UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A (Mark One) x
        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934  For the fiscal year
ended: December 31, 2004 OR o
        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition
period from _____ to _____ Commission file
number: 333-104141 REMINGTON ARMS COMPANY, INC.
(Exact name of registrant as specified in its charter) Delaware
(State or other jurisdiction of incorporation or organization)
        51-0350935
(I.R.S. Employer Identification No.)  870 Remington Drive
P.O. Box 700
Madison, North Carolina
27025-0700(Address of principal
executive offices)
(Zip Code) (336) 548-8700(Registrants telephone number,
including area code) Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports) and
(2) has been subject to such filing requirements for the past 90 days. Yes
x          
No  o Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
is not contained herein, and will not be contained, to the best of the registrants
knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K.    [Not applicable] Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of
the Securities and Exchange Act of 1934). Yes
o          
No x At
March 23, 2005, 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. This Form 10-K/A has
84 pages.    Explanatory Statement


Restatement of
previously issued financial statements


This
Form 10-K/A amends our Form 10-K filed March 24, 2005.  We have restated our previously
issued financial statements for the years ended December 31, 2004, 2003, and 2002 to
reflect the correction of a methodological error related to our reserve for potential
healthcare claims which resulted from the use of inaccurate data and methodologies, as
disclosed in our Form 8-K filing dated July 21, 2005.  The error resulted in the Companys healthcare
accrual being understated by approximately $0.7 million as of December 31, 2004.  The resulting
impact on operations from the correction of this error is to increase the Companys net loss in 2004 by $0.1 million and to decrease the Company's net
income in 2002 by $0.2 million.  There is no change to the Companys net loss for 2003.


For
a discussion of the restatement adjustment, see Item 7. Managements Discussion and
Analysis of Financial Condition and Results of Operations  Restatement of
Previously Issued Financial Statements and Note 3 to the audited consolidated financial
statements presented herein.  For a further explanation of the circumstances surrounding the restatement, see
Item 9A.  Controls and Procedures.


All
amounts referenced in this Form 10-K/A, including the 2003 and 2004 interim periods,
reflect the relevant amounts on a restated basis. We are concurrently amending our
Quarterly Reports on Form 10-Q for the periods ended June 30, 2004, September 30, 2004,
and March 31, 2005.  We are not restating our Annual Reports on Form 10-K for the years
ended December 31, 2002 or 2003, or our Quarterly Reports on Form 10-Q for quarterly
periods from January 1, 2002 through March 31, 2004.


Items
from our Form 10-K filed March 24, 2005 not included in this Form 10-K/A remain unamended.


The
previously reported 2003 and 2004 annual financial statements, included in the Companys
2004 annual report on Form 10-K, and the Companys previously reported 2004 and 2005
quarterly financial statements, which were included in the Companys quarterly reports on
Form 10-Q filed with respect to such periods, should no longer be relied upon and will
accordingly be restated.


REMINGTON ARMS
COMPANY, INC.


FORM 10-K/A


December 31, 2004


INDEX


Page No.PART I
     
     3ITEM 1. BUSINESS
     3PART II
     15ITEM 6. SELECTED FINANCIAL DATA
     15ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATION
     18ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
     37ITEM 9A. CONTROLS AND PROCEDURES
     75PART IV
     76ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
     76SIGNATURES
     77
PART I




Item 1.  BUSINESS


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


Company Overview


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


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


For
the year ended December 31, 2004, we had consolidated net sales of $393.0 million and a
net loss of $4.1 million, including a $15.5 million tax expense associated with
establishing a valuation allowance against certain deferred tax assets offset in part by
a $13.6 million gain on our sale of our fishing line business.  See Notes 4 and 19 to the
audited consolidated financial statements for additional disclosures relating to the sale
of the fishing line business and the valuation allowance on deferred tax assets,
respectively.


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


A
revision to the  classification  of licensing  income from  selling,  general,  and
 administrative  expense to other income was made to financial information  from prior
 periods to conform  with the current  presentation  format.  The change in
 classification  did not have a material  impact on the previously  reported  financial
 condition,  results of  operations  or cash flows of the  Company  (See Note 5 to the
 accompanying  audited  consolidated financial  statements for licensing income amounts).
 In addition,  as a result of the sale of specified assets of the fishing line business
on February 9, 2004, the results of these  operations  have been included in
 discontinued  operations and results from prior periods have been  reclassified
 accordingly (See Note 4 to the accompanying audited consolidated financial statements).



3


Recent Business
Developments


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


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


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


Sale of Fishing Line
Business


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


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



4


that the Stren transaction provides
Remington with flexibility to pursue a number of strategic alternatives in these markets.


On
February 8, 2005, in connection with the passage of the one year requirement to invest in
productive assets, we entered into a fourth amendment under the Credit Facility primarily
to permanently reduce our commitments under the Credit Agreement from $125.0 million to
$101.0 million and to amend the availability requirements. See Note 13 to the
accompanying audited financial statements for additional details regarding the fourth
amendment.


Financial Information
about Segments and Geographic Areas


We
evaluate our business as three separate reporting segments:


(1)
Firearms, which designs, manufactures and imports, and markets primarily sporting
shotguns and rifles;(2)
Ammunition, which designs, manufactures and markets primarily sporting ammunition and
ammunition reloading components; and(3)
All Other, which includes accessories and other gun-related products, surveillance
technology products primarily for the government,                   law enforcement and
military markets, and the manufacture and marketing of clay targets and powdered metal
products.The
following table sets forth our net sales, adjusted for the sale of our fishing line
business, for each of our aggregated reporting segments for the periods shown:


Year Ended December 31,2002
     
     2003
     
     2004Firearms
     
     
     $194.0
        
     $181.3
        
     $193.4Ammunition
     163.9
        
     157.1
        
     176.1All Other
     26.0
        
     22.3
        
     23.5Total
     $383.9
        
     $360.7
        
     $393.0See
Note 23 to the accompanying audited consolidated financial statements of Remington,
appearing elsewhere in the report.  There are no material assets owned by the Company
outside of our country of domicile.


NARRATIVE DESCRIPTION OF
BUSINESS BY SEGMENT


Overview


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


Firearms


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



5


Products


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


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


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


Product
Introductions


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


Seasonality


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


Competition


Product
image, performance, quality and innovation are the primary competitive factors in the
firearms industry, with price and customer service also being factors. Our shotgun
products compete with



6


products offered by O. F. Mossberg & Sons,
Inc., USRAC (which produces Winchester firearms), Browning, and Beretta. Our rifles
compete with products offered by Marlin Firearms Co., Sturm, Ruger & Co., Inc., USRAC,
Savage Arms, Inc. and Browning. We believe that we compete effectively with all of our
present competitors. However, there can be no assurance that we will continue to do so,
and our ability to compete could be adversely affected by our leveraged condition.


Manufacturing


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


Supply
of Raw Materials


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


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


Service
and Warranty


We
support service and repair facilities for all of our firearms products in order to meet
the service needs of our distributors, customers and consumers nationwide. New Remington
firearms products purchased in North America, with the exception of our Spartan Gunworks
product line which is warranted by its third party vendor, are warranted to the original
purchaser to be free from defects in material and workmanship for a period of two years
from the registered date of purchase. Warranty expense was $2.8 million, $2.8 million,
and $3.2 million in 2004, 2003, and 2002, respectively.



7


Ammunition


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


Products


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


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


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


Product
Introductions


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


Competition


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


Seasonality


Seasonality
in the ammunition segment revolves primarily upon hunting seasons for certain of our
hunting and shooting sports products, while other products, like shotshell target loads
and pistol and revolver ammunition, do not experience much seasonality.  We offer
extended payment terms on select ammunition categories primarily as a competitive
measure. For further discussion of seasonality and related



8


matters, see Managements
Discussion and Analysis of Financial Condition and Results of Operations--Purchasing
Patterns; Seasonality.


Manufacturing


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


Supply
of Raw Materials


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


The
price and availability of production materials are affected by a wide variety of
interrelated economic and other factors, including alternative uses of materials and
their components, changes in production capacity, energy prices, commodity prices, and
governmental regulations. Specifically, our manufacturing sites experienced cost
increases related to purchases of base metals related to our business and increased
energy costs. These increases were directly related to supply shortages due to foreign
markets demand for base metals and energy. Industry competition and the timing of price
increases by suppliers limits to some extent our ability and the ability of other
industry participants to pass raw material cost increases on to customers. We use
commodity options contracts to hedge against the risk of increased prices for certain raw
materials. See Managements Discussion and Analysis of Financial Condition and Results
of Operations--Liquidity and Capital Resources--Financial Instruments.


All Other Product
Lines


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



9


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


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


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


Unconsolidated Joint
Venture


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


OTHER CORPORATE
INFORMATION


Backlog
Information


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


Customer
Concentration


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


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


Marketing
and Distribution


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


Our
products are marketed and sold primarily through manufacturers sales representatives. In
2004, approximately 70% of our sales consisted of sales made through our five
manufacturers sales representative groups, who market and sell principally to
wholesalers, dealers and regional chains. These sales representatives are prohibited from
selling competing goods from other manufacturers and are paid variable commissions based
on the type of products that are sold. The customers to which the sales representatives
market and sell our products are authorized to carry specified types of Remingtonproducts



10


for a non-exclusive one-year term,
though not all carry the full range of products. These customers generally carry broader
lines of merchandise than do the mass merchants and are less seasonal in sales.


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


Patents,
Trademarks, and Copyrights


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


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


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


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



Remington
Licensing Corporation, a Delaware corporation owned equally by us and Remington Products,
owns the Remingtonmarks in the United States with respect to products of mutual
interest to us and to Remington Products.
Remington
Licensing Corporation licenses the Remingtonmarks 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 Remingtonmark beyond what has
been detailed in the trademark agreement.
If
certain bankruptcy or insolvency-related events occur with respect to either us or
Remington Products, the      bankrupt or insolvent party may be contractually required to
sell its interest in Remington Licensing corporation      to the other party at book
value or fair market value, depending on the circumstances. While in some cases this
     requirement may not be enforceable under the U.S. Bankruptcy Code, if Remington
Products came to own all of      Remington Licensing Corporation, that could provide
Remington Products with greater leverage over our licensing      relationship with
Remington Licensing Corporation for the non-core products discussed above.Research
and Development


We
maintain an ongoing research and development program, with approximately 40 employees
engaged in these efforts at our Elizabethtown, Kentucky facility as of February 28, 2005.
New products and improvements to existing products are developed based upon the perceived
needs and demands of consumers, as well as successful products introduced to the market
by our competitors. Our research and development program involves an in-house team of
engineers and technicians working with operations personnel using tools such as
computer-assisted design. Research and plant technical staff then collaborate to produce
an experimental prototype, ensuring that products and manufacturing processes are
concurrently



11


designed. Following a successful
prototype, a pilot run is commenced to ensure that plant personnel and equipment can
manufacture the product efficiently. We continue to introduce new products employing
innovations in design, manufacturing and safety in both firearms and ammunition, as
outlined in the Product Introductions sections above.


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


Regulation


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


In
September 2004, the United States Congress failed to renew a federal law with a ten-year
term which generally prohibited the manufacture of certain firearms defined under that
statute as assault weapons as well as the sale or possession of assault weapons
except for those that, prior to the laws enactment, were legally in the owners
possession. The now-expired law expressly exempted approximately 650 models of firearms
that are generally used by hunters and sporting enthusiasts.  None of our current
firearms products are considered to be assault weapons under that federal law or
existing state law. Another federal law, enacted in 1993 and extended in 1998, the
so-called Brady Bill, mandates a national system of instant background checks for all
firearms purchases from federally-licensed firearms retail dealers. Legislation has been
proposed to further extend this system to sales made by non-retail sellers at gun shows.


Bills
have been introduced in Congress to establish, and to consider the feasibility of
establishing, a nationwide database recording so-called ballistic images of ammunition
fired from new guns. Should such a mandatory database be established, the cost to
Remington and its customers could be significant, depending on the type of firearms and
ballistic information included in the database. To date, only two states have established
such registries, and neither state includes such imaging data from long guns, although
there can be no assurance that these (or other states) will not require the inclusion of
such imaging in the future. Proposed legislation in at least one other state would be
applicable to Remingtonrifles, and would call for imaging of both cartridges and
projectiles. In addition, bills have been introduced in Congress in the past several
years that would affect the manufacture and sale of handgun ammunition, including bills
to regulate the manufacture, importation and sale of any projectile that is capable of
penetrating body armor, to impose a tax and import controls on bullets designed to
penetrate bullet-proof vests, to prohibit the manufacture, transfer or importation of .25
caliber, .32 caliber and 9mm handgun ammunition, to increase the tax on handgun
ammunition, to impose a special occupational tax and registration requirements on
manufacturers of handgun ammunition, and to drastically increase the tax on certain
handgun ammunition, such as 9mm, .25 caliber, and .32 caliber bullets. Some of these
bills would apply to ammunition of the kind we produce, and accordingly, if enacted,
could have a material adverse effect on our business. We believe that existing
regulations applicable to ammunition have not had such an effect.


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



12


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.


We
believe that existing federal and state regulation regarding firearms and ammunition has
not had a material adverse effect on our sales of these products to date. However, there
can be no assurance that federal, state, local or foreign regulation of firearms and/or
ammunition will not become more restrictive in the future and that any such development
would not have a material adverse effect on our business whether directly or by placing
additional burdens on those who distribute and sell our products.


Environmental
Matters


Our
operations are subject to a variety of federal, state and local environmental laws and
regulations which govern, among other things, the discharge of hazardous materials to the
air and water, handling, treatment, storage and disposal of such materials, as well as
remediation of contaminated soil and groundwater. We have in place programs that monitor
compliance with these requirements and believe our operations are in material compliance
with them. In the normal course of our manufacturing operations, we are subject to
occasional governmental proceedings and orders pertaining to waste disposal, air
emissions and water discharges into the environment. We believe that we are in compliance
with applicable environmental regulations in all material respects, and that the outcome
of any such proceedings and orders will not have a material adverse effect on our
business. Under the terms of the Asset Purchase Agreement (the Purchase Agreement)
pursuant to which certain assets of E.I. DuPont Nemours & Company (DuPont) and its
affiliates (collectively, the Sellers) were acquired in 1993 (the Acquisition) to
constitute Remington in its present form, DuPont agreed to retain responsibility for
pre-closing environmental liabilities.  In connection with the Acquisition, Remington
also entered into an agreement with Dupont with respect to cooperation and responsibility
for specified environmental matters.  See Certain Indemnities.


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


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


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


Employees


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


The
United Mine Workers of America (UMWA) represents approximately 900 hourly employees at
our plant in Ilion, New York. The collective bargaining agreement with UMWA was
renegotiated



13


effective October 2002 with the
contract expiring in September 2007. We also have a labor agreement with Local 2021 of
the United Automobile, Aircraft and Agricultural Implement Workers of America, U.A.W.,
which represents less than 10 hourly employees at our plant in Findlay, Ohio, which
agreement is terminable by either party on notice. Employees at our Lonoke, Arkansas,
Mayfield, Kentucky and Ada, Oklahoma facilities are not represented by unions. There have
been no significant interruptions or curtailments of operations due to labor disputes
since prior to 1968 and we believe that our relations with our employees are satisfactory.


Available Information


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



14


ITEM 6.    SELECTED
FINANCIAL DATA


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


Year Ended December 31,2000
     
     2001
     
     2002Restated(A)
     2003Restated(A)
     2004Restated(A)(dollars in millions)Income Statement Data:Net Sales (1)
     $371.1
        
     $365.7
        
     $383.9
        
     $360.7
        
     $393.0Sales Growth (Loss) Percentage
     (3.2
        %)
     (1.5
        %)
     5.0
        %
     (6.0
        %)
     9.0
        %Gross Profit
     122.0
        
     99.4
        
     110.8
        
     90.5
        
     90.5Gross Profit Percentage
     32.9
        %
     27.2
        %
     28.9
        %
     25.1
        %
     23.0
        %Operating Expenses
     77.6
        
     65.9
        
     70.2
        
     75.0
        
     69.6Operating Profit
     44.4
        
     33.5
        
     40.6
        
     15.5
        
     20.9Interest Expense (2)
     11.7
        
     12.6
        
     10.5
        
     23.0
        
     24.6Income (Loss) from Continuing Operations before Taxes
     32.7
        
     20.9
        
     30.1
        
     (7.5
        )
     (3.7
        )Income Tax Expense (Benefit) from ContinuingOperations (3)
     12.6
        
     8.0
        
     11.8
        
     (2.9
        )
     14.0Income from Discontinued Operations, net of tax (4)
     (0.2
        )
     0.8
        
     2.9
        
     1.4
        
     Gain on Disposal of Discontinued Operations, net oftax (5)
     
        
     
        
     
        
     
        
     13.6Net Income (Loss)
     19.9
        
     13.7
        
     19.8
        
     (3.2
        )
     (4.1
        )Operating and Other Financial Data:Depreciation and Amortization (6)
     $16.4
        
     $16.9
        
     $10.0
        
     $9.5
        
     $9.2Other Non-Cash Charges (7)
     1.2
        
     1.1
        
     1.0
        
     3.4
        
     7.4Nonrecurring and Restructuring Items (8)
     0.5
        
     1.3
        
     2.1
        
     0.4
        
     (12.7
        )Special Payments (9)
     6.9
        
     
        
     1.8
        
     4.5
        
     Gross Capital Expenditures
     $17.4
        
     $4.2
        
     $7.5
        
     $6.9
        
     $9.5Other Unusual Charges (10)
     
        
     
        
     
        
     2.2
        
     Adjusted EBITDA related to Discontinued Operations(11)
     4.9
        
     5.2
        
     6.7
        
     4.1
        
     0.2Cash flows provided by (used in):Operating activities
     $22.3
        
     $50.9
        
     $14.1
        
     $(7.3
        )
     $(11.8
        )Investing activities
     (17.4
        )
     (4.2
        )
     (7.5
        )
     (6.9
        )
     35.1Financing activities
     (28.5
        )
     (35.9
        )
     (19.6
        )
     14.2
        
     (23.3
        )Balance Sheet Data (end of period):Working Capital (12)
     $109.9
        
     $91.1
        
     $90.2
        
     $119.5
        
     $116.0Total Assets
     361.9
        
     332.1
        
     335.1
        
     362.7
        
     351.6Total Debt (13)
     157.0
        
     115.3
        
     101.1
        
     230.5
        
     203.5Credit Facility
     64.5
        
     25.0
        
     11.0
        
     28.3
        
     1.8Shareholders Equity
     90.1
        
     103.6
        
     111.6
        
     11.8
        
     9.9Consolidated EBITDA (as defined in the Indenture)
    and Credit Statistics:
     2000
     
     2001
     
     2002
     
     2003
     
     2004Consolidated EBITDA (as defined in the Indenture)(11) (14)
     $73.0
        
     $56.8
        
     $60.7
        
     $39.6
        
     $38.6Consolidated Interest Expense (as defined in theIndenture) (15)
     $13.6
        
     $13.6
        
     $10.4
        
     $23.0
        
     $22.8Consolidated Coverage Ratio (as defined in theIndenture) (16)
     5.4
        x
     4.2
        x
     5.8
        x
     1.7
        x
     1.7
        xRatio of Earnings to Fixed Charges (17)
     3.6
        x
     2.6
        x
     3.8
        x
     (17
        )
     (17
        )15


