UNITED STATESSECURITIES 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 1934For the fiscal year ended: December 31, 2006ORo
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from _____ to _____  Commission
file number: 033-74194-01
 (REMINGTON LOGO)
 REMINGTON
ARMS COMPANY, INC.(Exact name of
registrant as specified in its charter)
  Delaware
51-0350935(State
  or other jurisdiction of incorporation or organization)
(I.R.S.
  Employer Identification No.) 870
Remington Drive
P.O. Box 700
Madison, North Carolina 27025-0700(Address of principal
executive offices)
(Zip Code) (336)
548-8700(Registrants
telephone number, including area code) Securities
  registered pursuant to Section 12(b) of the Act: NoneSecurities
  registered pursuant to Section 12(g) of the Act: None Indicate
by check mark if the registrant is a
well-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 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes o     No
x Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. x 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 27, 2007, 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 REFERENCE
None    REMINGTON
ARMS COMPANY, INC.

FORM 10-K

December 31, 2006

INDEX

Page No.NOTE
  REGARDING FORWARD-LOOKING STATEMENTSPART I

4ITEM 1.
BUSINESS

4ITEM 1A.
RISK FACTORS

16ITEM 1B.
UNRESOLVED
  STAFF COMMENTS

23ITEM 2.
PROPERTIES

24ITEM 3.
LEGAL
  PROCEEDINGS

25ITEM 4.
SUBMISSION
  OF MATTERS TO A VOTE OF SECURITY HOLDERS

29PART II

30ITEM 5.
MARKET FOR
  REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
  OF EQUITY SECURITIES

30ITEM 6.
SELECTED
  FINANCIAL DATA

31ITEM 7.
MANAGEMENTS
  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

35ITEM 7A.
QUANTITATIVE
  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

55ITEM 8.
FINANCIAL
  STATEMENTS AND SUPPLEMENTARY DATA

56ITEM 9.
CHANGES IN
  AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

100ITEM 9A.
CONTROLS
  AND PROCEDURES

101ITEM 9B.
OTHER
  INFORMATION

102PART III

103ITEM 10.
DIRECTORS,
  EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

103ITEM 11.
EXECUTIVE
  COMPENSATION

107ITEM 12.
SECURITY
  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
  MATTERS

131ITEM 13.
CERTAIN
  RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

134ITEM 14.
PRINCIPAL
  ACCOUNTING FEES AND SERVICES

136PART IV

137ITEM 15.
EXHIBITS,
  FINANCIAL STATEMENT SCHEDULES

137SIGNATURES

138SUPPLEMENTAL
  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

140EXHIBIT
  INDEX

141NOTE 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 Item 7, 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) (which was merged into Remington as of December
31, 2006) 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 and currently operating as a corporation, 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 190-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 powder metal products.

For
the year ended December 31, 2006, we had consolidated net sales of $446.0 million
and net income of $0.3 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), RA
Factors primarily existed to collect our accounts receivable, and Remington
Steam primarily exists to accommodate changes to the Companys long-term steam
supply at its Ilion, New York facility. 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 other accrued and long-term liabilities in
the consolidated statement of cash flows was made to financial information from
prior periods to conform to the presentation format at December 31, 2006. The
change in classification did not have a material impact on the previously
reported financial condition, results of operations or cash flows for 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. See Note 4 to our audited consolidated
financial statements for the year ended December 31, 2006 appearing elsewhere
in this annual report.

Recent Business Developments

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, these
products were transitioned to be sold solely under the Remington brand name.

In
2006, we increased our sourced product offerings, known as International
Sourced Products, to include over/under shotguns, muzzleloaders, rimfire
rifles, and centerfire rifles. These product offerings are part of our ongoing
strategy to enhance our existing product lines. In addition, we have developed
new products internally, including a new titanium receiver auto-loading shotgun
model. These products were introduced to enhance our existing firearms product
lines.

Also
in 2006, we completed our first full year of operations for our Technology
Products division, wherein we have an exclusive distribution rights agreement
through 2014 with a technology products manufacturer for

4

certain security products
within the United States, certain contractually defined United States
territories and Canada. We sell these security products to the federal agency,
military and law enforcement markets.

In
the fourth quarter of 2006, the Companys Board of Directors approved an
amendment to the Companys Pension and Retirement Plan (the Defined Benefit
Plan) to be effective January 1, 2008. As a result of the amendment to the
Defined Benefit Plan, for certain employees of the Company, including certain
of the Companys Named Executive Officers included in the Defined Benefit Plan,
future accrued benefits will be frozen as of January 1, 2008. For service
accrued prior to January 1, 2008, the pension calculation will not
change. Additionally, for affected employees participating in the Remington
Supplemental Pension Plan (the Supplemental Plan), including each of the
Companys Named Executive Officers, future accrued benefits will be frozen as
of January 1, 2008. As a result of the amendment, a curtailment gain was
recognized in the fourth quarter of 2006 in the amount of $7.4 million, which
consists of $7.3 million for the Defined Benefit Plan and $0.1 million for the
Supplemental Plan. This curtailment gain was reflected as a reduction in
pension expense, $6.1 million included in cost of goods sold and $1.3 million
in selling, general and administrative expense. Although the amendment will
result in a 2006 cost savings, cash flow contributions will not be reduced
until 2009 because the Company makes contributions one year in arrears due to statutory
funding requirements.

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 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 (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 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.Financial Information about Segments and Geographic
Areas

In accordance with the provision of Statement
of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and
Related Information (SFAS 131), after consideration of both
quantitative and qualitative factors, our operating segments form two
reportable segments  for the firearms and ammunition operating segments
 while the remaining operating segments are combined into our All Other
reporting segment:

(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 powder metal products.5

The
following table sets forth our net sales for each of our aggregated reporting
segments for the periods shown:

($ in
  millions)
  Year Ended December 31,2006

2005

2004Firearms

$
223.4

$
202.2

$
193.4Ammunition


204.9


184.5


176.1All Other


17.7


23.7


23.5Total

$
446.0

$
410.4

$
393.0See
Note 22 to our audited consolidated financial statements for the year ended
December 31, 2006 appearing elsewhere in this annual report. There are no
significant 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 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 $1200.

Our most popular rifles are the Model
700, Model Seven, and Model 710 centerfire
rifles and the Model 597 rimfire rifles. The Model 710 has been
updated to the Model 770for 2007 to address current market trends. To appeal to a broad
range
of gun owners, we manufacture these rifles in a wide variety of chamberings,
configurations and finishes. Retail list prices for our most popular rifles
range up to $900.

Product
Introductions

We
focus our product development efforts on introducing new products that satisfy
the need for specialized,
high-performance firearms. In 2006, we introduced the Model 105 CTi, which is designed to
provide a lightweight and soft recoiling
auto-loading shotgun due to its titanium receiver and advanced operating
system. 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 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. In 2007, we announced
the introduction of a line of side-by-side shotguns, a new trigger system for
the Model
700called the X Mark Pro,
and enhanced the Model Seven bolt-action rifle category through the addition of the
Model Seven XCR with proprietary TriNytecorrosion control
coating.

Seasonality

We
sell a broad range of firearms products. The majority of our firearms products
are manufactured for hunting, target, and plinking use, while other models are
intended for government, military, and law enforcement applications. As a
result of the core use of our products being used during the core fall hunting
season (September-December), the majority of our sales are seasonal and
concentrated toward the fall hunting season. We have historically followed the
industry practice of selling products 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.

6

As
a result of the seasonal nature of our sales, the extended payment terms under
our dating plan billing practices, and the aforementioned 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 come due and 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.

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. In
2006, Winchester closed the Winchester rifle factory in New Haven, Connecticut.
In 2007, Smith & Wesson, through its acquisition of Thompson/Center Arms,
Inc. became a competitor with their entry into the long gun market.

Manufacturing

Our facility in Ilion, New
York manufactures shotguns, rifles, powder metal parts, extra barrels, and gun
parts, and also houses our factory repair services and 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 2006, we began importing
sourced products from a few foreign vendors and will continue to do so in
2007. See Risk Factors for additional information on our sole source supplier
agreement and risks associated with this product line.

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 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 metals and other raw material
purchases and energy prices. We believe some of these increases were directly
related to supply shortages due to foreign market 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
in a timely manner. We have experienced favorable variances in utility costs
and expect to continue to see the leveling continue in the foreseeable future
for energy costs. 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.

7

Ammunition

Products

Our
ammunition product offerings consist of a comprehensive line of sporting
ammunition and ammunition reloading components, along with 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.

Product
Introductions

We
focus our product development efforts on introducing new products that satisfy
the need for specialized, high-performance ammunition. In 2006, we introduced a
completely new line of high density, high performance waterfowl ammunition
under the Wingmaster
HD
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. Also for 2006, we
introduced a 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.
For 2007, we have announced the introduction of the 17 Remington Fireball
Centerfire Rifle Cartridge. This new
cartridge is based on the design of the popular 221 Remington Fireball and will
provide the serious varmint
hunter with a lightning fast, low recoiling cartridge for high volume varmint
shooting. For 2007, we have also announced the introduction of 300 Remington
Ultra Mag Power Level ammunition. Through the unique
application of propellant technology, Power Level Ammunition will allow hunters to
obtain multiple
performance levels from their 300 Ultra Mag Rifle, which previously would only
be attainable by switching guns and cartridges. Lastly, Remington will be
reentering the Boxed Component Bullet business via the introduction of new
SKUs of our High Performance Core-Lokt Ultra Bonded Bullets. These bullets
have been available exclusively in our Premier Centerfire Rifle Ammunition
line, but now handloaders will be able to create their own loads using the most
technologically advanced bullet manufactured by Remington.

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 gain and
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

We
produce and market a broad range of ammunition products. The majority of our
ammunition products are manufactured for hunting use. Sales of some of our
products occur outside the core fall hunting season (September through
December) and consist of 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 ammunition products, however, are manufactured for hunting use. As a
result, the majority of the sales of our products being

8

seasonal and
concentrated toward the fall hunting season, we have historically followed the
industry practice of selling products 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 result of the seasonal nature of our sales, the extended payment terms under
our dating plan billing practices, and the aforementioned 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.

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 and lead
requirements are being serviced primarily by a few 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.

We
have written purchase agreements with the majority of our suppliers. 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.

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 2005 and 2006
our manufacturing site experienced cost increases related to purchases of base
metals related to our business, increased processing charges 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 these
types of 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 (primarily 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

9

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 initial terms of
various years and various renewals 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.

Powder
Metal Products. We market commercial powder 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 has been idle due to supply limitations discussed in Note 3 to
our audited consolidated financial statements for the year ended December 31,
2006 appearing elsewhere in this annual report.

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).Pursuant
to a joint venture agreement with ELSAG, Inc., an unaffiliated third party, we
have created RELES to sell and service mobile license plate reading technology
to state and local law enforcement agencies and certain federal agencies. We
own 50% of the joint venture which we do not consider to be a material portion
of our business. The joint venture agreement calls for each member to provide
50% of required capital investments and receive 50% of distributions, with an
original maximum contribution amount of $1.5 million by each party. As of
December 31, 2006, both parties have made their required capital contribution.
In addition, we provide certain administrative support functions, while ELSAG,
Inc. provides product technology support.

OTHER
CORPORATE INFORMATION

Backlog
Information

As
of February 28, 2007, the backlog of unfilled total orders was approximately
$125.8 million, which are reasonably expected to be filled during 2007,
compared to $99.7 million as of February 28, 2006.

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, $2.7 million, and $2.8
million in 2006, 2005, and 2004, respectively.

10

Customer
Concentration

Approximately
18% of our total 2006 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 6% in 2006, 5% in 2005, and 5% in 2004 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 60 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 via both direct sales representatives and manufacturers
sales representatives. Both groups market and sell principally to wholesalers,
dealers and regional chains. Our direct sales representatives market and sell
only Remington firearms, ammunition and accessory products while our
manufacturers sales representatives market and sell other product lines as
well. Our manufacturers sales representatives are prohibited from selling
competing goods from other manufacturers and are paid variable commissions
based on the type of products that are sold. The customers to which our 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
direct sales force primarily markets our product lines directly to national
accounts (consisting mainly of mass merchants), all customers in specific geographical
regions and to federal, state and local government agencies.

Patents,
Trademarks and Copyrights

Our
operations are not dependent upon any single trademark other than the Remington
word mark and the Remington logo mark. Some of the other trademarks that we
use, however, are nonetheless identified with and important to the sale of our
products. Generally, registered trademarks have perpetual life, provided that
they are renewed on a timely basis and continue to be properly used as trademarks.
Our business is not dependent to a material degree on patents, copyrights, or
trade secrets. We do not believe that the expiration of any of our patents will
have a material adverse effect on our financial condition or our results of
operations. We likewise 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 Co. LLC, and DESA, LLC, all
unrelated companies, claim rights to the Remington mark with respect to certain
other product areas, particularly personal care products (including electric
razors) and lawn and garden products.

Pursuant
to a Trademark Settlement Agreement reached with Remington Products Co. LLC, we
agreed as follows:

11


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 Settlement Agreement, as is Remington
  Products.
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 (now Spectrum Brands) came to own all
  of Remington Licensing Corporation, this could provide Spectrum Brands 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, 2007. New products and improvements to existing products are
developed based upon the perceived needs and demands of consumers, as well as
successful products introduced to the market by our competitors. Our research
and development program involves an in-house team of engineers and technicians
working with operations personnel using tools such as computer-assisted design.
Research and plant technical staff then collaborate to produce an experimental
prototype, ensuring that products and manufacturing processes are concurrently
designed. Following a successful prototype, a pilot run is commenced to ensure
that plant personnel and equipment can manufacture the product efficiently. We
continue to introduce new products employing 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 year ended
December 31, 2006 amounted to approximately $6.4 million, $5.9 million in 2005,
and in 2004 amounted to approximately $6.1 million.

Product
Liability

For
information concerning product liability cases and claims involving us, see
Item 3, 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, 2007. Certain of our
current excess insurance coverage expressly excludes actions brought by
municipalities as described in Legal

12

Proceedings.
We paid $3.2 million, $1.5 million, and $2.8 million in legal fees and
settlements in connection with product liability cases and claims in the years
ended December 31, 2006, 2005 and 2004, respectively, excluding insurance
costs. At December 31, 2006, our accrual for product liability cases and claims
was $10.5 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 probable 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.

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. None of our current firearms
products are considered to be assault weapons under that federal law. Various
states and cities have adopted or proposed their own version of the assault
weapon ban and some proposals could implicate Remington sporting firearms.

13

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. At least one jurisdiction bans
the possession of a firearm. Some states or other governmental entities 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 or municipal regulations applicable
to handgun ammunition. Remington firearms are covered under several recently
enacted state regulations requiring guns to be sold with internal or external
locking mechanisms. Some states are considering mandating certain design
features on safety grounds, most of which would be applicable only to handguns.
We believe that hunter safety issues may affect sales of firearms, ammunition
and other shooting-related products. In the northeastern United States, for
example, some communities 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
is 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 applicability of the law to
various types of governmental and private lawsuits has been challenged.

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 certain 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.

14

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. We do not anticipate incurring any material capital
expenditures for environmental control facilities for 2007 or 2008.

Employees

As
of February 28, 2007, we employed approximately 2,150 full-time employees of
whom nearly 1,900 were engaged in manufacturing, and approximately 250 of whom
were engaged in sales, general 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,
results of operations or liquidity 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
nature of potential 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.

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, 2006, approximately 13 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.

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 Item 3, Legal Proceedings.

Our business is
subject to extensive governmental legislation and regulation that may restrict
our operations, 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 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.

16

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.

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 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.17

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, 2006, we had approximately
$221.4 million of debt outstanding and our interest expense for the year ended
December 31, 2006 was approximately $28.0 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 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 obtain additional debt or equity financing due to applicable
  financial and restrictive covenants in our debt agreements.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 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;18


dispose of
  assets or enter into business combinations;
incur or
  guarantee additional debt;
issue
  equity;
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 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 firearms dating plan year) and pay for
them on extended terms. Historically, use of the dating plan has had the effect
of shifting some sales from the second and third quarters to the first and
fourth quarters. We attribute such use of dating plans to the seasonality that
exists within the markets in which we sell our products. Use of the dating plan
and the extended payment terms results in deferral of collection of accounts
receivable.

In
addition, we believe that economic conditions have caused other customers
(dealers and chains) 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 have somewhat stabilized during the
fourth quarter of 2006 and consumer confidence has reportedly not changed
significantly. Inflation dropped the last half of the year. Keeping inflation
under control is a top priority of the Federal Reserve. With the run up to 2008
elections, Democrats will be under pressure to keep the economy in good shape.
Oil and gasoline prices moderated from their July peak, but are still higher
than their historical average. In late 2006, our business also experienced the
stabilization of commodity prices for raw materials at still higher than
historical levels. We can provide no assurance as to the future trends of these
conditions.

19

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

We have
attempted to raise prices as we experienced increases in commodity and energy
costs. However, we can provide no 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 18% of our total 2006 sales and 10% of our
December 31, 2006 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 22% 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 difficulty 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, plastics and wood, as well as manufactured parts purchased from
independent manufacturers. An extended 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 third party
suppliers as part of our strategy to grow revenues and improve profitability,
which exposes us to additional uncertainties. In 2006, we increased the number
of product offerings by expanding the number of suppliers.

We
introduced an opening price point line known as Spartan Gunworks in 2004 and expanded the line
in 2005 with additional product offerings. This product line is made by a
foreign manufacturer, imported by a third party, and then resold by us under
the Remington
brand.

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

20

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 effect on our ability to maintain our current operating
results and 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 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.

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

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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, financial condition, results of operations or cash flows.

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--Firearms--Competition and BusinessAmmunition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, and health care cost trends) could
negatively impact our operating results, financial condition, and 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

21

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 the interests of other
investors.

The
Bruckmann, Rosser, Sherrill & Co. II, L.P. (the BRS Fund) presently owns
61.3% and the Clayton & Dubilier Private Equity Fund IV Limited Partnership
(the CDR Fund) presently owns 13.0% (and by proxy controls the votes of
26.6%) 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 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 $1.5 million from inception through
December 31, 2006. The joint venture has yet to operate in an annual positive
cash flow position. We made the final required funding payment of $0.2 million
on March 15, 2006. 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.

22

Item 1B. UNRESOLVED STAFF COMMENTS

None.

23

Item 2. PROPERTIES

We
currently own five facilities for our manufacturing operations. 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

1,000Lonoke,
  Arkansas

Shotshell; rimfire and centerfire ammunition

Ammunition

750Mayfield,
  Kentucky

Rimfire and centerfire rifles

Firearms

44Findlay,
  Ohio

Clay targets

All Other

40Ada,
  Oklahoma

Clay targets

All Other

21We
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
currently idle due to supply limitations discussed in Note 3 to our audited
consolidated financial statements for the year ended December 31, 2006
contained elsewhere in this annual report.

Our
headquarters and related operations are conducted in an office building that we
own in Madison, North Carolina. We believe that this facility is suitable
for the activities conducted therein and is appropriately utilized.

Research
and development is conducted at a facility that we own in Elizabethtown,
Kentucky. We believe that this facility is suitable for the activities
conducted therein and is appropriately utilized.

We
own a facility in Lexington, Missouri, which is used by a third party for the
production of wood stocks. We purchase a number of these wood stocks to use in
the production of certain firearms.

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 in Memphis, Tennessee from and contract for distribution
services with major third party contractors, which impacts distribution for all
of our reporting segments. We believe that this facility is suitable for the
activities conducted therein and is appropriately utilized.

24

Item 3. LEGAL PROCEEDINGS

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


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
  and intercompany accounts payable which do not represent trade accounts
  payable.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 individuals.
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, 2006 through November
30, 2007 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, 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, 2006,
approximately 13 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, 2006, one involves matters for which
the Sellers retained liability and are required to indemnify us. The remaining
12 pending cases involve post-Acquisition occurrences for which we bear
responsibility under the Purchase Agreement.

The
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 12 individual post-Acquisition
claims pending as of December 31, 2006, claimants specifying amounts purport to
seek approximately $28.5 million in compensatory and $10 million 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.

25

At
December 31, 2006, our accrual for product liability cases and claims was $10.5
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 probable 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 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

26

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 applicability of the law to various types of
governmental and private lawsuits has been challenged.

Other

On March
16, 2007, Remington, Holding, Clayton Dubilier & Rice, Inc. and certain
affiliates, Bruckmann, Rosser, Sherrill & Co., LLC and certain affiliates,
Thomas Millner (Remingtons President, Chief Executive Officer and a director),
Leon Hendrix (Remingtons Chairman), and Michael Babiarz (a Remington
director), as defendants, and Robert Haskin (a former Remington director
and employee), as plaintiff, entered into an agreement under
which Remington agreed to pay Mr. Haskin $775,000 in
consideration for dismissal of a non-employment related lawsuit and the
granting of mutual releases by the parties. The $775,000 was recorded as an
expense in the December 31, 2006, results of operations in accordance with Statement
of Financial Accounting Standard No. 5, Accounting for Contingencies
(SFAS 5) as the loss
contingency became probable and reasonably estimated. In the lawsuit, filed in
2006 in the General Superior Court of Justice, Superior Court Division,
Guilford County, North Carolina, Mr. Haskin alleged he was entitled to receive
a fee in connection with a transaction completed by the Company. The lawsuit
initially sought in excess of $1.0 million.

Litigation Outlook

We
are involved in lawsuits, claims, investigations and proceedings, including
commercial, environmental and employment matters, which arise in the ordinary
course of business. We do not expect that the ultimate costs to resolve these
matters will have a material adverse effect on our financial position, results
of operations or cash flows.

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 products discontinued at the time of closing.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
  and intercompany accounts payable which do not represent trade accounts
  payable.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 Product Liability Litigation.

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

27

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
Product Liability Litigation.

28

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

There
were no matters submitted to a vote of the Companys shareholder during the
fourth quarter of 2006.

29

PART
II

Item 5.
MARKET FOR REGISTRANTS COMMON EQUITY,
  RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESMarket
Information. There is no established public trading
market for either Holdings or Remingtons common stock.

Holders.
As of February 28, 2007, there were 26 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 2005 or 2006 and Remington did not pay
any dividends during 2005 or 2006.

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 15 to our audited
consolidated financial statements for the year ended December 31, 2006
appearing elsewhere in this annual report.

30

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 annual
periods ended December 31, 2006 and December 31, 2005, and
PricewaterhouseCoopers LLP, for the annual periods ended December 31, 2004,
December 31, 2003 and December 31, 2002. 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 Note 4 to our audited consolidated financial statements
for the year ended December 31, 2006 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 annual report.

Year Ended
  December 31,2002

2003

2004

2005

2006(dollars
  in millions)Income
  Statement Data:Net Sales
(1)

$
383.9

$
360.7

$
393.0

$
410.4

$
446.0Sales Growth (Loss) Percentage


5.0
%

(6.0
%)

9.0
%

4.4
%

8.7
%Gross
Profit


110.8


90.5


90.5


85.5


107.6Gross Profit Percentage


28.9
%

25.1
%

23.0
%

20.8
%

24.1
%Operating
Expenses


70.2


75.0


69.6


69.8


77.8Impairment
Charges (2)











4.7


0.2Operating
Profit


40.6


15.5


20.9


11.0


29.6Interest
Expense (3)


10.5


23.0


24.6


26.4


28.0Income
(Loss) from Continuing Operations before Taxes and Equity in
  Losses from Unconsolidated Joint Venture


30.1


(7.5
)

(3.7
)

(15.4
)

1.6Income Tax
Expense (Benefit) from Continuing Operations (4)


11.8


(2.9
)

14.0


0.4


0.9Income
(loss) from Discontinued Operations, net of tax (5)


2.9


1.4





(0.1
)

Gain on
Disposal of Discontinued Operations, net of tax (6)








13.6





Net Income
(Loss)


19.8


(3.2
)

(4.1
)

(16.9
)

0.3Operating
  and Other Financial Data:Depreciation and Amortization (7)

$
10.0

$
9.5

$
9.2

$
9.6

$
10.0Other
Non-Cash Charges (Gains) (8)


1.0


3.4


7.4


6.0


(0.3
)Nonrecurring and Restructuring Items (9)


2.1


0.4


(12.7
)

4.9


3.2Special
Payments (10)


1.8


4.5








Equity in
Loss for Unconsolidated Joint Venture











1.0


0.4Gross
Capital Expenditures


7.5


6.9


9.5


10.1


6.5Other
Unusual Charges (11)





2.2








Adjusted
EBITDA related to Discontinued Operations (12)


6.7


4.1


0.2





Cash flows
provided by (used in):Operating activities

$
14.1

$
(7.3
)
$
(11.8
)
$
(6.0
)
$
13.2Investing activities


(7.5
)

(6.9
)

35.1


(11.1
)

(7.9
)Financing activities


(19.6
)

14.2


(23.3
)

17.2


(5.3
)Balance
  Sheet Data (end of period):Working
Capital (13)

$
90.2

$
119.5

$
120.2

$
136.4

$
130.2Total
Assets


335.1


362.7


354.4


363.3


371.3Total Debt
(14)


101.1


230.5


203.5


221.7


221.4Credit
Facility


11.0


28.3


1.8


19.4


19.4Shareholders Equity (Deficit)


111.6


11.8


9.9


(11.1
)

(10.2
)31

Adjusted
  EBITDA and Credit Statistics:

2002

2003

2004

2005

2006Adjusted EBITDA (12) (15)

$
60.7

$
39.6

$
38.6

$
31.4

$
42.5Consolidated Interest
  Expense (16)

$
10.4

$
23.0

$
22.8

$
24.7

$
26.4Consolidated Coverage
  Ratio (17)


5.8
x

1.7
x

1.7
x

1.3
x

1.6
xRatio of Earnings to Fixed
  Charges (18)


3.8
x

(18
)

(18
)

(18
)

1.0
x(1)
Presented net of federal
  excise taxes. Federal excise taxes were $33.5 million, $31.2 million, $33.5
  million, $34.0 million and $37.4 million for the years ended December 31,
  2002, 2003, 2004, 2005 and 2006, respectively.(2)
These impairment charges
  in 2006 are associated with an incremental write-down in certain embellishing
  fixed assets in the firearms reporting unit and 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 3 to our audited consolidated
  financial statements for the year ended December 31, 2006 appearing elsewhere
  in this annual report.(3)
Interest expense included
  in discontinued operations is $1.8 million, $1.8 million, $0.1 million, zero,
  and zero, for the years ended December 31, 2002, 2003, 2004, 2005 and 2006,
  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 19 to the audited consolidated financial statements for the
  year ended December 31, 2006 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 4 to the audited
  consolidated financial statements appearing elsewhere in this annual report.(7)
Excludes amortization of
  deferred financing costs of $1.9 million, $1.8 million, $1.9 million, $1.8
  million and $1.6 million for the years ended 2002, 2003, 2004, 2005 and 2006,
  respectively, which is included in interest expense.(8)
Non-cash charges consist
  of the following: (a) 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;
  (b) for the year ended December 31, 2003, a $2.9 million accrual for retiree
  benefits and a $0.5 million loss on disposal of assets; (c) 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; (d) 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; and (e) for the year ended December 31, 2006, a $6.0
  million accrual for retiree benefits, a $0.8 million loss on disposal of
  assets, a $7.4 million curtailment gain for pension expense, and $0.3 million
  of other compensation expense associated with stock option expense
  recognition under SFAS 123R.(9)
Nonrecurring and
  restructuring expenses consist of the following: (a) for the year ended
  December 31, 2002, $1.4 million of Cumulative Effect of Change in Accounting
  Principle, net of tax, $0.3 million of nonrecurring legal fees and $0.4
  million associated with marking redeemable deferred shares to market; (b) for
  the year ended December 31, 2003, $0.2 million of severance costs and $0.2
  million loss on disposal of assets; (c) for the year ended December 31, 2004,
  $13.6 million gain on sale of the fishing 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; (d) 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 segment, 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 a32

contract in the Firearms
  reporting unit; and (e) for the year ended December 31, 2006, $2.8 million of
  nonrecurring professional fees, $0.2 million associated with an incremental
  write-down in certain embellishing fixed assets in the firearms reporting
  unit and $0.2 million associated with the exclusive distribution agreements
  for certain technology products.(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; and (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s
  prior senior secured credit facility (the Old Credit Facility).(12)
Adjusted EBITDA as
  presented herein has the same meaning as defined in Note 22 to the audited consolidated
  financial statements presented herein. Discontinued Operations relates solely
  to the sale of our fishing line business on February 9, 2004. Adjusted EBITDA
  related to Discontinued Operations is appropriately included in Consolidated
  EBITDA as defined in the indenture for the Notes for all periods presented.(13)
Working capital as
  presented herein consists of 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)
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. To calculate Adjusted EBITDA
  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 22 to the audited consolidated financial statements for the
  year ended December 31, 2006 appearing elsewhere in this annual report for a
  reconciliation of this measure to net income. Adjusted EBITDA is not a
  measure of performance defined in accordance with accounting principles
  generally accepted in the United States. However, we believe that Adjusted
  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. Adjusted 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 (where we use the substantially similar Adjusted EBITDA
  as noted above) 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 is 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.(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 its33

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
  $1.9 million, $1.8 million, $1.9 million, $1.8 million and $1.6 million for
  the years ended 2002, 2003, 2004, 2005, and 2006, respectively, and includes
  amounts reclassified to discontinued operations of $1.8 million, $1.8
  million, $0.1 million, zero, and zero, for the years ended December 31, 2002,
  2003, 2004, 2005, and 2006, respectively.(17)
Consolidated Coverage
  Ratio as defined in the indenture for the Notes is the ratio of Consolidated
  EBITDA (where we use the substantially similar Adjusted EBITDA as noted
  above) 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
  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 1:1.34

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.

