LLP for audit fees, audit-related fees,
tax fees and all other fees that were approved by the Companys Audit Committee was
100% in fiscal 2004 and 100% in fiscal 2005.

The
percentage of fees paid to Grant Thornton LLP for audit fees, audit-related fees, tax fees
and all other fees that were approved by the Companys Audit Committee was 100%in fiscal 2005.

# Audit Committee
Pre-Approval Policy

The
Companys Audit Committee approves all fees for audit and non-audit services of the
Companys independent auditor prior to engagement. It is the policy of the Audit
Committee, to pre-approve, to the extent required by applicable law, all audit and
non-audit services provided to the Company by its independent auditors.

119



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             |      | 59-60
|Consolidated Balance Sheets as of December 31, 2005 and 2004        |      | 61   
|Consolidated Statements of Operations for the years ended           |      |      
|December 31, 2005, 2004, and 2003                                   |      | 62   
|Consolidated Statements of Cash Flows for the years ended           |      |      
|December 31, 2005, 2004, and 2003                                   |      | 63   
|Consolidated Statements of Shareholder's Equity and Comprehensive   |      |      
|Income (Loss) for the years ended December 31, 2005, 2004, and 2003 |      | 65   
|Notes to the Consolidated Financial Statements                      |      | 66   
|                                                                    |      |      
|(2) Financial Statement Schedule                                    |      |      
|                                                                    |      |      
|Valuation and Qualifying Accounts                                   |      | 102  
|                                                                    |      |      
|(3) List of Exhibits                                                |      | 124  
|                                                                    |      |      

120



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 30, 2006.

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


Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on March 30, 2006.

|Signature | Title |  | Date
|--------- | ----- |  | ----

|/s/ Thomas L. Millner
Thomas L. Millner |  | Chief Executive Officer,President and Director | March 30, 2006
|----------------------------------------------------- |  | ---------------------------------------------- | --------------

|/s/ Mark A. Little
Mark A. Little |  | Executive Vice President, Chief
        Financial Officer, and ChiefAdministrative Officer | March 30, 2006
|----------------------------------------------- |  | ------------------------------------------------------------------------------------------ | --------------

|/s/ Leon J. Hendrix, Jr.
Leon J. Hendrix, Jr. |  | Chairman and Director | March 30, 2006
|----------------------------------------------------------- |  | --------------------- | --------------

|/s/ B. Charles Ames
B. Charles Ames |  | Chairman and Director | March 30, 2006
|------------------------------------------------- |  | --------------------- | --------------

|/s/ Michael G. Babiarz
Michael G. Babiarz |  | Director | March 30, 2006
|------------------------------------------------------- |  | -------- | --------------

|/s/ Bobby R. Brown
Bobby R. Brown |  | Director | March 30, 2006
|----------------------------------------------- |  | -------- | --------------

|/s/ Richard A. Gilleland
Richard A. Gilleland |  | Director | March 30, 2006
|----------------------------------------------------------- |  | -------- | --------------

|/s/ Richard E. Heckert
Richard E. Heckert |  | Director | March 30, 2006
|------------------------------------------------------- |  | -------- | --------------

|/s/ Hubbard C. Howe
Hubbard C. Howe |  | Director | March 30, 2006
|------------------------------------------------- |  | -------- | --------------

|/s/ Thomas E. Ireland
Thomas E. Ireland |  | Director | March 30, 2006
|----------------------------------------------------- |  | -------- | --------------

|/s/ Thomas F. LEsperance
Thomas F. LEsperance |  | Director | March 30, 2006
|------------------------------------------------------------- |  | -------- | --------------

121



|/s/ H. Norman Schwarzkopf
H. Norman Schwarzkopf |  | Director | March 30, 2006
|------------------------------------------------------------- |  | -------- | --------------

|/s/ Stephen C. Sherrill
Stephen C. Sherrill |  | Director | March 30, 2006
|--------------------------------------------------------- |  | -------- | --------------

122



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.

123



# EXHIBIT INDEXForm 10-K for Fiscal
Year Ended December 31, 2005

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 10.4).
| | --- | -------------------------------------------------

| | 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.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

124



| | 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.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4.4 | 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 referenc.e
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.1 | Investment Agreement, dated as of December 19, 2002, by and among Holding, the CDR 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.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.2 | 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.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.3 | Stock Subscription Agreement, dated as of November 30, 1993, between
Holding and the CDR 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.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.4 | Shareholders Agreement, dated as of February 12, 2003, by and among Holding, the CDR 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.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.5 | Indemnification Agreement, dated as of November 30, 1993, among Remington, Holding, Clayton, Dubilier& Rice, Inc.
and the CDR 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.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.6 | 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.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.7 | 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.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

125



| | 10.8 | 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.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.9 | 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.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.10 | 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.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.11 | 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.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.12 | 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.
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.13 | 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.
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.14 | 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.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.15 | 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.
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.16 | 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.
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.17 | 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.
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.18 | 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.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

126



| | 10.19 | 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.*
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.20 | 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.
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.21 | 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.*
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.22 | 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.*
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.23 | 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.*
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.24 | 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.*
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.25 | 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.*
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.26 | 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.*
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.27 | 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.*
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.28 | 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.*
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.29 | 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.*
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.30 | 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.*
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.31 | 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.*
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.32 | 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.*
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.33 | 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.*
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.34 | 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.*
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

127



| | 10.35 | 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.*
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.36 | 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.*
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.37 | 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.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.38 | Form of Death Benefit Plan; previously filed as Exhibit 10.51 to Remington's annual
report on Form 10-K, filed March 24, 2005 and incorporated herein by reference.*
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.39 | Description of 2006 Incentive Compensation Plan. *
| | ----- | --------------------------------------------------

| | 10.40 | Special Supplemental Retirement Plan for Paul Cahan; previously filed as Exhibit 10.53 to Remington's
annual report on Form 10-K, filed March 24, 2005 and incorporated herein by reference.*
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.41 | The Remington Arms Company, Inc. Pension and Retirement Plan, January 1, 2001 Restatement.
| | ----- | ------------------------------------------------------------------------------------------

| | 10.42 | The Remington Arms Company, Inc. Supplemental Savings Plan.*
| | ----- | ------------------------------------------------------------

| | 10.43 | The Remington Arms Company, Inc. Supplemental Pension Plan.*
| | ----- | ------------------------------------------------------------

| | 10.44 | Amended and Restated Credit Agreement, dated March 15, 2006, by and among Remington,
            RA Factors, Inc., Wachovia Bank, National Association, as Agent and Lender and other
            financials institutions party to the Amended and Restated Credit Agreement; previously
            filed as Exhibit 10.1 to Remington's report on Form 8-K, filed March 21, 2006 and
            incorporated herein by reference.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | 16.1 | Letter from PricewaterhouseCoopers LLP to the United States Securities
            Exchange Commission regarding change in certifying accountant, dated November
            15, 2005; previously filed as Exhibit 16 to Remington's report on Form 8-K,
            filed November 15, 2005, and herein incorporated by reference.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 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.**
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------

| | 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 sent to security holders for 2006 annual meeting.
| | ---- | ---------------------------------------------------------------

| | 99.3 | Notice of Annual Meeting and Instructions sent to security holders for 2006 annual meeting.
| | ---- | -------------------------------------------------------------------------------------------

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

128



| | ** | 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.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

129