(A)
We
have restated our previously issued financial statements for the years ended December 31,
2004, 2003 and 2002 to reflect the        correction of a methodological error related to
our reserve for healthcare claims. The error described above resulted from the use of
       inaccurate data and methodologies in calculating the health care accrual.  For a
discussion of the restatement adjustment, see Item 7.        Managements Discussion and
Analysis of Financial Condition and Results of Operations  Restatement of Previously
Issued Financial        Statements and Note 3 to the audited consolidated financial
statements presented herein.(1)
Presented
net of federal excise taxes. Federal excise taxes were $32.5 million, $32.1 million,
$33.5 million, $31.2 million and $33.5        million for the years ended December 31,
2000, 2001, 2002, 2003 and 2004, respectively.(2)
Interest
expense included in discontinued operations is $3.9 million, $2.7 million, $1.8 million,
$1.8 million, and $0.1 million, for the        years ended December 31, 2000, 2001, 2002,
2003 and 2004, respectively.(3)
The
year ended December 31, 2004 includes $15.5 million in tax expense associated with
establishing a valuation allowance against certain        deferred tax assets.  See Note
19 to the audited consolidated financial statements presented herein.(4)
On
February 9, 2004, we completed the sale of our fishing line business, and reclassified
the results as discontinued operations for all        periods presented.(5)
Reflects
the Gain on Disposal of assets sold associated with the sale of specified assets of our
fishing line business on February 9,        2004.  See Note 4 to the audited consolidated
financial statements presented herein.(6)
Excludes
amortization of deferred financing costs of $2.0 million, $1.7 million, $1.9 million,
$1.8 million and $1.9 million for the        years ended 2000, 2001, 2002, 2003 and 2004,
respectively, which is included in interest expense.(7)
Non-cash
charges consist of the following: (a) for the year ended December 31, 2000, a $0.7
million accrual for retiree benefits and a        $0.5 million loss on disposal of
assets; (b) for the year ended December 31, 2001, a $0.7 million accrual for retiree
benefits and a $0.4        million loss on disposal of assets; (c) for the year ended
December 31, 2002, a $0.8 million accrual for retiree benefits and a $0.2        million
loss on disposal of assets; (d) for the year ended December 31, 2003, a $2.9 million
retiree benefits and a $0.5 million loss on        disposal of assets; (e) for the year
ended December 31, 2004, a $7.1 million accrual for retiree benefits and a $0.3 million
loss on        disposal of assets.(8)
Nonrecurring
and restructuring expenses consist of the following: (a) for the year ended December 31,
2000, nonrecurring professional        fees of $0.5 million related to establishment of
subsidiaries; (b) for the year ended December 31, 2001, $0.6 million of nonrecurring
       legal and professional fees and $0.7 million of severance and relocation costs;
(c) for the year ended December 31, 2002, $1.4 million of        Cumulative Effect of
Change in Accounting Principle, net of tax, and $0.3 million of nonrecurring legal fees
and $0.4 million associated        with marking redeemable deferred shares to market; (d)
for the year ended December 31, 2003, $0.2 million of severance costs and $0.2
       million loss on disposal of assets; (e) for the year ended December 31, 2004,
$13.6 million gain on sale of the fishline line business,        offset by $0.2 million
of severance costs, and $0.7 million in consulting fees associated with the nonrecurring
exclusive distribution        and joint venture agreements for certain technology
products.(9)
Special
payments consist of the following: (a) In April 2000, Holding distributed on behalf of
Remington a special payment to holders of        all stock options and deferred shares of
approximately $63.93 per share, in an aggregate amount of $6.1 million. In October 2000,
Holding        distributed on behalf of Remington a special payment to holders of all
stock options and deferred shares of approximately $8.00 per        share, in an
aggregate amount of $0.8 million. (b) In August 2002, Holding distributed on behalf of
Remington a special payment to        holders of all stock options and deferred shares of
approximately $19.54 per share, in an aggregate amount of $1.8 million. (c) In
       February 2003, Holding distributed on behalf of Remington a special payment to
holders of all stock options (in connection with the        acceleration and resulting
cancellation of the options) of approximately $220.31 per share, in an aggregate amount
of $4.5 million.(10)
In
January 2003, $0.7 million of additional interest for early redemption of Remingtons 91⁄2%
Senior Subordinated Notes due 2003 (the        Refinanced Notes) and $1.5 million
for the unamortized debt acquisition costs were expensed related to Remington prior
senior secured        credit facility (the Old Credit Facility).(11)
Adjusted
EBITDA as presented herein has the same meaning as defined in Note 23 to the audited
consolidated financial statements        presented herein.  Discontinued Operations
relates solely to the sale of our fishing line business on February 9, 2004.  Adjusted
EBITDA        related to Discontinued Operations is appropriately included in
Consolidated EBITDA as defined in the Indenture for all periods        presented.(12)
Working
capital presented herein as total current assets less total current liabilities.(13)
Consists
of short-term and long-term debt, current portion of long-term debt, note payable to
Holding and capital lease obligations.(14)
Consolidated
EBITDA as presented herein is a financial measure that is used in the Indenture as a
component of a coverage ratio that is        used to test whether a variety of
transactions are permitted. Consolidated EBITDA (as defined in the indenture) differs
from the term        EBITDA as it is commonly used. In addition to adjusting net income
to exclude16


income taxes,
interest expense, and depreciation and amortization, Consolidated EBITDA (as
defined in the indenture) also adjusts net income by excluding items or expenses
not typically excluded in the calculation of EBITDA. To calculate Consolidated
EBITDA (as defined in the indenture) for the period ended December 31, 2004, we
also excluded Other Noncash Charges of $7.4 million and Non-Recurring and
Restructuring Items of ($12.7 million). See Note 23 to the audited financial
statements presented herein for a reconciliation of this measure to net income.The Indenture
provides that, in order to enter into the following types of transactions, in
addition to other applicable requirements, the ratio of Consolidated EBITDA (as
defined in the Indenture) to Remingtons consolidated interest expense (subject
to certain adjustments as provided in the Indenture) must be greater than 2.25
to 1.00 for the four most recent quarters for which financial statements are
available:
The
incurrence of indebtedness in addition to limited specified categories of permitted
indebtedness that are enumerated in the            Indenture.
Mergers
and consolidations involving Remington.
Dividends,
investments and other restricted payments in addition to limited specified categories of
permitted restricted payments and            investments that are enumerated in the
Indenture.
The
re-designation of an unrestricted subsidiary as a restricted subsidiary for the purposes
of the Indenture.(15)
Consolidated
Interest Expense as defined in the Indenture, consists of the total interest expense of
Remington and its subsidiaries,        net of any interest income of Remington and its
subsidiaries, and includes interest expense consisting of (a) interest expense
       attributable to capital leases, (b) amortization of debt discount, (c) interest on
debt of other persons guaranteed by Remington or any        of its subsidiaries, (d)
non-cash interest expense, (e) the interest portion of any deferred payment obligation
and (f) commissions,        discounts and other fees and charges owed with respect to
letters of credit and bankers acceptance financing. The definition of
       Consolidated Interest Expense also provides that gross interest is to be
determined after giving effect to any net payment made or        received by Remington or
its subsidiaries with respect to interest rate hedging agreements. Note that Consolidated
Interest Expense        excludes amortization expense associated with the Companys debt
acquisition costs of $2.0 million, $1.7 million, $1.9 million, $1.8        million and
$1.9 million for the years ended 2000, 2001, 2002, 2003 and 2004, respectively, and
includes amounts reclassified to        discontinued operations of $3.9 million, $2.7
million, $1.8 million, $1.8 million, and $0.1 million, for the years ended December 31,
       2000, 2001, 2002, 2003 and 2004, respectively.(16)
Consolidated
Coverage Ratio as defined in the Indenture is the ratio of Consolidated EBITDA (as
defined in the Indenture) for the four        most recently ended quarters for which
financial statements are available to Consolidated Interest Expense (as defined in the
Indenture)        for the same period. The Consolidated Coverage Ratio (as defined in the
Indenture) is presented for illustrative purposes.(17)
For
purposes of computing this ratio, earnings consists of earnings before income taxes and
fixed charges, excluding capitalized        interest. Fixed charges consist of interest
expense, capitalized interest, amortization of discount on indebtedness and one-third of
       rental expense (the portion deemed representative of the interest factor). Due to
our net loss in 2004 and 2003, this ratio was less than        1:1. Additional earnings
of $3.7 million and $7.5 million in 2004 and 2003, respectively, would have been required
to achieve a ratio of        1:1.17


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


The
following discussion and analysis should be read in conjunction with the Selected
Financial Data and our consolidated financial statements and related notes and the other
financial information appearing elsewhere in this report.


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



Executive
Overview.
Restatement of Previously Issued
Financial Statements.
Recent
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.
Product Liability.Executive Overview


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


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


We
evaluate our business primarily on Adjusted EBITDA (as defined in Note 23 to our audited
consolidated financial statements included in this report, to which we refer you) results
from two core segments, firearms and ammunition, with support from our other operating
segments, primarily Accessories and Clay Targets. As part of this evaluation, we focus on
managing inventory and payables through, among other things, production management and
expense control. These segments allow us to focus our strategies and initiatives on
growth opportunities primarily focused on the hunting and shooting sports marketplace.


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


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


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



In June 2004, we
delivered our first sales of the Spartan Gunworks product line, an opening price
point line of shotguns.
On July 19,
2004, we entered into a ten year exclusive distribution rights agreement with a
technology products manufacturer for certain security products within the United
States, certain of its territories, and Canada, that required the payment of
$0.5 million. We expect to sell these security products to the federal agency
and law enforcement markets. We incurred expenses associated with the initial
launching of these products during 2004 for distribution, selling, marketing,
administrative, and transaction costs, and included the related financial
results in the newly formed Technology Products operating segment, which is
combined with the All Other reporting segment in 2004. At year-end December 31,
2004, we expensed $0.8 million pursuant to this agreement (including the above
mentioned $0.5 million one time payment).18



On August 4,
2004, we entered into a joint venture agreement with ELSAG, Inc., an
unaffiliated third party, to form RELES. RELES will sell and service a license
plate reading technology that is expected to be sold to state and local law
enforcement agencies along with certain federal agencies. The venture gives us a
50% ownership interest. The agreement calls for each member to provide 50% of
required capital investments and receive 50% of distributions, with a maximum
contribution amount of $1.5 million by each party. In addition, we will provide
certain administrative support functions, while ELSAG, Inc. will provide product
technology support. On October 15, 2004, we made our initial contribution to the
venture of approximately $0.3 million. On February 1, 2005, we made an
additional contribution of approximately $0.2 million.In
connection with our growth initiatives, including those in our core businesses, we
expensed approximately $2.8 million during the year ended December 31, 2004.


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


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


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


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


Restatement of
Previously Issued Financial Statements


We
have restated our previously issued financial statements for the years ended December 31,
2004, 2003, and 2002 on Form 10-K/A to reflect the correction of a methodological error
related to our reserve for potential healthcare claims. On July 15, 2005 through
discussions by management and the audit committee, we determined that an error existed in
the calculation of our health care accrual included in previously issued financial
statements. The error resulted from the use of inaccurate data and methodologies in
calculating the healthcare accrual.  All amounts referenced in this Annual Report for
2004 reflect relevant amounts on a restated basis.  We are concurrently amending our
Quarterly Report on Forms 10-Q for the periods ended March 31, 2005, September 30, 2004,
and June 30, 2004. We are not amending our Annual Reports on Form 10-K for any years
prior hereto.  See Note 3 to the accompanying audited consolidated financial statements
for additional information.


Recent Developments and
Highlights


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



19


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



We believe that
economic conditions have caused customers (dealers, chains and wholesalers) to
defer purchases of our products until later in the core fall hunting season
(September through December) and to utilize lower inventory levels than during
prior periods. This overall trend in demand continues to date, and there can be
no assurance that such trends will not continue.
We believe that
hunting and shooting safety is an important issue that affects sales of
firearms, ammunition and other shooting-related products. We have focused on
safety education. Such instruction is also provided through an interactive
safety training course on our Internet web site, at www.remington.com. We also
provide substantial amounts of information regarding our products, their safe
use and handling, and general shooting and outdoors information on our website.
We also work through industry trade groups and hunter safety organizations to
teach both novices and experienced gun owners the safe use, care and handling of
firearms. Since early 2000, a majority of the firearms that we have shipped have
included a locking mechanism.
Environmental
issues, such as concern about lead in the environment, may adversely affect the
industry. We have developed multiple lines of shotshells that use steel shot
instead of the industry standard lead shot and to meet Government mandated
requirements for migratory waterfowl hunting.
We believe that
the number of private hunting facilities is increasing, as is the availability
of alternatives to traditional hunting activities, such as sporting clays and
other target sports. On the other hand, we believe that the development of rural
property in many locations has curtailed or eliminated access by hunters to
private and public lands.
We believe that
trends regarding firearms regulatory proposals, as well as pending municipal
litigation (or consumer perceptions of these developments) could adversely
affect the firearms and ammunition market. We produce firearms and ammunition
that are used by hunters and sporting enthusiasts, and to a lesser extent, by
law enforcement agencies. We do not produce assault weapons as defined in the
federal law enacted in 1994. We do not produce handguns and no Remingtonbrand
handguns (as that term is conventionally used) have been produced since before
World War II. We do, however, produce handgun ammunition.Although
we believe that these trends have not had a material adverse effect on our business in
the past, there can be no assurance that they will not do so in the future, or that
industry sales (or the number of retail outlets available for such sales) of firearms,
ammunition and other shooting-related products will not decline.


Business Outlook


General Economy


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


Industry


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



20


Remington


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


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


Seasonality


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


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


Liquidity and Capital
Resources


Overview


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


Liquidity


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



21


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


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


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


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


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


101⁄2% Senior
Notes due 2011


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


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


Credit Facility


On
February 8, 2005, in connection with the passage of the one year requirement to invest in
productive assets, we entered into a fourth amendment under the Credit Facility primarily
to permanently reduce our commitments under the Credit Agreement from $125.0 million to
$101.0 million and to amend the availability requirements. See Note 13 to the
accompanying audited financial statements for additional details regarding the fourth
amendment. As a result of the reduction in borrowing capacity, and in accordance with
Emerging Issues Task Force No. 98-14 (EITF 98-14), the Company reduced



22


its debt acquisition costs by $0.5
million upon signing of the fourth amendment to the Credit Facility in February 2005, the
expense for which will be recorded in the Other Expense line item on the Companys
Statement of Operations.


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


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


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


(1)
The minimum
amount of availability required to be maintained during the Availability Test
Period is $20.0 million (except during any single period of up to 60 consecutive
days from June through September of each year during the Availability Test
Period, when such minimum availability requirement is $10.0 million). For any
period during the Availability Test Period when such minimum availability
requirement is not met, the Company must maintain (i) a maximum leverage ratio
of 6.0 to 1.0 and (ii) a minimum fixed charge coverage ratio of 1.1 to 1.0. So
long as the minimum availability requirement is met during the Availability Test
Period, there is no requirement for the Company to meet the maximum leverage
ratio or the minimum fixed charge coverage ratio.(2)
The Company is
required to maintain specified minimum rolling four quarter levels of
Consolidated EBITDA (as defined in the Credit Facility) during the Availability
Test Period.(3)
All of
Remingtons existing and future domestic subsidiaries are either co-borrowers
under, or guarantors of, the facility. The Credit Facility is secured by
substantially all of our real and personal property, including without
limitation the capital stock of our subsidiaries.(4)
Amounts
outstanding under the Credit Facility bear interest at a rate equal to, at our
option, (1) an alternate base rate plus applicable margin, (2) a reserve
adjusted LIBOR rate plus an applicable margin. These margins are subject to
periodic adjustment based on certain levels of financial performance at various
times during the term of the Credit Facility.(5)
The Credit
Facility contains limitations on capital expenditures exceeding $12.5 million
during any fiscal year, adjusted upward for any previously unspent amounts in
prior years that were less than the annual $12.5 million limitation.(6)
The Credit
Facility contains limitations on indebtedness, liens, investments, mergers and
other acquisitions, asset dispositions, transactions with affiliates, and
dividends and other distributions.(7)
The Credit
Facility contains customary events of default.(8)
The Company is
required to pay certain fees in connection with the Credit Facility, including
(1) letter of credit fees, (2) agency fees and (3) an unused commitment fee of
0.375% which is payable if the average Credit Facility balance is 50% or more of
the aggregate revolving commitments in effect on the first day of such month,
subject to adjustment upward to 0.500% if the average outstanding Credit
Facility balance for any month is less than 50% of the aggregate revolving
commitments in effect on the first day of such month.(9)
The Credit
Facility contains other customary affirmative and negative covenants: including
but not limited to those listed above.23


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


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


Cash Flows and
Working Capital


Net
cash used in operating  activities was $11.8 million and $7.3 million for the fiscal
years ended December 31, 2004 and 2003,  respectively.  The $4.5 million  increase in
cash used in operating  activities  for the twelve months ended  December 31, 2004
compared to the same period ended December 31, 2003 resulted  primarily from higher
levels of accounts  receivable and inventory,  offset by changes in deferred  taxes,
 higher accrued  liabilities  and retiree benefits.  The sale of the fishing line
business also affected net cash used in operating  activities.  Specifically,  the
reasons  associated with these changes are summarized as follows:



Inventory
 increased  by $6.9 million over the twelve  months  ended  December 31, 2004  compared
to an increase of $0.1 million over the twelve              months ended  December 31,
2003.  The increase in inventory  over prior year is primarily  related to higher
 production  costs in the current              year, new product offerings in 2004
(primarily Spartan Gunworks), as well as a plant shutdown in the prior year.
Accounts
 Receivable  increased by $14.1 million over the twelve months ended December 31, 2004
compared to an increase of $8.5 million over the              twelve months ended
 December 31, 2003,  primarily due to higher sales in the third and fourth  quarters of
2004 as compared to the prior year              periods.
Deferred
tax  liabilities  increased by $18.4 million over the twelve months ended December 31,
2004 compared to a decrease of $1.0 million over              the twelve months ended
December 31, 2003, primarily due to recording a valuation allowance of approximately
$15.5 million.
Other
accrued and long-term  liabilities  increased by $1.7 million in the twelve months ended
 December 31, 2004 compared to a decrease of $1.8              million in the twelve
months ended December 31, 2003,  primarily as a result of timing of excise taxes payments
and higher pension liabilities              for the year ended December 31, 2004,
 combined with the payment of the incentive  compensation  and  transaction fee accruals
during the year              ended December 31, 2003.
The
provision for retiree benefits  increased  primarily due to higher pension and
 postretirement  benefit expense as compared to required cash              contributions
 during 2004 as compared to 2003. See Note 12 to the  accompanying  audited  financial
 statements for an  understanding  of our              benefit plan obligations.
The
sale of the fishing  line  business  on  February 9, 2004  resulted in an increase in net
income due to a gain (net of taxes) on the sale of              $13.6 million.  This
adjustment,  in combination with other  adjustments for accruals and taxes associated
with the sale are included in other              accrued and  long-term  liabilities  and
income  taxes  payable.  The amount of the cash  proceeds  from the sale was  included
 in  investing              activities as indicated below.Net
cash provided by investing  activities for the fiscal year ended  December 31, 2004 was
$35.1 million and net cash used in investing  activities in the fiscal year ended
 December 31, 2003 was $6.9 million.  Net cash  proceeds of $42.8  million  received from
the sale of our fishing line business in 2004,  combined with $0.4 million of cash
proceeds on sale of property,  plant and equipment  resulted in the increase,  slightly
offset by $7.8 million in cash  capital  expenditures  and the $0.3  million  investment
 in our  unconsolidated  joint  venture.  The $7.8  million and $6.8 million of cash
capital expenditures for investing  activities in the fiscal years ended 2004 and 2003,
 respectively,  consisted of capital  expenditures  primarily used both for new equipment
related to the manufacture of firearms and ammunition, as well as maintenance of existing
facilities.


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


Dividend Policy


The
declaration and payment of dividends,  if any, will be at the sole  discretion of the
Board of Directors of the respective  company,  subject to the restrictions set forth in
the Credit Facility and the indenture for the Notes,  which currently  restrict the
payment of dividends to shareholders.  We expect to make future  dividend  payments to
Holding based on available cash flows as and to the extent  permitted by the Credit
Facility and the indenture for the Notes.  During the year ended



24


December 31, 2004,  the Board of
Directors of the Company  declared and the Company paid $2.2 million of dividends to
Holding.