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


Executive Overview.
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, RA Factors and
Remington Steam 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
December 31, 2006 are outstanding at a value of $45.2 million, inclusive of
paid-in-kind interest. The CDR Fund holds all of the Holding Notes. RA Brands,
RA Factors and Remington Steam are wholly owned subsidiaries of Remington,
although RA Factors was merged into Remington as of December 31, 2006. RA Brands
acts as a holding company for our intellectual property and other intangible
assets, RA Factors was a subsidiary that primarily existed to collect our
receivables, and Remington Steam was formed to accommodate changes to our
long-term steam supply at our Ilion, New York firearms facility.

We
evaluate our business primarily on Adjusted EBITDA (as described in Note 22 to
our audited consolidated financial statements for the year ended December 31,
2006 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 (including
quantity), length and volume of extended dating receivables 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,
higher performance 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 are augmenting our already existing product lines 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.

35

We
have undertaken certain growth initiatives, including the following:


We have a
  joint venture agreement with ELSAG, Inc., an unaffiliated third party, that
  forms RELES. RELES sells and services mobile license plate reading technology
  products that are sold to state and local law enforcement agencies in
  addition to 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 an original
  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 its final contractual
  contribution to RELES of $0.2 million on March 15, 2006, and, accordingly,
  has no more commitments to fund RELES, although we may decide to do so in the
  future. For 2006, RELES generated approximately $3.5 million incremental
  revenues (which are not included in the Companys net sales) compared to
  2005.
In 2006, we
  increased our sourcing initiative, known as International Sourced Products,
  to include over/under shotguns, muzzleloaders, rimfire rifles, and centerfire
  rifles. These product offerings are part of our ongoing strategy to enhance
  our existing product lines. In addition, we have developed new products
  internally that we began to deliver in the last quarter of 2006, including a
  new titanium receiver auto-loading shotgun model. These products are designed
  to enhance our existing firearms product lines. In 2007, we will introduce a new
  line of side-by-side shotguns, a new trigger system and enhance some of our
  other offerings.
Also in
  2006, we completed our first full year of operations for our Technology
  Products division, wherein we have an exclusive distribution rights agreement
  through 2014 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, military and law enforcement markets.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, zinc, steel, fuel, and utilities) which are above any
historical comparison. We can provide no assurance that these trends will not
continue. Specifically, as of December 31, 2006, management estimates that its
annual costs at the end of 2006 for certain core materials and energy alone
have increased in the range of $30-45 million over 2003 annual levels. Based on
recent trends, management expects these costs to continue to increase in 2007
as compared to 2006. Management has initiated price increases to our customers
in an attempt to offset these costs and will continue to evaluate the need for
future price increases in light of these trends, the Companys competitive
landscape, and financial results. Management estimates that its cumulative
price increases initiated since 2003 have offset greater than 50% of the
estimate cumulative costs incurred. These estimates assume no significant loss
in overall sales or production volume.

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.

Developments and Highlights

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.

36

On
October 9, 2006 the Companys Board of Directors approved an amendment to the
Companys Pension and Retirement Plan (the Defined Benefit Plan) to be
effective January 1, 2008. As a result of the amendment to the Defined Benefit
Plan, for non-union employees of the Company, future accrued benefits will be
frozen as of January 1, 2008. For service accrued prior to January 1, 2008, the
pension calculation will not change. Additionally, for affected employees
participating in the Remington Supplemental Pension Plan (the Supplemental Plan),
future accrued benefits will be frozen as of January 1, 2008. As a result of
the amendment, a curtailment gain was recognized in the fourth quarter of 2006
in the amount of $7.4 million, which consists of $7.3 million for the Defined
Benefit Plan and $0.1 million for the Supplemental Plan. This curtailment gain
was reflected as a reduction in pension expense, $6.1 million included in cost
of goods sold and $1.3 million in selling, general and administrative expense.
Although the amendment will result in a 2006 cost savings, cash flow
contributions will not be reduced until 2009 because the Company makes
contributions one year in arrears due to statutory funding requirements.

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 2004. 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 stabilizing as a result of a drop in
inflation and a drop in energy and commodity prices in the last half of 2006.
Consumer confidence has increased. The Federal Reserve has been holding
interest rates steady and could lower by mid-2007 if the current reports
continue. The rising of commodity prices for raw materials such as lead,
copper, and steel, as well as rising energy costs, that our business had
experienced since the beginning of 2004 are at costs that are higher than
historical levels. See Item 7A, Quantitative and Qualitative Disclosures About
Market Risk. We can provide no assurance that these economic trends will
continue. Changes in consumer confidence and spending and/or significant
changes in commodity and energy prices could have a material impact on the
consolidated financial position, results of operations, or cash flows of the
Company.

37

Industry

As
discussed above, the consumer products environment appears to be improving due
to increased consumer spending, higher consumer confidence, and lower
inflationary pressures primarily from stabilizing energy costs. However, the
retail and consumer products industries in which we participate (mainly,
firearms and ammunition) continue to experience two specific trends  market
polarization and condensed seasonality.

The
market polarization appears to primarily be a function of demand from higher
end retailers and consumers being relatively inelastic 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 has continued to evaluate our product line, both through the
internal development of new products and the sourcing of products, in order to
focus our products in price points in appropriate consumer categories.

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. Nevertheless, in part due
to increased pricing pressures, the ammunition business has experienced
somewhat less of the season compression in 2006 as we believe customers made
purchases ahead of effective price increase dates.

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
applicability of the law to various types of governmental and private lawsuits
has been challenged.

Remington

Our
current business environment has improved somewhat in the latter half of 2006,
as a result of stabilizing commodity and energy costs and increased consumer
spending levels. Management 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 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
strategy 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. We have also engaged in selective
efforts to stimulate demand for our products through targeted product
introductions and promotions in selected product categories. Management
believes that we have successfully maintained the strength of our brand and our
market-leading positions in our primary product categories, and that we remain
poised to take advantage of any significant improvement in the demand environment.

Seasonality

We
produce and market a broad range of firearms and ammunition products. 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 have historically followed the industry practice of selling
products 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.

38

As
a result of the seasonal nature of our sales, the extended payment terms under
our dating plan billing practices, and the aforementioned 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.

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 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 13 to our audited consolidated financial statements for the year ended
December 31, 2006 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 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, 2006, we had outstanding approximately $221.4 million of
indebtedness, consisting of approximately $200.0 million aggregate principal
amount of the Notes, $19.4 million in borrowings under the Amended and Restated
Credit Agreement, $1.1 million in capital lease obligations and a $0.9 million
note payable to Holding. As of December 31, 2006, we also had aggregate letters
of credit outstanding of $4.4 million.

With
respect to other significant cash outlays, we contributed $8.0 million to plan
assets under our funded defined-benefit pension plan during 2006, and expect to
contribute approximately $16.5 million to these same plan assets in 2007.

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

39

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. The
Amended and Restated Credit Agreement also includes a letter of credit
sub-facility of up to $15.0 million. As of December 31, 2006, approximately
$51.2 million in additional borrowings beyond the minimum availability
requirements were available as determined pursuant to the Amended and Restated
Credit Agreement compared to $23.7 at December 31, 2005.

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 ranging
  from $10 million to $30 million 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) by providing written notice to the
  agent. For any period during the Availability Test Period when such minimum
  availability requirement is not met, the Company must maintain a minimum
  consolidated 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
  ranging from $28.5 million to $38 million and determined on 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 an
  applicable margin, or (2) a reserve adjusted LIBOR rate plus an applicable
  margin. These margins are subject to periodic adjustment based on certain
  levels of financial performance (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. The40

Amended and
  Restated Credit Agreement allows for capital expenditures up to $28.9 million
  in the 2007 fiscal year including unused capacity carried over from 2003,
  2004, 2005 and 2006.(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 (3) an
  unused line 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 and (4) audit and appraisal
  fees.(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, 2006
was 0.50% and 2.00%, respectively. The weighted average interest rate under the
Companys outstanding credit facility balance was approximately 7.60% and 6.70%
for the years ended December 31, 2006 and 2005, respectively.

Capital & Operating Leases and Other
Long-Term Obligations

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

Cash Flows and Working Capital

Net
cash provided by operating activities was $13.2 million for the fiscal year
ended December 31, 2006, while net cash used by operating activities was $6.0
million for the fiscal year ended December 31, 2005. The $19.2 million
improvement in cash from operating activities for the twelve months ended
December 31, 2006 compared to the same period ended December 31, 2005 resulted
primarily from:


The change
  to a net income of $0.3 million for 2006 from a net loss of $16.9 million in
  2005, including a gain of $7.4 million recorded in 2006 due to the
  curtailment of the pension plan and impairment charges in 2005 of $4.7
  million.
Accounts
  receivable increased by $0.6 million over the twelve months ended December
  31, 2006 compared to an increase of $11.0 million over the twelve months
  ended December 31, 2005. The net decrease in accounts receivable of $10.4
  million over 2005 is primarily related to shorter terms in 2006 compared to
  2005.
Accounts
  payable increased by $5.8 million in the twelve months ended December 31,
  2006 compared to an increase of $0.5 million in the twelve months ended
  December 31, 2005, primarily due to our higher costs of materials purchases
  offset by slightly quicker payment terms.
Inventories
  increased $11.5 million in the twelve months ended December 31, 2006 compared
  to an increase of $6.7 million over the twelve months ended December 31,
  2005, an increase of $4.8 million, primarily as a result of increased costs
  of inventory due to higher materials costs.Net
cash used in investing activities for the fiscal years ended December 31, 2006
and 2005 was $7.9 million and $11.1 million, respectively. The $3.2 million
decrease in cash used in investing activities resulted primarily from lower
cash capital expenditures and fewer required cash contributions to the
unconsolidated joint venture.

Net
cash used in financing activities for the year ended December 31, 2006 was $5.3
million, while net cash provided by financing activities for the fiscal year
ended December 31, 2005 was $17.2 million. The $22.5 million change in cash
used in/provided by financing activities from the year ended December 31, 2006
compared to the

41

year ended
December 31, 2005 primarily resulted from approximately $17.6 million of lower
borrowing needs under the Credit Facility and a larger reduction in the book
overdraft of $3.3 million in the current year, as well as cash paid of $0.8 in
the current year for debt issuance costs associated with our Amended and
Restated Credit Agreement.

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. There were no dividends paid in 2006
or 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.

Capital Expenditures

Gross
capital expenditures for the year ended December 31, 2006 were $6.5 million,
consisting primarily of capital expenditures both for new equipment related to
the manufacture of firearms and ammunition, as well as maintenance of existing
facilities. We expect capital expenditures
for 2007 to be in a range of $8.0 million to $12.0 million. Our Amended
and Restated Credit Agreement allows for capital expenditures of up to $28.9
million in 2007 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. 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 five 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, 2006:

Payments
  Due by PeriodTotal
  Amounts
  Committed

Less
  Than
  1 Year

1-3
  Years

4-5
  Years

Over
  5 Years(dollars in millions)Contractual
Obligations:101⁄2% Senior Notes due 2011

$
200.0

$


$


$
200.0

$
Expected interest payments associated with
  the Senior Notes due 2011


85.4


21.0


42.0


22.4


Required pension contributions


32.8


16.5


16.3





Working Capital Facility Borrowings


19.4








19.4


Due to RACI Holding, Inc.


0.9





0.2





0.7Capital Lease Obligations


1.2


0.5


0.7





Operating Lease Obligations


4.3


1.2


2.1


1.0


Other Long-term Purchase Obligations (a)


8.8


4.2


3.1


1.5


Total Contractual Cash Obligations

$
352.8

$
43.4

$
64.4

$
244.3

$
0.7Other
Commercial Commitments:Standby Letters of Credit

$
4.4

$
4.4

$


$


$
Total Commercial Commitments

$
4.4

$
4.4

$


$


$
42

(a)
Other
  Long-term Purchase Obligations includes minimum obligations due under various
  contracts, including a services contract with our third party warehouse
  provider, and minimum purchases associated with certain materials necessary
  for the manufacturing process.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, 2006 to the year ended December 31, 2005 and the year ended
December 31, 2005 to the year ended December 31, 2004.

Year Ended
  December 31,2006

2005

2004Net
Sales


100.0
%

100.0
%

100.0
%Cost of Goods
Sold


75.9


79.2


77.0Gross
Profit


24.1


20.8


23.0Operating
Expenses


17.5


18.1


17.7Operating
Profit


6.6


2.7


5.3Net Income/(Loss)
from Continuing
  Operations


0.1


(4.1
)

(4.5
)Year Ended December
31, 2006 as Compared to Year Ended December 31, 2005

Net
Sales. The following table compares net sales by reporting
segment for each of the years ended December 31, 2006 and 2005:

Twelve
  months ended December 31,
  (Dollars in Millions)2006

Percent
  Of Total

2005

Percent
  Of Total

$
  Increase/
  (Decrease)

%
  Increase/
  (Decrease)Net SalesFirearms

$
223.4


50.1
%
$
202.2


49.3
%
$
21.2


10.5
%Ammunition


204.9


45.9


184.5


44.9


20.4


11.1All Other


17.7


4.0


23.7


5.8


(6.0
)

(25.3
)Consolidated

$
446.0


100
%
$
410.4


100
%
$
35.6


8.7
%Firearms

The
increase in net sales of $21.2 million for the year ended December 31, 2006
over the prior-year period resulted primarily from higher sales volumes of
pump-action shotguns of $6.1 million, centerfire rifles of $8.2 million and
international sourced products of $3.0 million, as well as $4.1 million related
to higher pricing.

Ammunition

The
increase in net sales of $20.4 million for the year ended December 31, 2006
over the prior-year period is due primarily to approximately $23.6 million in
increased sales associated with higher pricing for ammunition products, higher
sales volumes/mix of pistol and revolver ammunition of $3.2 million, offset by
lower sales volumes/mix of shotshell ammunition of $3.9 million, centerfire
ammunition of $1.2 million and components and other of $1.4 million.

All Other
(including Accessories, Licensing Income, Clay Targets, Powder Metal Products,
and Technology Products)

The
decrease in net sales of $6.0 million for the year ended December 31, 2006 over
the prior year period is due primarily to lower accessories sales of $4.0
million associated with converting certain products to licensed products and
lower sales of clay targets of $3.0 million due to the supply limitation
discussed in Note 3 to the consolidated audited financial statements presented
herein, offset by an increase in shipments from our Technology Products
division of $1.7 million.

43

Cost
of Goods Sold. The table below depicts the cost of
goods sold by reporting segment for the years ended December 31, 2006 and 2005:

Twelve months ended December 31,
  (Dollars in Millions)2006

Percent
  Of Total

2005

Percent
  Of Total

$
  Increase/ (Decrease)



%
  Increase/ 
  (Decrease)Cost of Goods SoldFirearms

$
169.6



75.9
%

$
154.7



76.4
%

$

14.9




9.6
%Ammunition


156.0



76.1



152.3



82.6




3.7




2.4All
Other


12.8



72.3



17.9



75.5




(5.1
)



(28.5
)Consolidated

$
338.4



75.9
%

$
324.9



79.1
%

$

13.5




4.2
%Firearms

The
increase of $14.9 million for the year ended December 31, 2006 over the
prior-year period is due primarily increased sales volume of shotguns,
centerfire rifles, and international sourced products. Additionally, there has
been a change in sales mix toward products with a higher cost of production,
including centerfire rifles, and lower sales volumes of rimfire rifles with a
lower cost of production. Also contributing to the change in cost of goods sold
is higher pension and post retirement cost of $1.0 million, offset by a
reduction in pension expense of $1.6 million resulting from the curtailment of
the pension plan.

Ammunition

The
increase of $3.7 million for the year ended December 31, 2006 over the
prior-year period is due primarily to higher manufacturing costs of $18.3
million associated with higher materials costs of lead, copper, and zinc
commodities, and to a lesser extent in plastics and energy costs. This was
partially offset by realized hedging gains from the settlement of our option
contracts of $8.3 million, a reduction in pension expense of $4.3 million
resulting from the curtailment of the pension plan, as well as lower sales
volumes/mix, particularly in shotshell ammunition, centerfire ammunition and
components and other.

All
Other (including Accessories, Licensing Income, Clay Targets, Powder Metal
Products and Technology Products)

The
decrease of $5.1 million for the year ended December 31, 2006 over the prior-year
period is due primarily to lower accessories sales volumes associated with
converting certain products to licensed products, lower sales volumes of clay
targets due to the supply limitation discussed in Note 3 to the consolidated
audited financial statements presented herein, offset by higher sales volumes
of our Technology Products division.

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

Twelve months ended December 31,
  (Dollars in Millions)2006

2005

$
  Increase/ 
  (Decrease)

%
  Increase/ 
  (Decrease)Operating ExpensesSG&A

$
73.7

$
66.7

$

7.0




10.5
%R&D


6.4


5.9



0.5




8.5Impairment
Charges


0.2


4.7



(4.5
)



(95.7
)Other


(2.3
)

(2.8
)


0.5




(17.9
)Consolidated

$
78.0

$
74.5

$

3.5




4.7
%The
increase of $3.5 million in operating expenses for the year ended December 31,
2006 compared to the same period in 2005 was primarily attributable to higher
costs associated with legal fees, higher provisions for bad debts expense,
higher incentive compensation expense and higher selling and marketing
expenses, offset by a reduction in pension expense of $1.3 million resulting
from the curtailment of the pension plan and impairment charges of $3.7 million
in 2005 associated with the Clay Targets business unit and $0.8 million for the
firearms equipment that did not recur in 2006 as explained in Note 3 to the
audited consolidated financial statements for the year ended December 31, 2006
appearing elsewhere in this annual report.

44

Interest
Expense. Interest expense for the
year ended December 31, 2006 was $28.0 million, an increase of $1.6
million from the same period in 2005. The increase in interest expense during
2006 resulted primarily from higher average borrowings on the Credit Facility
of $1.9 million, partially offset by lower interest on capital lease expenses
of $0.1 million.

Taxes. Our
effective tax rate relating to
continuing operations is 75.0% for the year ended December 31, 2006. The change
to 75.0% from 2.4% for the same period in 2005 is primarily attributable to an
increase in the valuation allowance originally established in 2004 on deferred
tax assets.

As
of December 31, 2006, a valuation allowance of approximately $27.3 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 $25.6 million reserve that existed
as of December 31, 2005. The $1.7 million net change in the valuation allowance
consisted of an increase of $1.9 million taken as a charge against earnings
primarily related to the $0.9 million increase in net deferred tax assets in
2006 for which the benefits may not be realized and an increase of $1.0 million
due to an increase in deferred tax liabilities associated with indefinite-lived
intangible assets that have an indefinite reversal period. A change of $0.2
million was recorded against equity as a component of other comprehensive
income as a result of a decrease in the net deferred tax asset associated with
other comprehensive income. Therefore, the income tax expense in the statements
of operations primarily reflects state income taxes and the increase in
deferred tax liabilities associated with indefinite-lived intangible assets
that have an indefinite reversal period.

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 previous 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.

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

In
July 2006, the FASB issued FIN 48, which clarifies the accounting for
uncertainty in tax positions. This interpretation requires that we recognize in
our financial statements, the impact of a tax position, if that position is
more likely than not of being sustained under or as a result of audit, based on
the technical merits of the position. The provisions of FIN 48 are effective as
of January 1, 2007, with the cumulative effect of the change in accounting
principle, if any, recorded as an adjustment to opening retained earnings of
the earliest year presented in those financial statements. We have not fully
completed the process of evaluating the impact of adopting FIN 48.
Nevertheless, we have performed procedures to estimate the anticipated impact
of such adoption. We anticipate less than a $1.0 million impact to accumulated
deficit, an expected reclassification of approximately $1.5 million from
current to long-term liabilities and an impact of less than $0.5 million to net
operating loss carryforwards which would be fully offset by a valuation
allowance. These amounts are subject to revision as management completes its
analysis.

Discontinued
Operations.

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

Discontinued
  Operations:

December 31,
  2005Net Sales

$

Pre-tax
  operating results



(0.1
)Interest
  Expense Allocation



Income from
  operations, after tax



(0.1
)45

Year Ended December
31, 2005 as Compared to Year Ended December 31, 2004

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,
  (Dollars in Millions)2005

Percent
  Of Total

2004

Percent
  Of Total

$
  Increase/
  (Decrease)



%
  Increase/ 
  (Decrease)Net SalesFirearms

$
202.2



49.3
%

$
193.4



49.2
%

$

8.8




4.6
%Ammunition


184.5



44.9



176.1



44.8




8.4




4.8All
Other


23.7



5.8



23.5



6.0




0.2




0.9Consolidated

$
410.4



100
%

$
393.0



100
%

$

17.4




4.4
%Firearms

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 million related primarily to higher accrued discounts in the
current year.

Ammunition

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 million in
increased sales associated with higher pricing for ammunition products and
higher sales volumes of certain centerfire ammunition partially offset by lower
sales volumes of shotshell ammunition.

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

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, Powder Metal Products,
and Technology Products lines of business, which increased $1.7 million, and
which was offset by lower sales of $1.5 million in the Clay Targets business,
is due primarily to initial shipments of our surveillance security products and
higher sales of powder metal products and gun care products; partially offset
by lower sales of clay targets due to the supply limitation discussed in Note 3
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,
  (Dollars in Millions)2005

Percent
  Of Total

2004

Percent
  Of Total

$
  Increase/ 
  (Decrease)



%
  Increase/ 
  (Decrease)Cost of Goods SoldFirearms

$
154.7



76.4
%

$
144.0



74.5
%

$

10.7




6.9
%Ammunition


152.3



82.6



141.0



80.1




11.3




7.4All
Other


17.9



75.5



17.5



74.2




0.4




2.2Consolidated

$
324.9



79.1
%

$
302.5



77.0
%

$

22.4




6.9
%Firearms

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 products (primarily Spartan
Gunworks shotguns), partially offset by lower sales volumes of
shotguns.

46

Ammunition

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 gains from settlement of our copper and lead option
contracts which partially offset the previously mentioned higher material costs.

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

The
increase of $0.4 million for the year ended December 31, 2005 over the
prior-year period, predominantly in the Accessories, Powder Metal Products, and
Technology Products businesses, which increased $1.2 million, and which was
offset by lower costs in the Clay Targets business, is due primarily to initial
shipments of our surveillance security products and higher sales of powder
metal products and gun care products, partially offset by lower sales of clay
targets due to the supply limitation discussed in Note 3 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.

Twelve months ended December 31,
  (Dollars in Millions)2005

2004

$
  Increase/ 
  (Decrease)



%
  Increase/ 
  (Decrease)Operating ExpensesSG&A

$
66.7

$
65.1

$

1.6




2.5
%R&D


5.9


6.1



(0.2
)



(3.3
)Impairment
Charges


4.7






4.7




100.0Other


(2.8
)

(1.6
)


(1.2
)



75.0Consolidated

$
74.5

$
69.6

$

4.9




7.0
%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 3 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, 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 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 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

47

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 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.

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,Discontinued
  Operations:

2005



2004Net Sales

$




$

1.9Pre-tax
  operating results



(0.1
)



0.2Interest
  expense allocation








0.1Income from
  operations, after tax



(0.1
)



Recent Accounting Pronouncements

In
February 2006, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards (SFAS) No.
155, Accounting
for Certain Hybrid Financial Instruments  an amendment of FASB Statements No.
133 and 140(SFAS 155). SFAS 155 simplifies accounting for certain
hybrid instruments under SFAS 133 by permitting fair value remeasurement for
financial instruments that otherwise would require bifurcation and eliminating
SFAS 133 Implementation Issue No. D1, Application of Statement 133 to
Beneficial Interests in Securitized Financial Assets, which provides that
beneficial interests are not subject to the provisions of SFAS 133. SFAS 155
also eliminates the previous restriction under SFAS 140 on passive derivative
instruments that a qualifying special-purpose entity may hold. SFAS 155 is
effective for all financial instruments acquired, issued, or subject to a
remeasurement event occurring after the beginning of an entitys fiscal year that
begins after September 15, 2006. We will adopt this statement as required,
and adoption is not expected to have an impact on our results of operations,
financial condition or liquidity as we do not hold any of these financial
instruments.

In
March 2006, the FASB issued SFAS 156, Accounting for Servicing of Financial Assets  an
amendment of FASB Statement No. 140(SFAS 156). SFAS 156 permits
entities to choose to either subsequently measure servicing rights at fair
value and report changes in fair value in earnings or amortize servicing rights
in proportion to and over the estimated net servicing income or loss and assess
the rights for impairment or the need for an increased obligation. SFAS 156
also clarifies when a servicer should separately recognize servicing assets and
liabilities, requires all separately recognized assets and liabilities to be
initially measured at fair value, if practicable, permits a one-time
reclassification of available-for-sales securities to trading securities by an
entity with recognized servicing rights and requires additional disclosures for
all separately recognized servicing assets and liabilities. SFAS 156 is
effective as of the beginning of an entitys fiscal year that begins after
September 15, 2006. We will adopt this statement as required, and adoption
will have no impact on our results of operations, financial condition or
liquidity as we do not hold any of these financial instruments.

48

In
April 2006, the FASB issued FASB Staff Position (FSP) FIN 46R-6 Determining
the Variability to be Considered When Applying FASB Interpretation No. 46(R)(FIN
46R-6), which requires the variability of an entity to be analyzed based on
the design of the entity. The nature and risks in the entity, as well as the
purpose for the entitys creation are examined to determine the variability in
applying FIN 46R. The variability is used in applying FIN 46R to
determine whether an entity is a variable interest entity, which interests are
variable interests in the entity, and who is the primary beneficiary of the
variable interest entity. This statement is effective for all reporting periods
beginning after June 15, 2006. Since FSP FIN 46R-6 is for prospective
entities, the adoption had no effect on our results of operations, financial
condition or liquidity.

In
July 2006, the FASB issued FIN 48 Accounting for Uncertain Income Tax Positions(FIN
48), which clarifies the accounting for uncertainty in tax positions. This
Interpretation requires that we recognize in our financial statements, the
impact of a tax position, if that position is more likely than not of being
sustained based on the technical merits of the position. The provisions of FIN
48 are effective as of January 1, 2007, with the cumulative effect of the
change in accounting principle recorded as an adjustment to opening retained
earnings (accumulated deficit) of the earliest year presented in those
financial statements. We have not fully completed the process of evaluating the
impact of adopting FIN 48. Nevertheless, we have performed procedures to
estimate the anticipated impact of such adoption. We anticipate less than a
$1.0 million impact to accumulated deficit and these amounts are subject to
revision as we complete our analysis.

In
September 2006, the SEC staff issued Staff Accounting Bulletin (SAB) No. 108,
Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial
Statements(SAB 108).
SAB 108 was issued to provide consistency between how registrants quantify
financial statement misstatements. Historically, there have been two
widely-used methods for quantifying the effects of financial statement
misstatements, the roll-over and iron curtain method. SAB 108 established
an approach that requires quantification of financial statement misstatements
based on the effects of the misstatement on each of the companys financial
statements and the related financial statement disclosures. This approach is
commonly referred to as the dual approach because it requires quantification
of errors under both the roll-over and iron curtain methods. We currently use
the dual approach; therefore SAB 108 had no effect on our results of
operations, financial condition or liquidity.

In
September 2006, the FASB issued SFAS No. 157, Fair
Value Measurements(SFAS 157). SFAS 157 defines fair value,
establishes a framework for measuring fair value, and expands disclosure requirements
regarding fair value measurement. Where applicable, SFAS 157 simplifies and
codifies fair value related guidance previously issued within GAAP. Although
SFAS 157 does not require any new fair value measurements, its application may,
in certain instances, change current practice. SFAS 157 is effective for us in
2008. We are currently evaluating the impact of adopting SFAS 157 on our
results of operations, financial condition and liquidity.

In
September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans(SFAS 158), which
requires an employer to recognize the overfunded or underfunded status of a
defined benefit pension or other postretirement plan (other than a multiemployer
plan) as an asset or liability in its Consolidated Balance Sheet and to
recognize changes in that funded status in the year in which the changes occur
through comprehensive income, which is a component of stockholders equity.
SFAS 158 also requires additional disclosures in the notes to the financial
statements about certain effects on net periodic benefit costs for the next
fiscal year that arise from delayed recognition of the gains or losses, prior
service costs or credits, and transition asset or obligation. SFAS 158 is
effective for us as of December 31, 2007 and is not expected to have an impact
on the Statement of Consolidated Income, but will affect our Consolidated
Balance Sheet. If we had adopted this statement as of December 31, 2006,
it would have increased accrued benefit liabilities by approximately $7.7
million with a corresponding reduction in other comprehensive income
of $7.7 million. However, the actual impact on our financial position at
December 31, 2007 is not yet known.