Capital Expenditures


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


Contractual
Obligations and Commercial Commitments


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


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


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


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


Payments Due by PeriodTotal
AmountsCommitted
     Less
ThanYear
     
     1-3Years
     
     4-5Years
     
     Over 5Years(dollars in millions)Contractual Obligations:101⁄2% Senior Notes due 2011
     $200.0
        
     $-
        
     $-
        
     $-
        
     $200.0Expected interest payments associated with the Senior        Notes due 2011
     127.4
        
     21.0
        
     42.0
        
     42.0
        
     22.4Required pension contributions
     7.1
        
     7.1
        
     
        
     
        
     Working Capital Facility Borrowings
     1.8
        
     
        
     
        
     1.8
        
     Due to RACI Holding, Inc.
     0.9
        
     
        
     
        
     0.2
        
     0.7Capital Lease Obligations
     0.8
        
     0.6
        
     0.2
        
     
        
     Operating Lease Obligations
     7.8
        
     1.5
        
     2.7
        
     2.4
        
     1.2Other Long-term and Purchase Obligations
     16.5
        
     10.4
        
     5.7
        
     0.4
        
     Total Contractual Cash Obligations
     $362.3
        
     $40.6
        
     $50.6
        
     $46.8
        
     $224.3Other Commercial Commitments:Standby Letters of Credit
     $4.9
        
     $4.9
        
     $
        
     $
        
     $Total Commercial Commitments
     $4.9
        
     $4.9
        
     $
        
     $
        
     $Results of Operations


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



25


As RestatedYear Ended December 31,2002
     
     2003
     
     2004Net Sales
     
     
     100.0
        %
     100.0
        %
     100.0
        %Cost of Goods Sold
     71.0
        
     75.0
        
     77.0Gross Profit
     29.0
        
     25.0
        
     23.0Operating Expenses
     18.0
        
     21.0
        
     18.0Operating Profit
     11.0
        
     4.0
        
     5.0Net Income/(Loss) from Continuing Operations
     5.0
        
     (1.0
        )
     (4.0
        )Year Ended December
31, 2004 (Restated) as Compared to Year Ended December 31, 2003 (Restated)


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


Twelve months ended December 31,(Dollars in Millions)2004
     
     PercentOf Total
     
     2003
     
     PercentOf Total
     $
Increase/(Decrease)
     %
Increase/(Decrease)Net SalesFirearms
     $193.4
        
     49.2
        %
     $181.3
        
     50.3
        %
     $12.1
        
     6.7
        %Ammunition
     176.1
        
     44.8
        
     157.1
        
     43.5
        
     19.0
        
     10.8All Other
     23.5
        
     6.0
        
     22.3
        
     6.2
        
     1.2
        
     5.4Consolidated
     $393.0
        
     100
        %
     $360.7
        
     100
        %
     $32.3
        
     8.2
        %Firearms


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



higher
sales volumes of existing shotguns and higher margin rifles; and
shipments
of our opening price point shotguns; partially offset by
price
loss of $0.8 million related primarily to the sale of discontinued product.Ammunition


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



higher
sales volumes of shotshell ammunition and lower margin centerfire ammunition; as well as
higher
sales volumes of higher margin centerfire rifle ammunition; partially offset by
price
loss of $0.8 million associated primarily with the sale of discontinued product,  higher
volume rebates and higher volumes of product sold                   on terms.All
Other (including Accessories, Clay Targets, Powdered Metal Products, and Technology
Products)


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



higher
sales of knives, and new products in the cleaning product and shooting glasses
categories; partially offset by
lower
sales of gun safes.Cost
of Goods Sold.The table below depicts the cost of goods sold by reporting segment for
the years ended December 31, 2004 and 2003:



26


Twelve months ended December 31,(Dollars in Millions)2004
     
     PercentOf Total
     
     2003
     
     PercentOf Total
     $
Increase/(Decrease)
     %
Increase/(Decrease)Cost of Goods SoldFirearms
     $144.0
        
     74.5
        %
     $133.2
        
     73.4
        %
     $10.8
        
     8.0
        %Ammunition
     141.0
        
     80.1
        
     120.0
        
     76.4
        
     21.0
        
     17.6All Other
     17.5
        
     74.2
        
     17.0
        
     76.2
        
     0.5
        
     2.9Consolidated
     $302.5
        
     77.0
        %
     $270.2
        
     74.9
        %
     $32.3
        
     12.0
        %Firearms


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



higher
sales volumes of existing shotguns, higher margin rifles, and new opening price point
shotguns;
higher
pension and post retirement employee benefits expenses; and
price
loss of $0.8 million as explained in Net Sales above; partially offset by
lower
 manufacturing  variances as compared to the prior year period  primarily due to the
impact of the Ilion plant shutdown at the end of 2003                 ($2.8 million of
period expenses in 2003; compounded by fewer variances rolled out in early 2004 as
compared to the first half of 2003)Ammunition


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



higher
sales of lower margin ammunition, mainly shotshell and certain centerfire categories of
ammunition;
price
loss of $0.8 million as explained in Net Sales above;
higher
pension and post retirement employee benefits expenses; and
higher
levels of unfavorable  manufacturing variances recognized resulting primarily from higher
than expected commodity costs; partially offset                 by
realized
gains from settlement of our copper and lead option contracts.All
Other (including Accessories, Clay Targets, Powdered Metal Products and Technology
Products)


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



higher
sales volumes of knives; combined with
sales
of new products in 2004 (primarily shooting glasses and cleaning products) and their
related rollout of costs; partially offset by
lower
overall sales volumes of gun safes and black powder accessories products.Operating
Expenses.Operating expenses consist of selling, general and administrative expense,
research and development expense and other expense.


Twelve months ended December 31,
(Dollars in Millions)As Restated2004
     
     2003
     $
Increase/(Decrease)
     %
Increase/(Decrease)Operating ExpensesSG&A
     $65.1
        
     $64.2
        
     $0.9
        
     1.4
        %R&D
     6.1
        
     6.1
        
     
        
     Other
     (1.6
        )
     4.7
        
     (6.3
        )
     (134.
        0)Consolidated
     $69.6
        
     $75.0
        
     ($5.4
        )
     (7.2
        )%27


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


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


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


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


Taxes.Our effective tax rate relating to continuing operations is (39.5%), excluding the
impact of recording the valuation allowance, which increased the rate to 378.5%, for the
year ended December 31, 2004. The change to 378.5% from (39.5%) for the same period in
2003 is primarily attributable to the valuation allowance established on deferred tax
assets referred to below. We have utilized a 42% effective tax rate in calculating the
net gain on the sale of certain assets in the fishing line business. This rate differs
from the continuing operations rate primarily due to permanent differences related to
goodwill associated with the fishline business.


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


As
of December 31, 2004, a valuation allowance of approximately $15.5 million has been
established against deferred tax assets as a charge against earnings in accordance with
the provisions of Statement of Financial Accounting Standards No. 109, Accounting for
Income Taxes (SFAS No. 109).  Realization of the deferred tax assets is largely
dependent upon future profitable operations, if any, and the reversals of existing
taxable temporary differences. As a result of pre-tax losses from continuing operations
and future taxable income expected to arise primarily from the reversal of and creation
of temporary differences for the foreseeable future, we determined that in accordance
with SFAS No. 109, it is not appropriate to continue to recognize these deferred tax
assets.  Although there can be no assurance that such events will occur, the valuation
allowance may be reversed in future periods to the extent that the related deferred
income tax assets no longer require a valuation allowance under the provisions of SFAS
No. 109.


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


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


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


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



28


Discontinued Operations:
     
     December 31,2004
     
     December 31,2003
     
     December 31,2002Net Sales
     
     
     $  1.9
        
     $ 16.4
        
     $ 19.1Pre-tax operating results
     0.2
        
     4.1
        
     6.6Interest Expense Allocation
     0.1
        
     1.8
        
     1.8Income from operations, after tax
     
        
     1.4
        
     2.9In
the transaction described above, certain specified assets of $18.0 million and $16.4
million at December 31,2003 and 2002, respectively, were reclassified to Assets Held for
Sale in the consolidated balance sheet. Additionally, amounts related to the operations
for the years ended December 31, 2003 have been reclassed in the accompanying statement
of operations as discontinued operations.


Assets Held for Sale:
     December 31,2003Inventories
     
     
     $   6.3PP&E
     0.2Intangibles
     11.5Total Assets of Discontinued Operations
     $ 18.0Year Ended December
31, 2003 (Restated) as Compared to Year Ended December 31, 2002 (Restated)


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

Twelve months ended December 31,
(Dollars in Millions)2003
     
     PercentOf Total
     
     2002
     
     PercentOf Total
     $
Increase/(Decrease)
     %
Increase/(Decrease)Net SalesFirearms
     $181.3
        
     50.3
        %
     $194.0
        
     50.5
        %
     $(12.7
        )
     (6.5
        %)Ammunition
     157.1
        
     43.5
        
     163.9
        
     42.7
        
     (6.8
        )
     (4.1
        )All Other
     22.3
        
     6.2
        
     26.0
        
     6.8
        
     (3.7
        )
     (14.2
        )Consolidated
     $360.7
        
     100
        %
     $383.9
        
     100
        %
     $(23.2
        )
     (6.0
        %)Management
believes that the decline in consolidated sales was attributable to several factors
primarily including but not limited to general economic weakness combined with soft
consumer demand across most product categories, customer inventory reductions, and harsh
weather on the East Coast of the U.S. during the first half of 2003.


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


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


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


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



29


Twelve months ended December 31,(Dollars in Millions)2003
     
     PercentOf Total
     
     2002
     
     PercentOf Total
     $
Increase/(Decrease)
     %
Increase/(Decrease)Cost of Goods SoldFirearms
     $133.2
        
     73.4
        %
     $134.0
        
     69.1
        %
     $(0.8
        )
     (0.6
        %)Ammunition
     120.0
        
     76.4
        
     120.6
        
     73.6
        
     (0.6
        )
     (0.5
        )All Other
     17.0
        
     76.2
        
     18.5
        
     71.2
        
     (1.5
        )
     (8.1
        )Consolidated
     $270.2
        
     74.9
        %
     $273.1
        
     71.1
        %
     $(2.9
        )
     (1.1
        %)The
decrease in cost of goods sold for firearms from 2002 to 2003 is primarily due to lower
overall sales volumes of centerfire rifles and shotguns. As a percentage of sales, the
increase in cost of goods sold is primarily due to lower sales volumes of high margin
products, combined with higher pension and post retirement employee benefits expenses,
recognition of unfavorable manufacturing variances of $1.8 million caused by
manufacturing inefficiencies, and unplanned shutdown expenses of $2.8 million, partially
offset by lower inventory reserves and a reduction of scrap costs at our Ilion, New York
firearms plant of $1.7 million.  The shutdowns were taken in 2003 in an effort to manage
inventory levels and working capital.


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


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


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


Twelve months ended December 31,
(Dollars in Millions)As Restated2003
     
     2002
     $
Increase/(Decrease)
     %
Increase/(Decrease)Operating ExpensesSG&A
     $61.8
        
     $61.4
        
     $0.4
        
     0.7
        %R&D
     6.1
        
     6.1
        
     
        
     Other
     7.1
        
     2.7
        
     4.4
        
     163.0Consolidated
     $75.0
        
     $70.2
        
     $4.8
        
     6.8
        %The
increase in selling, general, and administrative expenses between the two periods was
primarily attributable to increased expenditures for product liability of $3.6 million
and higher marketing expenses combined with a reduction in licensing income of $0.6
million, offset by lower incentive compensation expense of $3.9 million. Research and
development expenses were $6.1 million in 2003, unchanged from 2002 and are related to
testing and development of existing and new products.


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


Interest
Expense. Interest expense in 2003 was $24.8 million, an increase of $12.5 million, or
101.6%, from $12.3 million in 2002. Interest expense includes $1.8 million in both 2003
and 2002 that was reclassified to discontinued



30


operations. The increase in interest
expense was primarily the result of $10.1 million resulting from higher overall
borrowings and $1.9 million related to higher interest rates on the Notes as compared to
the Refinanced Notes.


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


Recent Accounting
Pronouncements


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


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


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


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


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


Critical Accounting
Policies and Estimates


Our
discussion and analysis of our financial condition and results of operations are based
upon our consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation of these
financial statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On an ongoing basis, we evaluate our estimates,
including those related to inventories, supplies, accounts receivable, warranties,
long-lived assets, product liability, revenue recognition (inclusive of cash discounts,
rebates, and sales returns), advertising and promotional costs, self-insurance, pension
and post-retirement benefits, deferred tax assets, and goodwill. We base our



31


estimates on historical experience
and on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from other
sources. As noted below, in some cases, our estimates are also based in part on the
findings of independent advisors. Actual results may differ from these estimates under
different assumptions or conditions.


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


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


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


Inventories.Our inventories are valued at the lower of cost or market. We evaluate the quantities
of inventory held against past and future demand and market conditions to determine
excess or slow moving inventory. For those units of 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 issuances costs pursuant to SFAS 142 since
that time. Accordingly, management assesses goodwill for impairment whenever facts and
circumstances indicate that the carrying amount may not be fully recoverable. To analyze
recoverability, management projects undiscounted future cash flows resulting from the use
of the asset associated with the identified



32


reporting unit. If these projected
cash flows are less than the carrying amount of the goodwill, an impairment loss is
recognized, resulting in a write-down of goodwill with a corresponding charge to
operating income. The impairment loss is measured based upon the difference between the
carrying amount of the goodwill and the present value of future cash flows. The Company
uses a discount rate equal to its average cost of funds to discount the expected future
cash flows. Debt issuance costs are amortized over the life of the related debt or
amendment.


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


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


Employee
Benefit Plans.We have defined benefit plans that cover a significant portion of our
salaried and hourly paid employees. For the year ended December 31, 2004, we had $12.0
million of net pension benefit expense derived from our defined benefit plans. We derive
pension benefit expense from an actuarial calculation based on the defined benefit plans
provisions and managements assumptions regarding discount rate, rate of increase in
compensation levels and expected long-term rate of return on assets. Management
determines the expected long-term rate of return on plan assets based upon historical
actual asset returns and the expectations of asset returns over the expected period to
fund participant benefits based on the current investment mix of our plans. We note that
in 2004 we had returns on Plan assets of approximately 8% as compared to an assumption of
8%. Management sets the discount rate based on the yield of high quality fixed income
investments expected to be available in the future when cash flows are paid. The rate of
increase in compensation levels is established based on managements expectations of
current and foreseeable future increases in compensation. In addition, management also
consults with independent actuaries in determining these assumptions. At year end
December 31, 2004, we had an additional minimum liability with respect to our defined
benefit plans. See Note 12 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 is accounted for under the equity method
of accounting in accordance with Accounting Principles Board Opinion No. 18, The Equity
Method of Accounting for Investments in Common Stock(APB 18). Equity method
accounting was determined based upon the provisions of FASB Interpretation No. 46R,
Consolidation of Variable Interest Entities (revised December 2003) - an interpretation
of ARB No. 51(FIN 46R), as the joint venture is a variable interest entity for which
the Company was not the primary beneficiary. Accordingly, the Company recognizes an
investment on its statement of financial position at the carrying value of the Companys
cumulative cash contributions to the joint venture, adjusted for the Companys cumulative
equity in earnings (loss) (recorded in the Other Noncurrent Assets line), and the
Companys 50% share of the joint ventures equity in



33


earnings (loss), or operating
results, are recorded net of tax in the statement of operations (recorded in the Equity
in Earnings (Loss) from Unconsolidated Joint Venture, net of tax line).


Information Concerning
Forward-Looking Statements


The
statements contained in this report (other than our consolidated financial statements and
other statements of historical fact) are forward-looking statements, including, without
limitation (i) the statement in BusinessMarket Trends that we believe that hunting
safety issues may affect sales of firearms, ammunition and other shooting-related
products; (ii) the statement in Business--Regulation that we believe that the current
trend, or the consumer perception thereof, toward firearms regulatory proposals and
municipal handgun litigation could adversely affect the firearms and ammunition market;
(iii) the statement in BusinessSupply of Raw Materials that we believe we have a good
relationship with our vendors and do not currently anticipate material shortages or
disruptions in supply from these vendors; (iv) the statement in Business-- Supply of Raw
Materials that we believe we have a good relationship with our stamped parts supplier
and do not currently anticipate any material shortages or disruption in supply of these
stamped parts; (v) the statement in Business--Environmental Matters concerning our
belief that current environmental regulations or the outcome of any governmental
proceedings and orders pertaining to environmental compliance will not have a material
adverse effect on our business; (vi) other statements as to managements or our
expectations and beliefs presented in Business; (vii) the statement in Recent
Developments and highlights that current and continuing trends are not expected to have
a material adverse effect upon our financial condition or results of operations, (viii)
the statement in --Liquidity and Capital Resources--Capital Expenditures that we
anticipate year 2005 capital expenditures of $9.0 million to $11.0 million; (ix) the
statements in --Liquidity and Capital Resources--Overview concerning our belief that it
will be able to meet its debt service obligations and fund its operating requirements
with cash flow from operations and revolving credit borrowings prior to the maturity of
the Working Capital Facility and; (x) the statements in --Product Liability concerning
(a) our belief that product liability cases and claims involving occurrences arising
prior to the Acquisition are not likely to have a material adverse effect upon our
financial condition or results or operations, (b) our belief that the outcome of all
pending product liability cases and claims will not have a material adverse effect upon
our financial condition or result of operations and (c) managements estimates concerning
our claims relating to occurrences arising during 2004, 2003 and 2002 and the time period
during which the amount of our self insured retention will be paid out; (xi) the
statement in Quantitative and Qualitative Disclosures About Market Risk that we believe
that a significant changes in commodity pricing could have a material adverse impact on
our consolidated financial position, results of operations, future earnings, fair value
or cash flows (xii) other statements as to managements or our expectations and beliefs
presented in this Managements Discussion and Analysis of Financial Condition and
Results of Operations; (xiii) the statements in Legal Proceedings concerning (a) our
belief that its current product liability insurance coverage for personal injury and
property damage is adequate for its needs, (b) our belief that although we anticipate
that we will continue to be involved in product liability cases and claims in the future,
the outcome of all pending product liability cases and claims will not be likely to have
a material adverse effect upon our financial conditions or results of operations and (c)
our anticipation that we, as well as other manufacturers of firearm or ammunition
products, will continue to be involved in product liability cases and claims in the
future and (xiv) other statements as to managements or our expectations and beliefs
presented in Legal Proceedings.


Forward-looking
statements are made based upon managements current expectations and beliefs concerning
future developments and their potential effects upon us.  There can be no assurance that
future developments will be in accordance with managements expectations or that the
effect of future developments on us will be those anticipated by management.  The
following important factors, and those important factors described elsewhere in this
report (including, without limitation, those discussed in Business--Firearms,
--Ammunition, --Marketing and Distribution, --Patents and Trademarks and
--Environmental Matters and Managements Discussion and Analysis of Financial
Condition and Results of OperationsExecutive Overview, --Taxes, --Liquidity and
Capital Resources, --Product Liability, and Legal Proceedings), or in our other
Securities and Exchange Commission filings, could affect (and in some cases have
affected) our actual results and could cause such results to differ materially from
estimates or expectations reflected in such forward-looking statements.



Our
ability to make scheduled  payments of principal or interest on, or to refinance its
 obligations  with respect to its  indebtedness  and to       comply with the covenants
and restrictions  contained in the instruments  governing such indebtedness will depend
on our future operating performance       and cash flow, which are subject to prevailing
economic conditions,  prevailing interest rate levels, and financial,  competitive,
business and other       factors beyond our control including the responses of
competitors,  changes in customer inventory  management  practices,  changes in customer
buying       patterns, regulatory developments and increased operating costs.
The
degree to which we are leveraged could have important consequences,  including the
following: (i) our ability to obtain additional financing       for working capital or
other purposes in the future may be limited;  (ii) a substantial portion of our cash flow
from operations will be dedicated to       the payment of principal and interest on our
indebtedness,  thereby34


reducing funds
available for operations; (iii) certain of our borrowings will be at variable
rates of interest, which could cause us to be vulnerable to increases in
interest rates and (iv) we may be more vulnerable to economic downturns and be
limited in its ability to withstand competitive pressures.
Our
ability to meet our debt service and other obligations will depend in significant part on
customers  purchasing our products during the fall       hunting season.  Notwithstanding
 our cost containment  initiatives and continuing  management of costs, a decrease in
demand during the fall hunting       season for our higher  priced,  higher  margin
 products  would require us to further  reduce costs or increase our reliance on
borrowings  under the       Credit  Facility to fund  operations.  No assurance  can be
given that we would be able to reduce costs or increase our  borrowings  sufficiently  to
      adjust to such a reduction in demand.
Because
of the nature of our products,  we anticipate that we will continue to be involved in
product  liability  litigation in the future.  Our       ability to meet our product
liability obligations will depend (among other things) upon the availability of
insurance,  the adequacy of our accruals,       the Sellers  ability to satisfy their
 obligations to indemnify us against certain product  liability cases and claims and
Sellers  agreement to be       responsible for certain post-Acquisition shotgun related
costs.
We
face  significant  competition.  Our  competitors  vary according to product line.
 Certain of these  competitors  are  subsidiaries of large       corporations  with
 substantially  greater financial  resources than us. There can be no assurance that we
will continue to compete  effectively with       all of our present competition, and our
ability to so compete could be adversely affected by its leveraged condition.
Sales
made to Wal-Mart  Stores,  Inc.  (Wal-Mart)  accounted  for  approximately  16% of our
total net revenues in 2004 and 8% of the accounts       receivable  balance as of
December 31, 2004.  Our sales to Wal-Mart are not  governed by a written  contract
 between the parties.  In the event that       Wal-Mart were to  significantly  reduce or
terminate  its  purchases of firearms  and/or  ammunition  from us, our financial
 condition or results of       operations could be adversely affected.
We
utilize numerous raw materials,  including steel, lead, brass, plastics and wood, as well
as manufactured parts, which are purchased from one       or a few suppliers.  Any
disruption in our relationship with these suppliers could increase the cost of operations.
The
purchase of firearms is subject to federal,  state and local  governmental  regulation.
 Regulatory  proposals,  even if never enacted,  may       affect  firearms or
 ammunition  sales as a result of consumer  perceptions.  While we do not believe  that
 existing  federal and state  legislation       relating to the  regulation of firearms
and  ammunition  has had a material  adverse  effect on our sales from 2002 through 2004,
no assurance can be       given that more restrictive regulations, if proposed or
enacted, will not have a material adverse effect on us in the future.
As
a manufacturer of firearms,  we have been named as a defendant in certain lawsuits
 brought by  municipalities  or organizations  challenging       manufacturers
 distribution  practices and alleging that the defendants  have also failed to include a
variety of safety devices in their  firearms.       Our insurance  coverage  regarding
such claims may be limited.  In the event that  additional  such lawsuits were filed, or
if certain legal theories       advanced by plaintiffs were to be generally accepted by
the courts, our financial condition and results of operations could be adversely affected.While
we periodically reassess material trends and uncertainties affecting the operations and
financial condition in connection with its preparation of Managements Discussion and
Analysis of Financial Condition and Results of Operations contained in our quarterly and
annual reports we do not intend to review or revise any particular forward-looking
statement referenced in this report in light of future events.


Product Liability


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


While
it is difficult to forecast the outcome of litigation, we do not believe, in light of
relevant circumstances (including the current availability of insurance for personal
injury and property damage with respect to cases and claims involving occurrences arising
after the Acquisition, our accruals for the uninsured costs of such cases and claims and
the Sellers agreement to bear partial responsibility for certain post-Acquisition
shotgun-related product liability costs, as well as



35


the type of firearms products we
make), that the outcome of all pending product liability cases and claims will be likely
to have a material adverse effect upon our financial condition, results of operations, or
cash flows. However, in part because of the uncertainty as to the nature and extent of
manufacturer responsibility for product liability allegations, especially as to firearms,
as well as the potential nature of firearms-related injuries, there can be no assurance
that our resources will be adequate to cover both pending and future product liability
occurrences, cases or claims, in the aggregate, or that such a material adverse effect
will not result therefrom. Because of the nature of our products, we anticipate that we
will continue to be involved in product liability cases and claims in the future.


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


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



36


Item 8.   FINANCIAL
STATEMENTS AND SUPPLEMENTAL DATA


Report of Independent
Registered Public Accounting Firm


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


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


As discussed in Note 3 to the
consolidated financial statements, the Company has restated its previously issued
financial statements for the years ended December 31, 2004, 2003, and 2002.


As discussed in Note 9 to the
consolidated financial statements, the Company changed its accounting policy for goodwill
amortization in 2002.


/s/ PricewaterhouseCoopers LLP
Greensboro, North Carolina
March 11, 2005, except for Note 3, for which the date is July 28, 2005



37


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


Restated
     
     RestatedDecember 31, 2004
     
     December 31, 2003ASSETSCurrent AssetsCash and Cash Equivalents
     $0.4
        
     $0.4Accounts Receivable Trade - net
     81.2
        
     67.1Inventories - net
     92.6
        
     85.7Supplies
     7.2
        
     6.7Prepaid Expenses and Other Current Assets
     9.1
        
     6.8Deferred Tax Assets
     
        
     14.6Total Current Assets
     190.5
        
     181.3Property, Plant and Equipment - net
     75.3
        
     75.8Goodwill and Intangibles
     62.7
        
     62.7Debt Issuance Costs - net
     8.7
        
     10.6Other Noncurrent Assets
     14.4
        
     14.3Assets Held for Sale
     
        
     18.0Total Assets
     $351.6
        
     $362.7LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts Payable
     $24.5
        
     $20.1Book Overdraft
     10.0
        
     6.7Current Portion of Long-Term Debt
     0.6
        
     0.5Current Portion of Product Liability
     2.2
        
     2.4Income Taxes Payable
     0.8
        
     2.5Deferred Tax Liabilities
     1.5
        
     Other Accrued Liabilities
     35.0
        
     29.7Total Current Liabilities
     74.6
        
     61.9Long-Term Debt, net of Current Portion
     202.9
        
     230.0Retiree Benefits
     47.1
        
     43.1Product Liability, net of Current Portion
     11.2
        
     12.8Deferred Tax Liabilities
     4.2
        
     1.9Other Long-Term Liabilities
     1.7
        
     1.2Total Liabilities
     341.7
        
     350.9Commitments and ContingenciesShareholders EquityTotal Shareholders Equity
     9.9
        
     11.8Total Liabilities and Shareholders Equity
     $351.6
        
     $362.7The accompanying notes
are an integral part of these consolidated financial statements.


38


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


Year Ended December 31,Restated
2004
     
     Restated
2003
     
     Restated
2002Net Sales
     
     
     $393.0
        
     $360.7
        
     $383.9Cost of Goods Sold
     302.5
        
     270.2
        
     273.1Gross Profit
     90.5
        
     90.5
        
     110.8Selling, General and Administrative Expenses
     65.1
        
     64.2
        
     64.3Research and Development Expenses
     6.1
        
     6.1
        
     6.1Other Income
     (1.6
        )
     (2.0
        )
     (0.2
        )Other Unusual Charges
     
        
     6.7
        
     Operating Profit
     20.9
        
     15.5
        
     40.6Interest Expense
     24.6
        
     23.0
        
     10.5Income (Loss) from Continuing Operations before IncomeTaxes, Equity in (Earnings) Losses from UnconsolidatedJoint Venture and Sale of Assets
     (3.7
        )
     (7.5
        )
     30.1Income Tax Expense (Benefit)
     14.0
        
     (2.9
        )
     11.8Equity in (Earnings) Losses from Unconsolidated Joint Venture,net of tax
     
        
     
        
     Net (Loss) Income from Continuing Operations beforechange in Accounting Principle
     (17.7
        )
     (4.6
        )
     18.3Income from Discontinued Operations, net of tax expense of$0.1, $0.9 and $1.9, respectively
     
     
        
     1.4
        
     2.9Gain on Sale of Assets, net of tax expense of $9.8
     13.6
        
     
        
     Net Income (Loss) before change in Accounting Principle
     (4.1
        )
     (3.2
        )
     21.2Cumulative effect of change in Accounting Principle, net of $1.0tax benefit
     
        
     
        
     (1.4
        )Net Income (Loss)
     $(4.1
        )
     $(3.2
        )
     $19.8The accompanying notes
are an integral part of these consolidated financial statements.


39


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


Year-To-Date December 31,Restated
2004
     
     Restated
2003
     
     Restated
2002Operating ActivitiesNet Income (Loss)
     $(4.1
        )
     $(3.2
        )
     $19.8Adjustments to reconcile Net Income (Loss) to Net Cash(used in) provided by Operating Activities:Depreciation and Amortization of Deferred Financing Costs
     11.1
        
     11.3
        
     11.9Gain on Sale of Assets Held for Sale
     (23.4
        )
     
        
     Provision for Retiree Benefits
     7.1
        
     0.9
        
     1.8Provision (Benefit) for Deferred Income Taxes, net
     18.4
        
     (1.0
        )
     1.4Other Non-cash charges
     0.3
        
     2.0
        
     1.6Changes in Operating Assets and Liabilities:Accounts Receivable Trade - net
     (14.1
        )
     (8.5
        )
     (13.1
        )Inventories
     (6.9
        )
     (0.1
        )
     (7.0
        )Supplies
     (0.5
        )
     (0.4
        )
     (0.3
        )Prepaid Expenses and Other Current Assets
     (2.3
        )
     (4.4
        )
     (0.4
        )Other Noncurrent Assets
     (0.1
        )
     (4.4
        )
     (2.6
        )Accounts Payable
     4.4
        
     0.2
        
     (1.3
        )Product Liabilities
     (1.8
        )
     3.3
        
     (4.1
        )Income Taxes Payable
     (1.7
        )
     0.3
        
     0.4Other Accrued and Long-Term Liabilities
     1.7
        
     (1.8
        )
     12.5Net Cash (used in) provided by Operating Activities
     (11.9
        )
     (5.8
        )
     20.6Net Cash provided by (used in) Discontinued Operations
     0.1
        
     (1.5
        )
     0.6Net Cash (used in) provided by Operating Activities
     (11.8
        )
     (7.3
        )
     21.2Investing ActivitiesProceeds from Sale of Assets, net of Transaction costs of $1.2
     42.8
        
     
        
     Purchase of Property, Plant and Equipment
     (7.8
        )
     (6.8
        )
     (6.9
        )Proceeds from Sale of Property, Plant and Equipment
     0.4
        
     
        
     Cash Contribution to Unconsolidated Joint Venture
     (0.3
        )
     
        
     Net Cash provided by (used in) Investing Activities
     35.1
        
     (6.8
        )
     (6.9
        )Net Cash used in Discontinued Operations
     
        
     (0.1
        )
     (0.1
        )Net Cash provided by (used in) Investing Activities
     35.1
        
     (6.9
        )
     (7.0
        )Financing ActivitiesProceeds from Revolving Credit Facility
     142.8
        
     189.9
        
     183.6Payments on Revolving Credit Facility
     (169.3
        )
     (172.6
        )
     (197.6
        )Cash Dividends Paid
     (2.2
        )
     (103.3
        )
     (15.1
        )Proceeds from Issuance of Long-Term Debt
     
        
     200.0
        
     Principal Payments on Long-Term Debt
     (0.5
        )
     (87.8
        )
     (1.1
        )Capital Contributions from RACI Holding, Inc.
     3.2
        
     4.5
        
     Amount Paid on Behalf of RACI Holding, Inc.
     (0.6
        )
     
        
     Proceeds from Borrowings on Short-Term Debt
     6.9
        
     6.7
        
     6.0Principal Payments on Short-Term Debt
     (6.9
        )
     (6.7
        )
     (6.0
        )Change in Book Overdraft
     3.3
        
     (4.1
        )
     3.0Debt Issuance Costs
     
        
     (12.4
        )
     Net Cash (used in) provided by Financing Activities
     (23.3
        )
     14.2
        
     (27.2
        )Decrease in Cash and Cash Equivalents
     0.0
        
     0.0
        
     (13.0
        )Cash and Cash Equivalents at Beginning of Period
     0.4
        
     0.4
        
     13.4Cash and Cash Equivalents at End of Period
     $0.4
        
     $0.4
        
     $0.4Supplemental Cash Flow Information:Cash Paid During the Year for:Interest
     $22.8
        
     $21.9
        
     $11.6Income Taxes
     $5.6
        
     $1.8
        
     $8.5Noncash Financing and Investing Activities:Vendor Financed Fixed Assets Capitalized
     $0.4
        
     $
        
     $Change in Capital Expenditures Capitalized
     $1.3
        
     $
        
     $0.5Issuance of Deferred Shares in Lieu of Bonus
     $
        
     $0.3
        
     $Payment Made to Vendors on Behalf of RACI Holding, Inc.
     $
        
     $1.0
        
     $Capital Lease Obligations Incurred
     $
        
     $0.1
        
     $0.9Conversion of Parent Company Note to equity
     $3.2
        
     $4.8
        
     $7.6The accompanying notes
are an integral part of these consolidated financial statements.


40


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


Paid-in
Capital
     
     Accumulated
Other
Comprehensive
Income (Loss)
     
     Restated
Retained
Earnings
(Accumulated
Deficit)
     
     Restated
Total
Shareholders
EquityBalance, December 31, 2001 - As Reported
     
     
     $75.0
        
     $(0.2
        )
     $28.8
        
     $103.6Restatement (Note 3)
     
        
     
        
     (0.4
        )
     (0.4
        )Balance, January 1, 2002, as Restated
     $75.0
        
     $(0.2
        )
     $28.4
        
     $103.2Comprehensive Income:Net Income (Restated)
     
        
     
        
     19.8
        
     19.8Other comprehensive income:Minimum pension liability, net of tax effect of ($2.4)
     
        
     (3.8
        )
     
        
     (3.8
        )Net derivative losses, net of tax effect of ($0.2)
     
        
     (0.3
        )
     
        
     (0.3
        )Net derivative losses, reclassified asearnings, net of tax effect of $0.1
     
        
     0.2
        
     
        
     0.2Total Comprehensive Income
     
        
     (3.9
        )
     19.8
        
     15.9Cash Dividends Paid
     
        
     
        
     (15.1
        )
     (15.1
        )Contributions from RACI Holding, Inc.
     7.6
        
     
        
     
        
     7.6Balance, December 31, 2002
     82.6
        
     (4.1
        )
     33.1
        
     111.6Comprehensive Loss:Net Loss (Restated)
     
        
     
        
     (3.2
        )
     (3.2
        )Other comprehensive income:Minimum pension liability, net of tax effect of $0.7
     
        
     1.2
        
     
        
     1.2Net derivative gains, net of tax effect of $0.9
     
        
     1.4
        
     
        
     1.4Net derivative losses, reclassified asearnings, net of tax effect of $0.2
     
        
     0.3
        
     
        
     0.3Total Comprehensive Loss
     
        
     2.9
        
     (3.2
        )
     (0.3
        )Contributions from RACI Holding, Inc.
     4.8
        
     
        
     
        
     4.8Payment made to vendors on behalf of RACIHolding, Inc.
     (1.0
        )
     
        
     
        
     (1.0
        )Cash Dividends Paid
     
        
     
        
     (103.3
        )
     (103.3
        )Balance, December 31, 2003
     86.4
        
     (1.2
        )
     (73.4
        )
     11.8Comprehensive Income:Net Loss (Restated)
     
        
     
        
     (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 reclassifiedas earnings, net of tax effect of ($1.5)
     
        
     (2.5
        )
     
        
     (2.5
        )Total Comprehensive Loss
     
        
     1.8
        
     (4.1
        )
     (2.3
        )Cash Dividends Paid
     
        
     
        
     (2.2
        )
     (2.2
        )Contributions from RACI Holding, Inc.
     3.2
        
     
        
     
        
     3.2Amount Paid on Behalf ofRACI Holding, Inc.
     (0.6
        )
     
        
     
        
     (0.6
        )Balance, December 31, 2004
     $89.0
        
     $0.6
        
     $(79.7
        )
     $9.9The accompanying notes
are an integral part of these consolidated financial statements.


41


REMINGTON ARMS
COMPANY, INC.


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


Note 1Basis of
Presentation


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


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


Note 2Description
of the Business


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


Note 3Restatement
of previously issued financial statements


The
Company has restated its previously issued financial statements for the years ended
December 31, 2004, 2003 and 2002 to reflect the correction of a methodological error
related to its reserve for potential healthcare claims.  The error resulted from the use
of inaccurate data and methodologies in calculating the health care accrual.


All
amounts presented herein have been restated.  The table below sets forth the effect of
the adjustments for the years ended December 31, 2004, 2003 and 2002:


Restated Consolidated
Balance Sheet and Consolidated Statement of Shareholders Equity and Comprehensive Income
(Loss) Amounts


2004
     
     2003As Reported
     
     As Restated
     
     As Reported
     
     As RestatedDeferred Tax Assets (current)
     
     $0.0
        
     $0.0
        
     $14.2
        
     $14.6Total Current Assets
     190.5
        
     190.5
        
     180.9
        
     181.3Other Accrued Liabilities
     34.3
        
     35.0
        
     28.7
        
     29.7Total Current Liabilities
     73.9
        
     74.6
        
     60.9
        
     61.9Accumulated Deficit
     (79.0
        )
     (79.7
        )
     (72.8
        )
     (73.4
        )Total Shareholders Equity
     10.6
        
     9.9
        
     12.4
        
     11.842


REMINGTON ARMS
COMPANY, INC.


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


Restated Consolidated
Statement of Operations Amounts


2004
     2003
     2002As
Reported
     As
Restated
     As
Reported
     As
Restated
     As
Reported
     As
RestatedSelling,  General and Administrative Expenses
     
     $65.3
        
     $65.1
        
     $64.3
        
     $64.2
        
     $63.9
        
     $64.3Operating Profit
     20.7
        
     20.9
        
     15.4
        
     15.5
        
     41.0
        
     40.6Income (Loss) from Continuing Operationsbefore Income Taxes, Equity in (Earnings)Losses from Unconsolidated Joint Ventureand Sale of Assets
     (3.9
        )
     (3.7
        )
     (7.6
        )
     (7.5
        )
     30.5
        
     30.1Income Tax Expense (Benefit)
     13.7
        
     14.0
        
     (3.0
        )
     (2.9
        )
     12.0
        
     11.8Net (Loss) Income from Continuing Operationsbefore change in Accounting Principle
     (17.6
        )
     (17.7
        )
     (4.6
        )
     (4.6
        )
     18.5
        
     18.3Net Income (Loss) before change inAccounting Principle
     (4.0
        )
     (4.1
        )
     (3.2
        )
     (3.2
        )
     21.4
        
     21.2Net Income (Loss)
     (4.0
        )
     (4.1
        )
     (3.2
        )
     (3.2
        )
     20.0
        
     19.8For
information on the effect of the restatement on interim periods in 2003 and 2004, see
Note 25.


The
Company has not restated its consolidated financial statements for periods prior to 2002
because the error that arose in those periods was not material to any previously issued
consolidated financial statements for such periods.