In
September 2006, the Emerging Issues Task Force (EITF) issued EITF 06-3, How Taxes
Collected from Customers and Remitted to Governmental Authorities Should Be
Presented in the Income Statement (That Is, Gross versus Net Presentation)(EITF
06-3). The Task Force agreed that a company should disclose its accounting
policy regarding the gross or net presentation of certain taxes (i.e., sales,
use, value added and some excise taxes). If taxes included in gross revenues
are significant, a company should disclose the amount of such taxes for each
annual or interim period for which an income statement is presented. Taxes
within the scope of EITF 06-3 are those that are imposed on and concurrent with
a specific revenue-producing transaction. Taxes assessed on an entitys
activities

49

over a period
of time, such as income taxes or gross receipts taxes, are not within the scope
of EITF 06-3. EITF 06-3 will be effective for us as of January 1, 2007. We are
currently evaluating the impact of adopting EITF 06-3 on our results of
operations, financial condition and liquidity.

In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities  Including an amendment of FASB Statement No.
115(SFAS 159). SFAS 159 permits an entity to elect fair value as
the initial and subsequent measurement attribute for many financial assets and
liabilities. Entities electing the fair value option would be required to
recognize changes in fair value in earnings. Entities electing the fair value
option are required to distinguish, on the face of the statement of financial
position, the fair value of assets and liabilities for which the fair value
option has been elected and similar assets and liabilities measured using another
measurement attribute. SFAS 159 is effective for fiscal years that begin after
November 15, 2007. The adjustment to reflect the difference between the fair
value and the carrying amount would be accounted for as a cumulative-effect
adjustment to retained earnings as of the date of initial adoption. We are
currently evaluating the impact, if any, of FAS 159 on our Consolidated
Financial Statements.

In
February 2007, the FASB issued FSP 158-1, Conforming Amendments to the Illustrations in FASB Statements
No. 87, No. 88 and No. 106 and to the Related Staff Implementation Guides(FSP
158-1). FSP 158-1 updates the illustrations contained in the appendices of
FASB Statements No. 87, No. 88 and No. 106 to reflect the provisions of FASB
Statement No. 158. FSP 158-1 also amends the questions and answers contained in
certain FASB Special Reports and incorporates them into Statements No. 87, No.
88 and No. 106 as Appendices E, C and F, respectively. This FSP supersedes
those FASB Special Reports. Finally, this FSP makes conforming changes to other
guidance and technical corrections to SFAS 158. FSP 158-1 is effective as of
the effective dates of SFAS 158, which as noted above is as of December 31,
2007.

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 transfer to the customer. We
continually evaluate our sales terms against criteria outlined in SEC Staff
Accounting Bulletin 104, Revenue Recognition, which supersedes 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 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

50

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.

Goodwill,
Goodwill Impairment, Intangible Assets and Debt Issuance Costs.Prior
to January 1, 2002, intangibles, consisting primarily of goodwill, trade names
and trademarks, were amortized on a straight-line basis over their estimated
useful lives of 40 years. The Company adopted the provisions of Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets
(SFAS 142) on January 1, 2002 and has accounted for its goodwill, intangible
assets, and debt issuance costs pursuant to SFAS 142 since that time. 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 the 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 respective carrying amount. The Company uses a discount rate
equal to its average cost of funds to discount the expected future cash flows.
Debt issuance costs are amortized over the life of the related debt or
amendment.

Reserves
for product liability. We provide for estimated
defense and settlement costs related to product liabilities when it becomes
probable that a liability has been incurred and reasonable estimates of such
costs are available. Estimates for accruals for product liability matters are
based on historical patterns of the number of occurrences, costs incurred and a
range of potential outcomes. We also utilize independent advisors to assist in
analyzing the adequacy of such reserves. Due to the inherently unpredictable
nature of litigation, actual results will likely differ from estimates.

51

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. On
October 9, 2006, our Board of Directors approved an amendment to our defined
benefit plans to be effective January 1, 2008. As a result, future accrued
benefits for certain employees will be frozen as of January 1, 2008. In 2006,
we recognized a curtailment gain of $7.4 million as a result of the amendment.
For the year ended December 31, 2006, we had $4.3 million of total pension
benefit expense, which is comprised of $11.7 million of net periodic benefit
expense, less the curtailment gain of $7.4 million. 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 2006 we had returns on
plan assets of approximately 13.7% 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. See Note 12 to our audited consolidated
financial statements for the year ended December 31, 2006, 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.

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 (losses)
(recorded in the Other Noncurrent Assets line), and the Companys 50% share
of the joint ventures equity in earnings (losses), or operating results, are
recorded in the statement of operations (recorded in the Equity in Earnings
(Losses) from Unconsolidated Joint Venture line). During the second quarter of
2006, the Company reduced its investment in RELES to zero and discontinued the
recognition of net losses.

52

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.
Lead, copper
  and zinc prices have experienced significant increases over the past three
  years primarily due to increased demand (including increased demand from
  China). Furthermore, fuel and energy costs have increased over the same time
  period, although at a slower rate of increase. We purchase copper, lead, and
  zinc options contracts (first purchased zinc contracts during second quarter
  of 2006) to hedge against price fluctuations of anticipated commodity
  purchases. With the volatility of pricing that the Company has recently
  experienced, there can be no assurance that we will not see
  further material adverse changes in commodity pricing or energy costs,
  and such further changes, were they to occur, could have a material
  adverse impact on our consolidated financial position, results of operations,
  or cash flows of the Company.
Because of
  the nature of our products, we anticipate that we will continue to be
  involved in product liability litigation in the future. Our ability to meet
  our product liability obligations will depend (among other things) upon the
  availability of insurance, the adequacy of our accruals, the Sellers ability
  to satisfy their obligations to indemnify us against certain product
  liability cases and claims and Sellers agreement to be responsible for
  certain post-Acquisition shotgun related costs.
We face
  significant competition. Our competitors vary according to product line.
  Certain of these competitors are subsidiaries of large corporations with
  substantially greater financial resources than us. There can be no assurance
  that we will continue to compete effectively with all of our present
  competition, and our ability to so compete could be adversely affected by our
  leveraged condition.
Sales made
  to Wal-Mart accounted for approximately 18% of our total net revenues in 2006
  and 10% of the accounts receivable balance as of December 31, 2006. 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
  purchases53

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
  2004 through 2006, 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.

54

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, 2006, we had long-term borrowings of $221.0 million($221.3 million at December
31, 2005 and $202.9 million at December 31, 2004) of which $19.4 million ($19.4
million at December 31, 2005 and $1.8 million at December 31, 2004) was issued
at variable rates. Assuming no changes in the $65.4 million of monthly average
variable-rate debt levels for the year ended December 31, 2006 ($46.4 million
for the year ended December 31, 2005), we estimate that a hypothetical change
of 100 basis points in the LIBOR and ABR interest rates from year-end 2006
would impact interest expense by $0.7 million ($0.5 million at December 31,
2005) 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, 2006, 2005, or 2004.

The
estimated value of our debt at December 31, 2006 was $213.2 million compared to
a carrying value of $224.7 million. The estimated value and carrying value
of our debt at December 31, 2005 was $198.6 million and $221.7 million,
respectively. All fixed rate indebtedness was valued based on current market
quotes. All variable rate indebtedness is assumed at market.

The
Company purchases copper, lead, and zinc option contracts (first purchased zinc
contracts during second quarter of 2006) to hedge against price fluctuations of
anticipated commodity purchases. Lead, copper, and zinc prices have experienced
significant increases since 2003 primarily due to increased demand (including
increased demand from China). We use commodity option contracts to hedge
against the risk of increased prices for lead, copper, and zinc to be used in
the manufacture of our ammunition products. The amounts of premiums paid for commodity
contracts outstanding at December 31, 2006, 2005, and 2004 were $5.4 million,
$1.3 million, and $1.1 million, respectively. At December 31, 2006,
2005 and 2004, the market value of our outstanding contracts relating to firm
commitments and margin balance up to eighteen months from the respective date
was $6.6 million, $5.6 million, and $3.3 million, respectively, as determined
with the assistance of a third party. Assuming a hypothetical 10% increase in
lead, copper, and zinc commodity prices which are currently hedged, we would
experience an approximate $9.2 million ($3.7 million at December 31, 2005)
increase in our cost of related inventory purchased, which would be partially
offset by an approximate $2.6 million ($2.9 million at December 31, 2005)
increase in the value of related hedging instruments. The increase in exposure
as compared to the prior year can be associated primarily with higher
differentials between strike and spot prices between the two years, the
increased cost of hedging premiums, and the initial hedging of zinc during
2006, all of which results in more contracts, yet fewer contracts currently
in-the-money. 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. Assuming a hypothetical 10% increase in
steel prices, we would experience an approximate $0.7 million (an approximate
$0.8 million at December 31, 2005) 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.

55

Item 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA

Report of Independent
Registered Public Accounting Firm

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

We have audited the accompanying consolidated balance sheets of
Remington Arms Company, Inc. (a Delaware corporation) and Subsidiaries as of
December 31, 2006 and 2005, and the related consolidated statements of
operations, shareholders equity (deficit) and comprehensive income (loss), and
cash flows for the years 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 audits.

We conducted our audits 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 audits provide 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, 2006 and 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 years ended December 31, 2006 and 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

Charlotte,
North Carolina
April 2, 2007

56

Report of Independent
Registered Public Accounting Firm

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

In our
opinion, the consolidated financial statements for the year ended December 31,
2004 present fairly, in all material respects, the results of operations and
cash flows of Remington Arms Company, Inc. and Subsidiaries for the year 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 for the year 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 audit. We conducted
our audit 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 audit provides a reasonable basis
for our opinion.

/s/ PricewaterhouseCoopers LLP
Greensboro, North Carolina
March 11, 2005, except for the restatement described in Note 3 (not presented
herein) to the consolidated financial statements appearing under Item 8 of the
Companys 2004 Annual Report on Form 10-K/A.

57

Remington Arms Company, Inc.

Consolidated
Balance Sheets

(Dollars in Millions, Except Per Share Data)

December 31, 2006

December 31, 2005ASSETSCurrent AssetsCash and Cash Equivalents

$
0.5

$
0.5Accounts Receivable Trade
  - net


92.8


92.2Inventories - net


110.8


99.3Supplies


7.7


7.9Prepaid Expenses and Other
  Current Assets


13.0


12.3Deferred Tax Assets


0.9


0.8Total
Current Assets


225.7


213.0Property, Plant and
  Equipment - net


69.3


73.9Goodwill and Intangibles -
  net


59.1


59.1Debt Issuance Costs - net


5.7


6.5Other Noncurrent Assets


11.5


10.8Total
Assets

$
371.3

$
363.3LIABILITIES
  AND SHAREHOLDERS DEFICITCurrent LiabilitiesAccounts Payable

$
30.8

$
25.0Book Overdraft


4.5


8.9Short-Term Debt


3.1


Current Portion of
  Long-Term Debt


0.4


0.4Current Portion of Product
  Liability


2.9


2.5Income Taxes Payable


1.5


1.4Other Accrued Liabilities


52.3


38.4Total
Current Liabilities


95.5


76.6Long-Term Debt, net of
  Current Portion


221.0


221.3Retiree Benefits, net of
  Current Portion


45.2


58.0Product Liability, net of
  Current Portion


7.6


7.6Deferred Tax Liabilities


10.0


8.9Other Long-Term
  Liabilities


2.2


2.0Total
Liabilities


381.5


374.4Commitments and
  ContingenciesShareholders DeficitTotal
Shareholders Deficit


(10.2
)

(11.1
)Total
Liabilities and Shareholders Deficit

$
371.3

$
363.3The accompanying notes are an integral part
of these consolidated financial statements.

58

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

Year Ended December 31,2006

2005

2004Net
Sales

$
446.0

$
410.4

$
393.0Cost of
Goods Sold


338.4


324.9


302.5Gross
Profit


107.6


85.5


90.5Selling,
General and Administrative Expenses


73.7


66.7


65.1Research
and Development Expenses


6.4


5.9


6.1Impairment
Charges


0.2


4.7


Other
Income


(2.3
)

(2.8
)

(1.6
)Operating
Profit


29.6


11.0


20.9Interest
Expense


28.0


26.4


24.6Income
(Loss) from Continuing Operations before Taxes, Equity in
  Losses from Unconsolidated Joint Venture


1.6


(15.4
)

(3.7
)Income Tax
Expense


0.9


0.4


14.0Equity in
Losses from Unconsolidated Joint Venture


0.4


1.0


Net Income
(Loss) from Continuing Operations


0.3


(16.8
)

(17.7
)Loss from
Discontinued Operations, net of tax expense of zero





(0.1
)

Gain on
Sale of Assets, net of tax expense of $9.8








13.6Net Income
(Loss)

$
0.3

$
(16.9
)
$
(4.1
)The accompanying notes are an integral part
of these consolidated financial statements.

59

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

Year-To-Date
  December 31,2006

2005

2004Operating ActivitiesNet Income
(Loss)

$
0.3

$
(16.9
)
$
(4.1
)Adjustments
to reconcile Net Income (Loss) to Net Cash provided by
  (used in) Operating Activities:Depreciation and Amortization of Debt Issuance Costs


11.6


11.4


11.1Equity in
Losses from Unconsolidated Joint Venture


0.4


1.0


Gain on
Sale of Assets Held for Sale








(23.4
)Pension
Plan Contributions


(8.0
)

(7.1
)

(6.4
)Pension
Plan Expense


11.3


11.5


12.0Pension
Curtailment


(7.4
)




Provision
for Deferred Income Taxes, net


1.1


2.8


18.4Other
Non-cash charges


1.0


5.6


0.3Changes in
Operating Assets and Liabilities:Accounts
Receivable Trade - net


(0.6
)

(11.0
)

(14.1
)Inventories


(11.5
)

(6.7
)

(6.9
)Prepaid
Expenses and Other Current and Long-Term Assets


(1.2
)

(0.3
)

(2.4
)Accounts
Payable


5.8


0.5


4.4Income
Taxes Payable


0.1


0.6


(1.7
)Other
Accrued and Long-Term Liabilities


10.3


2.6


0.9Net Cash
provided by (used in) Operating Activities of Continuing
  Operations


13.2


(6.0
)

(11.9
)Net Cash
provided by Operating Activities of Discontinued Operations








0.1Net Cash
provided by (used in) Operating Activities


13.2


(6.0
)

(11.8
)Investing ActivitiesProceeds
from Sale of Assets, net of Transaction costs of $1.2








42.8Purchase of
Property, Plant and Equipment


(7.1
)

(9.4
)

(7.8
)Proceeds
from Sale of Property, Plant and Equipment








0.4Premiums
paid for Company Owned Life Insurance


(0.6
)

(0.7
)

Cash
Contributions to Unconsolidated Joint Venture


(0.2
)

(1.0
)

(0.3
)Net Cash
(used in) provided by Investing Activities


(7.9
)

(11.1
)

35.1Financing ActivitiesProceeds
from Revolving Credit Facility


178.3


214.3


142.8Payments on
Revolving Credit Facility


(178.3
)

(196.7
)

(169.3
)Debt
Issuance Costs for Revolving Credit Facility


(0.8
)




Cash
Dividends Paid








(2.2
)Principal
(Payments) Borrowings on Long-Term Debt


(0.3
)

0.6


(0.5
)Capital
Contribution Received from RACI Holding, Inc.


0.3





3.2Cash (Paid
to) Received from RACI Holding, Inc.


(0.1
)

0.1


Amount Paid
on Behalf of RACI Holding, Inc.








(0.6
)Change in
Book Overdraft


(4.4
)

(1.1
)

3.3Net Cash
(used in) provided by Financing Activities of Continuing
  Operations


(5.3
)

17.2


(23.3
)Change in
Cash and Cash Equivalents





0.1


Cash and
Cash Equivalents at Beginning of Year


0.5


0.4


0.4Cash and
Cash Equivalents at End of Year

$
0.5

$
0.5

$
0.4The accompanying notes are an integral part
of these consolidated financial statements.

60

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

Year-To-Date December 31,2006

2005

2004Supplemental
  Cash Flow Information:Cash Paid
During the Year for:Interest

$
26.0

$
24.7

$
22.8Income
Taxes

$


$


$
5.6Previously
accrued Capital Expenditures

$
1.3

$
1.8

$
0.8Noncash
Financing and Investing Activities:Financing of
insurance policies

$
3.1

$


$
Vendor
Financed Fixed Assets Capitalized

$


$


$
0.4Change in
Capital Expenditures Capitalized

$
(0.7
)
$
(1.0
)
$
1.3Capital Lease
Obligations Incurred

$
0.2

$
1.1

$
Conversion of
Parent Company Note to equity

$


$


$
3.2Conversion of
Parent Company Stock
  Liability to Equity

$
0.3

$


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

61

Remington Arms Company, Inc.

Consolidated Statement of
Shareholders Equity (Deficit) and Comprehensive Income (Loss)(Dollars in Millions)


Paid-in
  Capital

Accumulated
  Other
  Comprehensive
  Income (Loss)

Retained Earnings
  (Accumulated
  Deficit)

Total
  Shareholders
  Equity (Deficit)Balance,
  December 31, 2003

$
86.4

$
(1.2
)
$
(73.4
)
$
11.8Comprehensive
Income:Net
Loss








(4.1
)

(4.1
)Other
comprehensive income:Minimum
pension liability, net of tax
  effect of $0.6





0.9





0.9Net derivative
gains, net of tax effect of
  $2.1





3.4





3.4Net derivative
gains reclassified as
  earnings, net of tax effect of ($1.5)





(2.5
)




(2.5
)Total
Comprehensive Loss











(2.3
)Cash Dividends
Paid








(2.2
)

(2.2
)Capital
Contribution from RACI Holding,
  Inc.


3.2








3.2Amount Paid on
Behalf of RACI Holding, Inc.


(0.6
)







(0.6
)Balance,
  December 31, 2004

$
89.0

$
0.6

$
(79.7
)
$
9.9Comprehensive
Loss:Net
Loss








(16.9
)

(16.9
)Other
comprehensive income (loss):Minimum
pension liability, net of tax
  effect of ($0.7)





(5.2
)




(5.2
)Net derivative
gains, net of tax effect of
  $2.0





3.2





3.2Net derivative
gains reclassified as
  earnings, net of tax effect of ($1.4)





(2.2
)




(2.2
)Total
Comprehensive Loss











(21.1
)Cash
Contribution From RACI Holding, Inc.


0.1








0.1Balance,
  December 31, 2005

$
89.1

$
(3.6
)
$
(96.6
)
$
(11.1
)Comprehensive
Income:Net
Income








0.3


0.3Other
comprehensive income:Minimum
        pension liability, 
        net of tax effect of ($2.5)





2.0





2.0Net
        derivative gains, 
        net of tax effect of $4.9





5.8





5.8Net
        derivative gains reclassified as earnings, 
        net of tax effect of ($4.6)





(7.4
)




(7.4
)Total
Comprehensive Income











0.7Capital
Contribution from RACI Holding,
  Inc.


0.3








0.3Cash Payment
to RACI Holding, Inc.


(0.1
)







(0.1
)Balance,
  December 31, 2006

$
89.3

$
(3.2
)
$
(96.3
)
$
(10.2
)The accompanying notes are an integral part
of these consolidated financial statements.

62

REMINGTON ARMS COMPANY, INC.

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

Note 1Basis of Presentation

The
accompanying audited consolidated financial statements of Remington Arms
Company, Inc. (Remington) include the accounts of its wholly owned
subsidiaries, RA Brands, L.L.C. (RA Brands), RA Factors, Inc. (RA Factors)
(which was merged into Remington as of December 31, 2006) and Remington Steam,
LLC (Remington Steam), (collectively 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 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 other accrued and long-term liabilities in the
Consolidated Statement of Cash Flows was made to financial information from
prior periods to conform to the presentation format at December 31, 2006. Also
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 4).

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,
powder 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 60
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  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 22. 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 in the first quarter of
2005.

63

REMINGTON ARMS COMPANY, 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 as of March 31, 2005.

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 in the first quarter of 2005.

At
December 31, 2006, the remaining carrying value associated with the Clay
Targets reporting unit for trademarks, property and equipment are $1.8. As of
September 30, 2006, the Company performed the required annual evaluation for
impairment evaluation for goodwill and trademarks in accordance with the
provisions of SFAS 142 and determined that there was no impairment.

As
of each year end December 31, 2006 and 2005, the Company performed evaluations
for impairment in accordance with its policy and SFAS 144 on certain of its
fixed assets in the Firearms reporting unit and recorded associated impairment
charges of $0.2 and $1.0 for the years ended December 31, 2006 and 2005,
respectively, in the accompanying statement of operations. The Firearms
reporting unit is its own reporting segment, see Note 22. The evaluations were
triggered from the Company completing its budget process for the fiscal 2007
and 2006 years 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 4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, trade names 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

64

REMINGTON
ARMS COMPANY, INC.



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(dollars
in millions, except per share data)

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.

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:

Discontinued
  Operations:

December 31,
  2006

December 31,
  2005

December 31,
  2004Net Sales

$


$


$
1.9Pre-tax operating results





(0.1
)

0.2Interest expense
  allocation








0.1(Loss) Income from
  operations, after tax





(0.1
)

Included
in income from discontinued operations is an allocation of interest expense of
$0.1 for the year ended December 31, 2004. 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. The Stren business had historically
allocated interest expense (approximately $0.2 annually) as a result of actual
working capital balances for the fishing line business during each of the full
years in the mentioned period.

Note 5Summary of Significant Accounting Policies

Cash and Cash Equivalents:

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

Inventories:

Inventories
are stated at the lower of cost or market. The cost of inventories is
determined by the first-in, first-out (FIFO) method. Inventory costs
associated with Semi-Finished Products and Finished Products include material,
labor, and overhead; while costs associated with Raw Materials include only
material. The Company provides inventory allowances for any excess and obsolete
inventories.

Supplies:

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

Service and Warranty:

The
Company supports service and repair facilities for all of its firearm products,
with the exception of the Spartan Gunworks product line, which is serviced and repaired
by 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 was
discontinued and these products now 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.

65

REMINGTON
ARMS COMPANY, INC.



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(dollars
in millions, except per share data)

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.

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 assets deemed impaired
as of December 31, 2004. See Note 3 for impairment charges incurred in 2006 and
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. There was no capitalized interest in
2006 and 2004. In 2005, capitalized interest was less than $0.1.

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 the 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 respective
carrying amount. The Company uses a discount rate equal to its average cost of
funds to discount the expected future cash flows. There was no goodwill or
intangible assets deemed impaired as of December 31, 2004 and 2006. See Note 3
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 2006, 2005, and 2004 was $1.6,
$1.8, and $1.9, respectively, and is estimated to be approximately $1.5 in
2007, $1.5 in 2008, $1.5 in 2009, $1.2 in 2010 and less than $0.1 in 2011 based
upon the expected maturities of the Amended and Restated Credit Agreement as
described in Note 13.

66

REMINGTON
ARMS COMPANY, INC.



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(dollars
in millions, except per share data)

Financial Instruments:

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

All
of the Companys commodity option 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 the Other Noncurrent 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
accumulated other comprehensive income in shareholders deficit 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. During the year
ended December 31, 2006, a gain of $12.0 on derivative instruments was
reclassified to cost of sales from accumulated other comprehensive income ($3.6
in 2005), and a gain of $10.7 was recorded to accumulated other comprehensive
income and to prepaid expenses and other current assets ($5.2 in 2005).

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 2006, 2005,
or 2004.

Market
values of financial instruments were estimated in accordance with Statement of
Financial Accounting Standards No. 107, Disclosures about Fair Value of Financial Instruments
(SFAS 107), and are based on quoted market prices, where available, or on
current rates offered to the Company for debt with similar terms and maturities.
Unless otherwise disclosed, the fair value of financial instruments
approximates their recorded values. See Note 21.

Stock Options:

All
stock purchase and option plans outstanding are associated with common shares
of Holding. Effective January 1, 2006, the Company adopted Statement of
Financial Accounting Standards No. 123R, Share-Based Payment(SFAS 123R). Because
the Company is a debt registrant, it is considered a nonpublic company in
accordance with SFAS 123R. In addition, because the 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 meets the definition
of a private company 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.

The
adoption on January 1, 2006 had no impact on the Companys unaudited interim
consolidated financial statements because at adoption, all issued options were
out-of-the-money, as they all had an exercise price of $220.31 per share
compared to a fair value of $160 per share. On January 1, 2006, the Company had
two stock-based compensation plans, with 284 vested options and 12,621 unvested
options. The 12,621 unvested options had a total weighted average remaining
term of 4.2 years.

At
December 31, 2006, the Company had two stock-based compensation plans, with 427
vested options and 10,208 unvested options. The 10,208 unvested options have a
total weighted average remaining term of 3.3 years. Since the beginning of the year,
there have been no option grants, exercises, conversions or expirations. The

67

REMINGTON
ARMS COMPANY, INC.



NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

(dollars
in millions, except per share data)

decrease of 2,270 issued
options since January 1, 2006 is the result of forfeitures of unvested stock
options associated with the departure of the Companys former Chief Operating
Officer. All
of the 10,635 issued options at December 31, 2006, regardless of vesting, have
an exercise price of $220.31 per share compared to an estimated fair value of
$270 per share. Accordingly, these two plans have total unvested stock-based
compensation expense of $0.2, and total stock-based compensation expense,
recognized in selling, general and administrative expenses, aggregated $0.3,
all of which was recorded in the fourth quarter of 2006.

Prior
to the effective date, the stock-based compensation plans were accounted for
under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees (APB 25) and related interpretations, and had adopted
the disclosure-only provisions of Statement of Financial Accounting Standards
No. 123, Accounting
for Stock-Based Compensation (SFAS 123), as amended. Pro-forma
information regarding the impact of total stock-based compensation on net
income for prior periods is also required by SFAS 123R. Under APB 25, generally
no cost was recorded for stock
options issued to employees unless the option exercise price was below fair
value at the time options were granted. Since all options were granted at
exercise prices equal to the estimated fair value of the underlying Common
Stock, no compensation expense was ever recognized with respect to the grant of
any outstanding stock options.

Had
compensation expense for such option grants been recognized under SFAS No. 123
based on the fair value of such options during the years ended December 31,
2005 and 2004, the Companys net loss on a pro forma basis would not have had a
material impact as follows:

2005

2004Net
  Loss


As Reported

$
(16.9
)
$
(4.1
)Add:


Stock-based
  employee compensation expense included in reported net loss, 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
  Loss


Pro
  forma

$
(16.9
)
$
(4.1
)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

68

REMINGTON ARMS COMPANY, INC.

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

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,
2007. 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 limits. For the years
ended December 31, 2006, 2005 and 2004, there were no recoveries recorded. The
Companys estimate of its liability for product liability cases and claims
outstanding at December 31, 2006 and 2005 is $10.5 and $10.1, respectively.
Management uses independent advisors in their determination of the accrual. The
Company made total payments in 2006, 2005, and 2004 of $3.2, $1.5 and $2.8,
respectively (including pre-Acquisition occurrences for which the Company
assumed responsibility) related to defense and settlement costs. See Note 18.

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 $37.4, $34.0 and
$33.5 for the years ended December 31, 2006, 2005 and 2004, 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 deferral of collection of accounts receivable.
Customers do not have the right to return unsold products.

Shipping and
Handling Costs:

Shipping
and handling costs are included in Selling, General and Administrative expense
and are expensed as incurred. In 2006, 2005 and 2004 shipping and handling
costs totaled $12.3, $12.4 and $10.9, respectively.

Advertising and
Promotions:

Advertising
and promotional costs including print ads, commercials, catalogs, brochures and
co-op are expensed during the year incurred. Advertising and promotional costs
totaled $11.1 in 2006, $10.5 in 2005 and $11.7 in 2004. The Company licenses
certain of its brands and trademarks. The income from such licensing was $3.6,
$2.6 and $2.6 in 2006, 2005 and 2004, 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 $6.4,
$5.9 and $6.1 for the years 2006, 2005 and 2004, respectively.

Self-Insurance:

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

69

REMINGTON ARMS COMPANY, INC.

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

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).

In
September 2006, the FASB issued Statement of Financial Accounting Standards No.
158, Employers
Accounting for Defined Benefit Pension and Other Postretirement Plans
(SFAS 158). In February 2007, the FASB issued FSP 158-1, Conforming Amendments to the
Illustrations in FASB Statements No. 87, No. 88 and No. 106 and to the Related
Staff Implementation Guides(FSP 158-1).As the Company does not
meet the definition of a public company, it is not required to adopt SFAS 158
or FSP 158-1 until December 31, 2007.

Comprehensive
Income (Loss):

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

2006

2005Fair market
  value of financial instruments

$
6.3

$
3.3Additional
  minimum pension plan liabilities


(9.5
)

(6.9
)Total

$
(3.2
)
$
(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.

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 and any distributions (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
February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial
Instruments, an amendment of SFAS 133 and SFAS 140
(SFAS 155). SFAS 155 simplifies accounting for certain hybrid

70

REMINGTON ARMS COMPANY, INC.

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

instruments
under SFAS 133 by permitting fair value remeasurement for financial instruments
that otherwise would require bifurcation and eliminating SFAS 133
Implementation Issue No. D1, Application of Statement 133 to Beneficial
Interests in Securitized Financial Assets, which provides that beneficial
interests are not subject to the provisions of SFAS 133. SFAS 155 also eliminates
the previous restriction under SFAS 140 on passive derivative instruments that
a qualifying special-purpose entity may hold. SFAS 155 is effective for all
financial instruments acquired, issued, or subject to a remeasurement event
occurring after the beginning of an entitys fiscal year that begins after
September 15, 2006. The adoption is not expected to have an impact on the
Companys results of operations, financial condition or liquidity as we do not
hold any of these financial instruments.