Restated Consolidated
Statement of Cash Flows Amounts

2004
     2003
     2002As
Reported
     As
Restated
     As
Reported
     As
Restated
     As
Reported
     As
RestatedNet Income (Loss)
     
     ($4.0
        )
     ($4.1
        )
     ($3.2
        )
     ($3.2
        )
     $20.0
        
     $19.8Provision (Benefit) for Deferred Income Taxes,net
     18.0
        
     18.4
        
     (1.1
        )
     (1.0
        )
     1.6
        
     1.4Other Accrued and Long-Term Liabilities
     2.0
        
     1.7
        
     (1.7
        )
     (1.8
        )
     12.1
        
     12.5Note 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,  tradenames and
other intellectual  property,  records,  claims, and goodwill,  in each case relating to
Remingtons fishing line business,  which had been part of the All Other reporting
segment.


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


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



43


REMINGTON ARMS
COMPANY, INC.


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


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


Discontinued Operations:
     December 31,2004
     December 31,2003
     December 31,2002Net Sales
     
     $1.9
        
     $16.4
        
     $19.1Pre-tax operating results
     0.2
        
     4.1
        
     6.6Interest expense allocation
     0.1
        
     1.8
        
     1.8Income from operations, after tax
     
        
     1.4
        
     2.9Included
in income from discontinued operations is an allocation of interest expense of $0.1,
$1.8, and $1.8 for the years ended December 31, 2004, 2003, and 2002, respectively. The
interest expense allocation is based on the Company being required to make a payment of
$43.0 against its outstanding borrowings under the revolving Credit Facility with the
proceeds received at the closing of the transaction on February 9, 2004. The interest
expense allocation was computed by taking the $43.0 revolver balance required to be paid
down at the time of the sale closing, multiplied by the weighted average interest rate
through February 9, 2004 for 2004, and for the years ended 2003 and 2002. The Stren
business has historically allocated interest expense (approximately $0.2 annually) as a
result of actual working capital balances for the fishline business during each of the
full years in the mentioned period.


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


Assets Held for Sale:
     December 31,2003Inventories, net
     
     $   6.3PP&E
     0.2Intangibles
     11.5Total Assets of Discontinued Operations
     $ 18.0Note 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 its
third party vendor, in order to meet the service needs of its distributors, customers and
consumers worldwide. The Company provides consumer warranties against manufacturing
defects in all firearm products it sells in North America. Estimated future warranty
costs are accrued at the time of sale. Product modifications or corrections are voluntary
steps taken by the Company to assure proper usage or performance of a



44


REMINGTON ARMS
COMPANY, INC.


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


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 Statement of Financial Accounting
Standard No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets(SFAS
144), management assesses property, plant and equipment for impairment whenever facts
and circumstances indicate that the carrying amount may not be fully recoverable. To
analyze recoverability, management projects undiscounted future cash flows resulting from
the use of the asset over the remaining life of the asset. If these projected cash flows
are less than the carrying amount of the asset, an impairment loss is recognized,
resulting in a write-down of property, plant and equipment with a corresponding charge to
operating income. Any impairment loss is measured based upon the difference between the
carrying amount of the asset and the present value of future cash flows. The Company uses
a discount rate equal to its average cost of funds to discount the expected future cash
flows. There were no significant assets deemed impaired as of December 31, 2004, 2003 and
2002.


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


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


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


Prior
to January 1, 2002, intangibles, consisting primarily of goodwill, trade names and
trademarks, were amortized on a straight-line basis over their estimated useful lives of
40 years. The Company adopted the provisions of Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets(SFAS 142) on January 1, 2002
and has accounted for its goodwill, intangible assets, and debt issuances costs pursuant
to SFAS 142 since that time. Accordingly, management assesses goodwill for impairment
whenever facts and circumstances indicate that the carrying amount may not be fully
recoverable. To analyze recoverability, management projects undiscounted future cash
flows resulting from the use of the asset associated with the identified reporting unit.
If these projected cash flows are less than the carrying amount of the goodwill, an
impairment loss is recognized, resulting in a write-down of goodwill with a corresponding
charge to operating income. The impairment loss is measured based upon the difference
between the carrying amount of the goodwill and the present value of future cash flows.
The Company uses a discount rate equal to its average cost of funds to discount the
expected future cash flows. Debt issuance costs are amortized over the life of the
related debt or amendment.


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


Financial Instruments:


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


All
of the Companys commodity futures contracts are accounted for as cash flow hedges under
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities(SFAS 133), as amended by Statement of Financial
Accounting Standards No. 138, Accounting for Certain Derivative Instruments and Certain
Hedging Activities - an amendment of FASB Statement No. 133(SFAS 138) and Statement of
Financial Accounting Standards No. 149, Amendment of Statement 133 on Derivative
Instruments and Hedging Activities(SFAS 149). SFAS 133, as amended requires that all
derivative instruments be reported on the balance sheet at fair value and establishes
criteria for designation and effectiveness of hedging relationships. The fair value of
the Companys cash flow hedges at the time of purchase are



45


REMINGTON ARMS
COMPANY, INC.


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


recorded on the balance sheet in the
Prepaid Expenses and Other Current Assets line, and are marked to fair value at each
balance sheet date.  Gains and losses associated with these changes in fair value are
recorded on the balance sheet as other comprehensive income and recognized in the
statement of operations as a component of the cost of the related inventory when the
inventory is sold.


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


Market
values of financial instruments were estimated in accordance with Statement of Financial
Accounting Standards No. 107, Disclosures about Fair Value of Financial Instruments(SFAS 107), and are based on quoted market prices, where available, or on current rates
offered to the Company for debt with similar terms and maturities. Unless otherwise
disclosed, the fair value of financial instruments approximates their recorded values.
See Note 21 and Item 7A Quantitative and Qualitative Disclosures about Market Risk.


Stock Options:


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


Since
options have been granted at an option exercise price equal to the estimated fair value
of the underlying Common Stock, no compensation expense has been recognized with respect
to grants of stock options granted to date.  Had compensation expense for such option
grants been recognized under SFAS 123, as amended by SFAS 148, based on the fair value of
such options at the grant dates thereof in 2004, 2003 and 2002, the Companys net income
and income per share on a pro forma basis would have been as follows:


As Restated2004
     
     2003
     
     2002Net Income (Loss)
     
     
     As Reported
     
     
     $(4.1
        )
     $(3.2
        )
     $19.8Add:
     Stock-based employee compensation expense includedin reported net income, net of related tax effects
     
        
     2.7
        
     Deduct:
     Total stock-based employee compensation expensedetermined under fair value based method for allawards, net of related tax effects
     
        
     (1.8
        )
     Net Income (Loss)
     Pro forma
     $(4.1
        )
     $(2.3
        )
     $19.8In
February  2003,  Holding  distributed  on behalf of  Remington a special  payment to
holders of all stock  options  (in  connection  with the acceleration and resulting
 cancellation of the options) of approximately  $220.31 per share, in an aggregate amount
of $4.5, which is $2.7, net of tax, as accounted  for under APB Opinion  No. 25. The
 expense to be recorded  for 2003 under SFAS No. 123 would have been  approximately
 $1.8.  The  compensation expense associated with these options would have been recorded
in prior years under SFAS 123, as amended by SFAS 148.


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


2003
     2002Risk Free Interest Rate
     3.3%
     3.2%Dividend Yields
     0.0%
     0.0%Volatility Factor
     0.0%
     0.0%Weighted Average Expected Option Life
     0.8 years
     3.5 yearsThere
were no option grants in 2004 and therefore assumption disclosures for that period are
not applicable.



46


REMINGTON ARMS
COMPANY, INC.


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


Income Taxes:


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


Product Liability:


The
Company provides for estimated defense and settlement costs related to product
liabilities when it becomes probable that a liability has been incurred and reasonable
estimates of such costs are available in accordance with Statement of Financial
Accounting Standards No. 5, Accounting for Contingencies(SFAS 5). The Company
maintains insurance coverage for product liability claims, subject to certain policy
limits and to certain self-insured retentions for personal injury or property damage
relating to occurrences arising after December 1, 1993. The current insurance policy
extends through November 30, 2005. Product liabilities are recorded at the Companys most
probable exposure in accordance with SFAS 5, including consideration of historical
payment experience and the self insured retention insurance. For the year ended December
31, 2004, there were no recoveries recorded. For the years ended December 31, 2003 and
2002, there were recoveries totaling $1.0, and $2.7, respectively, which represented
claims paid in excess of the self-insured retention amounts. The Companys estimate of
its liability for product liability cases and claims outstanding at December 31, 2004 and
2003 is $13.4 and $15.2, respectively. Management uses independent advisors in their
determination of the accrual. The Company made total product liability payments in 2004,
2003, and 2002 of $2.8, $3.2, and $4.4, respectively (including pre-Acquisition
occurrences for which the Company assumed responsibility). See Note 17.


Revenue Recognition:


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


The
Company follows the industry practice of selling firearms pursuant to a dating plan
allowing the customer to purchase these products commencing in December (the start of the
Companys dating plan year) and to pay for them on extended terms. Discounts are offered
for early payment under this plan. The Company believes that allowing extended payment
terms for early orders helps to level out the demand for these otherwise seasonal
products throughout the year. Historically, use of the dating plan has had the effect of
shifting some firearms sales from the second and third quarters to the first and fourth
quarters. The Company believes that the dating plan helps facilitate a more efficient
manufacturing schedule. As a competitive measure, the Company also offers extended terms
on select ammunition purchases. Use of the dating plans, however, also results in
significant deferral of collection of accounts receivable until the latter part of the
year. Customers do not have the right to return unsold products.


Shipping and Handling
Costs:

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


Advertising and
Promotions:


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



47


REMINGTON ARMS
COMPANY, INC.


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


Research and
Development Costs:


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


Self-Insurance:


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


Pension and
Postretirement:


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


Use of Estimates:


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


Unconsolidated Joint
Venture:


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


Recent Accounting
Pronouncements:


In
May 2004, the FASB issued Financial Staff Position (FSP) SFAS No. 106-2 Accounting and
Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003 (the Act), which is effective as of the first interim period
beginning after June 15, 2004. On December 8, 2003, President Bush signed the Act into
law, which introduces a prescription drug benefit under Medicare as well as a federal
subsidy to sponsors of retiree health care benefit plans that provide a benefit that is
at least actuarially equivalent to that provided under the Act. FSP SFAS No. 106-2
supersedes FSP FAS 106-1, and clarifies accounting guidance for the Acts subsidy
provisions given to health care



48


REMINGTON ARMS
COMPANY, INC.


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


plan sponsors who provide specified
levels of postretirement healthcare benefits. The Company has adopted the Act and the Act
had no material impact on its consolidated financial condition and consolidated results
of operations.


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


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


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


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


Note 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 before extending credit
and establishes an allowance for doubtful accounts based upon factors surrounding the
credit risk of specific customers, historical trends and other information. Recoveries,
net of any bad debt expense, were ($0.1), ($0.7) and ($0.3) for years 2004, 2003 and
2002, respectively. The allowance for doubtful accounts amounted to $0.5 as of December
31, 2004 and 2003.


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


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


Note 7Inventories


At
December 31, Inventories consist of the following:



49


REMINGTON ARMS
COMPANY, INC.


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


2004
     
     2003Raw Materials
     
     
     $17.5
        
     $13.9Semi-Finished Products
     19.3
        
     18.9Finished Products
     55.8
        
     52.9Total
     $92.6
        
     $85.7Note 8Property,
Plant and Equipment


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


2004
     
     2003Land
     
     
     $1.5
        
     $1.5Building and Improvements
     26.0
        
     25.1Leased Assets
     4.9
        
     4.9Machinery and Equipment
     146.0
        
     143.5Construction in Progress
     7.5
        
     3.4Subtotal
     185.9
        
     178.4Less: Accumulated Depreciation
     (110.6
        )
     (102.6
        )Total
     $75.3
        
     $75.8Depreciation
expense for the years ended December 31, 2004, 2003 and 2002 was $9.2, $9.5, and $10.0,
respectively.  Accumulated depreciation on capital leases was $4.5 and $4.1 as of
December 31, 2004 and 2003, respectively.


Note 9Goodwill and
Other Intangible Assets


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


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


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


Goodwill
     December 31,2004
     December 31,2003Firearms
     
     
     $12.8
        
        
     $12.8Ammunition
     5.2
        
        
     5.2All Other
     2.9
        
        
     2.9Total
     $20.9
        
        
     $20.9Trademarks
     December 31,2004
     December 31,2003Firearms
     
     
     $20.4
        
        
     $20.4Ammunition
     19.4
        
        
     19.4All Other
     2.0
        
        
     2.0Total
     $41.8
        
        
     $41.850


REMINGTON ARMS
COMPANY, INC.


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


Note 10Other
Accrued Liabilities (Restated)


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


2004
     
     2003Marketing
     
     
     $6.2
        
     $6.1Healthcare Costs
     7.4
        
     7.8Retiree Benefits
     7.1
        
     5.8Workers Compensation
     3.3
        
     2.9Other
     11.0
        
     7.1Total
     $35.0
        
     $29.7Note 11Warranty
Accrual


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


2004
     
     2003Balance at January 1
     
     
     $0.8
        
     $0.9Current period accruals
     2.8
        
     2.7Current period charges
     (2.8
        )
     (2.8
        )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, 2004, 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.


Change in Benefit
Obligation:


2004
     
     2003Benefit Obligation at Beginning of Year
     
     
     $147.1
        
     $121.2Service Cost
     5.0
        
     4.2Interest Cost
     9.1
        
     8.1Actuarial Assumption Changes
     5.4
        
     10.0Actuarial (Gain)/Loss
     (1.7
        )
     6.7Benefits Paid
     (3.4
        )
     (3.1
        )Benefit Obligation at End of Year
     $161.5
        
     $147.151


REMINGTON ARMS
COMPANY, INC.


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


Change in Plan Assets:


2004
     
     2003Fair Value of Plan Assets at Beginning of Year
     
     
     $97.5
        
     $78.1Actual Return on Plan Assets
     9.3
        
     17.7Employer Contributions
     6.5
        
     5.3Benefits Paid(Expenses)
     (3.7
        )
     (3.6
        )Fair Value of Plan Assets at End of Year
     $109.6
        
     $97.52004
     
     2003Funded Status
     
     
     $(51.9
        )
     $(49.6
        )Unamortized Prior Service Cost
     (1.3
        )
     (1.5
        )Unrecognized Net Actuarial Loss
     27.2
        
     30.6Net amount recognized in the statement of financial position
     $(26.0
        )
     $(20.5
        )Amounts recognized in
the statement of financial position as of December 31 consist of:


2004
     
     2003Accrued Benefit Liability
     
     
     $(29.3
        )
     $(25.0
        )Intangible Asset
     0.2
        
     0.2Accumulated other comprehensive income
     3.1
        
     4.3Net Amount Recognized
     $(26.0
        )
     $(20.5
        )The
following is certain information about our pension plans that have accumulated benefit
obligations in excess of the fair value of their plan assets as of December 31:


2004
     
     2003Projected benefit obligation
     
     
     $161.5
        
     $147.1Accumulated benefit obligation
     138.9
        
     122.5Fair value of plan assets
     109.6
        
     97.5Components of Net
Periodic Pension Cost:


2004
     
     2003
     
     2002Service Cost
     
     
     $5.0
        
     $4.2
        
     $4.3Interest Cost
     9.1
        
     8.1
        
     8.0Expected Return on Assets
     (8.0
        )
     (7.4
        )
     (7.4
        )Amortization of Prior Service Cost
     (0.2
        )
     (0.2
        )
     (0.2
        )Recognized Net Actuarial Loss
     6.1
        
     2.7
        
     2.2Net Periodic Pension Cost
     $12.0
        
     $7.4
        
     $6.92004
     
     2003
     
     2002Weighted average assumptions used to determine net periodicpension cost for years ended December 31:Discount Rate
     6.25
        %
     6.75
        %
     7.25
        %Expected Long-Term return on plan assets
     8.00
        
     8.00
        
     8.00Rate of Compensation Increase
     4.00
        
     4.00
        
     4.50Weighted average assumptions used to determine benefitobligations at December 31:Discount Rate
     6.00
        %
     6.25
        %
     6.75
        %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



52


REMINGTON ARMS
COMPANY, INC.


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


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


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


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


TargetAllocations
     
     ActualAllocations2004
     
     2003
     
     2004
     
     2003Asset Category:Domestic equity funds
     40.0
        %
     40.0
        %
     42.0
        %
     43.0
        %International equity funds
     10.0
        
     10.0
        
     11.0
        
     10.0Domestic fixed income funds
     40.0
        
     40.0
        
     34.0
        
     36.0International fixed income funds
     10.0
        
     10.0
        
     10.0
        
     10.0Cash and cash equivalents
     
        
     
        
     3.0
        
     1.0Total
     100.0
        %
     100.0
        %
     100.0
        %
     100.0
        %Anticipated
Contributions:


The
Company expects to make cash contributions of approximately $7.1 to the Plan in 2005.


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


20042005
     
     
     $4.02006
     4.42007
     5.02008
     5.72009
     6.6Years 2010-2014
     50.8Savings Plans:


The
Company sponsors a qualified defined contribution plan and matches 50% of a participants
contributions up to a maximum of 6% of a participants compensation. All employees hired
after May 31, 1996 are also eligible for a discretionary contribution. The Companys
matching expense and contribution to this plan was approximately $1.4 in each of 2004,
2003, and 2002.


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



53


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:


2004
     
     2003Benefit Obligation at Beginning of Year
     
     
     $21.1
        
     $19.2Service Cost
     0.6
        
     0.6Interest Cost
     1.3
        
     1.2Plan Participants Contributions
     
        
     Amendments
     (0.8
        )
     (0.8
        )Actuarial Loss/(Gain)
     0.2
        
     1.7Benefits Paid
     (0.7
        )
     (0.8
        )Benefit Obligation at End of Year
     $21.6
        
     $21.1Accrued Benefit Cost:


2004
     
     2003Funded Status
     
     
     $(21.6
        )
     $(21.1
        )Unrecognized Net Actuarial (Gain)/loss
     3.9
        
     4.7Unrecognized Prior Service Cost
     (5.7
        )
     (5.5
        )Accrued Postretirement Benefit Obligation
     $(23.4
        )
     $(21.9
        )Components of Net
Periodic Benefit Cost for the year ended December 31:


2004
     
     2003
     
     2002Service Cost
     
     
     $0.6
        
     $0.6
        
     $0.6Interest Cost
     1.3
        
     1.2
        
     1.3Net Amortization and Deferral
     0.3
        
     (0.2
        )
     (0.1
        )Net Periodic Benefit Income/(Expense)
     $2.2
        
     $1.6
        
     $1.8Weighted average
assumptions used to determine net periodic benefit cost for years ended December 31:


2004
     2003
     2002Discount Rate
     
     
     6.25
        %
     6.75
        %
     7.25
        %Rate of compensation increase
     4.00
        %
     4.00
        %
     4.50
        %Assumed Healthcare cost
trend rates at December 31:


2004
     2003
     2002Healthcare cost trend rate assumed for next year
     
     
     8.05
        %
     8.80
        %
     9.45
        %Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
     3.25
        %
     3.50
        %
     4.00
        %Year that the rate reaches the ultimate trend rate
     2011
        
     2011
        
     2011Weighted average
assumptions used to determine benefit obligations at December 31:


2004
     2003Discount Rate
     
     
     6.00
        %
     6.25
        %Rate of compensation increase
     4.0
        %
     4.0
        %Assumed
health care cost trend rates have a significant effect on the amounts reported for the
health care plans.  A one-percentage point change in assumed health care cost trend rates
would have the following effects:



54


REMINGTON ARMS
COMPANY, INC.


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


1-Percentage Point Increase
     1-Percentage PointDecreaseEffect on total of service and interest cost
     
     $0.1
        
     $0.1Effect on accumulated postretirement benefit obligation
     1.1
        
     1.0Estimated
Future Benefit Payments Following is a summary, as of December 31, 2004, of the
estimated future benefit payments for our postretirement benefit plan in each of the next
five fiscal years and in the aggregate for five fiscal years thereafter.


20042005
     
     $   0.72006
     0.92007
     1.12008
     1.42009
     1.7Years 2010-2014
     11.8Note 13Debt


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


2004
     
     2003Revolving Credit Facility
     
     
     $1.8
        
     $28.310.5% Senior Notes due 2011
     200.0
        
     200.0Capital Lease Obligations (Note 13)
     0.8
        
     1.3Due to RACI Holding, Inc.
     0.9
        
     0.9Subtotal
     203.5
        
     230.5Less: Current Portion
     0.6
        
     0.5Total
     $202.9
        
     $230.0On
February 8, 2005, in connection with the passage of the one year requirement under the
indenture governing the Notes referred to below to invest net proceeds from the sale of
the fishing line business in productive assets, the Company entered into a fourth
amendment under the Credit Facility primarily to permanently reduce its commitments under
the Credit Agreement from $125.0 million to $101.0 million and to amend the availability
requirements as indicated below. As a result of the reduction in borrowing capacity, and
in accordance with Emerging Issues Task Force No. 98-14 (EITF 98-14), the Company
reduced its debt acquisition costs by $0.5 upon signing of the fourth amendment to the
Credit Facility in February 2005, the expense for which was recorded in the Other Expense
line item on the Companys Statement of Operations.


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


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


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


(1)
The minimum
amount of availability required to be maintained during the Availability Test
Period is $20.0 (except during any single period of up to 60 consecutive days
from June through September of each year during the Availability Test Period,
when such minimum availability requirement is $10.0).55


REMINGTON ARMS
COMPANY, INC.


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


For any period
during the Availability Test Period when such minimum availability requirement
is not met, the Company must maintain (i) a maximum leverage ratio of 6.0 to 1.0
and (ii) a minimum fixed charge coverage ratio of 1.1 to 1.0. So long as the
minimum availability requirement is met during the Availability Test Period,
there is no requirement for the Company to meet the maximum leverage ratio or
the minimum fixed charge coverage ratio.(2)
The
Company is required to maintain  specified  minimum rolling four quarter levels of
Consolidated  EBITDA (as defined in the Credit  Facility)
                            during the Availability Test Period.(3)
All
of Remingtons  existing and future domestic  subsidiaries are either co-borrowers under,
or guarantors of, the Credit Facility.  The Credit                             Facility
is secured by  substantially  all of the  Companys  real and personal  property,
 including  without  limitation  the                             capital stock of the
Companys subsidiaries.(4)
Amounts
 outstanding  under the Credit Facility bear interest at a rate equal to, at the
Companys  option,  (1) an alternate base rate plus an
                            applicable  margin,  or (2) a reserve  adjusted  LIBOR rate
plus an  applicable  margin.  These margins are subject to periodic
                            adjustment based on certain levels of financial performance
at various times during the term of the Credit Facility.(5)
The
Credit Facility  contains  limitations on capital  expenditures  exceeding $12.5 during
any fiscal year,  adjusted upward for any previously                             unspent
amounts in prior years that were less than the annual $12.5 limitation.(6)
The
Credit Facility contains limitations on indebtedness,  liens, investments, mergers and
other acquisitions, asset dispositions,  transactions                             with
affiliates, and dividends and other distributions.(7)
The
Credit Facility contains customary events of default.(8)
The
Company is required to pay certain fees in connection  with the Credit  Facility,
 including (1) letter of credit fees,  (2) agency fees and
                            (3) an unused  commitment fee of 0.375% which is payable if
the average  outstanding  Credit Facility balance is 50% or more of
                            the aggregate  revolving  commitments in effect on the first
day of such month,  subject to adjustment  upward to 0.500% if the
                            average  outstanding  Credit Facility balance for any month
is less than 50% of the aggregate  revolving  commitments in effect
                            on the first day of such month.(9)
The
Credit Facility contains other customary affirmative and negative covenants: including
but not limited to those listed above.The
interest rate margin for the ABR and the Euro-Dollar loans at December 31, 2004 is 1.50%
and 3.00%, respectively. The weighted average interest rate under the Companys Credit
Facility was 4.90% and 4.02% for the year ended December 31, 2004 and 2003, respectively.


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



56


REMINGTON ARMS
COMPANY, INC.


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


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


The
initial  issuance and sale of the  Companys  $200.0  aggregate  principal  amount 10.5%
Senior Notes due 2011 (the  Notes) was  completed in a private  offering on January 24,
2003. A portion of the proceeds  from the issuance of the Notes was used for the
 redemption  of all of the Companys 91⁄2% Senior  Subordinated  Notes due 2003 (the
Refinanced  Notes),  at a redemption price equal to 100% of the aggregate  principal
amount of Refinanced Notes then  outstanding of $86.9,  plus accrued and unpaid interest.
 The Notes are redeemable at the option of the Company,  in whole or in part, any time on
or after February 1, 2007.  The redemption  price ranges from 105.3% of the principal
 amount in 2007 to 100% in the year 2009 and  thereafter.  The Notes may also be redeemed
with  proceeds of specified  types of equity  offerings  prior to 2007, at a redemption
 price of 110.5% of the principal  amount.  In the event of a change in control,  the
Notes may be tendered at the option of the holders for the  principal  amount plus
 applicable  interest  and premium at that  date.  The Notes  are  unsecured  senior
 obligations  of the  Company,  ranking  equal in right of  payment  with all  existing
 and  future  senior indebtedness, if any, of the Company, including its indebtedness
under the Credit Facility.


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


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


Note 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, 2004,
are as follows:


CapitalLeases
     OperatingLeasesMinimum Lease Payments for Years Ending December 31:2005
     $0.8
        
        
     $1.52006
     0.3
        
        
     1.42007
     
        
        
     1.32008
     
        
        
     1.22009
     
        
        
     1.2Thereafter
     
        
        
     1.2Total Minimum Lease Payments
     1.1
        
        
     $7.8Less: Amount representing interest
     0.3Present Value of Net Minimum Lease Payments
     $0.8Rental
expenses for operating leases for 2004, 2003 and 2002 were $1.8, $1.6 and $1.6.


Note 15Stock
Purchase and Option Plans


As
of December 31, 2004,  Holding has reserved 39,615 shares of the Class A Common Stock,
 par value $.01 per share, of Holding (Common Stock) for issuance in accordance  with
the terms of the RACI Holding,  Inc. Stock  Incentive Plan (the 1999 Stock  Incentive
 Plan) and the RACI Holding,  Inc. 2003 Stock Option Plan (the 2003 Stock Option Plan).


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



57


REMINGTON ARMS
COMPANY, INC.


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


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


At
December 31, 2004 options to purchase 14,114 shares of Common Stock were outstanding, at
a per share exercise price of $220.31, of which 242 options were exercisable. Subject to
the continued service of any option-holder, 728 of the options vest ratably on the first,
second and third anniversaries of the options grant date; 6,693 of the options vest
ratably on the fourth and fifth anniversaries of the options grant date; and 6,693 of
the options vest ratably on the first, second and third anniversaries of the options
grant date, provided that the annual performance target is achieved in each of the
related three years or, if the annual performance target for a particular year is not
met, but the cumulative performance target for the subsequent year is met, a
proportionate amount of such options vest.  If the performance targets are not achieved,
subject to the continued service of any option holder, the options will vest on the ninth
anniversary of the grant date.  The vesting of options may be accelerated upon the
occurrence of certain events specified in the plans including a change in control as
defined therein.  Options not exercised will expire on the tenth anniversary of the date
of grant. The following is a summary of stock option activity under the 1999 Stock
Incentive Plan and the 2003 Stock Option Plan:


2004
     
     2003
     
     2002Shares
     Wtd. Avg.Ex. Price
     Shares
     Wtd. Avg.Ex. Price
     Shares
     Wtd. Avg.Ex. PriceOutstanding at January 1,
     
     
     15,138
        
     $220
        
     65,528
        
     $152
        
     69,387
        
     $151Granted
     
        
     
        
     15,138
        
     $220
        
     891
        
     $185Exercised
     
        
     
        
     
        
     
        
     2,000
        
     $100Cancelled/Forfeited
     1,024
        
     $220
        
     65,528
        
     $152
        
     2,750
        
     $161Outstanding at December 31,
     14,114
        
     $220
        
     15,138
        
     $220
        
     65,528
        
     $152Exercisable at December 31,
     242
        
     $220
        
     
        
     $
        
     46,045
        
     $134Weighted AverageFair Value Options Granted
     $12.20
        
     
        
     $11.52
        
     
        
     $36.40The
exercise price of all outstanding options at December 31, 2004 is $220.31, and the
weighted average contractual life on the unvested options outstanding at December 31,
2004 is estimated to be 3.6 years.  Included in the 14,114 options above are 1,099
options that were granted in 2003 which are accounted for under FIN 44, Accounting for
Certain Transactions involving Stock Compensation. If the market value of class A common
stock increases, Holding is required to recognize as expense, which will be pushed down
to the Company since the holders of the options are employees of the Company, the
incremental difference above the grant value. For the remaining 13,015 shares of stock,
the Company has adopted the disclosure-only provisions of SFAS No. 123, as amended by
SFAS No. 148, Accounting for Stock-Based Compensation.  See Note 4, Summary of
Significant Accounting Policies.


Note 16Investment
in Unconsolidated Joint Venture


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


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



58


REMINGTON ARMS
COMPANY, INC.


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


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


Account
     December 31, 2004Investment in Unconsolidated Joint Venture
     
     
     $ 0.2Equity in Earnings (Losses) from Unconsolidated Joint Venture, net of tax of $0.1
     $ Through
February 28, 2005, the Company has made a total of $0.5 in cumulative cash contributions
to RELES.


Note 17RACI
Holding Recapitalization Transactions


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


(1)
A
private offering of $200.0 principal amount of Notes, completed in January 2003. In the
event of a change in control, the Notes may be       tendered at the option of the
holders for the principal amount plus applicable interest and premium at that date.(2)
The
refinancing by Remington of substantially all of its existing indebtedness through (i)
the repayment of all amounts outstanding under       Remingtons prior senior secured
credit agreement (the Old Credit Agreement) concurrently with the termination of all
commitments       thereunder, and (ii) the redemption of all of the Refinanced Notes at a
redemption price equal to 100% of the aggregate principal amount       of Refinanced
Notes then outstanding of $86.9, plus accrued and unpaid interest and (iii) the closing
by Remington of a new Credit       Facility, under which up to $125.0 of revolving credit
commitments are available, subject to borrowing base and other limitations. The
      refinancing occurred in January 2003.(3)
The
issuance and sale by Holding, for $30.8, of 140,044 shares of common stock of Holding to
Bruckmann, Rosser, Sherrill & Co. II, L.P.       (the BRS Fund) and others, in February
2003.(4)
The
distribution of 15,970 shares of common stock of Holding in respect of 15,970 deferred
shares of Holding, the repurchase by Holding of       722,981 of the outstanding shares
of common stock of Holding and the cancellation of 64,144 options in respect of common
stock of Holding,       in an aggregate amount of approximately $163.7, consisting of
$130.8 million in cash and $32.9 aggregate principal amount of senior notes       of
Holding, or the Holding Notes.  As of December 31, 2004, the Holding Notes had a carrying
value of $35.0. The Clayton & Dubilier       Private Equity Fund IV Limited Partnership
holds all of the Holding Notes. Remington made a $100.0 dividend to Holding in connection
with       the funding of the repurchase. The repurchase occurred in February 2003.Note 18Commitments
and Contingencies


Purchase Commitments


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


Product Liability
Litigation


Pursuant
to the Purchase Agreement with Dupont for the Acquisition, the sellers in the Acquisition
(the Sellers) retained liability for, and are required to indemnify the Company
against, (1) all product liability cases and claims (whenever they may arise) involving
discontinued products, (2) all product liability cases and claims involving products that
had not been discontinued as of the Acquisition (extant products) and relating to
occurrences that took place prior to the Acquisition and (3) certain environmental
liabilities based on conditions existing at the time of the Acquisition. These
indemnification obligations of the Sellers are not subject to any survival period
limitation. The Company has no current



59


REMINGTON ARMS
COMPANY, INC.


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


information on the extent, if any,
to which the Sellers have insured these indemnification obligations. Except for certain
cases and claims relating to shotguns as described below and except for all cases and
claims relating to products discontinued prior to the Acquisition, the Company generally
bears financial responsibility for product liability cases and claims relating to
occurrences after the Acquisition.


Since
December 1, 1993, the Company has maintained insurance coverage for product liability
claims subject to certain self-insured retentions both on a per-occurrence basis and in
the aggregate for personal injury or property damage relating to occurrences arising
after the Acquisition. The Company believes that its current product liability insurance
coverage for personal injury and property damage is adequate for its needs. The Companys
current product liability insurance policy provides for a self-insured retention of $0.5
per occurrence up to the first $2.0 in claims, after which the self-insured retention
increases to $0.8 per occurrence. The current policy period runs from December 1, 2004
through November 30, 2005. The current policy has a batch clause endorsement, which in
general provides that if a batch of the Companys products were to be defective, the
Companys liability for expenses and damages related to the entire batch would be capped
at the amount of self-insured retention for a single occurrence. The policy excludes from
coverage any pollution-related liability. Based in part on the nature of the Companys
products, and the impact on the insurance market of the events of September 11, 2001,
there can be no assurance that the Company will be able to obtain adequate product
liability insurance coverage upon the expiration of the current policy. Certain of the
Companys current excess insurance coverage expressly does not apply to actions brought
by municipalities.


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


Municipal Litigation


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


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


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



60


REMINGTON ARMS
COMPANY, INC.


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


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


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


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


Environmental


The
Company does not expect current environmental regulations to have a material adverse
effect on the financial condition or results of operations. However, the Companys
liability for future environmental remediation costs is subject to considerable
uncertainty due to the complex, ongoing and evolving process of identifying the necessity
for, and generating cost estimates for, remedial work. Furthermore, there can be no
assurance that environmental regulations will not become more restrictive in the future.
The Company has not identified any loss contingencies with respect to environmental
remediation costs the realization of which the Company believes to be reasonably possible.



61


REMINGTON ARMS
COMPANY, INC.


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


Note 19Income
Taxes (Restated)


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


2004
     
     2003
     
     2002Federal:Current
     ($5.2
        )
     $
        
     $7.5Deferred
     17.4
        
     (3.5
        )
     3.6State:Current
     0.2
        
     0.7
        
     0.6Deferred
     1.6
        
     (0.1
        )
     0.1$14.0
        
     $(2.9
        )
     $11.8The
tax effects of temporary differences that give rise to significant portions of the
deferred tax assets and deferred tax liabilities are presented below:


2004
     
     2003Current
     
     Noncurrent
     
     Current
     
     NoncurrentDeferred tax assets:Accrued employee and retiree benefits
     $3.9
        
     $17.5
        
     $3.8
        
     $15.7Product, environmental and other liabilities
     1.2
        
     2.6
        
     1.4
        
     2.8Receivables and inventory
     3.4
        
     0.1
        
     3.8
        
     0.1Capitalized expenses
     
        
     1.0
        
     
        
     0.8Other comprehensive income
     
        
     1.1
        
     1.7
        
     State tax credits
     0.2
        
     0.6
        
     0.7
        
     Net operating losses
     
        
     
        
     4.0
        
     Total deferred tax assets
     $8.7
        
     $22.9
        
     $15.4
        
     $19.4Valuation allowance
     (8.7
        )
     (6.8
        )
     
        
     Net deferred tax asset
     $
        
     $16.1
        
     $15.4
        
     $19.4Deferred tax liabilities:Property, plant and equipment
     
        
     (13.1
        )
     
        
     (13.2
        )Intangibles
     
        
     (7.2
        )
     
        
     (8.0
        )Other comprehensive income
     (1.5
        )
     
        
     (0.8
        )
     (0.1
        )Total deferred tax liabilities
     (1.5
        )
     (20.3
        )
     (0.8
        )
     (21.3
        )Net deferred tax liability
     ($1.5
        )
     ($4.2
        )
     $14.6
        
     ($1.9
        )As
of December 31, 2004, a valuation allowance of approximately $15.5 has been established
against deferred tax assets as a charge against earnings in accordance with the
provisions of Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes (SFAS No. 109). Realization of the deferred tax assets is largely dependent upon
future profitable operations, if any, and the reversals of existing taxable temporary
differences. As a result of pre-tax losses from continuing operations and future taxable
income expected to arise primarily from the reversal of and creation of temporary
differences for the foreseeable future, we determined that in accordance with SFAS No.
109, it is not appropriate to continue to recognize these deferred tax assets.  Although
there can be no assurance that such events will occur, the valuation allowance may be
reversed in future periods to the extent that the related deferred income tax assets no
longer require a valuation allowance under the provisions of SFAS No. 109.


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


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



62


REMINGTON ARMS
COMPANY, INC.


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


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


2004
     
     2003
     
     2002Federal statutory rate
     
     
     (35.0
        )%
     (35.0
        )%
     35.0
        %State income taxes, net of Federal benefits
     (1.2
        )
     (4.2
        )
     1.4Permanent differences
     0.7
        
     (2.8
        )
     0.4Change in valuation allowance on deferred tax assets
     418.0
        
     
        
     Other
     (4.0
        )
     2.5
        
     2.2Effective income tax rate
     378.5
        %
     (39.5
        )%
     39.0
        %Note 20Issuance of
Holding Redeemable Deferred Shares and Options


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


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


Note 21Related
Party Transactions


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


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


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



63


REMINGTON ARMS
COMPANY, INC.


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


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


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


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


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


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


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


Note 22Financial
Instruments


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


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


Note 23Segment
Information (Restated)


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


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



64


REMINGTON ARMS
COMPANY, INC.


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


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


Information on Segments:


2004
     
     2003
     
     2002Net Sales:Firearms
     $193.4
        
     $181.3
        
     $194.0Ammunition
     176.1
        
     157.1
        
     163.9All Other
     23.5
        
     22.3
        
     26.0Consolidated Net Sales
     $393.0
        
     $360.7
        
     $383.9Adjusted EBITDA:Firearms
     $25.8
        
     $19.2
        
     $32.4Ammunition
     11.3
        
     13.2
        
     18.5All Other
     4.0
        
     3.5
        
     6.3Other Reconciling Items
     (2.5
        )
     3.7
        
     3.5Consolidated Adjusted EBITDA
     $38.6
        
     $39.6
        
     $60.7Assets:Firearms
     $137.8
        
     $118.7
        
     $111.1Ammunition
     110.4
        
     102.0
        
     101.3All Other
     12.8
        
     10.0
        
     9.7Other Reconciling Items
     90.6
        
     132.0
        
     113.0Consolidated Assets
     $351.6
        
     $362.7
        
     $335.1Gross Capital Expenditures:Firearms
     $4.8
        
     $4.3
        
     $3.1Ammunition
     3.8
        
     2.0
        
     3.3All Other
     0.2
        
     0.1
        
     0.2Other Reconciling Items
     0.7
        
     0.5
        
     0.9Gross Consolidated Capital Expenditures
     $9.5
        
     $6.9
        
     $7.5Reconciliation of
Income (Loss) from Operations to Adjusted EBITDA

Year ended December 31,2004
     
     2003
     
     2002Adjusted EBITDA
     
     
     $38.6
        
     $39.6
        
     $60.7Adjustments:Depreciation & Amortization (A)
     9.2
        
     9.5
        
     10.0Interest Expense(B)
     24.7
        
     24.8
        
     12.3Other noncash charges I
     7.4
        
     3.4
        
     1.0Non-recurring and Restructuring Items (D)
     (12.7
        )
     0.4
        
     2.1Other Unusual Charges(F)
     
        
     6.7
        
     Special Payment (E)
     
        
     
        
     1.8Income Taxes(B)
     14.1
        
     (2.0
        )
     13.7Net Income (Loss)
     $(4.1
        )
     (3.2
        )
     19.8(A)
Excludes
amortization of deferred financing costs of $1.9, $1.8 and $1.9, in 2004, 2003 and 2002,
respectively, which is included in       interest expense.(B)
Amounts
include interest expense of $0.1, $1.8, and $1.8, and income tax expense of $0.1, $0.9,
and $1.9, in 2004, 2003 and 2002,       respectively which was reclassified to
discontinued operations.65


REMINGTON ARMS
COMPANY, INC.