In
March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial
Assets, an amendment of FASB Statement No. 140 (SFAS 156).
SFAS 156 permits entities to choose to either subsequently measure servicing
rights at fair value and report changes in fair value in earnings or amortize
servicing rights in proportion to and over the estimated net servicing income
or loss and assess the rights for impairment or the need for an increased
obligation. SFAS 156 also clarifies when a servicer should separately recognize
servicing assets and liabilities, requires all separately recognized assets and
liabilities to be initially measured at fair value, if practicable, permits a
one-time reclassification of available-for-sales securities to trading securities
by an entity with recognized servicing rights and requires additional
disclosures for all separately recognized servicing assets and liabilities.
SFAS 156 is effective as of the beginning of an entitys fiscal year that
begins after September 15, 2006. The adoption will have no impact on the
Companys results of operations, financial condition or liquidity as we do not
hold any of these financial instruments.

In
April 2006, the FASB issued FSB FIN 46(R)-6, Determining the Variability to Be
Considered in Applying FASB Interpretation No. 46(R)(FIN
46R-6), which requires the variability of an entity to be analyzed based on
the design of the entity. The nature and risks in the entity, as well as the
purpose for the entitys creation are examined to determine the variability in
applying FIN 46R. The variability is used in applying FIN 46R to
determine whether an entity is a variable interest entity, which interests are
variable interests in the entity, and who is the primary beneficiary of the
variable interest entity. This statement is effective for all reporting periods
beginning after June 15, 2006. Since FSP FIN 46R-6 is for prospective
entities, the adoption had no effect on the Companys results of operations,
financial condition or liquidity.

In
July 2006, the FASB issued FIN 48,Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement
No. 109 (FIN 48), which clarifies the accounting
for uncertainty in tax positions. This Interpretation requires that the Company
recognize in its financial statements, the impact of a tax position, if that
position is more likely than not of being sustained, based on the technical
merits of the position. The provisions of FIN 48 are effective as of January 1,
2007, with the cumulative effect of the change in accounting principle recorded
as an adjustment to opening retained earnings (accumulated deficit) of the
earliest year presented in those financial statements. The Company has not
fully completed the process of evaluating the impact of adopting FIN 48.
Nevertheless, management has performed procedures to estimate the anticipated
impact of such adoption. The Company anticipates less than a $1.0 impact to
accumulated deficit and an expected reclassification of approximately $1.5 from
current to long-term liabilities. These amounts are subject to revision as
management completes its analysis.

In
September 2006, the SEC staff issued SAB No. 108, Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements (SAB 108). 
SAB 108 was issued to provide consistency between how registrants quantify
financial statement misstatements. Historically, there have been two
widely-used methods for quantifying the effects of financial statement
misstatements, the roll-over and iron curtain methods. SAB 108 established
an approach that requires quantification of financial statement misstatements
based on the effects of the misstatement on each of the companys financial statements
and the related financial statement disclosures.  This approach is
commonly referred to as the dual approach because it requires quantification
of errors under both the roll-over and iron curtain methods. The Company
currently uses the dual approach; therefore, SAB 108 had no effect on the
Companys results of operations, financial condition or liquidity.

In
September 2006, the FASB issued SFAS No. 157, Fair
Value Measurements(SFAS 157). SFAS 157 defines fair value,
establishes a framework for measuring fair value, and expands disclosure
requirements regarding fair value measurement. Where applicable, SFAS 157
simplifies and codifies fair value related guidance previously issued within
GAAP. Although SFAS 157 does not require any new fair value measurements, its
application may, in

71

REMINGTON ARMS COMPANY, INC.

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

certain
instances, change current practice. SFAS 157 is effective for the Company in
2008. The Company is evaluating the impact of adopting SFAS 157 on the
Companys results of operations, financial condition and liquidity.

In
September 2006, the FASB issued SFAS No. 158, Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans (SFAS 158). SFAS
158 requires an employer to recognize the funded status of a defined benefit
postretirement plan in its statement of financial position and to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income. SFAS No. 158 is effective for the Company as of December
31, 2007 and is not expected to have an impact on the Consolidated Statement of
Operations, but will have an impact on our Consolidated Balance Sheet. If the
Company had adopted this statement as of December 31, 2006, it would have
increased accrued benefit liabilities by approximately $7.7 with a
corresponding reduction in other comprehensive income of $7.7. However, the
actual impact on the Companys financial position at December 31, 2007 is not
yet known.

In
September 2006, the EITF issued EITF 06-3 How Taxes Collected from Customers and Remitted to
Governmental Authorities Should Be Presented in the Income Statement (That Is,
Gross versus Net Presentation)(EITF 06-3). The Task Force agreed
that a company should disclose its accounting policy regarding the gross or net
presentation of certain taxes. If taxes included in gross revenues are
significant, a company should disclose the amount of such taxes for each annual
or interim period for which an income statement is presented. Taxes within the
scope of EITF 06-3 are those that are imposed on and concurrent with a specific
revenue-producing transaction (i.e., sales, use, value added and some excise
taxes). Taxes assessed on an entitys activities over a period of time, such as
income taxes or gross receipts taxes, are not within the scope of EITF 06-3.
EITF 06-3 will be effective for the Company as of January 1, 2007. The Company
is currently evaluating the impact of adopting EITF 06-3 on the Companys
results of operations, financial condition and liquidity.

In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities  Including an amendment of FASB Statement No.
115 (SFAS 159). SFAS 159 permits an entity to elect fair value as
the initial and subsequent measurement attribute for many financial assets and
liabilities. Entities electing the fair value option would be required to
recognize changes in fair value in earnings. Entities electing the fair value
option are required to distinguish, on the face of the statement of financial
position, the fair value of assets and liabilities for which the fair value
option has been elected and similar assets and liabilities measured using
another measurement attribute. SFAS 159 is effective for fiscal years that
begin after November 15, 2007. The adjustment to reflect the difference between
the fair value and the carrying amount would be accounted for as a
cumulative-effect adjustment to retained earnings as of the date of initial
adoption. The Company is currently evaluating the impact, if any, of SFAS 159
on our Consolidated Financial Statements.

In
February 2007, the FASB issued FSP 158-1, Conforming Amendments to the Illustrations in FASB
Statements No. 87, No. 88 and No. 106 and to the Related Staff Implementation
Guides(FSP 158-1). FSP 158-1 updates the illustrations contained
in the appendices of FASB Statements No. 87, No. 88 and No. 106 to reflect the
provisions of FASB Statement No. 158. FSP 158-1 also amends the questions and
answers contained in certain FASB Special Reports and incorporates them into
Statements  No. 87, No. 88 and No. 106
as Appendices E, C and F, respectively. This FSP supersedes those FASB Special
Reports. Finally, this FSP makes conforming changes to other guidance and
technical corrections to SFAS 158. FSP 158-1 is effective as of the effective
dates of SFAS 158, which as noted above is as of December 31, 2007.

Note 6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.
Bad debt expense, net of any recoveries, was $0.8 in 2006 and ($0.1) and ($0.1)
for years ended 2005 and 2004, respectively. The allowance for doubtful
accounts amounted to $1.2 as of December 31, 2006 and $0.5 as of December 31,
2005.

72

REMINGTON ARMS COMPANY, INC.

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

Sales
to the Companys largest customer, Wal-Mart, comprised approximately 18% of
sales in 2006, 17% of sales in 2005 and 16% of sales in 2004. The accounts
receivable balance from Wal-Mart comprised approximately 10% and 9% of total
outstanding accounts receivable at December 31, 2006 and 2005, respectively; no
other customer accounted for sales equal to or greater than 10% of sales for
the years presented.

At
December 31, 2006, one other customer comprised approximately 12% of the
outstanding accounts receivable balance.
No other customers accounted for accounts receivable greater than 10% at
December 31, 2006. 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.

Note 7Inventories

At
December 31, Inventories consist of the following:

2006

2005Raw
  Materials

$
24.1

$
21.2Semi-Finished
  Products


23.5


22.7Finished
  Products


63.2


55.4Total

$
110.8

$
99.3

Note 8Property, Plant and Equipment

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

2006

2005Land

$
1.5

$
1.5Building and
  Improvements


28.0


26.3Equipment
  Leased Under Capital Leases


5.8


5.7Machinery
  and Equipment


152.4


145.3Construction
  in Progress


3.4


8.6Subtotal


191.1


187.4Less:
  Accumulated Depreciation


(121.8
)

(113.5
)Total

$
69.3

$
73.9

Depreciation
expense for the years ended December 31, 2006, 2005 and 2004 was $10.0, $9.6,
and $9.2, respectively.  Accumulated
depreciation on assets leased under capital leases was $4.8 and $4.6 as of
December 31, 2006 and 2005, respectively.

Note 9Goodwill and Other Intangible Assets

As
disclosed in Note 3, 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 2006, 2005 or 2004.

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

Goodwill

December 31,
  2006

December 31,
  2005Firearms

$
12.8


$
12.8Ammunition



5.2



5.2All Other







Total

$
18.0

$
18.073

REMINGTON ARMS COMPANY, INC.

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


Trademarks

December 31,
  2006

December 31,
  2005Firearms

$
20.4

$
20.4Ammunition



19.4



19.4All Other



1.3



1.3Total

$
41.1

$
41.1Note 10Other Accrued Liabilities

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

2006

2005Retiree
  Benefits

$
18.6

$
8.0Marketing


9.2


7.2Healthcare
  Costs


6.1


6.7Workers
  Compensation


4.5


3.6Other


13.9


12.9Total

$
52.3

$
38.4

Note 11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:

2006

2005Balance at
  January 1

$
0.8

$
0.8Current
  period accruals


2.7


2.7Current
  period charges


(2.7
)

(2.7
)Balance at
  December 31

$
0.8

$
0.8In
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, 2006 and 2005, our accrual for the costs of the product
safety program was less than $0.1.

Note 12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.

On
October 9, 2006, the Companys Board of Directors approved an amendment to the
Companys Pension and Retirement Plan (the Defined Benefit Plan) to be
effective January 1, 2008.  As a result
of the amendment to the Defined Benefit Plan, for certain employees of the
Company, including certain of the Companys Named Executive Officers included
in the Defined Benefit Plan, future accrued benefits will be frozen as of
January 1, 2008.  For service accrued up
to January 1, 2008, the pension calculation will not change.  Additionally, for affected

74

REMINGTON ARMS COMPANY, INC.

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

employees
participating in the Remington Supplemental Pension Plan (the Supplemental
Plan), including each of the Companys Named Executive Officers, future
accrued benefits will be frozen as of January 1, 2008. As a result of the
amendment, a curtailment gain of $7.4 was recognized in the fourth quarter of
2006, which consists of $7.3 for the Defined Benefit Plan and $0.1 for the
Supplemental Plan. This curtailment gain was reflected as a reduction in
pension expense, $6.1 included in cost of goods sold and $1.3 in selling,
general and administrative expense.

Change in Benefit Obligation:

2006

2005Benefit
  Obligation at Beginning of Year

$
176.1

$
161.5Service Cost


5.1


5.0Interest
  Cost


10.0


9.5Plan
  Amendments/Curtailment


(7.5
)

(7.3
)Actuarial
  Assumption Changes


(6.0
)

6.2Actuarial
  (Gain)/Loss


6.9


6.2Benefits
  Paid


(5.9
)

(5.0
)Benefit
  Obligation at End of Year

$
178.7

$
176.1Change in Plan Assets:

2006

2005Fair Value
  of Plan Assets at Beginning of Year

$
117.4

$
109.6Actual
  Return on Plan Assets


16.1


6.1Employer
  Contributions


8.1


7.2Benefits
  Paid and Expenses


(6.5
)

(5.5
)Fair Value
  of Plan Assets at End of Year

$
135.1

$
117.42006

2005Funded
  Status

$
(43.6
)
$
(58.7
)Unamortized
  Prior Service Cost


(0.4
)

(8.3
)Unrecognized
  Net Actuarial Loss


17.5


36.7Net amount
  recognized in the balance sheet

$
(26.5
)
$
(30.3
)Amounts recognized in the balance sheet as of
December 31 consist of:

2006

2005Accrued
  Benefit Liability

$
(36.0
)
$
(39.5
)Intangible
  Asset





0.2Accumulated
  other comprehensive income


9.5


9.0Net Amount
  Recognized

$
(26.5
)
$
(30.3
)The
accrued benefit liability is recorded on the consolidated balance sheet in the
Retiree Benefits, net of Current Portion, as well as in the Other Accrued
Liabilities line item as described in Note 10.

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:

2006

2005Projected
  benefit obligation

$
178.7

$
176.1Accumulated
  benefit obligation


171.1


156.9Fair value of
  plan assets


135.1


117.475

REMINGTON ARMS COMPANY, INC.

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

Components of Net Periodic Pension Cost:

2006

2005

2004Service
Cost

$
5.1

$
5.0

$
5.0Interest
Cost


10.0


9.5


9.1Expected Return on
Assets


(9.7
)

(8.7
)

(8.0
)Amortization of
Prior Service Cost


(0.9
)

(0.2
)

(0.2
)Recognized Net
Actuarial Loss


7.2


5.9


6.1Net Periodic
Pension Cost

$
11.7

$
11.5

$
12.0Curtailment (Gain)
Loss


(7.4
)




Total
Cost

$
4.3

$
11.5

$
12.02006

2005

2004Weighted
average assumptions used to
  determine net periodic benefit cost for years ended December 31:Discount
Rate


5.75
%

6.00
%

6.25
%Expected Long-Term
return on plan assets


8.00


8.00


8.00Rate of
Compensation Increase


4.00


4.00


4.00Weighted
average assumptions used to
  determine benefit obligations at December 31:Discount
Rate


6.00
%

5.75
%

6.00
%Rate of
Compensation Increase


4.00


4.00


4.00It
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 are defined as commodities, private placements, and derivative
instruments used solely for leverage. In 2006, upon recommendation of the
Companys investment advisors, the Companys Benefits and Investments Committee
elected to invest in certain private investment (hedge) funds that are deemed
permitted under the Companys current investment strategy. These private
investment funds are not currently subject to any direct regulation by the
Securities and Exchange Commission, the National Association of Securities
Dealers, or any other federal regulating commissions.

76

REMINGTON ARMS COMPANY, INC.

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

The
Plan weighted average asset allocations at December 31, 2006, and 2005, by
asset category are as follows:

Target
  Allocations

Actual
  Allocations2006

2005

2006

2005Asset Category:Domestic
  equity funds


50.0
%

45.0
%

47.0
%

52.0
%International
  equity funds


15.0


10.0


18.0


11.0Domestic
  fixed income funds


20.0


35.0


17.0


23.0International
  fixed income funds


5.0


10.0


5.0


10.0Private
  investment (hedge) funds


10.0





12.0


Cash and
  cash equivalents








1.0


4.0Total


100.0
%

100.0
%

100.0
%

100.0
%Anticipated Contributions:

The
Company expects to make cash contributions of approximately $16.5 to the Plan
during the 12 months ending December 31, 2007.

Estimated
Future Benefit Payments  Following is a summary, as
of December 31, 2006, 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.

20062007

$
6.32008


7.02009


7.82010


8.82011


9.8Years
  2012-2016


64.1Savings 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 $0.5 in 2006, approximately $1.5 in 2005 and
approximately $1.4 in 2004.

Effective
January 1, 2006, the Company established a second qualified defined
contribution plan that matches 100% of the first 4% of a participants
contributions of a participants compensation (the 401(k) Plan).  The 401(k) Plan includes the employees of
the Company not covered under the collective bargaining agreement in Ilion, New
York. The Companys matching expense and contribution to this plan was
approximately $1.7 in 2006. 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 $0.1 in 2006, $0.2 in 2005,
and approximately $0.1 in 2004. As announced in the Companys Form 8-K filed on
January 11, 2007, this plan was amended in 2006 to allow participants to make
an election to receive a distribution of their full accounts balance. On
January 16, 2007, $1.8 was distributed to the participants. This amount is
included in the Other Accrued Liabilities line on the balance sheet.

77

REMINGTON ARMS COMPANY, INC.

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

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:

2006

2005Benefit
  Obligation at Beginning of Year

$
22.6

$
21.6Service Cost


0.7


0.6Interest
  Cost


1.3


1.3Amendments


(6.1
)

Actuarial
  Loss


(1.8
)

0.2Benefits
  Paid


(1.1
)

(1.1
)Benefit
  Obligation at End of Year

$
15.6

$
22.6Accrued Benefit Cost:

2006

2005Funded
  Status

$
(15.6
)
$
(22.6
)Unrecognized
  Net Actuarial Loss


0.9


3.4Unrecognized
  Prior Service Cost


(10.5
)

(5.1
)Accrued
  Postretirement Benefit Obligation

$
(25.2
)
$
(24.3
)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:

2006

2005

2004Service Cost

$
0.7

$
0.6

$
0.6Interest
  Cost


1.3


1.3


1.3Net
  Amortization and Deferral


0.1





0.3Net Periodic
  Benefit Cost

$
2.1

$
1.9

$
2.2Weighted average assumptions used to
determine net periodic benefit cost for years ended December 31:

2006

2005

2004Discount
  Rate


5.75
%

6.00
%

6.25
%Rate of
  compensation increase


4.00
%

4.00
%

4.00
%Assumed Healthcare cost trend rates at
December 31:

2006

2005

2004Healthcare cost trend rate assumed
for next year


10.00
%

7.30
%

8.05
%Rate to which the cost trend rate
is assumed to decline (the ultimate
  trend rate)


4.25
%

3.00
%

3.25
%Year that the rate reaches the
ultimate trend rate


2011


2011


2011Weighted average assumptions used to
determine benefit obligations at December 31:

2006

2005Discount
  Rate


6.00
%

5.75
%Rate of
  compensation increase


4.00
%

4.00
%78

REMINGTON
ARMS COMPANY, INC.

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

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 Point DecreaseEffect on
  total of service and interest cost


$
2.1



($
1.9
)Effect on
  accumulated postretirement benefit obligation



0.0




(0.0
)Estimated
Future Benefit Payments  Following is a summary, as
of December 31, 2006, 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.

20062007

$
1.12008


0.62009


0.82010


0.92011


1.1Years
  2012-2016


6.7Note 13Debt

Short-term
debt at December 31, 2006 of $3.1 consists of an unsecured, fixed interest
agreement for financing insurance premiums. The weighted average interest rate
under this agreement was 5.5% at December 31, 2006.

Long-term
debt at December 31, 2006 and 2005 consisted of the following:

2006

2005Revolving
  Credit Facility

$
19.4

$
19.410.5% Senior
  Subordinated Notes due 2011


200.0


200.0Capital
  Lease Obligations (Note 14)


1.1


1.4Due to RACI
  Holding, Inc.


0.9


0.9Subtotal


221.4


221.7Less:
  Current Portion


0.4


0.4Total

$
221.0

$
221.3On
March 15, 2006, the Company entered into the Amended and Restated Credit
Agreement (the Amended and Restated Credit Agreement), which replaced the
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). Fees of approximately $0.8 were capitalized as debt issuance costs
and are being 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, under which the Company has aggregate outstanding letters of credit
of $4.4 as of December 31, 2006.

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 ranging
  from $10 to $30 during the period ending on the earlier of (i) March 31, 2009
  and (ii) such79

REMINGTON
ARMS COMPANY, INC.

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

date as the
  Company may determine (such period, the Availability Test Period) by
  providing written notice to agency. For any period during the Availability
  Test Period when such minimum availability requirement is not met, the
  Company must maintain a minimum consolidated 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
  ranging from $28.5 to $38 (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) 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 (ABR)
  plus an applicable margin, or (2) a reserve adjusted LIBOR rate plus an
  applicable margin. These margins are subject to periodic adjustment based on
  certain levels of financial performance (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 allowed for capital
  expenditures up to $28.9 in the 2007 fiscal year including unused capacity
  carried over from 2003, 2004, 2005 and 2006.(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 (3) an
  unused line 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 and (4) audit and
  appraisal fees.(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, 2006
was 0.50% and 2.00%, respectively. The weighted average interest rate under the
Companys outstanding credit facility was 7.60% and 6.70% for the year-to-date periods
ended December 31, 2006 and 2005, respectively.

As
of December 31, 2006 approximately $51.2 in additional borrowings beyond the
minimum availability requirements were available as determined pursuant to the
Amended and Restated Credit Agreement.

80

REMINGTON
ARMS COMPANY, INC.

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

The
Companys $200.0 aggregate principal amount 10.5% Senior Notes due 2011 (the
Notes) became 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 14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, 2006, are as follows:

Capital
  Leases

Operating
  LeasesMinimum
  Lease Payments for Years Ending December 31:2007

$
0.5

$
1.22008


0.7


1.12009





1.02010





1.02011





Thereafter





Total Minimum Lease Payments


1.2

$
4.3Less: Amount
  representing interest


0.1Present Value of Net Minimum Lease Payments

$
1.1Rental
expenses for operating leases for 2006, 2005 and 2004 were $1.5, $1.8 and $1.8.
The Company leases a portion of its equipment under operating leases that
expire at various dates through 2011.

Note
15Stock Purchase and Option
Plans

As of
December 31, 2006, 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). Options granted pursuant to these plans have
historically been awarded to employees and directors of the Company.

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, 2006, management has assessed the fair value of Common Stock to be
approximately $270.00 per share with the assistance of third party valuation
consultants.

81

REMINGTON ARMS COMPANY, INC.

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

At December 31, 2006 options to
purchase 10,635 shares of Common Stock were outstanding, at a per share
exercise price of $220.31, of which 427 options were exercisable. Subject
to the continued service of any
option-holder, 5,104 of the options vest ratably in June 2007 and 2008,
respectively; and 5,104 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:

2006

2005

2004Shares

Wtd.
  Avg.
  Ex. Price

Shares

Wtd. Avg.
  Ex. Price

Shares

Wtd. Avg.
  Ex. PriceOutstanding at January 1,


12,905

$
220


14,114

$
220


15,138

$
220Granted

















Exercised

















Cancelled/Forfeited


2,270

$
220


1,209

$
220


1,024

$
220Outstanding at December 31,


10,635

$
220


12,905

$
220


14,114

$
220Exercisable at December 31,


427

$
220


284

$
220


242

$
220Weighted AverageFair Value Options Granted


NA





NA





NAThe
exercise price of all outstanding options at December 31, 2006 is $220.31, and
the weighted average contractual life on the unvested options outstanding at
December 31, 2006 is estimated to be 3.3 years. Included in the 10,635 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 10,208 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 5, Summary of Significant Accounting
Policies.

Note 16Investment in
Unconsolidated Joint Venture

The
Company has a joint venture agreement with ELSAG, Inc., an unaffiliated
third party, which forms the joint venture Remington ELSAG Law Enforcement Systems,
LLC (RELES). RELES sells and services mobile license plate reading technology
products 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 an
original maximum contribution amount of $1.5 by each party.

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. If the Companys share of cumulative net
losses exceeds the investment in RELES, the Company discontinues recognition of
net losses in accordance with APB 18 since the Company does not guarantee or is
not otherwise committed to fund the obligations of RELES.

82

REMINGTON ARMS COMPANY, INC.

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

During
the second quarter of 2006, the Company reduced its investment in RELES to zero
and discontinued the recognition of net losses. As of December 31, 2006, RELES
must generate net income of $1.0 before any income or investment asset would be
recognized by the Company.

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

December 31, 2006

December 31, 2005AccountInvestment
  in Unconsolidated Joint Venture


$




$
0.2Equity in
  Losses from Unconsolidated Joint Venture



0.4




1.0Through
December 31, 2006, the Company has made a total of $1.5 in cumulative cash
contributions to RELES and accordingly the Company has no more contracted
commitments to fund RELES, although the Company may consider additional
contributions in the future.

Note 17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
  13.(2)
The closing
  by Remington of a credit facility expiring in January 2008, the 2003 Credit
  Agreement. See Note 13.(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, 2006, the Holding Notes had a total carrying
  value of $45.2, consisting of two notes with carrying values of $26.7 and
  18.5 due to accrued paid-in-kind interest, due in 2011 and 2012. 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 18Commitments and Contingencies

Purchase Commitments

The
Company has various purchase commitments, approximating $4.2 for 2007, $1.8 for
2008, $1.3 for 2009, $1.0 for 2010 and $0.5 for 2011, for services incidental
to the ordinary conduct of business, including, among other things, a services
contract with its third party warehouse provider. 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.

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

83

REMINGTON ARMS COMPANY, INC.

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

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, 2006 through
November 30, 2007 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, economic conditions, 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 13 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, 2006, one involves a matter for which the
Sellers retained liability and are required to indemnify us. The remaining
approximately 12 pending cases involve post-Acquisition occurrences for which
we bear responsibility under the Purchase Agreement.

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 for punitive damages may range from less than $0.5, to as
much as $100.0. Of the 12 individual post-Acquisition claims pending as of
December 31, 2006, where specific initial demands have been made, claimants
purport to seek approximately $28.5 in compensatory and $10 million 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.

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 applicability of
the law to various types of governmental and private lawsuits has been
challenged.

84

REMINGTON ARMS COMPANY, INC.

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

On March
16, 2007, Remington, Holding, Clayton Dubilier & Rice, Inc. and certain
affiliates, Bruckmann, Rosser, Sherrill & Co., LLC and certain affiliates,
Thomas Millner (Remingtons President, Chief Executive Officer and a director),
Leon Hendrix (Remingtons Chairman), and Michael Babiarz (a Remington
director), as defendants, and Robert Haskin (a former Remington director and employee), as
plaintiff, entered into an agreement under which Remington agreed to pay Mr.
Haskin $0.8 in consideration for dismissal of a non-employment related lawsuit and the granting of
mutual releases by the parties. The $0.8 was recorded as an expense in the
December 31, 2006, results of operations in accordance with SFAS 5 as the loss
contingency became probable and reasonably estimated. In the lawsuit, filed in
2006 in the General Superior Court of Justice, Superior Court Division,
Guilford County, North Carolina, Mr. Haskin alleged he was entitled to receive
a fee in connection with a transaction completed by the Company. The lawsuit
initially sought in excess of $1.0.

The
Company is involved in lawsuits, claims, investigations and proceedings,
including commercial, environmental and employment matters, which arise in the
ordinary course of business. The Company does not expect that the ultimate
costs to resolve these matters will have a material adverse effect on its
financial position, results of operations or cash flows.

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 products discontinued at time of closing.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, employee and retiree compensation and benefit liabilities, and
  intercompany accounts payable which do not represent trade accounts payable.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.

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.

85

REMINGTON ARMS COMPANY, INC.

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

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.

At
December 31, 2006 and 2005, the Companys accrual for product liability cases
and claims was $10.5 and $10.1, 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

86

REMINGTON ARMS COMPANY, INC.

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

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, results of operations or cash flows.
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.

Note 19Income Taxes

The
provision for income taxes consists of the following components:

2006

2005

2004Federal:Current

$


($
2.4
)
($
5.2
)Deferred


0.9


2.9


17.4State:Current


(0.2
)




0.2Deferred


0.2


(0.1
)

1.6$
0.9

$
0.4

$
14.0The
tax effects of temporary differences that give rise to significant portions of
the deferred tax assets and deferred tax liabilities are presented below:

2006

2005Current
  Noncurrent

Current
  NoncurrentDeferred tax assets:Accrued employee
and retiree benefits

$
3.7

$
16.1

$
3.8

$
19.2Product,
environmental and other liabilities


2.1


3.7


1.4


3.8Receivables and
inventory


4.7


0.2


3.4


Other
comprehensive income





3.6





3.4Federal tax
credits





0.4





0.4State tax
credits





1.7





1.5Net operating
losses





3.5





1.6Total deferred tax
assets


10.5


29.2


8.6


29.9Valuation allowance


(7.2
)

(20.1
)

(5.8
)

(19.8
)Net deferred tax
asset


3.3


9.1


2.8


10.1Deferred tax
liabilities:Property, plant
and equipment





(10.6
)




(11.4
)Intangibles





(8.5
)




(7.6
)Other
comprehensive income


(2.4
)




(2.0
)

Total deferred tax
liabilities


(2.4
)

(19.1
)

(2.0
)

(19.0
)Net deferred tax asset
(liability)

$
0.9

($
10.0
)
$
0.8

($
8.9
)As
of December 31, 2006, a valuation allowance of approximately $27.3 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 $25.6 reserve that existed as of December
31,

87

REMINGTON ARMS COMPANY, INC.

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

2005. The $1.7
net change in the valuation allowance consisted of an increase of $1.9 taken as
a charge against earnings primarily related to the $0.9 increase in net
deferred tax assets in 2006 for which the benefits may not be realized and an
increase of $1.0 due to an increase in deferred tax liabilities associated with
indefinite-lived intangible assets that have an indefinite reversal period. A
change of $0.2 was recorded against equity as a component of other
comprehensive income as a result of a decrease in the net deferred tax asset
associated with other comprehensive income. The income tax expense in the
statements of operations primarily reflects state income taxes and the increase
in deferred tax liabilities associated with indefinite-lived intangible assets
that have an indefinite reversal period.

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 previous 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, zero, and $5.6 in 2006, 2005 and 2004,
respectively. In 2006, 2005 and 2004 there were net tax refunds of
approximately $2.4, $2.4 and zero.