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


(C)
Non-cash
charges consist of the following: (i) for the year ended December 31, 2002, a $0.8
accrual for retiree benefits and a $0.2 loss       on disposal of assets; (ii) for the
year ended December 31, 2003, a $2.9 accrual for retiree benefits and a $0.5 loss on
disposal of       assets; and (iii) for the year ended December 31, 2004, a $7.1 accrual
for retiree benefits and a $0.3 loss on disposal of assets.(D)
Nonrecurring
and restructuring expenses consist of the following: (i) for the year ended December 31,
2002, $0.3 of nonrecurring legal       fees, $0.4 associated with marking redeemable
deferred shares to market, and $1.4 of Cumulative Effect of Change in Accounting
Principle,       net of tax; (ii) for the year ended December 31, 2003, $0.2 of severance
costs and $0.2 loss on disposal of assets; and (iii) for the year       ended December
31, 2004, $13.6 gain from the disposal of discontinued operations; offset by $0.7 from
the fees associated with an       exclusive distribution agreement and $0.2 for accrued
severance.(E)
In
August 2002, Holding distributed on behalf of Remington a special payment to holders of
all stock options and deferred shares of       approximately $19.54 per share, in an
aggregate amount of $1.8. This special payment was treated as compensation expense by
Remington       since the holders were employees and directors of the Company.(F)
In
February 2003, Holding distributed on behalf of Remington a special payment to holders of
all stock options (in connection with the       acceleration and resulting cancellation
of the options) of approximately $220.31 per share, in an aggregate amount of $4.5, $0.7
of       additional interest for early redemption of the Refinanced Notes, and $1.5
expensed for the unamortized debt acquisition cost related to       the Old Credit
Facility.Geographic Information:


2004
     
     2003
     
     2002Net Sales:Domestic
     $373.1
        
     $340.9
        
     $362.1Foreign
     19.9
        
     19.8
        
     21.8Consolidated Net Sale
     $393.0
        
     $360.7
        
     $383.9There
are no material assets owned by the Company outside the United States.  Approximately 16%
of the Companys net sales in 2004, 19% of the Companys net sales in 2003, and 22% of
the Companys net sales in 2002 consisted of sales made to a single customer. This
customer affects sales to both our Firearms and Ammunition segments.  The Companys sales
to this customer are not governed by a written contract between the parties. Although the
Company believes its relationship with this customer is good, the loss of this customer
or a substantial reduction in sales to this customer could adversely affect the Companys
financial condition or results of operations. No other single customer comprises greater
than or equal to 10% of sales.



66


REMINGTON ARMS
COMPANY, INC.


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


Note 24Financial
Position and Results of Operations of Remington Arms Company, Inc. (Restated)


The
following condensed consolidating financial data provides information regarding the
financial position and results of operations of Remington Arms Co, Inc., including
Remingtons 100% owned subsidiaries, RA Brands, L.L.C., and RA Factors, Inc. Separate
financial statements of Holding, Remingtons sole shareholder, are not presented because
management has determined that they would not be material to holders of the Companys
public securities, the Notes. Holding is not a guarantor of the Notes. The Notes are
fully and unconditionally guaranteed on a joint and several basis by all of Remingtons
subsidiaries. Holding does not have any significant independent operations or assets
other than its ownership interest in Remington. Holding has $35.0 aggregate principal
amount, including accrued interest, of senior notes due in 2010 and 2011 which were
created during the recapitalization of Holding in February 2003.


REMINGTON ARMS
COMPANY, INC. CONDENSED CONSOLIDATING BALANCE SHEET December 31, 2004


Remington
     Combined
GuarantorSubsidiaries
     Eliminations
     Remington
Arms Co. andSubsidiariesASSETSCurrent Assets
     $105.6
        
     $84.9
        
     $
        
     $190.5Receivable from Remington, Net
     
        
     120.3
        
     120.3
        
     Equity method investment in subsidiaries
     210.2
        
     
        
     210.2
        
     Noncurrent Assets
     122.9
        
     38.2
        
     
        
     161.1Total Assets
     $438.7
        
     $243.4
        
     $330.5
        
     $351.6LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities
     $41.4
        
     $33.2
        
     $
        
     $74.6Payable to RACI Holding, Inc., Net
     0.9
        
     
        
     
        
     0.9Payable to RA Brands, L.L.C., Net
     64.4
        
     
        
     64.4
        
     Payable to RA Factors, Inc., Net
     55.9
        
     
        
     55.9
        
     Noncurrent Liabilities
     266.4
        
     
        
     
        
     266.4Shareholders Equity
     9.9
        
     210.2
        
     210.2
        
     9.9Total Liabilities and Shareholders Equity
     $438.7
        
     $243.4
        
     $330.5
        
     $351.667


REMINGTON ARMS
COMPANY, INC.


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


REMINGTON ARMS
COMPANY, INC. CONDENSED CONSOLIDATING BALANCE SHEETS December 31, 2003


Remington
     Combined
GuarantorSubsidiaries
     Eliminations
     Remington
Arms Co. andSubsidiariesASSETSCurrent Assets
     $110.8
        
     $70.5
        
     $
        
     $181.3Receivable from Remington, Net
     
        
     118.9
        
     118.9
        
     Equity method investment in subsidiaries
     213.1
        
     
        
     213.1
        
     Noncurrent Assets
     131.8
        
     49.6
        
     
        
     181.4Total Assets
     $455.7
        
     $239.0
        
     $332.0
        
     $362.7LIABILITIES AND SHAREHOLDERS EQUITYCurrent Liabilities
     $41.7
        
     $20.2
        
     $
        
     $61.9Payable to RACI Holding, Inc. Net
     0.9
        
     
        
     
        
     0.9Payable to RA Brands, L.L.C., Net
     58.3
        
     
        
     58.3
        
     Payable to RA Factors, Inc., Net
     60.6
        
     
        
     60.6
        
     Noncurrent Liabilities
     282.4
        
     5.7
        
     
        
     288.1Shareholders Equity
     11.8
        
     213.1
        
     213.1
        
     11.8Total Liabilities and Shareholders Equity
     $455.7
        
     $239.0
        
     $332.0
        
     $362.768


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 OPERATIONS


Year EndedDecember 31, 2004
     Remington
     Combined
GuarantorSubsidiaries
     Eliminations
     Remington
Arms Co. andSubsidiariesSales
     
     
     $393.0
        
     $
        
     $
        
     $393.0Gross Profit
     90.5
        
     
        
     
        
     90.5Subsidiary Income (Expense)
     (26.7
        )
     26.7
        
     
        
     Income from Equity Investees
     23.5
        
     
        
     23.5
        
     Net Income
     (4.1
        )
     23.5
        
     23.5
        
     (4.1
        )Year EndedDecember 31, 2003
     Remington
     Combined
GuarantorSubsidiaries
     Eliminations
     Remington
Arms Co. andSubsidiariesSales
     
     
     $360.7
        
     $
        
     $
        
     $360.7Gross Profit
     90.5
        
     
        
     
        
     90.5Subsidiary Income (Expense)
     (25.7
        )
     25.7
        
     
        
     Income from Equity Investees
     11.2
        
     
        
     11.2
        
     Net (Loss) Income
     (3.2
        )
     11.2
        
     11.2
        
     (3.2
        )Year EndedDecember 31, 2002
     Remington
     Combined
GuarantorSubsidiaries
     Eliminations
     Remington
Arms Co. andSubsidiariesSales
     
     
     $383.9
        
     $
        
     $
        
     $383.9Gross Profit
     110.8
        
     
        
     
        
     110.8Subsidiary Income (Expense)
     (38.1
        )
     38.1
        
     
        
     Income from Equity Investees
     22.3
        
     
        
     22.3
        
     Net Income
     19.8
        
     22.3
        
     22.3
        
     19.869


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 CASH FLOWS December
31, 2004


Remington
     Combined
GuarantorSubsidiaries
     Eliminations
     Remington
Arms Co. andSubsidiariesOperating 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 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 Period
     0.4
        
     
        
     
        
     0.4Cash and Cash Equivalents at End of Period
     $0.4
        
     
        
     
        
     $0.470


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 CASH FLOWS December
31, 2003


Remington
     Combined
GuarantorSubsidiaries
     Eliminations
     Remington
Arms Co. andSubsidiariesOperating ActivitiesNet Cash Used in Operating Activities
     $(7.2
        )
     $(0.1
        )
     $
        
     $(7.3
        )Investing ActivitiesCapital Expenditures
     (6.9
        )
     
        
     
        
     (6.9
        )Net Cash Used in Investing Activities
     (6.9
        )
     
        
     
        
     (6.9
        )Financing ActivitiesNet Borrowings from Revolving Credit Facility
     17.3
        
     
        
     
        
     17.3Cash Dividends Paid
     (103.3
        )
     
        
     
        
     (103.3
        )Proceeds from Issuance of Long-Term Debt
     200.0
        
     
        
     
        
     200.0Principal Payments on Long-Term Debt
     (87.8
        )
     
        
     
        
     (87.8
        )Capital Contributions from RACI Holding, Inc.
     4.5
        
     
        
     
        
     4.5Book Overdraft
     (4.1
        )
     
        
     
        
     (4.1
        )Debt Issuance Costs
     (12.4
        )
     
        
     
        
     (12.4
        )Net Cash Provided by Financing Activities
     14.2
        
     
        
     
        
     14.2Increase (Decrease) in Cash and Cash Equivalents
     0.1
        
     (0.1
        )
     
        
     Cash and Cash Equivalents at Beginning of Period
     0.3
        
     0.1
        
     
        
     0.4Cash and Cash Equivalents at End of Period
     $0.4
        
     $
        
     $
        
     $0.471


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 CASH FLOWS December
31, 2002


Remington
     
     Combined
GuarantorSubsidiaries
     
     Eliminations
     
     Remington
Arms Co. andSubsidiariesOperating ActivitiesNet Cash Provided by Operating Activities
     $21.2
        
     $
        
     $
        
     $21.2Investing ActivitiesCapital Expenditures
     (6.9
        )
     
        
     
        
     (6.9
        )Net Cash Used in Investing Activities
     (6.9
        )
     
        
     
        
     (6.9
        )Financing ActivitiesNet Payments under Revolving Credit Facility
     (14.0
        )
     
        
     
        
     (14.0
        )Book Overdraft
     3.0
        
     
        
     
        
     3.0Principal Payments on Long-Term Debt
     (1.1
        )
     
        
     
        
     (1.1
        )Cash dividends paid
     (15.1
        )
     
        
     
        
     (15.1
        )Net Cash Used by Financing Activities
     (27.2
        )
     
        
     
        
     (27.2
        )Increase (Decrease) in Cash and Cash Equivalents
     (13.0
        )
     
        
     
        
     (13.0
        )Cash and Cash Equivalents at Beginning of Period
     13.3
        
     0.1
        
     
        
     13.4Cash and Cash Equivalents at End of Period
     $0.3
        
     $0.1
        
     $
        
     $0.472


REMINGTON ARMS
COMPANY, INC.


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


Note 25Quarterly
Financial Data (unaudited) (Restated)


2004
     As
ReportedFirst
     As
RestatedFirst
     As
ReportedSecond
     As
RestatedSecond
     As
ReportedThird
     As
RestatedThird
     As
ReportedFourth
     As
RestatedFourthNet Sales
     
     $83.9
        
     $83.9
        
     $87.2
        
     $87.2
        
     $119.2
        
     $119.2
        
     $102.7
        
     $102.7Gross Profit
     19.5
        
     19.5
        
     16.5
        
     16.5
        
     29.1
        
     29.1
        
     25.4
        
     25.4(Loss) Income from continued operations
     (4.0
        )
     (3.9
        )
     (7.3
        )
     (7.3
        )
     3.9
        
     4.0
        
     3.5
        
     3.5Net (Loss) Income from continued operations
     (2.5
        )
     (2.4
        )
     (4.3
        )
     (4.3
        )
     0.9
        
     0.9
        
     (11.7
        )
     (11.9
        )Net (Loss) Income from discontinued operations
     (0.2
        )
     (0.2
        )
     0.3
        
     0.3
        
     
        
     
        
     (0.1
        )
     (0.1
        )-Gain on Sale of Assets
     13.0
        
     13.0
        
     0.5
        
     0.5
        
     
        
     
        
     0.1
        
     0.1Net Income (Loss) (1)
     10.3
        
     10.4
        
     (3.5
        )
     (3.5
        )
     0.9
        
     0.9
        
     (11.7
        )
     (11.9
        )2003
     As
ReportedFirst
     As
RestatedFirst
     As
ReportedSecond
     As
RestatedSecond
     As
ReportedThird
     As
RestatedThird
     As
ReportedFourth
     As
RestatedFourthNet Sales(2)
     
     $81.0
        (3)
     $81.0
        (3)
     $80.2
        (4)
     $80.1
        (4)
     $112.0
        (5)
     $112.1
        (5)
     $87.5
        (6)
     $87.5
        (6)Gross Profit(2)
     21.4
        
     21.4
        
     19.0
        
     19.0
        
     30.3
        
     30.3
        
     19.8
        
     19.8(Loss) Income from continued operations
     (7.7
        )
     (7.7
        )
     (2.8
        )
     (2.8
        )
     6.5
        
     6.6
        
     (3.6
        )
     (3.6
        )Net (Loss) Income from continued operations
     (4.8
        )
     (4.8
        )
     (1.7
        )
     (1.7
        )
     4.0
        
     4.1
        
     (2.1
        )
     (2.2
        )Net Income from discontinued operations
     0.6
        
     0.6
        
     0.5
        
     0.5
        
     0.2
        
     0.2
        
     0.1
        
     0.1Net (Loss) Income
     (4.2
        )
     (4.2
        )
     (1.2
        )
     (1.2
        )
     4.2
        
     4.3
        
     (2.0
        )
     (2.1
        )(1)
A
valuation allowance of $15.5 was recorded on the Companys deferred tax asset in December
2004 - see Note 19.(2)
Previous
quarters for 2003 were reclassified to include discontinued operations - see Note 4.(3)
Sales
of $4.8 were reclassified to Income from Discontinued Operations(4)
Sales
of $4.5 were reclassified to Income from Discontinued Operations(5)
Sales
of $3.9 were reclassified to Income from Discontinued Operations(6)
Sales
of $3.2 were reclassified to Income from Discontinued Operations73


Schedule II


REMINGTON ARMS
COMPANY, INC.


Valuation and
Qualifying Accounts Years Ended December 31, 2004, 2003, and 2002
(Dollars in Millions)


Balance at
Beginningof Period
     Charged to
Costs andExpenses
     Deductionsto Reserve
     Balance at
End ofPeriodDescription:Deducted from Asset Account:Allowance for Doubtful AccountsYEAR ENDEDDecember 31, 2004
     $(0.5
        )
     $0.0
        
     $0.0
        
     $(0.5
        )YEAR ENDEDDecember 31, 2003
     $(2.1
        )
     $0.8
        
     $0.8
        
     $(0.5
        )YEAR ENDEDDecember 31, 2002
     $(5.1
        )
     $0.3
        
     $2.7
        
     $(2.1
        )Description:Deducted from Asset Account:Inventory ReservesYEAR ENDEDDecember 31, 2004
     $(2.7
        )
     $(0.9
        )
     $2.0
        
     $(1.6
        )YEAR ENDEDDecember 31, 2003
     $(2.5
        )
     $(1.8
        )
     $1.6
        
     $(2.7
        )YEAR ENDEDDecember 31, 2002
     $(2.5
        )
     $(1.2
        )
     $1.2
        
     $(2.5
        )Description:Deducted from Asset Account:Valuation allowance for deferred tax assetsYEAR ENDEDDecember 31, 2004 (Restated)
     $0.0
        
     $(15.5
        )
     $0.0
        
     $(15.5
        )YEAR ENDEDDecember 31, 2003
     $0.0
        
     $0.0
        
     $0.0
        
     $0.0YEAR ENDEDDecember 31, 2002
     $0.0
        
     $0.0
        
     $0.0
        
     $0.074


Item 9A. Controls and
Procedures


Section
404 of the Sarbanes-Oxley Act of 2002 requires non-accelerated filers, including us, to
report on the effectiveness of their internal control over financial reporting beginning
with their 2006 Annual Report on Form 10-K, which we are required to file with the SEC no
later than March 31, 2007. Our independent registered public accounting firm will be
required to attest to that report. Our management has been and is continuing to work to
ensure that our internal control over financial reporting provides reasonable assurance
regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with GAAP.


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


As
described in Managements Discussion and Analysis of Financial Condition and Results of
Operations and Note 3 to the consolidated financial statements included elsewhere in
this Form 10-K/A, we have restated our previously issued financial statements for the
years 2004, 2003 and 2002, including interim periods in 2004 and the first quarter of
2005, to reflect the correction of a methodological error related to our reserve for
potential healthcare claims which resulted from the use of inaccurate data and
methologies.


Impact
of the Restatement on Disclosure Controls and Procedures. As of and for the period ended
December 31, 2004 (the Evaluation Date), an evaluation of the effectiveness of the
Companys disclosure controls and procedures was conducted under the supervision of, and
reviewed by, the Companys Chief Executive Officer and Chief Financial Officer. Based on
that evaluation, the Companys Chief Executive Officer and Chief Financial Officer have
concluded that the Companys disclosure controls and procedures were effective.


Our
disclosure controls and procedures are designed to ensure that information required to be
disclosed in our financial reports have been made known to management, including our
Chief Executive Officer and Chief Financial Officer, and other persons responsible for
preparing such reports and is recorded, processed, summarized and reported.  The
circumstances surrounding the methodological error related to our reserve for potential
healthcare claims, which was not considered material to any single interim or annual
period as described below, were made known to the Companys Chief Executive Officer and
Chief Financial Officer through the course of our disclosure controls and procedures
during the Evaluation Date period.  The Companys Chief Executive Officer and Chief
Financial Officer have concluded that the disclosure controls and procedures were
accordingly operating effectively at the Evaluation Date.


Impact
of the Restatement on Internal Control over Financial Reporting. Our management
considered the control deficiency in internal control over financial reporting which
resulted in the need to restate our previously issued financial statements as disclosed
in Note 3 to the accompanying consolidated financial statements included in this Form
10-K/A. We reviewed and analyzed the Securities and Exchange Commissions Staff
Accounting Bulletin (SAB) No. 99, Materiality, Accounting Principles Board Opinion
No. 28, Interim Financial Reporting, paragraph 29 and SAB Topic 5 F, Accounting
Changes Not Retroactively Applied Due to Immateriality. As part of the analysis, our
management considered the impact of the restatement adjustment on the financial
statements of prior interim or annual periods taken as a whole. Our management determined
to restate our previously issued financial statements because the cumulative impact of
the error, if recorded in the current period, would have been material to the current
years reported net earnings, and not material to prior interim or annual periods taken
as a whole. Based on our review and analysis including the foregoing, our management also
concluded that the control deficiency in internal control over financial reporting that
resulted in the restatement of the prior period financial statements did not constitute a
material weakness. This control deficiency has been reported to the audit committee by
our management in accordance with Section 302 of the Sarbanes-Oxley Act of 2002. In
addition, our management has corrected the control deficiency by reviewing our
methodologies



75


and utilizing more accurate data in
our analysis of potential healthcare claims. Management believes that there have been no changes or
other events that occurred during the fourth quarter of fiscal 2004 that has
materially affected, or is reasonably likely to materially affect, the Companys internal
control over financial reporting.




PART IV




ITEM 15.    EXHIBITS,
FINANCIAL STATEMENT SCHEDULES

(a)
     
     
     Documents filed as part of this report:(1)
     Financial StatementsPageReport of Independent Registered Public Accounting Firm
     37Consolidated Balance Sheets as of December 31, 2004 and 2003
     38Consolidated Statements of Operations for the years endedDecember 31, 2004, 2003, and 2002
     39Consolidated Statements of Cash Flows for the years endedDecember 31, 2004, 2003, and 2002
     40Consolidated Statements of Shareholders Equity and ComprehensiveIncome (Loss) for the years ended December 31, 2004, 2003, and 2002
     41Notes to the Consolidated Financial Statements
     42(2)
     Financial Statement ScheduleValuation and Qualifying Accounts
     74(3)
     List of Exhibits
     7976


SIGNATURES


Pursuant
to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized as of August 2, 2005.



REMINGTON ARMS COMPANY, INC.By:
        /S/ THOMAS L. MILLNER

Name:   Thomas L. Millner
Title:     Chief Executive Officer, President and DirectorPursuant to the requirements of the
Securities Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities indicated on August 2, 2005.


Signature
Title

Date/s/ Thomas L. Millner
Thomas L. Millner
        
        Chief Executive Officer,President and Director
        August 2, 2005/s/ Mark A. Little
Mark A. Little
        
        Executive Vice President, Chief
        Financial Officer, and ChiefAdministrative Officer
        August 2, 2005Leon J. Hendrix, Jr.
        
        Chairman and Director
        August 2, 2005/s/ B. Charles Ames
B. Charles Ames
        
        Chairman and Director
        August 2, 2005/s/ Michael G. Babiarz
Michael G. Babiarz
        
        Director
        August 2, 2005/s/ Bobby R. Brown
Bobby R. Brown
        
        Director
        August 2, 2005Richard A. Gilleland
        
        Director
        August 2, 2005Richard E. Heckert
        
        Director
        August 2, 2005/s/ Hubbard C. Howe
Hubbard C. Howe
        
        Director
        August 2, 2005/s/ Thomas E. Ireland
Thomas E. Ireland
        
        Director
        August 2, 2005/s/ Thomas F. LEsperance
Thomas F. LEsperance
        
        Director
        August 2, 200577


Signature
Title

DateH. Norman Schwarzkopf
        
        Director
        August 2, 2005/s/ Stephen C. Sherrill
Stephen C. Sherrill
        
        Director
        August 2, 200578


EXHIBIT INDEX
Form 10-K/A for Fiscal Year Ended December 31, 2004


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 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 10.12).3.3
Certificate
of Formation of RA Brands L.L.C., dated June 29, 2000, previously filed as Exhibit 3.5 to
                    Registration Statement No. 333-104141, under the Securities Act of
1933, as amended, filed May 16, 2003                     by Remington and Holding, and
herein incorporated by reference.3.4
Limited
Liability Company Agreement of RA Brands, L.L.C. dated June 30, 2000, previously filed as
                    Exhibit 3.6 to Registration Statement No. 333-104141, under the
Securities Act of 1933, as amended,                     filed May 16, 2003 by Remington
and Holding, and herein incorporated by reference.3.5
Certificate
of Incorporation of RA Factors, Inc. dated January 2, 2001, previously filed as Exhibit
3.7                     to Registration Statement No. 333-104141, under the Securities
Act of 1933, as amended, filed May 16,                     2003 by Remington and Holding,
and herein incorporated by reference.3.6
By-Laws
of RA Factors, Inc., previously filed as Exhibit 3.8 to Registration Statement No.
333-104141,                     under the Securities Act of 1933, as amended, filed May
16, 2003 by Remington and Holding, and herein                     incorporated by
reference.79


4.1
Specimen
of Holding Class A Common Stock Certificate; previously filed as Exhibit 4.1 to Holdings
                    Annual Report on Form 10-K, filed March 30, 1998, and herein
incorporated by reference.4.2
Specimen
of Holding Class B Common Stock Certificate; previously filed as Exhibit 4.2 to Holdings
                    Annual Report on Form 10-K, filed March 30, 1998, and herein
incorporated by reference.4.3
Sublease,
dated as of March 1, 1987, between S&K Industries, Inc., as lessor, and Remington as
assignee                     of DuPont, as lessee (agreement to furnish such sublease to
the Securities and Exchange Commission upon                     its request); previously
filed as Exhibit 4.17 to Holdings Annual Report on Form 10-K, filed March 30,
                    1998, and herein incorporated by reference.10.1
Indenture,
dated as of January 24, 2003 among Remington, RBC Holding, Inc., RA Brands, LLC, RA
Factors,                     Inc. and U.S. Bank National Association with respect to
Remingtons 101⁄2% Senior Notes due 2011,                     previously filed as
Exhibit 4.7 to Registration Statement No. 333-104141, under the Securities Act of
                    1933, as amended, filed March 31, 2003 by Remington and Holding, and
herein incorporated by reference.Exhibit Number
Description
of Document10.2
Filed
as Exhibit 2.1.10.3
Filed
as Exhibit 2.2.10.4
Filed
as Exhibit 2.3.10.5
Filed
as Exhibit 2.4.10.6
Filed
as Exhibit 2.5.10.7
Filed
as Exhibit 4.3.10.8
Filed
as Exhibit 4.7.10.9
Investment
Agreement, dated as of December 19, 2002, by and among             Holding, the C&D Fund
and the BRS Fund, previously filed as Exhibit             10.9 to Registration Statement
No. 333-104141, under the Securities             Act of 1933, as amended, filed March 31,
2003, by Remington and             Holding, and herein incorporated by reference.10.10
Amended
and Restated Registration and Participation Agreement, dated             as of February
12, 2003, by and among the BRS Fund, Holding, C&D            Fund and Fund IV
Distributees, and acknowledged and consented to by             Remington, previously
filed as Exhibit 10.10 to Registration             Statement No. 333-104141, under the
Securities Act of 1933, as             amended, filed March 31, 2003 by Remington and
Holding, and herein             incorporated by reference.10.11
Stock
Subscription Agreement, dated as of November 30, 1993, between             Holding and
the C&D Fund; previously filed as Exhibit 10.15 to             Registration Statement No.
333-4520, 333-4520-01 under the             Securities Act of 1933, as amended, filed May
3, 1996 by Remington             and Holding, and herein incorporated by reference.10.12
Shareholders
Agreement, dated as of February 12, 2003, by and among             Holding, C&D Fund, the
BRS Fund and Fund IV Distributees, previously             filed as Exhibit 10.12 to
Registration Statement No. 333-104141,             under the Securities Act of 1933, as
amended, filed March 31, 2003,             by Remington and Holding, and herein
incorporated by reference.10.13
Indemnification
Agreement, dated as of November 30, 1993, among             Remington, Holding, Clayton,
Dubilier & Rice, Inc. and the C&D Fund;             previously filed as Exhibit 10.16 to
Registration Statement No.             333-4520, 333-4520-01 under the Securities Act of
1933, as amended,             filed May 3, 1996 by Remington and Holding, and herein
incorporated             by reference.10.14
Indemnification
Agreement, dated as of February 12, 2003, among             Remington, Holding,
Bruckmann, Rosser, Sherrill & Co L.L.C. and BRS             Fund II, previously filed as
Exhibit 10.14 to Registration Statement             No. 333-104141, under the Securities
Act of 1933,80


as
amended, filed             March 31, 2003, by Remington and Holding, and herein
incorporated by             reference.10.15
Second
Amended and Restated Consulting Agreement, dated as of             February 12, 2003,
among Holding, Remington and Clayton, Dubilier &            Rice, Inc. and Bruckmann,
Rosser, Sherrill & Co., L.L.C, previously             filed as Exhibit 10.15 to
Registration Statement No. 333-104141,             under the Securities Act of 1933, as
amended, filed March 31, 2003,             by Remington and Holding, and herein
incorporated by reference.10.16
Consulting
Agreement, dated as of February 12, 2003, among Holding,             Remington and
Bruckmann, Rosser, Sherrill & Co. L.L.C. and Clayton,             Dubilier & Rice, Inc,
previously filed as Exhibit 10.16 to             Registration Statement No. 333-104141,
under the Securities Act of             1933, as amended, filed March 31, 2003, by
Remington and Holding,             and herein incorporated by reference.10.17
Credit
Agreement, dated January 24, 2003, among Remington and RA             Factors, Inc.,
Wachovia Bank, National Association, as             administrative and collateral agent,
Fleet Capital Corporation,             National City Commercial Finance, Inc., and the
other Financial             Institutions Parties thereto from time to time, previously
filed as             Exhibit 10.17 to Registration Statement No. 333-104141, under the
            Securities Act of 1933, as amended, filed March 31, 2003, by
            Remington and Holding, and herein incorporated by reference.10.18
Borrower
Security Agreement, dated January 24, 2003, between             Remington Arms Company,
Inc. and Wachovia Bank, National             Association, as administrative and
collateral agent, previously             filed as Exhibit 10.18 to Registration Statement
No. 333-104141,             under the Securities Act of 1933, as amended, filed March 31,
2003,             by Remington and Holding, and herein incorporated by reference.10.19
Borrower
Security Agreement, dated January 24, 2003, between RA             Factors, Inc. and
Wachovia Bank, National Association, as             administrative and collateral agent,
previously filed as Exhibit             10.19 to Registration Statement No. 333-104141,
under the Securities             Act of 1933, as amended, filed March 31, 2003, by
Remington and             Holding, and herein incorporated by reference.10.20
Subsidiary
Security Agreement, dated as of January 24, 2003, between             RA Brands, L.L.C.
and Wachovia Bank, National Association, as             administrative and collateral
agent, previously filed as Exhibit             10.20 to Registration Statement No.
333-104141, under the Securities             Act of 1933, as amended, filed March 31,
2003, by Remington and             Holding, and herein incorporated by reference.10.21
Pledge
Agreement, dated January 24, 2003, between RA Brands, L.L.C.             and Wachovia
Bank, National Association, as administrative and             collateral agent,
previously filed as Exhibit 10.22 to Registration             Statement No. 333-104141,
under the Securities Act of 1933, as             amended, filed March 31, 2003, by
Remington and Holding, and herein             incorporated by reference.10.22
Pledge
Agreement, dated January 24, 2003, between Remington Arms             Company, Inc. and
Wachovia Bank, National Association, as             administrative and collateral agent,
previously filed as Exhibit             10.23 to Registration Statement No. 333-104141,
under the Securities             Act of 1933, as amended, filed March 31, 2003, by
Remington and             Holding, and herein incorporated by reference.10.23
Pledge
Agreement, dated January 24, 2003, between RACI Holding, Inc.             and Wachovia
Bank, National Association, as administrative and             collateral agent,
previously filed as Exhibit 10.25 to Registration             Statement No. 333-104141,
under the Securities Act of 1933, as             amended, filed March 31, 2003, by
Remington and Holding, and herein             incorporated by reference.10.24
Patent
and Trademark Security Agreement, dated January 24, 2003,             between RA Brands,
L.L.C. and Wachovia Bank, National Association,             as administrative and
collateral agent, previously filed as Exhibit             10.26 to Registration Statement
No. 333-104141, under the Securities             Act of 1933, as amended, filed March 31,
2003, by Remington and             Holding, and herein incorporated by reference.81


10.25
Subsidiary
Guaranty, dated January 24, 2003, between RA Brands,             L.L.C. and Wachovia
Bank, National Association, as administrative             and collateral agent,
previously filed as Exhibit 10.27 to             Registration Statement No. 333-104141,
under the Securities Act of             1933, as amended, filed March 31, 2003, by
Remington and Holding,             and herein incorporated by reference.10.26
Contribution
Agreement, dated January 24, 2003, by and among             Remington Arms Company, Inc.,
RA Factors, Inc., RA Brands, L.L.C.,             and RBC Holding, Inc., and Wachovia
Bank, National Association, as             administrative and collateral agent,
previously filed as Exhibit             10.29 to Registration Statement No. 333-104141,
under the Securities             Act of 1933, as amended, filed March 31, 2003, by
Remington and             Holding, and herein incorporated by reference.10.27
Form
of Director Stock Subscription Agreement; previously filed as             Exhibit 10.2 by
Holding in its Form 10-Q for the quarter ended             September 30, 1997, and herein
incorporated by reference.*10.28
Form
of Executive Employment Agreement, previously filed as Exhibit             10.38 to
Registration Statement No. 333-104141, under the Securities             Act of 1933, as
amended, filed July 7, 2003, by Remington and             Holding, and herein
incorporated by reference.*10.29
Director
Stock Subscription Agreement; previously filed as Exhibit             10.1 to Holdings
Quarterly Report on Form 10-Q, for the quarter             ended June 30, 1999, and
herein incorporated by reference.*10.30
Director
Matching Deferred Share Award Agreement; previously filed             as Exhibit 10.2 to
Holdings Quarterly Report on Form 10-Q, for the             quarter ended June 30, 1999,
and herein incorporated by reference.*10.31
1999
RACI, Holding, Inc. Stock Incentive Plan; previously filed as             Exhibit 10.3 to
the Holdings Quarterly Report on Form 10-Q, for the             quarter ended June 30,
1999, and herein incorporated by reference.*10.32
Form
of Management Stock Subscription Agreement; previously filed as             Exhibit 10.4
to Holdings Quarterly Report on Form 10-Q, for the             quarter ended June 30,
1999, and herein incorporated by reference.*10.33
Form
of Management Stock Subscription Agreement--Performance Option;             previously
filed as Exhibit 10.5 to Holdings Quarterly Report on             Form 10-Q, for the
quarter ended June 30, 1999, and herein             incorporated by reference.*10.34
Form
of Management Stock Subscription Agreement--Service Option;             previously filed
as Exhibit 10.6 to Holdings Quarterly Report on             Form 10-Q, for the quarter
ended June 30, 1999, and herein             incorporated by reference.*10.35
Form
of Stock Purchase Right Deferred Share Award Agreement;             previously filed as
Exhibit 10.7 to Holdings Quarterly Report on             Form 10-Q, for the quarter
ended June 30, 1999, and herein             incorporated by reference.*10.36
Form
of Matching Deferred Share Award Agreement; previously filed as             Exhibit 10.8
to Holdings Quarterly Report on Form 10-Q, for the             quarter ended June 30,
1999, and herein incorporated by reference.*10.37
Profit
Based Bonus Plan; previously filed as Exhibit 10.11 to             Holdings Quarterly
Report on Form 10-Q, for the quarter ended June             30, 1999, and herein
incorporated by reference.*10.38
Form
of Management Stock Subscription Agreement; previously filed as             Exhibit 10.46
to Holdings Annual Report on Form 10-K, filed March             8, 2002, and herein
incorporated by reference.*10.39
Form
of Management Stock Option Agreement; previously filed as             Exhibit 10.47 to
Holdings Annual Report on Form 10-K, filed March             8, 2002, and herein
incorporated by reference.*10.40
Form
of Deferred Share Award Agreement; previously filed as Exhibit             10.48 to
Holdings Annual Report on Form 10-K, filed March 8, 2002,             and herein
incorporated by reference.*10.41
RACI
Holding, Inc. 2003 Stock Option Plan, adopted June 13, 2003,             previously filed
as Exhibit 10.53 to Registration Statement No.             333-104141, under the
Securities Act of 1933, as amended, filed July             7, 2003, by Remington and
Holding, and herein incorporated by             reference.*82


10.42
Form
of RACI Holding, Inc. Management Stock Option Agreement, dated             as of June 13,
2003, previously filed as Exhibit 10.54 to             Registration Statement No.
333-104141, under the Securities Act of             1933, as amended, filed July 7, 2003,
by Remington and Holding, and             herein incorporated by reference.*10.43
Form
of RACI Holding, Inc. Director Stock Option Agreement, dated as             of June 13,
2003, previously, filed as Exhibit 10.55 to Registration             Statement No.
333-104141, under the Securities Act of 1933, as             amended, filed July 7, 2003,
by Remington and Holding, and herein             incorporated by reference.*10.44
Form
of RACI Holding, Inc. Management Stock Subscription Agreement,             previously
filed as Exhibit 10.56 to Registration Statement No.             333-104141, under the
Securities Act of 1933, as amended, filed July             7, 2003, by Remington and
Holding, and herein incorporated by             reference.*10.45
Form
of RACI Holding, Inc. Director Stock Subscription Agreement,             previously filed
as Exhibit 10.57 to Registration Statement No.             333-104141, under the
Securities Act of 1933, as amended, filed July             7, 2003, by Remington and
Holding, and herein incorporated by             reference.*10.46
First
Amendment to Credit Agreement, dated June 30, 2003, by and             among Remington,
RA Factors, Inc., Wachovia Bank, National             Association, as Agent and Lender
and other financial institutions             party to the Credit Agreement, previously
filed as Exhibit 10.58 to             Registration Statement No. 333-104141, under the
Securities Act of             1933, as amended, filed July 7, 2003, by Remington and
Holding, and             herein incorporated by reference.10.47
Second
Amendment to Credit Agreement, dated as of October 31, 2003,             by and among
Remington, RA Factors, Inc., Wachovia Bank, National             Association, as Agent
and Lender and other financial institutions             party to the Credit Agreement,
previously filed as Exhibit 10.59 to             Registration Statement No. 333-104141,
under the Securities Act of             1933, filed November 14, 2003, by Remington, and
herein incorporated             by reference.10.48
Third
Amendment, dated as of February 9, 2004, to Credit Agreement,             dated as of
January 24, 2003, among Remington, RA Factors, Inc.,             Wachovia Bank, National
Association, as Agent and the lenders from             time to time party thereto,
previously filed as Exhibit 10.2 to             Registration Statement No. 333-104141 on
Form 8-K, under the             Securities Act of 1933, filed February 18, 2004, by
Remington and             Holding, and herein incorporated by reference.*10.49
Asset
Purchase Agreement, dated February 6, 2004, among Remington             Arms Company,
Inc., RA Brands, L.L.C., Pure Fishing, Inc., Pure             Fishing, I, LLC and Pure
Fishing II, LLC, previously filed as             Exhibit 10.1 to Remingtons report on
Form 8-K, under the Securities             Act of 1933, filed February 19, 2004, and
herein incorporated by             reference.10.50
Fourth
Amendment, dated as of February 8, 2005, to the Credit             Agreement, dated as of
January 24, 2003, among Remington, RA             Factors, Inc., Wachovia Bank, National
Association, as Agent and             lenders from time to time party hereto, previously
filed as Exhibit             10.1 to Remingtons Form 8-K, under the Securities Act of
1933,             filed February 11, 2005, and herein incorporated by reference.10.51
Form
of Death Benefit Plan. *10.52
Description
of 2005 Incentive Compensation Plan. *10.53
Special
Supplemental Retirement Plan for Paul Cahan. *12.1
Statement
Re: Computation of Ratio of Earnings to Fixed Charges.21.1
List
of Subsidiaries31.1
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted             Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted             Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.83


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.**99.2
Form
of Proxy set to security holders for 2004 annual meeting.99.3
Notice
of Annual Meeting and Instructions sent to security holders             for 2004 annual
meeting.*
Management
contract or compensatory plan or arrangement.**
The
following exhibits shall not be deemed filed for purposes of             Section 18 of
the Securities Exchange Act of 1934, or otherwise             subject to the liability of
that Section. In addition, Exhibit No.             32.1 and Exhibit No. 32.2 shall not be
deemed incorporated into any             filing under the Securities Act of 1933 or the
Securities Act of             1934.84