At
December 31, 2006 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

State loss
  
  carry-forwards

Tax credit
  and
  other carry-
  forwards1  5 years

$


$
0.8

$
6  20 years


1.4


1.3


0.4Beyond 20
  years








1.3Total

$
1.4

$
2.1

$
1.7The
following is a reconciliation of the statutory federal income tax rate to the
Companys effective income tax rates:

2006

2005

2004Federal statutory
rate


35.0
%

(35.0
)%

(35.0
)%State income taxes, net of
Federal benefits


(17.5
)

0.4


(1.2
)Permanent differences


(8.5
)

3.6


0.7State tax net operating losses,
net of
  Federal benefits


(43.4
)

(10.0
)

State tax credits, net of
Federal benefits


(6.1
)

(4.4
)

Increase in valuation
allowance


175.3


53.4


418.0Federal tax credits





(2.3
)

(1.1
)Federal net operating
loss


(56.4
)




Other


(3.4
)

(3.3
)

(2.9
)Effective income tax
rate


75.0
%

2.4
%

(378.5
)%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 interest or penalties. 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

88

REMINGTON ARMS COMPANY, INC.

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

accounting for
income taxes. The Company has assessed the impact of the Jobs Act and has
determined it had no impact on 2005 or 2006 due to the Companys operating
performance.

Note 20Related Party Transactions

BRSE,
L.L.C., the general partner of the BRS Fund, which owned 61.3% of the
outstanding Common Stock of Holding at December 31, 2006, is a private
investment fund managed by Bruckmann, Rosser, Sherrill & Co. L.L.C.
(BRS). The CDR Fund, which owned 13.0% of the outstanding Common Stock of
Holding at December 31, 2006 (and through proxy controlled 26.6% 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 2006, 2005 and 2004. Fees and expenses paid to BRS were
$0.6 in 2006 and $0.5 in 2005 and 2004.

Remington
paid fees to the law firm of Debevoise & Plimpton LLP during 2006 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 2006, 2005 and 2004
were $1.5, $0.4 and $0.5, respectively.

In
2004, the Board of Directors of the Company declared and the Company 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
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.

During
2006, the Company converted $0.3 of RACI Holding, Inc. stock liability to
equity associated with employee stock option expense in accordance with SFAS
123R.

As
of December 31, 2006, $0.9 ($1.0 as of December 31, 2005) is due to RACI
Holding, Inc. representing the outstanding principal balance of three notes
established in connection with the Kentucky economic development project.
During 2006, a payment of $0.1 was made to RACI Holding, Inc. for interest
expense in connection with loans for a Kentucky economic development project.

Note 21Financial Instruments

The
estimated fair value of the Companys debt at December 31, 2006 was $213.0
compared to a carrying value of $224.5. These 2006 amounts include Short-Term
Debt of $3.1 for financing of the Companys insurance policies. The estimated
fair value and the carrying value of the Companys debt at December 31, 2005
was $198.6 and $221.7, 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, lead, and zinc options contracts (first purchased
zinc contracts during second quarter of 2006) to hedge against price
fluctuations of anticipated commodity purchases. The options contracts limit

89

REMINGTON ARMS COMPANY, INC.

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

the
unfavorable effect that price increases will have on these metal purchases. At
December 31, 2006, the fair value of the Companys outstanding derivative
contracts relating to firm commitments and anticipated consumption (aggregate
notional amount 44.6 million pounds of copper, lead and zinc) up to eighteen
months from such date was $6.6 as determined with the assistance of a third
party. At December 31, 2005, the fair value of the Companys outstanding
derivatives contracts relating to firm commitments and anticipated consumption
(aggregate notional amount of 40.7 million pounds of copper and lead) up to
twelve months from such date was $5.6 as determined with the assistance of a
third party. Net gains of $12.0 on derivative instruments were reclassified to
cost of goods sold from accumulated other comprehensive income based on
inventory turns, during the year-to-date period ended December 31, 2006 and net
gains on a net-of-tax basis of $2.2 and $2.5 on derivative instruments were
reclassified to cost of goods sold from accumulated other comprehensive loss
based on inventory turns, during the year-to-date periods ended December 31,
2005, and 2004, respectively.

Note 22Segment Information

The
Company identifies its reportable segments in accordance with Statement of Financial
Accounting Standards No. 131, Disclosures about Segments of an Enterprise and
Related Information (SFAS 131). Based upon SFAS 131, the Companys
business is classified into two reportable segments: Firearms, which designs,
manufactures, and markets recreational shotguns and rifles, and Ammunition,
which designs, manufactures and markets sporting ammunition and ammunition
reloading components. The remaining operating segments, which includes
accessory related gun products, the manufacture and marketing of clay targets
and powder metal products, licensed products, and the distribution of security
products to the federal agency, law enforcement, and military markets, are
combined into our All Other reporting segment. 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 50%, 49%, and 49% of our net
sales in 2006, 2005 and 2004, respectively, and ammunition accounted for
approximately 46%, 45%, and 45% of our net sales in each of 2006, 2005, and
2004, respectively. The Company has no material intersegment revenue.

90

REMINGTON ARMS COMPANY, INC.

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

Information on Segments:

2006

2005

2004Net Sales:Firearms

$
223.4

$
202.2

$
193.4Ammunition


204.9


184.5


176.1All Other


17.7


23.7


23.5Consolidated Net
Sales

$
446.0

$
410.4

$
393.0Adjusted
  EBITDA:Firearms

$
22.9

$
21.4

$
25.8Ammunition


17.5


6.6


11.3All Other


1.1


3.1


4.0Other Reconciling
Items


1.0


0.3


(2.5
)Consolidated Adjusted
EBITDA

$
42.5

$
31.4

$
38.6Assets:Firearms

$
151.0

$
153.3

$
137.8Ammunition


122.2


114.6


110.4All Other


21.5


15.5


12.8Other Reconciling
Items


76.6


79.9


93.4Consolidated Assets

$
371.3

$
363.3

$
354.4Gross
  Capital Expenditures:Firearms

$
2.8

$
4.3

$
4.8Ammunition


2.8


3.9


3.8All Other


0.8


0.1


0.2Other Reconciling
Items


0.1


1.8


0.7Gross Consolidated Capital
Expenditures

$
6.5

$
10.1

$
9.5Reconciliation of Income (Loss) from
Operations to Adjusted EBITDA

Year ended
  December 31,2006

2005

2004Adjusted
  EBITDA

$
42.5

$
31.4

$
38.6Adjustments:Depreciation & Amortization
(A)


10.0


9.6


9.2Interest Expense(B)


28.0


26.4


24.7Other noncash charges
(C)


(0.3
)

6.0


7.4Equity in loss for
Unconsolidated Joint
  Venture


0.4


1.0


Non-recurring and Restructuring
Items (D)


3.2


4.9


(12.7
)Income Taxes(B)


0.9


0.4


14.1Net Income
  (Loss)

$
0.3

$
(16.9
)
$
(4.1
)(A)
Excludes
  amortization of deferred debt issuance costs of $1.6, $1.8 and $1.9, in 2006,
  2005 and 2004, respectively, which is included in interest expense.(B)
Amounts
  include interest expense of zero, zero, and $0.1, and income tax expense of
  zero, zero, and $0.1, in 2006, 2005 and 2004, respectively, which was
  reclassified to discontinued operations.(C)
Non-cash
  charges consist of the following: (i) for the year ended December 31, 2004, a
  $7.1 accrual for retiree benefits and a $0.3 loss on disposal of assets; (ii)
  for the year ended December 31, 2005, a $5.6 accrual for retiree benefits and
  a $0.4 loss on disposal of assets, and (iii) for the year ended December 31,
  2006, a $6.0 accrual for retiree benefits, $0.8 loss on disposal of assets, a
  $7.4 curtailment gain on pension expense, and $0.3 of other compensation
  expense associated with stock option expense recognition under SFAS 123R.(D)
Nonrecurring
  and restructuring expenses consist of the following: (i) 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; (ii) 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, and (iii) for the year ended December 31, 2006, $2.8
  associated with professional fees, $0.2 associated with the write-down in
  embellishing fixed assets in the firearms reporting unit, and $0.2 associated
  with an exclusive distribution agreement.91

REMINGTON ARMS COMPANY, INC.

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

Geographic Information:

2006

2005

2004Net Sales:Domestic

$
418.3

$
388.0

$
373.1Foreign


27.7


22.4


19.9Consolidated
Net Sales

$
446.0

$
410.4

$
393.0There are
no material assets owned by the Company outside the United States.
Approximately 18% of the Companys net sales in 2006, 17% in 2005, and 16% in
2004 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.

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

The
following condensed consolidating financial data provides information regarding
the financial position and results of operations of Remington Arms Co, Inc.
(Remington), including Remingtons 100% owned subsidiaries, RA Brands, RA
Factors, and Remington Steam. This information complies with Rule 3-10 of
Regulation S-X and does not contain the financial statement disclosures
required for a complete set of financial statements as required by GAAP.
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, except Steam.
Remington Steam is a discrete legal entity; it is disregarded as an entity
separate from its owner and has no separate financial information. In addition,
Remington Steam is not included in the prior period statements because it was
formed in January 2006 to accommodate changes to the Companys long-term steam
supply at its Ilion, New York facility and had no operations prior thereto.
Holding does not have any significant independent operations or assets other
than its ownership interest in Remington. Holding has $45.2 aggregate principal
amount, including paid-in-kind interest, of senior notes due in 2011 and 2012
which were created during the recapitalization of Holding in February 2003.

REMINGTON ARMS COMPANY, INC.
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2006

Remington
  And 
  Remington 
  Steam

Combined
  Guarantor
  Subsidiaries

Eliminations

Remington
  Arms Co. and
  SubsidiariesASSETSCurrent
  Assets

$
224.3

$
1.4

$


$
225.7Receivable
  from Remington, Net





67.7


67.7


Equity
  method investment in subsidiaries


104.8





104.8


Noncurrent
  Assets


102.3


43.3





145.6Total
Assets

$
431.4

$
112.4

$
172.5

$
371.3LIABILITIES AND SHAREHOLDERS EQUITYCurrent
  Liabilities

$
95.4

$
0.1

$


$
95.5Payable to
  RACI Holding, Inc., Net


0.9








0.9Payable to
  RA Brands, L.L.C., Net


67.7





67.7


Noncurrent
  Liabilities


277.6


7.5





285.1Shareholders
  Equity


(10.2
)

104.8


104.8


(10.2
)Total
Liabilities and Shareholders Equity

$
431.4

$
112.4

$
172.5

$
371.392

REMINGTON ARMS COMPANY, INC.

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

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

Remington

Combined
  Guarantor
  Subsidiaries

Eliminations

Remington
  Arms Co.,
  Inc. and
  SubsidiariesASSETSCurrent
  Assets

$
114.9

$
98.1

$


$
213.0Receivable
  from Remington, Net





129.6


129.6


Equity
  method investment in subsidiaries


231.6





231.6


Noncurrent
  Assets


106.9


43.4





150.3Total
Assets

$
453.4

$
271.1

$
361.2

$
363.3LIABILITIES AND SHAREHOLDERS EQUITYCurrent
  Liabilities

$
43.9

$
32.7

$


$
76.6Payable to
  RACI Holding, Inc., Net


1.0








1.0Payable to
  RA Brands, L.L.C., Net


75.7





75.7


Payable to
  RA Factors, Inc., Net


53.9





53.9


Noncurrent
  Liabilities


290.0


6.8





296.8Shareholders
  Equity


(11.1
)

231.6


231.6


(11.1
)Total
Liabilities and Shareholders Equity

$
453.4

$
271.1

$
361.2

$
363.393

REMINGTON ARMS COMPANY, INC.

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

REMINGTON ARMS COMPANY, INC. 
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

Year Ended
  December 31, 2006

Remington
  and Remington 
  Steam

Combined 
  Guarantor 
  Subsidiaries

Eliminations

Remington 
  Arms Co., 
  Inc. and 
  SubsidiariesNet Sales

$
446.0

$


$


$
446.0Cost of
  Sales


(338.4
)







(338.4
)Gross Profit


107.6








107.6Subsidiary
  Income (Expense)


(31.2
)

31.2





Research and
  Development Expenses





(6.4
)




(6.4
)All Other
  Expense


(100.2
)

(0.7
)




(100.9
)Income from
  Equity Investees


24.1





24.1


Net Income

$
0.3

$
24.1

$
24.1

$
0.3Year Ended
  December 31, 2005

Remington

Combined 
  Guarantor 
  Subsidiaries

Eliminations

Remington 
  Arms Co., 
  Inc. and 
  SubsidiariesNet Sales

$
410.4

$


$


$
410.4Cost of
  Sales


(324.9
)







(324.9
)Gross Profit


85.5








85.5Subsidiary
  Income (Expense)


(27.4
)

27.4





Research and
  Development Expenses





(5.9
)




(5.9
)Impairment
  Charges


(4.7
)







(4.7
)All Other
  Income (Expenses)


(91.7
)

(0.1
)




(91.8
)Income from
  Equity Investees


21.4





21.4


Net (Loss)
  Income

$
(16.9
)
$
21.4

$
21.4

$
(16.9
)Year Ended
  December 31, 2004

Remington

Combined 
  Guarantor 
  Subsidiaries

Eliminations

Remington 
  Arms Co., 
  Inc. and 
  SubsidiariesNet Sales

$
393.0

$


$


$
393.0Cost of
  Sales


(302.5
)







(302.5
)Gross Profit


90.5








90.5Subsidiary
  Income (Expense)


(25.7
)

25.7





Research and
  Development Expenses





(6.1
)




(6.1
)All Other
  Income (Expenses)


(94.3
)

(7.8
)




(102.1
)Gain on Sale
  of Assets


1.9


11.7





13.6Income from
  Equity Investees


23.5





23.5


Net (Loss)
  Income

$
(4.1
)
$
23.5

$
23.5

$
(4.1
)94

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, 2006

Remington
  and
  Remington
  Steam

Combined
  Guarantor
  Subsidiaries

Eliminations

Remington
  Arms Co.,
  Inc. and
  SubsidiariesOperating
  ActivitiesNet Cash Provided by Operating Activities

$
13.0

$
0.2

$


$
13.2Investing
  ActivitiesPurchase of Property, Plant & Equipment


(7.1
)







(7.1
)Premiums Paid for Company Owned Life
  Insurance


(0.6
)







(0.6
)Cash Contribution to Unconsolidated Joint
  Venture


(0.2
)







(0.2
)Net Cash Used in Investing Activities


(7.9
)







(7.9
)Financing
  ActivitiesNet Borrowings on Revolving Credit Facility











Principal Payments on Long-Term Debt


(0.3
)







(0.3
)Debt Issuance Costs for Revolving Credit
  Facility


(0.8
)







(0.8
)Capital Contribution Received from RACI
  Holding, Inc.


0.3








0.3Cash Contribution to RACI Holding, Inc.


(0.1
)







(0.1
)Change in Book Overdraft


(4.4
)







(4.4
)Net Cash Used in Financing Activities


(5.3
)







(5.3
)Change in Cash and Cash Equivalents


(0.2
)

0.2





Cash and Cash Equivalents at Beginning of
  Year


0.5








0.5Cash and Cash Equivalents at End of Year

$
0.3

$
0.2

$


$
0.595

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
  Guarantor
  Subsidiaries

Eliminations

Remington
  Arms Co.,
  Inc. and
  SubsidiariesOperating
  ActivitiesNet Cash Used in Operating Activities

$
(6.0
)
$


$


$
(6.0
)Investing ActivitiesPurchase of Property, Plant & Equipment


(9.4
)







(9.4
)Premiums Paid for Company Owned Life
  Insurance


(0.7
)







(0.7
)Cash Contribution to Unconsolidated Joint
  Venture


(1.0
)







(1.0
)Net Cash Used in Investing Activities


(11.1
)







(11.1
)Financing
  ActivitiesNet Borrowings on Revolving Credit Facility


17.6








17.6Principal Borrowings on Long-Term Debt


0.6








0.6Cash Contribution from RACI Holding, Inc.


0.1








0.1Change in Book Overdraft


(1.1
)







(1.1
)Net Cash Provided by Financing Activities


17.2








17.2Change in Cash and Cash Equivalents


0.1








0.1Cash and Cash Equivalents at Beginning of
  Year


0.4








0.4Cash and Cash Equivalents at End of Year

$
0.5

$


$


$
0.596

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, 2004

Remington

Combined
  Guarantor
  Subsidiaries

Eliminations

Remington
  Arms Co.,
  Inc. and
  SubsidiariesOperating
  ActivitiesNet Cash Used in Operating Activities

$
(11.9
)
$


$


$
(11.9
)Net Cash Provided by Discontinued
  Operations


0.1








0.1Net Cash Used in Operating Activities


(11.8
)







(11.8
)Investing
  ActivitiesNet Proceeds from Sale of Assets


16.3


26.5





42.8Dividends Received


26.5





(26.5
)

Capital Expenditures


(7.8
)







(7.8
)Proceeds from Sale of Property, Plant &
  Equipment


0.4








0.4Cash Contribution to Unconsolidated Joint
  Venture


(0.3
)







(0.3
)Net Cash Provided by (used in) Investing
  Activities


35.1


26.5


(26.5
)

35.1Financing ActivitiesNet Payments on Revolving Credit Facility


(26.5
)







(26.5
)Cash Dividends Paid


(2.2
)

(26.5
)

26.5


(2.2
)Principal Payments on Long-Term Debt


(0.5
)







(0.5
)Capital Contributions from RACI Holding,
  Inc.


3.2








3.2Amount Paid on Behalf of RACI Holding, Inc.


(0.6
)







(0.6
)Decrease Book Overdraft


3.3








3.3Net Cash Used in Financing Activities


(23.3
)

(26.5
)

26.5


(23.3
)Increase (Decrease) in Cash and Cash
  Equivalents











Cash and Cash Equivalents at Beginning of
  Year


0.4








0.4Cash and Cash Equivalents at End of Year

$
0.4







$
0.497

REMINGTON ARMS COMPANY, INC.

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

Note 24Quarterly Financial Data (unaudited)

2006

First

Second

Third

FourthNet Sales

$
96.5

$
91.1

$
131.9

$
126.5Gross Profit
  (1)


18.3


18.2


30.7


40.4Net (Loss)
  Income (1)


(7.3
)

(8.8
)

2.6


13.82005

First

Second

Third

FourthNet Sales

$
84.9

$
92.7

$
124.5

$
108.3Gross Profit


17.7


17.5


25.6


24.7Net (Loss)
  Income from continuing operations (2) (3)


(10.0
)

(7.6
)

(0.2
)

1.0Net Income
  from discontinued operations


(0.1
)







Net (Loss)
  Income (2) (3)


(10.1
)

(7.6
)

(0.2
)

1.0(1) A curtailment
gain of $7.4 was recorded in the fourth quarter of 2006 associated with the
freezing of the Defined Benefit Plan and the Supplemental Plan  See Note 12.

(2) Impairment
charges of $3.7 were recorded in the first quarter of 2005 associated with the
Clay Targets reporting unit  See Note 3.

(3) 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 19.

98

Schedule II

REMINGTON ARMS COMPANY, INC.

Valuation and Qualifying
Accounts
Years Ended December 31, 2006, 2005, and 2004
(Dollars in Millions)

Balance at
  Beginning of
  Period

Charged to
  Costs and
  Expenses

Deductions
  to Reserve

Balance at
  End of
  PeriodDescription:Deducted from
Asset Account:Allowance for
Doubtful AccountsYEAR ENDEDDecember 31,
2006


$
(0.5
)


$
(0.8
)


$
0.1



$
(1.2
)YEAR ENDEDDecember 31,
2005


$
(0.5
)


$
0.0



$
0.0



$
(0.5
)YEAR ENDEDDecember 31,
2004


$
(0.5
)


$
0.0



$
0.0



$
(0.5
)Description:Deducted from
Asset Account:Inventory
ReservesYEAR ENDEDDecember 31,
2006


$
(1.9
)


$
(0.7
)


$
0.5



$
(2.1
)YEAR ENDEDDecember 31,
2005


$
(1.6
)


$
(1.2
)


$
0.9



$
(1.9
)YEAR ENDEDDecember 31,
2004


$
(2.7
)


$
(0.9
)


$
2.0



$
(1.6
)Description:Deducted from
Asset Account:Valuation
allowance for deferred tax assetsYEAR ENDEDDecember 31,
2006


$
(25.6
)


$
(1.9
)


$
0.2



$
(27.3
)YEAR ENDEDDecember 31,
2005


$
(15.5
)


$
(8.7
)


$
(1.4
)


$
(25.6
)YEAR ENDEDDecember 31,
2004


$
0.0



$
(15.5
)


$
0.0



$
(15.5
)99

Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
  DISCLOSUREThere were
  no matters subject to this item to disclose.100

Item 9A.
CONTROLS AND PROCEDURESThe
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, 2006 (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 2006 that have materially
affected, or are reasonably likely to materially affect, the Companys internal
control over financial reporting.

Section
404 of the Sarbanes-Oxley Act of 2002 and related SEC rulemaking currently
requires a company that is not an accelerated filer, such as the Company, to
report on the effectiveness of its internal control over financial reporting
beginning with its 2007 Annual Report on Form 10-K, which we are required to
file with the SEC no later than March 31, 2008. Under existing rules and
regulations, our independent registered public accounting firm will be required
to attest to the Companys effectiveness of internal control over financial
reporting beginning with the Companys 2008 Annual Report on Form 10-K. 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.

101

Item 9B. OTHER
INFORMATION

There
are no matters to report subject to this section.

102

PART
III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE

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

PositionLeon J.
  Hendrix, Jr.(a)(b)(e)

65

Director,
ChairmanB. Charles
Ames

81

DirectorMichael G.
  Babiarz(a)(e)

41

DirectorBobby R.
Brown(b)(c)

74

DirectorRichard A.
Gilleland(b)(c)(d)

62

DirectorRichard E.
Heckert(b)(c)(d)

83

DirectorHubbard C.
Howe(c)(e)

78

DirectorThomas E.
Ireland(b)(e)

57

DirectorThomas F.
LEsperance(e)

58

DirectorH. Norman
Schwarzkopf(b)(d)

72

DirectorStephen C.
Sherrill(a)(e)

54

DirectorThomas L.
Millner(a)(b)(e)

53

Director, President and Chief Executive OfficerStephen P.
Jackson, Jr.

38

Senior Vice
PresidentChief Financial
  Officer, Treasurer, and Corporate SecretaryPaul L.
Cahan

65

Senior Vice
PresidentEngineering and
  ManufacturingMark A.
Little

59

Executive
Vice President, Chief
  Administrative OfficerDon H.
Campbell

62

Vice
PresidentSales and MarketingFirearmsJohn M.
Dwyer, Jr.

48

Vice
PresidentSales and
  MarketingAmmunition and Clay TargetsRobert M.
Pantle

50

Vice
PresidentSales and MarketingLaw
  Enforcement, Federal and Military(a)
Member,
  Executive Committee(b)
Member,
  Public Policy Committee(c)
Member,
  Audit Committee(d)
Member,
  Compensation Committee(e)
Member,
  Benefits and Investment CommitteeAfter
being elected by the sole stockholder, each of our directors holds office until
the next succeeding annual meeting of the stockholders.

None
of our officers or directors 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 served as a director,
employee of the Company, and Chairman of Remington and Holding since prior to
2002. Mr. Hendrix currently serves as a director of Keithley Instruments and
Cambrex Corp.

B.
Charles Ames has served as a director of Remington and
Holding since prior to 2002. Mr. Ames has been a principal of CD&R
since prior to 2002. Mr. Ames is a director of Lexmark International, Inc. and
VMR International, Inc. and is a general partner of Associates IV.

103

Michael
G. Babiarz has served as a director of Remington and
Holding since prior to 2002. Mr. Babiarz was nominated by the CDR Fund. He has
been a principal of CD&R since prior to 2002.

Bobby
R. Brown has served as a director of Remington and
Holding since prior to 2002. 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. Gilleland has served as a director of Remington and
Holding since prior to 2002. Mr. Gilleland has been retired since prior to
2002.

Richard
E. Heckert has served as a director of Remington and
Holding since prior to 2002. Mr. Heckert has been retired since prior to 2002.

Hubbard
C. Howe has served as a director of Remington and
Holding since prior to 2002. Mr. Howe currently serves as a director of Western
Industries Inc. and Natural Pharmaceuticals Inc.

Thomas
E. Ireland has served as a director of Remington and
Holding since prior to 2002. Mr. Ireland was nominated by the CDR Fund. He has
been a principal of CD&R since prior to 2001.

Thomas
F. LEsperancewas appointed to the Board of Remington
and Holding in November 2004. Mr. LEsperance was nominated by the BRS Fund.
Since prior to 2002, he has been the Chief Executive Officer and President 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 Schwarzkopf has served as a director of
Remington and Holding since prior to 2002. From prior to 2002, 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. Sherrill was appointed to the Board of Remington
and Holding in February 2003. Mr. Sherrill was nominated by the BRS Fund. Since
prior to 2002, he has been a managing director of BRS, of which he is a
founding member. Mr. Sherrill currently serves as a director of B&G Foods,
Inc., Eurofresh, Inc., HealthPlus Corporation, and LazyDays RV SuperCenter. Mr.
Sherrill serves on the compensation committees of B&G Foods, Inc. and
HealthPlus Corporation.

Thomas
L. Millner has served as President, Chief Executive
Officer and a director of Remington and Holding since prior to 2002. Mr.
Millner currently serves on the Board of Directors of Stanley Furniture Co.,
Inc., LazyDays RV SuperCenter and Canine Health Foundation.

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. In April 2006, he became Senior Vice President, Chief
Financial Officer, Treasurer, and Corporate Secretary. From prior to 2002, he
was a Senior Manager with PricewaterhouseCoopers LLP and became partner at
PricewaterhouseCoopers LLP in July 2002.

Paul
L. Cahan has served as Senior Vice President 
Engineering and Manufacturing of Remington since prior to 2002.

Mark
A. Little had served as Executive Vice President,
Chief Financial Officer and Chief Administrative Officer of Remington since
prior to 2002. In April 2006, he became Remingtons Executive Vice President
and Chief Administrative Officer.

Don
H. Campbell joined Remington prior to 2002 as Director
of Sales  Ammunition and in May 2005 became Remingtons Vice President  Sales
and Marketing for Firearms.

John
M. Dwyer, Jr. has served as Remingtons Vice President
 Sales and Marketing for Ammunition and Clay Targets since prior to 2002.

Robert
M. Pantlejoined Remington in October 2006 as Vice
President  Sales and Marketing  Law Enforcement, Federal and Military. From
February 2005 until joining Remington in October 2006, he was Senior

104

Vice
President, Domestic Sales for DHB Industries, Inc. From prior to 2002 until
February 2005, he was Chief Executive Officer  North American Division for
Armor Group.

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
registered public accounting firms; 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
control 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 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;105

(iii)
any
  amendment to the Certificate of Incorporation or By-Laws of Remington or
  Holding, or any amendment to the shareholders agreement;(iv)
any increase
  or decrease in the number of directors of Remington or Holding;(v)
notwithstanding
  customary transactions with any management shareholder in connection with
  customary employment arrangements and item (vi) below, 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 supermajority as opposed to majority
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 $5.0
  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 $5.0
  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 the matters above 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 salaried 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 any 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.

106

Item 11. EXECUTIVE
COMPENSATION

Compensation
Discussion and Analysis

Overview

We
have implemented executive compensation programs that are designed to encourage
our executive officers to think and perform like stockholders of Holding,
Remingtons sole stockholder. We want our executive officers to take
appropriate risks with our capital in order to generate returns for our
stockholders and bondholders, while at the same time sharing the downside risk
if those risks cause poor performance or even loss. Through our compensation
processes and programs, we endeavor to create an environment that fosters and
rewards measured risk taking while aligning our compensation programs with our
overall compensation philosophy and principles, which consist of the following:

1.
Compensation
  should be a management tool to achieve business results.2.
Competitive
  total compensation opportunities should be provided based primarily on
  institutional knowledge of the industry and informal research, and3.
Total
  Compensation should be aligned with relative internal performance targets and
  contribution to the overall achievement of our business objectives focused on
  operating performance, working capital management, and business process
  improvement, which we refer to as Adjusted EBITDA. Adjusted EBITDA consists
  of earnings before interest, taxes, depreciation and amortization, as
  adjusted for certain non-recurring or unusual transactions as defined in Note
  22 to the accompanying consolidated audited financial statements.We
foster an attitude of shared risk-taking with our executive officers by
providing a significant portion of our executive officers incentive
compensation through long-term and short-term operating performance based
awards. We evaluate and reward executive officers based on dynamic factors such
as whether they are willing and able to challenge existing processes, adapt to
sudden or frequent changes in priorities and capitalize on windows of
opportunity.

Our
Compensation Committee reviews and approves our executive compensation
policies.

Executive
Compensation Policy

Remingtons
compensation programs consist of the following components:


Annual base
  salary
Annual cash
  bonus incentive plan
Perquisites
Equity
  awards
Long Term
  Incentive Compensation Plan (LTIP)
Pension and
  retirement benefits
Other
  benefits
Change in
  control and severance benefitsWe
use short-term compensation (base salary, annual cash bonuses, and perquisites)
and long-term compensation (equity, LTIP, pension and retirement, and other
benefits) to achieve our goal of driving long-term growth in Adjusted EBITDA
and generation of free cash flow. The annual cash bonuses and the long-term
compensation elements, particularly the equity and LTIP, are designed to emphasize
the performance measures our executive officers need to achieve in order to
deliver value. In short, compensation for executive officers is structured to
emphasize variable pay based on performance, with base salary and cash
incentive opportunities set based on historical averages which reflect updates
based on actual performance each annual period.

The
Compensation Committee is composed entirely of non-management directors, each
of whom has been determined in the Boards business judgment to be independent
based on the standards for independence adopted by the Board of Directors. The
Compensation Committee evaluates the percentage mix of compensation structures
it believes is appropriate for each of our executive officers. This is not a
mechanical process, and the Compensation Committee uses its judgment and
experience and works with our executives and board of directors to determine
the appropriate mix of compensation. The Compensation Committee has
responsibility for oversight and review of our

107

total
compensation strategy, taking into consideration existing company-wide benefit
plans, and has responsibility for certain executive benefit plans, including
administering our annual management cash bonus incentive compensation plan,
determining the compensation for the Chief Executive Officer and reviewing and
approving the compensation for the Chief Financial Officer and the five other
executive officers (or former executive officers) identified below, whom we
refer to collectively with the Chief Executive Officer as our Named Executive
Officers.

The
Compensation Committee reviews, on at least an annual basis, the
appropriateness and effectiveness of our compensation processes and programs as
enumerated in the Overview section above. The Compensation Committee approves,
on an annual basis, target award opportunities and performance criteria to be
utilized in the annual cash bonus incentive plan. In addition, the Compensation
Committee considers, on an annual basis and subject to periodic review,
equity-based awards and long-term incentive plans, including the LTIP.

We
informally consider competitive market practices with respect to the salaries
and total compensation of our executive officers. We review the market
practices by speaking to recruitment agencies and reviewing annual reports on
Form 10-K or similar information of other companies within our industry. In
addition, the Compensation Committee has the authority to engage an outside
compensation and benefits consultant to make recommendations relating to the
overall compensation philosophy, comparable base salary levels, short-term and
long-term incentive compensation plans, appropriate performance parameters for
such plans, and related compensation matters.

Components of Total
Compensation

Annual
Base Salary. Base salary is used to recognize the
experience, skills, knowledge and responsibilities required of the executive
officers in their roles. Salaries are reviewed on an annual basis, as well as
at the time of promotion or other changes in responsibilities. The leading
factor in determining increases in salary level is the employment market for
senior executives with similar levels of experience and skills.

For
fiscal year 2006, the Compensation Committee, after considering our recent
financial performance and corporate goals and objectives, did not adjust the
base salary of the Named Executive Officers except with respect to the Chief
Financial Officer, which was adjusted as a result of his promotion to that
position during fiscal year 2006 and the recommendation of the Chief Executive
Officer. When establishing the base salaries of the Named Executive Officers,
the Compensation Committee and Chief Executive Officer consider a number of
factors including the seniority of the Named Executive Officer, the functional
role of the position, the level of the Named Executive Officers
responsibility, and our ability or likelihood to replace the Named Executive
Officer with an individual with similar skills and experience.

Annual
Cash Bonus Incentive Compensation. Each year the Compensation
Committee considers adoption of an annual cash bonus incentive compensation
plan for our executive officers and certain other employees based on the
budgeted performance of Remington. In March 2006, the Compensation Committee
approved the 2006 Incentive Compensation Plan, which provides for eligible
participants to earn incentive compensation upon Remingtons achievement of
certain Adjusted EBITDA performance targets. For 2006, the threshold target at
which incentive compensation is triggered begins at $38.0 million of Adjusted
EBITDA and additional incentive compensation may be earned if Adjusted EBITDA
exceeds the $38.0 million target. With respect to the Named Executive Officers
and a limited number of other participants, 10% of their individual total award
is based on twelve working capital targets (in particular, quarterly targets
for Days Sales Outstanding, Days Sales in Inventory, and Days Payable
Outstanding). The size of each cash award is determined by establishing target
incentive awards expressed as a pool of incentive dollars allocated to each
participant based on a percentage of the participants base salary.

The
performance criteria applicable to the Chief Executive Officer, Chief Financial
Officer, and the other Named Executive Officers for purposes of the incentive
compensation plan are determined based solely on corporate performance. Upon
achievement of certain levels of Adjusted EBITDA, the Compensation Committee
provided for a percentage of the achieved Adjusted EBITDA level to be paid to
the employees in the plan. Once that total dollar amount was determined, then
each employee was allocated their bonus based on a pro-rata portion of the allocable
pool based on their target incentive award percentages of salary. For 2006, the
Compensation Committee provided that the target incentive award would begin for
the Chief Executive Officer at 100%, Chief Financial Officer at 90%, and other
Named Executive Officers depending on position at 60% to 90% of base salary. In
2006, the Named Executive Officers earned incentive compensation based on $42.5
million of Adjusted EBITDA (which at the plans 5% payout for this Adjusted
EBITDA level resulted in an allocable pool of approximately $2.1 million) and
67% of the available working capital targets (achieved eight out of the twelve
goals). Accordingly, members of

108

management
were eligible for and will receive bonus payments for the year ended December
31, 2006 in the aggregate amount of $882,100, with the Chief Executive Officer,
Chief Financial Officer and the remaining active Named Executive Officers
receiving the following individual amounts: Mr. Millner - $331,800; Mr. Jackson
- $118,000; Mr. Little - $151,100; Mr. Cahan - $151,100; Mr. Dwyer - $68,500,
and Mr. Campbell - $62,300. Mr. Bristol, whose employment was terminated in
February 2006, was not eligible for and did not receive any bonus payments for
the year ended December 31, 2006.

Annual
cash bonuses are intended to reward corporate performance during the year and
can therefore be highly variable from year to year.

Perquisites.

Personal
Financial Services Consulting. We retain the services
of a financial services firm to assist Mssrs. Millner, Jackson, and Little with
their personal asset management. Remington provides this benefit in order for
the officers to focus more of their time to the direction of our operations. In
2006, the cost of these services, including tax gross-up amounts, were $18,361
for Mr. Millner, $11,988 for Mr. Jackson, and $13,103 for Mr. Little.

Living
Expenses Reimbursement. Remington provided Mr. Cahan
with amounts for basic living expenses (including apartment rental) and income
taxes thereon, which were incurred in connection with his fulfillment of his
duties and responsibilities with respect to Remingtons operations in Ilion,
New York. Mr. Cahans primary residence is outside the state of New York. In
2006, these costs, including tax gross-up amounts, were $6,591 and were only
paid through April 30, 2006.

Equity Awards. Equity
awards , which are awarded as shares of Holdings common stock, are intended to
align executive managements interests directly with Holdings stockholders. In
addition, they can either be performance options, which are intended to reward
company performance during the year, or service options, which are intended to
incent management continuity and retention and longer-term strategic thinking.
As a result, each year the Compensation Committee will consider the existing
equity awards in place  both performance and service options  and determine
if additional equity awards should be awarded in the context of the overall
compensation philosophy and the interests of Holdings stockholders. We do not
engage in option timing of any kind and we expect that our equity awards will
be highly variable from year to year. In 2006, no equity awards were granted.

Long-Term Incentive Compensation
Plan. We believe that long-term performance is achieved by
requiring management to achieve certain levels of Adjusted EBITDA that generate
certain levels of cash flows. In August 2006, the Compensation Committee
recommended and the Board of Directors approved the 2006 Long-Term Incentive
Compensation Plan for ten executive employees including the Named Executive
Officers. The LTIP is based on our total Adjusted EBITDA performance for each
individual year between 2006 and 2009 and the total amount earned during the
period will be paid out in the first quarter of 2010. In order to receive the
2010 payment, each Named Executive Officer or other participant must be an
employee of Remington on December 31, 2009. The Compensation Committee approved
a target payout for all executive officers, including the Chief Executive
Officer and Chief Financial Officer, of 40% of base salary as of the end of
each calendar year over the 2006-2009 period. The Compensation Committee
established Adjusted EBITDA target goals of $40.0 million, $42.0 million, $44.1
million, and $46.3 million for 2006, 2007, 2008, and 2009, respectively.
Remington achieved its goal in 2006. Accordingly, LTIP participants were
eligible for and earned awards for 2006 in the aggregate amount of $665,400,
with the Chief Executive Officer, Chief Financial Officer and the remaining
Named Executive Officers who were included in the LTIP earning the following
individual amounts: Mr. Millner - $211,200; Mr. Jackson - $100,000; Mr. Little
- $107,800; Mr. Cahan - $107,800; Mr. Dwyer - $72,600, and Mr. Campbell -
$66,000. Mr. Bristol, whose employment was terminated in February 2006, was not
eligible for and did not earn any compensation attributable to the LTIP for the
year ended December 31, 2006.

Long-term
incentive compensation, and specifically this LTIP, is intended to reward
corporate performance, promote longer-term strategic thinking and promote
continuity and retention under the LTIP and can therefore be highly variable
from year to year.

Pension
and Retirement Benefits.

Defined
Benefit Plans. The Remington Arms Company, Inc.
Pension and Retirement Plan, which we refer to as 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. We also adopted the Retirement Plan in order to
maintain, and to decrease, employee turnover levels, as well as to protect our

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competitive
benefits position in the employment marketplace. Pension benefits under the
Retirement Plan are limited in accordance with the provisions of the Internal
Revenue Code of 1986, as amended, which we refer to as the Code, governing
tax-qualified pension plans. We also adopted a Supplemental Pension Plan
effective January 1, 1998, which we refer to as the Supplemental Plan, that
provides for payment to eligible participants of retirement benefits equal to
the excess over the IRS limit, 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 Retirement Plan. The Supplemental
Pension Plan is a non-qualified plan under the Code. Remington also adopted the
Supplemental Plan in order to provide an equitable pension award amount as a
percent of salary, in conjunction with the Retirement Plan, for those employees
whose salaries were above certain IRS limitations. We refer to the Retirement
Plan and the Supplemental Plan collectively as the Pension Plans. Messrs.
Millner, Little, Bristol, and Cahan were eligible to participate in the Pension
Plans during the year ended December 31, 2006, and each of them remain eligible
to participate in the Pension Plans except for Mr. Bristol, whose employment
with Remington was terminated in February 2006. Mr. Dwyer is eligible to
participate only in the Retirement Plan. Mr. Jackson was and remains eligible
to participate only in the Supplemental Plan. Benefits under the Supplemental
Plan are not pre-funded and 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 the applicable provisions of each of the
Retirement Plan and Supplemental Plan. 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. 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.

Benefits
recognized under the Pension Plans for the year ended December 31, 2006
generally include an employees average monthly compensation from January 1,
2006 through and including the last full month of service during fiscal 2006.
Compensation for this purpose includes base salary and 50% of annual cash
incentive compensation awards. Compensation does not include awards and
payments under any other special compensation plans such as the LTIP, payments
for severance, relocation or other special payments.

In
October 2006, the Board of Directors, upon the recommendation of the Benefit
and Investment Committee, approved an amendment to the Retirement Plan to be
effective January 1, 2008. As a result of the amendment, for the Named
Executive Officers in the Retirement Plan (Messrs. Millner, Little, Cahan, and
Dwyer), future accrued benefits will be frozen as of January 1, 2008. In
addition, for Named Executive Officers in the Supplemental Plan (Messrs. Millner,
Jackson, Little and Cahan), future accrued benefits also will be frozen as of
January 1, 2008 while years of service will continue to accrue when calculating
eligibility for early retirement. For accrued service through 2007, the pension
benefit calculation will not change. Mr. Bristols employment with Remington
was terminated effective February 28, 2006, and accordingly his benefits have
stopped accruing and are not affected by these amendments.

The
decision to freeze the Pension Plans for certain employees, including all Named
Executive Officers, was a result of the cost associated with the Pension
Plans as compared to the benefits realized by Remington, the levels of cash
required to maintain appropriate funding levels of the plans, and the competitive
requirements in the employment marketplace having changed since the inception
of the Pension Plans.

Defined
Contribution Plans. Prior to January 1, 2006, we
sponsored a qualified defined contribution plan, which we refer to as the Defined
Contribution Plan, and matched 50% of a participants contributions up to a
maximum of 6% of a participants compensation for all eligible employees.
Effective January 1, 2006, we established a second qualified defined
contribution plan that matches 100% of the first 4% of a participants
contributions, which we refer to as the 401(k) Plan. The 401(k) Plan includes
all nonunion employees of Remington, including the Named Executive Officers
listed below. The Defined Contribution Plan remains in existence for all Ilion
union employees who are not included in the 401(k) Plan. Messrs. Millner,
Jackson, Little, Cahan, Campbell and Dwyer participate in the 401(k) Plan.
Since these amounts are characterized as defined contribution, payments are
provided to the employees upon their termination from Remington in a manner
decided upon by each respective employee in accordance with his or her own
personal financial situation.

In
addition, effective January 1, 1998, Remington adopted the Supplemental Savings
Plan, which we refer to as the SERP Savings Plan. This plan is a non-qualified
defined contribution plan under the Code. The SERP Savings Plan provides for
matching of compensation contributions beyond the IRS covered compensation
limits in order to allow the Named Executive Officers the same salary matching
afforded to all employees. In addition, we

110

pay interest
on the balance of each account at the prime rate of interest as of December 31,
2006 (identified in the Wall Street Journal) plus 2% (10.25% at December 31,
2006). In 2006, contributions and interest earned for our Chief Executive
Officer, Chief Financial Officer and each of the remaining Named Executive
Officers was as follows: Mr. Millner was $17,507; Mr. Jackson was $2,385; Mr.
Little was $5,819; Mr. Cahan was $5,157; Mr. Dwyer was $0, and Mr. Campbell was
$162. Mr. Bristol participated in the 401(k) Plan and the SERP Savings Plan up
to his termination date of February 28, 2006, and his full balance in the SERP
Savings Plan was paid out effective with his termination date. The full
balances in the SERP Savings Plan for the remainder of the Named Executive
Officers were paid out in a lump sum in January 2007.

Postretirement
Plan. We also maintain a Postretirement Benefit Plan,
which we refer to as the OPEB Plan, whereby employees covered by the Retirement
Plan who have at least 15 years of service at Remington may continue certain
medical, dental, and life insurance benefits upon retirement, unless said
employees are required to utilize DuPont health and life insurance benefits
upon retirement. At December 31, 2006, the Postretirement Benefit Plan includes
the Named Executive Officers listed below. Medical coverage for participants in
the Postretirement Benefit Plan can continue until age 65 or until the retiree
becomes eligible for Medicare. At age 65, the retiree is eligible to receive a
Medigap reimbursement of up to $75 each month for the employee and his covered
spouse to purchase Medigap insurance. The Postretirement Benefit Plan also
provides life insurance equal to the final base pay of the participant upon
retirement. Currently, Messrs. Millner, Little, Cahan, and Dwyer are covered
under the Postretirement Plan.

Other
Benefits.

Extended
Medical Coverage. On January 23, 2002, our Board of
Directors, in an effort to provide benefits to our executive officers, extended
medical coverage to certain key employees (including Messrs. Millner, Little,
Bristol, and Cahan) and outside directors under the age of 65, which allows
them to continue to participate in our Health and Welfare Benefit 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), each participant will be entitled to continue to
participate in the Health and Welfare Benefit Plan or any successor plans, at a
cost equal to the cost for active Remington employees and on the same basis
until attaining the age of 65.

Company-provided
Life Insurance. We maintain a Life Insurance Plan
whereby we provide life insurance to all employees, including the Named
Executive Officers. All employees receive 100% of their annual base salary to
be paid in a lump sum after death, and the percentage amount gradually declines
after age 65 to 0% at age 75. To receive benefits, all covered persons must be
employees of Remington at the time of death, or be a retiree in good standing
with Remington. We provide this benefit through the purchase of insurance
policies on behalf of each employee, and Remington pays these annual premiums.
The life insurance premiums paid by Remington with respect to each of the Named
Executive Officers during the year ended December 31, 2006 was as follows: $2,328
for Mr. Millner, $492 for Mr. Jackson, $1,968 for Mr. Little, $9,288 for Mr.
Cahan, $456 for Mr. Dwyer, $1,968 for Mr. Campbell, and $66 for Mr. Bristol.

Special
Plan. Under a Special Supplemental Retirement Plan for
Paul L. Cahan, which we refer to as the Special Plan, 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) credit in the Supplemental Plan as 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 Pension and Retirement Benefits table below includes Mr.
Cahans benefits under the Special Plan.

Death
Benefit Plan. In January 2001, the Remington Arms
Company, Inc. Death Benefit Plan was adopted to cover the Named Executive
Officers and certain other employees. The Death Benefit Plan stipulates that in
the event of the death of the employee while employed by Remington, a covered
employees beneficiary receives two times the deceased employees annual base
salary to be paid over a period of four years (one forty-eighth of such sum is payable
in monthly installments) after death. The payments commence on the first day of
the month beginning after the anniversary of the employees death. The covered
employee must be an employee of Remington at the time of death in order to
receive any benefits from the Death Benefit Plan. We are not insured for these
potential amounts owed but use investments in company-owned life insurance to
protect against potential payments. The Death Benefit Plan specifically
excludes those employees who participate in the Supplemental Plan. Accordingly,
only Messrs. Dwyer and Campbell are eligible for this benefit.

111

Change in Control
and Severance

Based
on our ownership structure (being owned by a leveraged buyout firm) as well as
precedent for officers of similar companies, the Board of Directors, upon the
recommendation of the Compensation Committee along with the approval of
ownership, determined it was appropriate to enter into employment agreements
with certain of our Named Executive Officers. As part of this decision, the
Compensation Committee considered (1) restricting the ability of the
individuals to solicit employees or customers from Remington subsequent to
termination, (2) an estimated length of time for an individual to find
comparable employment at a similar level and (3) consistency with terms and
arrangements that the Committee and owners had provided with other companies.
An overriding premise in entering into these agreements was to provide certain
protections for Remington post-termination for a reasonable and measurable
cost. It was thus decided, in conjunction with the relevant Named Executive
Officers, to enter into the employment agreements that would be beneficial to
Remington (the addition of confidentiality, non-competition and
non-solicitation provisions) and beneficial to the employee (severance
arrangements). See Executive Employment Agreements below. It was considered
by the Compensation Committee that, given the time it would take for an
employee at this level to find a similar job, a decision to terminate without
cause would effectively freeze such Named Executive Officers career for a
period of time. Thus, the payment of an individuals severance was considered
reasonable given the employees position with Remington.

Executive
Employment Agreements - Severance.
In August 1999, we entered into Executive Employment Agreements with each of
Messrs. Millner, Little, Cahan, and Bristol. 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 employment of one of
these Named Executive Officers by us without cause (as defined in the
agreement) or by one of the Named Executive Officers for good reason (as
defined in the agreement), the Named Executive Officer will receive his base
salary (as defined in the agreement) for a period of time. In accordance with
these agreements, Mr. Millner, Mr. Little, Mr. Cahan and Mr. Bristol would
receive their base salaries for three years, two years, one year and one year,
respectively. Also, in each such case, a pro-rata portion of annual cash bonus
incentive compensation that would have been payable for the calendar year in
which employment terminates would be paid to Messrs. Millner, Little, Cahan and
Bristol in a lump sum. Messrs. Millner and Little will also receive additional
service credit under Remingtons Pension Plans of three and two years,
respectively. Our Executive Employment Agreements with these individuals are
without a fixed term. These agreements also contain certain non-competition and
non-solicitation provisions and provide for the termination of previously
existing employment and severance agreements and arrangements. Effective
February 28, 2006, Mr. Bristol resigned without good reason (as defined) and
accordingly received no payments under his employment agreement for salary and
other benefits.

Each
employment agreement includes a covenant by the Named Executive Officer not to
solicit employees or customers while an employee of Remington and during a
period of one year following the officers voluntary termination of employment
other than for good reason (as defined in each respective executive agreement).

Severance
payments for each of the Named Executive Officers with whom we have entered
into Executive Employment Agreements are in addition to Remingtons obligation
to pay such officers salary during the requisite notice period. The severance
payments are in addition to each officers rights to payment under the Stock
Option Plans discussed below.

Stock Option
Plans  Severance.
Upon termination of employment, the Named Executive Officers may receive
payments under Holdings Stock Option Plans and severance payments if certain
conditions are met or events are triggered in accordance with their employment
agreements.

Change in
Control Severance
Agreement. In October 2006, the Compensation Committee, on
behalf of Remington, entered into a severance agreement with Mr. Jackson which
becomes applicable in the event of a change in control of more than 50% of
Holdings equity. The agreement is renewable annually at the discretion of the
Compensation Committee. The severance agreement provides for two years base
salary based on his current salary at the time of such an event, payable in
equal amounts over the 24 months immediately following his separation from
Remington.

Stock Option
Plans  Change in
Control. At December 31, 2006 there were 8,365 options to
purchase Holding common stock under the 1999 Stock Incentive Plan and the 2003
Stock Option Plan, at a per share price of $220.31, of which only 195 options
were vested. Upon a change in control, the following options would immediately
vest: Mr. Millner, 3,632 options; Mr. Jackson, 680 options; Mr. Little, 2,270
options; Mr. Cahan, 680

112

options; and
Mr. Dwyer, 908 options. Given the most recent estimated fair market value of
common stock at $270 per share, all of these options were in-the-money at
December 31, 2006 and would have had a value as follows: Mr. Millner, $180,474;
Mr. Jackson, $33,789; Mr. Little, $112,796; Mr. Cahan, $33,789; and Mr. Dwyer,
$54,808. In addition, no stock options were exercised during 2006.

Comparison of
Change in Control
Severance and Executive Employment Agreements. We believe the
differences between the employment agreements entered into in August 1999 and
the change in control severance agreement entered into in October 2006, were
primarily due to the time it would take for an employee at this level to find a
similar position as discussed above. In addition, the severance agreement
entered into in 2006 differs from the employment agreements entered into in
1999 due to changes in the overall employment market. Specifically, with
respect to differences in the executive employment agreements, Mr. Millner and
Mr. Littles severance provisions are slightly greater than those of Mr. Cahan
because they include multiple periods of pay and pension service credit
enhancements, while Mr. Cahans does not. With respect to differences between
the employment agreements and the change in control severance agreement, the
primary differences are as follows: (i) Mr. Jackson has the right to leave
Remington upon a change in control for any reason and the agreement will still
provide the enumerated benefits, while Mr. Millner, Mr. Little, and Mr. Cahan
may leave only for good reason (as defined) to still be eligible for benefits
under their respective employment agreements; (ii) Mr. Jacksons agreement is
for one year (and may be reviewed annually by the Compensation Committee), he
has no pension service credit enhancement, his severance is based solely on
base salary without consideration of annual incentive cash compensation, and he
has no non-compete or non-solicitation clauses, while each of Mr. Millner, Mr.
Little and Mr. Cahan have evergreen agreements that automatically renew each
year, have pro-rated annual bonus earning potential, have non-compete clauses
as outlined in Executive Employment Agreements above, and, in the case of Mr.
Millner and Mr. Little, have incremental pension service credit.

Role of Executive Officers in Executive
Compensation

The
Compensation Committee recommends and approves the final determination of total
compensation for our Chief Executive Officer, Tommy Millner. The Compensation
Committee evaluates the total compensation of Steve Jackson (our Chief
Financial Officer), Mark Little (our Chief Administrative Officer), Paul Cahan
(our Senior Vice PresidentManufacturing), John Dwyer (our Vice President-Sales
and Marketing for Ammunition), and Don Campbell (our Vice President-Sales and
Marketing for Firearms) acting with advice from Tommy Millner (our Chief
Executive Officer). Tommy Millner (our Chief Executive Officer).plays no role
in determining his own compensation.

Conclusion

Remingtons
compensation policies and programs are designed to retain and motivate our
Named Executive Officers and to ultimately reward them for both current
operating results and long-term strategic performance.

Compensation Committee Report

The Compensation Committee
has reviewed and discussed the Compensation Discussion and Analysis that
accompanies this report with our management. Based on its review and
discussions, the Compensation Committee recommended to the Board that the
Compensation Discussion and Analysis be included in our Annual Report on Form
10-K for the year ended December 31, 2006.

Except
for the Annual Report on Form 10-K described above, this Compensation Committee
report is not incorporated by reference into any of our previous or future
filings with the SEC, unless any such filing explicitly incorporates the
report.

Richard A. Gilleland, Chairman
  Richard E. HeckertH. Norman Schwarzkopf113

Summary Compensation Table

The
following table summarizes the compensation paid by Remington for services in
all capacities rendered to Remington during the year ended December 31, 2006 by
its Chief Executive Officer, two executives who held the position of Chief
Financial Officer, and to each of its three other most highly compensated
executive officers and a departed officer who would have been included in the
total except for the fact that his employment was terminated during 2006. We
refer to these seven individuals collectively as our Named Executive Officers.
In 2006, there are a total of seven employees presented since Mr. Little and
Mr. Jackson shared Chief Financial Officer duties during the year, and Mr.
Bristol would have been a qualifying highly compensated employee but for the
termination of his employment with Remington on February 28, 2006.

In
2006, there was SFAS 123R expense recorded of $0.3 million, the results of
which are reflected below. See Note 16 to the accompanying audited consolidated
financial statements. See the Potential Payments Upon Termination or Change of
Control section below for an explanation of the material terms of any
applicable employment agreements, which are not included in the table below. As
shown in the Summary Compensation Table below, salary and bonus categories
generally constitute less than 50% of our Named Executive Officers, total
compensation in our effort to reward our officers for operating performance and
to encourage long-term strategic action. In addition, NQDC referenced in the
column header that follows refers to Non-Qualified Deferred Compensation plans,
of which we have the SERP Savings Plan and the Special Plan.

Summary Compensation TableName
        & Principal
        Position
    Year
    
    Salary
        ($)
    
    Bonus***
        ($)
    
    Stock
        Awards
        ($)
    
    Option
        Awards ($)
        (1)
    
    Non-Equity
        Incentive Plan
        Compensation
        ($)
        (2)
    
    
    Change
        in
        Pension
        Value and
        NQDC
        Earnings($)
    
    All
        Other
        Compensation
        ($)
    
    Total
        ($)Thomas
        L. Millner, President and Chief
        Executive Officer
    2006
    
    $
    528,000
    
    $
    
    
    $
    
    
    $
    107,418
    
    $
    543,000
    
    $
    265,673
    (3)
    $
    32,954
    (10)
    $
    1,477,048Stephen
        P. Jackson, Jr., 
        Senior Vice President, 
        Chief Financial Officer, 
        Treasurer, and Corporate
        Secretary
    2006
    
    $
    233,333
    
    $
    
    
    $
    
    
    $
    20,111
    
    $
    218,000
    
    $
    36,641
    (4)
    $
    16,245
    (11)
    $
    524,334Mark
        A. Little(*) , 
        Executive Vice President, 
        Chief Administrative 
        Officer
    2006
    
    $
    269,500
    
    $
    
    
    $
    
    
    $
    67,132
    
    $
    258,900
    
    $
    177,443
    (5)
    $
    24,686
    (10)
    $
    797,666Paul
        L. Cahan, Senior 
        Vice President -
        Manufacturing
    2006
    
    $
    269,500
    
    $
    
    
    $
    
    
    $
    20,111
    
    $
    258,900
    
    $
    262,668
    (6)
    $
    21,644
    (12)
    $
    832,829John
        M. Dwyer, Jr., 
        Vice President - Sales
        and Marketing - Ammunition 
        and Clay Targets
    2006
    
    $
    181,500
    
    $
    
    
    $
    
    
    $
    36,544
    
    $
    141,100
    
    $
    77,889
    (7)
    $
    12,645
    (13)
    $
    449,685Don H.
        Campbell, 
        Vice President - Sales
        and Marketing - Firearms
    2006
    
    $
    165,000
    
    $
    
    
    $
    
    
    
    NA
    
    $
    128,300
    
    $
    162
    (8)
    $
    16,247
    (14)
    $
    309,717Ronald
        H. Bristol, II
    2006
    
    $
    71,500
    
    $
    
    
    $
    
    
    
    **
    
    $
    
    
    $
    11,511
    (9)
    $
    10,138
    (15)
    $
    93,158(**),
        Former Executive 
        Vice President and
        Chief Operating 
        Officer114

*      Held
position of Chief Financial Officer until April 2006.

**    If
employed for entire year would have been included in table. Mr. Bristol, who
terminated effective February 28, 2006, had forfeitures of 2,270 options to
purchase Holding common stock, all of which were unvested and had no impact on
Remingtons expense since all options were out-of-the-money for the entire
duration in which Mr. Bristol held the options. There were no other forfeitures
in 2006.

***  Annual
cash incentive compensation earned pursuant to the 2006 Incentive Compensation
Plan is included in non-equity incentive plan compensation column.

(1)
Amount
  reflects the Named Executive Officers portion of SFAS 123R compensation
  expense recognized in Remingtons audited consolidated financial statements
  presented herein.(2)
Refer to the
  Grants of Plan-Based Awards table below for a break out of these amounts.(3)
Amount
  reflects change in amount accrued from December 31, 2005 to December 31, 2006
  for the Retirement Plan of $33,168, the Supplemental Plan of $128,683, and
  the OPEB Plan of $8,550, and the earnings and Company contributions during
  the same period associated with the SERP Savings Plan of $95,272. Does not
  include incremental three years of service under the Supplemental Plan that
  would be entitled for termination without cause subject to the Executive
  Employment Agreement, as discussed below.(4)
Amount
  reflects change in amount accrued from December 31, 2005 to December 31, 2006
  for the Supplemental Plan of $24,427 and the earnings and Company
  contributions during the same period associated with the SERP Savings Plan of
  $12,214.(5)
Amount
  reflects change in amount accrued from December 31, 2005 to December 31, 2006
  for the Retirement Plan of $44,675, the Supplemental Plan of $82,145 and the
  OPEB Plan of $1,535, and the earnings and Company contributions during the
  same period associated with the SERP Savings Plan of $49,088. Does not
  include incremental two years of service under the Supplemental Plan that
  would be entitled for termination without cause subject to the Executive
  Employment Agreement, as discussed below.(6)
Amount
  reflects change in amount accrued from December 31, 2005 to December 31, 2006
  for the Retirement Plan of $51,612 and the Supplemental Plan of $175,838, and
  the earnings and Company contributions during the same period associated with
  the SERP Savings Plan of $35,218.(7)
Amount
  reflects change in amount accrued from December 31, 2005 to December 31, 2006
  for the Retirement Plan of $74,104 and the OPEB Plan of $2,580, and the
  earnings and Company contributions during the same period associated with the
  SERP Savings Plan of $1,205.(8)
Amount
  reflects the earnings during the same period associated with the SERP Savings
  Plan of $102.(9)
Amount
  reflects change in amount accrued from December 31, 2005 to December 31, 2006
  for the Retirement Plan of $10,828, the Supplemental Plan of ($727) and the
  earnings and Company contributions during the same period associated with the
  SERP Savings Plan of $1,110.(10)
Amount
  reflects premiums paid by Remington for a Disability Insurance Policy,
  premiums for the Life Insurance Plan, personal financial consulting services,
  a tax gross-up on these personal financial consulting services, and Company
  matching contributions to the 401(k) Plan in the amounts of $4,151, $2,328,
  $10,054, $8,307, and $5,765, respectively, for Mr. Millner, and $3,850,
  $1,968, $9,850, $3,253 and $5,765 respectively for Mr. Little. The amount for
  Mr. Millner also includes $1,049 for the receipt of a Model 105Cti
  autoloading shotgun, which was provided to all of the members of our Board of
  Directors.(11)
Amount
  reflects premiums for the Life Insurance Plan, personal financial consulting
  services, a tax gross-up on these personal financial consulting services, and
  Company matching contributions to the 401(k) Plan for Mr. Jackson of $492,
  $8,420, $3,568, and $3,765, respectively.(12)
Amount
  reflects premiums for the Life Insurance Plan, basic living expenses
  (including apartment rental) as discussed in Compensation Discussion and
  Analysis above, a tax gross-up on these living expenses, and Company
  matching contributions to the 401(k) Plan for Mr. Cahan of $9,288, $4,069,
  $2,522 and $5,765, respectively.(13)
Amount
  reflects premiums for the Life Insurance Plan, the Death Benefit Plan, and
  Company matching contributions to the 401(k) Plan for Mr. Dwyer of $456,
  $4,929, and $7,260, respectively.(14)
Amount
  reflects premiums for the Life Insurance Plan, the Death Benefit Plan, and
  Company matching contributions to the 401(k) Plan for Mr. Campbell of $1,968,
  $7,679 and $6,600, respectively.(15)
Amount
  reflects premiums for the Life Insurance Plan, accrued vacation and Company
  matching contributions to the 401(k) Plan for Mr. Bristol of $66, $4,400 and
  $5,672, respectively.115

Grants of Plan-Based
Awards

The
following Grants of Plan-Based Awards Table summarizes the awards to be made to
our executive officers under any plan in 2006. The only relevant plans during
2006 were the 2006 Incentive Compensation Plan and the Long-Term Incentive
Plan, and a discussion of each is outlined below. There were no grants of
equity incentive plan awards during 2006. The amounts in the table below are
also included in the Non-Equity Incentive Plan Compensation column of the
Summary Compensation Table.

The
2006 Incentive Compensation Plan provides for eligible participants to earn
incentive compensation upon Remingtons achievement of certain Adjusted EBITDA
performance targets. For 2006, the threshold target at which incentive
compensation is triggered begins at $38.0 million of Adjusted EBITDA and
additional incentive compensation may be earned if Adjusted EBITDA exceeds the
$38.0 million target. With respect to the Named Executive Officers and a
limited number of other participants, 10% of their individual total award is
based on twelve working capital targets (in particular, quarterly targets for
Days Sales Outstanding, Days Sales in Inventory, and Days Payable Outstanding).
The size of each cash award is determined by establishing target incentive
awards expressed as a pool of incentive dollars allocated to each participant
based on a percentage of the participants base salary.

The
performance criteria applicable to the Chief Executive Officer, Chief Financial
Officer, and the other Named Executive Officers for purposes of the incentive
compensation plan are determined based solely on corporate performance. Upon
achievement of certain levels of Adjusted EBITDA, the Compensation Committee
provided for a percentage of the achieved Adjusted EBITDA level to be paid to
the employees in the plan. Once that total dollar amount was determined, then
each employee was allocated their bonus based on a pro-rata portion of the
allocable pool based on their target incentive award percentages of salary. For
2006, the Compensation Committee provided that the target incentive award would
begin for the Chief Executive Officer at 100%, Chief Financial Officer at 90%,
and other Named Executive Officers depending on position at 60% to 90% of base
salary. In 2006, the Named Executive Officers earned incentive compensation
based on $42.5 million of Adjusted EBITDA (which at the plans 5% payout for
this Adjusted EBITDA level resulted in an allocable pool of approximately $2.1
million) and 67% of the available working capital targets (achieved eight out
of the twelve goals).

The
Long-Term Incentive Compensation Plan is based on our total Adjusted EBITDA
performance for each individual year between 2006 and 2009 and the total amount
earned during the period will be paid out in the first quarter of 2010. In
order to receive the 2010 payment, each Named Executive Officer or other
participant must be an employee of Remington on December 31, 2009. The
Compensation Committee approved a target payout for all executive officers,
including the Chief Executive Officer and Chief Financial Officer, of 40% of
base salary as of the end of each calendar year over the 2006-2009 period. The
Compensation Committee established an Adjusted EBITDA target goal of $40
million for 2006; and Remington achieved its goal in 2006. Mr. Bristol, whose
employment was terminated in February 2006, was not eligible for and did not
earn any compensation attributable to the LTIP for the year ended December 31,
2006.

In
August 1999, we entered into Executive Employment Agreements with each of
Messrs. Millner, Little, Cahan, and Bristol . 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 employment of one of
these Named Executive Officers by us without cause (as defined in the
agreement) or by one of the Named Executive Officers for good reason (as
defined in the agreement), the Named Executive Officer will receive his base
salary (as defined in the agreement) for a period of time. In accordance with
these agreements, Mr. Millner, Mr. Little, Mr. Cahan and Mr. Bristol would
receive their base salaries for three years, two years, one year and one year,
respectively. Also, in each such case, a pro-rata portion of annual cash bonus
incentive compensation that would have been payable for the calendar year in
which employment terminates would be paid to Messrs. Millner, Little, Cahan and
Bristol in a lump sum. Messrs. Millner and Little will also receive additional
service credit under Remingtons Pension Plans of three and two years, respectively.
Our Executive Employment Agreements with these individuals are without a fixed
term. These agreements also contain certain non-competition and
non-solicitation provisions and provide for the termination of previously
existing employment and severance agreements and arrangements. Effective
February 28, 2006, Mr. Bristol resigned without good reason (as defined) and
accordingly received no payments under his employment agreement for salary and
other benefits.

Each
employment agreement includes a covenant by the Named Executive Officer not to
solicit employees or customers while an employee of Remington and during a
period of one year following the officers voluntary termination of employment
other than for good reason (as defined in each respective executive agreement).

116

Severance
payments for each of the Named Executive Officers with whom we have entered
into Executive Employment Agreements are in addition to Remingtons obligation
to pay such officers salary during the requisite notice period. The severance
payments are in addition to each officers rights to payment under the Stock
Option Plans discussed below.

The
employment agreements of Messrs. Millner, Little, and Cahan entitle them to a
severance payment if employment is terminated without cause.

As
used in these employment agreements, cause means:



the willful
  failure of the executive substantially to perform his duties (other than any
  such failure due to physical or mental illness) or other material breach by
  the executive of any of his obligations, after a demand for substantial
  performance or cure of such breach is delivered, and a reasonable opportunity
  to cure is given, to the executive by Remington, which demand identifies the
  manner in which Remington believes that the executive has not substantially
  performed his duties or breached his obligations;

The
  executives engaging in willful and serious misconduct that has caused or
  would reasonably be expected to result in material injury to Remington or any
  of its affiliates;

The
  executives conviction of, or entering a plea of nolo contendere to, a crime
  that constitutes a felony; or

violation of
  any provision of Remingtons business ethics policy.In
addition, the executive agreements provide for a severance payment if
employment is terminated for good reason.

As
used in these employment agreements, good reason means termination of
employment by executive within thirty days following the occurrence of any of
the following without the executives consent:



the
  assignment of the executive to a position the duties of which are a material
  diminution of the duties of his current title and position;

a reduction
  of the executives base salary or the percentage of such base salary made
  available as an incentive compensation opportunity;

the
  assignment of the executive to a principal office located beyond a 50-mile
  radius of the executives current work place; or

a material
  breach by Remington of any of its obligations associated with the employment
  agreement.The
employment agreements with Messrs. Millner, Little, and Cahan are without a
fixed term. The severance terms are as follows: Millnerthree years, Littletwo
years, and Cahanone year. The employment agreements with Messrs. Millner and
Little also include a provision for pension credited service.

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, 5,851 redeemable
deferred shares of Class A Common Stock and 2,089 redeemable shares of Class A
Common Stock outstanding under the 1999 Stock Incentive Plan, with 15,358
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.

117

Grants of Plan-Based AwardsName

Grant Date

Estimated Future Payouts Under Non-Equity
  Incentive Plan AwardsThreshold
  ($) (3)

Target
  ($) (3)

Maximum
  ($) (3)Thomas L.
  Millner,
  President and Chief
  Executive OfficerInc. Comp. Plan (1)


3/23/2006




$
331,800


LTIP (2)


8/2/2006




$
211,200


Stephen P.
  Jackson, Jr.,
  Senior Vice President,
  Chief Financial Officer,
  Treasurer, and Corporate
  SecretaryInc. Comp. Plan (1)


3/23/2006




$
118,000


LTIP (2)


8/2/2006




$
100,000


Mark A.
  Little, Executive
  Vice President, Chief
  Administrative OfficerInc. Comp. Plan (1)


3/23/2006




$
151,100


LTIP (2)


8/2/2006




$
107,800


Paul L.
  Cahan,
  Senior Vice President -
  ManufacturingInc. Comp. Plan (1)


3/23/2006




$
151,100


LTIP (2)


8/2/2006




$
107,800








John M.
  Dwyer, Jr.,
  Vice President - Sales and
  Marketing - Ammunition
  and Clay TargetsInc. Comp. Plan (1)


3/23/2006




$
68,500


LTIP (2)


8/2/2006




$
72,600








Don H.
  Campbell,
  Vice President - Sales and
  Marketing - FirearmsInc. Comp. Plan (1)


3/23/2006




$
62,300


LTIP (2)


8/2/2006




$
66,000








Ronald H.
  Bristol, II,
  Former Executive Vice
  President and Chief
  Operating OfficerInc. Comp. Plan (1)


3/23/2006




$




(4)LTIP (2)


8/2/2006




$




(4)(1)
The annual
  cash bonus incentive compensation as discussed in the Compensation
  Discussion and Analysis and the narrative preceding the chart is paid out
  pursuant to this plan.(2)
A component
  of Remingtons long-term incentive compensation, as discussed in the
  Compensation Discussion and Analysis and the narrative preceding the chart,
  is paid out pursuant to this plan.  In
  2006, each individual in the plan earned 40% of their year-end salary which
  will be paid in the first quarter of 2010, if the118

individual
  is still employed with Remington on December 31, 2009.(3)
Threshold
  and Maximum amounts in the above table are not applicable for disclosure
  purposes because as of March 15, 2007, the threshold is known to have been
  met and the maximum is known not to have been met.  As a result, Target is the only applicable disclosure
amount,
  since as of March 15, 2007, we know the amount each Named Executive Officer
  has earned related to fiscal year 2006.(4)
Mr. Bristol
  terminated his employment with Remington on February 28, 2006 and as a result
  was not eligible to be compensated under either plan during 2006.Outstanding Equity
Awards at Fiscal Year-End Table

The
following table summarizes the number of equity awards outstanding at December
31, 2006 for each Named Executive Officer.
None of these amounts are disclosed in the Summary Compensation Table as
they were issued prior to 2006.

Outstanding
  Equity Awards at Fiscal Year-EndOption AwardsName

Number of
  Securities
  Underlying
  Unexercised
  Options (#)
  Exercisable

Number of
  Securities
  Underlying
  Unexercised
  Options (#)
  Unexercisable
  (1)

Equity
  Incentive
  Plan Awards:
  Number of
  Securities
  Underlying
  Unexercised
  Unearned
  Options
  (#)

Option
  Exercise
  Price
  ($)

# of Options
  Unvested -
  Option Vesting
  Date

Total # of
  Options -
  Option
  Expiration Date
  (10 yrs from
  Grant Date)Thomas L.
Millner,





908




$
220.31


908 - 6/12/07


908 - 6/12/13President
and Chief





908




$
220.31


908 -6/12/08


908 -6/12/13Executive
Officer





1816




$
220.31


1,816 - 6/12/12


1,816 - 6/12/13Stephen P.
Jackson, Jr.,





170




$
220.31


170 - 6/12/07


170 - 6/12/13Senior Vice
President,





170




$
220.31


170 - 6/12/08


170 - 6/12/13Chief
Financial Officer,





340




$
220.31


340 - 6/12/12


340 - 6/12/13Treasurer,
and CorporateSecretaryMark A.
Little, Executive





567




$
220.31


567 - 6/12/07


567 - 6/12/13Vice
President, Chief





568




$
220.31


568 - 6/12/08


568 - 6/12/13Administrative Officer





1135




$
220.31


1,135 - 6/12/12


1,135 - 6/12/13Paul L.
Cahan,





170




$
220.31


170 - 6/12/07


170 - 6/12/13Senior Vice
President -





170




$
220.31


170 - 6/12/08


170 - 6/12/13Manufacturing





340




$
220.31


340 - 6/12/12


340 - 6/12/13John M.
Dwyer, Jr.,


195


227




$
220.31


227 - 6/12/07


195 - 3/6/13Vice
President - Sales and





227




$
220.31


227 - 6/12/08


227 - 6/12/13Marketing -
Ammunition





454




$
220.31


454 - 6/12/12


227 - 6/12/13and Clay
Targets

















454 - 6/12/13Don H.
Campbell, Vice President - Sales and
  Marketing - Firearms











N/A


N/A


N/ARonald H.
Bristol, II, Former Executive
  Vice President and Chief Operating Officer











N/A


N/A


N/A(1)
All of the stock options in the table above are service options with vesting
dates as outlined above. Subject to the
continued service of any option holder, 4,085 of the options in the
table above vest ratably in June 2007 and 2008, respectively; and 4,085 of the
options in the table above vest in June 2012.
The vesting of options may be accelerated upon the occurrence of certain events
specified in the 1999 Stock Incentive Plan and the 2003 Stock Option Plan,
including a change in control as defined therein. Options not exercised will
expire on the tenth anniversary of the

119

date of grant. All of these options were issued on June
13, 2003, except for Mr. Dwyers 195 vested options which were issued on March
7, 2003.

Although
Mr. Dwyer had 65 of his 195 vested options vest during 2006, neither he nor any
other Named Executive Officer exercised any options or had any shares of stock
vest during 2006. Given the current fair value of $270 per share, all options
were in-the-money at December 31, 2006. In addition, in accordance with SFAS
123R, the Company recorded an associated $0.3 million of compensation expense
during 2006, the portion of which that is assigned to each Named Executive
Officer is included in the Summary Compensation Table above. For additional
information on Remingtons stock-based plans, see Note 15 to the accompanying
audited consolidated financial statements.

Pension and
Retirement Benefits

Refer
to Pension and Retirement Benefits in the Compensation Discussion &
Analysis for a description of our pension and retirement benefit plans, the
reasons for the establishment of multiple plans, and the material terms and
conditions of benefits under each plan, including benefit formulas and
eligibility standards with respect to normal retirement payment. The following
table summarizes pension and retirement benefits as of December 31, 2006 for
each of our Named Executive Officers. The changes in this table are reflected
in the Change in Pension Value and NQDC Earnings column of the Summary
Compensation Table.

The
amounts presented below for the Retirement Plan and the Supplemental Plan
represent the present value of the current accrued accumulated benefit
obligation as of December 31, 2006, and are based on a 6% discount rate and use
the 1994 Uninsured Pensioners Mortality Table for males as deferred to age 65
annuities. Mr. Jackson will not be vested in the Supplemental Plan until 2008,
but his amount presented below assumes his continued service until that time.

In
order to be eligible for early retirement, the relevant Named Executive Officer
must be age 50 and have 15 years of qualifying service. Once these two criteria
have been met, the Named Executive Officer can receive payments under the
Retirement Plan and the Supplemental Plan before the age of 65 at a reduced
level. The Postretirement Plan benefits are unaffected for early retirement
status.

Payment
provisions for the Pension Plans are the same under early and normal
retirements, and in order to get payment plans other than a single life annuity
or 50% joint and survivor, an employee must have 15 years of service. Once an
employee has more than 15 years of service, then the payment options become
single life annuity, qualified joint and survivor, and income leveling (only
for early retirements prior to age 62), the last two of which have several
options for structuring payments to surviving spouses.

See
the Potential Payments Upon Termination or Change of Control section below
for an explanation of the material terms of any applicable employment
agreements, which are not included in the table below.

120

Pension and Retirement
BenefitsName

Plan Name

Number of
  Years of
  Credited
  Service
  (#)

Present Value
  of
  Accumulated
  Benefit
  ($)Thomas L.
  Millner,
  President and Chief
  Executive Officer


Pension Plan (1)


12.6


166,273Supplemental Plan (2)


12.6


635,422
(4)OPEB Plan (3)


12.6


66,193Stephen P.
  Jackson, Jr.,
  SVP, CFO, Treasurer and
  Corporate Secretary


Pension Plan (1)


N/A


N/ASupplemental Plan (2)


3.5


39,982OPEB Plan (3)


N/A


N/AMark A. Little,
  Executive
  V.P., CAO


Pension Plan (1)


10.5


205,779Supplemental Plan (2)


10.5


290,689
(5)OPEB Plan (3)


10.5


10,782Paul L.
  Cahan, Senior
  Vice President-
  Manufacturing


Pension Plan (1)


11.7


323,872Supplemental Plan (2)


11.7


496,932OPEB Plan (3)


11.7


53,321John M.
  Dwyer, Jr., VP -
  Sales & Marketing -
  Ammunition and Clay
  Targets


Pension Plan (1)


28.5


282,970
(6)Supplemental Plan (2)


N/A


N/AOPEB Plan (3)


28.5


28,953Don H.
  Campbell, VP -
  Sales & Marketing -
  Firearms


Pension Plan (1)


N/A


N/ASupplemental Plan (2)


N/A


N/AOPEB Plan (3)


N/A


N/ARonald H.
  Bristol, II,
  Former EVP and Chief
  Operating Officer


Pension Plan (1)


10.8


83,479Supplemental Plan (2)


10.8


95,771OPEB Plan (3)


10.8


(1)
The Pension
  Plan in the above chart refers to the Pension Plan as discussed in
  Compensation Discussion and Analysis, above.(2)
The
  Supplemental Plan in the above chart refers to the Supplemental Plan as
  discussed in Compensation121

Discussion
  and Analysis, above.(3)
The OPEB
  Plan in the above chart refers to the Postretirement Plan as discussed in
  Compensation Discussion and Analysis, above.(4)
The amount
  presented excludes incremental three years of service subject to Mr.
  Millners executive employment agreement of $190,493. See Executive
  Agreements below for additional information.(5)
The amount
  presented excludes incremental two years of service subject to Mr. Littles
  executive employment agreement of $93,810. See Executive Agreements below
  for additional information.(6)
The amount
  presented for Mr. Dwyer assumes that at age 58, he will have sufficient
  service to receive full benefits under the Pension Plan at that time. All
  other executives in the Pension Plan cannot receive full benefits unless they
  stay at Remington until the age of 65.Non-Qualified
Deferred Compensation

The
following table summarizes the non-qualified deferred compensation (the SERP
Savings Plan) that was earned by our Named Executive Officers in 2006. The SERP
Savings Plan is a non-qualified defined contribution plan under the Code. The
SERP Savings Plan provides for matching of compensation contributions beyond
the IRS covered compensation limits in order to allow the Named Executive
Officers the same salary matching afforded to all employees. In addition, we
pay interest on the balance of each account at the prime rate of interest as of
December 31, 2006 (identified in the Wall Street Journal) plus 2% (10.25% at
December 31, 2006). In 2006, contributions and interest earned for our Chief
Executive Officer, Chief Financial Officer and each of the remaining Named
Executive Officers was as follows: Mr. Millner, $17,507; Mr. Jackson, $2,385;
Mr. Little, $5,819; Mr. Cahan, $5,157; Mr. Dwyer, $0, and Mr. Campbell, $162.
Mr. Bristol participated in the 401(k) Plan and the SERP Savings Plan up to his
termination date of February 28, 2006, and his full balance in the SERP Savings
Plan was paid out effective with his termination date. The full balances in the
SERP Savings Plan for the remainder of the Named Executive Officers were paid
out in a lump sum in January 2007.

The
changes in this plan are reflected in the Change in Pension Value and NQDC
Earnings column of the Summary Compensation Table; specifically the earnings,
employee, and Company match associated with the SERP Savings Plan was $95,272
for Mr. Millner, $12,214 for Mr. Jackson, $49,088 for Mr. Little, $35,218 for
Mr. Cahan, $1,205 for Mr. Dwyer, $102 for Mr. Campbell, and $1,110 for Mr.
Bristol. In connection with the Board of Directors decision to terminate the
use of the SERP Savings Plan in 2006, based on elections made by the Named
Executive Officers who were participants in the SERP Savings Plan during fiscal
2006, the following amounts, less applicable taxes, were distributed on January
16, 2007: Mr. Millner - $886,726; Mr. Jackson - $67,734; Mr. Little - $485,176;
Mr. Cahan - $328,312; Mr. Dwyer - $13,020; and Mr. Campbell - $1,634.
Differences between these payout amounts and the amounts shown below relate to
amounts contributed to each employees 401(k) Plan amount, partially offset by
the incremental interest earnings from December 31, 2006 through January 16,
2007.

Under
the Special Plan, 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, which is the
non-qualified defined benefit plan as defined in Compensation Discussion and
Analysis, above, and (ii) credit in the Supplemental Plan as 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 lump-sum payment is reflected in the Nonqualified Deferred
Compensation table below.

122

Nonqualified Deferred
CompensationName

Executive
  Contributions
  in Last FY
  ($)

Registrant
  Contributions
  in Last FY
  ($)

Accrued
  Aggregate
  Earnings in
  Last FY ($)

Aggregate
  Withdrawals /
  Distributions 
  ($)

Transfer to
  Qualified Defined
  Contribution
  Plan
  ($)




Aggregate
  Balance at
  last FYE
  ($)Thomas L. Millner,
  President and Chief Executive Officer

$
84,480

$
21,120

$
79,917

$


$
(17,294
)  (1)



$
911,714Stephen P. Jackson, Jr.,
  SVP - CFO, Treasurer and Corporate Secretary

$
30,333

$
9,333

$
6,646

$


$
(11,294
)  (2)



$
91,211Mark A. Little, Executive
  Vice President, Chief Administrative Officer

$
67,375

$
10,780

$
44,073

$


$
(17,294
)  (1)



$
511,872Paul L. Cahan, Senior Vice
  President - Manufacturing

$
53,900

$
10,780

$
30,203

$


$
(17,294
)  (1)



$
355,675












(3)




77,000John M. Dwyer, Jr., Vice
  President - Sales and Marketing - Ammunition and Clay Targets

$


$


$
1,205

$


$

(4)



$
12,961Don H. Campbell, Vice
  President - Sales and Marketing - Firearms

$
3,300

$


$
162

$


$

(4)



$
3,462Ronald H. Bristol, II,
  Former Executive Vice President and Chief Operating Officer

$
5,720

$
1,907

$
4,875

$
(301,423
)
$
(18,921
)  (5)



$
(1)
Transfer to
  qualified defined contribution plan includes employee contributions of
  $11,529 and Company match of $5,765.(2)
Transfer to
  qualified defined contribution plan includes employee contributions of $7,529
  and Company match of $3,765.(3)
Reflects
  amounts associated with the Special Plan disclosed in the Compensation
  Discussion and Analysis section and the narrative preceding this table
  above.(4)
Messrs.
  Dwyer and Campbell did not make any contributions in 2006 to the SERP Savings
  Plan. Instead, the match to the qualified defined contribution plan for
  Messrs. Dwyer and Campbell was $7,260 and $6,600, respectively, and is
  included in the Summary Compensation Table under All Other Compensation.(5)
Mr. Bristol
  left the Company effective February 28, 2006 and as a result his balance in
  the SERP Savings Plan was distributed to him at that time, net of applicable
  taxes.123

Potential Payments Upon Termination or
Change-in-Control

Severance -
Employment Agreements

The
employment agreements of Messrs. Millner, Little, and Cahan entitle them to a
severance payment if employment is terminated without cause.

As
used in these employment agreements, cause means:


the willful
  failure of the executive substantially to perform his duties (other than any
  such failure due to physical or mental illness) or other material breach by
  the executive of any of his obligations, after a demand for substantial
  performance or cure of such breach is delivered, and a reasonable opportunity
  to cure is given, to the executive by Remington, which demand identifies the
  manner in which Remington believes that the executive has not substantially
  performed his duties or breached his obligations;
The
  executives engaging in willful and serious misconduct that has caused or
  would reasonably be expected to result in material injury to Remington or any
  of its affiliates;
The executives
  conviction of, or entering a plea of nolo contendere to, a crime that
  constitutes a felony; or
violation of
  any provision of Remingtons business ethics policy.In
addition, the executive agreements provide for a severance payment if
employment is terminated for good reason.

As
used in these employment agreements, good reason means termination of
employment by executive within thirty days following the occurrence of any of
the following without executives consent:


the
  assignment of the executive to a position the duties of which are a material
  diminution of the duties of his current title and position;
a reduction
  of the executives base salary or the percentage of such base salary made
  available as an incentive compensation opportunity;
the
  assignment of the executive to a principal office located beyond a 50-mile
  radius of the executives current work place; or
a material
  breach by Remington of any of its obligations associated with the employment
  agreement.The
employment agreements with Messrs. Millner, Little, and Cahan are without a
fixed term. The severance terms are as follows: Millnerthree years, Littletwo
years, and Cahanone year. The employment agreements with Messrs. Millner and
Little also include a provision for pension credited service.

Severance  Redeemable Stock and
Redeemable Deferred
Stock Amounts.

Messrs.
Millner, Little, Cahan, and Dwyer have accumulated stock ownership through
previously implemented incentive and deferred compensation programs. Upon
termination of employment, Holding has the right to repurchase these shares
from the executives and has a historical practice of doing so if permitted
under its existing debt agreements.

Stock Option Plans.

In
accordance with the 1999 Stock Incentive Plan and the 2003 Stock Option Plan,
upon a change in control, all outstanding stock options immediately vest.

Change in Control
Severance Agreement.

The
severance agreement with Mr. Jackson was entered into in 2006 as a result of
his promotion to Chief Financial Officer. Mr. Jackson is eligible to receive a
severance package in the event a change in control of more than 50% of
Holdings equity occurs during the period November 1, 2006 through October 31,
2007. This agreement is renewable on an annual basis at the discretion of the
Compensation Committee, and is enforceable upon the event of a change in
control of more than 50% of Holdings equity, and any of the following occurs:


a
  diminishment in scope of his duties occurs;
assignment
  to a primary office located beyond a 50 mile radius of his current workplace;124


he is not
  invited to stay with the new company; or
he chooses
  not to stay with the new company.Long Term Incentive
Plan(LTIP).

A
change in control is defined by the LTIP as:

        the
  acquisition by any person, entity or group (as defined in Section 13(d) of
  the Securities Exchange Act of 1934, as amended), other than Remington, any
  of its affiliates, any employee benefit plan of Remington or any of its
  affiliates, or the Funds, of 50% or more of the combined voting power of
  Holdings then outstanding voting securities; or        the
  merger or consolidation of Remington, as a result of which any person, entity
  or group (as defined in Section 13(d) of the Securities Exchange Act of
  1934, as amended), other than Remington, any of its affiliates, any employee
  benefit plan of Remington or any of its affiliates, owns, directly or indirectly,
  more than 50% of the combined voting power entitled to vote generally in the
  election of directors of the merged or consolidated company; or        the sale,
  transfer or other disposition of all or substantially all of the assets of
  Remington to any person, entity or group (as defined in Section 13(d) of
  the Securities Exchange Act of 1934, as amended), other than Remington, any
  of its affiliates, any employee benefit plan of Remington or any of its
  affiliates.Upon
a change in control, each participant who is actively employed by Remington or
was actively employed by Remington immediately prior to such change in control
will be entitled to a lump sum payment which shall be equal to (i) the amount,
if any, credited to each participant as of the date of the change in control
plus (ii) the amount that would have been credited to each participant in
respect of the fiscal year of the change in control and each subsequent fiscal
year if the participant had remained employed through the vesting date and
Remington had achieved the aggregate Adjusted EBITDA target for each such
fiscal year. Such payment shall be made on the date of such change of control.
Notwithstanding the foregoing, if the acquirer in such change in control
decides to continue the LTIP at the targets outlined following the change in
control, the amounts shall not be paid and the LTIP shall continue through the
original payment date.

Summary Tables for
Potential Payments upon Termination or Change in Control

The
following tables set forth potential payments to our Named Executive Officers
upon termination of their employment or a change in control related to the
shares in Holding under their current employment agreements and other
applicable agreements as of December 31, 2006. We note that the SERP Savings
Plan is available to each of the Named Executive Officers upon resignation,
however since the SERP Savings Plan was terminated and paid out effective
January 2007, as noted above in Non-Qualified Deferred Compensation above, we
have excluded it from the tables below.


Thomas L. Millner
President and Chief Executive Officer



Terminated
  with Cause

Terminated
  without
  Cause

Resign with
  Good
  Reason

Resign
  without
  Good
  Reason

Change in
  ControlSalary (1)

$


$
1,584,000

$
1,584,000

$


$
Cash Bonus (2)





331,800


331,800





Supplemental Plan (3)





190,493


190,493





Extended Medical (4)


270


270


270


270


Stock (5)


1,015,740


1,015,740


1,015,740


1,015,740


1,015,740Stock Options (6)














180,474LTIP (7)














844,800Special Plan (8)














$
1,016,010

$
3,122,303

$
3,122,303

$
1,016,010

$
2,041,014(1)
Salary is
  three times Mr. Millners base salary paid in equal installments over
  thirty-six months (3 years) in accordance with Mr. Millners executive
  employment agreement.(2)
Cash Bonus
  is Mr. Millners portion of annual cash incentive compensation that would
  have been payable assuming he was terminated at the end of the year, to be
  paid in a lump sum amount in accordance with Mr.125

Millners executive
  employment agreement.(3)
Supplemental
  Plan is the estimated actuarial value of an additional three years of service
  credit under Remingtons Supplemental Plan in accordance with Mr. Millners
  executive employment agreement.(4)
Extended
  Medical is the estimated annual amount of healthcare costs expected to be
  paid by the Company for Mr. Millner and his family, which is received until
  the age of 65 in accordance with the extended Medical Plan. The estimate is
  based on the past four years of actual experience, less estimated contributions
  to be made by Mr. Millner.(5)
Assumes that
  Holding will elect to pay Mr. Millner for all of his outstanding 3,762 shares
  of Holding upon the occurrence of all of these events. Amounts are based on
  the $270 per share current price, excluding tax effects.(6)
None of Mr.
  Millners 3,632 options to purchase Holding common stock are vested. Upon a
  change in control, all stock options immediately vest. All of Mr. Millners
  3,632 options to purchase Holding common stock have a strike price of $220.31
  per share and the current market value of Holding common stock is $270 per
  share.(7)
Assumes that
  upon a change in control, the acquiring company elects to terminate the LTIP,
  resulting in the payment of all applicable years under the LTIP. If the
  acquiring company does not elect to terminate the LTIP, then no payment will
  be made.(8)
This item is
  not applicable to Mr. Millner.Stephen
P. Jackson, Jr.Senior
Vice President - Chief Financial Officer, Treasurer, and Corporate Secretary

Terminated
  with Cause

Terminated
  without
  Cause

Resign
  with Good
  Reason

Resign
  without
  Good
  Reason

Change in
  ControlSalary (1)

$


$


$


$


$
500,000Cash Bonus (2)














Supplemental Plan (2)














Extended Medical (2)














Stock (2)














Stock Options (3)














33,789LTIP (4)














400,000Special Plan (2)














$


$


$


$


$
933,789(1)
Salary is
  two times Mr. Jacksons base salary (as of the date of termination) paid in
  equal installments over twenty-four months (2 years) in accordance with Mr.
  Jacksons change-in-control severance agreement.(2)
These items
  are not applicable to Mr. Jackson.(3)
None of Mr.
  Jacksons 680 options to purchase Holding common stock are vested. Upon a
  change in control, all stock options immediately vest. All of Mr. Jacksons
  680 options to purchase Holding common stock have a strike price of $220.31
  per share and the current market value of Holding common stock is $270 per
  share.(4)
Assumes that
  upon a change in control, the acquiring company elects to terminate the LTIP,
  resulting in the payment of all applicable years under the LTIP. If the
  acquiring company does not elect to terminate the LTIP, then no payment will
  be made.126

Mark A. Little
Executive Vice President, Chief Administrative Officer

Terminated with Cause

Terminated
  without
  Cause

Resign with
  Good Reason

Resign
  without
  Good
  Reason

Change in
  ControlSalary (1)

$


$
539,000

$
539,000

$


$
Cash Bonus
  (2)





151,100


151,100





Supplemental
  Plan (3)





93,810


93,810





Extended
  Medical (4)


8,750


8,750


8,750


8,750


Stock (5)


323,460


323,460


323,460


323,460


323,460Stock Options
  (6)














112,796LTIP (7)














431,200Special Plan
  (8)














$
332,210

$
1,116,120

$
1,116,120

$
332,210

$
867,456(1)
Salary is two
  times Mr. Littles base salary paid in equal installments over twenty-four
  months (2 years) in accordance with Mr. Littles executive employment
  agreement.(2)
Cash Bonus
  is Mr. Littles portion of annual cash incentive compensation that would have
  been payable assuming he was terminated at the end of the year, to be paid in
  a lump sum amount in accordance with Mr. Littles executive employment
  agreement.(3)
Supplemental
  Plan is the estimated actuarial value of an additional two years of service
  credit under Remingtons Supplemental Plan in accordance with Mr. Littles
  executive employment agreement.(4)
Extended
  Medical is the estimated annual amount of healthcare costs expected to be
  paid by the Company for Mr. Little and his family, which is received until
  the age of 65 in accordance with the extended Medical Plan. The estimate is
  based on the past four years of actual experience, less estimated
  contributions to be made by Mr. Little.(5)
Assumes that
  Holding will elect to pay Mr. Little for all of his outstanding 1,198 shares
  of Holding upon the occurrence of all of these events. Amounts are based on
  the $270 per share current price, excluding tax effects.(6)
None of Mr.
  Littles 2,270 options to purchase Holding common stock are vested. Upon a
  change in control, all stock options immediately vest. All of Mr. Littles
  2,270 options to purchase Holding common stock have a strike price of $220.31
  per share and the current market value of Holding common stock is $270 per
  share.(7)
Assumes that
  upon a change in control, the acquiring company elects to terminate the LTIP,
  resulting in the payment of all applicable years under the LTIP. If the
  acquiring company does not elect to terminate the LTIP, then no payment will
  be made.(8)
This item is
  not applicable to Mr. Little.Paul L. Cahan
Senior Vice President - Manufacturing

Terminated
  with Cause

Terminated
  without
  Cause

Resign with
  Good
  Reason

Resign
  without
  Good
  Reason

Change in
  ControlSalary (1)

$


$
269,500

$
269,500

$


$
Cash Bonus
  (2)





151,100


151,100





Supplemental
  Plan (3)














Extended
  Medical (4)


5,000


5,000


5,000


5,000


Stock (5)


140,670


140,670


140,670


140,670


140,670Stock
  Options (6)














33,789LTIP (7)














431,200Special Plan
  (8)


77,000


77,000


77,000


77,000


77,000$
222,670

$
643,270

$
643,270

$
145,670

$
605,659(1)
Salary is
  one times Mr. Cahans base salary paid in equal installments over twelve
  months (1 year) in accordance with Mr. Cahans executive employment
  agreement.127

(2)
Cash Bonus
  is Mr. Cahans portion of annual cash incentive compensation that would have
  been payable assuming he was terminated at the end of the year, to be paid in
  a lump sum amount in accordance with Mr. Cahans executive employment
  agreement.(3)
This item is
  not applicable to Mr. Cahan.(4)
Extended
  Medical is the estimated annual amount of healthcare costs expected to be
  paid by the Company for Mr. Cahan and his family. The estimate is based on
  the past four years of actual experience, less estimated contributions to be
  made by Mr. Cahan.(5)
Assumes that
  Holding will elect to pay Mr. Cahan for all of his outstanding 521 shares of
  Holding upon the occurrence of all of these events. Amounts are based on the
  $270 per share current price, excluding tax effects.(6)
None of Mr.
  Cahans 680 options to purchase Holding common stock are vested. Upon a
  change in control, all stock options immediately vest. All of Mr. Cahans 680
  options to purchase Holding common stock have a strike price of $220.31 per
  share and the current market value of Holding common stock is $270 per share.(7)
Assumes that
  upon a change in control, the acquiring company elects to terminate the LTIP,
  resulting in the payment of all applicable years under the Plan. If the
  acquiring company does not elect to terminate the LTIP, then no payment will
  be made.(8)
Amount
  relates to the non-qualified deferred compensation plan referred to as the
  Special Plan, which is owed to Mr. Cahan upon any terminating circumstance.John M. Dwyer,
Jr. Vice President
- Sales and Marketing - Ammunition and Clay Targets

Terminated
  with Cause

Terminated
  without
  Cause

Resign with
  Good
  Reason

Resign without
  Good
  Reason

Change in
  ControlSalary (1)

$


$


$


$


$
Cash Bonus
  (1)














Supplemental
  Plan (1)














Extended
  Medical (1)














Stock (2)


52,650


52,650


52,650


52,650


52,650Stock
  Options (3)














54,808LTIP (4)














290,400Special Plan
  (1)














$
52,650

$
52,650

$
52,650

$
52,650

$
397,858(1)
These items
  are not applicable to Mr. Dwyer.(2)
Assumes that
  Holding will elect to pay Mr. Dwyer for all of his outstanding 195 shares of
  Holding upon the occurrence of all of these events. Amounts are based on the
  $270 per share current price.(3)
195 of Mr.
  Dwyers 1,103 options to purchase Holding common stock are vested. Upon a
  change in control, his remaining stock options immediately vest. All of Mr.
  Dwyers 1,103 options to purchase Holding common stock have a strike price of
  $220.31 per share and the current market value of Holding common stock is
  $270 per share.(4)
Assumes that
  upon a change in control, the acquiring company elects to terminate the LTIP,
  resulting in the payment of all applicable years under the LTIP. If the
  acquiring company does not elect to terminate the LTIP, then no payment will
  be made.128

Don H. CampbellVice President - Sales and Marketing - Firearms

Terminated
  with Cause

Terminated
  without Cause

Resign with
  Good
  Reason

Resign
  without
  Good
  Reason

Change in
  ControlSalary (1)

$


$


$


$


$
Cash Bonus
  (1)














Supplemental
  Plan (1)














Extended
  Medical (1)














Stock (1)














Stock
  Options (1)














LTIP (2)














264,000Special Plan
  (1)














$


$


$


$


$
264,000(1)
These items
  are not applicable to Mr. Campbell.(2)
Assumes that
  upon a change in control, the acquiring company elects to terminate the LTIP,
  resulting in the payment of all applicable years under the LTIP. If the
  acquiring company does not elect to terminate the LTIP, then no payment will
  be made.Severance - Ronald
H. Bristol, II

Effective
February 28, 2006, Mr. Bristol resigned without good reason (as defined) and
accordingly received no payments under his employment agreement for salary and
other benefits, and Mr. Bristol did not participate in the LTIP. However, as a
result of the redeemable and redeemable deferred stock amount termination
provisions, in 2006, Holding converted Mr. Bristols 781 redeemable deferred
shares into common shares of Holding effective with his termination date.
Accordingly, upon a change in control, Mr. Bristol has 922 common shares of Holding,
which at $270 per share equates to $248,940. In addition, Mr. Bristol continues
to annually receive medical benefits of approximately $2,000 until he reaches
age 65.

Director Compensation

Members
of the Board of Directors of Remington who are not employees of Remington,
Holding, CD&R or BRS, who we refer to as eligible directors, receive a per
meeting fee of $1,000 for each Remington board and committee meeting attended
and an annual retainer of $25,000. The Eligible Directors include Messrs. Bobby
R. Brown, Richard A. Gilleland, Richard E. Heckert, Hubbard C. Howe, Thomas F.
LEsperance, and General H. Norman Schwarzkopf, General, United States Army,
Retired. An additional fee of $1,000 per meeting is paid to the chairman of
each committee. All directors are reimbursed for reasonable travel and lodging
expenses incurred to attend meetings.

The
Board of Directors previously approved outside directors under the age of 65 to
participate in Remingtons Medical Plan. Presently, one outside director, Mr.
Richard A. Gilleland, is enrolled in the Medical Plan and reimburses Remington
at the same cost as an active employee.

Mr.
Leon J. (Bill) Hendrix, Jr., a director, is also an employee of Remington. He
receives an annual salary of $60,000, and is included in the Medical Plan, the
Supplemental Plan, the SERP Savings Plan, the 401(k) Plan, and the Death
Benefit Plan.

The
following table summarizes our director compensation during the 2006 fiscal
year. NQDC referenced in the column header refers to Non-Qualified Deferred
Compensation plans, of which only the SERP Savings Plan is applicable to
directors.

129

Director CompensationName

Fees Earned
  or Paid in
  Cash
  ($)

Change in
  Pension
  Value and
  NQDC
  Earnings

All Other
  Compensation
  ($)

Total
  ($)Leon J.
  Hendrix, Jr.

$


$
27,329
(1)
$
61,288
(2)
$
88,617B. Charles
  Ames








1,049

$
1,049Michael G.
  Babiarz








1,049

$
1,049Bobby R.
  Brown


49,000





1,049

$
50,049Richard A.
  Gilleland


43,500





15,117
(3)
$
58,617Richard E.
  Heckert


38,000





1,049

$
39,049Hubbard C.
  Howe


34,000





1,049

$
35,049Thomas E.
  Ireland








1,049

$
1,049Thomas F.
  LEsperance


30,000





1,049

$
31,049H. Norman
  Schwarzkopf


30,500





1,973

$
32,473Stephen C.
  Sherrill








1,049

$
1,049(1)
Includes
  matching contributions and interest on behalf of the director to the
  Remington Savings and Investment Plans in the amount of $27,329.(2)
Includes
  salary of $60,000, a Board of Directors gift of a Model 105Cti autoloading
  shotgun and ammunition totaling $1,288.(3)
Includes net
  benefits paid as a result of inclusion in the Remington Medical and Dental
  Plan of $14,068, and a Board of Directors gift of a Model 105Cti autoloading
  shotgun of $1,049.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 2006 were Richard A.
Gilleland, Chairman, H. Norman Schwarzkopf, and Richard E. Heckert. None of the
members of our Compensation Committee during 2006 has ever served as an officer
or employee of the Company. During 2006, none of our executive officers served
on the compensation committee (or equivalent), or the board of directors, of
another entity whose executive officer(s) served on our Compensation Committee
or Board of Directors. In addition, during 2006 none of the members of our
Compensation Committee had any relationship requiring disclosure under Item 404
of Regulation S-K.

130

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, 2007, 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(1)

Percent of
  Class(1)Bruckmann,
  Rosser, Sherrill & Co. II, L.P(2)


135,954


64.4
%The Clayton
  & Dubilier Private Equity Fund IV Limited Partnership(3)


28,717


13.6
%Clayton
  & Dubilier Associates IV Limited Partnership


59,010


28.0
%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)(9)(10)(11)


13,582


7.0
%*
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,131

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 CDR Fund and Associates IV is 270 Greenwich
  Avenue, Greenwich, Connecticut 06830.(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 CDR 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 195 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 and is not included in the Companys
  aggregate executive officer share amounts but is included above since he is a
  Named Executive Officer.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, 2006.



Plan category

Class of Security

Number of 
  securities
  to be issued
  upon
  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
  plansEquity compensation plans
approved by
  security holders (2003 Stock Option Plan)


Options


10,208



$
220.31



5,682Equity compensation plans not
approved by
  security holders (1999 Stock Incentive Plan)


Options


427
(1)


$
220.31



21,209
(2)Total


Options


10,635



$
220.31



26,891
(2)(1)     Does not
include 5,851 outstanding deferred shares.

(2)     Includes
5,851 outstanding deferred shares. Excludes 2,089 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.

132

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 and maintain 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 2003 may receive additional grants under
the 1999 Stock Incentive Plan.

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. 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 acquirer 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 acquirer 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.

133

Item 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Principal Shareholders

The
CDR Fund, which currently holds, on a fully diluted basis taking into account
all options and deferred shares, 13.0% (and by proxy controls the votes of
26.6%) 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. Holding has
two senior notes totaling $45.2 million in principal, including paid-in-kind
interest, which were created during the recapitalization of Holding in February
2003. The current balances, including paid-in-kind interest, of the senior
notes that mature in 2011 and 2012 are $26.7 million and $18.5 million,
respectively.

The
BRS Fund, which currently owns, on a fully diluted basis taking into account
all options and deferred shares, 61.3% 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 that 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
2006, 2005, and 2004. We paid BRS an annual fee and out-of-pocket expenses of
$0.6 million in 2006, and $0.5 in each of 2005 and 2004. The consulting
agreements also provide that CD&R and BRS will perform financial advisory,
investment banking and similar services with respect to any 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
pay fees to the law firm of Debevoise & Plimpton LLP 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 2006, 2005, and 2004
were $1.5 million, $0.4 million, and $0.5 million, respectively.

134

Related Person Transaction Policy

The
Board has adopted a written related person transaction policy. This policy has
been adopted on a going-forward basis from the date of adoption and prior
related person transactions were approved by the Audit Committee, but not
pursuant to the new written related person transaction policy.

The
Board recognizes that related person transactions, as defined in the Companys
related person transaction policy, present a heightened risk of actual or perceived
conflicts of interest that could damage the reputation and public trust of the
Company. The Board therefore has adopted this policy to govern the procedures
for review and consideration of all related person transactions involving the
Company to help ensure that any such transactions are timely identified and
given appropriate consideration. It is the Companys policy to enter into or
ratify related person transactions only when the Board, acting through the
Audit Committee or as otherwise prescribed by the related person transaction
policy, determines that the related person transaction in question is in, or is
not inconsistent with, the best interests of the Company and its stockholder.

The
Audit Committee will annually review this policy and will recommend amendments,
if any, to the Board for its consideration. In addition, the Board has
determined that the Audit Committee of the Board shall consider and, if deemed
advisable, approve each related person transaction. The Audit Committee will
consider all of the relevant facts and circumstances available to the Audit
Committee, including but not limited to (i) the benefits to the Company; (ii)
the impact on a directors independence in the event the related person is a
director, an immediate family member of a director or an entity in which a
director is a partner, stockholder or executive officer; (iii) the availability
of other sources for comparable products or services; (iv) the terms of the
proposed related person transaction; and (v) the terms available to unrelated
third parties or to employees generally in an arms-length negotiation. No
member of the Audit Committee will participate in any review, consideration or
approval of any related person transaction with respect to which such member or
any of his or her immediate family members is the related person.

Director Independence

The
Board of Directors uses the definition of independent director as set forth
in Rule 4200(a)(15) of the NASDAQ Stock Market LLC in determining whether the
members of the Board are independent. An independent director per the NASDAQ
definition, generally means a person other than an executive officer or
employee of Remington or any other individual having a relationship which, in
the opinion of Remingtons Board, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director. The
NASDAQ definition also includes a series of objective tests that would not
allow a director to be considered independent if the director has or has had
certain employment, business or family relationships with us.

The
Board of Directors has affirmatively determined that the following directors
are independent within the meaning of NASDAQ Rule 4200(a)(15): Bobby R.
Brown, Richard E. Heckert, H. Norman Schwarzkopf, Richard E. Gilleland, and
Hubbard C. Howe. With respect to each of these directors, there were no
transactions, relationships or arrangements that were considered by the Board
but rejected as not impairing such directors independence.

Although
our Board does not consist of a majority of independent directors, we are
a controlled company as defined by NASDAQ listing standards and thus are
not required to comply with the NASDAQ requirement that our Board consist of a
majority of independent directors. A controlled company for these purposes is
a company of which more than 50% of the voting power is held by an individual,
group or another company. Since (i) 100% of our common stock is owned by
Holding; (ii) the BRS Fund and the CDR Fund maintain voting control, in
the aggregate, of almost 89% of Holdings outstanding common stock; and (iii)
the BRS Fund and the CDR Fund have entered into a Shareholders Agreement
that governs certain aspects of the relationships among us, Holding, the CDR Fund
and the BRS Fund, and sets forth certain arrangements with respect to the
corporate governance of us and Holding (including with respect to the election
of directors and director nominees), we satisfy the definition of a controlled
company and thus are not subject to the requirement that a majority of
our Board consist of independent directors, as that term is defined by NASDAQ
Rule 4200(a)(15).

135

Item 14. PRINCIPAL ACCOUNTING FEES AND
SERVICES

Change in Independent
Registered Public Accounting Firm

PricewaterhouseCoopers
LLP served as the Companys independent auditors until November 14, 2005 on
which date the Companys stockholder voted to appoint Grant Thornton LLP as the
independent auditors. 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 Grant
Thornton LLP for the audit of the Companys annual financial statements for the
years ended December 31, 2005 and 2006. Where applicable, we have also
presented the fees for professional audit services rendered by
PricewaterhouseCoopers LLP during fiscal year 2005.

Audit Fees

Our
audit fees to Grant Thornton LLP were $0.4 million in 2006 and $0.3 in 2005 for
professional services rendered in connection with the annual audit and
quarterly reviews of the financial statements.

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 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.

Audit-Related Fees

Our
audit-related fees to Grant Thornton LLP were less than $0.1 million in 2006
for services related to compliance with the Sarbanes-Oxley Act of 2002 and
related rules and regulations. There were no fees subject to this category to
report in 2005 for either PricewaterhouseCoopers LLP or Grant Thornton LLP.

Tax Fees

Our
tax-related fees to Grant Thornton LLP were less than $0.1 million for 2006 and
2005, primarily for professional services rendered in return preparation and
state tax consulting and review. There were no tax-related fees to
PricewaterhouseCoopers LLP in 2005.

Other Fees

In
2006, there were fees of less than $0.1 to Grant Thornton LLP primarily related
to an audit of the stand-alone financial statements of Holding. 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 were no such fees
paid to Grant Thornton LLP in 2005.

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 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
2006 and 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 registered public accounting firm 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 registered public accounting firm.

136

PART
IV

Item 15. EXHIBITS, FINANCIAL
STATEMENT
SCHEDULES.

(a) Documents filed as part of this report:

(1)
Financial StatementsPageReports
  of Independent Registered Public Accounting Firms

56-57Consolidated
  Balance Sheets as of December 31, 2006 and 2005

58Consolidated Statements of Operations for
  the years ended 
  December 31, 2006, 2005, and 2004

59Consolidated
  Statements of Cash Flows for the years ended 
  December 31, 2006, 2005, and 2004

60-61Consolidated
  Statements of Shareholders Equity and Comprehensive
  Income (Loss) for the years ended December 31, 2006, 2005, and 2004

62Notes
  to the Consolidated Financial Statements

63(2)
Financial
  Statement ScheduleValuation
  and Qualifying Accounts

99(3)
List of
  ExhibitsThe exhibits
  listed in the Exhibit Index, which appears immediately following the
  signature page and is incorporated herein by reference, are filed as part of
  this annual report on Form10-K

141(b)
ExhibitsSee the
  Exhibit Index

141(c)
Separate Financial Statements and SchedulesNone.137

SIGNATURES

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

Date:
March 27, 2007

REMINGTON
  ARMS COMPANY, INC.By:
/S/ THOMAS L. MILLNERName: Thomas
  L. MillnerTitle:   Chief Executive Officer, President and DirectorPursuant
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 and on the dates indicated.

Signature

Title

Date/s/ Thomas L. Millner

Chief
  Executive Officer,

March 27,
  2007President and
DirectorThomas L. Millner

(Principal
Executive Officer)/s/ Stephen P. Jackson, Jr.

Senior Vice
  President, Chief

March 27,
  2007Financial Officer, Treasurer andStephen P. Jackson, Jr.

Corporate Secretary (PrincipalFinancial Officer)/s/ Leon J. Hendrix, Jr.

Chairman and
  Director

March 27,
  2007Leon J. Hendrix, Jr./s/ B. Charles Ames

Director

March 27,
  2007B. Charles Ames/s/ Michael G. Babiarz

Director

March 27,
  2007Michael G. Babiarz/s/ Bobby R. Brown

Director

March 27,
  2007Bobby R. Brown/s/ Richard A. Gilleland

Director

March 27,
  2007Richard A. Gilleland/s/ Richard E. Heckert

Director

March 27,
  2007Richard E. Heckert/s/ Hubbard C. Howe

Director

March 27,
  2007Hubbard C. Howe/s/ Thomas E. Ireland

Director

March 27,
  2007Thomas E. Ireland/s/ Thomas F. LEsperance

Director

March 27,
  2007Thomas F. LEsperance138

Signature

Title

Date/s/ H. Norman Schwarzkopf

Director

March 27,
  2007H. Norman Schwarzkopf/s/ Stephen C. Sherrill

Director

March 27,
  2007Stephen C. Sherrill139

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.

140

EXHIBIT INDEXForm 10-K for Fiscal Year Ended December 31, 2006

Exhibit
  Number

Description of Document2.1

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 RACI Holding, Inc.
  (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 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 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 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 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
  herein incorporated by reference.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.141

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

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 (the form of which is included in such Indenture); previously
  filed as Exhibit 4.7 to Registration Statement No. 333-104141, under the
  Securities Act of 1933, as amended, filed March 31, 2003­ by Remington and
  Holding, and herein incorporated by reference.Exhibit
  Number

Description of Document10.1

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
  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, and the CDR Fund, 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 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 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 the BRS Fund; 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 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 for purposes of Section 4 only,
  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 herein
  incorporated by reference.10.8

Consulting Agreement, dated as of February
  12, 2003, among Holding, Remington and Bruckmann, Rosser, Sherrill & Co.
  L.L.C. and for purposes of Section 4 only 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 herein incorporated by reference.10.9

Borrower Security Agreement, dated January
  24, 2003, between Remington 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 herein incorporated by
  reference.142

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 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 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 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 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 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 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 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 herein incorporated by
  reference.10.18

Form of Director Stock Subscription
  Agreement; previously filed as Exhibit 10.2 by Holding in its Form 10-Q for
  the quarter ended September 30, 1997, and herein incorporated by reference.*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 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 Holdings Quarterly Report on Form
  10-Q, for the quarter ended June 30, 1999, and herein incorporated
  by reference.*143

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

Remington Arms Co., Inc. 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 reference.*10.30

Form of Management Stock Option Agreement 
  Service Option; 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 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 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 herein incorporated
  by reference.*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 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 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, 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

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 herein144

by reference. *10.40

The Remington Arms Company, Inc. Pension
  and Retirement Plan, January 1, 2001 Restatement; previously filed as Exhibit
  10.41 to Remingtons annual report on Form 10-K, filed March 23, 2006 and
  incorporated herein by reference. *10.41

The Remington Arms Company, Inc. Supplemental
  Pension Plan; previously filed as Exhibit 10.43 to Remingtons annual report
  on Form 10-K, filed March 31, 2006 and incorporated herein by reference. *10.42

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 financial
  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 31, 2006
  and incorporated herein by reference.10.43

The Remington Arms Company, Inc. 2006 Long
  Term Incentive Plan; previously filed as Exhibit 10.1 to Remingtons report
  on Form 10-Q, filed November 14, 2006 and incorporated herein by reference.*10.44

The Remington Supplemental Savings Plan,
  amended and restated as of August 2006; previously filed as Exhibit 10.2 to
  Remingtons report on Form 10-Q, filed November 14, 2006 and incorporated
  herein by reference.*10.45

Summary
  of Amendments to The Remington Arms Company, Inc. Pension and Retirement Plan
  and the The Remington Arms Company, Inc. Supplemental Pension Plan.*10.46

Severance Agreement for Stephen P. Jackson,
  dated December 1, 2006; previously filed as Exhibit 10.1 to Remingtons
  report on Form 8-K, filed December 7, 2006 and incorporated herein by
  reference.*10.47

Description
  of 2007 Incentive Compensation Plan.*12.1

Statement
  Re: Computation of Ratio of Earnings to Fixed Charges.16.1

Letter from PricewaterhouseCoopers LLP to
  the United States Securities and 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 Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of
  1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley
  Act of 2002.31.2

Certification
  Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of
  1934, as amended, 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, filed
  February 19, 2004­, and herein incorporated by reference.99.2

Form
  of Proxy sent to security holders for 2007 annual meeting.99.3

Notice
  of Annual Meeting and Instructions sent to security holders for 2007 annual
  meeting.Our SEC file number reference for documents
  filed with the SEC pursuant to the Securities Exchange Act of 1934, as
  amended, is 033-74194-01.*

Management contract or compensatory plan or
  arrangement.**

The following exhibits shall not be deemed
  filed for purposes of Section 18 of the Securities Exchange Act of 1934, or
  otherwise subject to the liability of that Section. In addition, Exhibit No.
  32.1 and Exhibit No. 32.2 shall not be deemed incorporated into any filing
  under the Securities Act of 1933 or the Securities Exchange Act of 1934.145